This article originally appeared in the Stanford Social Innovation Review (subscription may be required).
For decades, consumers, investors, government bodies, and others have voiced growing concerns about energy, waste, water, deforestation, and a host of social issues related to food production and distribution—across issue areas as wide-ranging as child labor and farm practices. Many companies involved in food production and selling have responded to the call. Seven of the 10 largest global consumer goods companies have set carbon emissions reduction goals that include reductions in other parts of their supply chains, and eight have ambitious sustainability targets that require engaging significantly with upstream suppliers.
But achieving those high sustainability targets is proving much harder than anticipated. Many of these companies now face a barrier. Retailers and consumer goods companies may have adapted their own production and logistics to lower-resource requirements, for example, and they want to do more. Yet they have discovered they cannot reach higher sustainability objectives without deep collaboration with their agricultural suppliers, who often set less-aggressive goals. The primary reason: Suppliers fully understand the on-the-ground challenges. They are much closer to where system-wide operating practice changes must actually happen.
As a result, consumer goods companies and retailers that have worked solely within their own four walls, with only their immediate suppliers (or those that have just flatly asked suppliers to assure them their products and practices are sustainable), now realize they need to get deeper into the details of how those products are produced.
Indeed, true progress is hard to achieve. Only two of the seven consumer goods companies with "scope 3" emissions targets (a category of indirect emissions that include both upstream and downstream emissions) reported reductions from purchased goods and services in 2016, with an average reduction of just 1 percent, according to the global environmental platform CDP. Furthermore, even as they tackle climate-related concerns, companies still face other issues. For example, even those with reputations for leading progress on sustainability may still struggle with child- and forced-labor issues.
Read the full article at Stanford Social Innovation Review.
Jenny Davis-Peccoud is the global practice leader of Bain & Company’s sustainability and corporate responsibility practice. She is based in Amsterdam. Sasha Duchnowski is a partner in Bain & Company’s Energy & Natural Resources practice. He is based in Chicago.
The authors appreciate the contributions to this work from Kaitlyn Brown and Clare Tovey.