Supply chain sustainability and the concept of “going green” continues to drive a lot of operational initiatives and innovations as companies and countries look at their overall carbon footprint and look for ways to be more environmentally friendly. There is of course a system of checks and balances for global corporations when looking at supply chain sustainability, as even though they may have the best intentions, profitability is still the main business driver. Over the last few years, supply chain sustainability has become increasingly important, as manufacturers and retailers have taken the lead on green initiatives across the full spectrum of the supply chain, including in the warehouse, store, and through transportation.
At last month’s Blue Yonder Icon virtual summit, Lisa Manley, Vice President of Sustainability at Mars, and Ezgi Barcenas, Global Head of Sustainability for Anheuser-Busch InBev, detailed how their respective companies are focusing their efforts and strategies to support supply chain sustainability. Sustainability initiatives cannot exist in a vacuum. Both speakers touched on how the Sustainable Development Goals (SDGs) established by the United Nations are a driving force behind individual initiatives.
UN Sustainable Development Goals
The SDGs developed by the UN are a collection of 17 interlinked global goals designed to be a “blueprint to achieve a better and more sustainable future for all”. The SDGs were set up in 2015 by the United Nations General Assembly and are intended to be achieved by the year 2030 and are included in a UN Resolution called the 2030 Agenda.
The 17 SDGs are: (1) No Poverty, (2) Zero Hunger, (3) Good Health and Well-being, (4) Quality Education, (5) Gender Equality, (6) Clean Water and Sanitation, (7) Affordable and Clean Energy, (8) Decent Work and Economic Growth, (9) Industry, Innovation and Infrastructure, (10) Reducing Inequality, (11) Sustainable Cities and Communities, (12) Responsible Consumption and Production, (13) Climate Action, (14) Life Below Water, (15) Life On Land, (16) Peace, Justice, and Strong Institutions, (17) Partnerships for the Goals.
Mars and Supply Chain Sustainability
Ms. Manley Vice President of Sustainability at Mars, indicated that global businesses play a large role in helping to advance the SDGs. While there are 17 dedicated SDGs, Mars has been purposeful on where to focus their efforts. To that end, the company is prioritizing specific SDGs. First is SDG 1: no poverty. According to Ms. Manley, poverty plays a huge role in agricultural supply chains. The UN highlights the five “outcome targets” for SDG 1: eradication of extreme poverty; reduction of all poverty by half; implementation of social protection systems; ensuring equal rights to ownership, basic services, technology and economic resources; and the building of resilience to environmental, economic and social disasters.
The second SDG to highlight is SDG 17: partnerships for the goals. Mars has a deep belief that the only way they are going to make a meaningful difference from a sustainability perspective is by working collaboratively with others.
The third SDG that Ms. Manley highlighted, and went deeper into is SDG 13: climate action. Climate action is incredibly important for Mars and its supply chain partners. To that end, Mars started with a commitment to 100 percent renewable energy a number of years ago and is making steady progress. The company has established long-term power purchase agreements at the country level. As a result, Mars has been able to procure renewable electricity to cover the entire business in those specific countries. The next part is to drive progress toward a science-based target that goes across value chain. Mars is working with top suppliers to take action similar to what they have done with renewable energy and launched a “Pledge for the Planet” a few years ago, asking suppliers to join them in a pledge for sustainability.
Mars is also focused on advocacy. It is one of 300 companies that came together in a request to the Biden administration to dig deep in its ambitions for climate action. It is asking for country level goals to reduce emissions by 50 percent of more by the end of 2030.
Ms. Manley highlighted another area of sustainability that is part of its strategy: eliminating single use plastics. For Mars, becoming more sustainable with its packaging is a huge priority. The company looks at the initiative in four ways:
- Identify the packaging they simply don’t need and stop using it. The company looks at different models of packaging use, and how it can be re-used or recycled. Ms. Manley gave the example of re-usable containers for pet food, which can be refilled at the store.
- Once you know what you do need, redesign the packaging to make it fit into a circular model.
- Namely, what is on the horizon for packaging technology? Mars has a dedicated team exploring the future of biodegradable papers and bio-based plastics.
- Mars can make all the changes it wants with packaging designs, but if the systems for collecting and recycling used packaging aren’t established around the world, the program cannot scale.
AB InBev and Supply Chain Sustainability
In an audience poll during the session, next generation technology like artificial intelligence (AI) and machine learning (ML) for forecasting demand and pricing was driving the most interest in sustainability. According to Ms. Barcenas, Global Head of Sustainability for Anheuser-Busch InBev, these findings are consistent with what influences sustainability in most supply chains. AB InBev definitely sees an opportunity to use more data to understand the impact of climate change on the value chain. In agricultural supply chains, there is a disproportionate level of impact in vulnerable communities, so the more they can bring in modeling and predictive analytics, the stronger sustainability initiatives can be.
Ms. Barcenas highlighted two distinct areas that AB InBev is looking at for supply chain sustainability. The first is the company’s approach to water management. There is a saying in the brewing industry: “no water, no beer.” But Ms. Barcenas pointed out that water is a critical resource beyond just being a main ingredient in beer. As the world’s leading brewer, AB InBev is committed to being part of the solution in areas where they are seeing growing water stress. The company’s focus on water management goes across 3 approaches:
- AB InBev is internally looking at water efficiency. The company is the most water efficient brewer in the world. Over the last decade, it has reduced its water usage over 40 percent. The company is working to continue that trend as part of its 2025 sustainability goals.
- Promoting a reduction in water usage or improving the health of a water shed is great. However, companies need to have a measurable improvement piece for the results to stand up. To that end, AB InBev has a rigorous reporting process on how these improvements are being measured, and partner with the Nature Conservancy and World Wildlife Fund (WWF) in its initiatives.
- AB InBev is working with farmers to be more climate resilient. This means ensuring farmers have the best practices in place, helping to provide the right crop management protocols. AB InBev uses AI and ML to help build a climate model and see how barley sourcing impacts the climate.
Ms. Barcenas also highlighted some of AB InBev’s procurement strategies for a sustainable supply chain. AB InBev has embedded sustainability in its procurement functions. The company has identified that over 80 percent of carbon emissions come from the value chain. The biggest opportunities are to enhance collaboration and innovation with their suppliers to address shared sustainability challenges. Ab InBev has over $30 billion in supply chain spend and tens of thousands of partners upstream. It needs to bring scale to new levels to innovate with them.
Part of this innovation was the launching of its Eclipse Initiative. The initiative was launched in 2019 and is a global sustainability platform. As of now, there are 50 suppliers that are part of the collaboration with a shared vision. The initiative looks to bring the suppliers together to co-innovate and co-design packaging and raw materials sourcing in the future. The end goal is improved supply chain sustainability.