General Mills, Inc. (GIS) Earnings Call Transcript & Summary

Greetings, and welcome to the General Mills Force for Good Investor Event Conference Call. [Operator Instructions] As a reminder, this conference is being recorded, Wednesday, May 4, 2022.

Good morning. I'm pleased to kick off General Mills' second Force for Good investor event, focused on our environmental, social and governance work. I'm glad you could join us and encourage you to stay tuned after our prepared remarks for a live Q&A session. For more than 150 years, General Mills has been doing good work for our people, our communities and our planet. Today, you'll learn more about our commitment to being a Force for Good, the progress we've made on our ambitious goals and how this work drives shareholder returns. With a firm grounding and our purpose to make food the world loves, our Accelerate strategy is centered on the strategic choices we've made about where we will play and how we will compete and win. A key pillar of our strategy is being a Force for Good through our brands and for our people, our communities and our planet. At General Mills, we believe for decades that doing good is good for business. In fact, doing the right thing has been a core value of our company since our founding. We were early leaders in this space with the publication of our Global Responsibility Report last month, marking the 52nd year we publicly reported on our social responsibility work. In 2015, we were the first company to have a full value chain greenhouse gas reduction target approved by the Science-Based Targets initiative. And in 2019, we were one of the first companies to make a bold commitment to advance regenerative agriculture. We align these and other commitments to the United Nations Sustainable Development Goals to ensure we are moving in concert with our industry, stakeholders and governments to make meaningful progress amid an ever-pressing climate crisis. These are just a few examples of our long history of social responsibility. Today, we are building on that history with a strong sense of urgency, focusing on how we can better integrate our Force for Good across our business. To improve the integration of ESG into our business, we recently formed a new Global Impact Governance Committee, which is accountable for ensuring our global responsibility programs are resourced, on track and, ultimately, achieved. I lead the committee, and I'm joined by a highly engaged group of cross-functional senior leaders. We convene the committee regularly, and the committee benefits from strong engagement and oversight from our Board of Directors. General Mills has 4 key priorities within our Force for Good pillar: regenerating our planet, improving food security, protecting our people and strengthening our communities. Our efforts and commitments have broad reach from food safety and planet regeneration to childhood nutrition and community food security. We are on the ground with partners doing critical work. While we still have much work to do to achieve our commitments, I'm proud of the work we've done and the recognition we received from a wide array of organizations. From a culture standpoint, General Mills has been recognized as a Best Corporate Citizen and Most Responsible Company. In terms of people, we've been named a Best Employer for Women, Diversity, Veterans and LGBTQ Equality. And on sustainability, we are members of the Dow Jones Sustainability Index as well as CDP's A-List for Climate Change and Water Security. Over the rest of this morning's presentation, you'll hear from a broad set of leaders who will share how we are bringing our Force for Good work to life across our business. Mary Jane Melendez, our Chief Sustainability and Global Impact Officer will tell you how we are regenerating our planet. Paul Gallagher, our Chief Supply Chain Officer, will share how we are integrating our key commitments into our supply chain. Jon Nudi, Group President of North America Retail, will explain how we are advancing this work through our brands. And Kofi Bruce, our CFO, will discuss how we're integrating ESG into our long-range planning to drive attractive shareholder returns. After our prepared remarks, we welcome you to join us for a live question-and-answer session, where we'll continue with the conversation. With that, I pass it along to Mary Jane.

