While congratulating this year’s 100 most sustainable firms in the “noble pursuit of the idea that business can be a force for good,” Prince Charles urgently called for the sort of leadership represented by the Global 100. He warned that the sum of all countries’ carbon reduction commitments won’t come close to limiting rising global temperatures to an average of 2°C – let alone the essential target of 1.5°. “Rather – and this is the problem – they deliver a 3.2°C increase, which means mass extinction and large parts of the planet being uninhabitable by the end of this century.

“As I’ve been trying to say, for more years than I can remember, what on earth is the point of testing this world, and nature, to destruction?”

The prince noted that with “more businesses, investors, shareholders and consumers recognizing the opportunity that a sustainable future affords,” we can shift the momentum of the private sector and capital markets in line with net-zero.

Echoing his message was Sanda Ojiambo, CEO of the United Nations Global Compact, which leads and supports international businesses on their path to sustainability. She noted that 2020 was one of the warmest years on record, with droughts, floods and rising sea levels having catastrophic effects. One bright spot: “Net-zero commitments by the business sector have doubled in the past 12 months.”

Roundtable moderator Diana Fox Carney led the four CEOs in discussing key steps being taken by the leading firms to align with 1.5°C. Asked whether he believed companies would achieve net-zero by 2050, Jean-Pascal Tricoire, CEO of this year’s top firm, France’s Schneider Electric, noted that, globally, “we are not at the right speed at all … The technologies are here, but what we need is to accelerate the way we design things – the way we design factories,buildings, cities – incorporating those existing technologies, because every decision we make counts.”

Tricoire added, “The buildings we build today … will be burning carbon for the next 50 years. Everything we build/do clean today will have implications for the next 50 years.”

Founded in 1836, during the First Industrial Revolution, Schneider develops electrical distribution products (including off-grid solar storage) and smart automation solutions to make the world more energy-efficient and renewable. Tricoire pointed out that when Schneider began to embrace sustainability 15 years ago, “it was a very lone crusade.” But in those 15 years, the company has tripled in size. Action is its own reward, he said: “We reset the bar every three years to a higher level.”

Like Schneider, Danish wind energy giant Ørsted (number two on this year’s Global 100) has also thrived by enabling the world’s broader journey to net-zero. CEO Mads Nipper noted that his firm is proof that change can happen in a blink, even in the dirtiest sectors. “Just 10 years back, we were one of the most coal- and oil-intensive utilities in Europe. We alone accounted for more than one-third of total emissions in Denmark. Since then, we’ve actually reduced our own emissions by 86%, by making a fundamental green transition.”

Founded in 1972 to develop oil and gas deposits in the North Sea, Ørsted is now the world’s largest developer of offshore wind power, producing 88% of its energy from renewable sources. By 2025, says Nipper, the company intends to be the world’s first carbon-neutral utility: “Our vision is a world that runs entirely on green energy.”

Lawrence Kurzius, CEO of McCormick & Co., a global leader in spices, seasoning and “flavour solutions,” agreed that companies can use existing technologies to future-proof their businesses for carbon. As a first step, he said that every new facility McCormick builds is either silver or gold LEED-certified, pointing out that McCormick co-invested in building a solar farm to power its new headquarters in Baltimore, Maryland. “Even though we’re not an energy company, we can certainly source from renewable sources.” Tackling plastic packaging is another key initiative, Kurzius said, adding that McCormick has made a commitment to go 100% circular. Today, 84% of McCormick’s plastic can be recycled, reused or repurposed.

As the top-ranked food company on the Global 100, McCormick has put sustainable farming at the heart of its net-zero plans. The company is leveraging new technology to work with hundreds of thousands of small farmers in 80 countries to help them develop sustainable farming practices – in some cases organizing the farmers into agricultural co-ops and committing to take the co-ops’ full outputs. “I think that that really multiplies the efforts that we undertake ourselves,” Kurzius said.

Roberto Marques, CEO of Brazil-headquartered conglomerate Natura & Co., spoke of sourcing ingredients while preserving the Amazon rainforest by working with the local communities as “guardians of the forest.” Last year, the personal-care company, whose brands include Avon and The Body Shop, committed to being net-zero by 2030 throughout its supply chain, including Scope 3 emissions (those created through use of its products) – “a daunting ambition for us,” Marques said. Natura is also targeting “full circularity” for its packaging by 2030 and intends that by then 95% of its products will be natural, renewable and biodegradable. “We don’t have all the answers today,” he said. “It’s a call to action – for society, for our partners, for the entire community.”

