As studies show that shoppers care about sustainability now more than ever, food and beverage companies are pledging to make their portfolios more eco-friendly. Even as the pandemic has shifted consumer demand, nearly half surveyed say the COVID-19 outbreaks have made them even more concerned about the environment.
But Hanneke Faber, Unilever's president of foods & refreshment, can see theopportunity.
"As a business, we don't like food waste either," she said. "That costs money if we make stuff and we don't sell it. So it really can be a win-win-win for people, for planet and for business if we attack and address and solve these issues."
Unilever set its first sustainability goals in 2010, and hasbeen adding to them since then. The international company's latest goals, released this past November, include cutting food waste from factory to shelf in half by 2025 — five years sooner than the company had previously committed to as part of the 10x20x30 initiative. The goals also include increasing plant-based sales to be worth 1 billion euros ($1.2 billion) in the next five to seven years, which Faber said is tied toreducing greenhouse gas emissions from traditional animal-based agriculture.
The company is not just working to solve these sustainability issues from the manufacturing side of the business. It also is looking at the consumer angle. Unilever's Hellmann's brand kicked off a marketing campaign that asks consumers to "make taste, not waste" in a Super Bowl ad featuring Amy Schumer. Following the Big Game commercial, the campaign features recipes and other content encouraging consumers to think before they throw away food.
Faber said that the versatility of Hellmann's mayonnaise makes it a great brand to carry the campaign, since the condiment is also an ingredient in several common recipes. The campaign was born out of research that found many consumers would open full refrigerators and say they had nothing to eat, she said.
While Unilever is setting ambitious goals and has been honored for its commitment to operating in a more sustainable way, Faber acknowledged the company still has a ways to go.
"It's not easy and it's a complicated problem," Faber said. "If it was easy to solve, we would have already done it."
Repurposing 'Oops' products and rethinking planning
While Unilever may want to end all food waste, it only has direct control over what happens in its own factories. And while some waste is inevitable, the company has been looking at ways to reduce it as much as possible.
As the world's largest ice cream manufacturer, Unilever has concentrated on curtailing waste in those plants. When an ice-cream manufacturing line changes over, a lot of ice cream ends up as a waste product, Faber said. Its German Cremissimo brand has found a way to rescue the would-be waste, re-melt it and put it back through the production process. The resulting flavor, with a name that translates to "Chocolate Hero," was an immediate best-seller and is one of the top five flavors of the brand, Faber said. Since its launch last year, Unilever has sold more than 1.2 million tubs of it, repurposing 160 metric tons (more than 352,739 pounds) of ice cream waste annually.
Faber said the flavor's popularity has less to do with what it tastes like and more to do with what it represents.
"It's just a cool idea," Faber said. "On the front of the pack, we retell the story, that this is a waste warrior product."
The approach has been adopted by Unilever's Ingman ice cream brand in Finland. The Finnish version is called "Hupsis," which translates to "Oops." The Hupsis packaging is fully recyclable, and the ice cream comes in two flavors: Chocolate with Caramel Swirl, and Hazelnut and Cacao with Licorice Sauce Swirl.
Unilever also uses upcycling to produce its popular British Marmite spread. Ever since its beginnings nearly 120 years ago, Marmite has been made from discarded yeast from breweries, making it an original upcycler. Today, the factories that make the spread have doubled down on reuse, Faber said. They take the manufacturing waste to an anaerobic digester, which produces biogas to power a boiler that helps run the plant on steam energy. Half of the energy needed to run the plant comes from wasted Marmite.
Unilever has other ways to minimize waste, including by maximizing its production efficiencies. It has invested in predictive analytics to reduce the amount of unused products that never make it to consumers. The tech also alerts the company to overruns.
In Europe, Unilever has made use of the Too Good to Go app, which allows food and drink makers to list and sell excess products at reduced prices, Faber said. The program will be expanding to the United States.
While shifting manufacturing and distribution processes is important, Unilever is also trying to influence consumers to change their behavior. After all, if consumers are aware of the long-term impacts of their food choices, they are likely to make more sensible ones.
One of the company's biggest opportunities is in plant-based products. The facts are clear, Faber said: Cows raised for food purposes produce a lot of greenhouse gases.
"Especially in the Western world — the Americas and Europe — we eat too much meat," Faber said. "So what can we do as a big food company is to stimulate plant-based eating. And that doesn't mean I'm asking everyone to become a vegetarian or vegan. You know, that's everyone's own choice. But if we could all replace once, twice, three times a week a meal that we have with meat with a plant-based option, that would go a long way."
