Sustainability, ESG and FMCG: three expert viewpoints
Following on from the success of our sustainability webinar in April, on the 4th of July we hosted another webinar with three sustainability and ESG experts from within the FMCG and consumer industry. During this webinar, Carrie Lomas, Stephanie Lykourgou and Michael Pennant-Jones, shared their experiences and opinions with Zoe Wakeham and Dan Wood, Consultants, Consumer and Retail Practice at Odgers Interim.
Carrie, Stephanie, and Michael spoke of their experiences and the challenges faced by both sustainability consultants and clients within the FMCG and consumer space. As consumers we are all responsible for the part we play in our purchasing choices, and during the webinar we learnt more about the importance for clients to really understand and know the working conditions of their supply and value chains.
Stephanie began her sustainability career around 10 years ago, in the food industry. Initially working inhouse, she worked across the food service sector, covering hospitality, food producers and retailers, and helped with elements of regenerative agriculture and waste management. Whilst working inhouse was rewarding, at times Stephanie felt she could add more value as a consultant. In an economic climate where clients face challenges to keep businesses afloat, Stephanie discussed the challenge of real business buy in, and working with clients to see not only short-term survival goals, but how to plan for longer lasting ESG goals.
Michael started his career working for Typhoo over 25 years ago, where he gained firsthand experience of the ESG impacts at the start of supply chain. During this time, he worked from Papua New Guinea to Rwanda, designing and implementing their supplier programme, as well as living in South India for two years as part of the commercial team. Michael then moved to Finlay’s; a vertically integrated tea, flour, horticultural, coffee, and minor crops company, where he set up their sustainability department. Interestingly, Michael discussed the importance for these clients to plan further into the future. With tea bushes lasting for 40 to 60 years, these suppliers needed to plan for future issues including climate change, which could impact these assets. Michael has also worked with a mix of companies across the FMCG and consumer space, and encountered issues and challenges impacting shipping elements, biofuels, and waste management. More recently, Michael has been leading a team of consultants who specialise in human rights. He has a deep understanding of the regulations imposed by the US government and the incoming EU due diligence. This can see clients under investigation for human rights infringements in their supply chains and he believes that this increasing regulatory burden is something that will shape the industry over the next 10 years.
Carrie started her corporate career in the technology industry, looking at deep tech and embedded technology for supply chains, retailers, and healthcare. Upon leaving her corporate career, Carrie created a couple of start-ups. Beginning in the fashion industry, she assessed data to understand what people care about – finalising on the five key measures: production processes, longevity, recyclability, manufacturing miles and company kindness. Carrie spent time working with factories based in India to review what best practice looked like, identifying that some elements are harder to audit from afar.
Carrie spoke of the importance for companies to acknowledge the human element of ESG and to consider the impact of their factories, plants, or extraction sites on the local community. It can be difficult for companies to know everything about the product production deep in their supply chain. For example, in the fashion industry, polyester is a product made from oil – but how much do you as the retailer or even the consumer know where that oil was mined, and which company mined the extraction? She also spoke of the knock-on effect and unintended consequences of human rights issues within our supply chains. In factories found to have child labour, this may be a case where that child is orphaned, or the parents need the additional income to help provide the necessities for the family. If we fully stop these children working, what happens to them and how to do they support themselves?
In the Q&A session, our panel asked how clients in the food industry prioritise regenerative agriculture and grower livelihoods. Stephanie indicated the need for clients to purchase appropriately, to make the effort to know their supply chain, and to spend money in the places that are representative of the company ethos.
Michael was asked, with incoming EU due diligence, what do clients need to be most aware of? To date for most UK companies, they have been assessing what they are impacting, and what they are causing through their buying practices and operating processes within the supply chain. Now companies need to assess whether they have something salient to its workers, or the environment in the supply chain that they may not be directly responsible for. Clients must also be aware of the ability of activists, NGO’s and other bodies who can petition against them for perceived issues within supply chains.
Our panellists were also asked, with the increase in fast fashion brands, how do we ensure and regulate sustainable supply chains and fair conditions for workers? This came down to knowing your supply chain as well as understanding and accepting the increasing regulation and incoming due diligence. It is easier to calculate waste, carbon and water usage used in physical products, but it can be harder to audit and regulate fair worker conditions. The more complex the supply chain, the harder this can be as different countries have different legalisation about what classes as “fair” for workers.
When discussing the merits of off-setting, our panellists shared the view that companies should ideally address issues in and regulate their supply chains before prioritising off-setting. Although it can be a useful addition to remediation of supply chains, giving companies the opportunity to give back for what they have taken. With regards to accreditation, there were mixed views on this, as whilst audits can highlight issues that need addressing, there are fears of auditors missing issues within supply chains, or clients focusing on a stamp of accreditation, which could lead to exposure if issues are missed in audit.
This summary is only a very brief synopsis of what was a fascinating and deeply insightful overview of three ESG experts within the FMCG and consumer industry. We hope you will be able to join us for future events.