World Environment Day: Olam reimagines food systems operating within nature’s boundaries

05 Jun 2020 --- World Environment Day is a vehicle of the United Nations (UN) encouraging awareness and action for the conservation of global ecosystems. In celebration of today’s global event, Olam International has outlined principal ways it is reimagining food systems to operate within nature’s boundaries. FoodIngredientsFirst speaks to Chris Brown, Vice President and Global Head of Environment at Olam International, on the company’s vision of an economic system that departs from the conventional capital-based business model to one based on the biodiversity and availability of nature’s assets.

When asked about the unique and emergent benchmarks in corporate environmentalism, Brown highlights a growing dependence on financial accountability for sustainability. “This is a nascent but exciting trend linking the finance and the sustainability teams as one. In the food and agribusinesses sector, our dependence on biodiversity is very apparent. Products from coffee to cotton rely on healthy ecosystems and biodiversity, as does our long-term value and profitability,” Brown explains.

Brown highlights a growing dependence on financial accountability for sustainability. Olam has recently created a new “Finance for Sustainability” (F4S) team to account for natural capital and work to incorporate it into the company’s profit and loss statement (P&L) and balance sheet, through its Integrated Impact Statement (IIS). 

“At Olam, F4S is a dedicated department responsible for developing the multi-capital accounting methodologies, helping embed human social and natural capitals within the organization. We’re trying to uncover these hidden benefits and value them with a goal to ensure that every financial decision takes biodiversity and ecosystem services into account,” he explains.

The trend of “Storytelling: Winning with Words,” crowned as Innova Market Insights’ Top Trend for 2020, notably ties into the eco-centric agri-food business model. “We’re seeing a big emphasis on knowing the real story behind your product and being able to demonstrate to customers and consumers that you know where it’s sourced from and that it’s been produced responsibly,” notes Brown.

“There is also increased interest from investor analysts on Environmental Social and Governance (ESG) reporting. This is good news as the finance sector plays a key role in enabling projects to turn into long-term programs. We see greater granularity across all areas,” he adds.

Olam underscores what is shaping up to be a year when nature will take center stage, albeit virtually, at the Convention on Biological Diversity. “I’m pleased that influential organizations and forward-thinking businesses have come together in one global collaboration, Business for Nature, to demonstrate business action and call on governments to reverse nature loss,” says Brown.

Accounting for nature
Instead of GDP being the main metric for success, Olam asserts that value should be assigned to the conventional assets that underpin economic prosperity. “So far I believe we’ve failed to evidence and articulate the business case for nature in a way that cuts through the short-term, globalized financial system we operate in,” says Brown.

“To really move the needle on natural capital, it can’t be confined to the remit of sustainability teams, but put into the hands of decision makers – this means policy leads, financial institutions and for businesses, the finance and risk teams. We're working to apply planetary boundaries in multi-capital accounting, allowing us to see the natural capital value we create, or erode, based on the decisions we take and subsequent risks or opportunities,” he stresses.

Olam utilizes the Olam Farmer Information System (OFIS) to map exactly where farmers are operating relative to the deforestation and work with them to prevent land expansion, while promoting productivity.Making data and insights accessible via AtSource
Through Olam’s sustainable sourcing platform AtSource, customers can track the environmental footprint – broken down into carbon, waste, water and 33 other indicators – along each step of the supply chain.

AtSource Infinity, a third tier of the sustainable sourcing program, represents the company’s highest ambition for positive system transformation. “In 2019, we identified six Infinity projects of which two are now being launched on the platform (as mentioned in the article) after approval by the AtSource Governance Group,” Brown further explains.

The first of Olam’s two sustainability programs to qualify for Infinity status is a circular coffee model, involving coffee roaster Solidaridad, Peru’s environmental authority SERFOR and a local farmer cooperative. Under this project, profits from the sale of products made from spent coffee grounds in the Netherlands will be re-invested into environmental conservation and improved farmer livelihoods in Peru.

The second Infinity project in action is in Ghana, co-created with Rainforest Alliance and in collaboration with Partnership for Forests (P4F). It is incentivizing 10,000 cocoa farmers to protect and restore the Sui River Forest Reserve, by helping them increase their yields through more sustainable agricultural practices and access to new income-generating opportunities.

Meanwhile in Mexico, Olam is part of the Alliance for Sustainable Landscapes and Markets project in partnership with United States Agency for International Development (USAID) and Rainforest Alliance, which is reforesting 4,000 hectares in the protected biological corridor in Chiapas, contributing to Mexico’s goal of zero deforestation by 2030.

Working to conserve natural capital
Despite Olam’s direct oversight and control at its own farms and plantations, the company flags the mammoth task of curbing deforestation linked to smallholder suppliers.” For this reason, we have developed the Forest Loss Risk Index (FLRI) to identify deforestation ‘hotspots,’ predominantly in cocoa and coffee supply chains, where we need to focus our attention,” Brown explains.

Having applied risk assessments to over 400 country and product combinations to date, Olam utilizes the Olam Farmer Information System (OFIS) to map exactly where farmers are operating relative to the deforestation and work with them to prevent land expansion, while promoting productivity. “To improve our scope for action on deforestation in Indonesia, last year we shared our OFIS technology with the Wildlife Conservation Society to reduce forest encroachment in the Bukit Barisan Selatan National Park (BBNSP) in Sumatra,” says Brown.

Through a “net-positive” approach within Olam’s Living Landscapes Policy, the company is building resilience into its supply chains with ecosystem conservation and regenerative farming practices, with the long-term goal of putting back more into food and farming systems than it is taking out.

“For example, in California, where we have our almond, walnut and pistachio ranches, Olam’s farming team is working with Groundwater Sustainability Agencies (GSAs) to push water back into the sub-basins, with 316 million gallons of groundwater recharged in 2019 alone,” details Brown.

In spite of the company’s best efforts, Brown notes that measuring the impact of environmental sustainability can prove to be a hurdle. “This can be very challenging when you try to isolate what is due specifically to your intervention and what is due to other factors. What is a fair representation of your efforts to demonstrate to stakeholders?” he muses.

“While we can say that we give sustainability support to more than 740,000 smallholders, we know that is an input rather than an impact. Olam Cocoa launched Cocoa Compass in 2019, which defines its sustainability ambition with a focus on 150,000 farmers to achieve a living income and 30 percent reduction in natural capital costs and increase in tree carbon stock by 2030. This is a huge step forward for focusing on impact.”

A final challenge is figuring out how to ensure transparency in indirect supply chains. “Through the Olam Supplier Code our buyers must engage with their direct suppliers, ensuring they take responsibility for managing upstream risks. If unacceptable practices are identified, we may terminate our relationship. But exiting high-risk supply chains rarely solves the underlying problem; in some cases, it will make it worse,” Brown concludes.

By Benjamin Ferrer