Use Milk in Your Cereal, Not Water: General Mills’ Approach to Water Conservation
As climate change causes major variability in water security, General Mills feels the imperative to set a good example in water conservation for its entire value chain and the communities within which it operates.
In an age of increasing corporate social responsibility, General Mills has taken their “Consumer First” slogan to heart and expanded it to incorporate a focus on climate change across the company, value chain, and entire industry. General Mills has sustainability as one of its four core pillars and has become a major advocate for innovative clean energy policies.1 Climate change ramifications include major shifts to the water supply across the United States and rest of the world, and General Mills – which had net sales of over $16.5B in FY20162 – recognizes that it must improve global water stewardship to protect all areas of its business and community, including agricultural inputs and manufacturing processes.3
Being a native Californian, water conservation is a topic near and dear to my heart. Climate change has already caused severe fluctuations in water supply globally, and will continue to aggravate the uncertainty and severity of this variability. Not only are rainfall, flood, and drought cycles less predictable, but their magnitude has a significant impact on water supply and sanitation, agricultural production, energy, and environmental sustainability.4 In particular, food production “relies heavily on an adequate supply of clean water, for growing crops and making products for today’s consumer.”5 A recent study published in Nature noted that over the time period of 1964-2007, “droughts and extreme heat significantly reduced national cereal production by 9–10%…with production losses due to droughts were associated with a reduction in both harvested area and yields.”6 Especially as the world’s population continues to grow, the potential for decline in agricultural yield due to water issues relating to climate change will threaten food safety. Changes in the frequency of both droughts and floods could pose challenges for farmers and ranchers, causing more of the population to be food insecure and also lead to a far-reaching negative impact on the economy and businesses operating within it.7
General Mills recognizes the threat that climate change poses to global water supply and the importance of water conservation for many aspects of its own business. Water is utilized by all parts of its supply chain, from initial growing of ingredients for food products in agricultural regions to manufacturing plants tasked with assembling and packing the final products. Created in 2014, General Mills’ Climate Policy notes that:
We realize that the majority of the water required to bring our products to consumers is used upstream of our direct operations. General Mills has assessed that 99% of the water use associated with our value chain occurs upstream of our direct operations in agriculture, ingredient production, and packaging.5
Security in the water supply is vital for General Mills’ food processing, and climate and weather extremes can reduce the water quality and increase the risk of germs transferred after the harvest process during handling and storage.8 Even worse, bringing water from other regions to agricultural areas affected by droughts, as described above, can have a compounding effect on climate change given that the “systems used to treat and move public water supplies require large amounts of energy, produced mainly by burning coal, natural gas, oil and other fossil fuels.”9
For all of these reasons, General Mills has committed to water conservation and sustainably sourcing ten priority ingredients – representing over 50% of total ingredient buy – by 2020.5 Increasing pressures on water supplies due to climate change will continue to pose risks for global operations and supply chains, so General Mills is taking action now to address water issues.10 The Company recognizes that it can have an influence on more than just its suppliers and business partners; it is pursuing a long term multi-stakeholder water stewardship strategy that includes local communities, governments, and NGOs in the regions where its operations and growing regions are located. It is working with smallholder and conventional farmers to strengthen globally sustainable farming practices.1 Additionally, it is publicly setting global targets and tracking its progress in reduction in both water usage and transportation as an effort to ensure accountability.
General Mills can continue to take steps towards improving water conservation and protecting against climate change. It should continue its partnership with The Nature Conservancy, fulfilling its commitment to “complete additional watershed assessments, develop stewardship plans for at-risk watersheds, and meet with communities to provide leadership and on-the-ground action,” proving that it really is walking the talk.11 Additionally, it can also look to competitors for inspiration and best practices. For example, Kellogg supplies its farmers in the Great Lakes region with precision water conservation tools that allow for measurement and variation of nutrient and water management field-by-field, preventing waste that occurs when using a one-size-fits-all approach.12 There is no one way to tackle water supply issues, but General Mills is helping to pave the way forward to address climate change and should continue to set a good example for its communities.
- General Mills, Inc. “Climate Change.” https://www.generalmills.com/en/Responsibility/Environment/Climate-change, accessed November 2016.
- General Mills, Inc. May 29, 2016 Form 10-K. https://www.sec.gov/Archives/edgar/data/40704/000119312516638404/d221637d10k.htm#tx221637_11, accessed November 2016.
- General Mills, Inc. “Global Responsibility.” https://globalresponsibility.generalmills.com/HTML1/tiles.htm?_ga=1.88374301.701342848.1478133097, accessed November 2016.