Thank you, Jeff, and good morning, everyone. I'm Mary Jane Melendez, and I lead our Global Impact team at General Mills. Our team stewards the company's sustainability and philanthropy efforts and partners across the organization to achieve our company-wide environmental and social commitments. It's an exciting time at General Mills. Led by our newly formed Global Impact Governance Committee, we are working in new ways as a company. With support from the GIGC, we continue to adapt the enterprise operating model to transform how we work and achieve our ambitious global impact goals. It's imperative we progress with the scale and speed to reverse the negative impacts of climate change and support Mother Nature's return to health. This is no longer solely the responsibility of the central sustainability team, it's the work of many. Sustainability is not siloed from the business, but inseparable from it. We're in the early days of integrating global impact into the business and across key functions. One way we're doing this is by integrating key ESG metrics into our enterprise strategic planning. This gives our cross-functional teams clear visibility and accountability to advance the work. Early work of the GIGC entailed further prioritization of our global impact initiatives and commitments. General Mills has established many important commitments across our Planet, Food, People and Community pillars, and we're differentially focusing on and investing in 3 commitments where we have the capabilities and processes to drive the largest impact for society. These priority commitments are reducing greenhouse gas emissions across our value chain, advancing regenerative agriculture and designing our packaging to be recyclable or reusable. Let me take some time this morning to go deeper on 2 of these critical areas, reducing greenhouse gas emissions and advancing regenerative agriculture. Simply put, General Mills' business is dependent on the earth. We rely on farming communities and the Earth for its natural resources. We transform the earth's outputs into nutritious, convenient great-tasting products for consumers. A healthy planet is critical for General Mills to continue to make food the world loves. Unfortunately, the negative impacts of climate change today are widespread and severe. This past decade was the warmest ever recorded, bringing with it extreme weather events that create real business challenges for us, from distribution disruptions to lower ingredient yields. For example, last year, U.S. spring wheat yields dropped more than 40% due to a drought in the Northern Plains. Extreme weather events like this require us to take a variety of actions to continue to secure supply while limiting the financial impact to our business. Climate change, coupled with growing demand, compels us to evaluate how we increase resilience for the planet, people and our business. Climate change is not breaking news for us. We were at the table early and continue to take action to mitigate risks. As Jeff mentioned, General Mills was the first company in any industry to publish a full value chain climate goal approved by the Science-Based Targets initiative. In 2020, we published our climate commitment in alignment with 1.5 degrees Celsius guidance. That guidance was set by the scientific community to limit further planetary warming and avoid catastrophic outcomes like crop failures, biodiversity loss and water scarcity. Our commitment is to reduce absolute greenhouse gas or GhG emissions across our full value chain by 30% and by 2030 and achieve net-zero emissions by 2050. And because a minimal amount of our GhG footprint is from owned operations, we've set goals that go beyond our walls, from farm to fork, addressing Scopes 1, 2 and 3. We are well positioned to advance this work. However, it comes with its challenges. Our business has grown significantly over the course of the pandemic. And the volatile operating environment has caused considerable inefficiency in our supply chain, including the need to reposition product and ship less-than-full truckloads in an effort to keep our customers' shelves stocked. As a result, our GhG emissions increased by 2% from fiscal 2020 to 2021. We see opportunities to eliminate those supply chain inefficiencies as supply and demand come into better balance. In addition, we're implementing several key strategies to further strengthen our GhG reduction efforts. For example, we are partnering with a leading sustainability consultants to evolve our enterprise climate plan and move beyond understanding our carbon footprint to actively building decarbonization strategies. In parallel, we're resourcing internal teams across our business to implement projects and new ways of working that will avoid or reduce emissions. More than 90% of General Mills' GhG emissions in our value chain come from Scope 3, the majority of which is upstream in agriculture. As a result, we are accelerating the adoption of regenerative agriculture, which we expect will be the largest contributor to our greenhouse gas reduction goals. Beyond regenerative agriculture, we see additional opportunities to lower our greenhouse gas footprint, including driving emission reduction across dairy, eliminating deforestation and supply chains across high-risk ingredient categories, sourcing, renewable electricity and leveraging more GhG efficient equipment and transportation. We are actively working and planning future actions across this breadth of initiatives. Later in this presentation, Paul Gallagher will share some examples of how we're working to reduce emissions within our owned operations. In addition, we are engaging our suppliers to reduce their own GhG emissions. Through the Supplier Leadership on Climate Transition Program, we have engaged dozens of our suppliers in training and education. We're helping them understand and calculate their GhG footprint, identify opportunities to reduce their emissions and prepare to set GhG reduction targets that are aligned with the Science-Based Targets initiative. We believe regenerative agriculture is the most promising solution to reach our chemicals and create positive planetary outcomes. Regenerative agriculture can help address climate change by pulling carbon from the atmosphere and sequestering it in the soil, improving soil health and driving other benefits. General Mills was one of the first companies to accelerate this farmer-led movement with a commitment to advance regenerative agriculture on 1 million acres by 2030. Today, more than 200,000 acres are enrolled in our program. In the near term, the 2 biggest ways we'll advance our impact are to accelerate farmer adoption and improve our measurement of environmental and economic outcomes. Regenerative agriculture is a holistic principles-based approach to farming that seeks to strengthen ecosystems and community resilience. To accelerate farmer adoption, we're taking a supply shed approach, partnering with farmers and local organizations in regions where we source our key ingredients like wheat, oats and dairy to bring regenerative principles to life. We're investing beyond our supply chain to drive meaningful systemic impact. This means not only will General Mills benefit, but so will other companies that source ingredients from these regions. There are 2 key elements of our programs that have resonated with farmers as they transition to a regenerative system. The first is our focus on the importance of education. Through our efforts, farmers gain an understanding of regenerative agriculture principles and how best to apply those principles to their farm's unique environmental, social and financial context. We fund multi-day soil health academies and workshops and follow up with select farmers with one-on-one additional coaching. Since no 2 farms or ranches are alike, sitting around the kitchen table with an experienced coach to develop a tailored plan is extremely useful. For example, a young farmer in our program was interested in applying regenerative agriculture principles, however, his father was hesitant. They had tried some techniques in the past like no-till farming and didn't see results. Thanks to coaching from our partners at Understanding Ag and working with other farmers, the young farmer and his father have learned from past failures and tell us that they've been transformed by our program. In 1 year, they moved from conventional farming to regenerative agriculture techniques, including no-till farming, cover cropping and integrating livestock on their study field. The second element of our program has focused on the importance of community building. We often hear from farmers that they're the only one in their area exploring regenerative agriculture, and that it can be isolating to farm differently. To address this problem, we are connecting farmers with their local peers and supporting farmer-led organizations to accelerate knowledge sharing and create a network of support. We've heard many encouraging stories of community building across our programs. For example, a group of farmers in Kansas recently shifted to using roller crimpers to support soil health. The tool terminates cover crops by rolling over them instead of using chemicals. They're now loaning their equipment to other farmers in the community so they can try it for themselves. We're sharing these and other examples of peer networking and innovation broadly, helping to further strengthen the community of regenerative farmers and expand the adoption of these important practices. Measuring environmental and economic outcomes is essential for General Mills as we advance and scale regenerative agriculture. We want to see a positive impact across different outcome areas, so we're measuring soil health and carbon sequestration, biodiversity, water quality and quantity as well as farmer economic resilience. Our goal is to show how these outcomes improve as farmers transition to regenerative agriculture. Measuring regenerative agriculture outcomes today is a significant undertaking requiring time, manual field sampling and expensive data analysis. To address this challenge, we are providing thought leadership and investing in research to enable better measurement technologies. These resources will help track regenerative agriculture and its outcomes at scale, benefiting General Mills and the broader industry. For example, we are using tools like satellite imagery to detect the presence of cover crops and amount of soil tillage. This data feeds into models that can estimate the impact of these practices. Eventually, we'll be able to model impact across whole supply sheds, the key regions where we source our ingredients and where we're investing to scale regenerative agriculture. We're also researching technologies to collect data across farms and our supply sheds to validate our models and develop new ones. For example, in partnership with Furman University, we're gathering data from microphones installed on farms to detect bird calls, and we're building a model simulating the effects of regenerative agriculture on bird populations and biodiversity. Preliminary results suggest regenerative agriculture may play an important role in conserving woodland and grassland species of birds in agricultural landscape. This matters because increased biodiversity means healthier ecosystem and more resilient farms. Changes in agriculture take time, and we expect to see significant measurement data for our program over the next year. With the prospect of stronger data and continued work on farm adoption, we remain optimistic about our ability to achieve our 1 million-acre regenerative agriculture goal. In summary, General Mills is building on our sustainability leadership, strengthening our governance structure and business integration and accelerating our efforts in key areas, including climate action and regenerative agriculture. I'll now turn the program over to Paul Gallagher, who will share how our key commitments are integrated into our supply chain.

