The risky business of climate risk: ‘Stop predicting the future’

March 8, 2021 by  
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The risky business of climate risk: ‘Stop predicting the future’ Elsa Wenzel Mon, 03/08/2021 – 01:00 Blindsided by how COVID-19 quickly dominated the planet? You’re not alone. Fourteen months ago, the World Economic Forum’s 2020 Global Risks Report neglected to include a pandemic among its major warnings for the year ahead. The crisis has exposed not only the lack of foresight but the lack of effectiveness in mainstream business risk management policies. Fewer than six out of 400 companies surveyed in 2020 legal filings said there was a potential pandemic problem, Rodney Irwin, managing director of redefining value at the World Business Council for Sustainable Development, said during GreenBiz 21. That’s despite this being the second pandemic in 10 years, the fourth respiratory illness in 18 years, and numerous warnings from the World Health Organization, he added at the February virtual event. “Let’s stop predicting the future because we’ve proven we’re incapable of doing it,” Irwin said. “Instead of asking, as part of our risk determination process, how likely something is to happen, we ask a more cerebral question, which is, if it did happen, could we manage it? That’s a very different question.” Reframe as vulnerability Irwin looks back on 2020 with “somewhat rose-tinted glasses” because it has proven the need to take the relationship between nature and society seriously. And that leaves a tremendous opportunity to address ESG-related issues. The process of handling disrupted supply chains, shifts in demands and business models and modes of communication; governance and decision-making changes during leadership under lockdown. “It’s also made us realize that the consulting world’s obsession with reducing everything down to the bare minimum, agility and removing all slack from our systems, doesn’t give you any wiggle room when the chips are down,” Irwin added. “So it’s allowed us to reintroduce to the world of the business community this notion of what it means to be resilient, and not just to be agile.” If risk management is the responsibility of corporate boards of directors, they have plenty of reckoning to do in the coming months and years about the effectiveness of existing risk management procedures and policies. Gloria Santona, Of Counsel at Baker McKenzie in Chicago, detailed three related legal issues that businesses should note: disclosure; compliance; and litigation. Consider disclosure As for disclosure, investors expect more of it and at a more robust level, but they are also demanding goal-setting, with metrics and accountability. The U.S. government may mandate for more companies to open up, as signaled in February when Satyam Khanna became the first policy adviser for climate and ESG within the U.S. Securities and Exchange Commission. Diversity and human capital management are also likely to come under more scrutiny legally and by stakeholders, Santona added. “The pandemic has raised a number of issues with respect to the way that people work, or the way that they’re treated when they’re ill,” she said. “Boards of directors are going to spend more time thinking about corporate culture than they have in the past and, as well, probably there’ll be more disclosure around that either in sustainability reporting or mandatory disclosure.” Consider compliance COVID-19 illuminated problems with complex supply chains, and Santona said she expects a rise in demand for transparency particularly around human rights, labor conditions and corruption, as well as biodiversity loss and water risks. Santona foresees the need for companies to talk with suppliers, even out to the third and fourth tiers, and to collaborate about climate change, identifying ways to harness renewable energy, reduce waste and streamline manufacturing and logistics. “At the end of the day, it’s really incumbent upon companies to scrutinize their compliance of their suppliers and align your suppliers with their own compliance practices,” she said, adding that mergers and acquisitions will force more companies into due diligence as their supply chain networks balloon. Balancing efficiency with resilience, as well as considering operational risk, are likely to become more of a focus, too. Consider litigation Santona brought up an ongoing debate to watch in the United States in cases involving ESG. The question is whether states can regulate and try cases having to do with climate change. “As lawyers, we’re concerned, because if there is no federal preemption, then there will be a multitude of litigation against the companies with respect to activities that they take that may be considered to be negative due to the climate change,” she said. The risks of not sharing Santona described the “siloing” of information within a corporation as the biggest impediment to risk management. “One of the things that we think about from a legal perspective is whether boards are properly organized in order to think about these risks, and whether there is a mechanism or a method to ensure that the board is actually hearing about all the risks it needs to hear about,” she said.  Santona noted the importance of auditing and the promise of emerging technologies, such as distributed ledgers and the blockchain, which can trace the material origins and points of contact within supply chains. Yet the most important factor is a senior management team that’s open to discussion across functions and geographies, especially for vast international operations. Without that, progress in one country or practice may not be matched by another elsewhere. “It’s a very much an ‘all hands on deck’ to get the best thinking together about how to manage these really complex problems,” Santona added. Bayer, for one, shows signs of moving toward such a direction. Its governance, risk management and ESG teams work together, and compensation for the board of management is tied directly to meeting sustainability goals. When bracing for future disruptions such as a pandemic, it’s important for companies to foster resilience within the communities it touches, said Gabriela Burian, global partnerships and multi-stakeholder platform lead at Bayer. “We were able to act fast because we have a plan for our resilience and engagement within our communities. But that being said, we really need to have a better plan for bigger impacts, and we are working on these.” In addition to its benchmark for 2030 to become carbon neutral, Bayer in January shared a goal to advance public health globally by boosting contraception access for 100 million women . The power of metaphor Bracing for big impacts organizationally may start with intimate conversations. Risk management is a human thing, Irwin noted. For example, you check the water temperature before you step into a shower, and click a seatbelt before you drive. But what happens when risk management comes into the workplace, and how does it translate to an organizational process? More than a decade ago, Irwin used a vulnerability management exercise called voyage mapping at courier company TNT (now part of FedEx). When the risk management team used metaphors to chart their journey, removing the barrier of language led to an outpouring of things people needed to say, he said. “But then you change the conversation and say, well, that’s the journey you’ve had, what is the one you want to have?” he said. “You’ve often heard the quote, ‘If you always do what you’ve always done, you’ll always get what you’ve always got.’ So look at 2020 at the gifts that it brought us — it has given us a vision of 20/20 to know that we have to change, so that risk management can be an area that you go back and have a rethink of. Bring it to the attention of the board because ultimately they are responsible for this.” Pull Quote It’s a very much an ‘all hands on deck’ to get the best thinking together about how to manage these really complex problems. Topics Risk & Resilience GreenBiz 21 COVID-19 Featured in featured block (1 article with image touted on the front page or elsewhere) Off Duration 0 Sponsored Article Off Illustration of the COVID-19 virus disrupting dominoes. Shutterstock eamesBot Close Authorship

