Kraft Foods: Walking the Walk on Sustainability

Slowly but surely, the world is beginning to wake up to the inconvenient truth of climate change and our impact on the environment around us. Public awareness of concepts such as conservation, the carbon footprint and renewable energy is now commonplace, as is the willingness to start making fundamental changes to the way we live our lives.

In the corporate world, the waters are muddied by the difficulties of reconciling responsibility with profitability. Environmental commitments are far more difficult to embrace when they lead to disgruntled investors. But that has not stopped a lot of leading companies, especially in the food sector, from finding ways to adapt to more sustainable practices. As the world’s second-largest food and beverage company, Kraft is expected to lead by example, especially in the space of sustainability. Many of its practices contain messages and lessons on where smaller players in the food processes industry can make change to benefit the communities and environment around them.

The Illinois-based food producer, which now has a massive global footprint, has had a determined push to reduce the impact of its operations on the environment in the US and around the world. Kraft released an ambitious sustainability agenda outlining its environmental goals recently – its global aims range from the reduction of energy used and CO2 emissions in food plants to the conservation of water and minimising excess packaging. Its list of goals shows a solid commitment to reaching quantifiable goals by 2011 (compared with 2005 levels).

The latest progress tables for Kraft’s sustainability goals suggest that the company is on track to meet its 2011 targets if it maintains current efforts. In fact, the company’s water conservation and waste reduction goals have already been surpassed by some margin. But there is still some way to go if it wants to meet all of its sustainability ambitions.

Kraft’s current sustainability goals for 2011 are:

• reduce plant energy usage by 25%

• reduce plant energy-related CO2 emissions by 25%

• reduce plant water consumption by 15%

• reduce plant waste by 15%

• eliminate 68 million kg of packaging

• support agricultural sustainability on key commodities (i.e. coffee and cocoa).

Conserving and cutting

Over the past few years, Kraft has been focussing on reducing environmental impact in a few key areas. Most of these are related to the environmental efficiency of Kraft’s food processing and distribution plants. By 2011, the company wants to cut global energy use at plants by 25% compared to 2005 levels.

Energy conservation inroads have been made at several high-profile Kraft sites. In 2008 the company announced it had worked with industrial property developer ProLogis to improve energy efficiency at its 800,000ft2 distribution centre in Morris, Illinois.

The installation of energy-efficient fluorescent lights with multi-level lighting controls reduced lighting-related energy consumption by 60% and a new HVAC system cut the plant’s heating and air conditioning power usage by 40%. These improvements led to the plant receiving Gold certification from the US Green Building Council’s Leadership in Energy and Environmental Design (LEED) scheme. At the time it was the largest facility in the world to achieve this accolade.

Kraft is doing more than just replacing lighting and AC systems to make its plants more efficient. In the UK and Germany, three of the company’s coffee plants are recycling used coffee grounds for burning on biomass boilers, providing an alternative energy source and reducing waste. At Kraft’s Banbury plant, in the UK, this practice has reduced the energy used per tonne of coffee produced by 29%, while total CO2 emissions for the plant have fallen by 19%.

Optimising and eliminating

Throughout Kraft’s sustainability agenda, optimising efficiency and eliminating waste is a key theme. It’s a concept that has influenced the company’s transportation strategy.

In 2008, Kraft began collaborating with global software corporation Oracle to implement Project MOST (Management of Optimised Sustainable Transportation), a system that tracks the company’s truck movement in the US to identify and eliminate "empty miles" (miles driven without any cargo). Other sustainability strategies include using shipping and rail routes to replace road transport where possible.

These efficiency savings have helped Kraft make massive cuts in its road mileage. Since 2005 the company has removed more than 50 million road miles from its global transportation network. Steve Yucknut, vice president for Sustainability at Kraft, said the firm is "finding ways to drive fewer miles, reduce inventory piles and eliminate idling trucks". "We’re collaborating with customers and suppliers. And we’re using a number of high-tech innovations for our trucks and warehouses to reduce energy and CO2 emissions," Yucknut says.

Kraft is also trying to optimise efficiency to reduce packaging in its food products as part of its commitment to eliminate 68 million kg of packaging by 2011. A considerable chunk of this reduction can be achieved by simply rethinking packaging design. In Brazil, the company has removed one million kg of excess material by redesigning packaging and shipping materials for its Tang, Lacta and Club Social brands.

And in the US, Kraft has entered two public recycling schemes that help reduce the impact of post-consumer packaging waste. Through a partnership with TerraCycle, a range of Kraft’s US product packaging (such as Capri Sun and Chips Ahoy!) can be ‘up-cycled’ into new consumer products. Capri Sun cartons might be transformed into a children’s back pack or an eco-friendly pencil case, for example.

It might seem like a publicity ploy but volunteers for the project recently collected their millionth drink pouch and there are now more than 14,000 collection centres across the country. It’s certainly a novel way to deal with un-recyclable packaging.

Making sustainability profitable

As well as the environmental benefits, Kraft is sure to reap considerable financial rewards from its sustainable strategies. While there has clearly been some upfront cost to developing these schemes, energy efficiency and reducing waste should fit into any company’s financial goals.

Investors might not all be interested in preserving the planet’s resources, but any company’s board should be enthusiastic about making extensive financial savings. Kraft’s redesigned Carte Noire coffee jars reduce packaging weight by 7.5%, which in turn means the company can ship 18% more jars per pallet. Similarly, energy savings and reductions in road miles cut expenditure on operating costs and fuel respectively. It would appear that Kraft is well aware that environmental and financial efficiency are not mutually exclusive.