Ceres Launches New Investor Guide to Engage Food Sector on Sustainability Risks
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Ceres has released a new peer-reviewed resource guide to help investors better understand and evaluate the environmental and social impacts that drive financial risk in the food sector. The tool comes as sustainability shareholder resolutions with food companies rise to several dozen filed in 2017, according to an analysis by Ceres.
The guide, known as Engage the Chain overviews the environmental and social challenges associated with the production of eight commonly sourced commodities: beef, corn, dairy, fiber-based packaging, palm oil, soybeans, sugarcane and wheat. It also provides specific examples of reputational, market, operational, litigation and regulatory risks that food companies may face as a result of these impacts in their supply chains.
“Commodity-based agricultural production is emerging as a key driver of climate change, deforestation, water pollution and biodiversity loss, while also subjecting hundreds of millions of people employed in agriculture around the world to harsh working conditions and poverty, said Allan Pearce, a shareholder advocate with Trillium Asset Management.
“Many companies don’t understand the full extent of the these impacts in their agricultural supply chains, which is alarming because these can pose real financial risk.”
“Commodity sourcing is an increasingly challenging business function for food companies, said David Bennell, director of food and capital markets at Ceres. “Engage the Chain was designed with investors for investors to help them reduce their exposure to the mounting reputational, operational and other material risks embedded in agricultural supply chains.”
The Online Resource Guide includes the following elements:
- An overview of key drivers of financial risk in agricultural supply chains including climate change, deforestation, land use and biodiversity, livelihoods, land rights, water scarcity and pollution, and working conditions;
- Detailed briefs on each of the eight commodities that include:
- Global production data;
- A visual of the value chain for each commodity, from production to processing to retail, with a list of key companies involved in each stage;
- An assessment of how the seven key drivers are impacting the commodity;
- An interactive table showing the exposure of major U.S. food and beverage companies to each of the commodities; and
- Guidance for investors on the steps they can take to evaluate material risks in their portfolios due to these supply chain impacts
Engage the Chain is designed to help other investors like Robeco, an international asset manager with EUR 148 billion in assets under management, which in 2014 conducted a social risk assessment of over ten soft commodities sourced by portfolio companies to guide its engagement with food companies in its portfolio.
“We are extremely pleased to see that Ceres has prepared the Engage the Chain investor resource and hope that it will result in meaningful and broad engagement that moves the food and agricultural supply chain to more sustainable production of food globally,” said Peter van der Werf, Senior engagement specialist at Robeco.
“If a company cannot trace its supply chain, it cannot begin to address the substantial risks, including potential involvement in illegal practices, that lie hidden several tiers down," added Adam Kanzer, managing director at Domini Impact Investments. "We hope that Engage the Chain will provide one more link in the chain of accountability."
Engage the Chain was developed with peer review support from investors, companies and NGOs. It was funded in part by the Gordon and Betty Moore Foundation, as part of a conservation and financial markets collaboration among the foundation, Ceres, World Business Council for Sustainable Development and World Wildlife Fund.
Ceres is a sustainability nonprofit organization leading the most influential investors and companies to build leadership and drive solutions throughout the economy. For more information, visit www.ceres.org or follow on Twitter @CeresNews.