Executive Summary

This Guide is a reference manual for companies seeking to source their agricultural raw materials sustainably. It is intended for any food and beverage company buying its agricultural raw materials from farmers and farmer organisations directly, or indirectly through supplier companies.

It describes every step of the process of a company’s sustainable sourcing strategy development and implementation, and contains suggestions, advice and concrete examples for each of those steps. That being said, there is no need to read it from cover to cover. The order of the different chapters is not necessarily the order in which you need to address issues in your firm. You may choose your own entry points, according to your needs.

There are substantial differences amongst companies between organisational cultures, structures, decision-making processes, markets, product portfolios, consumer markets and much more. For that reason, this guide is built around questions that will be answered differently by various firms and even by various parts of the same firm. It also provides real-life examples taken from very diverse organisations, showing how companies have successfully tackled certain issues. These are meant to inspire managers find solutions for their own companies as, throughout the document, we stress that solutions found in one company will not necessarily work in another.

  1. Chapter 1, Sustainable Sourcing as Leadership and Value Creation

    gives a general background on the strategic importance and the strategic conditions to successfully implement sustainable sourcing in a firm. It links our specific topic (‘sustainable sourcing’) to general strategic issues, the business context, the importance of stakeholder pressure and value drivers.
  2. Chapter 2, Implementing Sustainable Sourcing – Decisions to be Made

    gives a short overview of the different aspects that are the basis for chapters 4 to 8 in the guide, which deal with the process of implementing a sustainable sourcing strategy. In reality, decisions may develop in a different order than the one proposed, or parallel to each other.
  3. Chapter 3, Setting Priorities for your Company’s raw materials from Agriculture

    proposes a number of questions to ask before developing sustainable sourcing in great detail. The first step is to set priorities (priority raw materials, priority countries, priority issues, etc.) and to base a consistent sustainable sourcing programme on them.
  4. Chapter 4, Choosing Appropriate Sustainability Requirements

    describes the next step, which is to define the level of sustainability you want to achieve for specific agricultural raw materials: what sustainability criteria and minimum requirements. What role internally or externally defined standards may or may not play is also discussed in this chapter.
  1. Chapter 5, Implementing Sustainability Standards in your Company’s Supply Chain

    focuses on how to implement your sustainable sourcing ambitions. Of course, the steps needed for implementation are strongly dependent on the character of the supply chains. Direct sourcing is different from sourcing through suppliers or from commodity markets. There may be a need to redesign supply chains for the sake of sustainability. In the case of direct sourcing, implementation may require your company to be active in supporting farmers, possibly in cooperation with other companies sourcing from the same area. This chapter also addresses questions around monitoring implementation and certification. It does not give a binding advice on whether to seek certification or not, but provides a number of questions that you may want to ask before making a decision. The chapter concludes by looking at the relevance of impact assessment.
  2. Chapter 6 and Chapter 7

    describe the changes required in your firm’s business processes to achieve sustainable sourcing both internally and externally; and how to communicate the company's sourcing effort to the outer world. Actual or new managers will notably be required to acquire new skills, including the management of new relationships with suppliers and farmers. It will be probably also be necessary to adapt reward systems for managers and assess the allocation of resources for rolling out a sustainable sourcing strategy.

Throughout the guide, real-life examples are given from a variety of companies in the food and beverage sector. These are meant to inspire managers in other companies. They are not meant to simply be replicated as, throughout the document, we stress that solutions found in one company will not necessarily work in another. This is the reason why this guide is built around questions rather than final answers.

This Guide on the Sustainable Sourcing of Agricultural Raw Materials is the result of a cooperative effort by SAI Platform, IDH, ITC and IMD’s Corporate Sustainability Leadership Platform.

Foreword how to use this guide