Thank you, Mary Jane, and good morning to you all. Without a doubt, we have experienced unprecedented pressure across our supply chain in the past 2 years. And while the current operating environment remains dynamic and challenging, we continue to respond with new and more efficient ways to unleash our scale and drive systemic change for the food industry and for the communities where we live and work. Our supply chain is at the center of many aspects of our Force for Good work. For us, much of the magic happens where we produce our food, and that's at our plant level. Our 39 owned plants around the world represent different opportunities for us to have a positive impact on the environment, people and communities where those facilities are located. Today, I'm going to focus on 3 areas where we're making an impact within our owned operations: Zero Waste to Landfill, Renewable Electricity and Responsible Sourcing. One of the ways we can reduce their impact on the environment is by eliminating the waste we send to landfills. To support that, we are committed to achieving Zero Waste to Landfill status on 100% of our owned manufacturing facilities by 2025. As of fiscal 2021, nearly 1/3 of our global production facilities have achieved this status. We remain diligent in working to achieve our target and see opportunity for continued advancement. Commitment to this work starts at plant level. And we've learned that having passionate and dedicated champions at our plant location helps ensure broader adoption, progress and, most importantly, success. For example, this past December, our Vernon, California flour mill achieved Zero Waste to Landfill status. They created a centrally located recycling center that makes it easier for employees to segregate waste streams and allows for trash and cardboard to be compacted. The benefits go beyond convenience. And this also reduces the number of hauls and associated transportation and fuel costs, 2 of the primary expenses related to Zero Waste to Landfill. And not far from our global headquarters, our Chanhassen foodservice's dough facility proactively implemented Zero Waste to Landfill before we made our corporate commitment, led by a progressive and passionate on-site champion. And they've maintained the status at no additional cost by remaining committed to segregating their waste streams. Switching gears. On the Renewable Electricity front, we've launched initiatives at facilities worldwide to support our environmental objectives. We are committed to source 100% renewable electricity for our global operations by 2030. I'm proud to say that we are 63% of the way to our goal and continue to make fast progress on this commitment. So let me give you a few examples. With the recently completed upgrade to a biogas generator at Yoplait plant in Murfreesboro, Tennessee, we are generating 40% more renewable power from our on-site wastewater treatment. This is a great example of our plant engineering team leveraging green technology to harvest energy from our waste stream. Our Maverick Creek Wind energy partnership in the Texas Hill Country recently completed its first year of operation. The combination of wind energy offtake from Maverick Creek and Cactus Flats, our earlier wind energy investment, now exceeds the amount of power that we purchase across all of our U.S. supply chain locations. Internationally, we currently have 2 solar projects underway, one in San Adrián, Spain, and the other in Sanhe in China. We have installed thousands of solar panels at each location, helping us cut coal usage, reduce CO2 emissions and generate positive cost savings. Looking ahead to fiscal '23, we will be expanding our renewable electricity efforts in our Brazil, Mexico and India operations. At General Mills, we are responsible for maintaining high standards, not only across our own operations, but also across our entire value chain. Our supplier base is large, complex and global with thousands of suppliers in more than 25 countries. Through our Global Responsible Sourcing program, we uphold our Supplier Code of Conduct and drive ongoing supplier progress in these areas of health and safety, human rights, business integrity and the environment. In fiscal 2021, we advanced our Responsible Sourcing Program by better integrating our sourcing processes globally, including introducing a new escalation process to increase accountability and human right concerns. In addition, we more than quadrupled the number of supplier audits we performed from fiscal 2020 to fiscal 2021. And we are on track to almost double that number again in fiscal 2022. We are breaking down silos to share relevant information with key stakeholders and build an accurate view of our full value chain footprint. This helps us better understand our progress on our sustainability goals with Scope 2 and Scope 3 suppliers. We also regularly connect with key peers and leaders on the topic of responsible sourcing through industry forums such as AIM Progress. Benchmarking tells us that we're making real progress in advancing the effectiveness and integration of our program when compared against the largest manufacturing and suppliers in the CPG industry. Overall, our Global Responsible Sourcing program continues to protect and respect the people who supply, transform and manufacture the goods and services we use to make our products. Let me close by affirming that our supply chain plays a critical role in helping General Mills deliver on these and other important Force for Good commitments. We're doing that while keeping our employees safe and reliably making food that the world loves. I can't emphasize enough, none of this work would be possible without the drive and dedication of our committed team. I'll now turn it over to Jon Nudi to share how Force for Good is integrated into our brands.

Thank you, Paul, and hello. As we've shared today, being a Force for Good is a key pillar of our Accelerate strategy. We aim to use this strategy and our global scale to make an even bigger impact on our industry and on the planet. . One of General Mills' greatest strengths is our collection of loved and trusted brands. We have an extremely low consumer base. And we know that now, more than ever, our consumers are looking for brands that stand for something. Let me share some examples of how our brands are contributing to solutions that stand for good. Last year, we introduced the story of how our Nature Valley brand is creating more recyclable future. Nature Valley has always been a leader from the creation of the world's first-ever granola bar in 1975 to, more recently, in 2021, when Nature Valley released the first-ever recyclable snack bar wrapper approved for store drop-off. To put this in context, we sell about 1.4 billion Nature Valley crunchy bars each year in North America. That's 3.7 million pounds of recyclable film. Our industry-leading work was recently recognized by the Sustainable Packaging Coalition, which honored Nature Valley with the Innovation in Recovery Award. But we aren't stopping with Nature Valley. We are working to reduce the environmental impact of packaging across our portfolio by increasing use of recycled and recyclable materials, innovating to make our materials better and leading through external collaboration. For example, we are participating with The Recycling Partnership's Film and Flexibles Coalition to broaden the awareness and practice the film recycling. And we're working with our retailers to broaden their in-store recycling efforts. Our ambition is that all General Mills brands will design 100% of packaging to be recyclable or reusable by 2030, and we're well on our way to meeting that goal. So far through fiscal 2021, nearly 90% of our packaging by weight was recyclable. As we've said earlier today, we believe regenerative agriculture will play a critical role in reducing greenhouse gas emissions and improving planetary resilience. I'd like to share a few examples where General Mills brands are helping to advance regenerative agriculture. Almonds are a featured ingredient in many General Mills products like cereal and snack bars, and they're particularly important to our Lärabar brand. To advance regenerative agriculture in almonds, Lärabar is funding research with the Ecdysis Foundation to determine how farm practices are linked to regenerative outcomes. More than 80% of the global supply of almonds are sourced from California, a state that faces extreme water stress. Results from the first phase of our research have shown tremendous promise in the ways regenerative farming can address these water issues. In fact, we're seeing regenerative farming practices driving similar yields, increased farmer profits and up to 6x better water infiltration rates than the conventional approaches. In another example, our Annie's brand is partnering directly with innovative regenerative organic farmers in Montana to grow a variety of crops for limited edition Annie's Mac-and-Cheese. The crops for the pasta ingredients are grown with regenerative organic practices such as extended crop rotations and integrated crop and livestock management. By educating consumers on regenerative agriculture in our marketing and on our packages, Annie's is strengthening its bond with consumers who are looking to make a difference for the earth with their food choices. Finally, through our sourcing for EPIC meat bars, we support organizations committed to advancing regenerative agriculture and improving animal welfare standards. In collaboration with The Savory Institute, EPIC pioneered the industry first consumer product with a Land to Market Ecological Outcome Verification or, EOV seal. The Land to Market program is the world's first verified regenerative sourcing solution for the food and fiber industries. The EOV seal illustrates the beef in the EPIC product was raised using regenerative farming practices that improve soil health, biodiversity and ecosystem function. We sourced the beef from White Oak pastures, a supply partner that offsets 80% of its greenhouse gas emissions through regenerative farming practices. EPIC is Land-to-Market's longest-standing brand partner, and we look forward to continuing to collaborate with them as part of our shared mission to scale up regenerative agriculture. Our brand efforts go beyond planet initiatives to include other critical work within our communities. Nowhere is this more apparent than our Old El Paso brand's work with the LeBron James Family Foundation. LJFF first teamed up with Old El Paso at the start of the pandemic to donate Taco Tuesday meal kits to families from the I PROMISE School and others in need. The partnership expanded as Old El Paso became the official sponsor of I PROMISE Village Taco meals, donating meals for weekly community dinners, Taco Tuesday events, and I PROMISE school monthly family feasts. More recently, we partnered with LJFF to create The Taco Shop by Old El Paso, a fast casual restaurant for and by I PROMISE families. In addition to serving meals, this dining establishment provides needed space for family-led programming and hands-on job training for family members in the I PROMISE program. To close, General Mills is committed to being a Force for Good in the world, both as a company and through our brands. Now more than ever, consumers are looking for their brands to make a positive impact. Each brand has a unique way of bringing its purpose to life that's authentic to the brand's history and its consumers. I'm proud to see the impact our brands are having to the planet and our communities in such a positive way. I'll now turn the program over to Kofi, who will talk about how our Force for Good work drives shareholder returns.

