For Sodexo, halving food waste by 2025 is a fiscal issue
This article is adapted from GreenBiz's Circular Weekly newsletter, running Fridays. Subscribe here.
As those of us working in sustainability know all too well, the viability of a project often comes down to making the business case.
If the financial return doesn’t live up to its promise, the project may be in peril. Of course, the business case isn’t always about money. There are many other reasons why companies engage in sustainability actions. Still, as they say, money talks.
Money is speaking loudly at Sodexo when it comes to cutting food waste. The global foodservice management company has said that if it doesn’t meet its target to halve operational food waste and loss by 2025, its operating capital — as well as employee compensation — could be in peril.
Earlier this year, Sodexo announced its commitment to deploying Leanpath’s WasteWatch technology at 3,000 sites by the end of 2020. And while the rapid implementation of the smart food waste measurement technology in kitchens globally is notable on its own, what’s worth an extra look is that Sodexo is putting its money where its mouth is.
When the company renewed its $1.45 billion revolving credit facility in May, it included a pricing adjustment based on Sodexo's performance towards its food waste reduction goal. This facility — provided by nine banks, including BNP Paribas, Citibank, HSBC, ING and Wells Fargo — will reinforce Sodexo’s liquidity and increase the average maturity of its financial resources.
In other words, Sodexo has made reducing food waste a KPI from the kitchen to the boardroom, and will tie that to executive and manager compensation.
To make sure the program endures changes in leadership or political will, Sodexo’s change-management plan established a formal governance structure for food waste reporting. Each business has designated leaders who monitor and measure compliance, and all managers are held accountable through performance reviews — which ultimately affect compensation. Sodexo also will report progress on food waste reduction alongside year-end financial results.
It took 10 years of pilots and gradual progress for Leanpath to reach this point in its partnership with Sodexo, representatives from both companies told me at ReFED’s Food Waste Summit in San Francisco last week.
I asked Ted Monk, vice president for sustainability and corporate responsibility at Sodexo North America, and Andrew Shakman, CEO and co-founder of Leanpath, about the partnership. "Our CEO Denis Machuel sometimes jokes that Sodexo has more pilots than Air France," Monk noted. "But once the social, environmental and financial benefits were proven and leadership believed in the 'why', the important thing was scale."
Sodexo is no stranger to organizational change, and learned from its experience that elevating diversity and inclusion from a fringe consideration to a point of institutional pride by getting buy-in from top-level executives in the company.
"Our CEO talks about food waste whenever he has the chance," Monk shared.
Of course, Leanpath’s technology is just one course on the menu of approaches needed to answer the United Nations’ call to halve food waste globally by 2030. "Leanpath isn’t just a data collection tool or a data analytics tool, it’s a behavior change platform," Shakman said. "Solving the problem of food waste in foodservice kitchens is ultimately a challenge of behavior change."