Why more brands are investing in sustainable supply chains

As leaders of NSF International’s Responsible Sourcing team, Joshua Brugeman and Meredith Reisfield work with companies to assess and diagnose their responsible sourcing practices and build programs to help them improve their supply chains. They say they’ve seen an uptick in companies investing in creating more sustainable and responsible supply chains, for a number of reasons.

In a session at Natural Products Expo East, Reisfield and co-presenter Gabriel Thoumi of Climate Advisers will unpack one of those reasons that we don’t hear much about—why there is growing demand among investors for food and agriculture companies to invest in sustainable supply chains. They’ll also explore steps that companies can take to become aware of, monitor and mitigate risk within their supply chain.

Here, Reisfield and Brugeman set the stage for that conversation.

In working with your clients in the food industry, what are some of the supply chain challenges you see over and over again?

Meredith Reisfield: One big challenge we see is an information or diagnostic challenge. At any stage in a company’s journey toward a more sustainable supply chain, there are going to be new sources of data or information that a company needs that they didn’t look into or didn't have access to before. It could be knowing who their suppliers are on the farm level and knowing where things go back past their co-packer. Or, even if they’re feeling confident about where their suppliers may be on some things, being able to figure out what those knowledge gaps are and assess where they need more information.

Joshua Brugeman: We’re seeing a real range of maturity in what Meredith is describing. Some companies are much more advanced in understanding their supply chains and being able to obtain information from their supply chains, while others may have a hard time getting access to that information or having a full view into their supply chain. Overall, more companies are realizing that this is something they need to pay attention to. If they really want to have an impact on social and environmental impact, they need to be working with their supply chains, and they’re starting realize that a lot of the hidden risks that can affect their brand are in their supply chains, so they need to pay attention to that.

Another macro trend going on is that there is greater focus on supply chains now, especially on social issues. That’s been a pretty significant shift that’s occurred in the marketplace over the last couple years. With that being said, you still have some companies really focused on trying to get their own operations in shape—so they might be focused more on the energy, water and waste equation in their own manufacturing plant. And then you have other companies that have already done that and now they’re saying, we need to pivot from our own operations to working with our own supply chains now.

Josh mentioned a couple drivers of this shift. Are there others?

MR: Broadly speaking, we have seen three main drivers for this type of work. One is from the consumer. A second is that internal driver, where you have a company culture or a leadership team that’s really invested in being a responsible and sustainable company. The third one is that investor lens, which is the one we’ve found is a little more difficult for many people in this industry to get a handle on because it’s not as big of a part of their day-to-day. A lot of the information on how a potential group of investors—whether they’re institutional or individual investors—or how the larger industry is interpreting things like environmental and social governing data, is something that’s potentially a more quickly-evolving story.

JB: Most of the session is going to be focused on that financial driver and what companies should be paying attention to as the financial communities become more and more in tune to this.

For companies that are at that first stage, where they’re just dipping their toes into the water, are there any particularly good entry points in working toward a more sustainable supply chain?

MR: I’d say there are two or three big starting points. The first is going to be getting that organizational consensus on what the company’s vision is for what its operations or supply chain might look like three or five or ten years down the line.

Another would be an information or fact-finding mission to see what the emerging standards might be in your space, whether it’s regenerative agriculture, whether it’s an emerging commodity-specific standard and also figuring out within operations where there might be some potential areas to improve on your impact and opportunities to engage with your suppliers or consumers or stakeholders around that narrative.

Catch Meredith Reisfield at Natural Products Expo East.
What: Managing Investor Expectations & Risk: How to Establish a Responsible Supply Chain
When: 2 p.m., Friday, Sept. 15, 2017
Where: Hilton, Holiday Ballroom 2