Mars: Sustainable in a Generation
Offering over 500 products, exporting to New Zealand and throughout Asia Pacific is Mars Food Australia (MFA), owned by Mars, Incorporated. Mars, Incorporated is a family owned business with more than a century of history, working globally across six different segments: Mars Food, Mars Petcare, Mars Chocolate, Wrigley, Mars Drinks, and Mars Symbioscience.
MFA has over 300 employees, named Associates, creating healthy, easy and affordable meal solutions for Australians since 1967. MFA has a cross segment sales office in Sydney’s Macquarie Park and Melbourne, in addition to the Wyong office and manufacturing plant on the NSW Central Coast just 90 minutes away from Sydney’s CBD.
MFA is in nine out of 10 Australian homes and produces the iconic brands: MASTERFOODS®, DOLMIO®, KAN TONG®, and UNCLE BEN’S®. Responsible for Mars Food Australia’s supply chain operations is Jason Phyland. Previous experience working as Supply Director for Mars Petcare in Thailand and Operations Manager in Australia fully cemented Phyland’s position within the company’s various divisions, and he is behind the drive for Mars to become one of the most sustainable companies in Australia. “Sustainability is always front of mind for us, whether in our own operations or deep within in our supply chain,” he explains. “Our objective is to work with our customers to grow both businesses and in a sustainable way which includes efficiency and sustainable sourcing.”
With this in mind, all Associates at Mars are working towards being ‘Sustainable in a Generation’, which includes investing in renewable energy, reducing water usage, reducing energy usage, maintaining zero waste to landfill, and a packaging material reduction. Over 80,000 Associates across 77 countries are also united by Mars’ five principles: Quality, Efficiency, Responsibility, Mutuality and Freedom, with the long-term aim to create relationships with stakeholders which deliver key growth that the company can be proud of.
Sustainable in a Generation
Mars‘ ‘Sustainable in a Generation’ initiative has enabled company growth, increased value, whilst reducing cost and greenhouse gas emissions. Phyland‘s operations are therefore aligned against four core strategies: operational efficiency in energy reduction, capital efficiency, placing increased investment in processes and equipment, new technologies and embedding renewable energy sources through collaborative working and key partnerships.
An example of this is MFA’s purpose built Cogeneration facility, which independently produces energy from the grid, reducing CO2 emissions by 3,600 tonnes per year. MFA’s capacity of nine operating lines, including high speed glass and ready to heat, is more than 126,000T annually. Phyland explains: “We’ve seen savings of more than seven percent on the site electricity demand and, during full operation, the cogeneration plant enables us to generate an average of 75-85 percent of the site’s electrical needs.”
Throughout the company’s operations, Mars achieved a reduction in greenhouse gas emissions by 25 percent in 2015, but has the long term aim to eliminate all fossil fuel energy and greenhouse gas emissions by 2040. Consequently, a Greenhouse Gas Protocol has been implemented in order to reduce emissions further across the supply chain, with a planned 40 percent reduction by 2020, with an increase in on-site and off-site renewable projects.
LED lights have been installed across the site, leading to “a reduction in energy use by six percent, the equivalent of the power used by 160 homes for an entire year,” according to Phyland. With such changes, quality control and monitoring has also been embedded to ensure these initiatives do not lose their momentum.
MFA’s ambition to become increasingly sustainable also focusses on the packaging process, where Packaging Sustainability Guidelines are designed to reduce the amount of material, waste and energy used and ensure an increase in recycled material within this process. For example, the company has adapted packaging for the Masterfoods herb and spice glass jars, which has reduced the weight by up to 10 percent. This will also ensure a reduction in transportation costs and greenhouse gas emissions. Phyland comments: “By using less glass, there were efficiency savings in the manufacturing of the jars, transportation and fuel saving benefits.” In addition, the company has introduced recyclable material for the labels and bottles of Masterfoods squeezy tomato sauce, which has enabled the company “to reduce landfill by 10 tonnes,” reflects Phyland.
Rachel Goldstein, Global Sustainability Director Scientific and Regulatory Affairs, Mars, Incorporated, has stated on Mars’ website: “The sustainability of wrapping is becoming a growing concern for our customers. We’re working hard to make it as easy as possible for them to recycle, and be confident that Mars packs aim to have the lowest possible impact on the environment, while still providing the quality and safety our customers know and trust.” Such extensive effort has enabled MFA to achieve zero waste to landfill status across all its factories, and was the first of the 126 Mars factories to adopt the zero waste to landfill ambition.
Mars’ efforts also filter into its water and waste operations. By adopting a water strategy, MFA is able to monitor the quantity of water used, its source and traceability, local levels of water stress and wastewater quality. Since 2009, MFA has captured and treated 250,000 litres of water each day through the adoption of a Trade Waste Water Conservation facility, which is situated on site. Phyland explains that grey water is used for cooling and flushing, whilst town water is used for products. However, the company is working towards reducing water usage by three percent per annum. Nonetheless, since the end of 2015, none of Mars’ sites send waste of landfill, and four of Wrigley’s factories are part of this process – one of which is situated in Australia. “Regardless of the volume we produce our aim is to have reduced water usage by 15 percent in the next five years,” comments Phyland.
