Dole's Quest for a Carbon Neutral Supply Chain
Dole's Quest for a Carbon Neutral Supply Chain
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Dole, the largest fruit and vegetable producer on the planet, recently embarked on an ambitious journey to make its pineapple and banana supply chain originating in Costa Rica carbon neutral.
This involves measuring and neutralizing the emissions from growing the fruit to packing it, transporting it and distributing it to markets in North America and Europe. Dole exported more than 540,000 tons of bananas and about 160,000 tons of pineapples out of Costa Rica last year.
GreenBiz recently sat down with Sylvain Cuperlier, Dole's vice president of Corporate Social Responsibility in Paris, and Rudy Amador in Costa Rica, who is Dole's Director of Environmental Affairs. Although the project is in its infancy, the two men will discuss the reasons behind the initiative and the first steps the company has taken.
Tilde Herrera: Welcome, gentlemen, to GreenBiz Radio. Let's talk about some of the things that are driving this carbon neutral initiative. Rudy, what would you say are the primary drivers behind this project?
Rudy Amador: Well, good morning, and thanks for speaking with Dole. I would say (there are) basically three drivers. The first one being Dole's environmental policy and efforts that we've been undertaking for many years now, particularly with respect to pollution prevention.
Another very important driver for us has been inquiries from customers that buy Dole products, particularly those in the European Union. We have had inquiries regarding what our practices are, and how we can work toward mitigating effects on emissions, particularly CO2 emissions.
Dole has a regional office here in Costa Rica, which oversees the Latin American operations. And another driver has been the Costa Rican government's call to be a carbon neutral country by the year 2021, and Dole has signed an agreement with the government to work as part of private industry toward that goal
TH: Now, when you talk about questions from some of your customers, how does that work? What would have been the cost of inaction? What if Dole had chosen not to do anything at this time, or was that even an option?
RA: I'd say that it's difficult to put a finger on what would happen if we don't act. We are unsure. There are a lot of uncertainties regarding global warming, but we are starting to get some messages that there could be changes in legislation locally.
Maybe these customer concerns will get to the point where, if we haven't undertaken any action, they will be making purchasing decisions based on if companies are acting or not. I would not say that's the case right now, but we would like to be proactive and make sure that if it happens, that the actions are undertaken.
TH: Sylvain, is there anything you'd like to add?
Sylvain Cuperlier: Yes. I would like to add that some customers -- I mean retailers, particularly in Europe and talking more specifically about those in the United Kingdom -- they made very strong commitments as a means to address global issues.
Some of them are going to require their suppliers to post the CO2 emissions on the product labeling. Some other retailers are asking their suppliers to limit the packaging of the product.
Consequently, I think that if we are not in a position to make some proposals to make a very strong commitment to these retailers as a means to help them to achieve their goals, I think that, for some of them, we may be out of the market.
TH: Now, you just made the announcement just a few months ago. Can you talk a little bit, Rudy, about some of the first steps Dole has taken to lay the groundwork for this project?
RA: Yes, I can. It was very important for us once we made the decision to work on a carbon-neutral project to communicate internally and externally about this goal.
We deal with an extensive supply chain. We’ve very vertically integrated so another step for us has been to put together a team -- actually teams -- of people within our company that will be working on this. These teams include people from different functional areas.
We’re dealing not only with agricultural production but also dealing with the function of purchasing products from growers, we’re dealing with transportation, both road transportation and ocean transportation. And obviously, we deal with the function having to do with the distribution and sale of our products.
And another important first step for us has been to identify partners within and outside the supply chain who can assist us and be part of the project.
We knew about the Costa Rican government policy statement where they were going to seek carbon neutrality and we start to work with the government.
As one of our first steps, we did sign an agreement with an agency of the Ministry of the Environment in Costa Rica to work together on establishing methods to measure the emissions of the activities of our company. And we’ll also eventually work on compensation programs using environmental payment services they have for establishing forestry and reforestation projects.
Another of the first steps that we undertook was to perform a high-level life cycle analysis where we looked at our processes, both internally and externally. And using that analysis, we were able to essentially break the pie into several sections.
This is a very extensive project dealing with our whole supply chain. So having an organized way and using an established method like the life cycle analysis, we were able to section the project and identify those areas where we would be able concentrate or focus our attention in the first part of the project, which is the transportation side of our supply chain.
TH: Now, talking a little bit about you partners, you said that you’ve partnered with the government. Can you tell me about any other partners, and what you looked for when you were considering partnerships and what other companies might consider when they are undertaking similar projects?
RA: One of the things that you need to look at is your company’s supply chain and your partners within that supply chain. So for example, we would like to work with some of our growers and possibly identify some of the large growers.
When we talk about mitigation projects later, one of the things we’ll mention is the possibility of establishing reforestation projects, and growers can be a part of that.
So, looking at the supply chain, you can also identify outside parties, such as customers. There are customers, as we mentioned initially, that have asked the company what our efforts are.
