Is Big Food and Grocery fast becoming “Little Goody Two-Shoes” on ESG matters? Lobbying the EU and Brazil!

A group of 40 influential European food industry companies, including major retailers Ahold Delhaize, Aldi, Lidl, Migros, Sainsbury’s, Tesco and some of the big names in UK’s meat sector like Moy Park, Hilton Food Group and Cranswick  have  written an open letter on the protection of the Amazon to the National Congress of Brazil advising them that if measures are introduced in Brazil that undermine the protection of the Amazon rainforest region they will “have no choice but to reconsider our support and use of the Brazilian agricultural commodity supply chain”. In short, the food businesses are threatening to stop sourcing food products from Brazil. The letter specifically addresses the issue that Brazil’s legislature is considering introducing a bill to legalise the private occupation of public land in the Amazon region. The group believes such legislation would accelerate deforestation. The bill is being considered just months after Brazil pledged to end illegal logging.

The level of deforestation in the Amazon is reported as being the highest since 2008 – 175,000ha has been logged or burned in 2021 so far. Most of the cleared land is destined to grow soy and graze cattle for beef exports. The UK Coop grocery retail group said “it is imperative that the proposed legislation isn’t given any airtime by the Brazilian government”.

Is this just an idle threat or posturing to curry favour with green activists in Europe? Back in May 19th, 2020, essentially the same group of food companies, via an open letter, threatened to boycott Brazil over the same issues, although the link was made in their arguments that biodiversity is a vital factor in safeguarding against diseases like coronavirus that pass from animals to humans. The letter concluded: “We want to continue to source from and invest in Brazil and help ensure that protecting the Amazon can be economically productive for all. We urge the Brazilian government to reconsider its stance and hope to continue working with partners in Brazil to demonstrate that economic development and environmental protection are not mutually exclusive”.

Clearly, the world’s largest meat company, Brazil’s JBS, is nervous about how its customers might view “Beef from Brazil” as being unacceptable. Back in September 2020, JBS launched an “anti-deforestation plan” to ensure by 2025 that cows it purchases are not raised on deforested land, financed by a $45m fund with more money to come, and using a blockchain-driven “green” platform. The company has considerable ground to make up as it has been accused of “cattle laundering” – switching cattle from black-listed ranches to ones with a clean environmental bill of health.

Marfrig, JBS’s principal Brazilian and global competitor, is equally active in announcing its commitment to deliver a deforestation-free supply chain and has ambitions to reach net zero emissions by 2030 using, inter alia, extensive regenerative agriculture practices.

Close to half of China’s imports of beef come from Brazil and 70% of Brazilian beef imports to China are from the Amazon region where deforestation risks are highest. Using TRASE, a date-based supply chain tool, these risks can be quantified and influential Chinese trading houses, if minded, can place pressure on Brazilian beef exporters to require that they minimise the environmental and social risks associated with beef destined for China. 

It’s unusual for Big Food to stick its head above the parapet and place pressure on governments to up their standards relating to environmental and social policies and regulations relating to food production. However, the practice is becoming more common as social issues are increasingly taken into account by consumers when buying food. Big Food players, including Nestlé, Unilever, Mondelēz International, Ferrero and Aldi, have written a joint letter to European Members of Parliament asking that they pass legislation to phase out eggs produced from caged hens. The letter states that “Companies moving away from eggs from caged hens have paved the way for changing how EU farmed animals are kept. Cage-free systems are widespread, economically viable and provide better living conditions for hens”. The  signees called for support of poultry farmers during the transition.

The European Commission banned battery-caged eggs in 2012. Why would Big Food wish to push the legislators into better bird welfare regulations? After all, Unilever (amongst others) has already committed to eliminate caged eggs from its supply chains by 2025. For Nestlé, it’s simply “the right thing to do” and switching to cage-free eggs is “a central part of our strategy on improving animal welfare”. 

Is Big Food fast becoming “Little Goody Two-Shoes” on animal welfare and environmental matters? Yes although it’s with a big dollop of self-interest! Increasingly, society expects big companies to show leadership and “do the right thing”. However, if doing so raises costs (e.g. for free range rather than caged eggs, or sourcing soya and meat from higher cost countries than, say, Brazil), then, it is disadvantaged in the marketplace if other players, perhaps minor brands, do not follow, and consumers just don’t notice! In such cases, big businesses may prefer formal government regulation, even more than informal industry agreements to a standard that can’t be penalised if some firms elect not to follow the agreement. Also, it’s just smart for companies to keep their fingers to the wind and to anticipate food industry changes that will be driven by upcoming government policy changes. Right now, one can observe governments becoming much more active on healthy food regulations – moving from trying to nudge  their citizens towards healthier diets and exercise regimes towards harsher regulation – e.g. on fat/sugar/salt content, and advertising “junk” food to children. Better to make the changes before forced to by regulation and harvest the “healthy product halos”!  

Big Food is stuck “between a rock and a hard place” as it has to decide on which social issues it might not bend. To continue with another egg example: should Big Food’s eggs be free range and free of male chick culling (the common practice of slaughtering day-old male chicks that are bred for egg production and, unfortunately for them, turn out to be the wrong gender for egg-laying!)? In this case, consumers or consumer activists will set the agenda.

In short, food companies should at least keep abreast of the social issues that consumers consider important when buying food. Being only a follower on such issues can be damaging for corporate reputations.

Posted in Credentials, Sustainability
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About the authors
Prof David Hughes: Around the world, David speaks to senior agribusiness and food industry managers about global food industry developments that are and will affect their businesses and industry. Energetic, engaging, humorous and insightful, David gains the very highest evaluations at seminars, conferences and Board level discussions in every continent he visits. Miguel Flavián: works for several Spanish organisations and companies to help them to learn from the developments of the British grocery market and improve their business back home.
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