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Building resilient value chainsValue chain case studies illustrating different intervention types

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Introduction B&Q’s journey to sustainably-sourced timberbegan as a ‘decoupling’ intervention, butdeveloped into a number of ‘transitionschemes’ across their timber supply chainand beyond using certification, roundtablesand land use planning.

The intervention Estimates of illegal logging suggest that itaccounts for over a tenth of the globaltimber trade, with products valued at $15bnevery year contributing to globaldeforestation and climate change. In theearly 1990s, as rainforest deforestation andtropical timber sourcing gained publicprominence, B&Q (part of the KingfisherGroup) came under increasing pressure toshow transparency in its timber sourcing.This sparked a huge internal focus on itstimber supply chain to look for solutions.

The company concluded, along with anumber of other organisations, that asustainable timber product label which wascredible and trustworthy was needed to helpconsumers make informed purchases thatdid not contribute to forest degradation. As aresult, B&Q became a founding member ofthe Forestry Stewardship Council (FSC) in1991, and in 1993 was one of the firstretailers to develop a responsible timberpolicy.

Although the FSC was initially a roundtableinitiative for supply chain and forestmanagement issues, its scope andpartnerships grew. Non-governmentalorganisation (NGO) involvement was crucialin building FSC credibility and ensuring thatthe project was achieving its aims. FSC nowprovides assurance and a recognised chain ofcustody for certifying wood products, and isgenerally considered to be the ‘gold standard’

for sustainable forestry. It is included withingovernment procurement policies on themarket side and within their forestmanagement strategies on the productionside.

Independent verification of forestry enabledB&Q to move towards sustainably sourcingtimber for its products. At an early stage itannounced the aim to move to 100 per centproven well-managed and sustainablysourced timber, increasing its sustainablesupply each year. Several B&Q suppliers havegrown with the business, grasping theimportance of FSC from an early stage.

At the start, FSC was the intervention forB&Q. However, certification does not solve allforest issues, and B&Q and Kingfisher havenow developed a wider ‘forest programme’.This includes promotional campaigns such as‘Good Wood’ and ‘Forest Friendly’, awarenessraising through The Prince’s RainforestProject, regulatory engagement via ‘TheTimber Retail Coalition’, NGO programmessuch as ‘Forest Trust’ and WWF’s Forest andTrade Network, and investment mechanismssuch as ‘The Forest Footprint Disclosure’.These initiatives have led to strategicrelationships with suppliers to ensuretransparency and resource security in thesupply chain, an approach that is changingthe purchasing model norm within theKingfisher Group.

Approach, challenges and achievements Deforestation remains high in the publicconsciousness and a failure by companies toengage on the issues carries reputationalrisks. But consumer demand remains under-developed, and choice editing (in whichlower ethical or environmental choices areremoved from the customer or supplier offer)through timber procurement policies has

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APPENDIX: CASE STUDIES

B&Q: Sustainably sourced timber

Cargill: Sustainable Soy Partnership Page 5

Nestlé: The Nescafé Plan Page 8

Olam International: Rice Nigeria Page 10

SABMiller: Water Futures Page 13

Contents

B&Q: Sustainably sourced timber Communicated by Jamie Lawrence, Corporate Responsibility, Kingfisher plc

Case Studies:Layout 1 27/06/2011 10:23 Page 2

4 - Value chain case studies illustrating different intervention types

been the main element of the timberprogramme to date.

Refusing to buy certain species of timber,essentially banning them in-house, andrefusing to buy from non-certified sourceshas a significant influence on the supplychain. But, while this method can help anorganisation meet its individual sustainabilityneeds, it ‘decouples’ the business from non-complying suppliers/forests. The easier(short-term) option in many cases is for thecommercial team to switch suppliers ratherthan to move the supplier towardscertification. To mitigate this, B&Q haspartnered with the Forest Trust and WWF tomove forests as a whole towards certificationin a phased approach. This takes time.Moving a forest to FSC standard typically cantake up to five years.