Challenging targets produce results, Marques said: they capture people’s imaginations and spur innovation and collaboration. “We truly believe that by setting the bar high you end up driving innovation. At the end of the day, I don’t think there is room for even competition or political agenda when humanity is at risk.”

Collaboration was at the heart of Prince Charles’s message as well. “For the sake of a safer and more sustainable future, let us join forces and waste no more time. As each of you continues your heroic efforts as members of the Corporate Knights Global 100, I can only offer you my sincere congratulations and ask that you keep going, demonstrating the leadership the world so desperately needs.”

In the spirit of enshrining the rights and value of nature in capitalism, Corporate Knights is inviting the leaders of Global 100 companies to support the Terra Carta, a bold new climate action charter from the Prince’s Sustainable Markets Initiative.

“We are moving more quickly than we were before, but we really need to speed up,” Corporate Knights publisher Toby Heaps said in conclusion. “The good news is the solutions are on the shelf; they’re waiting for all of us to make the bold, smart choices to invest in them.”

Rick Spence is a business writer, speaker and consultant in Toronto specializing in entrepreneurship, innovation and growth. He is also a senior editor at Corporate Knights.

The post CKTV: Prince Charles joins top Global 100 CEOs with urgent call to action appeared first on Corporate Knights.

What’s different is that McCormick stayed long after the waters receded, expanding its efforts to support vanilla farmers in Madagascar, one of the world’s poorest countries. Besides rebuilding primary schools and funding vanilla processing centres in remote communities, it helped create a farmer-owned cooperative, giving farmers more control over their crops. McCormick also teamed up with WWF to make sure vanilla is sustainably farmed, restoring riverbanks and training farmers on water conservation. In addition, the company provides interest-free loans and healthcare insurance to vanilla growers, in concert with the German foreign aid agency and Biovanilla, a local supplier.

All this is good for farmers, who have to make a living in good times and bad, and for the environment that sustains them. It’s good for McCormick, too, helping to assure the company of a long-term supply of vanilla, one of the world’s most popular flavours.

“Improving farmer livelihoods is a major priority,” says Lawrence Kurzius, McCormick’s chairman, president and CEO, who has broadened and deepened the company’s commitment to social and environmental responsibility since becoming its top executive in 2016.

Based in Hunt Valley, Maryland, a suburb of Baltimore, McCormick employs 12,000 people, booked US$5.3 billion in sales last year and sourced agricultural products from more than 80 countries. While other food companies like Ben & Jerry’s and Clif Bar may be better known for their work on sustainability, McCormick’s efforts are serious and wide-ranging, Kurzius explains during an interview over lunch at McCormick headquarters. Prepared by a corporate chef, the menu includes vegetarian “scallops” and a pan-seared North African–spiced rockfish, all of it well seasoned, of course.

McCormick’s approach to sustainability, which the company calls “purpose-led performance,” is embedded throughout the business, Kurzius says, and shapes its dealings with farmers, workers and the planet. “It’s not a program or a project,” he says. “It is a principle that underlies everything that we do.”

Under Kurzius’s leadership, McCormick named Michael Okoroafor as its first full-time vice-president of sustainability, set the company’s first science-based greenhouse gas reduction targets, made a major commitment to renewable energy, and transformed a telephone-company office building into a US$170 million LEED Gold–certified corporate headquarters.

All of this has helped McCormick to land a spot on Corporate Knights’ Global 100 Sustainability Index in each of the last four years and to be ranked first in the food products category for the fourth year in a row, ahead of such better-known companies as Unilever and Campbell Soup.

McCormick shareholders have also done very well. In the last five years, the company’s share price has more than doubled, while the S&P 500 Index has grown by about 35%, as of May 5, 2020. McCormick’s brands include Frank’s RedHot, French’s, Lawry’s, Old Bay, Thai Kitchen, Club House and Zatarain’s, as well as McCormick herbs and spices. Sales to consumers bring in about 60% of revenues. The remainder comes from sales to food and drink companies and restaurants; PepsiCo is its biggest customer, the company says.