Thanks, Jon, and hello, everyone. Our Force for Good work continues to be a critical part of our Accelerate strategy and our objective to drive top-tier shareholder returns over the long term. Along with the other speakers today, I also serve on our Global Impact Governance Committee to ensure this work is integrated across our enterprise, from our day-to-day investment decisions to our long-range planning. Across our finance function, we are working to ensure our financial planning and capital management practices incorporate our ESG commitments. Now let me share how our Force for Good work is integrated into our shareholder return model. As a reminder, we focus on 4 key levers within our shareholder return model: first, through innovation and brand building on our leading brands, we aim to consistently deliver 2% to 3% organic net sales growth; second, with modest margin expansion, we look to achieve mid-single-digit growth in constant currency adjusted operating profit; third, we target converting at least 95% of adjusted after-tax earnings into free cash flow; and fourth, we aim to return approximately 80% to 90% of free cash flow to shareholders through dividends and share repurchases, resulting in mid- to high single-digit constant currency adjusted diluted EPS growth and top-tier total shareholder returns. Importantly, our Force for Good work is woven into each element of this model. Starting on the top line, we expect that embedding sustainability and purpose into our brands will drive stronger organic sales growth. Recent research from IBM and the National Retail Federation found nearly 8 in 10 consumers indicate sustainability is important for them. And for those who say it is very or extremely important, more than 70% would pay a premium of 35% on average for brands that are sustainable and environmentally responsible. In addition, from 2015 to 2019, sustainability-marketed products generated 55% of the growth in the CPG industry, despite representing only 16% share of the retail sales base, according to research published by the NYU Stern School of Business. And maybe not surprisingly, sustainable products are winning with the rapidly growing group of e-commerce shoppers, with higher market shares online versus brick-and-mortar outlets. We are seeing strong growth in brands that have purpose tied into their messaging and identity, including double-digit retail sales growth over the past 2 years on Pillsbury, Blue Buffalo, Old El Paso, Fruit Snacks and Annie's. With these statistics in mind, it is clear to us that investing in purposeful brands can drive the top line. On margin expansion, we look for strategic opportunities to drive sustainability while also reducing our costs. For example, Paul shared how we're reducing waste in our facilities as part of our journey to Zero Waste to Landfill. This initiative reduces the cost of waste and the cost of shipping it to a landfill. Paul also shared how we are implementing renewable electricity through wind farms in the U.S., which will generate approximately $10 million of cost savings between fiscal 2019 and fiscal 2022. Another way we can improve sustainability and grow margins is through our continual efforts to optimize logistics. We have found ways to reduce greenhouse gases and generate HMM cost savings through distribution network changes, such as shifting some shipments to rail or other intermodal means of transportation. We also continue to refine and innovate in the packaging space to become more eco-friendly while also reducing the weight of packaging. When we reduce the weight, we are often reducing the cost of goods sold and greenhouse gas emissions. For example, in fiscal 2021, we transformed how we package and produce Fruit Roll-Ups. By reducing film usage and internalizing production from an external supply chain location, we are able to unlock plant efficiencies and drive $2 million in HMM savings, while also reducing nearly 5 million square feet of plastic use per year. While these examples show how we can drive HMM while advancing our ESG efforts, it's clear that other aspects of our Force for Good work will require incremental investment. We are factoring those investments into our long-term plans, and we expect to offset them with benefits from HMM, strategic revenue management and our fixed cost leverage, allowing us to deliver on our goal of modest margin expansion over time. As we mentioned earlier, one of the key initiatives of the GIGC is to integrate our Force for Good commitments across the enterprise. I'm proud to say that we've led the way in the area of financial integration by aligning a portion of our company's financing with our commitment to address climate change. Last April, General Mills became the first U.S. CPG company to put in place a sustainability-linked credit facility. By entering into this agreement, we receive a pricing adjustment based on progress in 2 key areas: reducing greenhouse gas emissions and using renewable electricity for our global operations. Additionally, in October, we announced our first-ever sustainability-linked bond, making us the first U.S. investment-grade CPG company to execute this type of bond offering. The interest rate on this 10-year $500 million bond is tied to measurable improvements in our Scope 1 and Scope 2 greenhouse gas emissions. These innovative financing structures demonstrate our commitment to taking urgent action against climate change by embedding sustainability into the fabric of our operations. As we continue to look beyond our annual planning cycle, we need to understand the risk of climate change to our future business results. In 2019, General Mills signed on as a supporter of the Task Force for Climate-related Financial Disclosure or TCFD. We continue to enhance our reporting in this area, highlighted by our latest global responsibility report, which we issued last month, as well as a dedicated TCFD summary that you can find on the General Mills website. As you can see, we believe that being a Force for Good and integrating our ESG efforts across the enterprise is not only an imperative for the planet but also drives value for our stakeholders. Now let me turn it back to Jeff for some closing remarks.

