When it comes to corporate sustainability, Mars matters.
Mars has an impact, first of all, because of the company’s heft. With $30 billion in revenues and more than 65,000 workers around the world, Mars is the world’s second largest chocolate company (behind Kraft, which owns Cadbury), the world’s largest branded rice company (Uncle Ben’s), one of the world’s largest pet food companies (Pedigree, Whiskas) and the world’s largest chewing gum company (Wrigley, Orbit, Doublemint).
The company also matters because of the way it thinks about sustainability. Unlike most big companies, its sustainability goals are guided by science. By 2040, Mars says, its offices and factories will use no fossil fuels and emit no greenhouse gases–because scientists believe that greenhouse gas emissions need to be reduced by 80% by 2050, and getting to zero in the offices and factories will be needed for Mars to do its share. In agriculture, where the company has its biggest impact, Mars has pledged to buy 100% of its cocoa, coffee, tea, fish and palm oil from sources certified as sustainable by third parties.
Recently, I met with Kevin Rabinovitch, Mars global sustainability director, at corporate headquarters in McLean, VA. Reporters aren’t often invited inside Mars, which is a famously private company. It’s privately-held, owned by the Mars family, which began making candy in 1911. And, until recently, the company has been reluctant to talk about its business. “Kind of like Russia before Perestroika,” says a pal of mine who years ago did legal work for Mars. There’s no sign on the unassuming headquarters offices, which tells you how the company feels about unwanted visitors.
But Mars is pulling back the curtain around environmental issues. Kevin, 36, who was trained as a chemical engineer and later earned an MBA, has been leading its sustainability work for about five years. Talking more about sustainability is important to the company’s workers, he told me, as well as to other companies, governments and NGOs with whom Mars wants to collaborate. “For us to be a credible partner that people want to work with, we have to establish that credibility – and by talking about our work, thinking and goals, we help build the credibility to attract those partners,” he said.
A mutual benefit is a shared benefit; a shared benefit will endure.
We believe the standard by which our business relationships should be measured is the degree to which mutual benefits are created.
These benefits can take many different forms, and need not be strictly financial in nature. Likewise, while we must try to achieve the most competitive terms, the actions of Mars should never be at the expense, economic or otherwise, of others with whom we work.
Interesting, no? The Five Principles are key to the culture of Mars. So is taking a long-term view, Kevin said.
Although Paul Michaels, Mars’ CEO, is the company’s first CEO not named Mars, the family still has enormous influence over how the business is run.
“Our owners think about the business in generational terms,” Kevin told me. “The more you think about your business long-term, the more you naturally gravitate to thinking about sustainability.”
Mars began its sustainability work by looking at its operations. It owns about 140 factories, about a third in the US, about a third in Europe, and about a third elsewhere. It did all the usual stuff–replacing light bulbs, adding insulation, buying efficient boilers and motors, redesigning processes. Aside from a landfill gas project at a chocolate factory in Waco, Texas, the company is not buying much renewable power. “We don’t think paying a premium for renewable energy makes sense, mostly because it doesn’t scale,” Kevin said.
More innovative was its goal-setting. The company set a zero emissions goal for its factories and offices because most climate scientists agree that greenhouse gas emissions need to be reduced by 80% by 2050 to avoid risky climate impacts. Mars decided to overshoot that goal in its own operations because it will be harder to change agriculture, where its impact is biggest.
“We have been unequivocally convinced by climate science that this is a real issue,” Kevin said. “Humanity is causing it. We should be setting a CO2 reduction goal that bears a resemblance to what scientists say your CO2 reduction goal should be.” This may sound like common sense, but most companies can’t tell you why they set their targets where they did. Or, worse, they set relative targets–saying they will reduce emissions by X percent for each unit of sales–rather than absolute targets. Bill Baue, a sustainability adviser and writer, wrote an excellent article exploring this question of “sustainability context”at Mars for The Guardian.
The other area where Mars is doing what strikes me as pioneering work is in its supply chain. I’ve written before about Howard Yana Shapiro, the director of global plant science at Mars, who has lead a team that is decoding the cacao genome. [See my blogpost, The man who would save chocolate] Mars buys about 10% of the world’s cocoa, so it can change the way cocoa is grown. Already, it is delivering technical assistant to cocoa farmers in west Africa, among other places. Producing more cocoa on less land reduces pressures on forests and, not incidentally, increases the supply of chocolate, which is good for Mars.
“Yields of cocoa in west Africa could be tripled what they are today,” Kevin said. “No R&D. No magic pixie dust. The knowledge exists. The problem is getting the knowledge out to the cocoa farmers.” Mars is also working with a variety of NGOs and governments to curb child labor in the cocoa supply chain, the company says here.
There’s more than could be said about Mars–it has set targets around a range of sustainability and social issues, ranging from advertising its products on kids TV (basically, it won’t buy time on shows where more than 25% of the audience is under 12), getting rid of transfats, reducing water use and eliminating waste (which it hopes to do by 2015). Where it doesn’t have clout on its own, it is working with others, through groups like the Sustainability Consortium and the Roundtable on Sustainable Palm Oil.
Do consumers of M&M’s or Snickers care? Probably not, but Mars will go forward anyway. This is a company worth watching.