In the 21st Century, it is rare for any product to go from its source or place of creation straight to the hands of a consumer. For sustainable investors and consumers, it’s important to consider the steps in between, and the hands that a product passes through on its way to becoming commercially available.
“Sustainability is the key to our survival on this planet and will also determine success on all levels.”
– Shari Arison.
During the 1800s, middle class people would tend to shop for their essential grocery items on a daily basis. They would visit their local butcher for meat that had often been sliced and carved from an animal by the man who sold it to them. Similarly, a local fishmonger took delivery of fresh seafood from fisherman and transferred it, still smelling of the ocean, into the hands of local people with familiar faces. The neighbourhood baker rose early to cast preservative free dough into a hot stove. The dough would form imperfectly shaped loaves that were still warm when they reached the arms of early morning shoppers.
According to the British Library, a London street directory from 1890 lists the following shops on a single street: confectioner, grocer, tobacconist, pub, dairyman, tripe seller and cheesemonger.
Rather than roaming categorised rows of products in search of what they needed, shoppers were served directly, and products like butter and flour were even weighed and bagged by shop staff.
In a nod to the current popularity of grocery home delivery, 19th Century consumers could have their shopping brought to their home by a delivery boy who travelled by horse and cart or sometimes by bicycle.
Moving forward 127 years or so and there are significantly more steps between a product’s source or point of creation and the point of sale.
Milk, for example, travels from a dairy to a bottling plant via a logistics transport service, then from the plant to a distributer – again via a transport service, then to a supermarket, before it arrives in a consumer’s fridge. That simplified version of the supply chain process involves at least 6 different services or suppliers.
Increasingly multi-tiered supply chains exist in a modern world where more businesses are recognising the value of acting sustainably. Younger generations, in particular, are also showing a clear preference for companies that conduct their business in an ethical way that minimises harm. In this context, the complexities of supply chain governance – particularly where they intersect with corporate responsibility can represent a challenge for assessing a company’s true commitment to sustainable practices.
Consumers who want to leave a minimal footprint on the planet through their financial choices may need to dig deeper to make the wisest decision. In the case of investors, consulting a Financial Adviser is a great way of accessing specialised research-based insights to inform a sustainable and ethical portfolio.
Interestingly, one recommendation for assessing supply chain sustainability today has parallels with the familiar face-to-face communication and relationship-building that formed the foundation of 1890s style customer service.
Closer relationships with farmers is seen as a way of promoting best practice when it comes to sustainable sourcing. Offering longer-term contracts that encourage farmers to invest can also contribute to a supply chain’s sustainability and stability.
Do your homework: Questions to ask a food company about supply chain
Do you have a sustainable agriculture policy?
Do you publish a list of suppliers?
How many suppliers do you use?
Do you disclose the location of your suppliers?
What checks do you make before ordering from a new supplier?
What is your average length of relationship with suppliers?
Do you have traceability procedures in place?
For information on sustainable investment opportunities please contact your Morgan Stanley financial adviser.