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why

As a global food company, we have the responsibility to ensure that the way in which we source our ingredients is both sustainable and ethical. We understand that our supply chain is key to delivering uncompromising value to our customers and consumers. We continuously seek to enhance the quality of our products and brands, not only by the ingredients we use, but also by working with suppliers who meet our responsible sourcing standards.

Understanding and mitigating the environmental, economic and social risks within our supply chain is necessary to ensure our products are produced in a responsible manner. By incorporating responsible sourcing practices, we are able to mitigate negative impacts to the environment, realize economic savings, improve supplier relationships, reduce social, reputational, environmental and financial risks, and ensure long-term resiliency.

how

Last year, we developed a strategic approach to address our evolving supply chains and focus on more ethical and sustainable sourcing. Our Procurement Sustainability strategy focuses on the following key areas:

  • Understanding and Managing Risks;
  • Engaging our Suppliers;
  • Setting Expectations; and
  • Managing Performance.

This past year, as a result of the findings from our materiality process, we have identified the need to further enhance this strategy and put additional resources in place to address the increased expectations of both our internal and external stakeholders. We are currently building out this strategy and intend to provide additional details about the strategy in FY2016.

Understanding and Managing Risk

Our supply chain risk management process consists of three parts: risk identification, risk analysis and risk mitigation. We’ve identified “hot spots” within our supply chain related to sustainability issues and are proactive with our suppliers to address these key issues. Our risk analysis model includes sustainability, financial and supply risks associated with our product categories. Currently, our most important risks are associated with the rising cost of raw materials, impacts to climate and deforestation, brand and reputational damage, business disruption, regulatory challenges and supply chain interruption.

In 2015, we embedded value chain risk mapping as part of the overall purchasing manager’s category strategy. When a Campbell buyer develops their strategy for an ingredient or raw material, we develop tools to consider sustainability as part of the value-added opportunity. Our formal supply chain mapping system gives us a holistic view of our entire supply chain and shows areas of opportunity to collaborate with suppliers to improve functionality and sustainability, while driving cost savings.

Engaging Our Suppliers

One of the key elements of our strategy is to partner and collaborate with our suppliers to better understand sustainability issues in each category. Campbell collaborates with strategic suppliers on sustainability issues through our Supplier Relationship Management (SRM) program. Our SRM program enhances and expands our regular communications and idea exchanges with select suppliers, engaging them on topics such as sustainability projects, best practices and benchmarking, while addressing emerging trends in ethical and responsible sourcing. Our ultimate goal is to leverage these critical relationships for a mutual gain. Our SRM program once again proved to be successful in 2015 by establishing best practices in sustainability, cost savings and responsible sourcing.

Setting Expectations

Because responsible sourcing is integral to delivering the company’s Purpose, we require our suppliers to follow environmental and social standards that are aligned with our expectations. Our Supply Base Requirements and Expectations Manual identifies the expectations and requirements for current and potential brokers, co-packers, re-packers, special packers, suppliers, warehouses and licensees to meet our CR and sustainability objectives.

These standards cover a variety of critical subjects, including legal compliance, health and safety, human rights, quality, governance, animal welfare, environmental issues and employment standards. If a supplier is found to be out of compliance with the requirements, they are required to develop a formal corrective action plan — allowing Campbell to directly engage with the supply chain on responsible sourcing performance. In FY2016, we plan to revise the manual to reflect more rigorous expectations related to sustainability and ethical sourcing.

Managing Performance

Our Supplier Sustainability Scorecard captures environmental performance metrics, as well as social responsibility efforts, to better understand the policies and practices of our supply base. The Scorecard allows Campbell to benchmark and identify supply chain opportunities, especially where Campbell can directly engage suppliers on sustainability. We expect that the Scorecard will become a competitive differentiator when reviewing future supplier relationships. Our Campbell-certified auditors also conduct onsite audits of our suppliers, based on the standards laid out in our supplier base manual, and we perform third-party audits to maintain high accountability and performance. Follow-up audits and assessments are conducted based on the risk potential of supply interruption.

what

Commitments and Progress

Supply chain issues in the food industry have grown increasingly complex in today’s global economy, making visibility a constant challenge for major food brands such as ours. We hear increasingly from our external stakeholders — including NGOs, suppliers, industry and professional associations, consumers, academic institutions and other outside experts — that supply chain issues are a top corporate responsibility concern.

We collaborate with these stakeholders and rely on their expertise to better understand their concerns, communicate and establish a position, provide information and, when appropriate, take corrective action. A few examples of the types of NGO groups we engage with include the Humane Society of the United States, the Rainforest Action Network, GreenAmerica, Environmental Defense Fund and the Interfaith Center on Corporate Responsibility. While we are currently evaluating our ethical and sustainable supply chain strategy, we have made commitments and progress in some key areas.

