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Two Steps Forward ... Cargill and PwC link up on supply-chain sustainability

Burgess COMMENTARY ... comment posted on the blog
Please, can someone explain to me how this joining forces of PriceWaterhouseCoopers and Cargill is going to make the world a better place? One of these companies is described as a 'tax and advisory giant' and the other as a 'Food conglomerate' ... two descriptions that put me on alert from the getgo.

Actually I trained with Cooper Brothers ... a grandparent of PwC ... when accountancy was a profession and the work was more about getting things right than making high fees ... but that was in an era long gone. I have also been a CFO in the food business and have some understanding of the complexities of the supply chains in that industry.

So ... Cargill having a consulting firm help them with the challenges in their supply chain is understandable. How this translates into a better world that has better quality of life for all and less damage to the environment is not at all clear. How this results in sustainability impact, I do not know.

Accounting in its modern form was first described in the 15th century ... and the business world operates on a way bigger scale now it did then. Many more issues ought to be incorporated into the routine processes for accounting in these times than in the old days, including impact of business operations on key externalities like quality of life for people and impact on the environment both in the present and in the future. These should be 'numbered' and these should be the subject of independent verification just like the financial numbers.

From my perspective the accounting profession has changed over the past 50 years, but not always in ways that are good for society. As companies have grown in size, there have been some economies of scale but at considerable social cost and also at a huge cost in terms of public understanding of their impacts. On balance Cargill is probably a 'good' company, but it is impossible to know this for sure. Almost certainly there are quite substantial parts of the company that are engaged in business activities with significant negative impact on society or on the environment ... but how will we ever know. The essential metrics just are not in existence.

One day someone will harness big data and 21st century technology to enable a completely new level of oversight and accountability ... and I very much hope that this day will be soon in coming. In my own modest way, I am working on it ... and quite optimistic!

Peter Burgess TrueValueMetrics.org
Peter Burgess

Two Steps Forward ... Cargill and PwC link up on supply-chain sustainability

Photocollage by GreenBiz Group

Two corporate powerhouses are linking up to help companies improve their supply chains and align them with sustainability goals.

Food conglomerate Cargill and tax and advisory giant PricewaterhouseCoopers are launching a Responsible Supply Chain advisory service driven by companies’ needs to improve margins, reduce risks as well as meet growing social and environmental requirements.

The idea of companies partnering to address sustainability challenges has become part of the fabric these days — it’s hard to engage in a conversation about corporate sustainability that doesn’t bring up the topic. And partnerships are blossoming, with the public sector (companies working together with cities, states and other government agencies), with academic institutions (corporate partnerships with universities around R&D) and with nonprofit groups (a myriad of initiatives that range from philanthropy to research to project implementation).

There are also dozens of multistakeholder alliances, such as the Sustainable Apparel Coalition, The Sustainability Consortium, the Global Roundtable for Sustainable Beef and BSR’s numerous working groups that demonstrate the power of “getting everyone in the room” to create wholesale shifts in business practices or market dynamics.

Rarer are business-to-business alliances aimed at creating profitmaking sustainability solutions. Among the relatively few examples are Coke and Pepsi’s hook-up with Nike, Ford, Procter & Gamble and Heinz to accelerate the development of 100-percent plant-based PET; the Closed Loop Fund, an investment strategy by large companies to increase recycled materials in manufacturing supply chains; and Natureworks, originally a partnership between Cargill and Dow to create corn-based plastics, a venture now entirely owned by Cargill.

Cargill’s newest partnership stems from its longtime work with PwC to help Cargill develop its own process of assessing environmental and social risks in its supply chain.

“It was a way to harmonize and standardize their approach to managing environmental/social risks in their supply chains and be able to have a process where they could look their customer in the eye and say, 'We've got this fantastic process in place where you can be assured that we've got your back and we're taking care of the environmental associate issues upstream in the supply chain,'” Cope Willis, director in PwC's Sustainable Business Solutions practice, told me recently.

The two venerable companies — both were founded in 1865 — each bring unique capabilities and experiences. Cargill, one of the world’s largest agricultural companies, has more than 70 business units ranging from animal feed to agricultural products to steel trading to energy production to a fleet of 50 tanker ships. PwC compliments that with a network of more than 700 sustainability professionals, a supply-chain consulting practice and a client list that includes hundreds of the world’s biggest companies.

The typical engagement for the Responsible Supply Chain service involves two half-day working sessions involving a cross-functional team from the client company as well as from Cargill: marketing; finance; purchasing; sustainability; operations; and so on. Clients are asked to do up to two hours of preparatory work just prior to those half-day sessions, which take place on consecutive days.

The outcome are a set of quick “wins” to improve supply-chain efficiencies, lower costs, differentiate brands through increased transparency and spark innovation, said Steve Polski, senior director, sustainability at Cargill.

The cross-functional teams are crucial to success, said Polski: “We were able to address some opportunities that we would have never been able to address without having that cross-functional team there.”

For example, Cargill noticed that one of its customers was spending a lot amount of money processing cancelled truck orders — that is, a high percentage of truck orders were being cancelled in transit. The customer didn’t know about that. “It was as simple as there wasn't that direct communication,” said Polski. “It was a sustainability opportunity relative to reducing transportation, diesel, methyl bromide and process inefficiency. We were able to convert that into a CO2-reduction story that got the engagement catalyzed not only for that customer and cargo, but also the customer's customer.”

At its essence, said Polski, sustainability is really about behavior change. “Our intention is to create an immediate IRR with limited capital, limited expense, and start changing behaviors,” he said. “We look at sustainability as a behavior, and our intention and motivation is to be the catalyst to help our customers adopt those new behaviors.”

The goal, he said, is “to convert these environmental and social opportunities in the supply chains into such an economic language that it drives behavioral change,” he told me. “We feel as though if we can get quick wins and start changing behavior, it becomes less of a functional or corporate responsibility thought process and more of, ‘Hey, this is good business.’”