Investors push food industry giants for urgent action on transparency

New rankings show food companies slowly improving policies

Today 33 major investment funds, representing nearly $1.4 trillion of assets under management, called on food industry giants to improve their supply chain policies and transparency. In a statement shared with the ten biggest food and beverage companies in the world, the investors expressed support for Oxfam’s Behind the Brands initiative and urged companies to do more to reduce social and environmental risks in their supply chains.

“Due to a lack of transparency within the sector, it is difficult to fully evaluate the risk and opportunity that our companies bear within their supply chains,” reads the statement sponsored by Calvert Investments and signed by investors including F&C Asset Management, BNP Paribas Investment Partners and Aviva Investors. The investment funds promised to work with their companies to pursue changes to food and beverage company policies. “The data show there is a broad and urgent need for significant improvement across the sector.”

The investor letter comes six months after the launch of Oxfam’s Behind the Brands scorecard, ranking food and beverage companies on their policies and urging them to strengthen their efforts to prevent hunger, poverty and protect the environment. Today Oxfam announced its second update to the rankings showing small improvements companies have made to their policies. Companies including Nestle, Unilever, Coca-Cola, Danone and General Mills have seen slight increases in their scores, though no company performs better than “fair” overall.

“The scorecard is a valuable tool to identify areas of risk across companies’ supply chains and compare different efforts to mitigate those risks,” said Steve Waygood, Chief Responsible Investment Officer at Aviva Investors, a UK fund manager. “We are encouraged by the initial steps some of the companies are taking but hope to see more action and greater commitment from across the industry.”

Score increases since February:

• Unilever and Nestle: 7%
• Coca-Cola: 5%
• Danone: 4%
• Mondelez: 2%
• Mars and General Mills: 1%
• PepsiCo, Associated British Foods (ABF) and Kellogg’s: No Change

Among the changes that led to score increases:

• Nestle now recognizes land rights more comprehensively and is the first company of the Big 10 to fully support Free and Prior Informed Consent (FPIC) for local communities in its supplier guidelines, used for the sourcing of sugar, soy, palm oil and other commodities. FPIC requirements can help push suppliers to avoid land grabs and respect the rights of local communities when involved in large scale land acquisitions.
• Coca Cola's Sustainable Agricultural Guiding Principles now include policies that require suppliers to better manage water pollution, biodiversity and greenhouse gas emissions leading to small improvements in the company’s scores on Water, Land and Climate Change.
• Unilever's Gender score has improved from a 3 to 4 based on its endorsement of the UN Women’s Empowerment Principles and its commitment to conduct impact assessments on commodities it sources where women play a key role.
• Associated British Foods, General Mills and Kellogg’s remain at the bottom of the scorecard with few signs of progress.

“It is important to recognize the genuine effort some companies are making to address big challenges in their operations, but lasting solutions for communities will require much greater focus and ambition,” said Judy Beals, campaign manager for Oxfam’s Behind the Brands campaign. “Some companies are beginning to join the race to the top while others have barely approached the starting blocks. Now more than ever consumers and investors need to demand more action from companies to address the industry’s impacts on hunger and poverty.”

“Investors are increasingly rewarding companies that address sustainability challenges across their global supply chains,” said Bennett Freeman, Senior Vice President, Sustainability Research and Policy at Calvert Investments.  “Companies should show steady progress on the scorecard to manage risk and opportunity, especially in emerging and frontier markets.”

The updated scorecard (see below) comes just two weeks before Oxfam will release a major new investigation revealing land grabs in the sugar supply chains of major food and beverage giants. It will be the second major action since the Behind the Brands campaign began. Oxfam’s first campaign action on women’s rights resulted in new policy commitments from Mars, Mondelez and Nestle to address inequality in their cocoa supply chains.