{"id":10235,"date":"2016-11-04T17:18:54","date_gmt":"2016-11-04T21:18:54","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/nutella-no-more\/"},"modified":"2016-11-04T17:18:54","modified_gmt":"2016-11-04T21:18:54","slug":"nutella-no-more","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/nutella-no-more\/","title":{"rendered":"Nutella no more?"},"content":{"rendered":"

\u201cWe should stop eating Nutella\u201d<\/strong><\/p>\n

In June 2015, France\u2019s ecology minister, Segolene Royal, urged the public to boycott Nutella in a bid to curb Ferrero\u2019s contribution to climate change. Royal argued, rightly, that unsustainable palm oil agricultural practices contributed to deforestation and global warming. Ferrero produced Nutella, and Nutella contains palm oil\u00a0(1). Around the world, Nutella devotees clutched their chocolate spread laden spoons in horror.<\/p>\n

But they needn\u2019t have been concerned. Because, in fact, Ferrero has in recent years become a somewhat poster child for sustainable palm oil sourcing. In 2013, the group launched the \u2018Ferrero Palm Oil Charter<\/a>\u2019 (Exhibit 1<\/strong>), in partnership with the NGO\u00a0TFT<\/a>, and committed to ensuring 100% of its palm oil was sourced from suppliers are compliant with its 10 criteria (2). TFT teams work with suppliers engaged in time-bound action plans, and consumers are kept informed through bi-annual,\u00a0publicly available reports<\/a>\u00a0(3). This charter goes beyond environmental RSPO certification which it achieved for 100% of its supply in 2015. Greenpeace lauded their actions, celebrating Ferrero as \u201ca model for the rest of the industry to follow\u201d (Exhibit 2<\/strong>).<\/p>\n

Royal\u2019s comments were quickly and widely denounced in the press; she responded to criticism by tweeting her \u201cone thousand apologies\u201d (4).<\/p>\n

<\/a>
Exhibit 1<\/strong>: Ferrero’s Palm Oil Charter (2)<\/em><\/figcaption><\/figure>\n
\"capture\"<\/a>
Exhibit 2<\/strong>: Ferrero\u2019s commitment to sustainable palm oil sourcing is reflected in Greenpeace\u2019s Palm Oil company scorecard (5)<\/em><\/figcaption><\/figure>\n

 <\/p>\n

Ferrero looking out for itself<\/span><\/strong><\/p>\n

Ferrero\u2019s concern with sustainable sourcing is driven by self-interest. With hazelnut and cocoa as key ingredients, which have yields sensitive to variability in weather and water, Nutella is a likely culinary casualty of climate change.<\/span><\/p>\n

For hazelnuts, this is further compounded by its geographically-concentrated cultivation: over 70% of global supply is grown in Turkey. The risk that this single major source poses, with the increasing regularity of extreme weather caused by global warming (6), was\u00a0<\/span>demonstrated in 2014<\/a>\u00a0<\/span>when a period of severe frost in March and a freak hailstorm reduced hazelnut output by more than 30%. The ensuing shortage caused a 60% surge in hazelnut prices (Exhibit 3<\/span><\/strong>),\u00a0with an inevitable knock-on cost impact for Ferrero\u00a0(7, 8).<\/span><\/p>\n

<\/a>
Exhibit 3:<\/strong> Hazelnut shortage caused significant surge in prices (8)<\/em><\/figcaption><\/figure>\n

To safeguard its future hazelnut supply,\u00a0Ferrero acquired Oltan<\/a>, Turkey\u2019s largest hazelnut producer (8, 9). While this acquisition guarantees the supply of hazelnuts available<\/em> in any given year, this in itself does not protect Ferrero against future hazelnut shortages. Ferrero bolstered this by establishing 6 hazelnut agricultural companies in Chile, Argentina, South Africa, Georgia, Australia and Serbia to diversify the supply risk from extreme weather in any one geography (2).<\/p>\n

Unlike palm oil, Ferrero is still a long way off achieving 100% sustainable sourcing in cocoa and hazelnuts. Only 40% of Ferrero\u2019s cocoa supply was certified sustainable in 2013\/4 through its partners (UTZ, Rainforest Alliance). Promisingly, however, the group are embarking on a roadmap to achieve 100% sustainability by 2020. For hazelnuts, disappointingly, Ferrero has not committed itself to any sustainability targets. Its goal is simply to achieve 100%\u00a0traceability<\/em>\u00a0by 2020; this was only 5% in 2014 (2). In 2015, Ferrero launched the “Ferrero Hazelnut Award Contest” which granted \u20ac160,000 to three research groups who proposed the best (innovative and applicable) projects promoting hazelnut agricultural sustainability (10);\u00a0the impact of these projects to date is unknown.<\/p>\n

 <\/p>\n

A Nutella-filled future?<\/strong><\/p>\n

So then is Ferrero really doing enough to preserve the future of our favourite chocolate spread?<\/p>\n

While sustainable agriculture\u00a0is a first, important step towards limiting impact on climate change (as explained by the World Bank<\/a>), given the serious threat to Nutella\u2019s cornerstone ingredients, it is unclear whether Ferrero is as proactively collaborating with technical experts on climate modelling and agricultural innovation as it should. To ensure future sustainability, they should be mandating that suppliers, including in-house Oltan, are continually working towards a better understanding of how a crop planted today will need to adapt to the changing rainfall patterns as well as higher temperatures during its productive lifespan. And that they are complementarily innovating in soil fertility management and rehabilitation techniques to cater to this. Competitors (Nestle, Lindt & Sprungli, Mondelez) have all invested in\u00a0CocoaAction<\/a>, an umbrella initiative which includes this imperative (11).<\/p>\n

