Coke launches supplier finance incentive scheme

Coca-Cola Europacific Partners, the company that bottles Coke products in Europe, Australia, New Zealand and other south Pacific markets, has announced a new financing-based supplier incentive scheme linked to sustainability targets. Backed by specialist food and agriculture bank Rabobank, the programme will incentivise and reward suppliers for improving their ESG performance as part of Coca-Cola’s ambition to reach net zero by 2040. 

The first of its kind in the beverage industry, the programme will provide competitive finance to suppliers that make improvements against sustainability KPIs in the form of incremental discounts from the initial funding rate. 90% of Coca-Cola Europacific Partners’ emissions are in its supply chain and the company has already asked its suppliers to setting and validating emissions reductions with the Science Based Targets initiative by 2023, committing to 100% renewable electricity by 2023, and to share carbon footprint data. Business sustainability ratings provider EcoVadis will assess the supplier performance improving their ESG ratings. The programme is being launched initially in Germany and then suppliers in the rest of Europe and the south Pacific markets. 

Agricultural workers in the UK from Indonesia have been shown to be in debt for recruitment fees to employment agents – with levels up to £5000 in some cases according to an investigation by the Guardian. Workers at a Kent-based fruit supplier to UK retailers Marks & Spencer, Waitrose, Sainsbury’s and Tesco have paid fees to secure employment, alongside flights and visas. It is illegal for workers in the UK to be forced to pay recruitment fees to brokers in return for them finding jobs. 

The UK labour market has been put under intense pressure from Brexit, compounded by the war in Ukraine. 20,000 migrant workers came to the UK in 2021 from Ukraine alone under seasonal worker visa schemes. The levels of the fees, charged by brokers before the Indonesian migrants left home, which are recouped from the workers sending large chunks of their pay to the brokers every month, mean that there are risks of them being stuck in debt bondage. The UK farm and worker recruitment agencies deny any previous knowledge of the fees, and the supermarkets have called for immediate investigation. An Indonesian presidential task force is now investigating the case.    

The EU is mooting a new scheme to assess the quality of ESG market benchmarks so that investors are not misled by corporate sustainability claims. Asset managers have been using benchmarks to find the right investments for their clients, and the rise and rise of so-called sustainable funds has coincided with concerns over the basis for their credentials. According to the European Securities and Markets Authority, the fact that there is not clear labelling raises questions on the inclusion of companies with a negative environmental or social impact in ESG benchmarks. 

The authority says that the introduction of an EU ESG benchmark would provide a tool against greenwashing. The next step would be for the European Commission to set out rules changes before presenting them for approval to the European parliament and individual EU governments.

A number of news services have been reporting about a looming crisis for fertiliser supply, exacerbating the challenges facing global food supply chains. Problems from extreme weather affecting harvests, particularly in vulnerable regions including parts of Africa, have been exacerbated by the war in Ukraine. This has cut grain exports but also Russia’s highly significant role in providing the raw ingredients for chemical fertilisers, and the finished product, to markets around the world. 

High energy costs have also impacted fertiliser production – the finished product has increased in cost by 300% some say. The African Development Bank has warned that the continent is facing a 20% decline in food production worth over $11bn. The bank says that Africa is short of 2m tonnes of fertiliser. And when supplies get through, the spike in costs will inevitably mean higher food prices for the farmers to simply break even, making the food poverty crisis more acute.      

A new campaign from the responsible investment non-profit Ceres, based in Boston in the US, has been launched with the aim of engaging big companies and investors on the reforms necessary for the sustainability of global water resources. Ceres says that the Valuing Water Finance Initiative is the only global investor-led initiative aimed at moving companies to respond to the global water crisis. 

The initiative is targeted at 72 companies in multiple sectors, including food and drinks companies such PepsiCo, Coca-Cola, Nestle, Unilever and Kellogg’s, and fashion brands including Adidas, Burberry and Levi’s. The companies are being asked to prioritise six targets, focusing on protecting water quantity and quality, ecosystem protection and restoration of degraded habitats, and access to water and sanitation for indigenous communities in areas of operation and impact.  

The inclusion of significant climate change related legislation in the Inflation Reduction Act, which recently was passed in the US Sentate could mean reductions in the country’s carbon emissions by 40% this decade, supports of the bill have said. A total of $369bn worth of measures include up to $7,500 in tax breaks for buyers of electric cars, significant compensation for communities impacted by fossil fuel pollution, and big investment in clean energy technology such as solar panels and wind turbines. 

When voting, the senators split 50-50 along political party lines, with the vice-president casting vote required to pass the bill through to the House of Representatives. President Biden had pledged to return the US to centre stage on tackling climate change – and while the bill does not contain everything that might have been on environmentalists’ wish list it is the most that the US has done so far to try and stall global warming. 

UK startup Clean Food Group, a biotech business developing a yeast-based alternative to palm oil, has attracted enough initial funding – £1.7m – to bring the product to market. The lab-grown product uses microbial fermentation and follows a number of years of product development at the University of Bath. Next steps for Clean Food Group include development of a large scale pilot plant, and developing commercial collaborations to demonstrate the use of the alternative to natural palm oil in finished products. While the direct link to deforestation is of course removed using the alternative, what’s not yet clear is the life cycle analysis comparison of it with sustainably sourced palm oil.