This underpins Unilever's commitment to sell $1.2 billion in plant-based foods in the next five to seven years. According to The Guardian, the company's sales in the segment currently total 200 million euros ($243 million).
From reducing waste to encouraging plant-based eating, Faber said that all of the work on sustainability done by Unilever and other food and drink manufacturers has begun influencing an important group of consumers: policymakers. In September, the United Nations is hosting a Food Systems Summit to help launch sustainable development goals and increase food access and nutrition by 2030. Leading up to the summit, many companies are working together on food waste, emissions and sustainablepackaging.
"Whether it's Nestlé or Kellogg or Mondelez or Danone, everyone realizes that the food system needs some serious work to be future fit," Faber said.
Progress report: Brands face increasing pressure on recyclability claims in 2021
Major corporations have pledged big recycling-related changes by 2025, and environmental groups are holding them accountable through reporting requirements, shareholder agreements and lawsuits.
By: Megan Quinn• Published Aug. 17, 2021
Environmentalists and recycling stakeholders have long seen corporations as having a lead role in reducing plastic pollution and virgin plastic use. In 2021, they have put even more pressure on major companies to commit to bigger actions.
Organizations continue calling on businesses to sign onto aggressive pacts to use more recycled plastic in packaging, make packaging more recyclable and reduce overall waste. Meanwhile, environmental groups have attempted to wrangle corporate holdouts or press companies to make further and faster progress by using shareholder resolutions to hold them accountable for making incremental changes. Activists that allege companies are intentionally misleading consumers with their recyclability claims have also taken some of the largest brands to court.
Here’s a look at recent corporate developments toward broad climate and recycling goals in the first half of the year.
Companies balance ambition, accountability in meeting 2025 plastic reduction goals
Major brands have published sustainability reports recently to announce new goals or update the public on their progress toward reducing or eliminating virgin plastic packaging by 2025. That date is a common deadline, in part because it's the year set by the U.S. Plastics Pact, part of the Ellen MacArthur Foundation's (EMF) global Plastics Pact Network.
TheU.S. pact, part of a consortium The Recycling Partnership and World Wildlife Fund are leading, has four goals: define a list of “problematic” packaging and eliminate those products; make all plastic packaging 100% reusable, recyclable or compostable; recycle or compost 50% of plastic packaging; and ensure packaging has at least 30% recycled or bio-based content.
In June, the foundation released its new Roadmap to 2025, a strategy document meant to offer more details on how its corporate, nonprofit and government participants will live up to their promises.
In the year since the pact launched, the number of participants went from 60 to about 91. The growing number shows that more companies see the need to make bigger, faster plastic reduction changes, said Emily Tipaldo, the U.S. Plastic Pact’s executive director.
“There are lots of things within the control of [these] companies,” she said during the Plastic Recycling Conference in April. “We’re not saying that changes would be easy or would be cheap, but it’s about really taking ownership and responsibility and maximizing what can be done internally.”
As corporations strategize about how to create and stick to these 2025 plastics goals, they must strike a balance among being ambitious, realistic and sincere, said Conrad MacKerron, senior vice president at nonprofit As You Sow.
“It comes down to whether a company is serious about [its goals] or whether it’s pulling numbers out of a hat to make activists go away. Or, it’s not realizing that a certain goal is more complicated than what they can do on their own.”
David Tulauskas, chief sustainability officer of BlueTriton brands, said corporations have a responsibility to set sustainability goals with a high but meaningful bar. When companies bite off more than they can chew, it can cause distrust in the brand and create missed opportunities for companies to make real changes.
“I think it's important when you set your goals that they're within your sphere of influence. I've seen and I've been a part of companies that have set goals that, really, they don't have control of all the variables, and they're at high risk of not meeting [them],” he said during a panel discussion at the Circularity 21 conference in June.
By the end of 2021, BlueTriton plans to use 25% recycled PET in all of its packaging and 100% recycled PET for Poland Spring bottles, its largest water brand. By 2025, BlueTriton aims to use 50% recycled plastic in all of its packaging.
MacKerron said companies also must be transparent about their goal progress, even if they are falling behind. EMF has become one of the most influential organizations to spearhead 2025 sustainability goals, he said, in part because of its global name recognition and stringent requirements that participants make annual disclosures on their progress.
