MINNEAPOLIS — General Mills, Inc. is stepping up its efforts around regenerative agriculture and views the practice as key to reaching its ambitious greenhouse gas reduction goals, the company’s top sustainability officer said.
Mary Jane Melendez, chief sustainability and social impact officer, offered details about General Mills’ efforts around regenerative agriculture during the May 4 General Mills Force for Good event, conducted virtually with investment analysts. She also described setbacks over the past year in the company’s progress toward reducing greenhouse gas emissions.
Kicking off the investor event were remarks by Jeffrey L. Harmening, president and chief executive officer of General Mills.
Mr. Harmening sought to put the company’s current efforts into perspective by noting General Mills has publicly reported on its social responsibility work for 52 straight years and in 2015 became the first company to establish a full value chain greenhouse gas reduction target approved by the Science-Based Targets initiative. In 2019, the company made a commitment to advance regenerative agriculture. The objectives, he said, are aligned with the United Nations Sustainable Development Goals.
More recently, to better integrate environmental, social and governance goals into the company’s business, General Mills established a Global Impact Governance Committee (GIGC), “accountable for ensuring our global responsibility programs are resourced, on track and, ultimately, achieved.”
The committee, which Mr. Harmening heads, meets regularly and includes several cross-functional senior leaders. GIGC enjoys strong engagement and oversight from the General Mills board of directors, he said.
General Mills has committed to reducing absolute greenhouse gas emissions by 30% by 2030 and achieve net-zero emissions by 2050.
“And because a minimal amount of our GHG footprint is from owned operations, we’ve set goals that go beyond our walls, from farm to fork, addressing Scopes 1, 2 and 3,” she said.
Progress toward its goals has not been without challenges, Ms. Melendez said.
“Our business has grown significantly over the course of the pandemic,” she said. “And the volatile operating environment has caused considerable inefficiency in our supply chain, including the need to reposition product and ship less-than-full truckloads in an effort to keep our customers' shelves stocked.
“As a result, our GHG emissions increased by 2% from fiscal 2020 to 2021. We see opportunities to eliminate those supply chain inefficiencies as supply and demand come into better balance. In addition, we're implementing several key strategies to further strengthen our GHG reduction efforts.”
Of the company’s total greenhouse gas emissions, more than 90% come from Scope 3 — not related to activities at assets owned by the company. The majority of these are upstream in agriculture, Ms. Melendez said.
“As a result, we are accelerating the adoption of regenerative agriculture, which we expect will be the largest contributor to our greenhouse gas reduction goals,” she said.
The company has committed to advancing regenerative agriculture on 1 million acres by 2030, Ms. Melendez said. To date, the company is 20% of the way toward this goal.
To speed up farmer adoption and enhance measurement of environmental and economic outcomes, General Mills is taking a variety of steps, Ms. Melendez said.
Two elements in particular are resonating with farmers, she said.
The first is a focus on education, helping growers gain an understanding of regenerative agriculture principles and “how best to apply those principles to their farm’s unique environmental, social and financial context.”
The company funds multi-day soil health academies and workshops toward this objective. Individualized coaching of growers by partners from Understanding Ag LLC, Fort Payne, Ala., furthers the educational efforts, Ms. Melendez said.
Additionally, building community around regenerative agriculture will be important for achieving adoption, Ms. Melendez said.
“We often hear from farmers that they’re the only one in their area exploring regenerative agriculture, and that it can be isolating to farm differently,” she said. “To address this problem, we are connecting farmers with their local peers and supporting farmer-led organizations to accelerate knowledge sharing and create a network of support.”
Feedback regarding community building efforts has been encouraging, Ms. Melendez said.
As an example, she cited a group of Kansas farmers who recently shifted to using roller crimpers (a bladed drum attached to the front of a tractor) to support soil health.
“The tool terminates cover crops by rolling over them instead of using chemicals,” she said. “They’re now loaning their equipment to other farmers in the community so they can try it for themselves. We’re sharing these and other examples of peer networking and innovation broadly, helping to further strengthen the community of regenerative farmers.”
While General Mills is measuring the effects of regenerative agriculture on such measures as soil health and carbon sequestration, biodiversity, water and farmer economic resilience, Ms. Melendez said such measurements are time consuming and expensive. The company is investing in research to enable better measurement technology.
“For example, we are using tools like satellite imagery to detect the presence of cover crops and amount of soil tillage,” she said. “This data feeds into models that can estimate the impact of these practices.”
Relating the company’s efforts around regenerative agriculture to actual General Mills brands was Jonathon J. Nudi, group president, North America Retail.
For example, he cited a direct partnership with Montana growers to cultivate crops for pasta ingredients in limited edition Annie’s Mac-and-Cheese.
“The crops for the pasta ingredients are grown with regenerative organic practices such as extended crop rotations and integrated crop and livestock management,” Mr. Nudi said. “By educating consumers on regenerative agriculture in our marketing and on our packages, Annie’s is strengthening its bond with consumers who are looking to make a difference for the earth with their food choices.”
He also discussed work General Mills is doing around regenerative production of almonds, an important ingredient in the company’s ready-to-eat cereals and its Lärabar brand.
He noted that California produces 80% of the global almond supply and that the state has been grappling with extreme water stress. Research the company has conducted preliminarily indicates regenerative agriculture may help address the water issues.
“In fact, we’re seeing regenerative farming practices driving similar yields, increased farmer profits and up to 6 times better water infiltration rates than the conventional approaches,” Mr. Nudi said.
Sustainability efforts also are actively underway at General Mills facilities, said Paul J. Gallagher, chief supply chain officer. He focused on efforts to completely eliminate waste sent to landfills. The company has set a 2025 target for achieving Zero Waste to Landfill status at 100% of the company’ manufacturing facilities. To date, a third of its global facilities have reached this status, he said.
Mr. Gallagher said the company’s Los Angeles flour mill achieved Zero Waste to Landfill status in December.
“They created a centrally located recycling center that makes it easier for employees to segregate waste streams and allows for trash and cardboard to be compacted,” he said. “The benefits go beyond convenience. And this also reduces the number of hauls and associated transportation and fuel costs, two of the primary expenses related to Zero Waste to Landfill.”
Tying the company’s sustainability goals to its financial objectives was Kofi Bruce, chief financial officer. He reviewed the company’s targets, which include 2% to 3% sales growth, mid-single-digit operating profit growth and mid- to high-single-digits earnings per share growth.
“We expect that embedding sustainability and purpose into our brands will drive stronger organic sales growth,” he said.
Mr. Bruce cited data from IBM and the National Retail Federation indicating sustainability is important to 80% of consumers, and among this group, more than 70% would pay a premium of 35% on average for brands that are sustainable and environmentally responsible.
Additionally, he said many efforts associated with sustainability generate cost savings. For instance, wind farms will generate $10 million of cost savings for the company between fiscal 2019 and fiscal 2022.