In today’s marketplace, every company wants to be seen doing the right thing. They want to stand for something, have purpose and connect with their customers (and not just their wallets).
For a number of brands, this has underpinned their approach to sustainability – making bold, public declarations of becoming net zero, being eco-friendly and reducing their emissions.
But there is a key distinction between being seen to do the right thing, and actually doing it. To authentically stand behind sustainability commitments, companies have to take a long, hard look at themselves – and be prepared to invest both time and resources to turn pledges into results.
Mars Incorporated, which is one of the world’s largest privately-owned businesses, is a great example of a company that has been putting in the work to realize its sustainability objectives – which include achieving net-zero emissions by 2050.
In this article, GDS Group Presenter and Content Creator, Alex Wood, takes a closer look at the corporation, its ambitious Sustainable in a Generation (SIG) plan and its pledge to become a 1.5°C degree company.
In brief:
- Mars is investing $1 billion over the next few years to accelerate its sustainability agenda
- In 2015, Mars had a footprint of 33 million tons of CO2 equivalent per year – that’s more than double the annual total of Costa Rica
- Mars set a goal to reduce value chain emissions by 67% by 2050
- To marry purpose with profit. Mars is aligning its core business with the impact it wants to make on the planet.
Why 1.5°C?
The 1.5°C target is the stated goal of the Paris Agreement, a legally binding international treaty adopted by 196 parties at the UN’s annual Climate Change Conference in 2015.
The overarching goal is to hold “the increase in the global average temperature to well below 2°C above pre-industrial levels” and pursue efforts “to limit the temperature increase to 1.5°C above pre-industrial levels.”
The 1.5°C is not some random statistic, as Petteri Taalas, the Secretary General of World Meteorological Organization, once put it. If temperatures exceed that figure by 2100, scientists estimate 70% to 90% of coral reefs will die off worldwide, while sea levels could rise by an additional one to three feet. Storms, heatwaves and droughts, meanwhile, will become more extreme – potentially displacing millions of people in the process.
“The urgency of this is right now,” Barry Parkin, the Chief Sustainability Officer at Mars Incorporated, told the audience at GDS Group’s recent Supply Chain North America Summit.
“This is the IPCC – the international body on this – saying we’ve run out of time to think about this.
“Unless we act now, we’re not going to keep global warming below one and a half degrees. It’s going to cross that threshold in 2030 unless urgent action is taken now.”
“The footprint of our business is the size of a small country. Our greenhouse gas footprint is the same as Panama’s.”
Barry Parkin, Chief Sustainability Officer, Mars Incorporated
Decoupling growth from emissions
For a company as big as Mars, implementing ambitious – but also achievable – sustainability targets is a tall order.
We’re talking about a 112-year-old institution that operates in more than 80 countries worldwide and generates more than $45billion in annual sales.
“The footprint of our business is the size of a small country,” Barry said during his keynote presentation.
“Our greenhouse gas footprint is the same as Panama’s. How do you make a business like that sustainable and how do you keep it below 1.5°C?”
For Barry and his colleagues, it starts with the data. In 2015, an audit showed Mars had a footprint of 33 million tons of CO2 equivalent per year. That’s more than double the annual total of Costa Rica for that year. But after analyzing the data, Mars found that as much as 80% of its emissions originate from “agriculture and land use change.”
By measuring and monitoring climate impacts, Mars was able to pinpoint where to start and where it wants to go in terms of sustainability. For example, by 2025, they’re aiming to reduce their CO2 emissions by 27% (and by 67% by 2050).
“We’ve made some progress,” Barry continued.“We’re 8% lower than our baseline while we’ve grown our business 40% in sales over that period – so we’ve decoupled growth from our footprint.”
In 2015, Mars’ full value chain greenhouse gas emissions were estimated at33 million tonnes of carbon dioxide equivalent (source: Mars Incorporated)
‘Right Targets’ and ‘Big Bets’
Barry said companies should start by setting the “right” targets. For Mars, that’s becoming net-zero by 2050.
“That’s consistent with the science,” Barry explained to the audience. “And you’ve got to make progress along the way, you’ve got to be on that straight line to zero.”
