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The Right Chemistry

Grocery retailers will feel the sting of pollinator declines

Bees pollinating

Bees and other pollinators are essential to the production of one out of every three bites of food we eat. But they are in great peril; their populations are declining around the world due, in large part, to pesticide use and growing toxicity of agricultural lands. From honeybees to bumblebees, research shows that bee populations are declining and this loss is already causing shortages in key food crops in the United States.  

Without pollinators to help support the production of leading global food crops, grocery retailers are at risk of running short of some of our most important and nutritious foods, including nuts, beans, juices, fruit and vegetables and meat and dairy. This, in turn, will destabilize and disrupt major supply chains that grocery stores and their customers rely on. Globally, between $235 billion and $577 billion worth of annual food production relies on direct contributions by pollinators.

In response to findings from authoritative scientific studies, major marketplaces such as the European Union have banned the use of pollinator-toxic pesticides including neonicotinoids and chlorpyrifos. Unfortunately, U.S. regulatory agencies lag behind other countries.

Grocery retailers can use their enormous market power to reduce the use of toxic pesticides on farms in the U.S. and around the world, as well as build financial value into their supply chains.

Pesticide exposure also has been linked to increased risk of a range of health problems in humans including cancers, infertility, neurodevelopmental disorders such as autism and ADHD, and endocrine disruption. Consumers are increasingly concerned about the health implications of exposure to toxic chemicals and are driving demand for organic products (food grown without toxic pesticides). There has been a double-digit growth in consumer demand for organic products in most years since the 1990s — it accounts for over 4 percent of total U.S. food sales.

These trends, along with the growing weight of evidence that pesticides are contributing to an "insect apocalypse," create financial and reputational liabilities for companies. These growing risks are being noted by investors who are increasingly seeking action from growers, food suppliers and retailers.  

The pollinator crisis needs rapid response from food retailers

Major U.S. grocery retailers are among the biggest buyers of food produced with toxic pesticides.

A new Bee-Friendly Retailer Scorecard from Friends of the Earth grades the top 25 U.S. grocery retailers on pesticides and pollinator protection. Together, these companies control $910 billion in food and beverage sales every year. The top four alone — Walmart, Kroger, Costco and Albertsons — control $519 billion in sales.

To protect the long-term sustainability of their supply chains and to mitigate risks from changing regulations and consumer demand, these companies must demand action to reverse the pollinator crisis.

Among investor expectations for retailers:

1. Set quantifiable or timebound goals for reduction; track pesticides or key performance indicators. Disclosing measurable goals and tracking pesticide use and reduction is critical to evaluating financial risk. 

  • Costco and Whole Foods have pilot-level pesticide tracking programs through their participation in the Equitable Food Initiative, which also provides training to growers to shift to least-toxic integrated pest management approaches.
  • Aldi requires suppliers of key commodities to disclose whether they use chlorpyrifos and neonicotinoids. These types of initiatives need to be scaled industry-wide.

2. Establish pollinator health policies in their food supply chains. Strong policies would set commitments to reduce or eliminate use of pesticides of concern and support suppliers shifting to least-toxic approaches. Policies also should commit to expanding organic offerings.

  • Giant Eagle passed a policy in September to eliminate use of neonicotinoids in its produce supply chain. To date, this is the leading pollinator-related policy in the industry, as it is the only one to set a measurable goal for reduction of pollinator-toxic pesticides.
  • Five other major grocery retailers — Kroger, Costco, Albertsons, Aldi and Rite Aid — have established pollinator health policies in their food supply chains. However, these policies do not provide quantifiable measurements for investor assessments.

3. Disclose organic sales data. Most companies are not disclosing their organic sales data, which makes it difficult to assess their growth and competitive advantage in this marketplace.

