Supply Chain
Diageo, General Mills, PepsiCo Among Food Giants Committing to Tackle Water Risks in Ag Supply Chains

As climate change, population growth and water pollution increase pressure on freshwater resources, seven global food and beverage companies today announced commitments to work with the thousands of growers in their global supply chains to reduce water use and pollution impacts.

The seven companies – Diageo, General Mills, Hain Celestial, Hormel Foods, Kellogg, PepsiCo, and WhiteWave Foods – are participants in the AgWater Challenge, a collaborative initiative organized by Ceres and World Wildlife Fund (WWF). The Challenge aims to spur companies to make time-bound and measurable commitments to reduce the water impacts associated with key agricultural commodities, implement locally relevant strategies to mitigate risk in agricultural areas where water is scarce or polluted, and support and incentivize farmers to strengthen water stewardship practices.

Participants submitted detailed sustainable sourcing and water stewardship plans, and the companies meeting specific criteria were recognized by WWF and Ceres as AgWater Stewards (see summary here).

“Major food brands can be a powerful and constructive force for scaling water stewardship, especially at the farm level where the biggest footprint is by far,” said Brooke Barton, Senior Director of the Water and Food Program at Ceres. “These brands recognize the material financial impact that water risks pose to their business, from supply disruptions, to higher operating costs, to growth constraints. More than ever, companies are responding to these supply risks through farmer incentives, local partnerships and bottom line reductions.”

One-third of the world’s food is grown in areas of high water stress or competition, and agriculture is a leading cause of water pollution worldwide. The food sector, which uses 70 percent of global freshwater supplies, primarily for growing crops, can play a critical role at protecting limited freshwater resources by working with farmers to become more water smart.

“Mismanagement of our increasingly stressed freshwater resources presents a serious risk to life on Earth,” said Lindsay Bass, Manager of Corporate Water Stewardship at WWF. “The purpose of the Challenge is to encourage these companies to understand and address agricultural water risks, and share the knowledge picked up along the way. We all have a mutual interest in protecting the world’s most stressed water resources.”

To be named an AgWater Steward, companies had to complete minimal criteria, including setting a time-bound goal for completing a water risk assessment across their supply chains and setting sustainable sourcing goals. While all companies went beyond the minimum criteria, the AgWater Challenge recognizes that all companies’ efforts are a work in progress.

Commitments by Challenge participants include:

• PepsiCo will work with its agricultural suppliers to improve the water efficiency of its direct agricultural supply chain by 15 percent by 2025 (compared to 2015) in high-water-risk sourcing areas, including India and Mexico;
• Hain Celestial is setting a new sustainable sourcing goal for key agricultural inputs, including a commitment to strengthen water and fertilizer management practices of farmers in its ingredient and protein supply chains;
• Hormel Foods will develop a comprehensive water stewardship policy, setting water management expectations that go beyond regulatory compliance for its major suppliers, contract animal growers and feed suppliers – a meat industry first. Hormel will also support and engage with growers in high-water-risk regions by gathering water-related data from contract growers and growers that supply animal feed - and establishing time-bound goals aimed at improving water quality in high-water-risk regions; and
• WhiteWave Foods will develop a time-bound road map for agricultural water stewardship over the next 24 months that addresses shared water challenges facing its key commodities (dairy, soy, almond and produce) in areas of greatest water risk, including California. It will also support and scale projects that restore freshwater systems in areas material to supply chains and engage in policy advocacy to strengthen water management in high-risk, priority sourcing regions.

“We are proud of our decades-long water stewardship efforts as part of our sustainable business agenda called Performance with Purpose,” said Roberta Barbieri, VP of Global Environmental and Water Solutions at PepsiCo. “Expanding our water goals to include PepsiCo’s agricultural supply chain is a key part of our Positive Water Impact strategy, designed to enable long-term sustainable water security for our food and beverage business and others who depend on water availability.”