When FSC first started, initiatives requiredlittle coordination since very few existed. Asthe number of initiatives increases, andsustainable sourcing becomes moremainstreamed into company procurementpolicies, greater potential exists for overlapand duplication. As part of its process ofbuilding strategic supplier relationships, B&Qnow assesses and rates its own suppliers onsustainability issues and is working on howto complement this with independentinterventions such as the FSC and PEFC(Programme for the Endorsement of ForestCertification) . Nowadays, 77 per cent ofKingfisher Group timber is from proven, well-managed sources (50 per cent of this is FSC),and 100 per cent of B&Q UK productscontain wood from either certified orindependently verified sources.

Traditionally Kingfisher/B&Q have stayed fouror five steps away from the forest in thesupply chain. Now they are exploring how toget closer to the resource itself and influencethe debate to ensure that forests are

protected and sustained. What was once acertification intervention is now much morevaried – with certification, roundtables,regulatory/government engagement and,increasingly, taking retailers into land useplanning discussions.

Impact From an early stage, B&Q made the boldstatement that it would reach 100 per centsustainably sourced timber. Thisannouncement helped to move the debateforward significantly, but required a processfor measuring progress and checking sourcesof supply. As traceability became more andmore important to the Group, human error inpurchasing decisions needed to beeliminated. Purchasing policy has now beenincorporated into the Group’s quality controlsystems together with independentcertification and internal monitoring andassessment – all of which requires theallocation of internal resources.

From February 2011, B&Q became the firstmajor UK retailer to achieve 100 per centproven well-managed and sustainablysourced timber. A major effect of B&Q’s earlywork on timber has been the evolution ofthe debate internally and an opportunity toevolve a wider B&Q/Kingfisher forestprogramme and strategy. The company now has increasedunderstanding of what is meant by a resilientsupply chain. It also realises that resilienceand sustainability are not necessarily thesame. Having 100 per cent sustainablysourced timber does not guarantee that acompany will have commercial access to thatsource for the next 30 years. Competitors, oreven companies within the sameorganisational family, can tie up sustainableresources, and longer-term resilience in thesupply chain requires strong relationshipswith suppliers and partners.

Lessons learntTo operate sustainably and, as competitionfor ever decreasing resources continues, thecompany has realised that it must protectand enhance all the environmental resourcesand services that it uses or that are affectedby its operations. Learning from what wasonce a third party certification andverification process has extended beyondB&Q’s timber supply chain. It has enabledB&Q to diversify sustainable sourcing andchoice editing into areas such as peat use ingardening products and paints using volatileorganic compounds, Coordinating thetimber work with other interventions, bothinternal and external, has been crucial. Therole of the consumer has also beenimportant though through choice editingand not just a reliance on informedconsumer choice. Indeed, retailers gainadvantage if they anticipate what theircustomers will want two or three years downthe line and encourage this.

The business has also realised that it willneed to keep pace to respond effectively. Asit moves towards 2020, B&Q aims to do thisthrough continued work with governments(e.g. through the EU timber regulations),product innovation, working within ‘closedloop’ product systems and by understandingthe impacts of all products.

Although B&Q realised that it was importantearly on to proclaim its preference for FSC-sourced timber, its targets could only beachieved with sound policies that gave aclear remit and priorities to its buying teams,and effective monitoring, auditing and datacapture mechanisms. Its focus is increasinglyon tropical timbers, working either throughFSC or partners such as the Tropical ForestTrust, Rainforest Alliance and WWF.

The Kingfisher Group as a whole believedthat communications about corporateresponsibility issues needed to be stronglysupported by evidence, data and keyperformance indicators. This cautious viewhas meant that it has not alwayscommunicated its leadership position inrelation to timber and it could have beenlouder and prouder of what it was achieving.

Leading by example is important, and in2010 Kingfisher invited IKEA, M&S andCarrefour to join it in forming the TimberRetail Coalition to support EU-wideregulations to control the import of illegally-logged timber. This approach aims to createa ‘level playing field’ since illegal timbercontinues to have easy access to the marketand undermine sustainable sourcing.

