Based in Northfield, Illinois, Kraft Foods is the world's second largest food company with annual revenues of approximately $40 billion and sales in more than 150 countries.
Based in Northfield, Illinois, Kraft Foods is the world's second largest food company with annual revenues of approximately $40 billion and sales in more than 150 countries. They are also the only food company headquartered in the U.S. to make the Dow Jones Sustainability World Index. We talked with Steve Yucknut, VP of Sustainability at Kraft, about their unique approach to going green.
How does your business define sustainability?
We view sustainability as having three components: social responsibility, economic responsibility and environmental responsibility. If you envision each component as a circle that intersects the other, the center area is sustainability. Now, envision that center area as a lens. Look through that lens and you will see things differently. Unique opportunities for positive change will come into focus. Ideas that we may not have seen or appreciated in the past will become apparent.
We are mindful that there is a future we are responsible for, and that we can do well by doing good. We can minimize our impact on the environment and help advance society while increasing revenue and profit. We are striving to find that balance in everything we do.
How are you incorporating sustainable practices into your business?
Although sustainability isn’t new to Kraft, there has been an increased sense of focus in the last year and a half. In January 2007, we assembled a team that provides strategic direction so that sustainability becomes a part of every decision. We are incorporating aspects of sustainability into our business practices as well as well as making a change in the corporate culture. And we are succeeding in many ways.
One tool we developed to help us internally with our business practices is called the Eco Calculator. It’s a piece of software that calculates a score for any new package we design. The score is based on several criteria, including, but not limited to amount of material used, product to package ratio, recyclability and recycled content. The calculator provides the package developer and the brand team guidance and insight. Any new package that is developed at Kraft must go through this calculator or it cannot launch.
In terms of a cultural perspective, we’ve developed green teams that consist of volunteers who get together and determine how they can make changes for the better (i.e. getting rid of Styrofoam, reducing copying). In our Capri-Sun plant in Fresno, the facility was able to go 11 days without emptying a dumpster simply by finding alternative ways to use their waste. Now, other teams are looking at this as a record that needs to be broken. We’ve had a lot of success reducing waste by instilling a sense of healthy “green” competition among employees.
What are your short term and long term goals?
It’s easier to improve something if you measure it, so we are establishing baselines and looking at improvement on an annual basis. We have six areas of focus – agricultural commodities, packaging, energy, water, waste, and transportation/distribution – and we set goals in each segment.
In terms of quantifiable goals to be achieved by 2011 (using 2005 as our base year), we want to reduce plant energy usage by 25%, reduce plant energy-related CO2 emissions by 25%, reduce plant waste by 15%, reduce plant water usage by 15% and eliminate 150 million pounds out of our packaging stream.
In terms of qualitative goals, the publicity that comes along with our hard results is extremely advantageous to bringing about more change.
Where do you think you’ll have the biggest impact?
Looking back in five years, I think we’ll have the biggest impact on packaging and agricultural commodities. In packaging we are already doing a good job but there is always room for improvement in all phases – from sourcing to design to end of life.
We recently launched new packaging for our Yuban Rainforest Alliance-certified coffee. It’s now made with a composite paperboard canister that incorporates the use of recycled material. In terms of the design side, we are looking at reducing the amount of packaging we use (i.e. reducing the number of layers, reducing head space) to maximize efficiency.
We have made very large sustainable gains in end of life solutions too, partnering with TerraCycle (a program that takes materials that are challenging to recycle and turns them into high quality goods like bags, raincoats and shower curtains) and RecycleBank (a program that provides financial incentives for consumers to recycle by rewarding redeemable points for Kraft products). TerraCycle sells these products at places like Target and Walgreens, maintaining the original Kraft branding in a creative way. Both programs demonstrate our leadership in sustainability efforts beyond our four walls.
How do you measure your progress?
We measure EPIs, or Environmental Performance Indicators (water consumption, energy usage, energy-related carbon dioxide emissions, solid waste generation and recycling rates), and we measure them monthly. These numbers are analyzed and then published internally. On an annual basis, we report out our performance.
How do retailers factor into your efforts?
I would argue that retailers are further along on this journey than consumers. They are pretty sincere and dedicated to the cause. We provide the strategic insight, but they have to go down the path and actually make things happen. When retailers carry products like the ones made by TerraCycle, they are telling the industry they are committed to sustainability and taking the green challenge to heart.
Why are sustainable business practices important to the food industry?
We are especially reliant on the Earth to produce the resources we use to make high-quality, finished products (i.e. cocoa, wheat, corn). As population density increases and consumption patterns shift internationally, the Earth will need to become more efficient than it is today. For this to happen, sustainability issues must be attended to.
Why are sustainable business practices important to the consumer?
Consumers want to be sustainable, but for the most part they want their efforts to be compromise-free. They aren’t necessarily willing to pay more for a sustainable product and they don’t want to sacrifice taste. However, if they are choosing between two products that are the same in both cost and taste, more and more consumers will let sustainability be the tie-breaker.
Sustainability builds brand value. It can be a real differentiator, putting you in a competitively superior position. Yes, it takes time, effort and commitment, but it has great dividends on the back end. In essence, we are making our products more worthy of a consumer’s vote.
To learn more about Kraft's sustainability efforts, visit www.kraft.com.
This week on Supermarket B2B, we are running a series featuring interviews with food companies that are making strides in their sustainability efforts. Check in daily for a new feature.
If you are interested in telling us more about what your company is doing to get involved please contact Allison Bloom firstname.lastname@example.org.