At Mars, they identified six priority areas – or “big bets”, as Barry described them, including:
- Increasing the use of renewables
- Reducing deforestation
- Changing recipes and raw materials used
- Promoting climate-smart agriculture
- Transforming their logistics footprint
- Reviewing packaging
Switching to renewables was an “easy win” for the company, but reviewing its recipes – and the ingredients they use in their products – has proved more of a challenge.
“We buy more than 100 different raw materials from more than 100 countries around the world,” Barry said, referring to the company’s diverse portfolio of pet food and chocolate businesses.
“They’ve all got different greenhouse gas footprints and, frankly, we don’t know how to solve some of those.
“We’re going to have to switch to some new ingredients and some of these are pretty exotic.”
Like using insects in their pet food, for example. In 2021, the company launched a new cat food brand made exclusively from insects. Called Lovebug, it is a dry form of cat food made from black soldier fly larvae insect meal, as well as “essential nutrients such as amino acids” and a vegan coating. It is the first 100% insect-based cat food to be launched by a major supplier in the UK (although it is manufactured in Germany).
Does that mean we might one day see insects used in Mars’ well-known chocolate bars?
“Maybe not into human food initially, but probably into pet food,” Barry explained.
Phew.
By 2025, Mars aims to reduce its total greenhouse gas emissions by 27% (source: Mars Incorporated).
Is Purpose Profitable?
Of course, sustainability means different things to different organizations. But a number of studies have shown businesses that have successfully implemented sustainability programs have benefited far beyond simply defining their purpose. In fact, a growing body of evidence indicates Environmental Social and Governance (ESG) initiatives can drive profit and create new business opportunities.
According to research by Deutsche Bank, companies with high ratings for ESG factors have a lower cost of debt and equity. In fact, 89% of the studies they reviewed show that companies with high ratings outperform the market in the medium (three to five years) and long (five to 10 years) term.
The Carbon Disclosure Project found something similar – companies listed on its Carbon Disclosure Leadership Index and Carbon Performance Leadership Index record superior stock-market returns.
“[Sustainability] is entirely affordable,” Barry said. “Anybody who tells you this is not affordable doesn’t understand the problem or hasn’t done the work.
“This cost about 1% of our sales to harbour footprint and frankly, when I put that in front of our CFO and our board, they went ‘Is that all? Let’s do it.’
“We know how to do the first half of this journey – but it’s not just about doing projects and activities. You’ve got to build the organisational capability. You’ve got to change your operating model.
“We’re a private family-owned business and the family care about four things, one of which is positive societal impact, and they care about it as much as they do the financial performance. So, we govern them as if they are equally important.
“With board reviews, we plan for them, we monitor our performance on them, we invest against them.
“We’re going to be investing towards half a billion dollars a year by 2030, and we build incentives around them. [Our employees] want to know – what do I need to know? What do I need to do?
“We’ve gone from push to pull on this and that’s what you’ve got to do, too.”
$1 billion is how much Mars is investing in its Sustainable in a Generation Plan (source: Mars Incorporated).
The Future of Sustainability at Mars
So, what does the future look like for Mars and its sustainability objectives?
Mars’ “Sustainability in a Generation” movement is a testimony to how the brand sets its goals. Instead of assessing three-to-five year periods, the company is planning for decades and generations.
“We’re engaging along the supply chain – we’ve got 20,000 suppliers – and we’ve engaged all of them,” Barry added.
“Then it’s about your business processes. How do you build this into product design, into your capital decisions, into your mergers and acquisitions?
“We buy a lot of businesses and we can either buy businesses that make it harder to achieve our targets or easier to achieve our target. So, it’s built into our due diligence.
“And then, we’re asking why. The first why, obviously, is that it’s the right thing to do and it’s what the planet needs and what the world needs.
“But we also see that this is going to deliver a competitive advantage in many different ways.”
Supply Chain
GDS Summits are tailored 3-day virtual event conferences that bring together business leaders and solution providers to accelerate sales cycles, industry conversations and outcomes. Regarding the Supply Chain Insight Summits, 82% of delegates said their overall experience was either Above Average or Excellent and 75% of Solution Providers said they would be interested in sponsoring future events.
For more, click here to hear from attendees on how GDS has helped them to achieve their business outcomes.
Continue the debate at GDS’ Supply Chain Insight Summits where we bring together senior supply chain executives who are actively seeking to share, learn, engage, and find the best solutions.
