By Perry Cleveland-Peck Sept. 13, 2024 6:03 am ET|WSJ Pro
The family-owned food giant’s CSO Barry Parkin said the company is on target to meet its goal of a 50% cut in emissions by 2030, thanks in part to linking its sustainability objectives to executive remuneration.
Mars Chief Sustainability Officer Barry Parkin says the company has made its sustainability goals as important to its executives as its financial goals. And it has done so by linking performance objectives to executive pay.
The candy company, one of the largest privately held firms in the U.S., revealed in its sustainability report this summer it had reduced its carbon footprint by 8% in 2023. That’s no mean feat when most businesses are seeing only increases in their emissions numbers.
But when compared with Mars’s 2015 baseline, the achievement seems even more striking. The company, which has a goal of cutting emissions by 50% by 2030, has reduced its total emissions by 16%, or 5.7 million metric tons, in that time. And it has done so while growing the business 60% to more than $50 billion annually, according to the report.
Mars has also worked closely with its suppliers in an effort to lower their emissions – what Mars reports as its Scope 3 emissions. The company estimates that 96% of its total carbon footprint in 2023, or around 29 million metric tons, came from its indirect operations, including suppliers, 65% of which were related to agriculture and changing land use. “So we have to change something,” said Parkin.
WSJ Pro Sustainable Business interviewed Parkin last month shortly after Mars released its sustainability report. The conversation has been edited for clarity and brevity.
WSJ Pro: Mars has just released its latest sustainability report. What are the biggest challenges that the company faces in this area?
Barry Parkin: We’re making strong progress on GHG reduction. We delivered an 8% reduction last year, which is a stellar move forward on our path to minus 50% in 2030. We’re now at minus 16% [against a 2015 baseline]. At the same time we’ve continued to grow the business strongly—more than 60% since 2015. So we’ve decoupled our growth from our carbon footprint, which is of course what we need to do and what the world needs to do.
But we’re having to completely redesign and reimagine our supply chains. To get to net zero we’ve got to transform every single part of it. We have a big supply chain. Our carbon footprint is the size of a small country and we have more than a million farmers in more than a hundred countries around the world. So this is an all-in effort across the whole organization.
WSJ Pro: Your progress on emissions is in contrast with a lot of companies, whose Scope 3 figures have for the most part been up. How have you done it?
BP: We’ve made our sustainability goals as important as our financial goals. And 20% of our overall executive remuneration is attached to our sustainability goals. When you make it that amount of money—and it’s a significant amount of money for senior executives—they move from ‘I don’t know what to do about that. I wasn’t trained on how to reduce greenhouse gas. They didn’t teach me about that at business school,’ to ‘That’s serious. That’s significant. What do I need to know? What do I need to do?’
We’ve made this as important as the financial goals and that sounds simple but that’s what matters. We’re investing more than a billion dollars over the next few years on climate, more than two billion dollars on our overall sustainability. These are serious amounts of money—just as much as we’d be investing in building factories or acquiring businesses. So we have made it as important. Unless you do that, you haven’t got much chance of achieving these goals.
WSJ Pro: Would you part company with a supplier if they weren’t coming up to scratch or weren’t aligning with your net zero goals?
BP: Absolutely. I have the title of Chief Sustainability Officer and Chief Procurement Officer for a reason. We have to transform our supply chains and that means we have to change what we buy, or where we buy it, or how we buy it, or who we buy it from. If we don’t change any of those things, we’re not going to transform our supply chain and our greenhouse gas footprint. So suppliers have to be on board and we need to see them have the same serious ambition, set the same goals, but also get on with it.
One of the things we talk about a lot is moving from promises to performance. It’s very easy to promise a net-zero goal for 2050. But how many CEOs, how many chairmen are going to be around in 2050? How many chief sustainability officers? None of us. So if we set a goal, it will happen. We need to hold ourselves to account on our performance. Full scope. This isn’t about Scope 1 and 2. This is everything in. Absolutely nothing left out.
WSJ Pro: Are you confident that Mars will meet its 2050 net zero goal?
BP: I am increasingly confident, yes. We have a very detailed road map to minus 50% in 2030. We know what to do and we know we can do that with existing technology. We don’t need any massive breakthroughs to halve our footprint by 2030. And we know it’s affordable. We’ve costed it. Post 2030, it will get harder and we do need some breakthroughs in terms of transport and technology. We’re going to need ships that have completely different fuel. We’re going to need breakthroughs in some packaging materials and in raw materials.
And of course, it’s net zero for a reason. The science says that agricultural commodities will probably not get to zero and there will need to be some high-quality carbon credits at the end. So the last 10%-20% will probably have to get there through high quality carbon credits. That’s the ‘net’ of net zero. It doesn’t say zero. It says net zero. But that’ll be at the end of the journey.
WSJ Pro: You have a goal of 100% renewable electricity in your operations by 2040. How’s that coming along?
BP: You start with putting up a wind turbine at a factory or putting some solar on the roof of your offices and you quickly realize you’re never going to get to scale like that. So these last eight, nine years we’ve been putting in place large-scale off-site renewable projects—wind or solar—at a national scale. We’re putting up offtake agreements, typically 20 years. The developer builds a wind or solar farm for us. And we put renewable energy on the grid at large scale and offset our electricity usage in our factories and operations. It’s roughly cost parity with fossil fuels. So this is a no-brainer. Everybody could and should be electrifying their business. It’s pretty straightforward. I’d say it’s at the top of the list of things we know how to do.
WSJ Pro: Mars is invested in a number of coral-reef restoration programs. Why the sea? You don’t immediately associate Mars with the oceans.
BP: It’s not obvious, is it? In fact, our pet-food business is reliant on fish—cats like fish-flavored recipes. So we buy fish from all over the world. And a lot of the fish is spawned on coral reefs. So they are critically important in our supply chain. More than 10 years ago, we developed a process for rebuilding reefs that have been destroyed—often by fishing with explosives, particularly in Southeast Asia. We’ve got a system where we construct interlocking “hexapods” to rebuild reef infrastructure. Within three years, you get a completely new reef. Then the fish come back and you start to see the ecosystem working again.
We’ve done the biggest coral reef restoration project in the world in Indonesia. We’re now trying to scale it. What we need is serious money. I think something in the order of 200 times the amount of money that’s being invested in coral reef restoration globally is needed. So this is a pitch, we need funders to work alongside us on coral reefs. (Visit WSJPRO for the original article)
Write to Perry Cleveland-Peck at perry.cleveland-peck@dowjones.com
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