What We’re Seeing in 2022: Harmonizing Retailers Around THESIS
Throughout The Sustainability Consortium’s (TSC) 14-year history, one of our aspirations has been to create a sustainability performance system that harmonizes reporting, lifting the burden off suppliers. THESIS, our sustainability assessment service, allows a consumer product brand to communicate to many retailers or buyers at the same time with one tool. For a retailer or buyer, THESIS enables them to assess brand sustainability performance with a single tool across all the product categories they purchase. In the past year, THESIS adoption has significantly increased, with more retailers recognizing the benefits of a many-to-many data sharing platform.
In addition to our continuing partnership with SupplyShift, we have reconfigured THESIS as a service, where we can provide custom information and services for custom needs. From hotspot assessment to campaign management to powerful post-campaign analytics, TSC’s THESIS can now deliver more bottom-line value for its users.
“It has been heartening to see the uptick in use of THESIS from users and members, who include a record-number of retailers making science-based public commitments to sustainability. We are witnessing a tidal shift in the consumer goods industry where more companies than ever are taking the steps necessary to make real change.”
— Carolyn Baltz, VP, Development, TSC
These many-to-many benefits extend to TSC’s large and diverse stakeholder network. TSC members engage in collective action projects that move the needle on critical sustainability issues. Innovation and change within individual companies and supply chains is requisite to a more sustainable consumer economy, but these private efforts alone can only go so far. Issue after issue, TSC finds that corporations, NGOs, and even government need to work in a pre-competitive manner to address these messy challenges, combining a science-based approach with sensitivity to stakeholder implementation.
“Our stakeholders agree on two core beliefs: that collective action is the means to significant positive change, and that science should be the arbiter of our discussions and decisions. I have been a part of many multi-stakeholder initiatives and usually it’s the stakeholders who have the most resources that influence decisions the most. TSC’s anchoring on scientific evidence really creates a very different, objective dynamic within a group of stakeholders, one more likely to lead to collaborative innovation.” — Dr. Kevin Dooley, Chief Scientist, TSC
Finally, harmonization and collective action underlies our tag line: All Products Sustainable. It’s not enough to have a few companies selling more sustainable products, or for a company to have a few of its products be “green”. All consumer products need to become more sustainable.
A Note from TSC CEO, Dr. Christy Slay
As the incoming Chief Executive Officer, I am proud to share TSC’s 2022 Impact Report with you. I have been a part of TSC since its inception in 2009 and have seen sustainability transition from a buzzword to an imperative in the consumer goods industry. As I embark on this new role, I am eager to push both our organization and our members to move together with a greater sense of urgency and true impact. While investors and consumers drive more robust ESG reporting and science-based targets are set we see a proliferation of different data being collected that ultimately increases reporting burden and fractures efforts to drive impact at scale, collectively.
The time has come to utilize harmonized metrics and systems to address the world’s most pressing issues, moving beyond pilots and measurement for measurement’s sake. THESIS is an incredible tool that helps retailers, manufacturers and suppliers gather the same data on critical sustainability issues within their supply chains. It’s more important than ever that this data be used to inform business decisions. We can no longer simply pass sustainability decisions on to the consumer to figure out themselves via labels and product-level initiatives. We must move faster and at scale collectively and harmonized.
How we will get there:
- Ramp up partnerships and collective action to drive impact at scale. Kick small projects and pilots, and commitments without actions to the curb.
- Use harmonized data reporting systems, THESIS. The burden of reporting to the new proliferation of individual company programs is a major barrier to sustainability impact at scale.
- Take bold action beyond pleasing your investors. ESG won’t address the climate and other eminent crises facing the world.
- Meet suppliers where they are while making sure there are strong incentives in place to move them forward quickly.
A Maturity Model for Using THESIS
To address climate and other crises all businesses are facing it is imperative to use common, science-based metrics included in THESIS. Across its experiences in helping manage THESIS retailer campaigns, TSC has learned that THESIS users and respondents go through a common learning process with THESIS. As a user or respondent becomes more mature in their sustainability journey and use of THESIS, their sustainability performance and the value provided by THESIS often improves.
Three Stages of THESIS User:
Retailer or Buyer
Three Stages of THESIS Respondent:
Brand Manufacturer or Supplier
Table 1: Mean and Median of THESIS score versus company size
SME’s Keep Pace with Large Companies
Small and Large Companies Have Different Sustainable Supply Chain Challenges
Due to the required up-front investments in sustainable practices, including human resources, it may be natural to assume larger companies implement more sustainability practices than smaller companies (a.k.a. Small and Medium Sized Enterprises, or SMEs) because the larger companies likely have access to more resources.
About 70% (1207) of consumer goods brands and manufacturers who used THESIS 2020 to assess the sustainability of their products provided information on their company size (by amount of annual revenue).
