Monday, October 19, 2015 by Cheryl Baldwin
Food production dominates fresh water use and is a primary driving force for soil and biodiversity loss – and food demand is on the rise. The good news is that while faced with such challenges and often considered to be lagging on sustainability, the food and beverage industry stands out as most-improved in a 2015 survey.
In the second Pure Strategies review of product sustainability programs, there was an increase of food companies building their efforts and using environmental and social considerations to inform business decisions across the product life cycle. All of the food and beverage companies engaged in product sustainability in the survey have established goals for their product sustainability efforts, up from 82 percent of respondents in 2013. The impact is noticeable as programs are increasing in depth and breadth, with 95 percent of food and beverage firms evaluating and/or integrating sustainability into product decisions, up from 68 percent in 2013. These efforts across the value chain are providing substantially more business value to food and beverage companies.
Achieving value
Employee engagement was the top benefit in this year’s survey and the number of food and beverage companies reporting this benefit went from 44 percent of those surveyed in 2013 to 63 percent in 2015. Increased employee productivity and other efficiencies are typically among the first benefits earned. PepsiCo achieved $375 million in savingssince 2010 from its environmental sustainability programs at the same time the company experienced double-digit net revenue and operating profit growth.
Risk reduction is another growing benefit from product sustainability for food companies. Supply chain risk reduction was the second-most achieved benefit for food and beverage firms and grew from 20 percent of companies in 2013 to 58 percent in 2015. The notable challenges in the supply are a source of this increase such as water risks driving a 12 percent drop in Cargill’s 2014 fourth-quarter profits related to drought in beef production regions and a 28 percent drop in Campbell Soup Company’s early 2015 profit for California-produced carrots from drought and erratic rainfall.
Consumer demands are a consistent driver for food and beverage firm investment in product sustainability. Importantly, there was improvement related to this with more than twice as many food and beverage companies reporting increased sales from their product sustainability efforts, from 19 percent in 2013 to 46 percent in 2015. Unileverexperienced this with the brands contributing to its sustainability goals, such as Ben & Jerry’s and Lipton, growing twice as fast as others.