Kraft Heinz, a company known for its rigorous cost-cutting, now wants to improve animal welfare, help end the destruction of rainforests and fight world hunger.
Though cynics may roll their eyes, consider this: Growing a better world — as Kraft Heinz puts it — is also good for business. Increasingly, companies are ramping up their corporate social responsibility efforts because more consumers and investors demand it. Noble intentions aside, such efforts can improve marketing and sales, bolster the supply chain and help attract and retain talented employees, experts say.
Earlier this week, Kraft Heinz, co-headquartered in Chicago and Pittsburgh, released its first corporate social responsibility plan, a 70-page document outlining various aspirations, such as using only eggs from cage-free hens in all global operations by 2025 and using only sustainably sourced palm oil.
“What’s in it for us? It ensures the long-term sustainability of Kraft Heinz. It’s what our stakeholders want to see from from us,” said Caroline Krajewski, head of global corporate reputation for Kraft Heinz.
Last year, what’s known as sustainable, responsible and impact investing in the U.S. totaled $8.72 trillion, a 33 percent increase from 2014, according to the US SIF Foundation: The Forum for Sustainable and Responsible Investment. That means that about $1 out of every $5 in professionally managed assets in the U.S. considers environmental, social and governance factors.
In other words, the money is increasingly following do-gooder values. For some investors, it’s a matter of mitigating risk and exposure; for others, it’s about advancing certain beliefs. For large companies, investing in a corporate social responsibility plan, as Kraft Heinz just did, is the minimum of what’s expected, said Shannon Schuyler, an adjunct lecturer on social impact at Northwestern University’s Kellogg School of Management.
And given the volatile societal issues of the day — racial equality, LGBT rights, sexual harassment — many consumers want to see companies take more of a stand, said Schuyler, who’s also a principal at PwC, also known as PricewaterhouseCoopers.
“If you don’t respond to those issues, people will decide for themselves how you responded,” Schuyler said.
But companies also have to practice what they preach, so they’re not exposed as being inauthentic, Schuyler said. And the most successful companies weave corporate social responsibility into their business strategy, as opposed to keeping it as a separate and unrelated plan, she said.
Like Kraft Heinz, Mondelez International, the Deerfield-based global snack food company known for brands like Oreo cookies and Ritz crackers, believes it has a corporate social responsibility plan that will help drive its business. As one component, the company’s Cocoa Life program works with more than 90,000 cocoa farmers in Ghana, Ivory Coast and other countries to develop a sustainable network of cocoa into the future.
Each year, Mondelez sends 15 employees — known as “joy ambassadors” — to help the farmers and work on projects to improve the quality of life in their villages, said Christine McGrath, vice president of global sustainability at Mondelez.
“They come back so moved by the experience,” said McGrath, who’s done the program herself.
Mondelez is investing $400 million over 10 years in its Cocoa Life program. What it gets in return is a more robust supply chain of sustainably sourced cocoa as it looks to grow its chocolate business, employees who are excited by the project, and the ability to market such initiatives to consumers.
Kraft Heinz is investing $200 million in its corporate social responsibility plan, which it intends to release every two years with progress updates and new or revamped goals.
Such efforts could help both companies in the long run. Last year, 66 percent of consumers said they’d be willing to pay more for products from companies committed to social and environmental impact, according to a Nielsen survey of 30,000 respondents in 60 countries. Millennials, in particular, are willing to pay more if they trust the products are aligned with their values.
“To me, this is a really positive reinforcing cycle,” said Andrew Behar, CEO of As You Sow, a California-based nonprofit that challenges corporations on social and environmental issues.
Companies that don’t take corporate social responsibility seriously these days do so at their own peril, Behar said. As You Sow, which regularly invests in companies and then brings forth shareholder proposals, plans to pressure both Mondelez and Kraft Heinz next year to take more concrete action steps on recyclable packaging.
Kraft Heinz has been working on its social responsibility plan since July 2015, when Kraft Foods merged with H.J. Heinz Co., said Krajewski, the Kraft Heinz executive overseeing such efforts.
“We know it’s a journey and this is the beginning of our journey,” Krajewski said.
Twitter @GregTrotterTrib
