Kraft Heinz Says It Will Fall Short of 2020 Environmental Goals

Kraft Heinz Co. will fail to meet its 2020 environmental goals as the packaged-food giant struggles with supply chain constraints, a top executive said.

The manufacturer set targets in 2017 that called for 15% reductions in greenhouse gas emissions, energy, water and waste in its operations by the end of this year. It likely won’t meet any of those levels in 2020. Instead, Kraft Heinz this week announced a new round of more ambitious climate goals with a deadline of 2025.

“While it is unlikely that we will meet these four goals, we continue to make significant improvements in 2020 toward them, especially with regard to waste,” said Rashida La Lande, the company’s global general counsel and head of environmental, social and governance matters.

The miss underscores the challenges companies face in revamping global supply chains to make them greener amid a heightened focus on corporate sustainability. In Kraft Heinz’s sprawling operations, roughly 80% of the company’s total carbon footprint stems from suppliers, particularly in agriculture.

Kraft Heinz actually took a step back in several environmental categories. Compared to a 2015 baseline, the company increased water use by 1%, greenhouse gas emissions by 8% and waste to landfill by 16% through 2019, according to a sustainability report. Kraft Heinz cut energy use by 1%.

The goals set in 2017 were on per-ton of product manufactured basis, though sustainability experts say measuring in absolute reduction is better. That’s because companies can improve their emissions on a per-ton basis through better efficiency, but still be polluting more on an overall level.

Kraft Heinz acknowledged in the report that it has a “substantial amount of work” to do in these areas. It said the results are consistent with previous disclosures about supply chain issues, but didn’t offer additional details in the report.

Carbon Footprint

The company also doesn’t disclose its total carbon footprint, which makes it hard for investors to judge the company’s progress through independent analysis.

The pandemic is making it harder for companies to improve sustainability, particularly around waste, as consumers buy more individually packaged goods, La Lande said. Kraft Heinz packaging is now 70% recyclable, reusable or compostable, and the company is ahead of schedule in its effort to create a greener ketchup bottle by 2022.

The company now hopes to reduce energy usage 15% across most manufacturing facilities in the coming years. The company also aims to cut waste 20% and water at least 15% by 2025. While it fell short with its prior goals, Kraft Heinz said it’s taking additional steps this time around, including prioritizing “high-risk water sites,” improving its forecasting and revamping product-donation efforts.

The stakes are higher for executives with the new targets. ESG goals are now tied to performance metrics for management stretching as high as the chief executive officer.

©2020 Bloomberg L.P.

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