Key Insights Driving Global Sustainability and Its Impact on the Future Supply Chain

NAFFS Staff Report

“McCormick has been changing and these are exciting times for us,” Michael Okorafor, vice president of global sustainability & packaging innovation at McCormick & Co., told attendees at the NAFFS 100th Annual Convention. “When you talk about sustainability, it is not really about saving the planet. It’s about saving the planet and saving the bottom line. Most people don’t realize that. But if you do sustainability well, your business grows and you gain consumer loyalty,” he said.

The idea of make, use and dispose is over, explained Okorafor. “This era is make, use, renew. You just can’t keep disposing things and call it a sustainable environment.”

The world we operate in is changing, he said. Sustainability factors could alter the growth projections for consumer companies, seriously affecting their total returns to shareholders. “When you look at enterprise value for the top 50 publicly traded consumer package goods (CPG) companies, half depends on expected growth,” he said. “And growth is vulnerable to many things….carbon emissions, child labor issues, water shortages, deforestation, worker health and safety issues, etc. Any one of these issues can tank your brand. Hope is not a strategy. So we at McCormick are very focused on looking at this. And you have to do it based on informed science.”

Okorafor said McCormick was founded in 1889, employs 11,000 people worldwide and has facilities in 26 countries. To do sustainability well, McCormick adopted what Okorafor refers to as a holistic strategy. That strategy is a four-point system that includes its farmers and their communities, the customers who buy the products, the consumer and the company.

“When you look at sustainability the way it is, nobody cares about what you do. Do you know what people care about? The impact of what we do – that’s what’s important,” said Okorafor. “A lot of people spin their wheels running around doing stuff. But if it has zero impact, you’re wasting your time.”

With the farmers and their communities, the biggest impact is in improving their livelihood, Okorafor said. “You can do anything you want for Madagascar but if you’re not improving their livelihood, you’re wasting your time. The same goes for India, the U.S. or wherever you are – if you are not improving the livelihood of the community, then you are wasting your time.”

For the customer (such as Walmart), he asked, do you know what’s important for them? “Think about what the impact of our business is for Walmart. It’s trust. They want to know they can trust my company to deliver,” Okorafor said.

“Now for the consumers, especially the millennials, they don’t have a lot of money but they spend a lot on food and they talk about it. For them, what’s important is transparency. Where do you source your product? How do you treat your workers? That’s very important to them. They live in a different world than we do. For them, it’s about the global community and survival of the global community. So they need to be able to trust us. Transparency is key for them.”

As for the company, he said most would say it’s profit. “It’s not, he said. “Do you know what it is? Enduring supply chain. “If we can create an enduring supply chain through this process, then the profit will come down the road. But if you don’t have an enduring supply chain, it’s called a dying business. So you can see what I mean about taking a holistic approach.”

He said this “purpose-led performance approach” begins at the highest level with global representation in the company’s governance. “McCormick & Co. is driven every single day to do the right thing,” Okorafor said. “And to do it consistently in the world around us – not just in our corporate headquarters but in our farm communities as well.”

That, he said, leads to the framework. “We looked at our business and what is pertinent to our business. We are driven to make every day better for people, the communities and the planet. In our case it’s from farm to table. So we exist all the way along the supply chain – transparency has to bring the product from the farm to your kitchen.”

The process, he said, came via creating three strategic pillars: people; communities; the planet. “When it comes to our people, it’s about working to improve the health and wellbeing of our people and helping our employees thrive. We incorporate the fundamentals to help people feel good about us. We are a champion for equality and have a strong commitment to education and development of our employees. We have empowered factory workers with the knowledge to make decisions, which helps our company run better. By empowering and training our factory workers in Hunt Valley, Md., we were able to save more than $2 million. Sustainability is not just about saving the planet. It’s about saving the planet and saving the bottom line,” he said.

On the community side it’s about building vibrant communities in areas where the company’s employees live and work and in areas from which the company sources.

Okorafor said the third strategy is addressed by attempting to reduce the environmental impact of all the firm’s activities and by sustainable sourcing.

The United Nations, he said, produced a list of 17 sustainable development goals covering areas such as poverty, zero hunger, clean water and sanitation, reduced inequalities, quality education and gender equality.

The purpose-led performance goals include increasing the resilience and improving the livelihood of communities and small farmers, especially women. These farmers grow 90 percent of McCormick’s key iconic herbs and spices. McCormick will work to increase their skills and capacity, income, give them access to financial services, education, nutrition and health.

The company’s goals also include increasing the use of branded, sustainably grown herbs and spices, reducing greenhouse gas emissions, reducing water use, solid waste recycling and reducing packaging carbon footprint – all by the year 2025.

Okorafor listed some of the firm’s sustainability achievements and efforts:

● a 43-percent reduction in carbon footprint by using fewer trucks to transport (EMEA)

● 100 percent of its Gourmet Garden Australian operation uses harvested water

● the elimination of BPA packaging across product lines globally

● a $10M investment in wastewater projects through 2018.

McCormick is also currently supporting more than 3,000 farmers with Agricultural Best Practices training, bringing mobile phones through a partnership with FarmForce, partnering with third parties to create development funds to incentivize higher quality crops, supporting women farmer programs and assisting and rebuilding communities in Madagascar.

“This is what I mean about building capacity and capability,” said Okorafor. “It’s been done in Vietnam and we’re beginning to do that in Madagascar and India. It’s not about the depth of your pocket; it’s about your will and determination to do the right thing. Investing at the source is where to start.”