An analysis of their results challenges this assumption by finding there is no statistical or practical difference between sustainability performance, measured by THESIS scores, of companies of different revenue size.
Some large companies scored relatively low while some SMEs scored relatively high leading one to believe that all sizes can demonstrate sustainability leadership.
SME: Small to Medium Enterprises – How do SMEs differ from larger companies?
Barriers for SMEs to implement sustainable practices:
- Making the business case for sustainability
Difference between SMEs and larger company’s sustainability practices to the left.
THESIS Industry Insights reports dive deeper into sustainability trends based on recent THESIS data. Take a dive into more findings about how company size affects sustainability performance.
Science-Based Targets and THESIS – A Good Match
As of the summer of 2022, over 1,500 companies have adopted science-based targets for greenhouse gas emissions reductions.
Science-based targets (SBTs), and the accompanying accreditation by SBTI, are leading companies to adopt emissions goals that if collectively implemented will keep global warming to 1.5 or 2.0 degrees centigrade.
Significantly Higher on THESIS
In THESIS 2021 results, we found that 82 THESIS respondents also have SBTs. Companies that had SBTs scored significantly higher on THESIS than those without SBTs.
At the overall product category assessment level, SBT companies scored on average 58 (out of 100) whereas those without SBTs score 48.
Greenhouse Gas Emissions
On KPIs having to do with greenhouse gas emissions, the difference was even more stark — SBT companies scored on average 80 (out of 100) whereas those without SBTs score 53.
This correlation shows the power of science-based commitments.
While many companies have set internal goals for greenhouse gas reductions, and perhaps share them with organizations like CDP, the SBT commitment is transparent and aggressive. Companies that make such a public commitment are more likely to take quick action to improve GHG accounting for internal operations, and want to understand the risk level associated with Scope 3 GHG emissions in their supply chain.
THESIS and Scope 3
THESIS enables the collection of Scope 2-3 data in supply chains of nearly every product sourced at retail. Out of 820 suppliers there was an average 16% decrease in manufacturing GHG emissions between 2019-2021 and 146 of these suppliers reported reductions across all three years. On average, these same suppliers increased transparency and the ability to collect and report Co2e metrics in their supply chains.
Year in Review Showcase
Summary of 2021 THESIS Scores — From 2016 to 2021, the THESIS assessments of product manufacturers have improved (relatively):
from 32.5% to 48.4% (where 100% equals the maximum score).
This is an indication that the systems and processes put in place to respond to THESIS KPIs are creating positive changes in the manufacturer’s practices and its supply chain, leading to an overall improvement in scores. Scores improved from 2020 to 2021 at about the same pace they have annually over all six years.
Across these years, we have observed particularly large increases in many product categories in the level of transparency in the measurement of:
Water Use Intensity
Worker Health and Safety
The number of brand manufacturers using THESIS in 2021 was 1,160. If we compare how much scores have improved within any individual manufacturer, the average score of manufacturers using THESIS in both 2020 and 2021 increased from 49% to 50%.
In 2021, THESIS was used by more retailers than ever before, with assessment campaigns run by:
2021 THESIS Retail Users
Deriving the Value from THESIS Results
Recognizing the different priorities of retailers and buyers cuts across assessment categories, TSC has conducted enhanced categorization of the THESIS results, allowing for preliminary risk and gap analysis of retailer’s products, along with enhanced analytics following a THESIS campaign. These analytics allow retailers to see exposure and response opportunities to major impact topics of:
With companies prioritizing commitments to climate action, THESIS results found that CPG companies reporting supply chain (scope 3) GHG disclosures between 2019-2021, on average increased from 61% to 67% of supply chains disclosing. These improvements in scope 3 disclosures are critical to making progress on climate commitments to achieve net zero and climate positive goals. However, during these same years there were a significant number of CPG companies (ranging from 50-60% each year) reporting to THESIS who are not reporting data on scope 3 GHG disclosures. These companies are top priority for unmitigated climate risks with the steepest declines in reporting happening just last year in 2021.
Scope 3 water use tells a different story with CPG companies in the paper products, clothing, footwear, and textile sectors reporting improved supply chain water use disclosure covering an average of 81% (2019) of the supply chain to 85% (2021). However, CPG companies in the toys, and home and personal care sectors show significantly less scope 3 water use disclosure and same overall declining rates of disclosure, dropping from 61% to 55%, and 58% respectively across the 3 years. There were also a significant percentage of CPG companies overall (ranging from 34-42% each year) who did not report data on scope 3 water use to THESIS.
Given the importance of scope 3 emissions in supply chains, THESIS provides indicators of engagement and risk trends across the consumer packaged goods economy at retail.
TSC’s Commodity Mapping (CM) team is driving impact through place-based analytics of food, fiber and fuel crops.