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The risky business of climate risk: ‘Stop predicting the future’

Kraft Heinz sustainability chief reflects on ‘interdependence’

October 28, 2020 by  
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Kraft Heinz sustainability chief reflects on ‘interdependence’ Heather Clancy Wed, 10/28/2020 – 01:00 Food company Kraft Heinz has been relatively quiet about its corporate sustainability strategy in the five years since it was formed through the merger of food giants Kraft and Heinz — stepping out in early 2018 to provide an update . In September, the maker of well-known brands such as Kraft Macaroni & Cheese, Planter’s Nuts and Heinz Ketchup — which had $25 billion in revenue last year — spoke up again with a second combined report that shows it stalled on 2020 goals for energy and water through last year (it will miss both) and doubles down on work to create circular production processes for packaging (it’s ahead of schedule and will introduce the first circular Heinz bottle in Europe next year). Kraft Heinz also updated its commitments with new targets pegged to 2025. Here are some of the latest commitments, along with perspective on progress so far: Procure most electricity from renewable sources by 2025 and decrease energy usage by 15 percent. The company didn’t previously have a renewables target, but it has been emphasizing a goal to reduce energy consumption (per metric ton of product produced) by 15 percent, which it had hoped to achieve by this year. Through 2019, it managed a 1 percent reduction against a 2015 baseline. Decrease water usage by 20 percent at high-risk sites and 15 percent overall by 2025 (per metric ton of product made). The company had hoped to reduce consumption by 15 percent by this year, against a 2015 baseline, but it actually increased water use by 1 percent per metric ton of product produced.   Decrease waste by 20 percent across all Kraft Heinz manufacturing operations by 2025. That’s a higher percentage than its previous commitment, which focused on waste to landfill. The company actually increased waste to landfill by 16 percent through 2019 but is has pledged to focus more closely on “a strong byproducts plan, product donation strategy and improved forecasting.” Make 100 percent recyclable, reusable or compostable packaging by 2025. Through 2019, it has achieved 70 percent. Kraft Heinz is undergoing an assessment so it can set a science-based target for greenhouse gas emissions reduction. Emissions have increased since its 2015 baseline, although the company managed a 5 percent cut from 2018 to 2019. Responsible sourcing is a big focus , with the company aiming for 100 percent sustainably sourced tomatoes by 2025, 100 percent sustainable and traceable palm oil by 2022, and 100 percent cage-free eggs globally by 2025 (among other ingredients). Rashida La Lande, general counsel at Kraft Heinz, took on responsibility for the company’s environmental, social and governance (ESG) strategy at the end of 2018. I caught up with her recently for a brief conversation as the company disclosed its new target, chatting about how best practices from the previously independent companies have been shared, how the pandemic has affected progress and what’s to come for sustainable agricultural practices. Below is a transcript of that discussion, edited for style and length. Heather Clancy: It seems unusual for a general counsel to have this role. What prompted the decision to make it part of your responsibilities? Rashida La Lande: I think it was a couple of things. There are some general counsels that have it. It sometimes falls within corporate affairs, sometimes it falls within procurement. I think for depending on where you see it, it kind of reflects the way that the company might focus on the issue. From our perspective I think it reflects several things. One, it reflects the fact that it’s a passion of mine. It’s something I view, and I think is important. And I think at the time our CEO wanted to make sure that someone who was passionate about it and had real sense of the business and the industry was leading it. The environmental and, of course, the social are hugely important to us but we really start from the perspective of how can we design policy and reporting to maximize our result. In addition, when we look at ESG, I think the fact that it’s within legal also reflects the heavy importance that we put on its governance. From the governance part of it — meaning the reporting level of the board, the oversight, the disclosure — we really truly do believe that what you track, what you measure, what you report on, what you compensate on are the things that you see effectively change. So, of course, the environmental and, of course, the social are hugely important to us but we really start from the perspective of how can we design policy and reporting to maximize our result. Clancy: How is your team blending the legacy knowledge of the two separate programs at Kraft and Heinz? La Lande: That’s a really good question. Business continuity was the primary focus of the merger and of aligning the two companies. And they had very different sustainability programs at the time. Right now, what we’re trying to do is to make sure that the ESG focuses on the key parts of our enterprise strategy so we put the time and resources behind our commitments and where we think we can drive the biggest change. With the merger, we’re able to assess what each company was doing and how they were thinking about it. Frankly [we could] identify where we can take the things that they were doing best and then identify the things that each side needed to do better. So, for example, we had strong sustainable palm oil sourcing programs on the Kraft side whereas on the Heinz side there was a really strong focus on agricultural and sustainable agriculture commitments stemming from ketchup and our use of tomatoes. … Both companies had really strong histories of philanthropical support, Heinz in particular with the relationship it had in