Sustainable Business: The Only Way Forward

By Sean Moloughney, Editor | February 20, 2013

Responsible practices that preserve the health of ecosystems will win consumers and ensure long-term market viability.

For many consumers, sustainability is more than a buzzword; it’s a guiding life principle that steers purchasing decisions, which people base on perceptions of a brand’s or company’s impact on the environment. And for many businesses, sustainability has become an economic, as well as moral imperative.

According to the Natural Marketing Institute (NMI), Harleysville, PA, Generation Y consumers—born between the late 1980s and the 2000s—are increasingly concerned with the sustainability of the products they’re purchasing, suggesting this will be a long-lasting trend to consider. While Gen Y once had lukewarm engagement with the sustainability marketplace, as they advance in their careers and start families, they are buying more “green” goods.

More than one-third now say they buy as many eco-friendly products as they can, up from just one-quarter five years ago. And their willingness to pay for those products has increased at the same time. NMI’s data on green consumers and their purchasing habits was collected through the Lifestyles of Health and Sustainability (LOHAS) Consumer Trends Database in an annual survey focused on health and sustainability, corporate social responsibility, environmentalism and social issues.

In the nutraceuticals industry, which prides itself on natural health and wellness, the connection to sustainability and the “green” movement seems logical. But extracting the benefits nature has to offer without destroying another piece of it in the process can be a delicate dance.

The ‘Green’ Ocean

Seafood is the largest traded food commodity in the world and is critical to food security for more than 3 billion people, according to Mike DeCesare, communications director, Americas, for the Marine Stewardship Council (MSC), Seattle, WA, which has developed certification standards for sustainable fishing and seafood traceability. “Globally, about half a billion people depend on the seafood trade for their livelihoods. The decisions we make today affect the future of our children and people around the world. It is not enough to simply self-declare sustainability; increasingly, buyers and consumers are demanding proof.”  

Fishing practices, and understanding of their impact on ecosystems, have come a long way since the early 1990s, when the northern Atlantic cod fishery collapsed due to decades of overfishing. When the Canadian government was forced to impose a moratorium, the social and economic ripples through communities built around cod fishing were devastating.

Today, under the MSC program, there are three key “pillars” to a fishery’s certification, Mr. DeCesare noted. First, a certified fishery must operate so that it remains productive for existing users and for future generations. “The second principle is minimizing environmental impact. Fishing operations would be managed to maintain the structure, productivity, function and diversity of the ecosystem on which the fishery depends. The third principle demonstrates effective management. The fishery must meet all local, national and international laws and must have a management system in place to respond to changing circumstances and maintain sustainability.”

Globally, more than 17,000 products carry the distinctive blue MSC eco-label. “Walk into virtually any national brand pharmaceutical chain store today and there will be MSC labeled products from our partners on the store shelves. There are also a number of private label supplements that display the eco-label. The uptake and demand for certified sustainable products continues to grow in the marketplace.”

The sustainability of fisheries is vital to the sustained, long-term health of the seafood trade, as well as the omega 3 industry—a standout star in the dietary supplement, fortified food and natural products market.

Consumer perceptions about the importance of sustainability are a primary factor driving the omega 3 industry to communicate standards more clearly, according to Ellen Schutt, communications director, Global Organization for EPA and DHA Omega-3s (GOED), Salt Lake City, UT. “In reality, though, the sustainability issue at the fishery level is a perception issue rather than a true sustainability crisis,” she said. “GOED is in the process of researching fisheries around the world for a sustainability white paper and we are finding that the vast majority of fisheries have done their homework and put in place programs and measures to maintain a sustainable business. These include on-boat observers, in-depth biomass tracking and mandatory catch limits to maintain a sustainable harvest and promote the long-term health of the fishery.”

Krill Case Study

As an attractive, emerging segment of the omega 3 industry, krill represents a significant growth opportunity. As demand ramps up, what kind of pressure will be placed on this resource that is, experts say, vital to the health of its ecosystem? According to Becky Wright, communications and marketing manager, Aker BioMarine Antarctic US, Issaquah, WA, the krill fishery should actually be considered a good example of a “truly sustainable operation.”

