9-Point Guide to Achieving ESG Goals9-Point Guide to Achieving ESG Goals

Mars lays out best practices for environmental, social, and governance progress and success for packaging and manufacturing operations.

Melissa Griffen Young, Freelance Writer

October 4, 2024

1 Min Read
Sustainability meeting
Rawpixel/iStock via Getty Images

At a Glance

  • Environmental: Science-based targets; lifecycle analysis and materials, minimizing waste and energy, and supplier issues.
  • Social: Engaging consumers and communities; consumer recycling education, and ethical work environments.
  • Governance: Publishing transparency and regular reports and ensuring proper governance structures and accountability.

Mars Shares 9 Best Practices in 3 Sections.

As companies in the consumer packaged goods (CPG) sector are well aware, environmental, social, and governance (ESG) initiatives directly impact operational efficiency, brand reputation, and long-term profitability. It has become critical for CPGs, like Mars Inc., to improve sustainability and transparency and to measure their progress in meeting ESG goals.

Manufacturing and packaging operations are notable stops along the supply chain regarding ESG goal development and management. Effective ESG measurement allows businesses to track progress, optimize performance, and ensure compliance with regulatory and consumer expectations.

Below, Mars and The ESG Group, a CPG-focused sustainability consultancy, share best practices for measuring goals for the ESG categories within packaging and manufacturing operations. They are presented in three sections:

  • Environmental Sustainability (points 1 - 4)

  • Social Sustainability (points 5 - 7)

  • Governance Sustainability (points 8 - 9)

In addition to these best practices, we recommend you consider getting hands-on experience at the Sustainable Manufacturing Expo during the MD&M West 2025 mega-event on Feb 4-5 in Anaheim, CA. You can learn more about this event from Packaging Digest video interview with the new expo’s founder.

Environmental Sustainability.

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1. Establish clear, science-based targets:

One of the most effective ways to measure progress toward environmental sustainability is to set science-based goals that align with global environmental standards. Mars, for example, has set ambitious science-based targets to achieve net-zero emissions by 2050, starting from a 2015 baseline to tackle issues of unsustainable water use, stopping deforestation, and maintaining land use at a consistent level even as the business grows.

This goal includes reducing greenhouse gas (GHG) emissions by 50% by 2030 through renewable energy usage, sustainable packaging innovations, and supply chain redesigns to address deforestation, scaling climate-smart agricultural practices, optimizing recipes, improving logistics, and embedding climate action throughout the business, according to Mars’ Net Zero Roadmap. So far, Mars has reduced the GHGs of its full value chain by 16% and says it is on track to meet its goal.

Mars publishes its GHG emissions inventory annually through The Carbon Disclosure Project (CDP), a global non-profit organization that tracks GHG emissions and other environmental impacts. The company utilizes the Greenhouse Gas Protocol to calculate and report emissions in each source category, investing additional efforts in securing more granular data for categories with a larger share of the total emissions.

“We believe it is possible to run a profitable business and reduce GHG emissions at the same time. Our commitment to reducing our carbon footprint is not just an environmental responsibility; it’s a strategic imperative for long-term resilience and competitiveness and an essential part of creating a better world,” says Andy Pharoah, vice president of corporate affairs and sustainability at Mars.

Best Practice: Companies should implement similar science-based goals to address their environmental impact in areas such as carbon emissions, water use, and packaging waste. Establishing clear, measurable, and time-bound targets helps track progress more efficiently. It is also wise for companies to use public data sources to supply impact factors to use in calculations when available.

Companies should track Scope 1 (direct), Scope 2 (indirect), and Scope 3 (value chain) emissions to get a full picture of their carbon impact.

2. Lifecycle analysis and material optimization:

Packaging material optimization is an important aspect of sustainability as much of it is also consumer-facing. According to Roy Greengrass, president of The ESG Group, many CPGs evaluate the environmental impact of their packaging materials by adopting the Three Rs of packaging—Reduce, Reuse, and Recycle. They also utilize lifecycle assessment (LCA) tools to assess the GHG impact of packaging throughout its lifecycle, from raw material extraction to disposal.

LCA tools can include third-party auditing, which is another strong tool for measuring environmental sustainability. Various States, such as Nevada, provide platforms with easy access to information on auditing systems for waste streams, energy usage and efficiency, carbon footprint, water usage, inventory waste, and more.

Best Practice: Consider conducting regular lifecycle assessments to evaluate packaging materials’ environmental impact. This helps identify areas for material reduction and optimization, such as switching to recyclable or compostable alternatives.

“Material specifications development and supplier certifications such as on the amount of recycling in containers are examples of steps we have seen to reduce impacts,” says Greengrass. “Carbon impact reporting utilizing Scope 1-3 GHG protocols for packaging materials also provides an industry-standard measurement of the impact of measures taken.”

