Thursday, 22 October 2009

Business urged to protect nature; Unilever a model

Thu Oct 22, 2009


By Alister Doyle, Environment Correspondent

OSLO, Oct 22 (Reuters) - Companies must step up efforts to safeguard nature, according to a U.N.-backed study on Thursday that praised consumer foods giant Unilever (ULVR.L) as among few firms doing enough.

The report, looking at 31 companies in the food, drink and tobacco industries, predicted increasing risks to raw materials supplies and reputation for firms that undervalued natural services such as healthy soils, water and insect pollination.

"Many companies are failing to adequately address the issue of sustainable sourcing," according to the study by the U.N. Environment Programme's Finance Initiative, conservation charity Fauna & Flora International and a Brazilian business school.

The "Natural Value Initiative" (NVI) study said only Unilever qualified as "best practice" in the survey, judged against a new Ecosystem Services Benchmark.

"British retailer Marks & Spencer (MKS.L) also performed well," it added. "Both companies were distinguished by their well-documented, strategic and risk-focused approach."

Unilever, for instance, had guidelines for sustainable use of farm crops ranging from palm oil to peas.

A U.N. report last year estimated that the world was losing $50 billion in natural services -- ranging from water purification by wetlands to pollination by bees -- every year.

A rising world population, set to reach 9 billion by 2050 from 6.8 billion now, is damaging nature by raising demand for food with spinoffs including deforestation, pollution and climate change.

In other sectors -- but scoring lower than Unilever -- United Plantations (UTPS.KL) was best among food producers, BAT (BATS.L) top in tobacco and SABMiller (SAB.L) and Fosters (FGL.AX) scored highest among beverage groups.


Annelisa Grigg, project director of the Natural Value Initiative for Fauna & Flora, said too many companies had only piecemeal policies for sourcing raw materials.

"They lack a clear strategy," she told Reuters. The study said it was the first comprehensive analysis looking at the sector's impacts and dependence on ecosystems.

Among retailers, for instance, J. Sainsbury (SBRY.L) and Carrefour (CARR.PA) were alone in addressing pollination.

About 35 percent of world food production benefits from animal pollination, worth $112-$200 billion a year. But bees are in decline due to pollution, disease and loss of habitats.

Grigg said the survey, which looked mostly at multinationals as well as a few Brazilian firms, did not name the worst performers. A wider ranking was likely in future.

She said there were signs that investors were shifting away from a short-term focus to demand that companies did more to protect nature -- even though stripping nature, for instance, could often boost short-term profits.

Assets under management in the fast-growing socially responsible investments industry stand at $2.71 trillion, more than a tenth of total assets held by U.S.-based investors, according to the Social Investment Forum.

"Companies and their investors have long taken ecosystems for granted as if they came for free," said Karina Litvack, of F&C Investments which was among asset managers helping to design the benchmark for the study.

Among signs of companies surveyed trying to track their dependence on nature, a study by PepsiCo (PEP.N) showed that the biggest element of greenhouse gases linked to its orange juice was caused by fertilisers. (Editing by Janet Lawrence)