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Far from taking a backseat, sustainability initiatives are turning out to be savvy strategies for weathering not just this supply-chain storm but the storms to come, as well.
Nothing focuses the mind like a good global supply-chain crisis—nothing, that is, except a good global supply-chain crisis plus stratospherically skyrocketing prices.
And it’s amidst that confluence of calamities that wellness brands and suppliers now find themselves. In response, they’re reevaluating priorities in a bid to do more—more innovating, more R&D, more appealing to nervous consumers—with surprisingly less in the way of purchasing power, certainty, and resources in reserve for the next surprise.
So where does that leave any commitments to sustainability that brands and suppliers made in flusher times? In fact, far from taking a backseat until balance returns, sustainability initiatives are turning out to be savvy strategies for weathering not just this supply-chain storm but the storms to come, as well.
Recent events have given everyone in the supplement industry a crash course in supply-chain management, notes Wilson Lau, president, Nuherbs (San Leandro, CA). And as far as he can guess, those newfound skills will come in handy whenever the next disaster descends.
“‘Supply chain’ may have meant a container shortage over the previous two years,” he reflects, “but now it’s an energy crisis on top of economic and geopolitical uncertainty. So what will it look like next? Whatever it is, we’re transitioning from a ‘Get it at any cost because we needed it a month ago’ mindset to a situation where there’s still a lot of noise and uncertainty. And that makes demand planning and forecasting hard.”
Inflation makes them even harder.
“Basic warehousing and shipping costs are rising,” observes Jeff Chilton, founder and president, Nammex (Gibsons, BC, Canada). “That puts greater pressure on smaller customers who can’t amortize these costs with increased quantities of product purchased. So they’re the businesses most impacted by the current inflation.”
And from her perspective heading a botanical-supplement brand, Beth Lambert, CEO of Herbalist & Alchemist, notes that rising costs on her end mean that downstream prices for consumers “have had to increase accordingly.”
While she’s grateful that raw materials remain available—at least for now—she’s noticed a dismaying trend among botanical suppliers, and wild-crafters in particular, toward retirement. “And the next generation is currently not quite as reliable,” she adds diplomatically.
That alone paints the sector’s long-term sustainability in a murky light. But it’s not the only risk that supplement products—especially botanical ones—face.
Even setting aside the immediate threats of inflation, recession, and continued supply-chain and logistical hiccups, natural wellness products and their constituent ingredients are uniquely vulnerable to the consequences of climate change.
This is hardly news to sector insiders. As Chilton says, “Given that all reports show we’re farther down the climate-change road than was estimated, sustainability initiatives should be a priority for all. For those of us working with agricultural products, this has been clear for some time.”
Sticking to It
Yet it’s just as clear that sustainability initiatives impose upfront costs that sting even more in today’s economic environment.
Nevertheless, the conclusion most companies draw is that sticking to their sustainability guns is worth the price. As Muhammed Majeed, PhD, founder and group chairman, Sami-Sabinsa Group (Bengaluru, Karnataka, India), stresses, “It would be devastating to abandon sustainability projects based on current business cycles. Corporate governance must continue despite temporary setbacks.”
In fact, some argue, it should continue precisely because of those setbacks. As Alison Taylor, chief sustainability officer, ADM (Chicago), notes, “The disruptions our customers now face actually increase the importance of programs that maintain continuity across the food and agriculture value chains.”
In other words, building resiliency against supply-chain challenges and against the challenges of climate change are two sides of the same coin.
More with Less
As wellness brands are discovering, ensuring sustainability against the latter can actually save money.
“Tighter budgets mean we all have to operate more sustainably,” Lau states, “because we have less to work with. Besides their being the right things to do, practicing environmental stewardship and operating sustainability will be metrics for all companies in all industries as formerly externalized costs become internalized.”
Chilton goes so far as to see running his company sustainably not just as a responsibility but as an opportunity to review practices and consider smarter methods. “We’re always looking to streamline, simplify, and create more practical operational systems,” he says, “which in the end are the most sustainable ones.”
Chilton’s even found that addressing supply-chain troubles has led to solutions that further Nammex’s sustainability goals. “For example,” he explains, “we consolidate different production lots as much as possible so they ship together from factory to port. One ocean shipment means one customs entry and one transfer from the receiving port to our LA warehouse. This not only cuts fuel use but offers savings.”
Penny-Wise and Pound-Foolish
All of which adds up, in Lambert’s view. “Our sustainability choices have to make good business sense,” she says. “Otherwise, they’re not sustainable.”
That being the case, Herbalist & Alchemist continues to reduce energy use, minimize packaging, and reuse or repurpose boxes and barrels before recycling. They’re also maintaining their commitment to purchase certified-organic and ethically harvested botanicals, she says, while also seeking organic certification for single-extract products and broadening and diversifying their supplier network in the face of weather uncertainties.
But Lambert cautions against economizing on price. Case in point: It might seem cheaper to receive raw materials in powdered form, but by sourcing whole, organic botanicals—as Herbalist & Alchemist does—company staff can macroscopically identify the product rather than outsource identity testing to a lab. “And if the ingredients aren’t organic,” Lambert adds, “that adds pesticide-testing costs.”
