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Home / case studies / Case study: How Nutreco enhances sustainability across its supply chain

Case study: How Nutreco enhances sustainability across its supply chain

Nutreco is a global leader in animal nutrition and aquafeed, with sales in more than 90 countries around the globe. Nutreco has over 4,500 direct suppliers whom it seeks to motivate to address key sustainability issues  Tweet This! such as biodiversity loss, child labour, pesticide use, water use, antibiotic use, traceability and fishery management.

This case study is based on the 2018 Sustainability Report by Nutreco published on the Global Reporting Initiative Sustainability Disclosure Database that can be found at this link. Through all case studies we aim to demonstrate what CSR/ ESG/ sustainability reporting done responsibly means. Essentially, it means: a) identifying a company’s most important impacts on the environment, economy and society, and b) measuring, managing and changing.

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Nutreco asks all its suppliers to sign and agree to comply with its Supplier Code of Conduct (SCoC) and, to date, suppliers representing 84% of Nutreco’s direct spend have signed their commitment to comply with the SCoC. In order to enhance sustainability across its supply chain Nutreco took action to:

  • implement a Supplier Code of Conduct
  • audit suppliers

What are the material issues the company has identified?

In its 2018 Sustainability Report Nutreco identified a range of material issues, such as climate change, biodiversity, food safety, deforestation, slavery/human rights. Among these, enhancing sustainability across its supply chain stands out as a key material issue for Nutreco.

Stakeholder engagement in accordance with the GRI Standards              

The Global Reporting Initiative (GRI) defines the Principle of Stakeholder Inclusiveness when identifying material issues (or a company’s most important impacts) as follows:

“The reporting organization shall identify its stakeholders, and explain how it has responded to their reasonable expectations and interests.”

Stakeholders must be consulted in the process of identifying a company’s most important impacts and their reasonable expectations and interests must be taken into account. This is an important cornerstone for CSR / sustainability reporting done responsibly.

Key stakeholder groups Nutreco engages with:

Stakeholder Group
Employees
Government and regulations
External sustainability (e.g., food retailers and foodservice)
Food retailers and foodservice
Non-Governmental Organisations (NGOs)
Academia

How stakeholder engagement was made to identify material issues

To identify and prioritise material topics Nutreco invited 700 stakeholders to participate in a web-based questionnaire. These stakeholders represented suppliers, customers, non-governmental organisations (NGOs), academia, Nutreco’s parent company SHV’s sustainability platform and Nutreco employees.

What actions were taken by Nutreco to enhance sustainability across its supply chain?

In its 2018 Sustainability Report Nutreco reports that it took the following actions for enhancing sustainability across its supply chain:

  • Implementing a Supplier Code of Conduct
  • Nutreco asks all suppliers to sign and agree to comply with its Supplier Code of Conduct (SCoC), a three-page document (found on Nutreco’s website) divided into three components – general products, agricultural products and marine products – and covering criteria addressing various sustainability issues (including biodiversity loss, child labour, pesticide use, water use, antibiotic use, traceability and fishery management). Since its launch in 2017, all of Nutreco’s Supplier Code of Conduct documents are stored in its new 1QM quality system. The trend of direct spend (suppliers) who have signed their commitment to comply with Nutreco’s Supplier Code of Conduct is increasing marginally on a yearly basis. In 2016 and 2017, 86% of direct spend suppliers signed the SCoC. In 2018, though the 84% rate reflects a step down, it is the result of introducing close to 1,000 additional new suppliers when Hi-Pro Feeds was added to Nutreco’s portfolio of companies as a new business. Eliminating the effect of these new additions, for which approximately half have signed their commitment, the 2018 rate would have been 87%.
  • Auditing suppliers
  • Nutreco is committed to ensuring the sustainable sourcing of the raw materials it uses to produce high-quality nutritional solutions that enable farmers to grow healthier and safer seafood and animal proteins for the growing human population. Nutreco believes working collaboratively with its suppliers to meet its standards, is the only way to ensure safe and reliable solutions for its customers around the world. Through its divisions, in 2018 Nutreco performed quality audits at key suppliers, according to the division supplier and supply chain improvement plan. Audits are mainly executed by the Quality teams at each division and partly outsourced to a third party. Though audits mainly focus on quality and product specification characteristics, as a key part of Nutreco’s supplier development programme, a portion of the audit is structured to examine general sustainability issues relevant to the supplier. Out of our total of 4,562 suppliers, approximately 325 suppliers represent 80% of Nutreco’s annual spend. Of these 325 suppliers, Nutreco determined that approximately 225 suppliers represent a high risk, either due to the type of commodity they supply or the region it is sourced from. Nutreco’s high-risk suppliers are placed on a three-year audit cycle (audited once every three years). In October 2018, two NGOs in Norway released a report about Brazilian soy protein concentrate producers. These producers were accused of sourcing soybeans from some specific farms that, in the report’s opinion, had violated the law in a variety of ways, including illegal deforestation, slave-like labour and illegal pesticide use. The report did not accuse Skretting (Nutreco’s aquaculture division) of having received products that potentially had come from these farms, as it had purchased certified products. However, it suggested that it is not enough to only buy certified products, and that feed producers also have a role to play in overseeing that the soy product suppliers only deal with soybean farms that operate responsibly. Skretting does not disagree with the NGOs on this issue in principle, but it has also emphasised the difficulty in being certain that all suppliers to its own suppliers operate in a responsible, legal way. The audits found no evidence based on recent transactions (2018) that any of Skretting’s suppliers had bought from soy farms engaged in illegal activity linked to deforestation, “slave-like” labour or illegal pesticide use.

Which GRI Standards and corresponding Sustainable Development Goals (SDGs) have been addressed?

The GRI Standard addressed in this case is: Disclosure 412-3 Significant investment agreements and contracts that include human rights clauses or that underwent human rights screening

Disclosure 412-3 Significant investment agreements and contracts that include human rights clauses or that underwent human rights screening does not correspond to any SDG.

 

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SustainCase was primarily created to demonstrate, through case studies, the importance of dealing with a company’s most important impacts in a structured way, with use of the GRI Standards. To show how today’s best-run companies are achieving economic, social and environmental success – and how you can too.

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References:

1) This case study is based on published information by Nutreco, located at the link below. For the sake of readability, we did not use brackets or ellipses. However, we made sure that the extra or missing words did not change the report’s meaning. If you would like to quote these written sources from the original, please revert to the original on the Global Reporting Initiative’s Sustainability Disclosure Database at the link:

http://database.globalreporting.org/

2) https://www.globalreporting.org/standards/gri-standards-download-center/

Note to Nutreco: With each case study we send out an email requesting a comment on this case study. If you have not received such an email please contact us.

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