3. Circular economy and waste, energy minimization:

Achieving a circular economy is a future-proof strategy for minimizing waste and extending the lifecycle of packaging materials. Mars aims to make 100% of its consumer-facing packaging recyclable, reusable, or compostable by 2025 with clear instructions on the packaging to direct consumers on proper disposal processes. Though current infrastructure will not allow the company to reach the 2025 mark, Mars has reached 61% of its consumer-facing packaging — excluding transport and tertiary materials — being designed for circularity.

Mars is investing in recycling infrastructure by developing a plastic sorting facility to allow for proper recycling for more than 90% of after-use plastic, according to Mars’ Sustainable in a Generation Plan. The CPG is engaged in the Ellen MacArthur Foundation’s New Plastics Economy initiative, collaborating on the blueprint for the sorting facility.

Mars partners with suppliers, universities, and non-governmental organizations (NGOs) to develop mono-material packaging, with a goal of removing multi-material packaging from its portfolio for easier sorting and recycling. The company has already transformed more than 75 million bags made of multi-plastic materials to mono-material polypropylene across a number of its brands and launched compostable packaging alternatives for candy bars and other confections worldwide, according to the Sustainable in a Generation Plan.

Packaging reduction and redesigns can also lower logistic and transportation energy costs, says Greengrass. Shipping efficiency is further measured using key performance indicators (KPIs) in logistic and shipping operations, which includes data on damage and returns.

Most of The ESG Group’s customers track individual waste streams via internal data sources. And when an established benchmark is exceeded, which data comes from tracking operational yield rates, the companies take corrective actions.

“Product waste is typically measured as yield loss as part of the operations department KPIs. Disposal costs are tracked as they occur from invoices and waste trending tracked. The production department is usually responsible for an ongoing plan to reduce this waste on a year-over-year basis,” says Greengrass.

Best Practice: Actively invest in packaging designs that promote circularity. This can involve transitioning to mono-materials, which are easier to recycle, or exploring compostable alternatives. Track waste reduction efforts through KPIs, landfill avoidance, and operational yield rates. Greengrass also recommends tracking disposal costs as the company shifts away from landfill to recycling waste streams. Companies can implement green energy throughout their operations, including shipping, to increase sustainable efforts and results.

CPGs should partner with governments, universities, NGOs, suppliers, packaging manufacturers, designers, and peer companies to collectively help address global packaging sustainability challenges.

4. Supplier collaboration and sustainable Sourcing:

Sourcing sustainable materials is a non-negotiable element of future packaging. Mars, for instance, sources 100% of its fiber-based packaging from certified or recycled sources, adhering to Forest Stewardship Council (FSC) standards. Mars also measures its success in this area by aiming for 100% annual traceability of virgin pulp and paper-based packaging to at least the country of harvest.

Supplier partnerships are key to ensuring compliance with ESG values, such as stopping deforestation. Mars requires certification to a credible, independent standard to demonstrate compliance with its Sustainable Sourcing Principles. Mars also uses verification tools and is partnered with Earthworm Foundation, a global non-profit. And Mars uses renewable electricity plans to widely deploy this energy throughout its packaging value chain.

Best Practice: Work closely with suppliers to ensure that packaging materials are sustainably sourced. Certification from credible organizations like FSC or the Sustainable Forestry Initiative (SFI) should be a priority. Regular audits and third-party verification can further ensure compliance with sustainability standards. In connection with Social Sustainability goals, consider working with stakeholders from local governments of sourced materials, as well as civil society, organizations, and communities whose livelihoods depend on the forest landscape. This applies to any area a company may purchase or do business with.

Companies should consider investing in renewable forms of electricity as well to lower their carbon footprint. Renewable energy projects may require companies to look to off-site solutions, which could result in more power from fewer assets.

Social sustainability.

Social issues

5. Engaging consumers and communities:

Circularity will not be easily achieved without the help of consumers and communities. Mars collaborates with NGOs and governments to improve recycling systems and engage consumers in responsible packaging disposal through initiatives.

Greengrass also points out that pallet recycling and chemical or plastic tote container take-back programs are common recycling methods among CPGs. On occasion, disposable liners are deployed with knockdown boxes when savings can be justified.

Along with the development of an improved recycling facility, Mars says in its Sustainable in a Generation Plan, “Through partnerships, we aim to impact 10 million people by providing access to improved waste management and recycling systems, ultimately engaging consumers in sustainable practices.”

Best Practice: Foster consumer participation in recycling and sustainability programs by providing clear guidance on responsible disposal. Engage with local communities and government bodies to improve waste management and recycling infrastructure.

6. Consumer education on recycling:

Mars says it is redesigning more than 12,000 packaging types to fit with the recycling infrastructure that either exists today or is likely to exist in the future in the markets where the company operates, to make it easier for consumers to recycle the packaging.

