Sustainable agriculture and water: corporate efforts towards global sustainability

Toby Webb, Founder, Ethical Corporation.

MSc Corporate Governance and Ethics class, Corporate Responsibility module, Birkbeck College, University of London, February 17 2011

Sustainable Agriculture: The headlines

• Foresight report 2011: Calls for action: “The future of food and farming”

• 925 million people experience hunger: lack access to sufficient macronutrients

• Perhaps another billion suffer from ‘hidden hunger’: important micronutrients missing from diet

• Millennium Development Goal 1. Aims to halve the number of undernourished people from the 1990 level of 16% to 8% in 2015. Current figure is 13.5%

• Consequent risks of physical and mental impairment

• A billion people substantially over-consuming, spawning a new public health epidemic

• Looks at pressures to 2050, offers policy choices to feed population

• Current system needs radical overhaul: Farming practice changes for yield increases

• Incentives need to tackle malnutrition in next 20 years

• Food prices gone up dramatically Nov-December 2010. Broke 2008 records, according to Food and Agricultural Organisation’s “Food Price Index” late 2010

• Sugar, cereals and oil prices all shooting up

• Export barriers put up across producer/exporter nations “food hoarding” concerns

• Food insecurity for business: Increases costs, drives inflation, affects worker health

Serious risks to inaction on food sustainability:

• Without change, global food system will continue to degrade the environment

• Will compromise the world’s capacity to produce food in the future

• Also contributing to climate change and the destruction of biodiversity

• Soil loss due to erosion, loss of soil fertility, salination and other forms of degradation;

• Rates of water extraction for irrigation exceeding rates of replenishment

• Over-fishing a widespread concern

• Heavy reliance on fossil fuel-derived energy for synthesis of nitrogen fertilisers and pesticides

• Food production systems emit significant quantities of greenhouse gases and release other pollutants

PROPOSED SOLUTIONS:

• More food must be produced sustainably through the spread and implementation of existing knowledge, technology and best practice, and by investment in new science and innovation and the social infrastructure that enables food producers to benefit from all of these

• Demand for the most resource-intensive types of food must be contained

• Waste in all areas of the food system must be minimised

• The political and economic governance of the food system must be improved to increase food system productivity and sustainability

Solutions?

• Land use: Global crop yields grew by 115% between 1967 and 2007, area of land in agriculture increased by only 8%

• Global energy demand: Projected to increase by 45% between 2006 and 2030

• Global water demand: Agriculture already currently consumes 70% of total global ‘blue water’ withdrawals from rivers and aquifers available to humankind. Demand for water for agriculture could rise by over 30% by 2030, while total global water demand could rise by 35–60% between 2000 and 2025

• Application of knowledge & technology could increase yields two- to threefold in Africa, twofold in the Russian Federation. Productivity in aquaculture could be raised by around 40%.

• Increasing the skills and knowledge base of food producers (often women) is critical

• Improving the functioning of markets / market access vital in low-income countries

• Rights to land and natural resources, water, fisheries and forests should be high priority

• Infrastructure must be improved to facilitate access to markets/investment in rural economies

• 30% of all food grown worldwide may be lost or wasted before and after it reaches the consumer. Possibly as high as 50%

• Last 20-30 yrs: Small number of companies dominate global food supply chain.

• All along supply chain: Agri-business, commodity wholesalers, manufacturers & retailers

• Concerns raised corporate power: retail markets and purchase contracts with suppliers (particularly smaller farmers); public access to agri intellectual property & transparency of governance

• Extending best practice in the food supply chain has the potential to make radical improvements in sustainability across the food system

• Food industry leaders want ‘level playing field’ in standardising best practice in sustainability. Government support needed for development, direction setting & consensus for action

SOLUTIONS?

• taxing non-preferred food types / ‘choice editing’ /regulatory or voluntary actions on individual behaviour (public education, advertising, targeted programmes in schools and workplaces) Better labelling to enable the public to make more informed decisions

• Agriculture estimated to contribute 12–14% of GHG emissions, figure rises to 30% or more beyond the farm gate & when land conversion is added

• Agriculture contributes disproportionate amount of greenhouse gases with high impact on warming: approximately 47% and 58% of total CH 4 and N O emissions respectively

