Maple Leaf Foods proves that purpose meets profit

From the C-Suite newsletter: Commitment to ESG has elevated the CPG's perceived value, enabling it to charge a premium.

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By Will Novosedlik

Harvard professors and business strategy gurus Michael Porter and Mark R. Kramer have long written about how prioritizing shareholders over social and environmental impact was unsustainable for business.

Way back in 2006, and again in 2011, they turned shareholder primacy on its head with the assertion that by considering the corporation’s broader impact on society and the environment, companies could create greater competitive advantage. By leveraging “innovation in new technologies, operating methods, and management approaches,” Porter and Kramer suggested, “a firm can improve society while increasing its productivity and profitability.”

Eleven years later, ESG has become a front-burner issue. But while many companies report on their ESG activities, the link between going green and being profitable is still difficult for them to prove. But not at Maple Leaf Foods.

Though its overall profitability has been challenged by the supply chain issues that currently plague the market, Maple Leaf Foods has demonstrated that a commitment to reducing environmental harm and health issues elevates perceived brand value, enabling the company to charge a premium for its products.

“Maple Leaf Foods is one of North America’s largest producers of Raised-Without-Antibiotics (RWA) pork and poultry,” says Tim Faveri, VP of sustainability and shared value at Maple Leaf Foods. “Antibiotic resistance in humans is a global public safety issue. According to the World Health Organization, by 2040, more people on the planet will die of antibiotic resistance than of cancer, and animal agriculture accounts for 80% of global use of antibiotics. By moving away from antibiotics we’ve been able to create a very sustainable system. As well, that’s an attribute that consumers will pay more for. So by addressing that social and environmental problem, we can charge a premium and drive more profit.”

If MLF’s first quarter results are any indication, Faveri’s claims are legit. Sales grew 7%, producing a margin of 5.9%. The meat protein group saw a 7.5% increase in sales and a margin of 9%, while the plant protein group saw sales increase by 5.9%.

The RWA initiative is only one of several ways in which Maple Leaf has made the concept of “creating shared value” or CSV (where companies don’t look to tick a generic set of sustainability checkboxes, but rather solve core issues for the benefit of the company and society/the world) a reality.

The company’s efforts over the last seven years since Faveri took on the role helped it achieve carbon neutrality by 2019. “We’re purpose-led,” says Faveri. “We’ve looked deep inside the company to define why we exist. We’ve looked at our culture, our people and, and what we can influence. At the same time, we’ve looked outside the company at what society needs. And that has taken us to our purpose: to raise the good in food. Our vision is to be the most sustainable protein company on earth. That drives all our strategies and our processes and our systems.”

MLFs

The marketing team at Maple Leaf Foods does annual customer surveys and the latest revealed that 92% of Canadians know they have a duty to protect the environment, but 52% don’t even know where to start. That was the impetus behind the recent creation of its Green Glossary, a guide to the terminology around sustainability. When it was launched in April, Faveri did a tour of breakfast TV shows and quizzed the hosts to demonstrate how little (or how much) Canadians know about sustainability.

Another tactic, called “Change the expiry date,” used social channels to illustrate how (without change) the places we know, love and live in will be directly affected. Adding an expiry date to an image of Niagara Falls, for instance, contextualizes climate change and makes something that slowly changes over time feel immediate enough to inspire action.

It’s well known that packaging – especially plastic – is one of the biggest sources of land and sea pollution. With that in mind, MLF is one of the founding companies of a new organization called the Canada Plastics Pact. Its purpose is to drive innovation and increase recyclability of all types of packaging. Part of that is educating the consumer by using the label to let them know what bin to put it in, a simple but extremely helpful gesture.

It’s also known that animal agriculture is responsible for massive methane emissions. Although, there are conflicting views. A recent report by Climate Healers, a non-profit promoter of veganism, claims that annual methane emissions from animal agriculture alone cause more global warning than the CO2 emissions of fossil fuels, contributing to more than 87% of annual greenhouse gas emissions. By contrast, the UN Food and Agriculture Organization claims it’s only 14.5%. Somewhere between those two numbers lies the truth, but any way you look at it, that’s a lot of gas.

What’s MLF doing about it? “We’ve pivoted to become a protein company, not just a meat company,” says Faveri.

All signs point to an increased demand for protein as the population explodes. Through the acquisition of two companies in the United States, MLF is investing in plant protein, insect protein, cultured meat fermentation and plant-based seafood, which makes MLF the largest producer of plant protein in Canada. It’s not mainstream now, but in 10 years it will be. If MLF can scale alt proteins, it will also demand a premium in the marketplace. Faveri says the ultimate goal is for MLF revenue to be evenly split across meat-based and non-meat-based products.

With all this good work being done, one hopes the company is getting the word out, not only to consumers but to other companies in the space. “Our partners at Strategic Objectives have developed a sustainability communications program,” notes Faveri. “We have a calendar of events such as Earth Day and Water Day and other annual sustainability-related dates. We have created the Maple Leaf Centre for Action on Food, aimed at reducing food insecurity in Canada by 50% by 2030 – since the pandemic, something like six million Canadians are food insecure.”

The above by no means represents all of the initiatives underway at MLF. They illustrate that there is no single path to sustainability, but that it must be approached from many different angles. The company has clearly demonstrated that it is not only talking the talk, but walking it too.