Supply chain stakeholders rally to launch new initiatives to meet retail demands.
Originally printed in the September 2021 issue of Produce Business.
While it comes with its challenges, addressing sustainability measures to limit climate change, resource depletion and labor inequality has made made an impact in bolstering the fresh produce industry and the communities it serves. Global supply chains are continually being pressed not only to report sustainability data but to improve on farm practices where needed.
Both buyers and suppliers focus their efforts on developing new creative alternatives in key measurable areas. What’s already in motion are innovations in reducing the use of plastics, reversing fresh food waste, and incorporating consumer-friendly recycling language on packaging.
As retailers raise the bar on their own sustainability procedures, they also have upped the ante with their supply chain partners to scale their effect. For example, retailers and suppliers have taken notice of Walmart’s extensive outline of its latest sustainability initiatives, and many retailers have followed in its footsteps.
“Walmart’s sustainability efforts prioritize people and the planet by aiming to source responsibly, eliminate waste and emissions, sell sustainable products and protect and restore nature,” says Laura Himes, Walmart’s senior merchandising director, produce. “Specifically, we focus on four key areas: climate, nature, waste and people in supply chains.”
As initiatives such as Walmart’s continue to mold how our industry operates, there has been a huge movement from other retailers/buying groups in demanding their produce suppliers adhere to new sustainability metrics and key performance indicators (KPIs). Unfortunately, since an industrywide audit benchmarking standard that both retailers and suppliers can adhere to has yet to be developed, some producers feel overstretched in their attempt to provide information for each retailer.
But a few frontrunners and NGOs have developed tools to help suppliers develop their sustainability scorecards. Whether you have jumped in with both feet, or are merely sticking your toe in the water to check the industry temperature, learning more about what others in the fresh produce industry have accomplished can provide insight on new initiatives to incorporate in your sustainability mission.
“We all benefit from the experience of others,” says Xavier Roussel, chief marketing and sustainability officer, Dole Food Company, Charlotte, NC. “We are trying to join alliances and like-minded groups,” to move forward, he adds. As far as promoting sustainability and industry change, “We as a company want to do our part,” adds Roussel. “It is good to see the industry, retailers and farmers working together. Look at how we’ve progressed; it is encouraging,” he adds.
Retailers are increasingly requesting an alphabet soup of audits and certifications from the fruit and vegetable supply chain. And with each retailer sending its own individual request, a ripple effect results in an overload of paperwork some suppliers are hard-pressed to provide in a timely manner. Even larger producers, such as Dole and Del Monte, say that though they want to collaborate with retailers, they feel the strain of the extra workload as well from providing so many audits.
Some experts claim that the farming industry is overwhelmed with retailers’ bids for more operational transparency. “Request for information from retailers is tripling, being driven by consumer demand,” says Nikki Rodoni Cossio, founding principal of Measure to Improve (MTI), a fresh produce sustainability consulting firm in Salinas, CA. We understand that “buyers want to mitigate their risk,” she adds.
“Growers have not been asked to be as transparent as retailers are now asking,” she adds. As far as investment in data gathering, changing practices, changing culture, “we need to work together as a supply team. I see how much information the growers are being asked to deliver.” Meanwhile, the bigger growers do a good job on the sustainability front, says Cossio. They should share best practices with others, including what works and what doesn’t, she adds.
Requests from retailers are not inconsequential: they include many audits, including measuring or defining use of water, waste, packaging and more. According to Ed Treacy, vice president, supply chain and sustainability for Newark, DE-based Produce Marketing Association, “There are more than 150 different sustainability audit schemes produced and distributed by buyers nationwide.”
“Farmers often ask me, ‘Where do we begin, how do we start? What does sustainability even mean?’,” says Cossio. “As consultants, we explain to farmers that often they don’t have to start from scratch; they are already incorporating sustainability measures as part of their normal operations. Our approach is to give them some examples so they can start understanding,” says Cossio. “We do a lot of zero-waste initiatives. We work with growers and processors building a bridge between buyers and growers,” she adds. “We do it by collecting the data.”
Whatever suppliers do in the name of sustainability, it needs to be “financially” sustainable, says Treacy. “But there is a perception among growers that ‘this is going to drain my bottom line,’ which doesn’t have to be the case,” he says. “There are modifications they can do now with onsite energy, soil, and water that have a short payback period.” For some companies, “They just have to document what they are already doing,” he says.
