Lessons learnt: Visibility leads to sustainable sourcing
Tracing the origin of every single category of raw material that we buy is a huge challenge. Experience has taught us that our influence for change is greatest where we have the clearest line of sight throughout the chain – so that’s where we are focusing.
All our brands – from our soaps and shampoos to our ice creams and beauty products – rely on hundreds of different raw materials every single day. The smooth running of our business depends on our being able to source these materials in the markets where we need them, at the times when we need them and in the volumes we need them.
We are ever mindful of this reliance. We are also mindful that the planet’s resources are finite. At Unilever, maintaining the regenerative capacity of our shared planet is an overarching and longstanding priority.
100% sustainable: a transformational target
This is why, back in 2010, we set ourselves the goal of sourcing 100% of our agricultural raw materials sustainably. Of all our Unilever Sustainable Living Plan (USLP) goals, this was perhaps the most ambitious. We are currently at 62% – which is short of our target, but up considerably from 14% a decade ago.
Was it ever going to be possible to hit 100%? Perhaps not, reflects Jonathon Porritt, a leading sustainability expert and Special Adviser on the USLP. “But that didn’t impair the ambition level,” he says. “It didn’t make people give up; instead it made them think, how do we take this to the next level?”
Delivering on this next level is something we remain very much committed to. But we face numerous hurdles. The most substantive of these relates to the sheer variety of raw materials that we source. Take starch, for example, which we use right across our brand portfolio. Just one container of this multi-functional additive could easily contain 50 different plant ingredients.
The logistical exercise of tracing each and every one of these materials back to its original farm, field or plantation is very “lengthy and complex”, explains Petronella Meekers, Unilever’s Global Head of Sustainable Sourcing.
The twin challenges of complexity and volume
Tracing products back to their origin is essential to offering the guarantee of sustainability that we want and that consumers are increasingly requesting.
So, why exactly is achieving such traceability so complex and costly? The answer has to do with the nature of modern supply chains, which, as well as being highly efficient, are extremely global in reach and multi-layered in scope.
Typically, we are buying from large suppliers, who very often source from smaller suppliers, and so on down the chain. As a result, it is often not possible to gain full visibility of the entire chain. This problem is often most acute for those raw materials that undergo some form of processing before arriving at our factories – with starch, once more, an emblematic case in point.
A related challenge that we face connected with the nature of modern supply chains relates to volume. Buying is very much a numbers game. The greater the volume, the greater your leverage. Anyone who has bought a multi-pack product in a supermarket will know the price advantages this can bring. It is no different for us when we buy raw materials.
The amount of raw materials we purchase varies considerably. Large or small, however, these volumes are relatively insignificant in the context of the global market. So, even supposing we could map out the entire supply chain for yams, say, our ability to influence how yams are produced would be limited. Our buying power, relatively speaking, just isn’t big enough.
Despite these hurdles, our resolve to drive sustainability through our supply chain has not weakened over the last decade. We have experimented with different strategies and tested out different approaches. It has been a journey of ups and downs, but we have learnt many valuable lessons along the way.
Key categories: narrower focus for wider impact
The most important of these is to focus our efforts where we can have the highest impact. “Our 100% ambition still remains, and our predominant focus is on those materials where we have ‘line of sight to farm’, as we call it, and greatest buying power. This is where we feel we can most influence producers to adopt sustainable practices,” says Petronella.
This decision had led us to a list of 12 key ingredient categories to focus on, including all commodities such as sugar, palm oil, soy, cocoa, paper and board and tea. Collectively, these comprise about two-thirds of our total volume of agricultural raw materials, 88% of which are sustainably sourced.
To increase that influence, we will continue to work with farmers, suppliers, governments and civil society to promote sustainable agriculture and forestry systems beyond the boundaries of our own business needs. Global alliances such as the Consumer Goods Forum and the Sustainable Agriculture Initiative Platform provide excellent platforms for doing this.
Collaborations with like-minded buyers are especially important. Take sugar. Back in 2012, we made our first purchase from Bonsucro (Opens in a new window), which represents sustainably certified sugar producers. Today, thanks to collective demand from hundreds of other buyers, Bonsucro’s certification stamp covers one-quarter of all land planted with sugar cane.
This collaborative approach will increasingly require us to work in new and even surprising ways. Our project with farmers in the drought-hit US state of Iowa offers a taste of what’s to come. Through this initiative, we are encouraging participating farmers to grow cover crops such as rye grasses or oats. For their main crops, these farmers tend to rotate between corn, which PepsiCo buys, and soy, which we buy. So, it makes sense to run the project together with PepsiCo – which is exactly what we are doing.
Radical transparency: achieving all-round assurance
Another area where our work will continue is the promotion of chain-of-custody transparency in our critical supply chains.
We are making steady progress here, as our efforts in the palm oil sector demonstrate. Back in 2014, we began asking our palm oil suppliers to provide GPS coordinates for the mills that they source from. This gave us visibility on over 1,800 mills – around two-thirds of the total number of mills at the time.
Across all our key category areas, we will continue to push for more producers to achieve sustainable certification and drive impacts. Equally, we also want to find innovative ways to carry on increasing supply chain transparency, especially for the most complex raw materials. We have started with publishing our supplier lists for tea, soybean oil and paper and board.
We have come a long way, but much more still remains to be done, says Petronella. “We want greater assurances that the impacts we wish to see, such as no deforestation, regenerative practices and improved yields for smallholder, are being driven forward.”
Lessons for the future
- Continue working in partnership with farmers, suppliers, governments and civil society to promote sustainable agriculture and forestry systems.
- Find innovative ways to drive change, not only within the boundaries of our own business needs but also at the level of entire supply chains – ingredient by ingredient.
- Strengthen the business case for sustainable agriculture by driving down the cost of traceability and assurance, and by driving up demand for sustainably produced materials.