General Mills just issued its 2014 Global Responsibility Report. I received an advanced review copy and spoke with Chief Sustainability Officer Jerry Lynch to get his perspective. The 121-page report is organized into five major sections: Health, Environment, Sourcing, Workplace and Community. These are consistent with the company’s mission of “Nourishing Lives- making lives healthier, easier and richer – for 147 years.”
Triple Pundit: One statement in the introduction really impressed me. “Our business depends on the availability of natural resources and the strength of the communities where we operate.” This neatly sums up the reason why companies should care about and invest in corporate social responsibility and sustainability. It’s the awareness that companies do not exist in a vacuum, and that in fact all of their inputs (raw materials) and outputs (sales) are in constant interaction with ecosystems that are subject to continuous change and are sensitive to factors that they themselves can have a significant impact upon.
Jerry Lynch: Thank you.We take the output of Mother Nature, then add value to it for our consumers. So if the front end of that business model breaks down, we’re in a world of hurt. The focus of our work is to conserve and protect our natural resources and the communities that our business depends on. So it’s really a hard-nose business imperative behind this.
3p: What do you see as your major challenges in achieving this?
JL: We’re looking at increasing demand for food as population grows and more people are moving into the middle class. This is happening at a time when Mother Nature is facing major challenges.
3p: What efforts to address your impact would you like to highlight?
JL: The two areas we spent a lot of time on were sourcing and water. We also describe in detail our enterprise-wide footprint, which looks at the whole value chain. When we look at our business, we find that two-thirds of our carbon footprint and 99 percent of our water footprint is in the raw materials.
But raw materials also happen to be our biggest single spend as a company. That means that there is a lot of impact that we can address and a lot of value that we can recover. So it’s really an innovation challenge for us to unlock value, quality, cost savings etc., while also reducing our impact.
3p: I see that you’ve committed to 100 percent sustainable sourcing of your 10 key raw materials. How do you define sustainable sourcing?
JL: It depends on which ingredient we are talking about. Each ingredient is geographically unique, with unique challenges. We’ve been working with WWF and a number of other groups including Field to Market (also known as the Alliance for Sustainable Agriculture) and Bonsucro as well as nongovernmental organizations (NGOs) like the Nature Conservancy (TNC), Rainforest Alliance and the international humanitarian organization CARE to develop those criteria.
[Note: These 10 key ingredients represent a full 50 percent of General Mills’ raw material purchases.]
3p: So how does this work?
JL: The strategy is based on creating economic, environmental and social value. Each ingredient goes through a four-phase process. The phases are: Assessment, Strategy formation, Transformation, and Monitoring & Evaluation. All 10 are currently in the transformation phase, except for sugar cane which is in strategy formation.
3p: Can you give me an example?
JL: Most of our vanilla comes from Madagascar. There the primary challenge is social. The small holder farmers are not making enough money. That leaves them open to temptation to knock down the rainforest to grow crops like rice. We are working with vanilla supplier Virginia Dare, the international humanitarian organization CARE and Madagascar-based NGO Fanamby to improve farmer incomes. They are training these farmers to cure the vanilla beans, which provide them with additional income. We’re also supporting research at [the University of California at Davis] mapping the vanilla genome and are now analyzing the vanilla plant’s responses to environmental stress, such as heat and drought, defenses against pathogens, and traits that determine fruit quality and aroma.
3p: Great. So let’s talk about water.
JL: We work with a team of PhD hydrologists from the Nature Conservancy. Together, we are assessing 75 key watersheds either where we have a production facility or a key sourcing area, or in some cases, both. We develop a strategy. We engage with other key players, including other corporations, NGOs and government agencies. Together we develop a watershed stewardship plan.
3p: Some examples?
JL: In Irapuato, Mexico, where we grow many of our Green Giant vegetables, we have completed a watershed analysis and are now working on a strategy to improve it. In China, we are assessing the Yangtze River watershed, and here in the U.S., we are conducting a detailed review of the Snake River in Idaho, which is an area where we grow a lot of wheat.
[Note: In the report the company assesses the water risk level for a number of these watersheds.]
3p: You mention the Field to Market framework. What criteria do they provide and who are some of the other participants in the consortium?
JL: Field to Market is a very broad coalition that includes all of the stakeholders involved in food production. Farmers, distributors, seed companies, manufacturers, retailers, as well as a number of environmental groups.
3p: I see there are a number of bio-technology companies involved. You recently announced that Cheerios would soon be GMO-free. What is your position on GMOs, and is it evolving? What is the value that you feel they provide to you as a manufacturer?
[Note: Credo Mobilize has organized a petition asking General Mills to remove GMOs from all of its products. As of this writing,125,000 people had signed it.]