Thank you, Kofi, and to all of today's participants. Your leadership and commitment to this work is critical as we accelerate our efforts. While we spent most of our time today on our planet initiatives, we continue to make progress in other areas as well. For example, this past year, we advanced our efforts to drive sustainable and meaningful change on the issues of racial and social injustice, with a focus on racial disparities in food security, equity and education and representation and access within our own workforce. More specifically, over the past 5 years, General Mills and our foundation directed $18 million to nonprofits in the Twin Cities to promote equitable food access and equity in K-12 education. Last year, we achieved our commitment to double spending with minority-owned businesses. Our commitment to representation starts at the top, 3 out of our 11 Board members are people of color and 5 are female. And across the enterprise, 51% of our professional positions and 33% of our company officer positions are held by women. We know these issues of equity are broad and complex. And we also know we must be part of a larger collective effort if we hope to continue to make progress in this space. That's where we remain focused. As you heard throughout this morning's presentation, and you've seen through the tangible actions we've taken to support our people, planet and communities, we remain steadfast in our belief that doing good is good for business. We know our work is not done, and we'll continue to partner with our stakeholders, push for progress and report on our priorities with that in mind. Our scale brings both opportunity and responsibility, and we're more determined than ever to ensure that G in General Mills stands for good. That concludes our prepared remarks this morning. We invite you to join us in a moment for our live question-and-answer session, where we'll continue this important conversation. Thank you.

I would now like to turn the conference over to Jeff Siemon. Please go ahead, sir.

Good morning, everyone. I'm Jeff Siemon, Vice President of Investor Relations for General Mills. Thank you so much for joining our ESG investor event this morning. We're now going to kick off our Q&A session with management. And I'm joined this morning by Jeff Harmening, our Chairman and CEO; Kofi Bruce, our CFO; Paul Gallagher, our Chief Supply Chain Officer; Jon Nudi, Group President of our North America Retail segment; and Mary Jane Melendez, our Chief Sustainability and Global Impact Officer. This morning, this session will include a mix of live questions as well as some questions that we've received in via e-mail over the past couple of days. And in fact, I will go ahead and start with one of those questions before we move to the live conference call. And the first question is from Alexia Howard at Bernstein. And the question is, how can the packaged food industry become more consistent in the sustainability metrics all companies publish on a regular basis so that investors can compare companies more easily? And what progress has General Mills made in recent years in this regard?

Thank you for the question, Alexia. So I believe that the packaged food industry can demonstrate leadership in that area by moving to a more consistent and clear reporting and disclosure framework. In 2019, General Mills signed the Task Force for Climate-related Financial Disclosures and have been reporting and disclosing against that framework for the past few years. And in 2022, we published our first-ever climate change TCFD index. And you will also see that several of our peers are moving in this direction, leveraging that TCFD framework. In addition to TCFD, I think another area is going to help the late industry and more companies move towards very inconsistent reporting and disclosure frameworks is the SEC's climate disclosure role that will really help to even the playing field and simplify climate-related financial disclosures going forward.

Great. With that, Kelly, why don't you please open the line for questions? .

[Operator Instructions] Our first question comes from Cody Ross.

You spoke a lot today about the environmental initiatives General Mills is undertaking I was hoping you could discuss the efforts you're making on the social side, specifically the health of your products, whether it be reducing your sugar content, more simple ingredient labels, et cetera. And then how much of your innovation efforts today are dedicated towards making healthier products?

So let me -- Cody, this is Jeff Harmening. Let me start the answer, and if someone wants to add on, they certainly can. First of all, I would say we've been making products healthier for a long, long time. And it started back in whole grain, making all our series whole grain back when I was running our cereal division well over a decade ago and reducing sodium in Cheerios starting in early 2000. So we've been making our products healthier and healthier for a long, long time. We're really pleased with the work that we've done. Over 40% of our products qualify as nutrition-forward food, and that's not even including pet food. And so we've done a lot of work in this space. We continue to make our products healthier. There are 3 free things consumers want. They want stuff to good, they want them to be convenient and they want to be good for them. Those are the 3 things they want. And when we do those things well, like we do in Nature Valley or like we do in Cheerios, we get big businesses as a result.

Our next question comes from Pamela Kaufman.

You touched on how you are highlighting your sustainability efforts into your product packaging and marketing to consumers. How are you prioritizing which brands to lean into from a sustainability perspective, whether it relates to marketing or product innovation or renovation for particular brands?

So let me maybe just start at the top with some, really, some beliefs at the enterprise level. So we believe doing good is good for business, and you heard that throughout our presentation this morning. There's all kinds of facts, facts that all of the brands are focused on the consumer and are really constantly evolving to meet consumer needs. And now more than ever, our loyal consumers are looking for brands that stand for something and really have a purpose. So we build that purpose into each of our brands. It has to be [indiscernible] to the brand and the examples are really different. So in Cascadian Farm, in partnership with The Land Institute, we commit to the successful commercialization organic Kernza, which is really a perennial grain relative of annual wheat. In 2017, we donated $500,000 to the nonprofit and academic partners to support advanced research. Committed to the potential of Kernza, significantly reduce greenhouse gas emissions associated with food production in terms of the best management practices with regenerative ingredient and sustainable production. This year, those efforts really culminated with the Cascadian Farm Climate Smart Cereal with Kernza grains. So again, it's been a multiyear really effort to make sure we get to this point. We launched it at Whole Foods, and we expanded it to other retailers this past year. So again, for Cascadian Farm, getting closer to this novel grain really made a lot of sense, really worked for us. Nature Valley is different. So for Nature Valley in addition to recyclable wrappers that I talked about, we focused on national parks for the last several years, actually going back all the way to 2009. So at some point, we donated over $4 million and just this year was recognized by the National Parks' Defender Award for the great work that we've done. And then finally, Pillsbury is different as well. Instead of environmental issue that we're focused on, we're focused on social issues. So with Operation Homefront, which is a nonprofit working to support transitioning military families. So Pillsbury's donated more than $5.5 million over the last few years to help transitioning military families transition back to civilian life. So it's really understanding our brands, understanding their consumers and then building purpose in each of the brands. And as I just gave you some examples, the purpose really differs between the brands are really [ a funding ] relative to each other.

Okay. We are going to go to an e-mail question here. And the next question comes from John Baumgartner at Mizuho. The question is, to what extent has the COVID era complicated your ESG efforts? And have you seen any time line delays or incremental expenses required due to the pandemic?

So this is Jeff. Let me field that one. I would say everything has been complicated during the Pandemic, and including our ESG efforts at the first point. And the second one would be -- what I'm really proud of is even given these complications, we haven't taken our eye off the ball on. So the first I guess would be how has it complicated our efforts this pandemic. I would say quite a bit through logistics. And we've been spending most of our time just making consumers can get the food that they need over the past 2 years. And with that, our logistics network has been a lot more efficient as it has been across the industry. So there are more miles traveled on the road and more greenhouse gases through things like Scope 3 emissions. And so it's been really challenging. What I'm proud of is that the things within our control, we've done a good job at. So let me give you a couple of core examples. Over the past 2 years, we've tripled the amount of acres that we have dedicated to regenerative agriculture. We're really proud of that. And that's a big greenhouse gas reducer for us. The second to the last year, within with Scope 1 and Scope 2 emission, whichever is in our control, we reduced those by about 25%. So even though, overall, our emissions are up by 2, it's totally incumbent upon our Scope 3 emissions. So the things within our control we have done very well. So it is a tough environment, but we've made good progress. I'm proud of what we've done, but there's a lot more to do, and we'll keep doing it.

