Our strategy & footprint
Food security is increasingly under threat and there is an urgent need to source sustainably.
Half our raw materials come from agriculture and forestry so we are focusing our efforts on our most important agricultural materials.
In November 2010 we announced our commitment to source 100% of our agricultural raw materials sustainably by 2020. We also committed to link more than 500 000 smallholder farmers and small-scale distributors into our supply chain.
Sourcing sustainably means that farmers and farm workers can improve their living conditions and earn an income they can live on. It also helps to maintain and improve soil fertility, enhance water quality and availability and protect biodiversity.
Our approach is to work closely with our suppliers to help them improve their farming practices and minimise their environmental impacts.
We have developed a metric for the sustainable sourcing of raw materials. This is defined as either raw or packaging material sourced from verifiable sustainable renewable sources or made from recycled materials (as a % by weight).
For certain raw materials our share of world volumes is large:
We are focusing our efforts first on our top ten agricultural raw materials, which account for around 70% of our agricultural raw material volumes. These are palm oil, paper and board, soy, sugar, tea, fruit and vegetables, sunflower oil, rapeseed oil, dairy ingredients and cocoa.
We have also made a commitment to source 100% of our paper and board for packaging from certified sustainably managed forests or from recycled material by 2020. This is discussed in more detail in our Packaging & waste section.
Why does it matter to our business?
Changing weather patterns, water scarcity and unsustainable farming practices are putting pressure on agricultural supplies. In addition, food security is also under threat from rising populations. Climate change is having an impact. Flooding and more severe droughts can lead to the loss of ecologically and agriculturally valuable soils, and damage agricultural yields.
Since half the raw materials we buy are from farms and forestry, a secure supply of these materials is a core business issue. Unsustainable farming practices will have serious repercussions on the environment and in grower communities. This presents an operational and reputational risk to our business. Our business is linked to a complex network of thousands of farmers: smallholders as well as large agri-businesses and third-party suppliers. We also buy ingredients from the agricultural commodity markets.
Sustainable sourcing not only helps us manage a key business risk; it also presents an opportunity for growth, allowing our brands to differentiate themselves to the growing number of consumers who choose products based on their sustainability credentials.
A roadmap for delivery
At the end of 2010 we sourced over 10% of all our agricultural raw materials sustainably, achieving our ambition to reach 10% by the end of the year. We intend to increase this to 30% by 2012, 50% by 2015 and 100% by 2020.
We have a roadmap for the sustainable sourcing of around two thirds of our agricultural raw materials. This covers ingredients where we are a significant global buyer.
However, we face two big challenges in achieving sustainable sourcing. First, we know that the last 20% of our agricultural raw materials are ingredients where our volumes are small and our market leverage is weak. These ingredients will be complex to source sustainably so our success will depend on working with others.
Secondly, we are developing plans to source our non-agricultural (mainly chemical) raw materials responsibly.
What do we mean by sustainable sourcing?
Each of our agricultural raw materials, whether tea, tomatoes or soy, has a different growing method. When we began working on this issue, there were no agreed definitions of what sustainable farming meant for these and other crops. We established our Sustainable Agriculture Programme over 15 years ago. In that time, we have developed detailed guidelines on what sustainable agriculture means for our key crops.
We define sustainable sourcing using 11 social, economic and environmental indicators:
- Soil health: improving the quality of soil and its ability to support plant and animal life.
- Soil loss: reducing soil erosion which can lead to loss of nutrients.
- Nutrients: reducing the loss of nutrients through harvesting, leaching, erosion and emissions to air.
- Pest management: reducing the use of pesticides.
- Biodiversity: helping to improve biodiversity.
- Farm economics: improving the product quality and yield.
- Energy: reducing the greenhouse gas emissions associated with farming.
- Water: reducing the loss and contamination of water supplies from agriculture.
- Social and human capital: ensuring the capacity of people to earn and sustain their livelihoods as well as enhancing farmers’ knowledge, training and confidence.
- Local economy: helping sustain local communities.
- Animal welfare: ensuring animal standards are based on the ‘five freedoms’ defined by the Farm Animal Welfare Council.
These are now formalised in the Unilever Sustainable Agriculture Code – detailed guidelines for agricultural best practice. The Code applies to all Unilever suppliers of agricultural goods, the farmers producing them and contractors working on farms. The Code is incorporated into our contracts with our own growers. See downloads for more information.