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and raise awareness about deforestationissues and offer the support of theResponsible Soy Partnership. As well asmapping, training and monitoring, thePartnership offered to assist farmers onworking out land rights issues. Land rightsare a complex and heated topic in Brazil, withlayers of rights on the same piece of land sothat farmers may not actually own the landthat they think they do. Legal assistance wasgiven to the famers to help them navigatethe legal maze providing an attractiveincentive for farmers to become involved.

Cargill offered a second incentive: a market.The company would sign supply contractswith the farmers that stipulated Cargill wouldonly buy from them if they were incompliance with the Forest Code.

Localisation played a key role. The plant waslocal to the farmers and Cargill had a daily,long-term presence. This localisationgenerated interest from farmers, civic andcivil society groups in the area. It alsopresented the biggest challenge, that ofbuilding trust with stakeholders. The farmersneeded to trust both Cargill and the NGO,and Cargill and the NGO needed to trusteach other. Building relationships andengaging communities takes time andregular two-way communication betweenpartners to be successful. Relationships havenow been built at all levels with local andnational industry bodies, and local andfederal government. Transparency, clear andcomplementary partner objectives and clearcommunications within and beyond thepartnership have been vital in ensuring thepilot project was successful in gettingfarmers on board and keeping theminvolved.

ImpactThe primary project goals were to combatdeforestation in the Santarém area, satisfycustomer concerns, and uphold Cargill’sreputation and commitment to corporate

responsibility. Demand in the soy beanmarket is such that the farmers could havesold their produce elsewhere and continuedto neglect the Forest Code. Working with thefarmers and keeping them in the supplychain with more sustainable practices, ratherthan excluding them and allowing continueddeforestation, has meant that nodeforestation has occurred the area aroundCargill's soybean terminal in Santarém since2008 (as verified by satellite imagery). TheResponsible Soy Partnership with Cargill andTNC has not only halted deforestation in theSantarém area, it has also provided a modelfor the Brazilian government's conservationefforts in other parts of the Amazon.

Soy beans produced by the project are beingsupplied to Cargill’s European customers,helping to address commercial risks andconcerns about responsible and sustainablesourcing practices.

By starting with a pilot project focused onhigh conservation-value land management,Cargill has seen in practice the layers ofcomplexity that also apply to its supplychains in many other geographies. Once offthe ground, the Responsible Soy Partnershipwas able to coordinate its work with a biggerproject – the Roundtable on Soy Moratoriumin the Amazon. Cargill, other Brazilian soyprocessors and NGOs signed the Moratoriumin 2006, publicly committing the soyprocessors to not purchase soybeans fromlands that have been deforested in theAmazon biome. The Moratorium hascontributed significantly to reducingdeforestation by independently monitoringsoy production, and penalizing farmers whocut down local forests.

A number of important secondary goalshave now been achieved. The project hasshown Cargill that this type of intervention isan effective model for working with NGOs toaddress supply chain issues. As a result of itsexperience with the Responsible Soy

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IntroductionBy using roundtables, land use planning andindependent monitoring of compliance witha national Forest Code, the Sustainable SoyPartnership is a ‘transition scheme’ that keepsfarmers in the Santarém area of Brazil in thesupply chain, helping them transition tocompliance with government legislation.

The interventionCentred around Cargill’s soybean terminal inSantarém in Brazil, the Responsible SoyPartnership was initiated in 2004 by Cargilland The Nature Conservancy (TNC). Brazil isunusual in that it has an excellent nationalForest Code to help protect highconservation-value land and pristine Amazonforest. At the time, the code was not beingimplemented nor was well enforced.

TNC saw Cargill as a key stakeholder in theAmazon land use issue – soy farmers in thesupply chain were not complying with theBrazilian Forest Code, exacerbatingdeforestation in the area. At the same time,European non-governmental organisations(NGOs) were highlighting the effects ofdeforestation due to soy farming, with thesubject gaining ground in the media. Cargill’sinternational customers did not want theirproducts associated with deforestation andso commercial pressures were brought tobear on the issue. Given Cargill’s role in themarkets and the company’s investment inthe region, it was in a good position to showleadership to address the issue.

