Sustainability in the food industry has become much more than a buzzword, as companies increasingly realize that it is vital to their long-term profitability.
About a decade ago, most major food companies started issuing Corporate Social Responsibility (CSR) reports, but reporting had plateaued by 2015, according to consultancy firm SustainAbility. Instead, sustainability for many companies has become better integrated into everyday business practice – while others have yet to begin thinking about sustainability. For the food industry as a whole, progress tends to focus on reducing water and energy consumption, improvements to packaging, and in cutting carbon emissions, but there are other areas that need improvement.
The food industry faces major challenges to ensure an abundant, nutritious food supply as the global population continues to grow and natural resources are becoming increasingly depleted. However, the food industry also contributes to these challenges with greenhouse gas emissions from agriculture alone contributing an estimated 19-29% of the global total, according to the US Environmental Protection Agency.
One of the biggest challenges to sustainability efforts in the food sector is ensuring different parts of the supply chain work together, from farming and processing to manufacturing and retail. Even from a reporting perspective, fewer than 10% of companies issuing CSR reports examine carbon emissions from the use or disposal of their products, according to consultancy firm KPMG, suggesting a need for better life cycle assessments.
However, there are some industry pioneers who have embraced the three pillars of sustainable development – the economic, social and environmental – with the understanding that addressing all three simultaneously means that social and environmental factors also fuel economic sustainability, meaning ongoing financial viability for suppliers and manufacturers alike.
According to the latest CDP Global Supply Chain Report, which ranks companies across industries on their sustainable development, several ingredients suppliers – Firmenich, Givaudan, IFF and IFF – were among the top performers for tackling climate change, while BASF, Symrise and Firmenich were top performers for tackling water use.
Although consumers may have little awareness of such rankings, particularly in the ingredients sector, many are concerned about sustainability, and the number of ethical and environmental claims on product packaging is rising. According to a 2017 report from Ethical Consumer, sales of products carrying sustainable and ethical claims on were up 9.7% last year while conventional food sales were struggling. What’s more, the stock price of the world’s most ethical publicly traded companies is 6.4% higher than the S&P 500 average, according to The Ethisphere Institute.
Some ethically-minded food companies may be undercut in the short term by those looking to produce similar products on the cheap, but in the long term, unethical business practices are unsustainable, not only from an environmental and social perspective but also from an economic one.