So how healthy is the krill population? According to Ms. Wright, the krill biomass is the largest on Earth, at twice the weight of the human population. In the Food and Agriculture Organization’s Fishing Area 48 (where Aker harvests krill) the biomass is estimated to be around 60 million metric tons. “Currently, the precautionary catch limit for Area 48 is set at 5.6 million metric tons, which is around 1% of the total biomass. The trigger level is set at 620,000 metric tons (the trigger level is another precautionary limit). These limits were built in so the fishery couldn’t upset the balance in the ecosystem, or worse, drive the biomass toward dangerously low levels.”

Last year the entire krill harvest in Area 48 was about 157,000 tons, of which Aker BioMarine caught almost two-thirds. “On average, the fishery catches less than one third of 1% of the krill in Area 48 on an annual basis.”

“Krill is an important part of the ecosystem, so Aker knew from day one that we needed to take every precaution possible to safeguard this resource,” Ms. Wright continued. “To that end, we have invested millions of dollars to build an infrastructure, which factors in the critical importance of sustainability.”

As part of its efforts, Aker has relationships with the MSC, the Commission for the Conservation of Antarctic Marine Living Resources (CCAMLR) and the World Wildlife Fund (WWF-Norway). The MSC certifies that Aker’s Superba Krill ingredient is sustainable “from sea to shelf,” Ms. Wright said. “In fact, consumers can actually trace their supplements to the area in the Antarctic where the krill in their product was harvested. WWF-Norway works with Aker to make sure we meet key MSC certification requirements, including mapping our fishing activities against local predator populations and ensuring that our operations do not cause serious harm to the ecosystem.”

CCAMLR closely monitors the krill fishery. “In our case, we make sure we harvest krill in various parts of Area 48, rather than continually taking from the same place. CCAMLR requires krill fishing companies to report back on a weekly basis; Aker reports back to CCAMLR daily. CCAMLR also requires independent observers to be aboard krill fishing vessels 50% of the time; we have independent observers on our vessels 100% of the time.”

Aker’s proprietary krill fishing methods, called Eco-Harvesting, were designed to result in almost no by-catch. “Traditional trawling methods where the catch is hauled up on deck and emptied into holding tanks before processing is unsuitable, as krill contains highly digestive enzymes and basically self-destructs before it can be processed,” Ms. Wright noted. “Furthermore, unwanted by-catch (e.g., of fish and seals), is a problem with regular trawling in the South Atlantic and may pose a threat to fragile marine eco-systems in the Antarctic. Aker BioMarine’s Eco-Harvesting system allows the fishing net to stay submerged during the entire operation. Independent observers have verified that our novel harvesting method ensures no by-catch of species other than Euphausia superba (krill).”

Aker BioMarine also supports scientific research needed for CCAMLR’s management of Antarctic krill. The company co-founded the Association of Responsible Krill Harvesting Companies (ARK), an organization developed to promote research for the sustainable harvest of Antarctic krill. ARK was established to coordinate and cooperate with CCAMLR, facilitating research and sharing information on krill, the krill fishery and its impact on the ecosystem, with the goal of contributing to CCAMLR’s work to manage the krill fishery on a sustainable basis. It is a center of information collection and distribution between ARK members and CCAMLR entities.

In addition, Aker sponsors research to monitor the health of the krill biomass. “The ultimate goal of all of this is to make sure we are taking the appropriate steps to secure this resource now and well into the future.”

Mr. DeCesare confirmed that krill is “sustainable and well-managed,” and annual audits continue to confirm sustainability over the five-year period of an MSC certification. “The Aker BioMarine krill fishery voluntarily entered MSC assessment and confirmed its sustainability through a scientifically rigorous process that included significant stakeholder involvement and scientific peer review to confirm the findings and determination made by an independent certification body that measured the fishery against the MSC standard.”