Recently we’ve even received a visit from one of these customers, a customer from Norway. Obviously the customers are part of the partners that we have chosen to work with. Sylvain will probably mention a little bit more about that but effort needs to be made to communicate the company effort to our customers, and see if we can collaborate on some of the mitigation and sequestration projects.
Another important issue to look at when choosing partners is out of the supply chain analysis and out of the knowledge that you have of your company, you can identify where there are information gaps.
So, for example, in our case, we understand that we’re going to need to undertake probably some research in production agriculture to try to determine what is the sequestration potential of plantations - bananas and pineapples - and also to determine the possibility of sequestering carbon within the agricultural soils. Those are two areas that we’re not familiar with, so we’re looking for partners in academia that could help us undertake additional research.
TH: Now, just out of curiosity, you said that one of your customers -- a Norwegian customer -- had recently paid a visit. Was it in relation to this carbon neutrality project?
RA: Yes. This particular customer -- and it may just be by chance -- but this particular customer is undertaking within their company an analysis of their environmental footprint beyond carbon emissions, but including carbon emissions of their specific company and of their suppliers.
They basically contacted us maybe a week after we did our worldwide release on the company project and explained to us that they wanted to visit us, and that one of the things that they would like to look into were basically supply chain aspects and our carbon-neutral project.
TH: How would you describe this customer?
RA: This is one of our largest customers in Europe so it’s a very important customer to us and possibly the largest fruit and vegetable distributor in Norway so definitely important, and also, I would say, a leader in environmental and corporate social responsibility.
TH: You mentioned some of the mitigation projects that are being considered. Can you elaborate, Rudy?
RA: Yes. We’ve identified some projects that we feel we can work on to mitigate and reduce our emissions. Some of those are, as an example, using railroad transportation.
Railroad transportation is more efficient from the emissions point of view than road transportation. Twenty percent of our volume of bananas in Costa Rica uses rail and we’re looking at ways in which we can increase that percentage.
The other thing we’ve been looking at when we look at the agricultural side is if we are able to reduce our use of inputs, particularly fertilizers, we will also be able to reduce emissions. Some of the fertilizers, particularly those containing nitrogen, do have an impact on greenhouse gases, particularly through the emission of nitrous oxide.
Dole has an extensive supply chain. As part of that supply chain, we deliver our products in a refrigerated fashion, particularly to the U.S. market using containers. So we have a large container fleet of about 11,000 units. We’ve decided to upgrade our container fleet and we’re going to be purchasing 2,000 new units of containers that are around 30 to 35 percent more energy efficient.
Those are basically three examples of mitigation projects. We would add those to the traditional efforts we hope to work on with the Ministry of the Environment regarding reforestation and how to use our existing commercial forests to sequester more carbon by managing them better.
TH: Now you said that some of these mitigation projects are currently being implemented and some, it sounded like, are just being considered. Can you tell me, how does a company evaluate which mitigation projects it will actually implement?
RA: One of the benefits of the high-level life cycle analysis was specifically that -- to be able to identify which processes were creating emissions. By doing that analysis, you can identify processes where you have more direct control, and processes where, by changes to practices in the short-term and medium-term, you can have a quick effect on emissions.
Obviously, there are changes to technology and processes that require investment, so those requiring high (capital) investments are going to be possibly longer-term in an implementation time frame. Those will not necessarily be the ones that have the highest impact, believe it or not, but that’s obviously a very important consideration.
There are some that you can identify as things you can quickly do. What the company has decided to do - and this goes back to the question you asked regarding partners - is we will be partnering with the premier business school in Latin America, which is also based here in Costa Rica. They’re called INCAE.
And one of the things they’re going to be doing is basically looking at the strategy side of choosing mitigation projects using business strategy as criteria to basically help us select which mitigation projects to undertake.
TH: So in three years, the company hopes to have established carbon neutrality for this particular supply chain? Is that correct?
RA: No. We need to establish the balance first to determine how much we need to offset through mitigation or through fixation. We also need to continue to develop the relationships with customers, and hopefully get interest in participating together in the mitigation sequestration projects.
So it’s difficult to say at the end of three years. I do know the country, as I said, has the goal of 2021, and we would like to contribute toward that. The sooner, the better. So it’s tough to say whether we’ll be there in three years.
What I can say is that at the end of three years, we will know precisely what the emissions are, or what our carbon inventory situation is for our complete supply chain, and we would already have established and implemented several mitigation timeframes, or projects. By the end of those three years, we’ll know how close we are to actual carbon neutrality, but that is the goal.
TH: Sylvain, can you talk a little bit about the importance of clearly communicating time frames and objectives in a project like this?
SC: Well, you know, I think that (for) a company like Dole, when we make such a commitment, we have to be fully transparent because for the time being it’s a commitment.
It’s a strong commitment, but we know that we will be judged on the results, so that’s why we should be very, very clear, as Rudy explained previously about what our priorities are, what the steps are, and continuously report on the results.
So then also how can we communicate that to the different audiences? I think that there are several stakeholders to whom we communicate our plans, and we are asking whether they would like to be on board or not. We talked about the retailers, the suppliers, the government, of course. The communication is slightly different between retailers, suppliers, and government.
