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13 June 2014 | Will Green
Buyers at Asda will be encouraged to consider sustainability and longer contracts with suppliers as the company acknowledged 95 per cent of its fresh produce was at risk from climate change.
Paul Kelly, vice president of corporate affairs at Asda, said the supermarket would be “rebalancing the relationship” with suppliers to ensure continuity of supply in the face of the risk.
Speaking at the launch of Asda’s Climate Resilience Programme in London, he told SM Asda would be raising awareness of sustainability among buyers and producing a dashboard of KPIs.
“With the buyers we are just raising these issues with them and getting them to think more broadly and saying: ‘These are the factors you need to bear in mind as you make buying decisions’,” he said.
“Particularly as you start to look at the three, five, 10-year buying agreements, some of the factors you have got to account for are climate change and what are the right questions to be asking suppliers about their plans. If they haven’t got plans, how can we help them? What do we need to look at in terms of how we work with our supply base to make them more efficient? That’s sharing information, looking at how we could invest and encourage investment in those suppliers so they are able to continue to supply us.
“It’s an awareness raising exercise at this stage and that will feed through to ultimately giving a buyer a dashboard where when they are plugging in their information to help them make their decisions, they are also getting information back around the factors they need to be taking into account.”
Kelly said the company had mapped its supply chain with help from PwC and the Environment Agency.
A third of its fresh produce was at “high risk” from climate change. The risk to sourcing processes was worth £101.9 million, the risk to food processing was valued at £163.9 million, and the risk to logistics was worth £103.8 million.
Kelly said long-term relationships with suppliers was key to tackling risk. “There’s nothing to be gained from chopping and changing suppliers who are performing and producing quality in pursuit of what you think might be a lower price, because those are the guys who have been investing in quality for a long time,” he said. “You actually need to give them the incentive to continue doing that.”