Okoroafor is the face of the firm’s sustainability program. The youngest of four children, he was raised in a village in Nigeria, where his mother was a subsistence farmer and his father was a railroad worker. “My mom would farm from morning until night,” he recalls. She encouraged him to work hard, and Okoroafor earned scholarships to a Catholic boarding school, to the University of Nigeria and, eventually, to Michigan State, where he earned a PhD in polymer chemistry. His wife, Ngozi Okoroafor, also holds a PhD in chemistry.

Before arriving at McCormick, Okoroafor worked at Bausch & Lomb, PPG Industries, Coca-Cola and Heinz, accumulating more than 40 patents and helping to develop such innovations as the Coca-Cola PlantBottle, a recyclable PET bottle made partially from plants. His initial focus at McCormick was packaging – the company is seeking to ensure that 100% of its plastic packaging can be reused, recycled or repurposed – but he eagerly accepted the opportunity to work with farmers as well, which reconnected him to his own childhood. “Making an impact is what drives me,” he says.

“We need an enduring supply chain. If we don’t have anything to sell, we don’t make money.”

—Michael Okoroafor

McCormick’s work with farmers focuses on what it calls its five iconic ingredients: vanilla, red pepper, black pepper, oregano and cinnamon. Vanilla is by far the most complex, both in its flavour profile and in the process of cultivating and processing vanilla pods, which come from vine-like plants that wrap themselves around small trees. It’s labour-intensive work that requires patience and good timing: new vanilla vines take several years to mature and have to be pollinated, by hand, during the early-morning hours on the first day that the delicate orchid flowers bloom. Once harvested, bean pods are soaked in hot water at night and dried during the day for as long as a month. “The curing of vanilla is a fusion of art and science,” says Okoroafor. Madagascar produces about 80% of the world’s crop, because climatic and soil conditions are right, labour is cheap, and growing vanilla has become part of the culture.

In the wake of the 2017 cyclone, which hit during a worldwide vanilla shortage, the crops became so valuable that theft was rampant. Farmers also faced exploitation by middlemen, known as collectors, who offered them high-interest loans during the so-called lean season and underpaid them for what they grew. “The net effect is that the farmer is impoverished and the collector is driving a Mercedes,” Okoroafor says. Middlemen also mixed different grades of vanilla or bought premature vanilla to increase their profits, thereby degrading quality.

The risks to McCormick were clear. “We need an enduring supply chain,” Okoroafor says. “If we don’t have anything to sell, we don’t make money.”

With matching funds from USAID, McCormick and the National Cooperative Business Association’s international arm, NCBA CLUSA, organized a co-op of vanilla farmers in the Sava region of Madagascar. Farmers run the co-op and sell a substantial portion of their crop to McCormick. “You’re getting the buyer coming directly to the farmer,” says Jonathan White, director of private sector partnerships at NCBA CLUSA. “When that happens, more opportunities can flow down to the farmer.” Farmers get a fair price, advice about growing and harvesting, and the opportunity to certify their product as organic or fair trade if they choose.

McCormick can count on a steady supply of high-quality vanilla.

Even so, it does not want to become dependent on Madagascar, so it has tried to develop alternative sources of vanilla in Indonesia and East Timor, again working with NCBA CLUSA. Farmers at a well-established cooperative in East Timor called CCT have thrived by growing coffee, which they have sold to Starbucks since the 1990s, but they have begun to grow vanilla and cloves as well, to diversify their sources of income.

Other notable sustainability efforts at McCormick include a partnership with CARE, studying women’s contributions to spice farming. McCormick commissioned the development non-profit to do village-level surveys designed to find ways to improve the status of women producing vanilla in Madagascar, black pepper in Vietnam, red pepper in India and oregano in Turkey. The ultimate goal, the company says, is to recognize the contributions of women and empower them in tangible ways. Rahul Chandran, managing director of CARE consulting, says, “These are really complex issues. They are trailblazing for their sector.”

Internally, the company is also well on its way to meeting goals for diversity and inclusion. Women hold 49% of middle management jobs and 40% of senior management jobs, the company says in its sustainability report. It aims to get those percentages up to 50% by 2025.

Meantime, its climate footprint is shrinking. McCormick has been buying small amounts of solar energy since 2006 but stepped up its commitment last year by making a deal with Constellation, an electricity provider, to purchase solar energy to power its corporate headquarters, four manufacturing plants and distribution centres in Maryland and New Jersey. The initiative will help McCormick achieve its goal of cutting absolute carbon emissions from its own facilities from 2017 levels by 20% by 2025.