“Those are the big goals that everyone is watching. It’s an organization everyone is watching. Those factors suggest that [participating] companies will make more aggressive, good-faith efforts to meet 2025 goals,” he said.
Another looming hurdle for companies with 2025 goals is the concern that recycled plastic supply won’t be able to meet increased demand, making it hard to fulfill recycled content promises, said Charlie Schwarze, director of sustainability for Keurig Dr Pepper, during a panel discussion at WasteExpo in June.
“If you look at PET, and the goals that are being made around recycled content for 2025, we are going to be around a billion pounds short if it's a business-as-usual scenario going forward,” he said, adding that improved infrastructure, such as sorting and reprocessing technology, could help bridge the gap, especially for food-grade resins.
A recent report from AMERIPEN, which studied corporate commitments of 35 consumer goods companies, said demand for recycled plastic resins except HDPE will outpace supply. A combination of better collection systems, improved recycling capacity, consumer education about what can and cannot be recycled, and other systemic changes in U.S. recycling systems will be needed to catch up. Recent PCR laws in some states are also expected to drive demand further beyond expected supply this supply issue.
Here are some of the more notable announcements of 2021 so far:
According to its most recent sustainability report, Keurig Dr Pepper used 2% postconsumer resin in its plastic packaging in 2020 and plans to make that 25% by 2025. The company recently converted three of its product bottles to 100% recycled PET.
Blue Apron announced in July it will use only 100% recyclable, reusable or compostable material for its meal kit boxes by the end of 2025, and it will use 75% postconsumer recycled content by weight in its boxes.
Walmart says 62% of its global private brand packaging is now reusable, recyclable or industrially compostable. The company aims to reach 100% by 2025, according to its recent environmental, social and governance (ESG) report. By that same year, it aims to have 17% of its private-brand plastic packaging made of postconsumer recycled content. It currently is at 9%.
Outdoor furnishing company Keter says it’s “ahead of schedule” in reaching its 2025 sustainability goals of making 100% of products recyclable and using 50% recycled content in production. It has made 99.9% of its consumer products recyclable, according to a recently released ESG report, and its product line uses 40% recycled content.
Mandarin Oriental hotel group has reduced its annual plastic footprint by about 70% and estimates that its hotels will eliminate single-use plastics by the end of the first quarter of 2022.
Wastequip aims to reduce the amount of virgin resin its Toterbrand cart manufacturing operation uses by 25%. Citing a 2020 study by Resource Recycling Systems, the company says the change will reduce Toter’s carbon footprint by 9% per cart.
Shareholder resolutions make further ESG impacts
Companies involved in the U.S. Plastics Pact or other public sustainability goals are participating voluntarily, but organizations such as As You Sow say more needs to be done to hold accountable companies that won’t step up on their own or haven’t committed to big enough changes. Shareholder resolutions are one strategy, MacKerron said.
The resolutions are not legally binding in the U.S., but they can act as important leverage to force companies to publicly respond to calls for reducing virgin plastic use or other plastics-related initiatives, he said. AYS has typically focused its shareholder resolutions at the brand level, but last year, it turned its focus on Waste Management and Republic Services, which later released more detailed information on recycling infrastructure, plastic markets and policy positions. At the time, MacKerron described this as an important step to better understand processing infrastructure and inform future proposals at the brand level.
In January, As You Sow returned its focus to brands by filing shareholder proposals with 10 companies — Amazon, Keurig Dr Pepper, Kraft Heinz, Kroger, McDonalds, Mondelēz International, PepsiCo, Restaurant Brands International, Target and Walmart — and calling for “absolute cuts” in plastic packaging use.
AYS has already seen positive results from some of the proposals, MacKerron said. Target and Keurig Dr Pepper agreed to cut virgin plastic use 20% by 2025, while Mondelēz agreed to a 5% overall reduction (including a 25% cut in virgin plastic in its rigid plastic packaging), AYS said in a release announcing the resolutions. PepsiCo and Walmart also agreed to cuts, which are still being finalized, it said. In June, 35% of Amazon shareholders voted in favor of the same proposal.
Kraft Heinz told Crain's that the company and shareholders agreed to table a similar resolution after agreeing to disclose sustainability goals and progress. About 80% of its packaging is reusable, recyclable or compostable, it said, and the company aims to make that 100% by 2025.
