Oatly and Sustainability-Strategic Ingredients
Here’s a piece on some of our favorite things to consume, aside from oat drinks and TikTok videos featuring cute animals or plant-based recipe tutorials. Things like chocolate and coffee, of course!
But as we say in Sweden, you have got to “take the good with the bad” and even things that bring as much joy as chocolate and coffee, come with several challenges. At least if you, like us, look at it from a supply chain and cultivation perspective. It’s essential for us to be mindful and strategic when choosing our ingredient suppliers. And just like that, we’ve created a nice segway into the topic of sustainability-strategic ingredients (a.k.a risk ingredients)!
Firstly, it is important to highlight that sustainability is integrated directly into our sourcing function to make it an embedded part of our sourcing processes and ensure that it is close to our sourcing decisions. Secondly, we have also set up several sustainability criteria which our suppliers are required to meet, and we always strive to find suppliers with best practices in place when it comes to sustainability-strategic ingredients. Because as it happens, we use a number of these ingredients in our products.
In 2021, we conducted stakeholder assessments and internal workshops to map out all our ingredients from a sustainability risk vs. business impact perspective, as well as their overall climate footprint. Currently, the raw materials identified as sustainability-strategic are the ones shown in the graph below, but it should be noted that the list is not exhaustive and that it is one that we will review continuously.
When it comes to sustainability-strategic ingredients, we aim to promote higher standards on a global scale. Therefore, we’ve developed a global sustainable sourcing framework, as a guideline for sustainable sourcing.
Working with sustainability-strategic ingredients is all about long-term value creation, collaboration, partnership, and strengthening supply chain resilience. As a food producer, we’re often quite far from the source (cultivation) and in some instances we may have a relatively small purchasing power (i.e. we source small volumes) and limited ability to influence our suppliers as much as we’d like to. Thus, we must be more strategic about how we go about influencing for example how suppliers work with the well-being of their workers, and how we can best support farmers and lift them to higher welfare.
It is also worth noting that country avoidance is not necessarily a feasible option as many ingredients are region, or even country-specific, in terms of their cultivations. Neither is country avoidance helpful to improve the conditions farmers face. Rather, such avoidance provides room for companies with less or little sustainability values to sweep in instead. In addition, some ingredients are indeed more likely to involve risks in how they are sourced and produced, but any type of crop that is heavily used will impact the balance of farming globally. Therefore, we will always need companies like ours to keep other supply chain actors accountable.
When it comes to coconut, vanilla, cocoa, coffee, and cane sugar specifically – it’s also important to keep in mind that our product portfolio would be very limited if we were to avoid these ingredients completely. In fact, we most likely wouldn’t be able to have any flavored products at all. And since our mission is to make it easier for people to eat better and live healthier lives without recklessly taxing the planet’s resources and enable an easy conversion from animal-based dairy to plant-based products like ours, we see it as pivotal to be able to provide flavored products. Thus, we have decided to use sustainability-strategic ingredients, but to do so mindfully by finding the best suppliers and driving sustainability standards.