As climates more dramatically change going forward, Ferrero should also plan for the likelihood that their agricultural products may need to be cultivated in other geographies, as temperatures elsewhere become more appropriate and temperatures in current locales less so.<\/p>\n

Finally, more radically, could Ferrero consider experimenting with raw material substitutes, such as Carob, a drought-resistant pseudo-cocoa crop\u00a0(12), in place of cocoa? Or is the Nutella taste too sacred to experiment with?<\/p>\n

As the world continues to go \u2018nuts for Nutella<\/a>\u2019 (Exhibit 4<\/span><\/strong>), let\u2019s hope Ferrero faces up to the challenge of sustainably satisfying its increasing fan base \u2013 for the good of the environment, and our pancakes.<\/span><\/p>\n

 <\/p>\n

<\/a>
Exhibit 4<\/strong>: Ferrero faces an increasingly difficult challenge of sustainably satisfying the global appetite for Nutella, which has been growing at 10%p.a. (8)<\/figcaption><\/figure>\n

Word count: 773 words<\/p>\n

\"68d8ca6810d64f8a1e68bb9732844a40\"<\/p>\n

 <\/p>\n

\n

References<\/strong><\/p>\n

    \n
  1. AFP, \u201cStop eating Nutella and save the forests, urges French ecology minister\u201d, The Guardian, <\/em>June 16, 2015, https:\/\/www.theguardian.com\/environment\/2015\/jun\/17\/stop-eating-nutella-and-save-the-forests-urges-french-ecology-minister<\/a>, accessed November 3, 2016.<\/li>\n
  2. 2014 Corporate Social Responsibility Report \u2013 Sharing Values to Create Value. Alba, Italy: Ferrero, 2015.<\/li>\n
  3. \u201cFerrero Palm Oil Progress Report.\u201d https:\/\/www.ferrero.com\/group-news\/Ferrero-palm-oil-progress-report—November-2014\/?searchcat=&searchdate=2014-11<\/a>, accessed November 3, 2016.<\/li>\n
  4. Segolene Royal (@RoyalSegolene), \u201cMille excuses pour la polemique sur le #Nutella. D\u2019accord pour mettre en valeur les progres\u201d Twitter post, 17 June 2015, 10:31 a.m., https:\/\/twitter.com\/RoyalSegolene?ref_src=twsrc%5Etfw<\/a><\/li>\n
  5. Greenpeace, \u201cCutting Deforestation out of the Palm Oil Supply Chain \u2013 Company Scorecard 2016\u201d, downloaded from Greenpeace website, http:\/\/www.greenpeace.org\/international\/Global\/international\/publications\/forests\/2016\/gp_IND_PalmScorecard_FINAL.pdf<\/a>, accessed November 3, 2016<\/li>\n
  6. US Environmental Protection Agency. \u201cUnderstanding the Link Between Climate Change and Extreme Weather\u201d, https:\/\/www.epa.gov\/climate-change-science\/understanding-link-between-climate-change-and-extreme-weather<\/a>, accessed November 3, 2016<\/li>\n
  7. Terazono, Emiko, \u201cHigh hazelnut prices torment confectioners\u201d, FT.com, August 13, 2014, accessed November 3, 2016 (via ProQuest ABI\/INFORM)<\/li>\n
  8. Wong, Vanessa, \u201cNutella Hogs Hazelnuts to Meet the World’s Insatiable Craving for Chocolaty Goodness \u201c, Bloomberg<\/em>, August 15, 2014, http:\/\/www.bloomberg.com\/news\/articles\/2014-08-14\/nutella-buys-hazelnut-supplier-to-protect-against-worldwide-shortage<\/a>, accessed November 3, 2016.<\/li>\n
  9. Anzolin, Elisa, \u201cNutella maker Ferrero buys Turkish hazelnut company Oltan\u201d, Reuters<\/em>, July 16, 2014, http:\/\/www.reuters.com\/article\/us-ferrero-hazelnuts-turkey-idUSKBN0FL2CY20140716<\/a>, accessed November 3, 2016.<\/li>\n
  10. Ferrero, \u201cFerrero Hazelnut Award Contest\u201d, https:\/\/www.hazelnutcompany.ferrero.com\/Ferrero-Hazelnut-Award-Contest\/<\/a>, accessed November 3, 2016<\/li>\n
  11. World Cocoa Foundation, \u201cCocoa Action Annual Report 2015\u201d, downloaded from World Cocoa Foundation website, http:\/\/www.worldcocoafoundation.org\/wp-content\/uploads\/CocoaAction-Annual-Report-2015-English.pdf<\/a>, accessed November 3, 2016<\/li>\n
  12. Baltozi, P, et al, \u201cLow Water\u2013Demand Plants for Landscaping and Agricultural Cultivations \u2013 A Review Regarding Local Species of Epirus\/Greece and Apulia\/Italy.\u201d Elsevier Vol. 4 p250-260, 2015. http:\/\/www.sciencedirect.com\/science\/article\/pii\/S2210784315000923<\/a>, accessed November 3, 2016<\/li>\n<\/ol>\n

     <\/p>\n","protected":false},"excerpt":{"rendered":"

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