Prioritizing the Planet Over Profits? Inside Mars' Long-Term Sustainability Vision

Thank you for inviting me, Jean-François. It's always a pleasure to come to Lausanne and be at IMD.

Fundamentally, we have three businesses: one that is a snacking business, one that is a pet business, and our food business. The pet business is approximately a bit less than 60% of the revenue. We have 4-5% that is our food business, and the rest is our snacking business. So we are made up of, you can say, two very large segments and a smaller segment. And we operate pretty much everywhere around the world.

As a company, you mentioned in your introduction, we actually have the environmental footprint of a small country. For Mars, Incorporated, right now it's the size of Finland as a country with an environmental footprint. And we need to solve this problem for the next generation to be able to be on a planet that is thriving. And therefore, we decided that we should be at the forefront of reducing our environmental footprint. And we're doing that by investing in science and technology, by investing in energy consumption — all of our factories are on green electricity, most of our veterinary hospitals. We have a few countries on green electricity as an example. We have zero waste to landfill in all of our operations, and our scope for greenhouse gases, Scope 3. So we measure all the way to the consumer and all the way back to the farmer. Close to 80% of the environmental footprint of Mars, Incorporated is agriculture, being a food manufacturer. So we need to work with farmers, whether it is cocoa farmers, to make sure we have no deforestation. And if I take that as an example, it has taken many years. We have satellite images of all farms, 98% of farms that we buy cocoa from, to make sure that there's no deforestation that takes place. This is 500,000 smallholder farmers. So it's a very big effort to make sure that we solve for problems of deforestation around the world. Likewise for palm. When we come to plastic, we design for recyclability. We try and use recycled plastic that is food-grade, of course, where there is a shortage at this very, very moment. And on thriving people, it is to make sure that we improve the lives of one million people in our supply chain. So we have invested in programs. We buy a lot of raw materials from fragile areas of the world where the living conditions are not good enough. And we have struggled for years to get them up to a good living wage. So we are investing in this area, and making sure that we do our bit to improve the living conditions of these many predominantly farming communities. Nourishing wellbeing, it's setting standards about nutritional value, and declare nutritional value of our products. It is advertising only — to not advertising under the age, I think 13 or 14, where children cannot discern between what is a commercial message and information. So we were the first to stop advertising to children this way. We have withdrawn our products from school vending machines, et cetera, et cetera. So it's standards we try and live up to. And I would say, again, it's very good to have shareholders where you can take your mobile phone, call them and say, 'Does this feel right?' And then have a conversation about it, and probably not be asked by an investor community whether this is good business, because it is good business long term. It may not be short term, but we all want this planet to be a thriving place.

I wish I had a magic formula to do it, and I'm not sure we always get it right at all. But if I take the area of nutrition as an example, and, of course, we get a lot of critical questions being a sugar confectionery and a chocolate company. We start by a strong belief that we should advocate a healthy diet. We also have a belief that chocolate plays a role, and personally, a world without chocolate would probably be a less fun life. Now, if you're a heavy user of M&M's in the United States, which is our biggest brand in the United States, you buy M&M's five times per year. So it is actually not as if — it's not three times per week. Yes, and for Snickers, the biggest chocolate bar, it is between three and four. However, we need to play our role. So we work on the portion size. We make it very, very clear the calories that are in each pack. We make sure we advertise it ethically, and not encourage overconsumption, as an example of that. And I mentioned the protocols. And then we work on science and technology to try and replace sugar. Just like in our food business, we try and reduce salt. So one of the ways of doing that is by using, for instance, lemon juice to reduce salt. And we check formulas for different sugar levels. And some of it you can't do, but hopefully by constantly investing in the technology, there might be opportunities later. So I think the first decision is we are a snacking company and we are very proud of being a snacking company. And what we want to do as a snacking company is to make sure we set the highest ethical standards for how we operate as a snacking company, and always put to ourselves the challenge to invest in new technology and science that will enable us to be at the forefront. The good news about our products is that Snickers will never be considered as a salad. So it's not like you consume hidden calories when you consume our products. It's pretty obvious what you consume. So from that point of view, I think we have a more straightforward communication task, but it's a lot of investment in technology. And then you think, 'Okay, is this too early to go?' Years ago, our British business made a Mars Bar with low calories, and it didn't work at all. And this was when the diet culture was really on the rise. And the insight we learned was the consumer would actually prefer to have a salad at lunchtime, and take a snack in the afternoon than having a compromised-on-taste Mars Bar. So it all has to start from the consumer, and work backwards with the addition of science, and technology, and R&D capabilities in the mix.

Yes, and then constant, keep the ambition. I can take a parallel with sustainability. We've just reviewed our sustainability activities and the first reductions were relatively easy. They were low-hanging fruits. And an example of that would be deforestation. What is much more difficult is the methane emission of dairy cows. So we know when working on this, it takes longer time, but our learning has been that there's a bit of a learning curve. And after this learning curve, when you have invested four or five years, you figure out there are solutions. I could give another example. We know when we design recipes for pet food, the carbon footprint of beef is substantially higher than that of lamb, is substantially higher than that of poultry. So we start from a scientific point of view: what is the optimal nutrition from the animal? We can never compromise that. And then we look at different levers to bring the carbon footprint down of the recipe. This requires, Jean-François, that the R&D person that sits in a lab and designs the product used to be trained only in nutrition and now needs to understand the carbon footprint of all the ingredients that go into a given product. And therefore it's a long investment, and you need to be kind to the people that work on the project and to yourself to say, 'Give it time. Give it time because we will learn.' And this cumulative learning will enable us to make progress maybe in three, four, five years. We can't see it tomorrow.

Yes, and I would also give many NGOs credit, the fact that they're critical about how we perform, the fact that they ask us tough questions helps us to be better. I will give credit to a younger generation. When I started a job, I said, 'Can I please have a job?' The young people that come in now, they say, 'Why should I work for you?' So it's almost like the table has been reversed, that we need to justify why they want to work for us. So I think these critical voices in society are also helpful if we want to listen to them.

Thank you for hosting me.