Several months ago, we highlighted news that Kroger was phasing out plastic grocery bags as part of its Corporate Social Responsibility (CSR) commitment. The national grocery chain is not alone. When it comes to addressing food supply chain risk, corporate social responsibility programs are helping companies deliver on customer expectations AND mitigate reputational risk. Trader Joe’s public CSR statement highlights the organization’s use of reusable bags for the last 40 years, keeping more than 30 million paper grocery bags out of landfills in 2017 alone.
The statement also notes, “It’s been our long-running policy to donate 100% of products not fit for sale but safe for consumption. In 2017, we donated nearly $350 million dollars of product, which equates to approximately 70 million pounds of food or 58 million meals to combat hunger.” The grocery chain also uses compostable produce bags rather than plastic ones in pursuit of CSR. A focus on Corporate Social Responsibility certainly helps mitigate reputational risk—and can add value for brands—but the food supply chain is replete with other risks.
Managing a wide range of food supply chain risk
Forced Labor Considerations
Agri-businesses and other original sources of food products—from lettuce fields to fishing vessels—may be quite distant from the consumer end of the supply chain, but grocery chains must stay alert to the potential for forced labor, no matter where it occurs. The California Transparency in Supply Chains Act, which passed almost a decade ago, requires that retailers or manufacturers with over $100,000,000 in annual global gross receipts that conduct business in California must disclose on their websites how they are working to reduce forced labor in the supply chain. This includes:
- Engaging in third-party verification of its supply chains to evaluate and address the risk of trafficking and forced labor;
- Conducting independent, unannounced audits of suppliers to evaluate their compliance with company standards for trafficking and forced labor in its supply chains;
- Requiring supplier certification that materials incorporated into the product comply with local laws on trafficking and forced labor;
- Establishing and implementing internal accountability standards and procedures for employees and contractors failing to meet company standards regarding trafficking and forced labor;
- Training employees with direct responsibility for supply chain management on trafficking and forced labor issues.
Not living up to these standards—as well as the guidance and best practices set forth by the United Nations and the International Labor Organization—puts organizations’ reputations on the line. But it can be a financial risk too. In the wake of revelations about forced labor in the Thai fishing industry, major grocery chains were targeted for boycotts and subject to class-action suits.
Food Safety & Verification Considerations
The rise of convenience food has been linked to a rise in food recalls, which can be damaging to a brand’s reputation and, in turn, profits. But food safety is also a driving concern for the FDA and regulations like the Food Safety Modernization Act and its Rule on Foreign Supplier Verification Programs . Organizations have a regulatory obligation to ensure that foreign suppliers adhere to the same level of preventative controls, safety requirements, and allergen labeling required of U.S. suppliers. Toward that end, grocery chains should:
- Conduct risk assessments to identify known or foreseeable hazards with food from foreign suppliers;
- Use those risk assessments in determining appropriate due diligence and ongoing risk monitoring for each supplier;
- Establish and follow written procedures to ensure food supplies are sourced from suppliers that meet these high standards;
- Maintain an auditable record (FSVP) for each food brought in and each supplier of that food;
- Develop a plan for corrective actions should a risk be identified.
- Check out our eBook on regulations—from farm to fork—to learn more about food supply chain risk .
- Learn how due diligence and ongoing risk monitoring enable improved visibility into regulatory risk.
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