Business Times

Supply chains: Plan for the future from fork to farm
By Ross Tieman

FT.Com, London -- Building sustainable supply chains is not just about counting carbon emissions, says Professor Mohan Munasinghe, director general of the Sustainable Consumption Institute at Manchester University in the UK. Rather, it is about choosing evelopment and production patterns that can still function “in 50 years’ time”.

The professor, who first unveiled his “Sustainomics” framework at the Rio Earth Summit 18 years ago, identifies four “core principles” that any food manufacturer or retailer needs to keep in mind for a sustainable supply chain.

Development, he says, needs to become sustainable, whether it is growing tea in Sri Lanka or beef in Brandenburg. Second, the three “key dimensions” of sustainable development – economic, social and environmental – must have equal priority.

He is emphatic about this. Farmers in much of the world need higher incomes, he says. Food production regimes that degrade soil or water resources, or that lead to social breakdown, merely stock up problems for the future. But if farmers can use economically resources and earn enough to pay for water, electricity, healthcare and schooling, those services will come to them.

Third, humans need to acquire “sustainable values”. The shift in thinking needs to run from farmers right through the supply chain to consumers. Finally, retailers and manufacturers need integrated tools to make a full life-cycle analysis of their products. This must span, he says, “from growing tea to picking, to shipping, to retailing, to brewing the tea to disposal of the tea-bag”.

That is a pretty sweeping list, but the professor is an optimist. “It’s not rocket science,” he says. “These are not intractable problems. We can do it.” In the past couple of years, an awful lot of people in the food industry have come round to Prof Munasinghe’s way of thinking.

Mella Frewen, director general of the Confederation of Food and Drink Industries of the EU (CIAA) says: “Sustainability is about a lot more than just carbon and carbon foot-printing.” The CIAA, she says, is working “with the entire supply chain from fork to farm”, tackling economic, environmental and sourcing issues.

Countless initiatives have been launched, often embracing international and government agencies and non-governmental organisations, such as the European Food Sustainable Consumption and Production Round Table, chaired by Pascal Grévarath, director of environmental sustainability at Nestlé.
Food retailers, too, have begun serious efforts to develop environmentally sustainable supply chains. Altruism may play a part, but David North, consumer and government director at Tesco, a UK-based international supermarket group, insists there is also a strong commercial reason to develop sustainable supply chains.

“The supply chain is the big prize,” he says. “We think that in the future many of our customers are going to care about this: we think this will be an area of competitive advantage.” Last year, Tesco started looking both upstream and downstream in its supply chain. The company had achieved big environmental improvements in its own distribution activity. Yet studies suggested the environmental impact of suppliers was about 10 times greater than that of its “in-house” activities, while the impact after goods were purchased was 100 times greater.

It is now looking for a 30 per cent reduction in carbon emissions among suppliers by 2020, while aiming to help consumers halve emissions arising from their purchases by the same date. Data about upstream carbon emissions is lacking. Nonetheless, by the end of next month Tesco aims to have established the carbon footprint of 500 of its products. Details will be added to the product label. Consumer choices will be closely watched.

Mr North reckons CO2 emissions and cost are generally synonymous. “We can reduce costs by stripping out CO2,” he says, and making supply chains more resource-efficient should make them more resilient. A study for Tesco found that foodstuffs were the biggest sources of carbon emissions, headed by fruit and vegetables, processed foods, meat and dairy, and beverages. Consumer goods were a long way down the table.

Euan Murray, head of carbon footprinting at the Carbon Trust, a not-for-profit group whose PAS 2050 standard has been adopted by many companies, says big retailers and food manufacturers are engaging with suppliers and farmers around the world.

He says: “A farmer can’t tell you what his carbon footprint is, but he knows all about stocking density, the feed he grows, and so on. He has the necessary data points.” Fragmentation of suppliers means thousands of farmers and suppliers have to be drawn into dialogue.

Today, the biggest challenge for development of sustainable supply chains is gathering information. Communication, and then action, will be the logical next steps.

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