Cargill and TNC started a pilot trainingscheme of 25 small- and medium-sized farmsin the immediate area around Cargill’s soyterminal. The pilot study provided farmertraining, legal assistance and land mappingtools. The scheme has now grown to over

350 farmers, covering an area of around1,200 kilometres. The training supports thefarmers in working toward compliance withthe Brazilian Forest Code. A fundamentalrequirement of the code is that 80 per centof the farmers’ land must remain forested.

Farmers are initially supported by the projectto map areas of their land which are notcomplying with the forest code, and thenhelped to improve their practices to bringthem up to compliance. GPS (GlobalPositioning System) is used to monitor therate of deforestation in the area and helpensure farmer compliance.

Approach, challenges and achievementsIncentives to tackle the issue came from twodirections. The first was NGO concerns aboutdeforestation and the second wascommercial concerns from corporatecustomers about product supply. Theapproach to meeting both is broadly thesame: partnership.

Cargill had already had a long history ofpartnership with TNC in the USA before theNGO opened a conversation with thecompany in São Paulo about soy productionin Santarém and the effects on deforestationon the Amazon biome (i.e. a large naturallyoccurring community of flora and faunaoccupying a major habitat). This trustedrelationship was an opportunity for Cargill’swork in the Amazon to be a learning‘laboratory’ on soy. The NGO broughtexpertise to the partnership and did notexpect Cargill to do all the work itself. Thequality of TNC’s field staff in the area gaveCargill the confidence to move ahead withthe pilot project.

TNC and Cargill staff would visit soy farmers

Cargill: Sustainable Soy PartnershipCommunicated by Mark Murphy, AVP Corporate Affairs, Cargill



Partnership, Cargill is now working inpartnership with NGOs to address social andenvironmental challenges in its supply chainsin other regions, for instance, for cocoa inAfrica and palm oil in Indonesia.

Lessons learntBy building compliance to an existingnational Forest Code into the operatingprinciples of the intervention, theSustainable Soy Partnership has been able todevelop a business strategy that addressescommercial, reputational and policy issues intheir supply chain.

The Sustainable Soy Partnership hasencouraged Cargill to take a broaderstakeholder perspective on supply chainissues and to be sensitive to a greater array ofexternal factors.

Cargill has seen the benefit in demonstratinggreater transparency and accountability, andin looking for alternative ways to reachsolutions. NGOs are increasingly viewedwithin Cargill not as a detractor but rather askey partners in building successfulinterventions by understanding andproviding training and solutions – as in thecase of the Sustainable Soy Partnership.

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the potential to increase their income bydoubling their crop yield. To improvecultivation techniques the company trainedtwo Thai scientists in sustainable agriculturaltechniques. These scientists then workedwith the farmers to encourage them toadopt more sustainable practices, such asreducing chemical use and using improvedpruning techniques.

The Nescafé Plan is not an isolatedintervention but comprises a number ofworkstreams and initiatives that build onprevious work (such as the Cocoa Plan). ThePlan is coordinated with other Nestléinitiatives, such as waste-to-energy schemeswhere spent coffee grounds are used tomeet factory energy requirements, andimproved industrial refrigeration techniquesthat reduce energy usage, carbon emissionsand pollutants.

Scaling up is the single biggest challengethat the intervention faced. Nestlé has set uppilot studies and demonstration plots, butthere are too few ‘trained trainers’ to provideexpertise to the huge numbers of farmingcommunities involved. By working withpartners, the intervention is increasing thenetwork of agricultural advisors who cansupport the farming communities directly.Nestlé also works with its large scale suppliercompanies to encourage them to addressthe issues in their supply chains.

Impacts The intervention will be ‘work in action’between 2010 and 2020. By providing-on-the-ground training and technical expertise,

the plan has already increased the uptake ofimproved farming methods by developingdirect relationships with farmers. In someareas, Nestlé has bought direct from farmers,cutting out middle-men and therebyincreasing farmer profits and control. Acornerstone of the plan has been thedistribution of millions of higher-yield anddisease resistant coffee varieties to farmers.

Lessons learntThe Nescafé Plan acknowledges theimportance of a long term (ten-year)investment in local engagement. Training bylarge numbers of agricultural advisors andthird party verification to bring suppliers upto standard and improve efficiencies in thesupply chain, is critical in this engagement.The effect is magnified by encouraginglarge-scale suppliers to address issues in theirsupply chain.