AYS called out Kroger in June after 45% of its shareholders voted in favor of the resolution. AYS says the company lacks transparency in disclosing the amount of plastic it uses. In Kroger's proxy statement, shareholders asked the board to issue a report on the company’s plastic use and give details on company strategies or goals to reduce the use of plastic packaging.
Kroger has not yet responded to a request for comment, but the board of directors recommended voting against the proposal, saying in an SEC filing that the company has already set sustainable packaging goals for 2030 aimed at reducing packaging pollution, “improving end-of-life management for packaging, and driving demand for recycling through our material choices and customer engagement.”
Some experts think these types of shareholder proposals, as well as waste company reports on their own handling of plastic, could continue to ramp up. Waste companies have increasingly called out plastic recycling as a goal in their ESG reports as well.
Meanwhile, arecent reportfrom the Harvard Law School Forum on Corporate Governance says shareholder proposals related to ESG practices are on the rise. At the end of the 2020 proxy season, 90% of S&P 500 companies had published some kind of ESG report, up from 86% the prior year and 20% 10 years ago.
The Securities and Exchange Commission’s new leadership under President Biden may be more supportive of shareholder resolutions on ESG issues than it was under the Trump administration, the Wall Street Journal reported, adding that the SEC under Trump gave guidance that encouraged companies to block certain ESG-related shareholder resolutions.
Tracking recyclability lawsuits
Environmentalists and consumers have filed several lawsuits so far in 2021 that aim to prove that major corporations have made false claims about the recyclability of their products.
Under the Federal Trade Commission's (FTC) Green Guides, manufacturers are required to ensure their labeling claims are truthful. One key part of the Green Guides is a rule that only allows companies to make unqualified claims about a product's recyclability when 60% or more customers have access to recycling facilities accepting the material in places where the product is sold. One recent example is the Smith v. Keurig Green Mountainlawsuit first filed in 2018, in which a California consumer claims the labels on Keurig’s single-use coffee pods, known as K-cups, misleads consumers into believing they can be recycled. The company has said its pods are indeed recyclable.
An uptick in these types of recyclability lawsuits in the last few months hints that environmentalists see legal recourse as a strategy for targeting greenwashing. Jan Dell of the Last Beach Cleanup, an environmental group that recently sued TerraCycle and eight brands for alleged false recyclability claims, said she could not comment directly on ongoing lawsuits, but she believes companies need to be transparent and accountable when they tout their products as recyclable.
"In the U.S., it is the wild, Wild West of product labels and claims right now. There are weak laws and no sheriff in town," she said, "so product companies are claiming and labeling products as recyclable, compostable or reusable with little fear of government enforcement."
Mark Henriques, partner at the firm Womble Bond Dickinson, wrote in a recent National Review article that some recyclability lawsuits may unfairly target companies that are making efforts to improve their ESG practices. At the same time, he cautioned that companies advertising products with recyclability language or logos should “carefully document” their claims and closely read the requirements outlined in the Green Guides to make sure they align with the current standards.
Here are a few of the recyclability lawsuits we’re following:
Sierra Club vs. The Coca-Cola Co. et al.
The lawsuit: California consumers and the Sierra Club sued the Coca-Cola and BlueTriton Brands on June 16, saying the companies falsely claim some of their plastic beverage bottles are 100% recyclable. The Sierra Club filed two lawsuits, one on its own behalf and a class action complaint on behalf of consumers.
According to the lawsuit, the bottle’s label and cap are made from a type of polypropylene the Sierra Club states is not recyclable. The lawsuit also claims that while the bottles themselves are made of PET, which is recyclable, “28% of PET plastic that is deposited for recycling is unrecyclable due to contamination and processing loss.” The rest may end up in landfills or waterways, the Sierra Club said.
Neither Coca-Cola nor BlueTriton Brands has responded publicly to the lawsuits, and a spokesperson for Coca-Cola said the company does not comment on pending litigation. BlueTriton has not yet responded to Waste Dive's request for comment.
The latest: On Sept. 30, Coca-Cola requested that the judge throw out the two lawsuits, arguing that the plaintiffs cannot sue since they did not claim to be harmed by the labels, Law360 reported.
Last Beach Cleanup vs. TerraCycle Inc.
The lawsuit: The Last Beach Cleanup, a nonprofit environmental organization, filed a civil complaint against TerraCycle and eight brands in March, claiming the brands used deceptive labeling for mail-in collection programs.