- Alavian, Vahid; Qaddumi, Halla Maher; Dickson, Eric; Diez, Sylvia Michele; Danilenko, Alexander V.; Hirji, Rafik Fatehali; Puz, Gabrielle; Pizarro, Carolina; Jacobsen, Michael; Blankespoor, Brian. “Water and climate change : understanding the risks and making climate-smart investment decisions.” World Bank. (2009) http://documents.worldbank.org/curated/en/362051468328208633/Water-and-climate-change-understanding-the-risks-and-making-climate-smart-investment-decisions, accessed November 2016.
- General Mills, Inc. “Climate Policy.” https://www.generalmills.com/News/Issues/climate-policy, accessed November 2016.
- Lesk, Corey; Rowhani, Pedram; Ramankutty, Navin. “Influence of extreme weather disasters on global crop production.” Nature 529, 84–87 (January 2016) http://www.nature.com/nature/journal/v529/n7584/full/nature16467.html, accessed November 2016.
- USGCRP (2014). Ziska, L., A. Crimmins, A. Auclair, S. DeGrasse, J.F. Garofalo, A.S. Khan, I. Loladze, A.A. Pérez de León, A. Showler, J. Thurston, and I. Walls, 2016: Ch. 7: Food Safety, Nutrition, and Distribution. The Impacts of Climate Change on Human Health in the United States: A Scientific Assessment. U.S. Global Change Research Program, Washington, DC, 189–216.
- GRACE Communications Foundations. “The Impact of Climate Change on Water Resources.” http://www.gracelinks.org/2380/the-impact-of-climate-change-on-water-resources, accessed November 2016.
- The Nature Conservancy. “Irapuato Water Stewardship Assessment.” http://www.nature.org/about-us/working-with-companies/companies-we-work-with/irapuato-water-stewardship-assessment.pdf, accessed November 2016.
- The Nature Conservancy. “Companies We Work With: General Mills.” http://www.nature.org/about-us/working-with-companies/companies-we-work-with/general-mills.xml, accessed November 2016.
- “How COP21 is feeding Kellogg’s supply chain strategy.” https://www.greenbiz.com/article/how-cop-21-feeding-kelloggs-supply-chain-strategy, accessed November 2016.
Student comments on Use Milk in Your Cereal, Not Water: General Mills’ Approach to Water Conservation
Thanks NDG- this is a great, informative post about the impact of water supply fluctuations on cereal production! I had a couple of thoughts as I read through this:
1. The work that General Mills is doing sounds like its high priority for the organization. It reminded me of our IKEA case from Friday, particularly Option 2 that IKEA had for reducing its impact on the environment by setting high targets for sourcing materials. As we discussed in class, this was a low-risk approach to reducing the impact of climate change on the organization (and reducing the organization’s impact on the environment) but it was also limiting in terms of control over the results. I wonder if this action can be paired with additional initiatives to help ensure that the lofty goals Mills has set (sustainably sourcing 50% of its ingredient buy by 2020) are met. For example, Wal-Mart has a supplier sustainability index that it publishes and creates great press around suppliers who are complying well with sustainability initiatives (and bad press for those who are not). Mills has enough scale to make such action effective and successful. This is an example of creating incentives in the supply chain to ensure compliance.
2. I also love the example you included from Kellogg’s. I think this is an example of another action that Mills could take to ensure its work through the supply chain is successful. In thinking about other tools that may be helpful, I wonder if Mills could publish a newsletter for farmers in its supply chain that highlights best practices for water conservation. This would help improve communication and best practice sharing and to improve suppliers efforts by leveraging one another.
Thanks again NDG- great note!
Really interesting article about my former employer! I was proud to work for a company that recognize’s its obligation to drive advance sustainability effort across the entire supply chain. As we have seen in a few cases in TOM, it can be difficult for firms to influence the entire supply chain when they don’t have control. From your post, its clear that General Mills doesn’t have much control. 99% of the water used occurs outside of its direct operations. Though, General Mills doesn’t let that fact stop it from making an impact and driving sustainable practices across the entire supply chain. The company uses it’s scale to influence to make a difference by mandating water conservation and sustainability across the entire supply chain.
Very interesting article that sheds an interesting light on downstream food processing industry. As the headline suggests, we could have a similar articles on milk producers and the impact of cows on climate change.
Reading through, I was wondering:
1. Given low direct water usage, to what extend the reduction of water consumption shall come from the public sector regulating vs. private companies efforts? Some of those efforts seems to look like green wash if the problem is not completely cured. As there is mpg targets and emission regulation, you could imagine similar systems for cereals farmers with smooth transition mechanisms.
2. Thinking of agricultural efficiency, this echoes various posts on seed & agri-business companies (Syngenta & Monsanto) – there is clearly more than just business here. How the profit and incentives of agri-innovation is shared seems critical to me?