The company is also working on location-based guidance for all products in its major markets so that consumers have the proper information to dispose of each packaging type as each country has different mandatory requirements for labeling packaging recycling standards.

Mars measures the effectiveness of consumer recycling initiatives such as its SWAP program, where consumers are encouraged to recycle packaging, and tracks participation through the volume recycled.

Best Practice: Ensure recycling directions on labels fit the standards of each country the product is consumed in. Also, ensure the recycling directions are easy for consumers to understand and follow. Companies can measure the success of recycling programs through volumes recycled and volumes thrown into landfill.

7. Ethical work environments:

Mars has put in place a reward system to ensure suppliers treat their workers fairly and provide them with safe conditions through the incentive of longer-term contracts for those who commit to the CPG’s environmental, social, and ethical expectations.

Inside Mars’ own facilities, the company has implemented ‘Be Well Together’, which is “designed to promote a culture where health and wellbeing is a priority [and] encourage Associates to improve their health in whatever way is best for them,” says the Sustainable in a Generation Plan. Goals for employees are measured through action plans.

Other programs include the Responsible Workplace Program, which promotes respect for the human rights of all Associates and workers, and Mars Veterinary Health. These programs include independent auditors and experts to evaluate facilities and progress.  The CPG’s Human Rights Policy utilizes an assessment process to identify forced labor, child labor, lack of living income and wages, gender discrimination, and mental and physical health and safety. Mars deploys programs that may include third-party experts to prevent and address salient issues in its operations.

According to an endline worker voice survey, 80% of Mars’ employees and workers along its supply chain agreed that communication with management had improved compared to the previous year.

Best Practice: Companies should create and implement programs that protect and empower employees. They should also use systems that allow employees to provide honest feedback anonymously and/or without repercussion. Develop standards for suppliers and perform audits to ensure those standards are kept.

Governance sustainability.

Corporate governance

8. Transparency and regular reporting:

Mars publishes its sustainability achievements annually, offering detailed insights into its progress toward environmental, social, and governance goals. This includes reports on renewable energy usage, GHG emissions reduction, and packaging circularity.

Mars has its suppliers also set targets and regular reporting. The company leverages tools such as peer benchmarking, request for solution processes, continuous improvement targets, co-investment, and longer-term contracting to develop stronger supply chains with easier communication.

The company also welcomes third-party evaluations and audits to rank and verify its environmental performance and further ensure its transparency and accountability.

Best Practice: Companies should establish a regular reporting mechanism to track and publicly disclose progress toward ESG targets. Transparent reporting builds trust with consumers, investors, and regulators and helps identify areas for continuous improvement. Utilize audits and third-party evaluators to keep the company accountable and transparent.

9. Governance structures and accountability:

Developing and meeting ESG goals starts in the C-suite and filters down to each department and facility. The Mars Board of Directors and its committees oversee a Sustainable in a Generation Plan. The board and Mars Leadership Team (MLT) also review other global ESG goals for the company.

The Sustainability Steering Group at Mars, composed of senior sustainability vice presidents, determines what a truly sustainable business is and makes recommendations to the MLT and Board. The senior-level Sustainability Reporting Steering Committee then directs efforts on sustainability reporting.

Mars’ Facility Sustainability approach outlines environmental management within its facilities, which are all designed under the guidance of Mars’ Global Facilities Manual. Each facility must have strong governance through special teams and other environmental resources and must implement a documented Environmental Management System, which is consistently reviewed and updated. This approach extends to proper maintenance of facilities and equipment, as well as proper supervision and training of employees, among other goals.

To ensure the company is consistently working to improve its sustainability, Mars integrates ESG targets into overall business performance measures, as a long-term incentive award with 20% of the payout linked to a non-financial sustainability measure for more than 1,700 senior leaders. An additional compensation of 40% of the payout is offered to more than 400 senior leaders, who must also contribute to achieving sustainability goals through non-financial measures.

Paul Weihrauch, Mars' CEO, says, “Running a financially fit and a sustainable business are not two mutually exclusive things. In fact, they are self-reinforcing in my opinion. Running a profitable business is the only way we can generate the resources necessary to invest and make a real difference to people, pets, and the planet. And when we run a sustainable business, it helps ensure we have a healthy planet where our consumers, clients, and stakeholders thrive, while remaining an attractive place to work, grow, and develop.”

Best Practice: Companies should create sustainability head positions throughout their operations and consider sustainable methods to build and upkeep facilities. They should embed sustainability goals into the broader corporate governance framework. CPG companies should further consider linking ESG performance to executive compensation to drive accountability. Regular reviews by leadership teams and board-level oversight can help ensure that sustainability initiatives are prioritized across all levels of the organization.

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