The brands named in the lawsuit use TerraCycle’s mail-in recycling program for products and packaging that is considered hard to recycle or is not accepted in most municipal recycling programs. CSC Brands, Gerber, Late July Snacks, L’Oreal USA, Materne North America, Coca-Cola, Clorox, Procter & Gamble, and Tom’s of Maine are all named in the complaint.
The Last Beach Cleanup says TerraCycle advertises free recycling programs, but it doesn’t clearly disclose that the free service is limited and that consumers may have to pay to send in certain items. The lawsuit states that those caveats could prompt consumers to throw away the items, or, “worse yet, some consumers instead discard the packaging into their curbside recycling bins, thereby contaminating legitimate recycling streams with unrecyclable materials and increasing costs for municipalities.” The suit also claims that it’s not clear how many tons of material TerraCycle recycles from the amount it collects.
TerraCycle CEO Tom Szaky told Resource Recycling and Vox that the company disputes the claims. The TerraCycle labels do not guarantee free recycling availability, he said, and the company provides recycling documentation to all its customers.
The lawsuit: Greenpeace’s lawsuit against Walmart, filed in December 2020 in California Superior Court, alleged the company has falsely claimed its private-label products made from plastics Nos. 3-7 are recyclable. Walmart uses How2Recycle labels that indicate that packaging is either recyclable depending on local regulations or recyclable if consumers follow certain instructions.
Greenpeace argued the labeling is deceptive because most Californians — as well as most U.S. residents — do not have access to facilities that can recycle these types of plastics, meaning the packaging will likely end up in a landfill, not a recycling bin.
Walmart filed a motion to dismiss the case in March, arguing that “none of the allegedly deceived consumers are parties here, and the products are not erroneously labeled.” Walmart maintains its recycling labels are clear, and “the reasons more plastic products are not recycled involve market conditions and third-party actions for which Walmart is not responsible.”
The latest: On Sept. 20, Judge Maxine Chesney of the Northern District of California dismissed the case, ruling that Greenpeace lacked standing to sue Walmart.
Article top image credit: Justin Sullivan via Getty Images
How one California almond grower is doing more with less
Everybody has a happy place, and for Christine Gemperle, that place is deep in the heart of her almond orchards. Gemperle and her brother Erich farm 135 acres of orchards as the sole managers and operators of Gemperle Orchards. The fact that she finds her happy place so readily despite the economic and environmental pressures that she and other almond growers face testifies to her belief that the hard work and sustainable growing practices she’s adopting will kick those pressures into reverse.
If anyone knows how to make sustainable almond farming work, Gemperle does. Having grown up in a poultry- and almond-farming family in California's Central Valley, she's spent much of her life watching farmers steward the resources around them.
The two-person operation that she and her brother run sounds intensive and demanding—which it is—but Gemperle insists that despite its attendant responsibilities, the setup has its advantages.
"If you own a farm, I think you should be part of the workforce," she opines. "I would rather do 10 extra hours of hard work a week than five extra hours of paperwork any day. Doing things this way means Erich and I know every aspect of this operation inside and out."
That gives Gemperle a unique perspective on how almond agriculture is changing along with the climate.
"It's definitely changed," she affirms. "Sometimes we have to wait until December to get our first rains, whereas when I was a kid it usually started in October or November. And we used to have the valley fog, which helped put our trees into the dormant cycle that they need. Now we're not seeing that as much because we don't have the moisture."
And despite describing California as having an elaborate water-delivery system, it's no secret that it was built for a different climate than what we face now. No longer can California rely on a winter's-worth of Sierra Nevada snow to fill reservoirs as it melts.
"Now we're seeing these big rain events come through and drop a lot of water that our system isn't set up to collect," Gemperle observes. Case in point: When unusually high rains several seasons back brought as much rain in one day as her water district needed for a whole year, much of it flowed directly to the Pacific Ocean rather than being captured for future use.
Gemperle refers to research trials underway to develop best practices for on-farm groundwater recharge, the practice of applying excess winter stormwater to dormant almond orchards, allowing it to seep down and replenish underground aquifers. California's aquifers are the state's largest water storage system, and water recharged back into them is used statewide for drinking water and farming.
Every drop counts
An evolved water-management policy and infrastructure might one day make that possible, but until then Gemperle Orchards monitors "every drop we use," Gemperle insists, "and we make sure that it's all focused on the growth of the nut and health of the tree—but not in excess beyond that."