Scaling up is a huge challenge. Theintervention is in part an evolution of existingrelationships between Nestlé and NGOs, andbrings together a number of initiatives thatbuild on previous work. Joining forces withNGOs, and applying their expertisespecifically to Nestlé’s own supply chains, hasenabled the company to push its existingengagement further and faster.

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Introduction Through a partnership between Nestlé and anumber of non-governmental organisations(NGOs), the Nescafé Plan is a ‘transitionscheme’ that uses land use planning and thesharing of technical expertise to movetowards publicly stated targets forsustainably sourced coffee, and to increasethe stability of supply.

The intervention The Nescafé Plan was created to improve thequality of coffee and to transform coffee farmmanagement. Endorsed by the RainforestAlliance, the Sustainable Agriculture Network(SAN) and the Common Code for the CoffeeCommunity (4C), the Plan supportsresponsible farming, production andconsumption. The initiative aims to bring allfarms that directly supply Nescafé factoriesup to the 4C baseline code by 2015.

Through the Nescafé Plan, experiencedagricultural specialists from the RainforestAlliance, SAN and Nestlé bring together thelocal knowledge of farmers with modernscience. Farmers are given new tools andtechniques so that they can sustainably farmby using less water and fewer agrochemicals,and without clearing the rainforest.

Based on Nestlé’s concept of ‘Creating SharedValue’, the Plan’s stated commitment is tosafeguard the supply of coffee as animportant raw material for the company andfor the future of the communities whoproduce it. The company aims to double thecoffee it purchases directly from farmers andfarmer associations from 170,000 farmers to180,000 tonnes by 2015.

Responsible production and supply formsthe second strand of the intervention by

optimising product packaging, makingfactories more energy- and water-efficient,and by reducing waste. Raising consumerawareness about being energy efficientwhen preparing coffee products, andproposing a solution for consumers toreduce their footprint, are important aims ofthe intervention.

Approach, challenges and achievements Partnerships have driven the intervention.Through partnerships with public and privateinstitutions in a number of countries (such asMexico, Thailand, the Philippines, Tanzaniaand Uganda), Nestlé has distributed over 16million coffee plantlets in the past ten years.To further improve the quality of the coffeeharvest, the company has expanded itstechnical assistance programmes, providing10,000 coffee farmers a year with access toNestlé agronomists who advise them onfarming and post-harvest practices.

The project would not be possible withoutNGOs such as Oxfam and the RainforestAlliance. Many other NGOs and unions, incoffee-growing countries and elsewhere,also play an important role in workingtowards the Plan’s goals.

In Thailand, partnership and research havegone hand in hand. Nestlé wanted to ensurea long-term supply from the 25,000 growerstending the robusta coffee bean. Farmerswho cannot earn a sustainable income fromcoffee in the years when coffee prices fall,may change crops to para rubber trees orpalm oil, thereby endangering the supplychain. To head off this risk, Nestlé testeddifferent varieties of robusta coffee plantsand selected the best ones for specificenvironmental conditions. As a result, 600farmers bought planting materials that had

Nestlé: The Nescafé Plan Communicated by Claus Conzelmann, Vice President, Head of Safety, Health &Environmental Sustainability, Nestlé



expansion. Because of the involvement ofthe State Government, Olam and USAID, FirstBank of Nigeria came on board to supplycredit lines so that farmers could take outannual crop loans for items such as fertiliserand pesticides.

Credit has traditionally been a majorchallenge for small scale farmers in the area.Crop loans depend on the farmers’ obtaininginsurance against crop failures, droughts, andoutbreaks of pests and diseases. Insurance isa major hurdle as insurers traditionally havehad very little experience of dealing withsmaller farmers and have considered themuninsurable. Participation by NigerianAgricultural Insurance Company in theprogramme cleared that hurdle. The farmersnow obtain credit and insurance in groups of200 and not individually, so fees andoperational costs are kept down. With Olam’sbacking, and a tangible market for thefarmers’ crops, the farmers are considered asafer investment, and the Bank feels moreconfident in the process.