In addition to completing multiple analyses for TSC members, TSC participates in grant-funded research related to commodity production and associated sustainability issues. The commodity mapping team was awarded a grant by the Walmart Foundation in May 2021 to create a web platform for Commodity Mapping, allowing users to log in and analyze their supply chains with new features and functions to drive taking action in supply chains.
The web platform is under construction with partners Azavea and the Center for Advanced Spatial Technologies (CAST) at the University of Arkansas. In August 2021 the team began another grant-funded project to update the drivers of global forest loss model to a higher spatial resolution, continuing TSC’s close partnership with the World Resources Institute. This new map will enable business and policy decisions to protect our world’s remaining forests. Finally, in May 2022 the team completed another grant-funded research project working with Conservation International, CIAT and others to create a decision making tool including ecosystem restoration potential in coffee landscapes in Colombia and Indonesia.
Small Format Circularity
TSC is leading a growing coalition of academia, corporate, and NGO stakeholders to improve the recyclability of small format packaging and products. Building off work conducted with student teams at ASU’s InnovationSpace, participants including Burt’s Bees, P&G, Colgate-Palmolive, Haleon, L’Oreal, Kraft Heinz, The Recycling Partnership, and MIT have been collaborating pre-competitively to drive progress on this unique sustainability challenge.
The coalition kicked off two workstreams in 2022: 1.) waste characterization studies of small format items in residential waste and recycling streams and 2.) sponsored research with MIT focused on mechanical recycling technology. The group has also begun to explore the joint opportunity space with glass recyclers out of the recognition that most small format items that enter the recycling system end up in the glass stream after falling through cracks within materials recovery facilities.
Resilient Agriculture Accelerator Fund (RAAF)
In partnership with the National Fish and Wildlife Foundation, TSC’s Resilient Ag Accelerator Fund combines agricultural funding from TSC members and other corporates to be matched at a minimum 1:1 scale with federal, state, and other private funding. Since the Fund’s launch, Nutrien Ag Solutions, Syngenta, the Zoetis Foundation, and others have jointly pledged $1 million creating at least $2 million in total funding to directly support growers and producers in their transition to more sustainable agricultural practices. Projects to date include supporting small dairies in the Northeast to improve practices related to water quality, habitat, and soil health, as well as the implementation of cover crops and other conservation agriculture practices that will improve carbon sequestration on corn and wheat farms in Iowa and Kansas. In August 2022, RAAF recieved nearly $.5M from $135M awards from the USDA’s Climate Smart Commodities funding for two projects in partnership with Farmer’s for Soil Health and Trust in Food. These projects will work to connect farmers with funding to transition to climate smart agriculture practices.
Responsible Pest Management (RPM) Framework
TSC is revising its Responsible Pest Management Framework after an initial pilot phase. The framework was developed in partnership with food, fiber, & forestry business, university, and NGO stakeholders to address the need for improved communication about RPM practices across the value chain in a consistent and practical way.
TSC staff have been working on alignment and mapping the RPM Framework with existing initiatives, such as SAI Platform and Global G.A.P., to support user-friendly implementation of the tool by different stakeholders. The revision process will focus on usability and relevance to stakeholders, as well as ensuring the tool is meeting its intended purpose of driving increased adoption of RPM practices on-farm and in-forest across the globe.
Circular Plastic Packaging
Over the last four years, TSC has received research funding from The Global Kaiteki Center at Arizona State University to research circular plastic packaging.
One of the studies was an assessment of the “circular roadmaps” that exist for plastic packaging, based on what consumer goods companies are currently doing. TSC’s research focused on common drives among CPG companies and their suppliers as well as common goals, commitments, and actions.
Researching Growers of Animal Feed
TSC is conducting a research project in partnership with Trust in Food, Farm Journal’s Climate Smart Ag Initiative, to explore farmers’ barriers to collecting and sharing production-level data specifically related to feed ingredients.
This research can provide organizations with an improved understanding of the main factors affecting farmers’ decision and willingness to collect and share farm-level data associated with the most commonly used feed ingredients in the US.
In 2022, TSC revamped our ProductFinder tool, which showcases the products covered through our THESIS assessments that help thousands of companies gain visibility and improvement in their consumer product supply chains. TSC’s science-based methodology covers 600+ consumer products, or about 90% of all products produced that you can purchase as a consumer in a retail store in-person or online. This online database lets users search from General Merchandise, Food Beverage & Agriculture, Clothing Footwear and Textiles, and Home and Personal Care.
Little Circular Economy That Could
TSC Chief Scientist, Dr. Kevin Dooley, was inspired by TSC’s work in circular economy to create a short fable about the Little Circular Economy That Could. The small train needed to climb Mount Carbon but ran into many obstacles in its path.