From a pure business perspective, sustainability should be considered as an economic principle, said Luc Rainville, director of scientific affairs, Neptune Technologies & Bioressources Inc., Laval, Canada. “Sustainability in the context of Neptune’s business and the larger nutraceuticals markets we serve corresponds to the principle of exploiting the most potent and profitable compounds for human health conditions, using the least amount of living marine biomass resource to achieve this goal. It appears that in the last 100 years it was the opposite.”

Today though, the tide has turned, as more companies recognize sustainability is just good business. “Most omega 3 fish oils come from very abundant populations of small fishes—so called staple fish such as anchovies, sardines, capelins, herrings and menhaden. It is the same with Antarctic krill and some species of squid. But one must not forget that the total marine omega 3 (fish oil) extracted from these most abundant marine biomasses is a very small fraction of the overall marine omega 3s used for aquaculture.”

Neptune’s use of Antarctic krill has been certified by two organizations: NSF International and Friend of the Sea (FOS). FOS is an international non-profit organization with an independent certifying body and a public assessment process. FOS focuses on the health of ocean stocks and how they are managed, in addition to assessing the effect of the fishery on the wider ecosystem, which includes a range of marine mammals, birds and fish.

While many groups, including GOED, research the fisheries that supply omega 3 oils, sustainability extends beyond the ocean, said Ms. Schutt. “Companies must implement complete life-cycle analyses that not only address the fishing methods and what happens on the boat, but also look at how the products are manufactured, what conservation and pollution measures are in place and what happens as the product goes through its life cycle.”

Botanical Case Studies

From the ocean to the forest, as popular nutraceuticals reach mainstream consumers, the long-term health of these markets depends in part on a sustained, responsible balance of supply to meet demand.

Seth Flowerman, director of business development, P.L. Thomas & Co., Inc., Morristown, NJ, said his company is focused on the responsible sourcing and supply of natural ingredients. “Our sustainability efforts are focused on sourcing traceable and renewable resources in a socially responsible manner.”

Traceability, he added, involves closely monitoring the path an ingredient takes from seed to plant to table. “Renewable” crops are responsibly grown and harvested while maintaining adequate supply. And “social responsibility” means working with local communities to “improve their overall welfare and ensure that they will continue to support and develop the essential natural resources that power our industry.”

An example of a truly sustainable product, Mr. Flowerman said, is the patented Zembrin ingredient, the first standardized and clinically studied extract of an elite selection of Sceletium tortuosum, which is known by the San people of South Africa as “Kanna.” This herb has been used for millennia for its stress-relieving and mood-enhancing effects, Mr. Flowerman noted. Zembrin has received the first Export and Bioprospecting permit ever issued by the South African government.  “As a socially responsible company, HG&H Pharmaceuticals (Pty) Ltd., Bryanston, South Africa, has formally recognized the primary indigenous knowledge holders of Sceletium, and successfully concluded South Africa’s first ‘prior-informed consent’ benefit-sharing agreement with the South African San Council.”

Including the San community in the Zembrin project is part of a larger effort defined by the South African biodiversity act, which comprises activities to sustain the diversity of life forms in an ecosystem. On Dec. 8, 2009, HGH Pharmaceuticals became the first company in South Africa to be granted a bio-prospecting and export permit, Permit Number 0001, signed by the Minister of Water and Environmental Affairs. This permit allows the company to research and develop Sceletium and to export the raw material, as well as the company’s proprietary, standardized extract Zembrin. P.L. Thomas is the exclusive marketing and sales partner of HG&H Pharmaceuticals.

“Besides the moral imperative of protecting our planet and raising the level of welfare around the world, sustainability makes good business sense,” said Mr. Flowerman. “Working with the local community to ensure they are treated fairly and have an incentive to work the land allows us to maintain a more stable supply and helps keep prices consistent for our customers.”

Stable supply has been the crux of controversy around palm oil for years. Recently, Dr. Mehmet Oz touted the health benefits of red palm oil, sparking demand in the supplement industry.

Traditionally, palm oil production was managed as part of mixed farming practice in West Africa. Today, most production is being expanded as an industrial-scale monocrop, imposing significant environmental risks as well as impacts on local societies, particularly for people with limited economic capacities, according to the United Nations Environment Programme (UNEP).