A big challenge is to get farmers on board,gain their trust and develop their confidencein the programme. The farmers need to trustthat OIam is going to be there over the longterm, and that the partners are coordinatingacross the programme. Trust takes time tobuild – often over three to four growingseasons - and requires an understanding oflocal cultural norms. Since the farmer groupsdeliver the rice direct to the local mill, themiddle-man is cut out. The rice is sold locallyrather than exported so the farmers (andprogramme partners) see their own ricebeing processed by the mill. Since Olam runsthe mill and markets the rice locally, thecompany develops an ‘everyday’ relationshipwith farmers that builds trust in bothdirections.

Rice Nigeria is a standalone on-the-groundintervention. It is not currently coordinatedwith other supply chain interventions as this

is one of Olam’s first moves into foodproduction. As the company’s involvement inthis area expands, coordination will be key inreducing duplication and overlap.

Impact From the start, Olam’s definition of successwas to make rice production, and the mill,economically viable. This has been achieved.Rice production is economic and profitable,and the Lobi Rice brand has a goodreputation and sells well. Average crop yieldsfrom farmers in the partnership have risenfrom 1.5 tonnes per hectare to 4.4 tonnes perhectare, raising farm incomes andprofitability.

Olam is now confident that this type ofintervention is effective in the long-term. Theprogramme has given the company a newperspective on the rice supply chain, movingfrom its historical view that the supply chainwas about procuring, packing and shippingAsian rice to Nigeria, to a view that rice canbe competitively produced locally for thelocal market. This programme was Olam’s firstforay from cash crops, such as cocoa, intofood crops.

Olam is now building a rice mill in a secondNigerian state, and is in the early stages ofreplicating the model in Mozambique. Feedthe Future USA are looking to employ themodel in other countries, and theprogramme is being promoted as anexample of successful interventions byUSAID and the United Nations.

For the programme to be successfully rolledout on a wider scale, it will need to beadapted to the local environments where it isbeing deployed. Business opportunities mustbe identified that will encourage corporateinvolvement and enable partners to fulfilcomplementary aims. A strong reason for thesuccess of Rice Nigeria is that it plays animportant role in helping the main partnersto achieve their aims. For the State

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Introduction An example of land use planning andinternational government co-ordination, RiceNigeria is a ‘transition scheme’ in which Olamis working with partners and suppliers tobring change from the base up in theNigerian rice supply network.

The intervention Rice Nigeria began in 2005, when Olamidentified a business opportunity andpurchased a defunct rice mill from theNigerian Benue state government, whichwanted to privatise some of its assists.Nigeria imports approximately 1.23 milliontonnes of rice each year so is heavily exposedto volatility in the international rice market.The government hoped that corporateinvestment in renovating the mill wouldsupport domestic rice production andcontribute to its food security agenda.

Olam is currently the third biggest globalplayer in the rice business, handling in excessof one million tonnes of rice annually. TheNigerian rice mill was flagged up as abusiness opportunity because of the widercontext. Crucially there was already a localdemand for rice, which is a Nigerian ‘fastfood’.

An initial partnership was born betweenOlam and the Benue state government. Inthe early stages of the programme, theprogramme directly supported 1,000 localrice farmers over an area of 1,200 hectares. Itcontracted them to supply the renovatedmill and helped to establish model farms andfarmer field schools that provided training incrop techniques.

By 2007 the programme was working welland Olam wanted to scale it up since the mill

had the potential to process much largerquantities of rice. The challenge was two-fold: funding and farmer training. The latterwas not considered by Olam to be a corecompetency.

To overcome these challenges, thepartnership was expanded. It now includeslocal Farmer Associations, the US Agency forInternational Development (USAID fundingthe delivery of farmer training), the StateGovernment (land & fertiliser allocation), FirstBank of Nigeria (crop finance for farmers) andthe Nigerian Agricultural Insurance Company(reducing risk for farmers). Over the followingtwo years, the number of farmers grew to12,000, split into groups of around 200farmers each. The programme currentlyproduces up to 70,000 tonnes of rice eachyear for the Nigerian domestic market underthe ‘Lobi Rice’ brand.

