General Mills

FAIRR Commentary

• General Mills’ exposure to animal proteins is unclear; it is likely segments that comprise nearly 67% of the company’s revenues in 2017 are exposed to animal proteins. Further, they have significantly reshaped their portfolio through the recent acquisition of the pet food company Blue Buffalo, with annual sales of 1.3 billion.
• General Mills continues to emphasise that it is predominantly a wholegrain business and therefore its efforts are focused on improving agricultural practices to achieve their climate targets rather than on protein diversification. Nevertheless, the company now recognises that animal-based ingredients contribute to nearly 34% of their total carbon footprint. Additionally, the company acknowledged that the acquisition of US pet food business Blue Buffalo has significantly increased the company’s exposure to animal-based ingredients and the associated impacts.
• The company led its peers when it established its venture funding arm 301 Inc, which has primarily invested in plant-based brands. Further, the company was one of the first to adopt a percentage-based target on Scope 3 emissions. However, since then, the company’s progress on this issue seems to have slowed. It is unclear how 301 Inc.’s investments are ultimately going to reshape the company’s portfolio; in addition, the company has made a strategic investment in a business that increases its exposure to animal-based sourcing.

Company Comment

Thank you for the opportunity to comment on FAIRR’s draft ranking on sustainable proteins. Please allow me to reply on behalf of General Mills.
General Mills shares FAIRR’s belief in the critical importance of ensuring a sustainable food supply for the growing global population. Our company’s philanthropic and sustainability work is focused on this goal, with strategies to increase global food security, reduce our carbon footprint and influence a shift in agricultural practices to radically reduce the carbon footprint of agriculture overall.
Our industry leading climate change commitment is aligned to the 2° Celsius scenario and extends across our full value chain including agricultural commodities. It is recognized by the Science Based Targets Initiative. Furthermore, we continuously work to improve our disclosures for stakeholders. For example, this year our Global Responsibility report includes a SASB table (here). We acknowledge physical, reputational and regulatory risks to climate change that can affect our business (here). Questions from CDP’s climate change ranking aligned to TCFD in 2018, when General Mills was one of only 139 companies worldwide to receive a top rating of “A” in the CDP ranking.
As iconic global brands like Cheerios and Nature Valley demonstrate, General Mills is a primarily grain-based company. As such, our best opportunity to mitigate climate change is through influence on the methods used to grow the crops that provide ingredients for our products – including oats, wheat, sugar beet, corn, and sugarcane. In March we announced a commitment to advance regenerative agriculture practices, such as cover cropping and no-till farming, on one million acres of crop land by 2030. This will touch a significant portion of our oat supply chain and reduce carbon impact upstream of all food (and livestock) operations. As you can see, we are tackling the climate impact of our foods, through an approach that makes strategic sense for a grain-based company.
Here are other recent developments in our company’s work on these issues, all of which took place since our conversation last September:
– Our venture capital arm and “brand elevator”, 301 Inc., led a $40 million capital investment in Kite Hill, a rapidly growing brand of plant-based yogurt, cream cheeses, and probiotic drinks. It was our third investment in the company since 2011 and a sign of our belief that Kite Hill will bring delicious, plant-based products to more mainstream retailers in the coming years. 301 Inc. now invests in a portfolio of 10 companies, including other innovative plant-based brands like Beyond Meat.
– Yoplait launched its first plant-based products: five varieties of almond and coconut-based yogurts for the French market (Panier Vegetal). We do not disclose products in the development pipeline for competitive reasons but are happy to share this news as Panier Vegetal is now in the marketplace.
– In partnership with fluid milk suppliers for Yoplait in the U.S., General Mills received a Dairy Sustainability Award for Outstanding Supply Chain Collaboration from the Innovation Center for US Dairy. Working with our suppliers to implement an environmental assessment tool and supplement the tool with trainings and incentives, we were able to help our suppliers achieve an 11% reduction in GHG emissions over a three-year period, outperforming national and regional benchmark averages.
– General Mills funded a life cycle analysis on White Oaks Pastures farm in Georgia, a regenerative farm with integrated grazing and a key supplier to our brand EPIC. Among the findings: The beef produced at White Oak Pastures has a carbon footprint 111% lower than a conventional US beef system. The practices at White Oak include those that we seek to advance on one million acres by 2030.
FAIRR asks for some information that we cannot provide, including new product development plans. We also cannot foreshadow any plans General Mills may have to increase our ownership stake in companies in our venture capital portfolio.
As you note, Annie’s, Lärabar and Food Should Taste Good all make delicious vegan products. These brands are key to General Mills’ growth strategy – in fact Lärabar recently made its debut in the U.K. Annie’s and EPIC are driving change in other ways as well – providing a market for the crops farmers add to their crop rotations to protect soil health; driving consumer awareness of plant proteins such as yellow peas; and leading cross-sector collaborative work to advance regenerative agriculture.
Leadership on these issues takes many forms. We understand that ours does not conform perfectly to the metrics chosen in the FAIRR ranking, but and we welcome continued dialogue with FAIRR and affiliated investors. We look forward to having more to share about our work in regenerative agriculture and carbon reduction in the coming years.