In addition to new commitments, the AgWater Challenge recognizes companies with far-reaching, ongoing commitments. Diageo, General Mills, and Kellogg were recognized as AgWater Stewards for showing action across all five categories of the AgWater Challenge checklist – from water risk assessments and setting reduction goals, to reducing water risk in agricultural supply chains and supporting producers in addressing these issues.

“The footprint of our extended value chain goes well beyond our offices and facilities. A very large portion of that footprint is in agriculture,” said Jerry Lynch, chief sustainability officer at General Mills. “The challenges facing our company and our planet are more pressing than ever, so we have to build resiliency in our supply chains to ensure that we can continue to serve the world by making food people love. Our ambition through the AgWater Challenge and all of our water initiatives is to lead by example and we hope to encourage others to do the same**.”**

Among these companies’ commitments:

• Diageo committed, by 2020, to establish partnerships with farmers to develop sustainable agricultural supplies of key raw materials such as barley, maize, agave, aniseed, sugar/molasses, sorghum and cassava. The company has also committed to sourcing 80 percent of its raw materials locally in Africa by 2020 and equipping its suppliers with tools to protect water resources in the most water stressed locations including in seven African countries.
• General Mills completed a comprehensive risk assessment, including water use and water quality risks, of all raw materials bought worldwide, and a global water risk assessment of all its production facilities and growing regions, identifying 8 high-risk watersheds. It is partnering with local stakeholders on sustainable sourcing through collective action and policy advocacy in several high-water-risk regions, including in California.
• Kellogg Company committed by 2020 to responsibly source its 10 priority ingredients (including rice, wheat, corn and sugar beets), by measuring continuous improvement for row crops through metrics focused on water, fertilizer use and other factors. Kellogg is supporting 17,000 agricultural suppliers, millers and farmers across 22 different countries to optimize water use and enhance watershed quality, such as by providing financial and agronomic assistance.

“Diageo makes over a third of our products in water stressed areas globally and over 70 percent of our water use is in agriculture, said John O’Keeffe, President of Diageo Africa. “This means working with small holder farmers in Africa to help them manage water risk is absolutely essential to achieving our growth ambitions across Africa, and more importantly to the future of the farmers and their communities.”

WWF and Ceres will complete a more in-depth analysis of the companies’ water stewardship efforts and report on their progress in one year.

In 2017, Ceres will evaluate the companies’ adherence to their commitments through the release of its second “Feeding Ourselves Thirsty” report, which benchmarks global food and beverage companies on their water management practices. All of the AgWater Stewards will be benchmarked in the report, along with several dozen additional companies.

This is the latest in a string of recent business-NGO partnerships aimed at addressing various global water risks in the agricultural supply chain, with many overlapping participants:

• WWF, Unilever, Sainsbury’s, M&S, and Coca-Cola are among companies that have joined the call for better water management in the south of Spain, where strawberry farms are largely to blame for the misuse of water. UK-based Innocent Drinks worked with Unilever to map the water footprint and efficiency of a number of its strawberry suppliers over a three-year period; based on its findings, the company has since created an app called Irri-Fresa that calculates optimal daily irrigation times. In 2015, participating farmers using the app saved 1.7 billion litres – cutting water use by up to 40 percent on their farms.
• Last month, leading food and agriculture supply chain companies and conservation organizations formed an “end-to-end” partnership to support farmers in the improvement of soil health and water quality. The Midwest Row Crop Collaborative (MRCC) – whose founding members also include General Mills, Kellogg Company, PepsiCo and WWF - is a broad-based effort to support, enhance, and accelerate the use of environmentally preferable agricultural practices already underway in Illinois, Iowa, and Nebraska.
• And just last week, a working group of 20 environmental organizations, food and beverage companies, non-profits, farmers and local water districts - including General Mills and WWF - announced the formation of the California Water Action Collaborative (CWAC), an effort to support critical projects designed to protect the state’s water future.