Pittsburgh. And so it’s coming together and really thinking about as a food company how can we best talk about food insecurity and feeding people globally, which is something that really gels from both companies’ background. Media Source Courtesy of Media Authorship Kraft Heinz Close Authorship Clancy: How has the pandemic changed the focus of the Kraft Heinz ESG team? La Lande: It really put a focus on how much of a global company we are and our interdependence through all of our systems, businesses, units and people. And frankly, it has highlighted some of the ways that our global ESG perspective [is a strength] for us as a company and how important it is for our strategy. One of the things that we have been talking about since I started working on ESG is how important it is for us to support our community in their time of need. So we really looked at places where we’ve got employees and factories and consumers and customers, and we started to do more programming around not only the food insecurity but also making sure that we were available to people at the time of the disaster. So when the pandemic hit, it really caused us to quickly recognize that how we were thinking about this already, in terms of community, disaster relief and feeding people, put us in a really unique position to be impactful and to think about the global need that was going to be coming from the pandemic. So, we committed to provide meals to those in need and trying to do what we could to eliminate global hunger. And the pandemic just punctuated the need. At this point, to date, we’ve donated more than $15 million in financial and product support to help people all across the globe access the food that they need. And we’ve done it both in a fast time, mobile way as well as [through] a local touchpoint where we have business and community impact. Clancy: I know I’m jumping around a little bit. That’s the nature of having only a few minutes with you. What is the company’s policy for protecting biodiversity? La Lande: Right now, we’re working to update our sustainable agricultural practice by the end of 2020. We’re doing the work with a very seasoned agricultural team … primarily coming from the Heinz side but not exclusively. We have a strong history of sustainable agriculture. We’re working with developing that program further based on input from our growers and our suppliers, the farmers that we buy from. And we even have an upcoming “In Our Roots” program where we’re going to be working with suppliers to ensure that all of their agricultural practices satisfy our customer needs for safe food and traceable origin, [and] satisfy consumer demands for reliable supply, particularly of affordable nutritious food. We focus on promoting and protecting the health and welfare and the economic prosperity of the farmers, the workers, the employees and the communities within our supply chain. We’re very focused on minimizing our adverse effects on the Earth’s natural resources and biodiversity. We think those are the ways that we’re going to contribute, and that’s what we’re focusing on as we develop this program. We expect to roll it out more effectively — more widely, I should say — in 2021. Our main focus is on being good stewards of the environment, sourcing responsibilities, tracking and verifying where our ingredients come from, making our concerns and commitments with our suppliers and our supply chain very clear. Clancy: Will regenerative ag be part of that? La Lande: I think that is one of the things that we’re talking about, but I think we’ll have an ability to think more specifically about it once we make a more specific announcement in 2021. Clancy: Fair enough. How does Kraft Heinz blend environmental justice considerations into its ESG strategy? La Lande: Our main focus is on being good stewards of the environment, sourcing responsibilities, tracking and verifying where our ingredients come from, making our concerns and commitments with our suppliers and our supply chain very clear. Working and partnering with our supply chain to make sure that they have the training and expertise and understanding of our expectations. And verifying our ingredients, where they come from, what the impacts of our operations are. Through all of this, we think we’re better able to ensure that our environmental impacts are not so delineated by socioeconomic or demographic lines and instead really focus on how we can impact and have good stewardship worldwide. That’s why you see one of our key pillars being environmental stewardship as a global strategy. Clancy: You probably have 18 priorities or probably 18 million priorities. But what do you feel is your most important priority in this moment? La Lande : My goodness. I do have 18 million priorities. But for me, I think in this moment in the pandemic it’s really the focus on feeding people. There is a lot of hardship that people are facing. Unfortunately, I think there’s going to be more hardship kind of globally before we [as a society] get ourselves out of the position that we’re currently in. So I think while everything that we’re doing is extremely important, I think the day-to-day needs that we’re seeing and addressing those needs for people have to be at the forefront of what we do and have to be our first commitment. Pull Quote The environmental and, of course, the social are hugely important to us but we really start from the perspective of how can we design policy and reporting to maximize our result. Our main focus is on being good stewards of the environment, sourcing responsibilities, tracking and verifying where our ingredients come from, making our concerns and commitments with our suppliers and our supply chain very clear. Topics Food & Agriculture Collective Insight The GreenBiz Interview Featured in featured block (1 article with image touted on the front page or elsewhere) Off Duration 0 Sponsored Article Off Kraft Heinz general counsel Rashida La Lande leads the giant food company’s corporate social responsibility and ESG strategy. Courtesy of Kraft Heinz Close Authorship