Approach, challenges and achievements Partnership is the driving force of theprogramme. Each partner contributes a vitalelement without which the programmewould struggle to continue. The bedrock isthe demand for the product, which Olamtapped into by purchasing the rice mill andmarketing the Lobi Rice brand. This created amarket for local rice farmers to sell their cropsto Olam. The state government allocatedfarm land for further expansion, and alsoguaranteed fertiliser to the farmers. Givingfarmers a guaranteed source of fertiliser at aguaranteed government price reduces riskand allows the rice farmers to plan moreeffectively for the coming year.

Funding by USAID enabled the training to bescaled up to include more farmers. USAID’sparticipation also leveraged further partners,helping to support the programme’s

Olam International - Rice Nigeria Communicated by Chris Brett, Senior Vice President Head of Corporate Responsibilityand Sustainability, Olam International


2 - Phase one summary report

Government, this means achieving foodsecurity. Local farmers improve yields andprofitability. USAID can integrate farmers intothe supply chain, and the First Bank ofNigeria can fulfil its licence to lend byproviding 10 per cent of loans to agriculture.

Lessons learntRice Nigeria has required both a long-termview of interventions and companyinvestment in time and money. Partnershipshave been key in kick-starting the projectand its expansion to current levels. Localgovernment and farmer groups are workingwith business to determine the best land usefor the area, helping improve incomes forlocal people as well as securing supply forthe business.

Scaling up the intervention had two

challenges from the outset: funding andfarmer training. Farmer training was fundedby a major US Government developmentagency. Difficulties for farmers in obtainingcredit and insurance have been overcome byproviding these on a group basis and notindividually to keep down fees andoperational costs. Farmers gained trust andconfidence in the initiative when they sawthat Olam was committed to working locally,over time and in close collaboration with itspartners. The company took care tounderstand local cultural norms so that theintervention is adapted to local environmentin which it is being deployed.

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The interventions have achieved their goalsto date, although SABMiller recognises thatthe partnership is still evolving and thewatershed initiatives will take time. Key tothe successes to date, SABMiller has had tojustify investment in Water Futures to itsinternal stakeholders in the same way that itwould any other business investmentdecision, thereby ensuring both businessbuy-in and sustainability of the projects.

Partnerships with stakeholders are for aninitial 3-year period. Ultimately Water Futureswill only be judged a success if operations onthe ground are sustainable over a longperiod. The project intends to grow existingmulti-stakeholder partnerships and buildnew ones over time.

Impacts of water risk managementprojects SABMiller started with the understandingand commitment that real change takes timeto achieve. Water Futures was, in part, bornout of experience from previous projects thatSABMiller has been involved in, and thepartnership has learnt from these. Theseprojects have shown that it takes time tomitigate freshwater ecosystems risks andproduce tangible results. Impacts of theprojects can only be evaluated fully - and realchanges seen - in locations where SABMillerhas been operating for two to three years,such as in India and Colombia.

In India for example, a ground waterrecharge project introduced by SABMiller isproducing improved groundwater levels. InBogota, Colombia, river sedimentation hadincreased due to run off from surroundingland in which vegetation had been clearedfor livestock. As a result, the cost of municipalraw water treatment had risen, with aresultant impact on the utilities pricing tousers. Through working in partnership withlocal stakeholders, a project is now wellunderway with farmers to address the runoffand improve local water quality and therebyreducing the associated costs relating to theresource.

Lessons learntSABMiller has faced three main challengeswith this project.

• The nature of the partnerships themselves,.Partnerships by their nature can bechallenging since they combine differentgroups with different objectives.Understanding how partnerships work andproviding the necessary skill sets have tobe addressed straight away to ensure thatthe operations function effectively on theground.

• Lack of data on watershed hydrology andrisk in the area which the project operates.In a number of cases, considerableinvestment in research is required, takingtime to build the necessary evidence base.

• The need to work with stakeholders tounderstand SABMiller’s reasons forundertaking the project. Governments andcommunities are not used to the level oftransparency that Water Future discloses. Afundamental part of the project has beento take the time to build trust with projectpartners.

