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(Calvert Investments) - A diverse group of thought leaders from local organizations, non-profits, government, and international corporations weigh in on food sustainability

Tell me what you eat, and I will tell you what you are.
-Anthelme Brillat-Savarin

Quick. What did you have for breakfast? Did you make it yourself? If you ate cold cereal, was it made from a grain traded on global markets, such as corn or wheat? Was the cereal high in sugar or sodium? Was it marketed to children? Were the cereal company employees protected by safe labor practices? Did your milk come from cows raised in a large feedlot or local dairy? Were the cows treated humanely?

It’s enough to make you lose your appetite. Working through the sustainability profile of any given food – much less the company that grows, manufactures, or serves that food –is a daunting task. In fact, the sustainability risks and opportunities for investors in the food sector are so intricate that Calvert invited outside experts to spend the day sharing various perspectives with our staff, members of the Boards of Directors/Trustees of the Calvert sustainable and responsible funds, and members of the former Advisory Council of Calvert Social Investment Fund (CSIF) on June 13 and 14. We aimed to untangle some of the most material and thorny issues in the food industry in order to test our analytical approaches and advocacy goals in three broad areas:

Nutrition, Obesity, and Marketing to Children

Calvert recognizes how critical these issues are for society today and how much our food system is impacted by these factors. Three experts shared their perspectives on these issues.

Tanikka Cunningham, Executive Director of the non-profit Healthy Solutions, explained how her community of Southeast Washington, DC – the majority of which is African-American and lives below the poverty line – manages without adequate access to fresh food. In fact, a 2010 analysis of food deserts in the DC area found that there was one grocery store for every 23,000 people in Ward 8, where Healthy Solutions operates, compared to one grocery store for every 7,300 people in Ward 3, one of DC’s wealthiest areas. Ms. Cunningham explained how difficult it is for some residents to reach grocery stores on public transportation, and described the cooking classes, farmers’ markets and small-farmer assistance her organization provides in Washington, as well as in North Carolina and Alabama.

Another pre-symposium speaker, Jim Weill – former member of the CSIF Advisory Council and President of the Food Research and Action Center, a domestic anti-hunger/anti-poverty organization – addressed critical issues of hunger in the U.S. today. He discussed how nearly fifty million people live in households struggling to put adequate food on the table throughout each month, and how corporate policies may help or hinder the efforts to reduce hunger and improve nutrition for low-income people.

Margo Wootan, Director of Nutrition Policy at the Center for Science in the Public Interest (CSPI), explained that aggressive marketing to children by food manufacturers and restaurants has been pervasive and contributes to obesity and increased rates of Type II Diabetes. For example, more responsible companies within the industry have signed onto voluntary initiatives, which limit marketing to children under 12-years-old and encourage reformulation of products to reduce levels of sodium or sugar. However, these measures generally present enough loopholes that children continue to see thousands of commercials for unhealthy food. CSPI found that in 2005, before many of these voluntary programs took effect, almost 90% of food advertising on Nickelodeon was for food of poor nutritional quality; in 2009, after most of the voluntary programs had been instituted, that level dropped only by about 10%.

Finally, Bob Langert, VP, Corporate Social Responsibility for McDonalds Corp., explained the efforts his company has made to introduce healthier products for children, such as low-fat milk or apples, and encouraging children to exercise. He also discussed general lessons learned by the food industry in the area of marketing healthier products. In general, finding the right balance of responsible marketing and product reformulation in a way that is appealing to children is difficult. And getting healthy products to food deserts is a significant challenge.

Participants generally agreed that these problems require a partnership approach of various stakeholders, standardized nutritional guidelines, and developing strong corporate policies on marketing to children. Participants also supported addressing product packaging and the marketing that is targeted at children in schools.

Sustainability Challenges in the Supply Chain

Calvert understands that many food companies have made vast improvements in the way their companies affect the environment, workers, and consumers, but that some of the greatest sustainability challenges reside in the supply chain of food companies. The central question presenters addressed was how to support alternative food systems or supply chain metrics that might lessen negative supply chain impacts such as human rights violations, resource depletion, and other similar concerns. Bama Athreya, Executive Director of the International Labor Rights Forum (ILRF), gave an overview of food industry labor relations issues, particularly in comparison to apparel companies. Ms. Athreya, who spoke the evening before the Symposium to members of the funds’ Boards and former Advisory Council, described ILRF’s efforts to hold pineapple growers and chocolate companies accountable for human rights and labor abuses in their operations or supply chains.