Our next question comes from Michael Lavery.

Just was curious if you could, maybe at a high level, talk about some of how you get consumer insights on ESG stuff. Certainly, you have a market research, consumer insight-led process for all your brands and it's kind of the heart of how you operate. But how do you think about what consumers are looking for when it comes to sustainability type issues? And then I missed some of the presentation, I think you may have touched on this, but can you just give some of how you then communicate that to them and kind of close the loop on what it is they're really looking for?

Yes. So again, I think it gets back to really understanding each of our brands and what our consumers are looking for, for each of them. So we, as you know, have a wide-ranging portfolio all the way from everything from the biggest natural organic -- one of the biggest natural organic portfolios in the country to very indulgent snacks and products as well. So as we look at our Annie's brand, for example, it's really on the cutting edge of what consumers are looking for in terms of commitment to the environment, commitment to our communities. And one of the things that we're doing there is really focused on regenerative agriculture. So that came out in the example I used around Kernza. In addition to that, we've got any [ lack of seeds ] that actually tied back to specific farms that are using regenerative agricultural practices because we're actually highlighting the farmers on the package, which is really relevant and really working for us. On other brands, again, it just really shows up in different ways. I mentioned on Pillsbury. We know that many of our consumers are [ world ] consumers and the military is a really important group of people to them. So that's why we tie into things like the nonprofit that I mentioned. So it does at the macro level, there's certainly trends that are affecting everyone, but is really dig into each of our brands to truly understand who they are, who our consumers are, we find the most relevant issues and really trying to bring this to life. And our marketing, you have to be authentic, right? You can't just pick the [indiscernible] du jour and slap it on your package. It has to be something you build over time and stay committed to over time as well.

That's great color. That makes a lot of sense. Can I just add one follow-up? Again, sorry if I might have missed this, but how does Blue Buffalo fit in? Are there anything -- is there anything specific to that brand that you guys have been able to develop? I know it's a relatively newer part of the portfolio, but how should we think about its role?

Yes. Michael, this is Jeff Siemon. I would say there's a couple of things. First of all, obviously, the nutritional aspect. I mean the brand was built on this promise of wholesome natural food for your pet as a -- and the heritage of the brand. Blue was the family dog for the Bishop family. And thinking about wanting to make sure that they were feeding the family the most healthy -- or feeding their pet the most healthy, nutritious products possible [ to true ]. But I think also, more recently, you've seen Blue really invest in the issue of pet health and pet cancer with significant donations toward pet cancer research. And so that's a way and that can flow through into the marketing of the brand as well. So it's a way that, that brand is trying to tie into what the purpose of the brand is and how they show up in the market today for pet parents.

Our next question comes from Ken Zaslow.

General Mills has set out some longer-term targets, 2030 and 2050. How do you commit to a level of accountability in the near term to ensure that you're on your milestones? Not that I don't want you guys to be around in 2030 and 2050, and I think the company would be better off, but just how do you get to the accountability to get there because you may not be around by then?

We all hope to be around by 2030, and we're going to record that remark that you hope that we do, too. But all kidding aside, it's an important question. I mean the first thing I would say is that we -- important to remember that for our Board of Directors, we've had a Public Responsibility Committee for 50 years. And so the Board of Director has the oversight on the company and what our commitments are. So there's continuity at the Board of Director level. Then when you get within the company, we have a Global Responsibility Committee, which I chair and which has many of our senior leaders, including those around the table here today with Mary Jane and Jon and Kofi. And our responsibility is to not only set the targets but also to create glide paths and the resources necessary to hit those glide paths. And you see this carry out. I'll give you a practical example. I'm not the one who set the target for having our top 10 ingredients be sustainably sourced by 2020. Ken Powell did that, and I became the CEO and Chairman in 2017. And we carried that commitment all the way through because of the commitment we have made. It's not Ken's commitment, it's General Mills' commitment. And that's overseen by the Board of Directors and the committee that I'm now responsible for chairing. And so it actually is a really important question. In fact, all kidding aside, I'm glad you asked. But we have robust systems in place and have for some time that will enable us to make sure that the commitments that we're making are General Mills' commitments and not mine personally.

Great. The follow-up I have is on Scope 3. I know you kind of discussed it on the COVID side, but just there does seem to be some relationship with the increase in the GHG commitment where you had supply challenges that increased by 2%. I guess my question is twofold. One is, to what extent did the supply challenges and the global uncertainty affect your ability or delay any ESG goals? But more importantly, how do you get the commitment outside of your firm to improve the Scope 3 and how do you accelerate that to get more of a buy-in from outside your abilities into the third parties? How does that work? And I'll leave it there, and I appreciate your time.

Thank you, Ken. I'm happy to take that question. So to address the first part. So yes, supply chain challenges are real. We did experience some challenges earlier this year or we had plans to, for example, expand our recycled packaging beyond the Nature Valley Crunchy Bar. And that was related to delays due to the fact that there were material shortages. So this is real, and it's impacting the glide path that we have built internally and have been required us to change our plans. But we're on track and working very closely in partnership with our supplier to make sure that we can continue to advance our work there and maintain the overall enterprise price glide path so we can achieve that public commitment. When it comes to the question on Scope 3, I think this is the part that so many companies are dealing with because these are -- Scope 3 emissions are actually the emissions from our supply base, and they are outside of the control of General Mills. And a few things that we have done this year to help mitigate the GHG emissions coming from Scope 3 are there a few things. First, we've engaged our suppliers in a program called Supplier Leadership on Climate Transition. This is actually a program that was [ started ] back in 2019 by a number of CPG companies where we are actually paying for our suppliers to get educated on how do you calculate your GHG footprint? How do you begin to think about carbon accounting for emission. How do you set in place a science-based target to help reduce emissions over time? So I think that supplier education is key. And I would say that if you think about it, we have thousands of suppliers within our supply base, and they're all at different rungs of the spectrum when it comes to GHG. So I think first and foremost, inviting them to learn more to set that science-based target is really important. And then I would say there's also opportunities for us to continue to collaborate with our peers. So this is an area where, yes, we compete very fiercely on the shelves when it comes to doing good and trying to do good for society and for our planet. There's a lot of collaboration that's happening. And one of the things that we do include collaborating with our peers through the Consumer Goods Forum Forest Positive Coalition of Action. So General Mills, alongside many of our peers, are working to invest in helping to move some very fragile ingredient stream to being deforestation-free. That's something that no company can do alone. The challenges are very, very complex. And so we've been proud of the partnership there and the willingness for people to engage to really help crack the code on some of these challenges. And then one thing, we also do really good work with the Consumer Brands Association when it comes to packaging and sustainability. We're part of their advisory group and are working in partnership to not only have these companies move their packaging to be more recyclable but also working to address the very significant challenges in the United States of a very fragmented recycling system. So we know that we need to move from 9,000 different recycling municipalities, all that have different rules and regulations about what can be recycled and what area and that we need to help move to a system that works for everybody, regardless of where they are. So I would say the supplier engagement and then the partnership with our peers are absolutely key to ensuring that we can reduce the Scope 3 emissions over time.