For some retailers who made a very strong commitment, like the U.K. retailers, it’s also part of the marketing issue because they made a strong commitment and they are kind of competing among each other about this issue of how they address global warming.
Consequently, we were asked by the buyers of the supermarkets what we are going to do to address the issue of global warming because even though some of them made a strong commitment, they don’t know exactly how they are going to address on the ground the issue of global warming and CO2 emissions, particularly in the agricultural sector.
So we had to communicate internally first to our sales people -- I’m talking about Europe, for example -- about the project in Costa Rica, but also about some other initiatives we are developing in other divisions worldwide and see if the objectives that we have for a project such as the one we are developing in Costa Rica are compatible with our retailer’s objectives.
Until now, we have not communicated too much toward the public at large, I would say. While we made a press release announcing our commitment, we don’t want to use it as a marketing tool, because as I mentioned earlier, for the time being, it’s an ambitious commitment that we will be judged on the results. So we will report the results also to the public but I don’t think that we can use this commitment and this project as a marketing tool.
TH: Now, Rudy, the project is in its early stages. At this point, what do you think are going to be the big challenges for this project?
RA: Regarding challenges in the short term, we see the obvious challenge of the breadth of the project since it deals with our complete supply chain.
We are focusing initially on one of our countries, which happens to be one of the most important supply countries for fresh fruit in bananas and pineapples involving both markets: Europe and the United States. The intrinsic scope of our project is challenging, to say the least.
However, I do see opportunities since Dole is a company that actually has quite a bit of control of our supply chain. We do deal with a lot of growers, but we have had -- I would say in general, in both bananas and pineapples -- very long-term relationships with growers so we feel that we can have an impact and can have some of them, or many of them, participate in our project. However, it does remain a challenge because they’re not Dole companies.
There are other third parties, such as transportation companies that do transportation services for Dole here in Costa Rica, so it is going to be a challenge to obtain the detailed information we need to actually measure the emissions.
And then I did mention there are some areas where we don’t have information and we will need to (do) research. So our research department here in Dole, which is also based here in Costa Rica, will be working with academic institutions to develop some research projects to try to establish some of the unknowns we have with respect to the production side, particularly sequestration by plantations and sequestration in soils.
TH: Now how is the company working with some of these third parties to get the data for the carbon emissions? How does this all work? How is the company going to educate its suppliers about the information it needs to perform these measurements?
RA: When we spoke about timelines, I mentioned that we will be focusing the initial efforts on the transportation side for finished product. Fortunately in this area we do have very good internal information systems so we can identify for bananas and pineapples exactly who our external carriers are and who is transporting our products.
What we are doing at this time are face-to-face meetings with these carriers -- these suppliers of internal transportation -- to get a feel for what information they currently have to see if we can build in or take advantage of their existing information system structure because this is a multi-year project and any measurements that are taken we will need to redo, which is also important to communicate to other companies. This is not a one-time measurement you do and then forget about it. It’s something you’re going to need to continuously measure.
So when we’re speaking to our third party suppliers, we’re communicating that to them to see how we can use their internal structure, their reporting structure to add any additional information that we need to be able to recalculate the emissions of that particular function, such as internal transportation, in an effective manner.
TH: What do you think is the biggest challenge when approaching a supplier and wanting, say, this internal information to measure this carbon, or just to get them to possibly alter the way that they are producing their goods? What are the biggest challenges in that approach?
RA: It is important to be communicating at all times what the actual goals of the project are. As with any business, there will be concerns with our growers and suppliers about the additional costs for their business by participating in our project.
When we communicate, we need to be able to explain to them that being involved with a project like this (gives them) another opportunity, I would call it, to link to the supply chain and respond to customers that are interested in this. (They will) maybe even be able to differentiate (their) products if they participate with us.
TH: Now, Sylvain, how does this project fit into Dole’s overall CSR goals, especially when environmental issues aren’t the only things the company is dealing with?
SC: Well, actually, I would say that now it’s no longer a CSR or environmental project. You know, I heard about this project months ago, because the Corporate Social Responsibility department has strong links with the environmental department in Costa Rica. I said, 'You know, this is a great project. You’ll get my support. I will try to get also the commitment from some other people in the company, including our CEO, because such a project has to be supported.'
But now it's not really a CSR issue, because of the way we are managing this project. (It) is not managed directly by the CSR department. But once we got the commitment from our CEO, he decided to create a worldwide team of 10 people, a worldwide team composed of people with very different expertise.
We have representatives from the research department, from the environmental department, from the department of logistics, from the supply chain, from corporate responsibility, and from marketing because I think that this project and the way a company should address the issue of global warming should not only be from a technical point of view, should not only be from a marketing point of view, should not only be from a logistics point of view.
We have to bring all this different expertise together so that we can make the best decisions for the people living in the production area, for our customers in the U.S. or on some other continents, and for all the stakeholders who are involved in the project. So it's no longer a CSR project. It's a top priority project for the company but which goes about the various departments we have within the company.
Tilde Herrera is the Associate Editor at GreenBiz. This article originally appeared as a podcast on GreenBiz Radio.