According to Kyla Oberman, director of marketing for California Giant Berry Farms in Watsonville, “It takes lots of tracking and hours to stay on top of the requests.” Cal Giant supports its farmers through the cost of an audit. “If a retailer is really driving a request, we’ll turn it around and be a middleman to support the farmers.” This is a service Cal Giant’s sustainability team can provide, including reviewing the checklist and working with certificating auditors. “It’s all about partnership, relationships and respect. We are all in it for same end goal: to be successful,” she adds.
Oberman says sustainability is an increasingly strategic factor for retailers and suppliers, and a source of value and growth. “Retailers help by being cheerleaders, encouragers for us,” she says. “They’ve increased their asks and prioritization: that has led us to do more, too,” Oberman adds. “I see it as a team effort. the more people who can think this way, the better our planet will be. This is the right thing to do.”
It is true that there are many different audit requirements, and retailers have become aware of the possible concerns. There is an attempt to become more universal, says Dole’s Roussel.
“The fatigue is there,” as is the administrative burden, says Roussel. “We welcome any dialog and specification to address that,” he says. “Benchmarking requirements are tedious, and not as easy as it seems, but we have the willingness to make it happen,” he adds.
In the end, all of goals are heading in the same direction, adds Roussel. “There is no transformation of the supply chain if everybody doesn’t do their part. The retailers are raising the bar; we are raising the bar,” he says.
Most retailers cannot successfully complete the majority of their sustainability goals without the support of their suppliers, says Janis McIntosh, director, marketing innovation & sustainability for Naturipe Farms, based in Salinas, CA. “With packaging and waste reduction being the most consumer-facing initiatives, suppliers must actively participate in order for retailers to meet their goals,” she adds. “Even though the produce industry is naturally sustainable, benchmarking, certifying and ultimately modifying our practices to become even more sustainable will come at a cost,” she says.
Hans Sauter, chief sustainability officer at Del Monte Fresh Produce, Coral Gables, FL, explains how his team addresses the issue of tackling dozens of audits. “As a small team, we respond to dozens of surveys each year, so we need to be strategic,” he says. “Rather than collecting new data for each request, we are very targeted in what data we collect and report annually on sustainability. We work to ensure the data in our sustainability report will be relevant to our retailers,” Sauter adds.
Sauter explains how Del Monte reaches this goal: “We conduct materiality assessments to focus our efforts on the topics most important to our stakeholders and most relevant to our business. In early 2021, we conducted a materiality update to further drill into our priorities, refine our focus, and identify areas to push ourselves further as we think ahead to the future of the food industry, the changing needs of our customers, and the impact we want to achieve by 2030 and beyond.”
In addition, Sauter emphasizes that stakeholder engagement is one of the most critical components of Del Monte’s overall sustainability strategy. “We actively engage our key stakeholders — team members, customers, investors, consumers, NGOs, community groups, and suppliers on an ongoing basis,” he adds.
This is an important point for smaller growers in tackling audit requirements instituted by retailers. Ask questions of all members of your grower community to gather pertinent information on sustainability initiatives you may or may not be aware of in your own fields. Other ways suppliers can get a better handle on their audits: provide equitable audit reports that include the key elements retailers are asking for rather than reinventing the wheel for each report. “Often retailers will accept equivalent standards,” Dole Fresh’s Roussel says.
More Help for Reporting
The PMA has developed two online tools for its members (and United Fresh members) to help define sustainability efforts and better communicate their findings. “Our members may adopt and use sustainable initiatives, but they are not very good at bragging on themselves,” he adds. “We are now providing them the framework to bring them to a conscious level,” says PMA’s Treacy. They include:
- A sustainability assessment tool to provide questions suppliers can use to assess the areas in which they have something to share or areas where they need to improve.
- A best practice communications document providing a communication framework and practical guidelines for suppliers to tell their story to retailers and the public.
The assessment tool introduces questions to consider on all areas of sustainability, especially those you might not have considered, says Treacy. “It can be a great opportunity to measure your goals and growth and can be used as a planning tool to get your whole team on the same page.”
The communication tool “will help you align or capture the work you are doing in a shared language,” he adds. “When we start thinking of communicating with consumers or across industries, we can pull from language others use,” Treacy says. “It helps to create a common language and provide a holistic standard,” he adds, since PMA used the United Nations’ Sustainable Development Goals as the framework. As the PMA website explains further, “A powerful sustainability story can inspire others looking to implement practices of their own; convince potential or existing organizations to collaborate or partner; and educate various audiences (including consumers) on the importance and impact of sustainable practices.”