  • Ahold Delhaize, Albertsons, Costco, CVS, Kroger and Target publicly reported expanding organic offerings within the past three years.
  • Only Whole Foods, Trader Joe’s and Ahold Delhaize publicly provide this data. Whole Foods reports that over 30 percent of overall sales are organic, Trader Joe’s reports that over 20 percent of overall products sold are organic and Ahold Delhaize stated in its 2019 annual report that 3 percent of total food sales were organic.

4. Increase organic offerings. Independent grocery stores far surpass the largest U.S. food retailers on organic product offerings as a percent of overall sales.

The report includes results of a survey of 36 independent food retailers across the country. Ninety-four percent (34 of 36) reported that at least 15 percent of total sales were organic, while 64 percent (23 of 36) reported that over 50 percent of their total sales are organic.

These retailers are responding to consumer demand and creating competitive advantage with their larger offerings of organic and bee-friendly foods. Major grocery retailers need to follow the lead of independent grocery stores and transition their supply chains to more organic products to avoid competitive disadvantage and reputational risks associated with toxic pesticides and products.

5. Support the expansion of organic agriculture in the U.S. Whole Foods was also the only company to report that it advocates for federal policies that support strong organic standards and increased funding for organic research. These are best practices that need to be scaled industry wide.

  • Whole Foods reports the most extensive set of practices supporting U.S. organic growers, including committing to price floors for farmers in transition to organic, providing financial support for organic and family-scale farmers via loans, and investing resources in educating suppliers about organic practices and how to transition.
  • Costco reports working with U.S. farmers and ranchers to transition land to organic production, and Wegmans operates its own research-oriented organic farm to educate farmers about best practices.

6. Apply pesticide policies to other product categories. Agriculture accounts for most pesticide use; however, companies are modeling important steps to protect pollinators in their home and garden supply chains.

Nine companies have pesticide policies in their home and garden supply chains showing it is possible to reduce pesticide use in other product categories. Costco no longer sells products containing neonicotinoids in its U.S. locations or products contain­ing glyphosate in any store locations worldwide. Walmart also has eliminated almost all garden products contain­ing neonicotinoids, CVS and Ahold Delhaize committed to end sales of products containing glyphosate, and Whole Foods does not sell garden products containing neonicotinoids or glypho­sate.

In addition, Costco, Aldi, Kroger, Walmart, Giant Eagle and BJ’s Wholesale Club have committed to greatly reduce or eliminate the sourcing of plants and flowers treated with neonicotinoids.

These impactful policies reduce risk and can serve as a template for food retailers as they work to expand pesticide use reduction targets across their agricultural supply chains.

Lower chemical footprints through pesticide use reduction programs

The Investor Environmental Health Network (IEHN) and Mercy Investment Services are co-leading a pesticide initiative of investors, including Trillium Asset Management and As You Sow, representing $444 billion in assets under management.

Using the Chemical Footprint Project’s framework, the campaign is asking companies to adopt and implement a process of safer chemical management that can be applied to different types of agrochemicals. By conducting a chemical footprint of the pesticides used in their agricultural supply chains, companies can identify harmful pesticides, set reduction targets and develop safer, more sustainable alternatives, thus mitigating risks and protecting human and environmental health.

At the same time, investors are also asking food manufacturers to measure and reduce pesticide-related supply chain risks. Last year, As You Sow published a first scorecard and report assessing the policies and practices of major food manufacturers, suggesting similar action in that sector. Ultimately, shifting agricultural supply chains from industrial, chemical-based systems to sustainable growing practices will require action from across the food system.

The inadequacies of our current food system were made clear during the current COVID-19 pandemic when supply chains experienced significant disruptions, and new research suggests links between exposure to pollutants, including pesticides, and severe COVID-19 symptoms.

Grocery retailers can use their enormous market power to reduce the use of toxic pesticides on farms in the U.S. and around the world, as well as build financial value into their supply chains by bolstering the ability of farmers and suppliers to rapidly transition to sustainable farming systems. Our financial system is dependent on a robust, healthy and stable food supply system.

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