Okay. We're going to take a question from -- coming in via e-mail. This one is from Ken Goldman at JPMorgan. The question is, how do you balance the longer-term goals, for example, the 2050 net zero target, and is that a more effective target? Or would it be more effective to really lean into shorter-term goals and deliver the -- on the short term and to be able to hit those as a way to the 2050 target?

Thank you for the question, Ken. I would say it's actually a combination of both. Both are incredibly important. We have to look at, in the near term, what can we do to start reducing our own emissions and what plan can we put in place to start bringing our greenhouse gas emissions and those of our suppliers down now. We don't have the luxury of waiting until 2050 to help Mother Nature return to health. We have to start working now. Another reason why it's important that we focus on short and long term is because some of these -- the solutions to these very complex challenges are incredibly complex. And the answers aren't there today. We actually have to invest in innovation. We have to work in collaboration with our customers, our suppliers, our peer groups to bring some of these solutions forward. So I think it's equally important that we work to address short term and then have a clear plan to how we're going to hit that 2050 target. So it seems far out. It actually for me, as I think about the amount of work that has to be done between now and 2050, doesn't seem all that far away.

Our next question comes from Chris Growe.

I just had a question. Kofi, you mentioned like the likelihood of a consumer's willingness to pay more for sustainability. There's obviously a higher cost for these products, too. Just from a high level, not certainly by product, but can the price premium you can charge for these products offset the incremental cost, if you're able to isolate those costs for sustainability? And then I'd also just like to get a sense of are you pushing more products towards sustainability? They may have a higher cost, but for which you could price to that? Are there any other brands which you're moving that way, maybe similar to what you do with like Nature Valley packaging, for example.

Yes. So great question, Chris. So as we think about this, I mean, some of this is visible and priceable. Certainly, it has value for the consumer that you can pass through and see at the shelf. Some of this, candidly, at least in the near term, goes into our business model, right, and we remain committed to our shareholder return model. And the job for us over time is to use the leverage we get out, the HMM and SRM over time to ensure that we are keeping the business model intact, right? So I think the other thing I would note is some of the things that we are doing are actually very consistent with both delivering HMM and supporting our goals, whether it's greenhouse gases or other sustainability goals. So for example, over the last 10 years, some of the moves we've made proactively on things like packaging, transportation efficiency and energy efficiency all remove waste and extra cost, but also reduce the greenhouse gas footprint of our operations and product production. So I think those things are not always in contention, which I think is an important point as we think about greenhouse gases going forward.

Are there any products, maybe to Jon, or products you're pushing this way in terms of sustainability?

Yes. So Chris, each of our major brands has a Force for Good commitment, so some of those are based on sustainability, some are based on communities. And again, it gets back to being authentic to the brand. We're actually working with retailers on some big moves that could change the game for some of our categories. If you think about compaction technology on boxes that are large and maybe not filled up, there are some things that we can do, but really need an industry-wide solution. So there's a lot effort and retailers are -- everybody is committed to sustainability as we are. And I think there's a lot of opportunity in that space as well. So I think you'll see more in the short term here from some of our major brands.

Our next question comes from John Baumgartner.

Jeff, thanks for your detail in my written answer. But I'm curious, as you think about regulatory risks, where do you see the largest risks or pressures for the food industry now? I mean is it from an emissions perspective, in carbon taxes? Is it from packaging disposal taxes? Where do you think the industry needs to really concentrate the most to sort of stay ahead of the regulatory curve at this point?

From a regulatory perspective, I guess I would say there is both risk and there's opportunity. And from a regulatory perspective, the biggest thing we see coming is going to be on packaging and recyclability. And I think it's a great chance for the U.S. to try to actually develop a recycling system, which we actually don't have. We have 10,000 independent units rather than a whole system. And to further that point, General Mills, you may or may not have seen this morning, just announced a plan to work with several other food companies, along with the state of Minnesota to the Corinna recycling plant here in Minnesota that will help address the issue because the issue is actually not our ability to create packages recyclable, it's actually consumers recycle less than about 5% of what they could because of the system itself. And so I think in there lies a risk because if you end up paying taxes, for example, for recycled products, but it actually doesn't fit the system, then you have a risk, you create a cost, but you actually don't impact the plant in a positive way. However, to the extent that we can -- that there's regulation and it's uniform and it's national around recyclability, not state by state, then we have a chance actually to create an opportunity -- a huge opportunity for the food industry and our planet. So that, I think, is both the biggest risk and the biggest opportunity, and I'm really proud of what General Mills has done in this area. 89% of our packaging is already recyclable, and we have 11% to go. We're dedicated to doing that. And just today, in Minnesota, we've shown our commitment by an equity investment in a company that will help with the recyclability.

And maybe just a follow-up for Jon. From a marketing perspective, as you accrue these milestones and you expand your progress, what are you finding or hearing from consumers in terms of how that could communicate the progress? I guess building on Chris Growe's question. Even if you can't recoup the cost increases in the pricing in all scenarios, do you sense that a tipping point where if you don't undertake these initiatives, it becomes a volume risk where consumers move to brands who do engage in sustainability practices? Just your thoughts on consumer reactions here would be appreciated.

Yes, absolutely, John. So big picture, and I think Kofi hit on it this morning. I mean there's a lot of research that says products that are in brands that are built with purpose are driving the majority of the growth in the industry, and we absolutely believe that. So when we look at things like Nature Valley and our recyclable wrapper being the first in that space, I can tell you we got a tremendous amount of really positive consumer feedback. to that move, and there's more to be done. It's only on our Crunchy Bar line now we continue to expand that across the rest of the line. . And today, I think we benefit from it. I think over time, it will become table stakes. And for us, leading in this space, we think we can get there first. We think we can actually really build our brands, get a lot of positive goodwill from consumers for being recognized as a leader. But over time, for sure, if we don't keep upping our game, it will become a bigger and bigger challenge. So again, really, it varies by brand and by category. If you look at cereal and regenerative agriculture, and the #1 ingredient is -- it's whole grain. So again, there's a lot we can do in that space. We're doing a lot today. What we're working on now is how do we bring that to life. If you think about cereals, which is an inherently simple product that oats is the #1 ingredient and the work we're doing at oats, there's a real marketing opportunity for that. We're continuing to dig into and explore and you'll see more in the coming months and years around that. So we're really excited. We do think it's important work. It's work that has to be done, but we also think it can build our brands and really drive our business as well.