So, what’s next for the company? Phyland explains that MFA is “constantly monitoring and looking for ways to be more efficient and sustainable,” and will aim to embed sustainable energy, such as wind and solar to power all of Mars’ Australian operations and significantly reduce carbon emissions across the supply chain, optimising the logistics network and factories, and maintaining zero waste to landfill. Watch this space…
Opinion: Are you ready for a wealth tax?
Wealth taxes – a levy charged on the total value of someone’s wealth – have fallen out of favour over the last 20 years with only three OECD countries choosing to levy a recurring tax on wealth, down from 12 in 1990. Almost overnight, however, wealth taxes are back on the cards worldwide, as governments grapple with rebalancing the books post-pandemic.
As the world turns its attention to paying for the pandemic, there has been a steady chorus of calls – most notably in the US and the UK, and recently from the International Monetary Fund – to introduce a new tax on the value of someone’s wealth. Singapore is not immune, and it is likely we will see a review of Singapore’s wealth taxes in the future.
After Coronavirus, anything and everything must be on the table and up for consideration by the government to fill the fiscal hole left by the pandemic. We have never experienced a crisis quite like this, and the government must quite rightfully have a serious conversation about what needs to be done next to help balance the books post-pandemic.
The truth is that Singapore, like most of the world, has an ageing population that will require more and more tax revenue to pay for an ever-increasing cost of care. It sounds logical for a wealth tax to fill that revenue requirement, but there is one big issue with such a tax: it is complicated, very complicated.
The government would have to track down and accurately value all kinds of assets considered to be ‘wealth’, from fine art to Ferraris and everything in between. And for this they will need a vast, and expensive, administrative army.
What happens to people with considerable illiquid assets but few liquid assets to settle the bill? How do you value an insurance or pension policy, which may pay a sizeable amount but isn’t sat as a capital sum in someone’s account? How do you value someone’s wealth tied up in their business?
Then there’s a question of implementation. Do you go for a one-off tax or an ongoing tax? Do you focus the tax on the mass affluent or just the ultra-high net worth? What assets are you going to include as wealth? What rate will you set the tax at? Will there be any exemptions?
Then there is the most important question of all: how do you avoid killing the goose that lays the golden egg by spurring people to up sticks and leave to avoid paying the levy? This is a particularly acute problem for Singapore given our competitive advantage largely rests on an attractive low tax regime.
While the jury is still out on whether Singapore will go down the route of introducing a new wealth tax, the government may be tempted to instead tweak existing taxes, or introduce new, less controversial, taxes on wealth. A case study in this is the UK, whose government categorically rejected proposals by a wealth tax commission to introduce a one-off wealth tax, but that didn’t stop them tweaking pre-existing taxes on wealth, including capital gains tax and inheritance tax at the Budget in March.
If the UK is anything to go by, we could see all the talk of a new wealth tax in Singapore translate into changes to pre-existing taxes, or the introduction of new, but less severe taxes on wealth including estate duty and capital gains taxes.
As there are clearly more questions than answers at this stage, it would be wise to get your ducks in order and consider how your wealth is structured so that when the time comes for any future tax tweaks, you are prepared and can ensure maximum efficiency.
If implemented, a wealth tax can come in many different forms, which clearly means that any wealth structuring will depend on the actual rules on implementation. But as an example, if a wealth tax comes in the form of capital gains tax upon the sale of an investment, it may be worth considering holding your investments in a tax efficient vehicle such as a Private Placement Life Insurance (PPLI), whereby the liability to tax can be deferred into the future.
Within this vehicle, investments can grow virtually tax-free, until a chargeable event such as death, maturity, early encashment or surrender occurs. As little to no tax is being charged, there will be more investment returns to compound over time. Using a tax-efficient structure and the power of compounding are two of the most important tools in the accumulation and preservation of wealth.
If Singapore goes down the route of estate duties or inheritance tax, we can take guidance from other jurisdictions. For instance, a properly structured Trust or Private Placement Life Insurance can minimise estate taxes, but for certain assets there may be a ‘look through’ so such structures may not be appropriate. In such instances, an insurance policy can provide liquidity to help the beneficiaries pay the tax bill.
It is important to note that the effectiveness of various structures will depend entirely on the tax rules being implemented in Singapore. The key is to have an open mind as there are many possibilities on structuring your wealth to achieve tax efficiencies and efficient succession planning. A financial adviser experienced in such structures can provide this support and can position your finances so that you are prepared for whatever is thrown at you post-pandemic, a wealth tax or otherwise. But speak to different professionals as well, as there is no one solution that works for all, it really depends on your scenario and what you want to achieve.
Eryk Lee is chief executive of AAM Advisory, part of Quilter plc