Kurzius says all of these efforts are good for business in multiple ways. “Sustainability is increasingly important to investors,” he says, particularly long-term institutional investors such as pension funds and insurance companies.

Corporate customers such as PepsiCo and Walmart also reward the company for its environmental practices. As well, those practices help attract and engage staff. “The best employees want to work for the good guy,” he says.

For Kurzius, there are personal rewards, too. He has been interested in the environment since growing up in Huntsville, Alabama, where he was president of his high school ecology club. An early Tesla buyer, he notes that the parking lot outside company headquarters is equipped with electric-car charging stations.

“I’d like to think this will be one of my legacies,” he says.

Marc Gunther is a veteran journalist, speaker, and writer whose focus is business and sustainability.

The post How McCormick is making sustainability its secret spice appeared first on Corporate Knights.

The Bank of Canada struck an optimistic note in its April Monetary Report, suggesting that “Canada’s economy will begin to recover as the health impacts of COVID-19 fade, businesses begin to reopen and gradually resume their operations, and people start returning to their normal lives.”

Of course, uncertainty remains over if, how and when the economy will return to pre-crash levels. The bank’s report highlighted unprecedented levels of monetary and fiscal stimulus but also noted concerns about historically low oil prices, a surge in unemployment and sharply lower business and consumer confidence.

Without the ability to forecast with confidence, we should prepare for the recovery period to drag on for some time and continue to examine greener companies that are expected to profit during a longer period of pandemic-induced economic pain.

Note: These are investment ideas, not recommendations. Speak to a financial professional before investing and ensure that any holdings are part of a more diversified investment strategy.

McCormick & Company

With restaurants closed, home chefs are having their moment. Unfortunately, we’re not all great cooks. I’m leaning heavily on my spice cabinet to make my home-cooked meals a little tastier. When in doubt, throw a little hot sauce in the dish! McCormick & Company is a spice and flavour manufacturer that sells a wide array of spices, condiments and sauces. You’ll likely recognize some of its popular household brands, like Old Bay seasoning, French’s condiments, Thai Kitchen and Frank’s hot sauce. The company is well positioned to benefit as families keep eating at home.

In 2017, McCormick set impressive sustainability goals, such as slashing its greenhouse gas emissions by 20 per cent, sourcing all herbs and spices sustainably, and committing to making 100 per cent of its plastic packaging reusable or recyclable by 2025. The company has a long way to go in meeting these goals, but I’ll give it the benefit of the doubt, since its environmental, social and governance (ESG) scores from the Corporate Knights research arm, as well as MSCI and Sustainalytics, are among the best in its sector. Furthermore, McCormick ranked 22nd on the 2020 Corporate Knights Global 100 Most Sustainable Companies in the World.

McCormick’s share price fell by 32 per cent with the rest of the market during the crash but has rebounded nicely and sits down just five per cent since the start of the year. The stock is expected to pay a 1.58 per cent annual dividend. (Scorecard below)

Northland Power

Renewable energy utilities are in the enviable position of having consistent cash flows, since they have long-term purchase price agreements that set a fixed price on the electricity they generate. Northland Power, headquartered in Toronto, is one such utility. With a mix of solar, wind and thermal (natural gas) projects, the company’s cash flows shouldn’t suffer if the pandemic’s stay-at-home orders persist.

Most of Northland’s facilities generate renewable energy, but about 26 per cent of its revenues come from natural gas. This will be a turnoff for some green investors, while others will appreciate a diversified approach. I’m disappointed that Northland has taken a step backward in its ESG data disclosure. The company produced a 2018 Sustainability Report but didn’t disclose any information for 2019. This lack of ESG disclosure could hurt them as investors increasingly incorporate the data into investment decision-making. Still, generating 74 per cent of revenues from renewable energy is enough to make me feel good about this stock.

Northland’s share price fell by 36 per cent during the crash but bounced right back and is up almost 13 per cent since the start of the year. The stock is expected to pay a 3.91 per cent annual dividend. (Scorecard below)

The post Pandemic Portfolio: Two stocks to watch as COVID-19 drags on appeared first on Corporate Knights.