The FMCG that’s moving fast towards sustainability

According to a McKinsey report, 90% of companies’ impact on the environment comes from supply chains. It makes sense, therefore, that sustainability at giant fast-moving consumer goods companies now means more than just eco-friendly packaging and environmental consumer social responsibility projects. With a growing realisation of the effects of consumerism on the environment, both consumers and companies are actively moving towards more sustainable practices.

That’s where global initiatives like the Living Business programme are helping companies become more competitive and productive by incorporating socially and environmentally sustainable practices into their business operations. By offering one-on-one expert strategic guidance, Living Business improves companies’ business governance and embeds sustainability more deeply within existing strategic, governance and reporting frameworks.

IFFCO, the UAE-based international group, which manufactures and markets a well-integrated range of mass-market food products, related derivatives, intermediates, and services, has been invited to participate in the Living Business program for three consecutive years. Their participation allowed the company to co-develop foundations for wider sustainability priorities beyond palm sustainability, where it started in 2019.

“We want to create products that not only our customers and consumers enjoy but also contribute to positive environmental and social impacts, thus, sustainability is the way forward. IFFCO first joined the Living Business program in 2020 to learn the best practices from field experts and to challenge ourselves to better understand how to implement sustainability in every action we take,” says Rizwan Ahmed, Executive Director at IFFCO.

When assessing sustainability in FMCGs, important environmental metrics to consider are carbon footprint, use of energy and water, waste handling, recyclable and climate-efficient packaging and sustainable sourcing. IFFCO’s participation in the Living Business program has confirmed the importance of embedding sustainability as an ingredient in manufacturing its products and have since appointed a senior executive to run sustainability initiatives globally, reporting to the Executive Director. The growing sustainability team is driving a sustainability strategy and action plan at its 23 production sites and across the organisation globally. During its participation in 2021, IFFCO identified 25 sustainability projects that were undertaken and planned at various sites, one of which was the Living Business-sponsored energy audit conducted by external expert with plans to implement scaled energy efficiency and renewable energy projects. 

From solar-powered plants for olive oil in Spain and seed crushing in Pakistan that are using 43% and 14% respectively of their energy consumption from renewable sources, to sourcing traceable and sustainable palm oil at its facilities in Indonesia, UAE, KSA, Egypt and Pakistan, to innovation in making sustainable packaging using less paper and plastic materials, as well as collaborating with an Egyptian recycling project, Green Pan, to help collect used cooking oil from households and turn it into biofuel, IFFCO’s sustainability actions are becoming second nature.

As IFFCO recognizes that its impact on environment also comes from supply chain, the company has been working on palm sustainability since early 2019 and is is committed to sourcing and processing traceable and sustainable palm oil for its facilities. Its palm oil roadmap will guide its progress towards that commitment and light the way to establishing partnerships that create scalable impacts.“While IFFCO does not own or operate palm oil plantations and mills, our company is dedicated to only source from third-party suppliers that embrace the same sustainability commitment and achieve traceability to mill and plantations. Our refinery in Indonesia, which supplies nearly 50% of IFFCO Group palm requirement, is constantly working with suppliers to map the supply base, to obtain understanding regarding deforestation risk and properly inform the necessary action. This helps us to establish global footprint and baseline traceability scores for our palm oil supply chain,” Ahmed says. The refinery in Indonesia achieved 100% traceability to mill (TTM) and 84% traceability to plantation (TTP) for the volume processed in 2020/21 and is set to continue the effort it has begun since 2020 to further increase the TTP score for 2021/22 volumes.

Sustainability allows companies to improve their environmental footprint and their market reputation but can also deliver benefits at the checkout counter. According to the EY Future Consumer Index, 43% of global consumers want to buy more from organisations that benefit society. That intention offers a major growth opportunity for consumer-facing companies as the industry rebuilds value chains in the wake of the pandemic, the report says.

But while green business strategies will pay off at the checkout counter, delivering the value consumers seek must become an integral part of operations.

For its part, IFFCO understands that sustainability is a journey, not a destination. As Ahmed puts it, “Building a sustainable practice requires transformational organisation change and a continuous effort that extends across the business. Our collaboration with HSBC Living Business program helped us pinpoint challenges and areas of improvement within our processes.”