Deforestation

Deforestation is a major concern among many NGOs and other stakeholders. Irresponsible sourcing of ingredients such as palm oil, soy, beef and pulp/paper can harm fragile ecosystems and impact many vulnerable communities. We also recognize that deforestation is seen as a key contributor to global greenhouse gas emissions. There are also many negative social impacts from irresponsible sourcing of these ingredients.

We see the connection between the long-term vitality of our business and an imperative to advance environmental and social sustainability. In addition, Campbell’s President and CEO Denise Morrison is the Vice Co-Chair of the Consumer Goods Forum (CGF). The CGF member companies have agreed to mobilize their resources to help achieve zero net deforestation by 2020. As part of this commitment, Campbell has set targets to source palm oil sustainably, and to work with a range of our suppliers to drive more sustainable sourcing of other ingredients and packaging to help achieve zero net deforestation by 2020.

Palm Oil

We are a relatively small user of palm oil, which is an ingredient in some of our cookie and cracker products. We understand that unsustainable harvesting of palm oil can have serious social and environmental impacts. Both Campbell and our palm oil suppliers are members of the Roundtable on Sustainable Palm Oil (RSPO), a group composed of palm growers, palm oil users, retail food chains and NGOs. As a company, Campbell is working with our suppliers to ensure that the palm oil we source is derived from sustainable practices. Our commitment is to purchase 100 percent certified sustainably sourced palm oil through a combination of mass balance and segregated, where feasible, by the end of 2016. We previously committed to doing this by the end of 2015, but due to several barriers such as excessive cost and inability to secure the supply needed, we were unable to meet that timeline.

As we continue to make this shift and strive for full segregation of our palm oil purchases, we will also work with our suppliers, industry groups and others to provide transparency and traceability into our supply chain. For more information, please see our Palm Oil Guidelines, which include details on our commitments and milestones.

Human Rights

We are keenly aware of the potential for human rights risks within our supply chain and know that we must be proactive in assessing and addressing these risks. We will continue to perform risk assessments of our global agricultural supply chain to ensure that we are proactively addressing any potential human rights issues. For example, we partnered with Business for Social Responsibility in 2014, to analyze our agricultural supply chain, measuring the potential risk of various crops, including tomatoes, jalapeños and sweet potatoes sourced globally. Based on the potential risk indicators identified, we continue to develop a risk profile for each supplier in this area as we map out sustainability issues within our supply chain categories. Also, as part of our commitment through the CGF, Campbell is actively involved in CGF’s Social Sustainability Committee, which is focused on efforts to eradicate forced labor in the supply chain. We understand that this is an important issue and we are working to put more formal strategies in place in this area.

Animal Welfare

We are dedicated to the humane treatment of animals and believe that animal welfare is an important part of our vision for a responsible supply chain. As part of our animal welfare commitments, we developed an animal welfare policy that was integrated into our annual revision of the Supply Base Requirements and Expectations Manual. As stakeholder expectations continue to change, we consistently evaluate necessary changes in our policies. As such, we have made specific commitments to eliminate the use of gestation crates for pigs by 2022 and to source only cage-free eggs within our supply chain by 2025.

Conflict Minerals

Since Campbell does not use conflict minerals in the production of foods and beverages, we are not subject to the related disclosure requirements by the Securities and Exchange Commission (SEC). We are working with our suppliers that are subject to the SEC disclosure requirements to ensure they have appropriate policies and reporting procedures in place. To date, we have determined that about 75 percent of our packaging suppliers do not use conflict minerals, and we are continuing to evaluate the remaining 25 percent.

Supplier Diversity

We believe our suppliers should be a reflection of our diverse consumers and the markets in which we sell our products. Supplier diversity adds value to our long-term growth, strengthens our competitive advantage and has the potential to increase market share and shareholder return. We strengthen our U.S. supply base by offering diverse suppliers equal access to potential business opportunities.

In FY2015, Campbell exceeded its diversity spend goal with $171 million purchased from more than 250 women- and minority-owned suppliers. Since 2006, our diversity spend has increased at an average compound annual growth rate of more than 7 percent, with a spend of nearly $1.5 billion since the program inception. In our continued efforts to be more reflective of the communities we serve, we have broadened our categories of diverse suppliers to include both veteran and LGBT (lesbian, gay, bisexual and transgender) businesses.

By supporting minority- and women-owned businesses, Campbell has increased our social impact on local communities by offering employment opportunities, modeling for younger generations and encouraging purchases from other diverse businesses. The business advantages from a robust supplier diversity program are clear. We’ve witnessed competitive costs and quality improvements; responsiveness and agility to adapt to changing business needs; dedicated and enhanced customer service; and fresh perspectives and new ways of thinking to promote innovation.

We advocate for our diverse suppliers through stakeholder engagement efforts, including corporate memberships and sponsorships at supplier diversity events with leading organizations such as the National Minority Supplier Development Council and the Women’s Business Enterprise National Council.