By Debra Belluomini
Measuring past and potential financial returns is how businesses characterize ROI, but Smithfield Foods is moving beyond that definition with their sustainable take on the acronym: Responsibility, Operational excellence, and Innovation.
This set of core values is the CSR driver for the $14 billion global pork processor and hog producer, according to Stewart Leeth, Smithfield vice president of Regulatory Affairs and chief sustainability officer. Leeth provided an inside look at the company’s recent sustainability achievements and ambitious goals for the future at this year’s COMMIT!Forum.
“If you’re in the food business and know the food business, it is a very disruptive time in food manufacturing, probably the most disruptive time in most our memories,” Leeth said. “There are a lot of great opportunities and food challenges ahead.”
Those challenges cover a lot of ground: accelerating world population growth, extremes in weather, unprecedented access to information (most of which are negative reports, noted Leeth), and widely divergent views on how food should be manufactured. While disruption brings with it uncertainty and greater business risk, Smithfield is forging forward with numerous sustainability initiatives intended to build upon the organization’s values, mission, and goal to enhance its position as the world’s largest consumer packaged goods and protein company.
“Smithfield Foods is very focused on this (ROI) and our sustainability platform,” Leeth said. “It is starting to drive and accelerate the sustainability program in our company: taking responsibility for what you do, not walking by it - you own it; optimizing and making best uses of resources that we have and, of course, innovation. We have a brand new chief innovation officer who is focused on new products.”
Collectively comprising what Leeth calls “pillars” of value creation, Smithfield’s sustainability platform covers five key areas: animal care, environment, food safety and quality, people, and helping communities.
How do those pillars translate to action in a global consumer packaged goods company? Leeth cited several examples, including the transition over the past 10 years toward “cage-free” enclosures that house pregnant sows on all company-owned farms (around 40 percent of suppliers).
“This is actually a seminal year for us,” said Leeth. “We report on this every year, and last year we were 87 percent, and this year we’re confident that we’re going to make that happen.”
Smithfield’s first sustainability initiative in the company’s 81-year history was tackling tough environmental issues in the food industry. It was the first food company in the industry to become ISO certified. In 2016, it put plans into place to attain its next industry ‘first’: a 25 percent absolute GHG reduction goal across Smithfield’s entire supply chain within the next 8 years.
Leeth explained, “We committed to reduce greenhouse gases across our entire value chain by 25 percent by the year 2025. The question is: How are you going to do that? That’s a big, bold commitment.”
The answer is a new business unit titled Smithfield Renewables, which will focus on reuse and renewable energy projects across the company’s operations in North American and Europe. Introduced publicly for the first time at COMMIT!Forum, the unit will be lead by Kraig Westerbeek, VP of Environment and Support Operations, and, according to Leeth, will yield results that equate to removing 900 thousand cars from roadways.
Smithfield is working with the Environmental Defense Fund to optimize fertilizer use on the company’s feed grain farms, upgrading equipment, and launching energy efficient projects such as transforming animal waste into renewable energy to ultimately produce more than 2 billion cubic feet of renewable natural gas – enough, says Leeth, to provide electricity to approximately 53 thousand homes for a year.
Another facet of this effort is value creation. Explained Leeth, “We had real challenges in our environment back in the 90s – the battle days I call it – and we’ve gradually grown this program to meet the needs of our stakeholders. Underlying that is something we call value creation, which is our take on shared values through which we try to articulate the projects that we are undertaking. We are creating value, not just for the company in terms of dollars and cents - which is important, but to many stakeholders and our customers. We’re a business-to-business company, so we want to make sure our brand is not a threat to other brands.”
Food safety and quality
In the food business, brands can be destroyed with just a single instance of a food-borne crisis – think the Mexican restaurant chain Chi Chi’s Hepatitis A outbreak in 2003 or Jack in the Box E. coil outbreak in 1993. Leeth stated that Smithfield has increased its long-standing vigilance to maintain high standards of food safety and quality through its Raise Your Hand program and it’s first sustainability web presence that contains a glossary for food ingredients. Site visitors can go to the glossary, look up terms found on food labels, and learn their meaning.
The Raise Your Hand program encourages all employees to engage in maintaining food safety and quality – and to speak out when they spot a problem.
“Smithfield Foods has been involved in food safety for a long time,” Leeth said. “Years ago we were featured on some magazines and a few months ago in a magazine that said that we had a food safety culture long before was deemed cool, and that’s very true. This program is designed to take responsibility for everybody in the plant.”
Describing the depth of the commitment, he explained how Smithfield integrates employees on an individual level. “Your job is food safety,” he said, referencing all of the company’s 50,000 employees. “Your job is if you see a problem, say something about it. Halt the line. And that’s a big deal to manufacturing company. If you halt the line, you’re going to cost the company money and cost that plant manager money, but we train our food safety folks and everyone that works in the field and on the floor to do that.”
People and helping communities
Most of Smithfield’s operations are in small communities across North American and Europe, which means they are often the largest employer in those communities. Therefore, said Leeth, the company’s focus is on local education, hunger relief programs such as Helping Hungry Homes and hiring veterans in those areas.
In 2016, Smithfield donated more than 17 million servings of food to those in need and the Smithfield Foundation awarded almost $400 thousand in college scholarships to dependent children and grandchildren of full-time and retired employees.
From core values to practical application, how does a global industry leader walk their CSR talk? Smithfield Foods seems to have the right approach, with their new chief innovation officer, Marketing SVP William Brunt, leading the charge for organization-wide engagement toward transformational change. The last decade has been a landmark timeframe for the company, as the recipient of at least 10 major sustainability awards. According to Leeth at COMMIT!Forum, the next 10 years promise to be equally impressive.