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Harry Morrison: So I'm here with Alastair Child, Chief Sustainability Officer of Mars. Alastair, we've been talking about climate risk. How do you see the challenge of climate risk at Mars?
Alastair Child: Well, at Mars, we think in generations. A very long-term family-owned company. And we're thinking about, is our company viable for our consumers, our associates, and the Mars family? Is there a business we can pass on to the next generation? And that means we don't just think about the financials. We tend to think in generations, not quarters. And we think a lot about the mutuality of our interaction with the people and the planet we depend on to make the products that we sell.
Harry Morrison: For you, where does risk show up? Is it in your operations, or is it more in your sourcing?
Alastair Child: Well, of course, traditionally, you think about your operations and the risks of any acute stress to your factories, to your associates, your employees—we call them our associates. But actually, a lot of our risk is in our supply chains. The vast majority of our footprint on the planet is from the raw materials we use to make the chocolate, the pet food, and the products that we sell.
And so that's where we believe the risks are greatest, and why we are often very farmer-focused in the way that we mitigate risks—not just creating resilience through our interaction with our direct suppliers, but often investing not just in farms, but even in the plant material that is bred for farmers to use, to ensure they have resistance to drought, pests and diseases, and are producing productive yields for their incomes.
Harry Morrison: And with these value chains, you often have a choice: do you diversify, or do you go deep and actually work directly with farmers and producers upstream? How do you think about the pros and cons of diversification versus that closer working relationship?
Alastair Child: I think we're getting into the difference now between resilience and true sustainability, because I think to be resilient is to be diversified—to be able to absorb a shock because you've got geographical diversification, or you've got a number of suppliers. If you've got an issue with one supplier, you can switch to another. You're resilient, and you're ready.
But in truth, sustainability is more about your long-term structural exposure to risks that might hit all of the supply chains. A change in climate is something that is going to affect the production of the raw materials we source—from cocoa to wheat to corn—for all of our supply chain partners. We can't diversify our way out of a problem that is going to affect us structurally and globally, all at one time.
And I think there are some raw materials where that exposure is greater, and some where it's less, but fundamentally, where we think it's that higher level of exposure, we have to get into sector-level collective action on addressing the issues and the threats—whether it be the impact of water on almond production in California, the impact of pest and disease in cocoa in West Africa, whatever it might be.
And that's why, as a company, we're often doing genetics, working with farmers, introducing regenerative agriculture to our supply chains by partnering with not just our suppliers, but farmers in our supply chain as well.
Harry Morrison: It's fascinating to hear that range of levers—from diversification, to the upstream work with farmers, to formulation of products, etc. How do you think about the value case for that? Because often these activities are at a bit of cost short term, and maybe they're in tension with being efficient in the supply chain. So, resilience versus efficiency—how do you see that debate?
Alastair Child: Yeah, it's very, very difficult to put an ROI on some of these investments. And I think this is why timeframe is such an important aspect, and why we like to say we think in generations, not in quarters. If we were to think in quarters, then probably we wouldn't make some of the investments we're making that will make our business resilient and sustainable in the long run.
You know, back to the definition of meeting the needs of the present without compromising the ability of future generations to meet their needs or have their needs met. I think it comes down to a belief and a principled level of belief in terms of how you run your business. Can we do the calculation now and convince the finance department of the exact return on those investments? No. But do we believe, as a family-owned company, in the principle of mutuality—the fact that a shared benefit will endure? Absolutely. And those principles guide our decision-making. In the long run, we think it will make us more competitive. And I think as we're seeing what once were risks of tomorrow become realities of today, we think that's a winning business strategy.
Harry Morrison: Thank you so much.
Alastair Child: Thanks, Harry.