The Hershey Company

FAIRR Commentary

• Hershey’s revenues are predominantly derived from its North American business. The company has said that “as most of our products contain chocolate, which contains milk, nearly 90% of our revenue comes from products that contain some animal protein”.
• The company does not seem to think sustainable proteins is a material issue for their business because their products typically do not come with protein claims. However, they anticipate that “additional forms of protein will play a bigger role in our products as we expand our portfolio more broadly across snacking.” The company recently acquired a meat snacks company (KRAVE).
• We acknowledge that as a predominantly confectionery/snacking business, Hershey has a limited role to play in shifting diets. However, plant-based snacking and dairy-free chocolates are a growing market, and Hershey does not seem to have a current foothold in either market beyond a few products.
• Further, the company’s portfolio is highly exposed to animal ingredients. Hershey’s has joined the Science Based Targets initiative and will be addressing Scope 3 emissions including those derived from animal-based proteins. We believe this is first step towards addressing some of the sustainability impacts of animal protein, however we have yet to see evidence of how the company is planning to comprehensively address impacts including those relating to manure management and feed., but the company does not seem to be addressing the sustainability impacts of these commodities, either in dairy or in meat.
• We believe that this is a material issue for the business, given the growing market interest and innovation in plant-based snacking as well as the company’s current dependence on a resource intensive commodity such as milk (which is primarily sourced from Pennsylvania, according to the company).
• The company has said that protein will play a bigger role in their portfolio. We encourage the company to externally articulate what forms of protein it plans to focus on, and how these will impact its sourcing and emissions targets. Further, we would encourage the company to strengthen its sustainability work in dairy and explore alternatives to dairy ingredients. As the company seeks to expand its protein portfolio, it must do so as part of a strategic plan to ensure any exposure to animal proteins is in line with a low-carbon strategy.

Company Comment

The company responded to FAIRR and provided feedback on individual sections