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ANALYSIS: Food Companies Score Double-Zeros for Supply Chains

Aug. 24, 2022, 9:00 AM

In light of recent signs of increased supply chain regulation, stakeholders are likely to soon set their sights on pushing companies to incorporate supply chain management into their ESG policies and make relevant disclosures. Companies will need to review ESG policies to ensure that their supply chain management provisions promote sustainability and ethical working conditions.

That transition may be especially difficult for food-related industries, which already has come under fire from stakeholders for ESG-related issues.

To find the companies that could be the least prepared for such demands, I looked at companies that scored zero (out of 10) on Bloomberg’s issue scores for both environmental supply chain management and social supply chain management.

From 2019 through the latest preliminary data in 2021, Bloomberg issued a total of 46 double-zero scores. Seventeen of those scores went to companies in the food, beverage, and tobacco industry group (all of which were food companies), 14 went to companies in consumer services (all but two of which were restaurants, and the other two were restaurant holding companies), and four went to companies in food and staples retailing.

Given these low scores, what can food-related companies do to improve?

Improving on Zero

To increase their own supply chain management scores, food-related companies should start to build supply chain policies and risk mitigation procedures that:

  • Determine and disclose of the scope of their supply chain, including farmers, packaging companies, wholesalers, and retailers.
  • Identify and draft policies covering all components that lead to a heightened risk of exploitative practices.
  • Identify and draft policies covering all components that can lead to heightened climate risks, including food waste and fertilizers.
  • Assign personnel dedicated to overseeing the supply chain and its risks (the top scorer on these issue scores, Allegheny Technologies, already has a director of supply chain).
  • Incentivize supplier reporting to support industry members needing an overhaul.

Food-related companies can also benefit by keeping an eye on the performance and disclosure practices of industry peers.

Bloomberg Law subscribers can find related content on our ESG Practice page, as well as our Practical Guidance: ESG Risk Management page. Bloomberg’s ESG scores are available on the terminal at ESGD <GO>.

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