About 90% of the global supply of palm oil currently comes from Indonesia and Malaysia, according to Orangutan Outreach, which recently teamed with the Rainforest Action Network to encourage Dr. Oz to retract his endorsement of red palm oil. The organizations said that increased demand has led to “heinous ecological atrocities, including the systematic genocide of orangutans,” which are native to the forests of Borneo and Sumatra. “Indonesian and Malaysian forests are being burned to the ground—releasing so much carbon into the atmosphere that Indonesia now ranks third behind China and the U.S. in carbon emissions.”

Palm oil provides one of the leading vegetable oils produced globally, accounting for one-quarter of global consumption and approximately 60% of international trade in vegetable oils, according to 2010 World Bank statistics. Oil extracted from these palms is used in everyday products like margarine, baked goods and sweets, detergents and cosmetics. An estimated 74% of global palm oil usage is for food products and 24% is for industrial purposes. Since the 1990s, the area occupied by palm oil cultivation has expanded worldwide by around 43%, driven mainly by demand from India, China and the European Union.

Established in 2004, the Roundtable of Sustainable Palm Oil (RSPO) is an international organization of producers, distributors, conservationists and other stakeholders who promote the production and use of sustainable palm oil. RSPO is currently the most broadly recognized framework reference for sustainability in palm oil and defines standards for plantations, including environmental and socio-economic aspects. Many suppliers are using RSPO certification as a means to differentiate themselves in the marketplace while promoting the important of sustainable palm oil.

Forward Thinking

Sustainability in business requires commitment and long-term vision. As popularity for the natural sweetener stevia has taken root in the U.S. and Europe, many suppliers are actively positioning themselves as environmentally conscientious.

According to the Global Stevia Institute, stevia requires lower inputs of land, water and energy to produce the same amount of sweetness found in other natural sweeteners. “Stevia’s sweet components, steviol glycosides, can be up to 400 times sweeter than sugar. This high sweetness level can allow for greater efficiencies and smaller environmental impact in stevia sweetener production, from farming to the finished ingredient.” Also, since stevia crops generally require less land, many stevia farmers still grow other crops and maintain agricultural diversity, an important component of environmental sustainability and healthy ecosystems.

The Truvia business of Minneapolis, MN-based Cargill reported in January that its stevia sweetener received carbon footprint certification from the U.K.-based Carbon Trust, which reviewed the total greenhouse gas emissions at every stage of the supply chain, including cultivation, processing, packaging, transport and use and disposal. Under the certification, the Truvia business has signed up to use the carbon reduction label, which in this case covers the U.K., U.S., Mexico, Spain, France and Italy, signifying the Truvia brand is committed to reducing the carbon footprint of its sweetener over a two-year period.

In 2010, the Truvia business set a number of sustainability goals, including becoming carbon neutral and zero waste in 2020. To that end, the company said it would reduce its carbon footprint by 50% in 2015 from a 2010 baseline; ensure all processed water is returned to the same quality in which it was taken, and reduce net depletion by 25% by 2020; and reduce waste by 50% across the supply chain in 2015.

Malaysian producer of high purity stevia ingredients, PureCircle Limited, released a whitepaper last year that its stevia sweeteners have a carbon footprint that is as much as 82% lower and a water footprint that is as much as 97% lower than other publicly available sweetener benchmarks. PureCircle’s findings were based on measurements of the 2011 fiscal year production of its high purity sweeteners. The footprints were assessed by Camco Clean Energy, U.K., a leading independent water and carbon footprint expert, and further peer-reviewed by footprint experts, Dr. Tim Hess of Cranfield University, U.K. and Zahir Lazcano, an independent consultant.

An industry leader in agricultural processing, Sunwin Stevia International, Deerfield Beach, FL, also recently announced a new stevioside extraction line that uses a state-of-the-art crystallization process, which substantially reduces production time while increasing product yield. Added efficiencies in production will improve an already low carbon footprint, according to the company.

In the future, more pressure will be placed on limited resources from growing populations and developing economies. Companies and industries that manage secure and sustainable supply chains can serve as models for responsible growth, offering benefits that extend far beyond business.