Key priorities for action for policy makers

1. Spread best practice.

2. Invest in new knowledge

3. Make sustainable food production central in development

4. Work on the assumption that there is little new land for agriculture

5. Ensure long-term sustainability of fish stocks

6. Promote sustainable intensification

7. Include the environment in food system economics

8. Reduce waste – both in high- and low-income countries

9. Improve the evidence base upon which decisions are made and develop metrics to assess progress

10. Anticipate major issues with water availability for food production

11. Work to change consumption patterns

12. Empower citizens.

Source for slides 2-6: “The Future of Food and Farming: Challenges and choices for global sustainability”. UK Government Office for Science, January 2011. Also see: “Realizing a New Vision for Agriculture: A roadmap for stakeholders” (World Economic Forum 2011) And: “The top 100 questions of importance to the future of global agriculture” INTERNATIONAL JOURNAL OF AGRICULTURAL SUSTAINABILITY (2010) AND "Toward Sustainable Agricultural Systems in the 21st Century". The National Academy of Sciences 2010

Business is worried!

• Davos 2011: Coalition of 17 multinational food and drinks companies called for major change in direction for the world’s farming in a paper: “A New Vision for Agriculture”

• Cadbury, Marks & Spencer and Unilever boast long track records. Bigger companies now on board in last few years: Wal-Mart, PepsiCo, Coca-Cola, Cargill, Nestlé etc

• Sustainable Agriculture Initiative set up by big food: http://www.saiplatform.org

CORPORATE CHALLENGES OF SCALE / SUSTAINABILITY:

• If security of supply is the goal, that could lead to larger and more technology-reliant farms

• Economic arguments also remain inconclusive. Producers might see costs increase (at least initially) rather than reduce

• Higher productivity is not a certainty either – as in the case of organic versus non-organic cotton. The cost to the buyer (or end consumer) could increase (premium for certified crops is the obvious example)

• For the big commodity producers, meanwhile, recouping costs or realising a premium on the open market is an intractable conundrum

• Fairtrade certified coffee garners ONLY 20% of the total roast and ground market in the UK

Source: Ethical Corporation Sustainable Agriculture Briefing, March 2011

Sustainable Agriculture podcasts:

David Wilkinson, PepsiCo European Agriculture Director:

http://www.ethicalcorp.com/content.asp?ContentID=7133

 

David Croft, Head of Sustainable Agriculture, Kraft UK:

http://www.ethicalcorp.com/resources/downloads/Ethical%20Corporation%20Podcast-%20Ghana_Pod_4_David_Croft.mp3 

Ghana Cocoa Farm Slideshow:https://picasaweb.google.com/tobiaswebb/BestOfGhanaPics?feat=blogger#slideshow/5512687683085062898 

Richard Reed, Innocent Drinks (6 mins in):

http://www.ethicalcorp.com/content.asp?contentid=7282

 Chris Wille, Rainforest Alliance Podcast on sustainable agriculture: http://www.ethicalcorp.com/resources/downloads/Carbon%20credits%20for%20coffee%20farmers.mp3 

What companies are doing in 2011: Coca-Cola

• January 2010 Coca-Cola initiated an $11.5m four-year project in Kenya and Uganda to bring 50,000 small farmers into its supply chain

• Partnered with Bill & Melinda Gates Foundation (which put up $7.5m) and agricultural development charity TechnoServe

• Participating farmers should see their productivity increase and their profits double. About 27,000 peach farmers already involved. Passion fruit growers will follow shortly

• With the help of Coca-Cola’s non-profit partners, the fruit producers receive training in improving quality, increasing production and getting organised into farmer groups. The latter will help their access to credit

• Coca-Cola active further up the value chain, too. The company’s local subsidiaries are working with puree manufacturers to boost their production capacity

• On the back of purchasing guarantees small processing companies are already investing in new equipment

• Project focuses on three main areas where large procurers of agricultural raw materials can have the largest impact: strengthening the supply chain, sharing technical expertise and providing finance

What companies are doing in 2011: Starbucks

• 2004: Starbucks launched certification experiment in Central America. Coffee and Farm Equity (C.A.F.E.) Practices initiative expanded to 140,000 farmers in about 20 countries

• By 2010, participating producers provided Starbucks with 81% of its coffee beans

• Producers large or small (99% of participating farms are 12 hectares or smaller) need to pass basic quality check

• Applicants independently certified against a scorecard of environmental, social and economic transparency criteria

• In contrast to other certification processes, third-party certifiers operate entirely independently from Starbucks

• Starbucks has a number of zero-tolerance criteria. List includes practices such as underage or forced labour and payment below the minimum wage

• Starbucks funds a loan scheme for small farmers to the tune of $14.5m a year. Aims to increase this to $20m soon 