Our next question comes from Steve Powers.

I was hoping you could first talk maybe a little bit more about how you measure against these ESG goals and how your ability to measure has evolved over the course of time and the investments you've made there, just as a sort of a general question. . And then maybe a little bit related. I'm curious, from a financial governance perspective, how sort of the management of these ESG efforts have integrated themselves into compensation considerations, both at the executive level and then throughout the business at the managerial level. I don't believe there are ESG targets tied to long-term incentive compensation. Maybe you can correct me if I'm wrong about that. But just how you think about ESG as it relates to the compensation would be helpful as well. .

Maybe I can start by answering your question, Steve, around the measurement of the goals and our ability to measure. So a couple of different things. I would say that because we have a broader rate on different types of shipments that we've made over the last decade in the space, the measurement approach is very different. So for them, when you think about our greenhouse gas emissions, we're pulling in information from across our value chain to come up with the size of our carbon footprint, which has been reduced, working with a lot of life cycle analyses to get these estimates in. And I would say that's a place where we continue to iterate, where we refine and get better at that reporting. We have, obviously, a third party that audits and verifies that information every year. And reporting, for example, on regenerative agriculture look very different. So there, General Mills is making some significant investment to actually advance measurement and outcome reporting as it relates to the difference that regenerative agriculture is making on the farm. So for example, we're making investments to help measure soil health, the carbon sequestration, potential of the soil that are moving towards regenerative agriculture. We're measuring biodiversity, both within the soil and above the ground. We're measuring the ability for the soil to hold water and actually the water quality that's now being held on that farm, and they're moving to regenerative practices. So there's a lot -- there's more complexity in some of these things than in other areas. But I would say it's definitely a place where I think we continue to get better and where we continue to drive disclosures of how we're performing and where our challenges are.

If I could just also add, and one of the areas where we are making some investments are in data. In particular, some of our data investments are meant to support broader measurement across the organization of progress against our sustainability goals. You also asked a question about compensation. Certainly, in the short term, myself and my peers on the senior executive leadership team have, as part of our annual performance objectives, our sustainability goals and progress against our sustainability goals. So there is a pretty direct impact on our short-term incentive compensation.

Okay. Maybe just a quick follow-up on the measurement piece of that. Is -- I guess is managing sort of disparate measurements and measurement systems across the industry a challenge as there seems to be, in some cases, different definitions of different criteria and how things are measured. Just I guess to what degree is that a challenge as you navigate towards your longer-term goals? Or has there been enough progress there where there is sort of a evolving standards that make the overall journey more effective?

Thanks, Steve. I can follow up on that. So I would say, yes, absolutely, I think there is opportunity for improvement in measurement and consistencies. But when you're looking at an ESG report from 1 company, it's more apples-to-apples. That's not how it's happening today. And I think the framework such as TCFD will help move the industry in the right direction to make this reporting less complicated. But yes, there's definitely an opportunity, I think, for there to be more apples-to-apples reporting to make each of people to understand the progress that companies are making and where they still have challenges.

Okay. We're going to take one more from the e-mail queue here. And this question is, Paul, for you. It's around renewable energy or renewable electricity. And the question is, you've set a goal of sourcing 100% of renewable electricity for global operations by 2030. Currently, we are a bit north of 60%. How are we going to close the gap to 100%? And is there opportunity to accelerate that 2030 goal?

Yes. Thanks for the question, Jeff. And I'm very proud of the progress that we've made already at 63% and across the globe and already 100% within our U.S. business as well. And we've achieved that through the work that we've done with renewable energy through our Maverick Creek and Cactus Falls (sic) [ Cactus Flats ] and Texas facilities. And we continue to expand out work just recently putting in solar capability in San Adrián and also in our facility in China. The next evolution is more on our international side of the business. We've got plans in place for Mexico and Brazil and others in order for it to achieve that within the time frame that we set. So great progress to date. Obviously, still more to be done, but on a great trajectory at the moment.

Okay. I think we have time for one more. Operator, if you can maybe queue up that last one.

Certainly. Our final question comes from [ Cody Ross ].

I was just wondering. You -- supply chains have been under extreme pressure for the past year, so labor and supply remains limited. How do you balance working towards your Force for Good goals and not allowing cost to accelerate even more than they have?

Well, maybe I'll take a crack at that. I mean it's part of breaking things down into measurable goals over time. So laddering up to our commitments, we now have a road map of what we have to do short term and long term. And short term, it causes us to ask real questions and really look at those trade-offs. And I'll tell you, today, we've decided that if we're going to stay on these glide paths into our goals, we need to stay committed to investing. And with that, it might be that we have to plus up HMM and do some other things to offset the challenges. But the reality is supply chain's a challenge now. We think it will be for the foreseeable future. And if we wait until we get through the supply chain issues, we're not [ going to ] where we need to be. So we're constantly making those trade-offs and today prioritizing the initiatives that we have [ in flying ].

Great. I think we'll pass it over to Jeff to wrap us up.

Certainly. I want to thank everyone for taking the time this morning. I know you're busy. There's a lot going on. I have a couple of things I'd like to leave you with. One is that, yes, there has been a lot of disruption during the pandemic, but General Mills is as committed, as we always have been, to be a force for good. And we're making our progress against those goals. They are measurable progress, and they're consistent over time, and we have governance mechanisms in place, whether it's sustainability or equity or governance itself, to make sure that we keep making strides. We feel like we've been a leader in ESG. It's paid off for our consumers. It's paid off for us with our retail customers. It certainly paid off for us with our employee base. And even though that we've done a lot, there's still a lot more that we can do and a lot more that we need to do. And we think it's not only the right thing to do, it's good for our business. And that's why it's woven into our strategy, and it's woven into our strategy in a way that I think is extraordinarily clear and the initiatives that we've undertaken are initiatives that are directly tied to our business, and we prioritize those initiatives. And so again, we're really proud of what we have done, but we have a lot more work to do. And hopefully, you hear today that it's woven into all of our business practices, whether through supply chain or whether it's through our brands, whether it's through our financial reporting, and we'll continue to do that.

That does conclude the conference call for today. We thank you for your participation, and we ask that you please disconnect your lines.