Meanwhile, a number of retailers, brands, manufacturers, and producers have joined forces to support the global non-profit organization, The Sustainability Consortium (TSC), based in Scottsdale, AZ. Its sustainability performance assessment platform – The Sustainability Insight System (THESIS) Index (formerly the Sustainability Index) – claims to help communications between buyers and suppliers. Walmart, Kroger, Sprouts, Target, Costco and other retailers are among its 100+ worldwide members.
The TSC initiative implores industry groups to “work collaboratively to build science-based decision tools and solutions that address sustainability issues that are materially important throughout a product’s supply chain and lifecycle.” TSC also offers a portfolio of services to help drive effective improvement and implementation. In fact, Walmart has become a major player in this arena, adopting the TSC learning tools as part of its sustainability initiative, adapting its THESIS Index as part of its “Project Gigaton”, which has the goal of reducing greenhouse gas emissions of one billion metric tons, or one gigaton, by 2030. To date, more than 2,300 suppliers have formally signed on.
Walmart outlines actions suppliers can adapt, including formulating KPI’s on its sustainability initiatives. “These tools allow our suppliers to set goals, evaluate their operations and make progress toward sustainability,” says Himes.
According to Walmart’s sustainability hub, it uses the data from THESIS assessments “to identify key social and environmental hot spots and to set an agenda as we work with our suppliers to drive continuous improvement. Suppliers can see their own scores, how they rank relative to the field and gain insight into improvement opportunities for each of the categories they supply.”
Approximately 900 suppliers have been recognized by Walmart as “Giga Gurus,” those who have set SMART goals (specific, measurable, achievable, relevant and time limited) and have agreed to share it publicly.
Del Monte’s Sauter adds, “We engage with many retailers each year and are actively involved in Walmart’s Project Gigaton and Sustainability Index. In fact, we have achieved Walmart’s “Giga Guru” status, the highest level of supplier recognition for sustainability,” he says. “We have also achieved ALDI’s A-status for our efforts on climate action,” adds Sauter.
What Consumers Want
The latest edition of the Ernst & Young Future Consumer Index suggests 43 percent of global consumers want to buy more from organizations that benefit society, even if their products or services cost more. And 64 percent are prepared to behave differently if it benefits society.
According to Rick Stein, vice president, fresh foods at the Washington, DC-based Food Marketing Institute, the Chicago-based market research firm IRI found that shoppers who say they will make trade-offs that favor the environment represented 27% of fresh food spending in the first quarter of 2021. Moreover, they spent 30% more than other shoppers on fresh foods.
“Large retailers are under a microscope,” says MTI’s Cossio. Younger consumers want to know all about the products they are buying, and how suppliers are improving ways to treat the planet, especially climate change. Millennials (ages 23 – 38) and Generation Z (ages 7 – 22) stand out in a new Pew Research Center survey published May 2021, particularly for their high levels of engagement with the issue of climate change. Their tastes and preferences support creating sustainability and equality for all.
A report by a retail technology company, First Insight, Inc., found that members of Generation Z (Gen Z) are basing more of their shopping decisions on sustainable retail practices (62 percent) on par with Millennials. That report says Gen Z is also the most willing to pay more for sustainable products (73%). Why? Because consumers, especially Millennials and Gen Z, have become super sleuths, investigating and spending more money with companies that do more to protect the environment, reduce energy use, treat their workers well, and promote transparency concerning their efforts.
Suppliers and retailers that communicate ongoing and future sustainability goals are rapidly setting themselves apart from the competition.
Suppliers and retailers that communicate ongoing and future sustainability goals are rapidly setting themselves apart from the competition. Social media has been the key for some suppliers to reach consumers. “At retail, the potential to communicate at point of sale is difficult, so we bring consumers to our website,” says Dole’s Roussel. “We are trying to give consumers a direct experience on what we are working on it,” he adds, citing a blog around sustainability, virtual reality farm tours on the website and Dole’s campaigns for sustainability.
“Consumers want to see tangible results and go deeper,” learning more about operations and Dole’s focus on the future, says Roussel. “With a strong brand like ours, people tend to trust us, but it is up to us to move them,” he says.