Our aim is to ensure continued access to our key agricultural raw materials and ultimately to develop market mechanisms that allow consumers and retailers to influence the sourcing of raw materials through their buying habits.
We will expect all our suppliers of agricultural raw materials to commit to improving their sustainability and to demonstrate that they adopt minimum standards and improve performance over time.
Meeting the criteria for sustainable sourcing
We use a variety of ways to ensure that our supplies of raw materials meet our sustainable sourcing requirements. We can do this either through third-party certification, or through a combination of self-verification and performance reporting.
We are working with certification organisations such as the Rainforest Alliance (for tea), the Roundtable on Sustainable Palm Oil (for certified sustainable palm oil) and Fairtrade (for Ben & Jerry’s ice cream ingredients). Please see Working with others for more information.
However, external certification will not work across the board. Sometimes these standards do not apply to all types of raw materials or geographies. And it is very difficult for us to work with hundreds of different national and crop-specific schemes. Where certification standards do not exist, our approach is to supplement our certified partnerships with a system based on self-verification.
For some of our crop suppliers, we are using Quickfire, a software tool which allows our suppliers to carry out a self-assessment against each of the 11 indicators which make up our Sustainable Agriculture Code. In April 2011 a new version of the software was released to reflect our latest sustainability requirements.
The tool quickly calculates whether or not a supplier's volume counts as being sustainably sourced and identifies areas of best practice and areas for improvement, providing a basis for us to build a collaborative action plan for continuous improvement. It also collects data that allows us to measure the impacts of sustainable sourcing.
We began using this system in 2009 with our third-party suppliers of fruit and vegetables. By the end of 2010, 130 suppliers were registered on the system.
This process is being reviewed by an independent external advisory board to ensure that it is an adequate basis for self-verification.
We intend to complement our system by carrying out third-party auditing. This will provide verification of what our suppliers enter into the online system.
Tools to improve sustainable farming
In 2010 we launched our Cool Farm Tool, a calculator to help farmers reduce their carbon emissions on their farms. In addition to raising awareness of the effect their actions have on the climate, the tool prompts farmers to make improvements, which often cut bills as well as benefiting the planet.
We developed Cool Farm with experts from the University of Aberdeen in Scotland. It is designed to be simple and practical to use, allowing farmers to identify the changes that will have an impact on reducing emissions. It also allows farmers to prioritise options by running different scenarios to see how much of an impact they make. Cool Farm takes account of a wide variety of factors including soil, climate, livestock, land use and input intensities, then presents the user with measures that can be implemented at the field and farm level.
To encourage wider use of the tool in the agricultural sector, we have made it available for other companies to use free of charge. Nearly 20 companies are using the tool.
We also use our web-based tool, EIGER, which provides maps giving detailed information about agricultural raw materials, biodiversity, water, GDP and population.
EIGER helps us to identify new supply chains and new supply routes to ensure a secure supply of raw materials over the long term. It identifies opportunities and risks posed by global environmental and social trends that we need to consider when making sourcing decisions.
- New sourcing countries: where do crops grow best, now and in the future?
- Water vulnerability: what areas suffer water scarcity or will do so in the future? What is the irrigation water demand for our crops?
- Biodiversity impacts: are existing or new sites and supply chains close to or inside biodiversity conservation areas?
The database was compiled using data from a range of R&D organisations and institutes.
Laying the foundations of our Sustainable Agriculture Code
Unilever has been carrying out research into sustainable agriculture since the mid 1990s. Our ‘Lead Agriculture Programmes’ have investigated a range of techniques to reduce the environmental impact of farming, while maintaining yield and profits for farmers.
We started with a focus on five key crops – palm oil, peas, spinach, tea and tomatoes. While some of these programmes continue today, we have now extended our work into other crops and ingredients, for example fruit and vegetables, gherkins, dairy, eggs and vegetable oils.
Throughout we have worked closely with local growers and planters, research institutes, industry and farmers’ associations, local government, NGOs and sometimes community groups.
We began publishing these techniques for all our key crops in Good Agricultural Practice Guidelines booklets. In 2004, we started engaging our growers in the use of these Guidelines, in co-operation with other partners. This led to several changes and improvements leading up to the publication of the Unilever Sustainable Agriculture Code in April 2010.