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Achieving growth while cutting emissions in a company’s value chain is an ambitious target. Mars Inc. CEO Poul Weihrauch thinks he has the right strategy and he wants to help other business leaders replicate it.
A little over a year into his role, annual revenue at the company has risen to $50 billion from $45 billion. While decoupling growth from environmental impact, Mars says it has grown 60% since 2015 and reduced greenhouse gas emissions by 8% across its value chain. It’s all part of the confectionary, pet food and pet care company’s plan to halve its emissions by 2030 and reach net-zero by 2050. Its other environmental initiatives include investing in efforts to restore coral reefs as part of its sustainability plan.
A lot of these efforts are possible because of the Mars family’s values, which have been consistent since the early years of the company, Weihrauch says. The family still owns all shares in Mars. “The family wants to feel proud about what they own,” he says. “They want to leave a great legacy behind.” Weihrauch acknowledges that dealing with shareholders of a public company would be very different, given the regular turnover of shares. “If I’m a publicly listed CEO, the people I present to at the annual general meeting [each] year are just not the same.”
Weihrauch sat down for a rare interview with TIME in London on Nov. 28, en route to COP28. He discussed how the company is thinking about impact, working with the Mars family and why the company, often described as secretive, is now sharing more about itself.
This interview has been condensed and edited for clarity.
You’re just over a year and into your role. You’ve acquired six companies in that time. Is the business where you would like it to be right now?
I’m privileged in the sense that I took over a well-running company from my predecessor Grant Reid. So we’ve been incredibly focused on continuing the work Mars has been [doing] the last couple of years, which is really the work of responsibly growing the company. Our owners have a compass for the company, which has four elements to it. Two traditional ones: a growth target and a financial profile. Then we have two non-financial objectives. One is positive societal impact, where we look at greenhouse gas, and plastic—which are the two big topics for us—and our reputation. We define this as responsible growth. So, we need to grow at the same time as solving problems for society. And then we need to develop our people as well, which is very, very close to our heart at Mars. So really, the job has been about continuing that.
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That’s a very ambitious target—trying to grow while having real environmental and social impact. How does that work in reality?
It’s a lot of hard work. If you think about the issues we need to solve, we have a planetary crisis. In the food industry, the biggest impact we have is greenhouse gases. So we have many teams that work around making sure we don’t have deforestation, making sure that we lower the greenhouse gases in what we procure, making sure we work with our suppliers—we have formed an alliance of supply leadership for climate action. So we need great people. And then we need capital. We have committed to invest $1 billion over the next three years in solving these issues. For example, packaging—we have 12,000 products that we are reformulating to have higher recyclability of plastic in; our percentage is now 59%. We would love it to be higher—we’ll get there. But you actually need to reformulate each product at a time. So you can only imagine how many people are working on changing 12,000 products around the world. So how does it look? A lot of hard work, great people, and capital behind our commitments.
There’s also an incentive piece for your people. Could you expand on that?
Yes. I mentioned the compass that has four quadrants. The way it works at Mars is [that] top management—really about 350 people—are compensated on this compass. If I take the example of myself, 40% of my long-term incentive is on non-financial metrics. And I think it’s really important—and fantastic to have shareholders that actually asked me as many questions about our financial performance as they do about our other important metrics, such as climate or plastic or reputation. So I think what it means is when I talk to associates, they know we’re serious about it. And I don’t think you’ll find many other companies that put such a big percentage of compensation on non-financial metrics. I think it’s testimony to the kind of shareholders we have, that want to run a business that has a target to responsibly grow the company. I mean, it’s not it’s not very good data, when we actually use our 1.7 planets in one year, is it? And business has a very important responsibility in solving that. I firmly believe that my generation of CEOs have to fix this issue.
And the people you attract know this coming in and therefore are more aligned with the mission?
My experience with when you recruit people, particularly people younger than I am, is actually the first question they ask you at the interview is, why should I work for you? When I graduated in 1992, you didn’t dare to ask that question. You said, “Can I have a job, please? And what’s the salary?” Today, it is, “Why should I work for you? And what does Mars do for the planet?” So I would argue you get the best people by aligning what we need to do as a company and attracting the next generation because they are asking different questions, and they’re voting with their feet. If we as a company don’t do what we say we do, we lose the best people. So part of us being a very attractive employer and attracting the best in our industry is having an alignment between our growth target and our impact on the planet.
How does the responsible growth effort translate to your supplier relationships and also with the companies that you acquire?
If I start with the companies we acquire, for instance, earlier this year, we bought a Canadian company called Champion Petfoods in an auction. And the way it works is we literally take the negative externality—the environmental footprint of Champion—and we put a cost to it. And we put this in the business case. Our teams need not just to bid the highest price, but in our business case, they get the cost of what it takes to solve the environmental footprint of this company. So our teams need to work extra hard to make it happen. And I look at it this way, when they come into our fold, we help solve the environmental problems of more companies.
