Industry News - AM

Report ranks meat processors’ efforts to address water risks

By Tom Johnston on 9/12/2017

Meat processing companies have continued varying efforts to reduce their risks associated with water scarcity, but they have plenty of room for improvement in that area as compared with others in the food sector, as indicated by a new benchmarking analysis published Monday.

This is the second “Feeding Ourselves Thirsty” report, the first having been published in 2015, put out by Ceres, a nonprofit organization working with major investors in publicly traded companies to find sustainable solutions to challenges including water scarcity, pollution, climate change and human rights abuses.

“Feeding Ourselves Thirsty: Tracking Food Company Progress Toward a Water-Smart Future” highlights the impact that the 42 largest companies in the vulnerable U.S. food sector — packaged foods, beverages, agricultural products and meat — have on the issue of water scarcity and urges companies to recognize the potential impact on their profitability. The review covers the largest publicly traded companies, with some large private and non-U.S. companies, ranking them on a 0-100 point basis over four categories of water management: governance and strategy, direct operations, manufacturing supply chain and agricultural supply chain.

“Smart water management is a business imperative for food companies, as the impacts of climate change and water scarcity and pollution accelerate around the world,” said Brooke Baron, senior director of water and food at Ceres, in a news release. “Some corporate leaders are making strong progress, but the majority must do more to waterproof their businesses to protect and sustain our water supplies.”

The report overall called for improvement in governance and board oversight, wastewater management, integrating water risk into procurement processes and collaboration to protect watershed. In contract, areas showing most improvement since 2015 include integration of water risks into business strategy, setting water targets, water accounting, risk assessment and sustainable sourcing programs.

Meat ranked the lowest in the food sector in terms of average score. Packaged food ranked first, beverage ranked second and agricultural products ranked third. The meat industry’s performance improved the most (20 percent) from 2015, but its top scorer, Smithfield Foods, received only 33 points (no change from 2015), followed by Hormel Foods (23, up 12 points), JBS (16, up 5 points), Tyson Foods (11, up 3 points), Perdue Farms (9, no change) and Pilgrim’s Pride (1, down two points).

Nestlé, in packaged foods, topped all companies in all sectors with 82 points. Beverage leader Coca-Cola Company had 72 points, and Olam led agricultural products with 49 points.

Data collection for this report was cut off at March 16, 2017, so any new initiatives or information companies announced (10-K filings, sustainability reports, CDP water survey) after that date would not be factored into the scoring.

Ceres assigned the most weight in its scoring system to agricultural supply chain because that’s where the bulk of the water use and risk resides.  

“Over 70 percent of the world’s irrigated land faces water shortage either chronically, seasonally, or during dry periods, and that means our food supplies are at risk,” said Kate Brauman, lead scientist at the University of Minnesota Global Water Initiative. “Food companies need to step up sustainable management of water resources, including by working collaboratively with their agricultural suppliers.”

Eliza Roberts, water manager for Ceres, told Meatingplace, in an interview that companies of this size and stature can go beyond their plant operations and use their purchasing power to be highly influential in moving suppliers of their raw materials toward more sustainable water use practices.

Nestlé ranks so high in that regard, Roberts explained, because the company is working on the ground with upwards of 70,000 farmers to improve practices by having set water-use targets for them and ensuring that those suppliers are meeting them.

Similarly, what has helped Smithfield lead its peers in the meat industry, she said, is its work with grain farmers to improve soil health. The company gets high marks for lending expensive technology free of charge to farmers to help them identify precise fertilizer needs in real time and determine if it’s worth their investment.

Meanwhile, Hormel was among the most improved among all sectors. In October 2016, the company joined Ceres’ and World Wildlife Fund’s “AgWater Challenge” in which it made a number of commitments. The big tally for the company in “Feeding Ourselves Thirsty” was its meat industry-leading water management expectations for suppliers that go beyond regulatory compliance, Roberts said.

“It’s very clear that there’s a lot that companies in the meat industry can be doing to improve their practices, and that a lot of those practices would help them impact their current and future profitability,” she said.

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