JL: We’re faced with the challenge of feeding another 2 to 3 billion consumers, with many moving into the middle class. Our projections show that we will need 50 percent more food, 45 percent more energy and 20 percent more water by 2050. Biotech is an important tool. The sources we rely on tell us they are safe. With it, farmers need less energy (fewer passes over the fields), emit lower GHG emissions, use less chemicals, resulting in better water quality, better nitrogen retention, etc.
So there’s a number of potential benefits there that we think are an important part of this work to get more for less in agriculture. Even the [World Health Organization] has talked abut the important potential they provide towards agricultural productivity and improved nutrition. But we’re also a consumer products company, and we recognize that there are some consumers that are concerned about GMOs and are uncomfortable with them. That’s why we provide GMO-free options. We have a large organic business, including Cascadian Farms and Muir Glen, among others
3p: Do you specify to your growers, what varieties, etc., they should grow?
JL: Quite often we buy from a supplier who adds some value by refining the raw material, so we generally don’t deal directly with farmers. Usually we can’t even trace the origins. By the time we get the refined product, there’s no way that you can trace, because the protein that marks biotechnology has been taken out of the process.
In some cases, like with vegetables, we do contract directly with farmers, but that’s not the biggest part of our business. So we’re really not doing specification, except for our organic businesses, when it comes to this.
3p: What do you specify, then?
JL: What we’re specifying, typically, is food safety, first and foremost. Next comes nutrition and product quality attributes, and then finally, there would be the functional attributes in the production system (like a rising characteristic in a dough-based product). So that’s how those relationships work at this point in time.
3p: Looking at the reporting section of the report, I see you’re falling short on energy savings. Your goal was to reduce consumption by 20 percent by next year, and so far, you’ve only reduced consumption by 10 percent since 2005. What went wrong there, and what are your plans to recover?
JL: A lot of that has to do with product mix. Recently we’ve been selling a lot more baked goods, like muffins, instead of the mixes. As you can imagine, it takes far more energy to make muffins than muffin mix because we have to do the baking. Our energy team has been auditing the cereal production operation, which is the most energy intensive product from a production standpoint.
We’ve installed more meters, optimized dryer efficiency, updated our boilers, and improved efficiency of lighting, HVAC, refrigeration and pumps. That yielded a 6 percent improvement, close to 60 million kWh … So we are working hard on this, keeping in mind that our production facilities represent only about 8 percent of our total carbon footprint.
3p: Interesting. I’m thinking that if you look at this from a system perspective, someone has to bake those muffins, and you can probably bake them a lot more efficiently than your customers can, because you bake in large batches. Maybe you need to think about how you are reporting these numbers, since you’re penalized for something that could actually save energy.
JL: That’s a good idea, thank you.
3p: Despite the fact that you’re a bit off-target on energy, you are actually on-target with GHG emissions. So that means that when you further improve energy, GHG should get even better.
JL: Yes, the goals were set back in 2005, and they are beginning to diverge. Acquisitions outside the U.S. have helped us on the GHG front. Yoki, in Brazil, which has biomass energy, uses peanut shells to fuel production. Here at home, in our Cheerios operation, oat hulls are fed into a biomass burner. This creates 90 percent of the steam required. Excess energy is sold to an energy company.
You know, the company started with hydropower in Minneapolis at St.Anthony’s Falls, where Gold Medal Flour was first made.
3p: Speaking of water, it seems like the acquisition of Yoplait has been a challenge in that regard.
JL: The reasons we’re down 22 percent is because these are rate-based goals. We’ve always been a licensee of Yoplait in the U.S. Eighteen months ago, we purchased the remaining global sales. When we added their water intensity into the mix, that took us backwards. This is a water intensive business, and we see an opportunity there for a reduction [of] 11 percent against our 20 percent goal.
3p: Going back to your involvement in collaborative efforts, like Field to Market: I see that some of the participants are direct competitors, like Kellogg and Unilever. Talk to me about that.
JL: That’s simple. All this work is pre-competitive. It has to be. We’re trying to make enormous changes and none of us is big enough to move the market alone.
Join Triple Pundit for a Twitter chat with General Mills and CSRwire on April 23 at 12 p.m. PST/3 p.m. EST. Jerry Lynch, as well as General Mills Sourcing Director Steve Peterson, will be on hand to answer questions on sustainable sourcing.
To register, just send out the following tweet: I’ll join @gmills_jerry @CSRwire & @triplepundit to discuss what it takes 2 reach 100% #susty sourcing http://bit.ly/GenMillsSusty #GenMillsSusty
Image courtesy of General Mills
RP Siegel, PE, is an inventor, consultant and author. He writes for numerous publications including Justmeans, ThomasNet, Huffington Post, and Energy Viewpoints. He co-wrote the eco-thriller Vapor Trails, the first in a series covering the human side of various sustainability issues including energy, food, and water in an exciting and entertaining romp that is currently being adapted for the big screen. Now available on Kindle.
Follow RP Siegel on Twitter.