With suppliers it means that we have very close collaboration with packaging suppliers, whether it’s with protein suppliers or cocoa. We praise ourselves at Mars for having a principle of mutuality. It’s a wonderful principle that Forrest Mars Sr. [son of Mars Inc. founder Frank C. Mars] laid down in 1947. And he said that the sole purpose of Mars was to create value for everybody we engage with—consumers, suppliers, governments, even competitors—he wrote that we [should] solve problems with them. Beautiful principle—long before stakeholder capitalism was written about. Typically, we have relationships with suppliers for 20 years. Yes, we discuss prices and have tough conversations. But we also tell them, we want to work with him for the next 20 years. Because that’s the way you do good business and you solve these problems together, not by being transactional in your way of thinking, but to really work long-term, solving. We like to think at Mars we work in generations and not in quarters.
There’s the environmental impact, but also the broader societal impact that companies have. As a candy company, there are some who might raise the issue of the obesity crisis and the role that companies like yours might have in that. How would you respond to those critics?
If you look at our portfolio, it is a very broad portfolio. We’re the world’s biggest chewing gum company—98% of our chewing gums are sugar-free. We are also a chocolate company, and everybody that buys a Snickers knows it’s not a salad. And to give a data point on it, if you’re a heavy user of Snickers in the United States—[it’s the] biggest chocolate bar in the United States—you buy five times per year. If you’re a heavy user of M&Ms, you buy eight times per year. So we maybe have a perception that we sit and eat this all the time. Actually, we don’t. What we promote is a responsible diet. And that a treat is part of a responsible diet, on the occasions where we need a little bit of a smile during the day, or a little bit of enjoyment after a sports match. We don’t promote it. In 2007 we were the first confectionery company to stop advertising to children. And at that time, our age limit was 12. We have since revised it to 13, because of neuroscience. This is when a child can distinguish between a commercial message and information. And online, we make sure that when we place ads we adhere to these rules, we have 99.5% compliance. It’s not perfect, but it’s at least in a good place.
Were those age restrictions something that came internally from Mars?
We were the first that voluntarily did it. We actually went to politicians, and said we will implement this policy tomorrow, because it’s the right moral thing to do. And quite a few in the industry have followed, which is pleasing to see—that we can make an impact.
You’re attending COP28. What are your priorities there?
COP is a good opportunity to meet a lot of partners at the same time. So my priority is to engage in a couple of conversations with governments, with NGOs, about some of the issues, we need to solve, principally around greenhouse gas. What this is about is we need to grow business responsibly. And we need to get more companies to engage in that conversation. And secondly, we need to be known for action, not just making declarations. What we have done at Mars is we have decoupled [growth from environmental impact], so we need to invest in capabilities and drive a change. So those are the conversations we will have at COP—getting more companies to engage in, “what are you really doing?” instead of “what are you talking about?”
You’ve been with Mars for 23 years now, so, you must have seen a lot of change at the company. Mars has often been described as secretive. Has that changed?
The company has changed a lot—23 years is a long time. Back then we were principally a chocolate, pet food and food company. Today we are a chewing gum company—we bought Wrigley in 2008. We are also the world’s biggest company in veterinary, we have 2,500 veterinary clinics. And we have gone into diagnostics as well. So the portfolio transformation at Mars Inc. is unbelievable. I think when I joined [revenue] was $13 or $14 billion. And today we have crossed $50 billion as a corporation. So the change is unbelievable, the geographical spread is unbelievable. And yes, we are more open today than we were back then. We know we need to engage more with the world, we know that the young generation that wants to join us, they expect we are more public, they expect we share more. And that’s a good thing. So I would say we have evolved over those years and, and started telling a little bit about our story, because we think it’s a good story to tell.
There aren’t very many companies of the size of Mars that are still completely privately owned by the founding family. Can you tell me about how your relationship with the family works?
We have a supervisory board with six family members, and we have some advisors, and the family is very active with us. I look at it as a massive advantage. If we have something we want to discuss, I can take my phone and I can call the shareholder. We have had the same owners since 1911 and we hope to have the same owners the next 100 years as well. I truly believe one of the very important reasons why we have engaged in a different way of growing is because the family wants to feel proud about what they own. They want to leave a great legacy behind, like we all do in our job. And their legacy is that the way they contribute to society is the way Mars grows responsibly—by helping solve issues around sustainability and by continuing to develop great people in our business. [The owners leave] more than 90% of our earnings in the company. They don’t take it out, they invest it in Mars. If [we] were publicly listed, [shareholders] would take a higher dividend, do share buybacks—they don’t. They like what we do, they’re proud of what they own and what they have inherited, and want to give it to the next generation and contribute that way. So it’s a very close relationship with a lot of mutual respect, and a little bit of disagreement from time to time, like you have with all shareholders. It’s certainly the way it should be.
Pet food and candy are not necessarily what people would assume go together. It’s a diverse portfolio that you have. Are there other sectors that you’re eyeing, or that you could see Mars getting into beyond your core businesses?
We have a great diverse portfolio. We are in pet food and we are in veterinary, which is health care. And we are in diagnostics as well, which is both equipment and health care. We are in better-for-you snacking and Mars snacking. We will strengthen in these areas. We will continue to invest in new markets. And who knows maybe one day we’ll look at something else.