Supply chain rules need rewriting, Oxfam says

20th April 2016


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Author

Allen Hamadziripi

Radical changes need to be made to business models that dictate how food is produced, traded and processed, according to poverty campaigners.

In a progress report on its Behind the Brands campaign, Oxfam noted that major food and drink companies have made significant new commitments to improve social and environmental standards in their supply chains in the three years since it launched.

Nonetheless, it said companies must ensure suppliers actually change their practices in line with these commitments. To secure more value for farmers and workers who produce ingredients, companies should fundamentally rewrite the business models in their supply chains, it recommended.

The campaign has targeted the ten largest global food and drink companies – Associated British Foods (ABF), Coca-Cola, Danone, General Mills, Kellogg, Mars, Mondelez, Nestlé, PepsiCo and Unilever – and tracked performance on seven issues: climate change, water, women, workers, smallholder farmers, land, and transparency.

When the campaign launched in 2013, Oxfam found that most of the companies were lagging on social responsibility and sustainability in their supply chains. In February 2013, when the campaign began, seven of the 10 companies had overall scores of 31% or below. The new scorecard shows no company scoring below 36%.

Oxfam’s latest analysis revealed that most progress had been made in tackling gender inequality, protecting land rights and reducing greenhouse gas emissions. Rights of workers, water and transparency were less likely to have improved.

Oxfam criticised the industry as a whole in being slow to commit to full transparency. ‘The risk is that this sends a signal to the public that companies have something to hide in their agricultural supply chains’, the report states.

Demand for greater transparency is growing from both investors and consumers, Oxfam noted. Digital technology allows for more openness and also makes it easier for consumers to access information about their favourite brands and share it with others, it said.

Kellogg (up 30%) and Unilever (up 26%) made the most progress across all issues since February 2013, while nine companies had improved their overall score by at least 10%, with only Danone failing to make double-digit progress.

Overall, Unilever was ranked top with a score of 74%, with Nestlé following (69%). Coca-Cola, with strong policies on land rights, came third (57%), followed by Kellogg (53%).

ABF, with weak commitments on farmers, gender and water, was in last place in 2013 and remains one of the poorest performers in 2016, despite improvements by some of its subsidiaries. Danone is the other poorest performer, despite significant commitments on climate.

Meanwhile, Business in the Community’s (BITC) annual corporate responsibility index also highlighted engagement with the supply chain as a key area in need of improvement.

Although 90% of companies had identified employees responsible for managing sustainability aspects of the procurement process and given them training, only 50% considered social and environmental supply chain performance when appraising and remunerating these employees, BITC found.

BITC found that only a third of companies that do not have dedicated staff to engage their supply chain integrate sustainability factors into their tender processes. This compares with 89% of those with staff dedicated to supply chain engagement.

Companies without a dedicated resource are also less likely to integrate sustainability criteria into their assessment of suppliers’ management and performance, such as by monitoring them to ensure they meet minimum standards or collaborate with them to solve challenges, it found.

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