Our Operations, Manufacturing and Supply Chain Sustainability Efforts

May 26, 2022 at 05:20 AM EDT

By Mark Schissel Chief Operating Officer

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Working for a global company has many benefits but also includes a great responsibility to care for our communities and planet. Our team has a challenging but inspiring goal: to boost our environmental stewardship by improving and evaluating everything from packaging, waste reduction, water management, and ingredient sourcing.

For more than 40 years, Herbalife Nutrition has been a leader in providing nutrition products that support people’s health and wellness goals. We are also on a mission to ensure our products are manufactured responsibly and sustainably.

To make a big and bold impact on the earth takes significant proactive initiatives, which is why our commitment to protect and safeguard our planet sits at the heart of our sourcing and manufacturing efforts, guided by our core value to always do what’s right.

Evolving Our Operations To Improve Our Environmental Footprint

We work to ensure that our products are sourced, manufactured, and distributed in the most sustainable way possible:

Harnessing the power of plants

With the global population expected to cross 9 billion by 2050, demand is expected to increase 74 percent for daily protein servings. As the world is more focused on climate change, people are looking for alternatives to animal-based proteins that contribute significantly to greenhouse gas (GHG) emissions. Plant-based proteins are considerably more efficient to grow, using less water and emitting less carbon, and producing more protein per acre than beef, eggs, or milk. These are among the main reasons that Herbalife Nutrition has been harnessing the power of plants for over 40 years.

Eighty-four percent of protein in Herbalife Nutrition products is plant-based, with primary ingredients being soy, pea, rice, and quinoa. Soy is the number-one ingredient in many of our products, including most varieties of Formula 1, our flagship product. Soy is one of the only complete plant-based proteins since it contains all nine essential amino acids that our bodies cannot produce on their own. Soy is also significantly more efficient to grow, using less water and emitting less carbon, and producing more protein per acre than beef, eggs, or milk.

Herbalife Nutrition’s annual soy usage per year is roughly 30K metric tons and is expected to grow at an estimated rate of 6-8 percent annually. We work with soy suppliers committed to sourcing responsibly. We have the goal to source only soy ingredients and palm oil from companies certified by the Roundtable on Responsible Soy (RTRS) and the Roundtable on Sustainable Palm Oil (RSPO), respectively.

Supply chain responsibility

When I first started at Herbalife Nutrition, we outsourced the manufacturing and distribution of most of our products. To garner more control and general oversight, we decided to bring many of these functions in-house. We created a program we call “Seed to Feed,” which tracks where our ingredients are planted, where they are raised, and how they are shipped to our manufacturing facilities. Our commitment to transparent operations extends to our suppliers. We have stringent standards for supplier selection and only work with those who share our ideals for product quality while leaving a minimal environmental impact.

Working with our technical, scientific, engineering, and operational experts, we have creatively found ways to improve our sourcing. We look for opportunities to limit our environmental footprint and use technology in our manufacturing that allows for significantly faster production that uses less electricity than the industry standard. In fact, as part of our 50 by 50 campaign, we have committed to achieving net-zero emissions by 2050.

The role of packaging

While packaging plays a critical role in keeping products fresh and safe, it also poses environmental challenges, especially in countries where the waste-management infrastructure is underdeveloped. Reduction of packaging and waste benefits our environment, and our business in cost savings and efficiencies gained. By minimizing packaging, using recycled material, and eliminating non-recyclable material from our packaging, we will help achieve a waste-free future and help advance the circular economy.

We are proud of our early achievements, including eliminating plastic bags in some countries, reducing excess packaging materials, and increasing post-consumer resin (PCR) – a material made from recycled plastic. We’re proud to now include 25 percent of PCR plastic in our flagship Formula 1 Healthy Meal Nutritional Shake Mix canisters in the North American region and planning to expand globally in markets where allowable over the next two years.

Smart, streamlined distribution

Our work also includes evaluating and enhancing how we distribute products to 95 countries and territories worldwide, primarily through a global distribution and logistics network. Currently, we have five manufacturing facilities, along with several trusted contract manufacturers. Combined, these manufacturing centers span four continents and empower us to meet worldwide demand. The move in recent years to vertically integrate our operations not only has ensured better product quality and cost control, but also provides us with increased opportunities to reduce the environmental impact of our manufacturing facilities.

We primarily use ocean transport for global shipping, which has the lowest carbon footprint of any commercial transportation mode. For some routes, such as between Russia and China, we use rail given its cost-effectiveness and energy efficiency. We only use airplanes for transporting product transport in rare instances. As we work to formalize carbon reduction strategies in the future, we will be prioritizing the carbon footprint of our logistics operations to gain additional efficiencies where possible.

What the Future Looks Like

My team and I are proud of the changes we are making to impact the environment positively. Some of our strategies for the future include:

Leveraging advancements in technology to reduce our overall consumption of chemicals and reagents in our laboratories
Working with equipment manufacturers and other industry partners to find novel ways to improve our testing capability and reduce waste
Reducing our use of plastic and incorporating more recycled and biodegradable materials in our products
Sharing best sustainability practices across regions to ensure that positive initiatives are global

Moving forward, we want our sustainability efforts to serve as a model in our industry and one of our key differentiators. We intend to lead not only in our ability to nourish people but the planet as well.

When I think of the future, I can’t help but think of my kids. My wife and I have two children, and we love to spend our vacations in national parks. Whether it’s rafting, hiking, or camping, I always remind my kids we’re able to appreciate that because somebody 100 years ago said, “this is something that we should protect and preserve.”

I feel our company’s efforts towards sustainability follow the same logic: we’re taking steps to protect and preserve the planet for future generations. To me, that’s very meaningful because, as we sit in those National Parks, I’m thankful that somebody had the foresight to protect natural environments that allow people to experience the unmatched beauty of nature.

Our journey to support the environment is reflected in our first Global Responsibility Report.

Mark Schissel Chief Operating Officer

Mark Shissel is responsible for overseeing worldwide operations, global business services, the regional finance and operations functions, information technology and infrastructure, cybersecurity, and global security. Mr. Schissel has more than 20 years of financial management and IT leadership experience.

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KEYWORDS: NYSE: HLF, Herbalife Nutrition, Herbalife