From BlackRock to Black Angus: Adapting Global to Local

Global materiality frameworks need regional adaption
From BlackRock to Black Angus: Adapting Global to Local
Publ. date 13 Jul 2015
The Food and Agriculture Organization (FAO) of the United Nations has recently called for "urgent concerted policy responses" to deal with the growing threat of climate change to global food security. With predicted demand for ruminant meat to almost double between 2000 and 2050, which is in line with earlier reports concerning the growth effects of dairy and poultry on global warming, the FAO flags potential problems to be addressed – particularly on the issue of water scarcity. When looking at the broader range of materialities surrounding the highly globalized food industry, there appears to be a strong need for a local approach to address these issues in an effective manner.

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Food safety, antibiotics, animal care and welfare, land use, and environmental risks in the feed supply chain are among the range of issues deemed relevant for the food industry as identified by Sustainability Accounting Standard Board (SASB). Its provisional standards for the consumption sector, launched last June, provides an overview of industry-specific social, environmental and governance issues that should be addressed by companies in their annual reports. Standards are developed for the agricultural products, meat, poultry & dairy, and processed foods industries. 

Material issues: Think global, act local 

Recent mergers, acquisitions and strategic partnerships among large food companies and retailers such as Heinz & Kraft, Mondelez & D.E Master Blenders, and Ahold & Delhaize, are underpinning the fact that food truly is a global business. This calls for a global overview of the issues that are most pressing for global stakeholders. An example of such an urgent global stakeholder might be the world’s largest asset manager, BlackRock, which recently published guidance for institutional investors on engaging with companies and policymakers on sustainability issues (please see our free PDF download at the left bottom section of this page). On the other hand, it is vital to the company itself to have this insight on issues, since it lays the foundations for strategic decision making and unravel which topics earn undivided attention and which might be less pressing.

Nevertheless, it is important to note that significant variances may occur at the level of regional and local conditions as well as between different business areas. There is a growing need for companies to develop regional materiality assessments that build on the company’s global framework but also take the specific (local) stakeholder's needs and business impact for the operating company into account. On this area, BlackRock’s guide specifically mentions the need to recognize regional differences and working with investment experts that know the local context, challenges and concerns.

Partnering in the value chain 

Engaging with stakeholders on a global and local level not only reveals which topics are most relevant for your company to address, it can also help you to determine how to best collaborate with suppliers, customers or NGO’s to collectively tackle issues that go beyond your organization’s influence. This does not only accelerate sustainability progress, it also builds stronger ties within your value chain, strengthens your reputation, and will inspire employee engagement and customer intimacy.

A recent example of a strategic partnering initiative in the food value chain is the cooperation between Novozymes and Adisseo, two global leaders in the animal nutrition and feed additive industry. Addressing the issue of antibiotic use in animal production the partnership is aimed at developing and marketing a probiotic for poultry. In practice, this means that Novozymes will be responsible for in-vitro screening, development and production, while Adisseo will manage in-vivo testing, marketing and sales, expecting to launch the product mid 2016. Another longer lasting initiative in the dairy sector is the development of the Dairy Sustainable Framework:

Example: Dairy Sustainability Framework 

Combining strengths, sharing resources, providing guidance and aligning efforts to achieve better outcomes are the guiding principles of the Global Dairy Agenda for Action (GDAA). The GDAA was launched in 2009, and committed the dairy industry to actively reducing GHG emissions and also took the opportunity to profile the efforts of the sector to reduce GHG emissions throughout the value chain. The initiative has now developed a framework to provide overarching goals and alignment of the sector’s actions globally on the path to a broader sustainability: the Dairy Sustainability Framework (DSF).

The DSF is designed to accelerate sustainability in the dairy sector through a common language, alignment of international sustainability activity and through this generate a common sustainability commitment at global, regional, national and organizational levels. The Framework recognizes 11 sustainability issues to be addressed. Implementation of the different materialities can vary depending on the company’s priority areas. However, all the categories should ideally be evaluated and tackled over time. In 2014 FrieslandCampina, together with its partners Unilever and Danone, started an implementation pilot project to be able to demonstrate the increasing sustainability of dairy farming to customers and consumers.

Materiality as a building block for business model innovation

From the work with a broad variety of global companies in the food value chain, ranging from animal pharma, food commodity originating/trading to food companies such as FrieslandCampina, McDonald’s and Heinz, Finch & Beak experienced the necessity to distinguish focus materialities for different regions and business areas, and the opportunities they provide. These findings have been incorporated in our materiality assessment approach, which is not just aimed at delivering a short-term result in the shape of a materiality matrix, but rather looks ahead to see how a strategic approach can be built to address issues with innovation and strategic partnerships.

More information 

Are you looking for opportunities to balance global and local ESG-issues in your company’s approach for sustainability? Please contact Josée van der Hoek, founding partner, at +31 6 28 02 18 80 or josee@finchandbeak.com.

Image source: Bob B. Brown, Flickr

About Josée van der Hoek

Experienced strategic issues management specialist with expertise in strategy development, food waste and DJSI. | josee@finchandbeak.com

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