As a publicly traded company, Smithfield Foods has a responsibility to drive growth and improve shareholder value. However, we believe that financial stability and sustainability go hand in hand. Our sustainability strategies help us improve our company’s performance.
Over the past decade, we have worked to embed sustainable practices and principles systematically throughout our operations. In 2010, we increased our commitment to sustainability by creating a new sustainability management program, including board- and corporate-level oversight committees, a new executive level position to oversee our efforts, and a core team to drive further progress. We also set specific goals and targets for the first time relating to the five pillars of our sustainability program: animal care, employees, environment, food safety and quality, and helping communities.
For this year’s report—Smithfield’s first to combine information on our financial and nonfinancial performance—we have set out to articulate a sixth pillar, which we call “value creation.” Under this new pillar, we highlight ways that Smithfield’s sustainability program creates value for all our stakeholders—from shareholders to employees, from community members to nongovernmental organizations, from customers to consumers—while simultaneously improving company financial performance. This pillar will also help tie our sustainability progress to overall financial reporting.
[Fiscal 2012 Sales]
Includes intersegment sales of $2.5 billion.
We are working hard to better understand and identify the connections between the costs and benefits of our sustainability program, and how they relate to our bottom line. We believe we can create greater value for each of our stakeholders by recognizing the intrinsic interconnections between our business objectives and our sustainability objectives.
[Fiscal 2012 Expenditures to Communities]
Smithfield Foods spent more than $290 million on capital improvement projects in fiscal 2012. Wherever possible and practical, we aim to spend money locally. For this report, we took a close look at five of the largest capital improvement projects implemented at our facilities. Of the total investments of nearly $28 million, more than 60 percent was spent within a 100-mile radius of the facility.
Spent locally: $4.7 million / Not spent locally: $5.5 million
Spent locally: $2.6 million / Not spent locally: $2.2 million
Spent locally: $318,000 / Not spent locally: $1.5 million
Spent locally: $6.5 million / Not spent locally: $803,000
Spent locally: $3.3 million / Not spent locally: $431,000
We also understand that investors and capital markets want to know more about the relationships and linkages among financial, social, and environmental performance, and how they can increase corporate earnings. We believe that our sustainability programs have been helping Smithfield Foods build and deliver value for more than a decade—and will do so even more in the future. Now, through this sixth pillar, we have the ability to highlight the specific ways that they do.
The world’s population is expected to jump from about 7 billion today to 9 billion by 2050. This growth will put further pressure on the cost and availability of natural resources—including land, water, energy, seed, and fertilizer—to produce sufficient food. Just as important, it will challenge global systems of agriculture and food distribution to provide a nutritious diet to those who need it—when they need it and wherever they are located.
At Smithfield, we believe we can play an important role in providing affordable sources of protein that are produced in responsible ways. Smithfield is working, along with the rest of the pork industry, not only to provide sustainable food but also to provide enough of it to feed the rapidly growing population at a reasonable cost.
A recent report by the National Academy of Sciences emphasized the importance of increasing global food supplies through sustainable intensification. At Smithfield, we recognize food security as a growing and complex issue that will require collaboration, creativity, and new approaches to solve. We’re engaging with a number of organizations to come up with solutions. For example, our chief sustainability officer sits on the National Academies’ Roundtable on Science and Technology for Sustainability and contributed to the recent report.
To see our Producing Enough Sustainable Food video, check out youtube.com/smithfieldfoods.