Jackie Warledo of the Seminole Nation and International Indian Treaty Council explained the unique relationship that Indigenous Peoples have with food and food production. Many native cultures hold food sacred, begin their calendar year in time with the planting or harvest of a certain crop, and have special ceremonies for food or medicinal plants that serve as a cultural memory and teaching tool for youth. The commercialized or industrial food system typically relies on resources obtained from Indigenous Peoples, such as water, land, medicinal knowledge, and seed varieties.

Indigenous Peoples around the world view food sovereignty as a right and seek to define policies and strategies for sustainable production, distribution and consumption while respecting cultures and natural resource systems. Unlike Food Security, which ensures that there is enough for all to eat, Food Sovereignty protects the right of Indigenous Peoples to produce and eat food as they choose, in a culturally appropriate manner. Other groups have also adopted the Food Sovereignty concept as a way of preserving food diversity, local crop varieties, recipes and traditions, and control over food production methods and ingredients.

LeAnn Oliver of USDA’s Rural Development office detailed US agriculture trends and ways in which investors can support small-scale, local or alternative farming or distribution. She said there has been tremendous growth in direct farmer-to-consumer sales, with impressive increases in the number of farmers’ markets. In general, value-added production and product differentiation help small-scale farmers – for example, by producing cheese instead of milk. She suggested that investors investigate ways of extending the production cycle, and invest in mobile processing facilities and renewable energy projects to generate revenue from waste.

For the corporate perspective, we asked Harriet Hentges, Vice President for Corporate Responsibility and Sustainability of Ahold USA (the Netherlands-based parent company of Washington-area Giant Foods, Giant of Carlisle, PA, and New England-based Stop-and Shop), to weigh in. She explained that the supply chain is getting ever more complex, and suggested that there are several opportunities to increase supply chain sustainability.

First, she recommended harnessing a surprisingly strong wave of pre-competitive collaboration of food retailers as well as the increased collaboration of retailers and consumer packaged goods companies.

Second, she noted the importance of the work of the Sustainability Consortium, a network of companies, non-profit organizations and academics working to develop a system to measure and share data on life-cycle analysis to gain better insight into supply chain sustainability.

Third, she suggested that for verification programs in the supply chain, training of buyers and category managers is essential. Finally, she agreed with Ms. Oliver that investing in value-added production schemes can help struggling farmers. She said that though consumers are demanding more local products, local sourcing poses significant product safety and predictability of supply challenges. The sense of the panel discussion was that supporting these alternative food systems and corporate efforts to improve sustainability are both important.

The Global Food System

The third panel turned to the issue of long-term sustainability of our food system given pressures of climate change, resource scarcity (water, land, biodiversity) and population growth. Gawain Kripke, Policy Director of Oxfam USA, provided an overview of the growing hunger crisis. He discussed the roots of the crisis, including diminishing yield increases in modern agricultural techniques and food price volatility and price increases. He suggested that solutions lie in investing in livelihoods and farmer resilience, and developing safety nets and food reserves.

Leslie Lowe, former Director of the Energy & Environment Program at the Interfaith Center on Corporate Responsibility, outlined the process that created a broken food system. She explained that we have moved from a mostly place-based system to a global industrial agricultural system, which extracts surplus value (such as water) from countries where food is grown to consuming countries and destroys topsoil with intensive chemical use. She cautioned that investors are attracted to scarcity, but investing in foreign land for agricultural export could leave investors vulnerable to local governments wresting control in times of hunger or famine. She also said we should expect greater disruption to the global food system due to climate change and the vulnerability of a just-in-time management system in an era of political and environmental instability.

Arlin Wasserman, Vice President of Sustainability and CSR for Sodexo, a global food service provider, said that food companies are now facing the same scrutiny that apparel companies like Nike faced years ago during anti-sweatshop campaigns. The difference is that food companies have more complex products and supply chains, so this effort is more difficult and will take time. We may need to switch diets and enable farmers to grow different crops over time, enhancing their resilience. He also recommended that companies work together on pre-competitive issues such as species extinction, and not use them as differentiators for marketing purposes.

Food for Thought

Calvert is sifting through the recommendations provided by the speakers at the Food Symposium, as well as comments from Directors/Trustees of the Boards of our sustainable and responsible funds and former CSIF Advisory Council members. We’ll be reaching out to select food companies to find ways to implement some of the ideas proposed at the Symposium, and continue our dialogue with stakeholders as well as consider advocating for specific public policy initiatives that will help advance our concerns in these areas and others where we can provide an investor perspective.