Ann Armbrecht, PhD, director of the Sustainable Herbs Program, American Botanical Council (Austin, TX), notes that research1 has associated investments made into sustainable, long-term supplier relationships, contracts, and fair pay for harvesters with higher-quality raw material than one would find on the open market. And higher quality, she adds, translates into “less raw material in the finished product. So even in the immediate term, investing in these initiatives helps ensure the quality of the products you bring to market.”
Climate and Community
The relationship among quality, sustainability, and…well, relationships underscores a key feature of “Sustainability 2.0”—namely, that the concept goes beyond mere carbon and climate to encompass communities, too.
“Since many naturally occurring plants are located in the wild,” Majeed explains, “any sustainability program must also assist the communities there, improving their standard of living without compromising their sustainable way of life.”
Majeed has found the farming and wild-crafting communities that Sami-Sabinsa works with to be quite willing to participate in conservation efforts, he adds, especially when those efforts help “safeguard the environment for future generations and prevent the extinction of species.”
Finally, Majeed notes that the company’s conservation programs—which include the recent planting and cultivation of such rare and endangered species as Pterocarpus marsupium in Central India and Picrorhiza kurroa in the Himalayas—align with the goals of India’s Biological Diversity Act of 2002, conserving biological resources, sustainably managing their use, and promoting the fair and equitable sharing of the benefits they provide with local communities.
Lau notes that supply-chain challenges helped inspire Nuherbs’s new grower partnership for sourcing organic hibiscus from Mexico. With most hibiscus originating in Sudan and Nigeria, stopping in Egypt or Europe for processing and only thereafter arriving at U.S. facilities, he explains, “We designed our vertical integration to avoid the supply-chain vulnerabilities inherent to obtaining most hibiscus raw material this way, while also reducing hibiscus’s carbon footprint for North American users. The disruptions of the past few years were all the motivation we needed to build our supply chain closer to home.”
And Herbalist & Alchemist supports organic farmers and sustainable wild-crafters, Lambert insists, giving preference to local suppliers whenever possible. “Many are friends from the farming, herbalist, and permaculture communities,” she adds, “and we’re proud of the long-term relationships we’ve nurtured through fair, honest business practices. Sourcing this way ensures that our botanicals, the farmers who grow them, and the crafters who harvest them will be around in the future.”
And that makes sense to Armbrecht. “To my mind, you can’t separate sustainability from the practice of botanical sourcing,” she says. “By investing in programs to ensure that plants aren’t overharvested, people are paid fairly, and soils are healthy, you’re investing in the conditions that ensure a continued—and sustainable—supply of the raw materials on which your company depends.”
Such relationships aren’t the sole province of the botanical sector, either. Major ingredient suppliers are also keen to support their growers’ efforts to farm more sustainably—and not just for the farmers’ or the planet’s sake, but to please increasingly exacting customers.
“More than ever, our customers are coming to us with a sense of urgency to act on their sustainability commitments,” claims Gurneesh Bhandal, customer sustainability leader, global partners, Cargill (Minneapolis). Cargill thus launched its RegenConnect program last summer as a “voluntary, market-based regenerative-agriculture program” to offer domestic farmers a “simple, flexible, and transparent” portal through which to enter the carbon marketplace.
Specifically, Cargill will offer one-crop-year contracts to producers in eligible states to sequester carbon via regenerative-agriculture practices like cover crops, no-till or reduced-till farming, and more. Meanwhile, carbon that the program sequesters will contribute not only to Cargill’s Scope 3 climate commitment but to the ability of downstream customers to meet their carbon-reduction goals.
Bhandal is quick to note that the program’s “farmer-centric” approach helps these essential players in the supply chain navigate “incredibly disruptive global market conditions.” The upshot, she says: The program builds soil health and strengthens supplies against climate change and other disruptions.
“We believe profitability and positive environmental impacts can work together,” Bhandal concludes. “Anything we do together to reduce emissions and improve soil health should also improve partners’ businesses while yielding long-term dividends for us all.”
Similarly, a partnership that ADM’s entered into with USDA, the agency’s Natural Resources Conservation Service, and the National Fish and Wildlife Foundation allows the company to invest $20 million to support the widespread, voluntary adoption of cover crops in corn, soy, and wheat systems across the Midwest, Taylor notes.
As part of the effort, ADM’s partner growers can enroll in public and private programs that help mitigate the risks attendant upon adopting sustainable practices like cover-cropping. As Taylor says, “We understand that to avoid vulnerability, on-the-ground partners need support and financial empowerment.”
The company’s also joined with global farmer-to-farmer network and ag-tech innovator Farmers Business Network (FBN) to grant access to Gradable, FBN’s farm-business-management platform, to 55,000 North American grain growers in ADM’s family—“empowering them with a digital solution to manage their business and track sustainable production data,” Taylor says.
In addition to helping farmers farm more efficiently—always a sustainability and cost-savings win—participation includes agronomic guidance and help maintaining regenerative-farming records essential to qualifying for ADM incentives. “Programs like these prove that implementing sustainable-agriculture initiatives helps all parties along the supply chain thrive, leaving less room for weaknesses in future disruptions,” Taylor declares.
And whether we like it or not, those disruptions will come. We’ll just be better prepared for them when they do.