Kraft Foods’ third-party alliances key to sustainability strategy

With its global reach and massive market shares, Kraft Foods is setting new standards on how to source through sustainable agriculture and keep packaging out of landfills. Chris McGrath explains why third-party alliances are an important part of the company's sustainability strategy.

Let’s talk about sourcing some of your food ingredients first.

Sustainable sourcing is a key part of our strategy. To date, we have defined sustainably-sourced as third-party certification or verification. That’s because models like Rainforest Alliance, Fair Trade and UTZ Certified help boost crop yields, protect the environment and help farm workers and their families improve their livelihoods.  And they can help boost overall capacity more quickly.

I’m proud we’ve played a unique leadership role in bringing certified coffee and cocoa to mainstream consumers. Last year alone, we increased our sustainable sourcing of agricultural commodities by 36 percent.  We’re among the world’s largest buyers of cocoa from Rainforest Alliance Certified farms and the world’s largest buyer of Fairtrade Certified cocoa and Fairtrade organic cocoa. Today, more than 15 of our brands now carry the Fair Trade or Rainforest Alliance marks.

Where are you in the process of looking at your supply chain? That’s a hugely complicated task for a company as big as Kraft Foods.

You’re right. To get the biggest impact, you have to look across the supply chain end-to-end. We recently completed a pioneering survey that maps our company’s total environmental footprint. This was a first-of-its-kind project for our industry. We’d been working since 2009 to measure, understand and manage our global environmental footprint -- not just the carbon footprint for climate change, meaning air, but for land and water use, too. 

We did the footprinting work to better understand our impacts and gain more insight into where we can make the greatest difference. Having this knowledge can help us improve our capabilities and effectiveness in sustainability projects. To help ensure we got it right, we found some excellent partners and had the work reviewed by the World Wildlife Fund and notable academics at the University of Minnesota’s Institute on the Environment.

Our footprint shows clearly that our focus should remain on sustainable agriculture as that is where the majority of our impact lies.

Have you had other new kinds of collaborations as part of your sustainability work?

Well, a great example is our work with TerraCycle. They have consumers send them non-recyclable packaging and then reward consumers for sending it back rather than putting it in the trash. They have a great, unique business model.

TerraCycle had approached us with a novel way of turning used packaging into brand new products like tote bags and folders. We wanted to find solutions to help divert packaging that can’t be recycled from going to landfill, and we knew that working with TerraCycle would raise our brands’ profile and influence our consumers to make better choices.

We were the first major company to partner with TerraCycle when they were still very small. Our Capri-Sun beverage brand took a risk. Because TerraCycle gave us a unique solution, that relationship has blossomed.

Today, several of our brands are working with TerraCycle and we’re the largest sponsor of TerraCycle brigades, which we’ve helped expand to 11 countries. We now have more than 130,000 locations around the world with around 2.5 million people collecting post-consumer waste. TerraCycle has enabled us to divert more than 170 million household packages and 3,800 tons of manufacturing waste from going to landfills or incineration.

That sounds like a really exciting partnership to have watched blossom.

As much as we can do by ourselves, we can do even more with others. By partnering, we share funding, training and know-how. We’ve been fortunate to find great partners in sustainability projects over the past several years, from the Bill & Melinda Gates Foundation and the World Wildlife Fund to the World Cocoa Foundation, Fairtrade and Rainforest Alliance. These collaborations boost our scale and help accelerate development and change in more areas, and in more commodities, more quickly than if we were to go it alone.

This article is adapted from “Why Kraft Foods Cares About Fair Trade Chocolate”  by Nina Kruschwitz, which was published by MIT Sloan Management Review on September 12, 2012. The complete article is available at  http://mitsmr.com/QT42Z1 .

Copyright © Massachusetts Institute of Technology, 2012. All rights reserved.