People are Paramount
“Every year our growers work to sustain their land and livelihood through sustainable practices,” says Naturipe’s McIntosh. “Our number one goal is to support and sustain those family farms who have been farming the land for over 100 years. So first and foremost, from now into the future, the decisions we make as a brand must positively impact the land and the very people that bring our berries to market,” she adds.
“Throughout the pandemic, a focus on ‘people’ has become paramount,” says Rachelle Schulken, marketing event manager at Renaissance Food Group (RFG), Rancho Cordova, CA, a wholly owned subsidiary of Calavo. “Putting in place sound practices that support and enhance the lives of the people who bring produce to life is more important than ever,” she says, adding examples like ensuring that proper safety protocols are in place in fields and facilities; supporting team members’ need for workplace flexibility; and shining a spotlight on diversity, equity, and inclusion.
“Consumers are increasingly curious about and in-tune with employee working conditions. The practice of sound fair labor initiatives will help to drive purchasing decisions and create consumer loyalty,” Schulken explains.
Hundreds of industry members have endorsed the guiding principles and values framework for responsible labor practices in the Ethical Charter on Responsible Labor Practices, by PMA and United Fresh. The framework is a cross-industry process or action for ensuring that people throughout our industry are treated with dignity and respect, says Treacy. Endorsers cut across the industry, and include growers, labor agencies, packers, distributors, foodservice operators, marketers, and retailers.
Fighting Food Waste
Grocery retailers are responsible for approximately 10 percent of U.S. food waste (43 billion pounds annually) with even more food waste in the supply chain, according to the research paper, “Sustainable Retailing,” published in the May 2021 edition of Journal of Retailing. Acknowledging this challenge, large retailers, including Walmart, Kroger, and UK-based Tesco have thrown down the gauntlet, resolutely expanding their efforts to reduce food waste throughout the supply chain.
Going from individual efforts to group, the Washington, DC-based World Resource Institute’s “10x20x30 Initiative” brings more than 10 of the world’s largest food retailers and providers, each engaging at least 20 suppliers to halve food loss and waste by 2030. The 10x20x30 initiative is a distinct recourse for companies to work in partnership with hundreds of food suppliers to undertake food waste from farm to retail centers.
This private sector commitment is designed to be a noteworthy advancement toward the United Nations’ Sustainable Development Goal (SDG) Target 12.3, which calls for a 50% reduction in food loss and waste by 2030 worldwide.
“Food loss and waste is a massive global challenge. While addressing this challenge is a priority for us, 10x20x30 is built on the fact that no one company can address this challenge alone,” said Laura Phillips, senior vice president of sustainability for Walmart Inc. in a press release. “With 10x20x30, retailers work to reduce in-store food loss and waste as well as support their upstream suppliers to reduce their own loss and waste,” she adds.
“We are part of the industrywide 10x20x30 initiative,” says Del Monte’s Sauter. “Our work with this initiative allowed us to align with the highest ambition for our industry with our own goal to cut our food loss and organic waste sent to landfill in half by 2030 compared to our 2020 baseline,” he says.
According to Rachelle Schulken of Renaissance Food Group, “As a direct result of joining the 10x20x30 initiative, RFG and our parent company, Calavo, began to evaluate and track our food waste streams, and collaborate with various stakeholders throughout our operations,” says Schulken. “We’ve determined best practices for recycling optimization, with programs in place at all facilities, and employees trained on proper disposal of recyclables,” she adds.
To that end, RFG and Calavo reuse discards, including working with local farms to provide animal feed, or using avocado seeds and skins to turn into avocado oil. “We will be sharing our first data point on food waste in 2022,” says Schulken.
Del Monte takes a comprehensive approach to reduce food waste at all stages — from the farm to the marketplace. “Our approach not only reduces the environmental impacts of food waste going to landfill, but also helps communities access healthy fruits and vegetables,” says Sauter. “We use the EPA Food Recovery Hierarchy to prioritize our actions for addressing food waste, with the preferred option being to reduce the amount of waste generated, followed by finding alternative, value-added uses for produce that can still go toward feeding people,” he adds.
Dole’s innovative waste reduction goals include ensuring all packaging materials used in its banana and pineapple businesses are either recyclable or compostable by 2025. In the company’s 2020 Corporate Responsibility & Sustainability Report, Dole also aims to achieve 100% optimized water management on all farms managed by Dole and for all packing facilities by 2025. “We are accelerating our journey to reduce carbon emissions,” says Roussel. “Now that we have merged with Europe’s Total Produce this year, carbon has become one of the main points we are focused on,” he adds.