As the Water Futures Partnership developsinto a model for water risk management inseveral regions with relative success so far,could it be replicated in other countries?Expansion is a definite possibility, but thelocal, individual nature of the interventionsneed to be taken into account. The approachis different for every scenario and researchbefore an intervention is a major part of thework.

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Introduction Water Futures is a partnership betweenbusiness, NGOs and government with anobjective to protect watersheds critical toSABMiller’s operations and supply chains. Atthe same time, the partners aim to prove thebusiness case for more companies to engagein sustainable water management.

The intervention Water Futures was established in 2009 whenSABMiller identified risks to its futureoperations from the impacts of water scarcityand wanted to address global frameworks formanaging freshwater ecosystems. Its waterrisk management projects in Honduras,Colombia, India and the US had highlighteda lack of global consistency in approaches tofresh water management. The projects hadalso demonstrated that fresh water is notsufficiently valued as a resource.

The Water Futures partnership was initiallyestablished with WWF, and then joined byDeutsche Gesellschaft für InternationaleZusammenarbeit (GIZ), a German state-funded sustainable solutions enterprise. Toexplore the shared risk of watershedmanagement, Water Futures ran sixroundtable discussions between experts inwater management and the local waterindustry. These roundtables were run inregions where SABMiller already had majoroperations: South Africa, Tanzania, Peru andthe Ukraine.

Water Futures has benefited from theexpertise and experiences of both WWF andGIZ, establishing contacts in the partnershipcountries through their combined networks.In addition, GIZ provided matched fundingthat SABMiller put into certain water projects,so the scope of the project could beexpanded.

Approach, challenges and achievements Water Futures identifies water risks andimplements mitigation strategies, whereappropriate, for specific watersheds. It aimsto secure sustainable fresh water suppliesthrough more effective supply chainmanagement of freshwater ecosystems, fromthe bottom up. In doing so, it reduces sharedrisks for stakeholders (including SABMiller)from poor watershed management.

The intervention is still at the early stage ofrisk identification and has two initialobjectives. First, to identify and reduceshared water-related risks between SABMillerand other users of the relevant watersheds.Second, to increase sustainability ofSABMiller's operations and supply chains bythe better management of these watershedsthrough partnerships

The project has three phases: 1. Water footprinting. Assess shared water

risk and develop a plan of action at countryand local level

2. Multi-stakeholder partnerships. Mitigateshared water risk through multi-stakeholder partnerships

3. Shared learning. Spread lessons learned toother stakeholders in order to influencewider change in the affected watersheds

The approach adopted has depended on thespecific country since that water has verylocal manifestations and as such must bemanaged through local stakeholderinterventions. Stakeholders engaged canvary greatly but would typically consist ofnational government, local government,farming communities, industry groups, otherbusinesses and local communities in theaffected watershed.

SABMiller: Water Futures Communicated by David Grant, Sustainable Development Projects Manager, SABMiller


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In the United States3440E Spruce StreetSeattle, WA 98111T: +1 (206) 792 9984E: [email protected]

© Cambridge Programme for Sustainability Leadership 2011Designed by: www.adrenalinecreative.co.uk

The University of Cambridge Programme for Sustainability Leadership (CPSL)works with business, government and civil society to build leaders’ capacity tomeet the needs of society and address critical global challenges. Our seminars andleadership groups and our partnerships with those who make or influencedecisions are designed to transform public and private sector policies andpractices and build greater understanding of our interdependence with oneanother and the natural world. Our network of alumni brings together the mostinfluential leaders from across the world who share an interest in and acommitment to creating a sustainable future.

CPSL is an institution within Cambridge University’s School of Technology. We work

in close collaboration with individual academics and many other departments of

the University. HRH The Prince of Wales is our patron and we are also a member of

The Prince’s Charities, a group of not-for-profit organisations of which His Royal

Highness is President.

CPSL is grateful for the support of its Strategic Partners:

Anglo American, Arup, Deloitte LLP, DLA Piper, Kingfisher, Lloyds Banking Group, Maersk Oil, Nestlé, Shell


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