LONDON: Companies like Unilever, Nestlé and Danone are benefiting from focusing on sustainability when manufacturing and marketing their products, a new report has found.
Two Tomorrows, the consultancy, assessed the strengths of ten major players in the food and beverage sector in this area, based on metrics including leadership, innovation and engagement.
It suggested that the overall impetus to improve corporate performance in relation to these issues resulted from several factors, not least "consumers' social and environmental concerns".
"The number of potential customers in emerging markets is another strong incentive to develop new products and distribution models that work in challenging socio-economic circumstances and address special nutritional needs," its study added.
Unilever headed the rankings, with a rating of 64%, and was credited with having established a "comprehensive" approach backed both by its senior management and formal communications.
Moreover, its efforts to cut carbon emissions and water usage, and its proactive response to high-profile criticisms regarding its processes of sourcing of palm oil, were also received favourably.
Nestlé was in second, on 59%, having built a direct relationship with 660,000 suppliers, which has provided financial efficiencies and enhanced the "traceability" of ingredients.
The owner of Nescafé has also partnered with the Rainforest Alliance and various national authorities to help rural communities access clean water, generating what it calls "shared value".
Danone, which came in third on 58%, was praised for having made the most progress when it comes to creating "shared business models".
For example, it has forged a tie-up with Grameen bank to provide "microfinance" loans supporting the construction of a yoghurt factory in Bangladesh, and the people who sold its goods door-to-door.
"This has brought brand benefits, as well as a solid grounding in a future growth market. Despite some challenges since launch, sales have reached all-time highs, and a second factory is set to be launched in 2010," Two Tomorrows stated.
PepsiCo, on 51%, and Coca-Cola, on 49%, made up the top five, and were the only other operators that posted above-average scores.
Anheuser-Busch and Kraft registered totals of 46%, with Heineken on 39%, Tyson on 28%, and Kirin on 23%.
Two Tomorrows also said food safety, health and nutrition, water use, carbon emissions and eco-friendly packaging were attracting greater interest from these ten firms.
Responsible marketing practice had also been "recognised" as a matter of importance by 90% of its sample, but only half had shown "evidence for performance improvements" on this measure.
"While leaders such as Unilever, Nestlé and Danone can demonstrate strong initiatives across these areas, there are laggards whose communications indicate only limited awareness of these challenges," its report argued.
The vast majority of organisations were trying to build relationships with local communities, while around 60% were working with advocacy and development bodies, and with farmers.
Slightly more than half were actively informing customers and investors about these aspects of their operations, and a similar number had forged links with groups promoting responsible consumption.
This figure fell to 40% for pursuing agreements with retailers to make in-roads, a situation that will have to change going forward.
"Limited engagement with retailers ... appears unsustainable, as these stakeholders play a key role in awareness raising and other efforts to address issues such as food waste and responsible consumption," Two Tomorrows' report warned.
Two Tomorrows, the consultancy, assessed the strengths of ten major players in the food and beverage sector in this area, based on metrics including leadership, innovation and engagement.
It suggested that the overall impetus to improve corporate performance in relation to these issues resulted from several factors, not least "consumers' social and environmental concerns".
"The number of potential customers in emerging markets is another strong incentive to develop new products and distribution models that work in challenging socio-economic circumstances and address special nutritional needs," its study added.
Unilever headed the rankings, with a rating of 64%, and was credited with having established a "comprehensive" approach backed both by its senior management and formal communications.
Moreover, its efforts to cut carbon emissions and water usage, and its proactive response to high-profile criticisms regarding its processes of sourcing of palm oil, were also received favourably.
Nestlé was in second, on 59%, having built a direct relationship with 660,000 suppliers, which has provided financial efficiencies and enhanced the "traceability" of ingredients.
The owner of Nescafé has also partnered with the Rainforest Alliance and various national authorities to help rural communities access clean water, generating what it calls "shared value".
Danone, which came in third on 58%, was praised for having made the most progress when it comes to creating "shared business models".
For example, it has forged a tie-up with Grameen bank to provide "microfinance" loans supporting the construction of a yoghurt factory in Bangladesh, and the people who sold its goods door-to-door.
"This has brought brand benefits, as well as a solid grounding in a future growth market. Despite some challenges since launch, sales have reached all-time highs, and a second factory is set to be launched in 2010," Two Tomorrows stated.
PepsiCo, on 51%, and Coca-Cola, on 49%, made up the top five, and were the only other operators that posted above-average scores.
Anheuser-Busch and Kraft registered totals of 46%, with Heineken on 39%, Tyson on 28%, and Kirin on 23%.
Two Tomorrows also said food safety, health and nutrition, water use, carbon emissions and eco-friendly packaging were attracting greater interest from these ten firms.
Responsible marketing practice had also been "recognised" as a matter of importance by 90% of its sample, but only half had shown "evidence for performance improvements" on this measure.
"While leaders such as Unilever, Nestlé and Danone can demonstrate strong initiatives across these areas, there are laggards whose communications indicate only limited awareness of these challenges," its report argued.
The vast majority of organisations were trying to build relationships with local communities, while around 60% were working with advocacy and development bodies, and with farmers.
Slightly more than half were actively informing customers and investors about these aspects of their operations, and a similar number had forged links with groups promoting responsible consumption.
This figure fell to 40% for pursuing agreements with retailers to make in-roads, a situation that will have to change going forward.
"Limited engagement with retailers ... appears unsustainable, as these stakeholders play a key role in awareness raising and other efforts to address issues such as food waste and responsible consumption," Two Tomorrows' report warned.
Data sourced from Value Tomorrow; additional content by Warc staff
