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Sustainable sourcing on the rise but not universal, Leatherhead report

By Jess Halliday , 15-Feb-2011
Last updated the 16-Feb-2011 at 09:53 GMT

Sustainability concerns are having an increasing impact on food companies’ supply chain practices, finds a new report from Leatherhead, with more organic and Fairtrade products being offered and more ethical approaches to ingredient sourcing.

The report, put together following desk research, details the sustainability activities of 22 food companies. The companies – mainly food manufacturers including the likes of Unilever, Nestle, Kraft, General Mills, Groupe Dannone and PepsiCo, were selected on the basis of their significance in terms of sustainability strategies.

Two ingredients companies – Cargill and Danisco – are also included, as are reviews of the sustainability strategies of the world’s largest retailers.

The report values the global Fairtrade market at under US$5bn as of 2009, but it has tripled since 2005 and there are now 827 Fairtrade certified producer organisations in 58 producing countries. However, Fairtrade accounts for under 2 per cent of the overall food and drink market at retail, and the report says there is little sign of it becoming mainstream outside of products like coffee, bananas, chocolate and cocoa.

Both Fairtrade and organic foods are said to have benefited from greater ethical sensitivities amongst consumers. The natural and organic is said to be worth around $53bn.

The report found that greater levels of awareness of sustainability in the supply chain is in evidence, especially with regard to ingredient sourcing. While some companies have entered into partnerships for sustainable ingredient sourcing with NGOs like Rainforest Alliance, it says “it is worth noting that this trend has not been universal across the industry”.

Palm oil is flagged up as one prime are where “where sustainability has assumed

increasing significance”, following the establishment of the Roundtable on Sustainable Palm Oil (RSPO) in 2004.

“Mainly as a result of the RSPO’s efforts, an increasing amount of palm oil used in global food manufacture now comes from sustainable sources – the organisation’s members [388 ordinary members and over 80 affiliates] now account for over a third (35 per cent) of global palm oil production.”

What is sustainability?

The authors note that there is “no clear and overriding definition” of sustainability at present – although they say this may change as companies’ strategies become more developed.

Indeed, sustainability is already becoming “an increasingly significant concern for companies, consumers and governments”, the report notes – and for the food and drink industry it is often seen as forming an integral part of company strategy. The main driver is concern over pressure on the world’s resources, with the global population expected to increase by more than 50 per cent by 2050, as well as concerns over the environment.

For the purposes of the report, however, they took sustainability to cover:

  • Health and well-being
  • Packaging reductions and/or recycling
  • Carbon footprint
  • Energy efficiency
  • Water footprint
  • Sustainability in the supply chain

More details of the report are available here .