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Kraft Heinz sustainability chief reflects on ‘interdependence’

Episode 113: Mars, GM, BT cultivate supply chains; plus, an (electric) ferry tale

February 23, 2018 by  
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In this week’s episode, we consider the role of corporate giants in encouraging their suppliers to become more environmentally sustainable and discuss plant sourcing strategies with egg-free mayonnaise maker JUST.

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Episode 113: Mars, GM, BT cultivate supply chains; plus, an (electric) ferry tale

Tech meets transparency: The rise of connected supply chains

October 28, 2015 by  
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Transparency has arrived — whether companies and their suppliers like it or not — thanks to technologies related to smartphones, Big Data and the Internet of Things.

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Tech meets transparency: The rise of connected supply chains

Heard at VERGE: Highlights from the stage

October 28, 2015 by  
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Missing the show? No fear. Here’s a recap of quotes and tweets from San Jose.

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Heard at VERGE: Highlights from the stage

Whole Foods Market Requires Suppliers to Label Products with GMO Ingredients by 2018

March 12, 2013 by  
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Whole Foods customers asked for it, and they got it. Last week at the  Natural Products Expo West ,  Whole Foods Market announced that by 2018, all of their suppliers must either make their products with ingredients from non-GMO verified sources or they must clearly label all products as containing GMO ingredients. Of course, while consumers would rather see the change occur immediately, Whole Foods explained that the 5-year timeframe is to allow their suppliers to adjust to the demands. In a press release, Whole Foods noted: “We are putting a stake in the ground on GMO labeling to support the consumer’s right to know. We are stepping up our support of certified organic agriculture, where GMOs are not allowed, and we are working together with our supplier partners to grow our non-GMO supply chain to ensure we can continue to provide these choices in the future.” READ MORE > Permalink | Add to del.icio.us | digg Post tags: genetically modified objects , genetically modified organisms , GM food , GMO , GMO foods , GMO labels , GMO transparency , Natural Products Expo West , organic foods , whole foods , Whole Foods Market

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Whole Foods Market Requires Suppliers to Label Products with GMO Ingredients by 2018

Nearly 6,000 Pig Carcasses Have Been Pulled from the Shanghai River

March 12, 2013 by  
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This past weekend, the world was shocked as images depicting thousands of pig carcasses being pulled from a river in Shanghai surfaced across the internet. As of today, nearly 6,000 pigs have been found floating down the Huangpu River . The mysterious pigs started appearing on Thursday, and not surprisingly have caused widespread alarm over local  water contamination . Read the rest of Nearly 6,000 Pig Carcasses Have Been Pulled from the Shanghai River Permalink | Add to del.icio.us | digg Post tags: dead pigs china , eco design , green design , Huangu River , sustainable design , water pollution china

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Nearly 6,000 Pig Carcasses Have Been Pulled from the Shanghai River

Supply chain reporting on climate risks reaches new heights

July 2, 2012 by  
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Large companies invited an unprecedented number of their suppliers to take part in this year's CDP's questionnaire

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7 steps to a greener Chinese supply chain

June 25, 2012 by  
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Some leading companies have found that the right incentives and collaborative efforts can help their suppliers achieve better environmental performance.

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Victoria’s Secret Pushes Up Green Paper Content in Catalogs

October 28, 2011 by  
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The Victoria’s Secret catalogs are known for stirring up many thoughts, but forest preservation usually isn’t the first one that comes to mind — though ForestEthics thinks it should be.

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Victoria’s Secret Pushes Up Green Paper Content in Catalogs

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