From hazelnut traceability to renewable energy: Ferrero makes ‘strong progress’ towards sustainability goals

The 2021/2022 financial year (FY) was a ‘particularly challenging’ one, according to confectionery major Ferrero. “War broke out, supply chains were disrupted, energy costs surged, and inflation grew alongside the cost of raw materials,” said Giovanni Ferrero, executive chairman of the Ferrero Group.

But the group’s ‘solid progress’ in its sustainability plans has not been affected, he stressed in Ferrero’s recently published Sustainability Report. “In the face of these challenges, Ferrero has not only been able to grow, but to make strong progress with a number of our sustainability targets – and, in some instances, exceed them.”

Cutting GHG emissions across Scope 1, 2 and 3

Back in 2020, Ferrero announced a new set of science-based commitments for 2030. These included a reduction of Scope 1 and Scope 2 emissions by 50% from a 2018 base year. A target reduction of Scope 1, 2, and 3 emissions intensity by 43% per tonne of product produced, from a 2018 baseline, was also set.

Scope 1 emissions concern the group’s own operations. Reduction strategies include investing in energy-efficient technologies, increasing the production of on-site renewable energy, improving energy efficiency, and aiming to use alternative sustainable fuels to generate energy.

In Scope 2 emissions (indirect emissions arising from purchased electricity, heat and steam), the group says it continues to increase the amount of renewable electricity its factories buy. This year, the group is celebrating that 92% of its global electricity now comes from renewables – up from 84% last year.

Scope 3 emissions currently account for the vast majority (93%) of Ferrero’s total carbon footprint. Because the group does not have direct control over these emissions, addressing this part of its carbon footprint (which includes raw material and packaging) is the most challenging.

So, what progress has been made? In FY 2021/22, Ferrero’s Scope 1, 2 and 3 emissions actually increased 7,318,172tCO2eq (compared to 7,007,128tCO2eq for FY 2020/21), while its intensity ratio has slightly decreased to 4.02tCo2eq per tonne produced. The group puts this down to its production growth of 6% and increase of mobility intensity after the COVID-19 pandemic.

But where emissions wins have been made, Ferrero attributes these to its decarbonisation programme and investment in renewable electricity. “This resulted in direct Scope 1 emissions remaining almost constant in absolute value, while our Scope 2 emissions significantly decreased by 41%.”

Sourcing cocoa and palm oil, sustainably

Family-owned Ferrero sells its brands, ranging from Nutella to Kinder and Tic Tac, to more than 170 countries globally. Sourcing raw materials for its confectionery products (cocoa, hazelnut, palm oil and others), sustainably, is a major objective for the company. And for FY 2021/22, the group is reporting ‘great strides’ towards this goal.

Cocoa, a fundamental ingredient of many of Ferrero’s brands, is predominantly sourced from Ivory Coast and Ghana, and complemented by Nigeria, Cameroon, Ecuador and Colombia.

This year, Ferrero purchased around 97% of its cocoa volume from farmer groups it supports through sustainability programmes, of which 82% was sourced from its own farmer groups. All cocoa was sourced through certifications and other independently managed standards.

More than 96% cocoa traceability to farm gate level and 100% back to origin country was also achieved. “Traceability is at the heart of our responsible sourcing approach. We are always working towards boosting the visibility of our supply chain through strengthening partnerships with our suppliers and using the most advanced technology available,” a Ferrero spokesperson told FoodNavigator.

“This includes utilising a dedicated, cocoa-focused platform that will provide us with the visibility we need to realise our commitment to trace all cocoa back to farm level, and to perform additional risk assessments and compliance checks.”

This year, Ferrero also completed its four-year Cocoa & Forests Initiative (CFI) Action Plan, reaching – or in some cases, surpassing – targets it set back in 2018.

“Our new plan in development will have targets for 2025,” explained Lapo Civiletti, chief executive officer of the Ferrero Group.

Palm oil also plays a key role in Ferrero’s confectionery production. In FY 2021/22, the group sourced around 230,000 metric tonnes of palm oil – the equivalent of around 0.3% of global production.

One hundred percent of palm oil used by Ferrero is certified segregated by the Roundtable on Sustainable Palm Oil (RSPO), meaning that its sustainable palm oil is kept separate from the plantations and farms all the way along the supply chain. A total of 99.95% of its palm oil is traceable to 146 palm oil mills and 722 plantations.

Spotlight on hazelnuts

Hazelnut is a characteristic ingredient in many of Ferrero’s brands, including Nutella, Kinder, and Ferrero Rocher. But clear risks within the hazelnut supply chain exist, and are often derived from complex, systemic and ‘deeply ingrained’ challenges in producing countries, noted the group.

For example, Turkey, among other places, attracts seasonal migrant workers who travel with their families and lack access to schools and childcare. This sometimes results in exploitation , such as bonded labour or child labour, poor working conditions and inadequate accommodation. Ferrero mainly sources its hazelnuts from Turkey, Italy, Chile and the US.

The recent earthquake on the Turkey/Syria border did not directly impact the hazelnut growing areas, as these are located in the Black Sea region, a Ferrero spokesperson confirmed.

In FY 2021/22, Ferrero achieved 79% traceability for the hazelnuts it buys. Chile, Argentina, France and the US all confirmed they were fully traceable after implementing the Sourcemap platform.

“Traceability lets us monitor not only where our hazelnuts come from, but also the conditions under which they are produced. It helps us to support farmers and suppliers to develop and implement better social and environmental practices, for the benefit of the sector overall,” explained the spokesperson. But this process is ‘particularly challenging’ in the hazelnut sector because of the complex and often fragmented supply chains in some areas.

One key challenge is the inherent nature of hazelnut farming, which means that in many cases, hazelnuts are grown on small family-owned orchards. “There are a variety of intermediaries, different data processing systems, and limited availability of technology – making it challenging to reach a full traceability picture,” the spokesperson told this publication. Working collaboratively, Ferrero is ‘committed’ to tackling this systemic supply-chain complexity.

“Despite this, we’re proud to have achieved 79% traceability for our sourced hazelnuts, and we’ll continue to work closely with key partners throughout the supply chain to overcome the barrier to reaching 100%.”