• Technical advice passed on to coffee farmers. Co-ordinated through farm support centres in Costa Rica and Rwanda (others to follow in Colombia and China), Starbucks’ agronomists offer training and advice in a range of environmentally friendly and efficient farming methods 

Corporations and water sustainability

Three key areas:

• Water footprinting and usage• Water ethics and rights• Water supply security

When it goes wrong: Bechtel and water in Bolivia: http://www.youtube.com/watch?v=xw5Fon_EjGw 

According to an August 2007 study by the UN High Commissioner for Human Rights: “the human right to water entitles everyone access to a sufficient, safe, physically accessible, and affordable amount of water for personal and domestic uses. This access should be prioritized over other water uses,,,notably...water for agriculture and industry and should be nondiscriminatory. Further, a rights based approach to water means that priority should be given to those who do not have access and requires that individuals and communities have access to information, justice, and participation in decision‐making processes concerning water. 

“The Human Right to Water: Emerging Corporate Practice and Stakeholder Expectations” (United Nations Global Compact, Pacific Institute 2010)

Water: Key stats and facts:

• 41% of the world’s population lives in a river basin under water stress

• By 2025, two-thirds of the world’s population could face serious water shortages

• Climate change will exacerbate water challenges, leading to droughts, rising sea levels and floods (WWF 2009)

Water and industry·

• Global water withdrawals for industry accounted for 22% of total global water use. The figure hits 59% in the case of high-income countries, but is only 8% in low-income countries

• The annual water volume used by industry will rise from 752tn litres in 1995 to an estimated 1,170tn litres in 2025

• In 2025, the industrial component is expected to represent about 24% of total fresh water withdrawal

• In developing countries, 70% of industrial wastes are dumped untreated into waters where they pollute the usable water supply. Source: Unesco 2008

UN Global Compact CEO Water Mandate: http://www.unglobalcompact.org/issues/Environment/CEO_Water_Mandate

Launched in July 2007, the CEO Water Mandate is a unique public-private initiative designed to assist companies in the development, implementation and disclosure of water sustainability policies and practices.

The CEO Water Mandate covers six elements: Direct Operations; Supply Chain and Watershed Management; Collective Action; Public Policy; Community Engagement; and Transparency.

List of CEO signatories is at:

http://www.unglobalcompact.org/issues/Environment/CEO_Water_Mandate/endorsingCEOs.html

See also: The CEO Water Mandate: “Guide to Responsible Business Engagement with Water Policy” November 2010 

Ethical Corporation podcast on corporate water approaches: http://www.ethicalcorp.com/resources/downloads/Ethical%20Corp%20podcast-%20ECI%20water%20report.mp3

Company actions on water sustainability

• SABMiller’s subsidiary in Mozambique, Cer vejas de Moçambique has tackled two challenges: improve production efficiencies and embark on conventional development projects.

• 2008: SABMiller funded two projects in Maputo, with the Mozambique Foundation for Community Development, designed to provide clean water for more than 13,000 people whose needs the government so far has failed to meet.

Corporate conservation (2008)

 SABMiller is working with the US environment group Nature Conservancy to establish a “water fund” in Bogotá, Colombia. The fund is supporting reforestation programmes and improving agricultural management in the catchment area. This reduces soil erosion and sedimentation.

Globally, SABMiller’s comprehensive water efficiency programme has enabled it to reduce its water consumption from 11 litres of water per litre of beer to 4.6 litres, the lowest in the brewing industry.

Coca-Cola committed $20m in 2007 to help conserve seven of the world’s largest freshwater river basins. The initiative with WWF, is part of the drinks company’s global effort to become water neutral. In 2006, Coca-Cola used 290bn litres of water. It aimed to recycle all water used in its manufacturing processes by 2010. 

US fruit company Dole has introduced irrigation systems fed with water recycled from packaging processes. Reduced water use by 95% on banana plantations in the Philippines. 

 Intel reclaims more than 3bn gallons of water a year by collecting and recycling wastewater, solid waste and chemical waste. Each new manufacturing facility equipped with wastewater collection system. Recycled water used in its facility equipment such as cooling towers and scrubbers.

Rio Tinto developed diagnostic tool to assess performance and risk across all water management aspects within its operations. Process, which covers initial exploration through to closure, provides management with an action plan to improve performance at each of its operations. Rio Tinto appointed “water champions” at many sites to promote water improvement activities.

Sources: Companies, papers previously cited, Ethical Corporation: “Water resources: Efficiency and conservation – Swimming in dwindling waters, November 2008”

Report: "Unlocking the profit in Water savings", Ethical Corporation, June 2010