Turning Business Risk into Opportunity

WWF's David McLaughlin engages food companies to promote sustainability

david mclaughlin headshot

David McLaughlin leads WWF’s work engaging key global food companies to promote sustainable sourcing of agricultural commodities. Prior to joining WWF in 2008 as vice president of agriculture, McLaughlin spent 28 years with Chiquita Brands International, where he led efforts to improve the company’s palm oil and banana plantations in Costa Rica and Panama, and implemented global environmental and labor strategies. McLaughlin has worked in agricultural production throughout Latin America, Africa, the Philippines and Australia.

I firmly believe that businesses have a responsibility to drive sustainability, and I also believe it’s in their best interest. One of the most rewarding parts of my job is getting to see companies really take this to heart. A great example is the transformation I’ve witnessed at General Mills.

Four years ago, General Mills approached WWF, concerned about water risks that threatened commodities such as wheat, oats, dairy and sugar beets. The company was tentative in the beginning—unsure of how WWF could add value to their business and uncertain about making changes.

But this collaboration was a perfect place to start. WWF has a renowned risk assessment tool that we use as an entry point to begin conversations with companies. We show them which questions to ask about their supply chains, where their biggest risks are, and what changes would produce the most meaningful impacts.

While many big companies have great clarity of vision when it comes to consumer markets, they do not always know how to prioritize their sustainability efforts. This is particularly true when they have a diverse portfolio of products, as General Mills does. WWF has the expertise to shine a light on issues of concern and help create a road map for mitigating risk.

Food companies have long been accustomed to steady supplies and stable prices on ingredients. In recent years, however, there has been major volatility in commodity prices, often tied to shortages resulting from crop failures and the impacts of climate change. All of a sudden, companies have begun to examine their supply chains with greater scrutiny and think about the long-term implications: No matter how great the brands, if you don’t have access to the right commodities, you don’t have a solid business plan.

“While many big companies have great clarity of vision when it comes to consumer markets, they do not always know how to prioritize their sustainability efforts.”

David McLaughlin
Vice President, Agriculture, WWF

With General Mills, WWF mapped out regions where the company’s priority ingredients faced the greatest threats from water shortages. The first step was to work with vegetable suppliers in Mexico, where assessments showed that the water supply would be depleted within 20 years. General Mills helped to install drip irrigation systems and convened other stakeholders in the area to develop water stewardship policies. They then began working with their wheat producers in Idaho’s Snake River watershed to implement sustainability metrics on production factors such as water and fertilizer use.

Over time, the relationship between WWF and General Mills deepened and expanded to address other aspects of sustainable sourcing. Through the process, the company grew much closer to its farmers, many of whom are based in North America. One way the company drives sustainability is by encouraging healthy competition among farmers, who collect and share data on inputs used (such as fertilizers or water) and outputs realized (crops). When a farmer sees that a competitor generated a higher yield but used less fertilizer, he or she is prompted to think differently and try more efficient practices.

What began at General Mills as a cautious, incremental approach has burgeoned into a wider embrace of environmental accountability across their sourcing. Last year, the company made a commitment to sustainably source 100% of its 10 priority ingredients by 2020.

I have been amazed by the shift that has taken place in the company’s culture. They are taking real risks and being proactive. Steve Peterson, director of sourcing and sustainability, is a Minnesota farmer himself, so he understands the issues that farmers face. He knows firsthand that reducing a farm’s ecological impact also increases its profitability.

What is equally encouraging is that General Mills’ decisions have been a wake-up call to corporate peers. I’ve attended meetings with Peterson and representatives from other big food companies where Peterson challenged them to see the writing on the wall and realize that sustainable sourcing is not only good practice, but absolutely vital for their future.

It is imperative that more companies embrace this challenge. Corporations have enormous power to reduce the environmental impacts of their supply chains. They also possess an incredibly influential voice. When a nongovernmental organization shows up at a corporate or government office, that’s one thing. But when a major company shows up and declares that resource strategies must be taken seriously, it’s an entirely different ballgame.

Earning profits is no longer enough: Ensuring sustainability is an integral part of what it means to be a successful company in the 21st century.

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