The Crowd Blog Sowing the Seeds for Supplier Resilience

Being resilient to change and uncertainty has always been a fairly reliable indicator of a company's long-term prospects; but faced with the unprecedented challenges of today's increasingly unpredictable and volatile world, ensuring longevity now depends on it. As the social, economic and environmental consequences of climate change become increasing concerns for consumers and business communities alike, business leaders are becoming ever more thoughtful about not just how to prepare for an unsettled future, but also what opportunities lie within it. For retailers and manufacturers in particular, there is only so much a company can do to "future-proof" its business in-house. More often than not, the tangible effects and threats of climate change are being most keenly felt in the regions of the world where their suppliers are based. Ensuring long-term resource availability involves adopting a bottom-up approach, working much more closely with suppliers to improve trading relationships, support sustainable livelihoods, and build resilience in the supply base. Many businesses recognise the need - and are willing to take action - to build supply base resilience in key sourcing areas, but are coming up short when it comes to quantifying robust and effective improvement programmes. But this needn't be so. As the following case study of a well-known tea and coffee company demonstrates, carbon finance initiatives offer a tried and tested way of delivering verified results and putting the metrics behind the means. An industry facing climate challenges After water, tea is the most-drunk beverage in the world, consumed at a rate of three billion cups a day. But tea as we know it is under threat: aside from being grown in some of the countries most vulnerable to climate change-induced weather extremes, many other factors are leading to rapid change, from competition for land to changing consumer habits and the mass migration of agricultural workers to the city in search of higher wages and better lives. In the face of these challenges, the sector is rallying together. The Ethical Tea Partnership (ETP), for example, was formed in 1997 as a not-for-profit membership organisation working "to improve the sustainability of tea production, the lives of tea workers, and the environment in which tea is produced". More recently, the collaborative Tea 2030 initiative was set up by global sustainability non-profit, Forum for the Future, to bring together leading organisations from across the tea sector to better understand how current trends will affect the industry and to create a roadmap to tea's sustainable future. Direct action Bettys & Taylors Group, known for tea and coffee brands Yorkshire Tea and Taylors of Harrogate, is itself a member of both ETP and Tea 2030, and is taking a collaborative, long-term approach to addressing supplier resilience that will deliver long-term results. By 2020, the Yorkshire-based family business aims to have carbon neutral sourcing through a range of activities including planting of one million trees across tea farms in its supplier heartland in the foothills of Mt Kenya, delivering both carbon sequestration and livelihood benefits. The Community Reforestation Programme is being carried out in partnership with Natural Capital Partners, specialists in working with corporations on results-based solutions for their environmental goals. Through the initiative, participating farmers - tea farmers directly supplying Bettys & Taylors - receive a modest annual income for every tree planted on their land, and further revenue as the trees grow and sequester carbon. They will also be sharing knowledge and best practice on how to sustainably manage their land and increase biodiversity through training programmes and seminars in conservation farming and agroforestry techniques. In conjunction, an ongoing life cycle assessment will guide Bettys & Taylors toward an internal reduction target of 20% by 2020. The second phase of the carbon management programme will use carbon finance projects to address the company's coffee business. More than just a tree Tree-planting has long been linked to carbon offsetting schemes, but while offsetting is an important part of the effort - Bettys & Taylors has pledged to make its entire tea and coffee sourcing operations CarbonNeutral® by 2020 - sequestering carbon is just one of the Kenyan programme's many benefits. Many of the trees being planted will be fruit and nut trees, which in time will become valuable cash crops for farmers, diversifying their money-making potential and increasing their economic security. Applying conservation agriculture techniques will also help farmers increase yields and improve food security. Planted in the right locations, trees provide useful shading to prevent tea bushes from scorching as well as acting as wind breaks, natural barriers to reduce surface water run-off and even as barricades against roaming elephants. Trees also support soil fertility and reduce erosion, a serious problem in many deforested areas, and provide fallen leaves and bark for mulching and composting. Simon Hotchkin, Head of Sustainable Development at Bettys & Taylors, said the programme provided the "perfect fit" for the company's carbon neutral ambition and broader environmental and social objectives, and complemented its previous tree planting schemes (Bettys & Taylors Group's Trees for Life campaign, for example, is responsible for the planting of three million trees worldwide since 1990 and has protected an area of Amazonian rainforest larger than the Yorkshire Dales.) He said: "We could have bought carbon credits as a quick-win solution to achieving our carbon neutral goal, but that's not the way we do business here. Our top quality tea comes from the Mt Kenya region and so ensuring its continued availability is critical to the future of our business. We wanted an approach that would protect and enhance production while improving the livelihoods of our suppliers and their communities, which in turn would safeguard the supply and quality of our tea. This programme with Natural Capital Partners delivers on all fronts." He added: "This is not about CSR or philanthropy, this is about building up a sustainable business for all and integrating sustainable development within the whole community. After all, what's the point in having a sustainable farm in an unsustainable landscape?" The programme involves an extension of the wider International Small Group and Tree Planting Program (TIST), to tea farms surrounding four strategic factories in the Mt Kenya region important to Bettys & Taylor's supply and managed by key supply partner, the Kenya Tea Development Agency (KTDA). Smallholders supplying tea to these factories typically come to hear about the programme through word of mouth or organised "come and see" seminars, and those that are interested register their interest to get involved. Bettys & Taylors has made a ten-year commitment to the programme, by which time, it is hoped that over 3,000 local tea farmers will be benefitting from the scheme, with one million new trees sequestering over 84,000 tonnes of CO2 from the atmosphere and offsetting around 40-50% of Bettys & Taylors entire sourcing emissions globally. Sarah Roberts from the ETP said the initiative was an excellent example of how project-based carbon finance programmes could build resilience in the tea industry. She said: "People around the world treasure their daily cup of tea, but are often unaware of the challenges the industry is facing from climate change. It is small farmers who are most vulnerable to the effects of climate change and in Kenya they are fundamental to the tea industry, supplying both more volume and higher quality teas than the large estates. So building their resilience is not only essential for farmers' livelihoods and the future of their communities, but it is important for tea-drinkers too. The work that Bettys & Taylors' is doing directly with the farmers that supply them is a brilliant approach to using carbon finance to support rural livelihoods and another example of the incredibly strong and strategic relationship that Bettys & Taylors have with their suppliers. I am sure it will point the way for similar initiatives in the future." Carbon finance By focusing results-based carbon finance projects within the supply base, companies like Bettys & Taylors are able to meet emission reduction targets while providing a host of additional benefits to communities and biodiversity which are critical to their success. And thanks to organisations like the Climate, Community and Biodiversity Alliance who are working to measure and validate these added positive impacts, taking such a direct course of action is becoming an increasingly easier sell to corporate finance teams and investors. Simon Brown, European Managing Director of Natural Capital Partners, said that Bettys & Taylors' long-term commitment to the project is indicative of a shift in businesses' interest from simple carbon offsetting schemes to projects where additional sustainable impacts like biodiversity, education, water provision, empowerment and job creation are the primary focus. Through Natural Capital Partners Project Catalyst solution, a number of corporates are customising and developing projects to meet targeted sustainable development outcomes that align with business goals. He said: "It is hard to conceive of any business in the food and drink sector that is not aware of the risks and issues presented by climate change and don't have some form of plan - it would be negligent not to. But there is a difference between awareness and taking action through leadership. Leaders like Bettys & Taylors see the bigger picture, but also realise that the only way they can achieve it is if they are prepared to stick with the project for many years. "In doing so they are demonstrating to their suppliers that although they may