Unilever makes sustainable sourcing headway

Anglo Dutch fmcg giant Unilever is now sourcing more than a third of its agricultural raw materials sustainably, having made significant progress towards its target of 100% by 2020. With 36% now sourced sustainably, it has exceeded the interim milestone of 30% it set itself in 2010 when launching the Unilever Sustainable Living Plan.

Significant milestones
The improvement was made against a backdrop of the company reporting annual sales of €51bn in 2012. Taken together, they represent significant milestones on the way to realising Unilever’s vision of doubling the size of its business whilst reducing its environmental footprint and improving its positive social impact.
“Climate change, water scarcity, unsustainable farming practices, and rising populations all threaten agricultural supplies and food security.?Half of the raw materials Unilever buys are from the farming and forestry industries, so ensuring a secure supply of these materials is a major business issue,” says Marc Engel, chief procurement officer. “However, sustainable sourcing is not only about managing business risks, it also presents an opportunity for growth, allowing brands to stand out in the marketplace.”

One example is how Knorr has supported sustainable growth. In September 2012 a new soup launched in France became the first Unilever product to promote an ingredient (tomatoes) as sustainably grown in accordance with the Unilever Sustainable Agriculture Code. This was made possible through the Knorr Sustainability Partnership Fund, which uses €1m a year to support vegetable suppliers on complex sustainable agriculture projects.

This development has boosted shelf standout and competitive differentiation and now Knorr plans to continue to label other products. For cocoa, 43% was sourced sustainably by the end of 2012. And 64% of cocoa for ice cream brand Magnum was sustainably sourced through Rainforest Alliance certification.

Farmer field schools
To achieve certification, Unilever has been working with supplier Barry Callebaut to run farmer field schools with 20,000 small farmers across West Africa. The schools work with local farmers to build skills and knowledge around sustainable cultivation practices. Then the farmers spread the knowledge through the community. Magnum also shares with its consumers why it works with Rainforest Alliance to source cocoa sustainably: to source high-quality cocoa beans, to increase the income of farmers and deliver social benefits such as improved health and safety practices.

Other examples of progress in sustainable sourcing include:

• Palm oil: All palm oil is now covered by GreenPalm certificates. Unilever is working towards the new commitment to 100% certified sustainable palm oil which is traceable back to the plantations on which it is grown.
   
• Sugar: Unilever has purchased its first ever Bonsucro sustainable sugar credits in Brazil, and has become the first ever Bonsucro member to obtain these worldwide. Working with Usina Sao Joao, Unilever purchased the first 3262 tonnes of Bonsucro sustainable sugar credits in Brazil when the credit platform opened for business in December 2012.
   
• Vanilla: A collaboration with Symrise, one of the world’s largest vanilla suppliers, has led to Unilever’s first Rainforest Alliance (RA) certified vanilla beans. Together through the partnership, Symrise has, trained more than 1,100 farmers – with almost 5,000 more set to benefit from the programme.
   
• Sunflower oil: In South Africa, Unilever has been working with supplier Ceoco to improve traceability in the supply chain. A farming community was identified in Limpopo with practices that could initially pilot the project. Unilever and Ceoco have since worked with the farmers by providing financial incentives to develop hybrid seeds with higher yields.

Comment
Simon Webley, Research Director, Institute of Business Ethics

There is little doubt that Unilever are serious in their ambition of sourcing 100% of their agricultural raw materials from sustainable sources by 2020.

This is involving considerable investment of time and money in assisting their supply chain (all over the world).

While this Case in Point concentrates on the company’s agriculture-based output, their Sustainable Living Plan operates throughout the business.

Its purpose is to improve the way of life of its many overseas suppliers, reduce water use, and environmental degradation.

It is using its major brands i.e. Knorr, Magnum, PG tips etc., to proclaim its environmental credentials and sees its Plan as good for the earth, good for people and good for the company.

What perhaps needs more explanation is how this Plan fits with the company’s other shared values: ‘honesty, integrity and openness, and with respect for human rights and interests of our employees’.

Simon Webley
Research Director