In Gemperle Orchards' case, farming with less water means intensive soil-moisture monitoring, strategic-deficit irrigation and the use of technologies that create efficient irrigation schedules tailored to the operation's water supply, evapotranspiration rates and even weather forecasts—"because the schedule will change as you go through the irrigation season," Gemperle explains. She praises the technology as "very smart and very tied to the biology of the tree," adding that it "goes deep into our understanding of the relationship between the soil, the tree, the climate and water availability."
"Our work completely revolves around the climate and the weather, the availability of water, when it rains and how much it rains," Gemperle says.
Though these factors are keeping farmers on their toes, right now, Gemperle feels good about the systems and best water management practices she and her brother Erich have established within their orchards. Almond farming has progressed greatly since Gemperle was a child, and she’s hopeful that the industry's continuous improvements are paving the way for future generations.
Visit Almonds.com for more information on how California almond growers are innovating to use water in the most efficient way possible.
Article top image credit: Permission granted by Al Golub Photography
Broiler chicken industry points to sustainability gains over past decade
By: Chris Casey• Published Sept. 22, 2021
The National Chicken Council, a poultry industry trade group, has released its first U.S. Broiler Chicken Industry Sustainability Report. It found that the industry cut its greenhouse gas emissions per kilogram of bird produced 18% between 2010 and 2020, despite producing 21% more poultry by weight in that same time period. Land and water use fell 13% and fossil fuel consumption dropped 22%.
The report also highlighted improved animal welfare standards among poultry producers, with on-farm mortality rates for broiler chickens declining 72% since 1925. Access to adequate feed improved and the animals are now less susceptible to disease and predators, and are raised by professionals trained to industry welfare standards, the group said.
As consumers seek out food from more environmentally conscious sources, the chicken industry has a vested interest in framing its members as sustainable and ethical.
The sustainability of poultry companies' operations have come under fire after reports detailed their heavy contributions to greenhouse gas emissions and fossil fuel use. In 2019, a climate change report from the Intergovernmental Panel on Climate Change, commissioned by the UN, found that if the world population shifted from meat and embraced a more plant-based diet, by 2050 it could reduce global carbon dioxide emissions by up to eight billion tons per year.
Poultry processing companies, who make up the membership of the National Chicken Council, want to build trust with consumers regarding their practices and to keep chicken a staple in their diets. And they've been rolling out a series of commitments to turn the conversation positive.
Critics have also questioned how the industry raises chickens, arguing that today's birds are bred for quantity of meat, at the loss of quality of life. White striping disease, a muscular ailment that erodes a chicken’s muscle and increases its fat levels, is now found in 99% of supermarket chickens, according to a report released this week by the Humane League. The animal rights group said it occurs when chickens are bred for rapid growth.
Many consumers have shown they prioritize ethical production of chicken. According to a report from Compassion in World Farming that references Mintel data, 29% of consumers said the most important thing to them when buying chicken is the "humanely raised" label.
For the poultry industry, being responsive to consumers' concerns and demonstrating its sustainability is key. Many people are looking for more environmentally friendly ways to fulfill their protein needs. In lieu of poultry, some are turning to plant-based chicken, which saw an 18% increase in sales in 2020,according to SPINS data.
Article top image credit: Scott Olson via Getty Images
Farm to pint: How Anheuser-Busch cultivates its ingredients amid a changing climate and consumer
In addition to stringent farming protocols, the company is investing millions to find the next rice, hops and barley varieties that can be grown using less water or are more resilient to diseases.
By: Christopher Doering• Published Feb. 20, 2020
When it comes to making beer, few things matter more than ingredients. At Anheuser-Busch, the U.S. division of the world's largest brewer AB InBev, changes in what consumers look for in their beverages and a more volatile climate, have forced the company to change how it goes about purchasing ingredients now and laying a foundation for new ones well into the future.
"Just from the brewing side of the brewmaster's standpoint, understanding where your ingredients come from is an important part of our job," Travis Moore, head of North America brewing for Anheuser-Busch, told Food Dive. "Because we can't make really great beer without having really great ingredients."
The beer giant, known for popular brews such as Bud Light, Budweiser and Michelob Ultra, routinely tests ingredients before they go into the product. It is also investing millions of dollars to find the next rice, hops or barley varieties, such as versions that can be made using less water or are more resistant to challenges such as drought or diseases.
Working closely with farmers
Anheuser-Busch works closely with more than 1,000 U.S. barley, rice, and hops farmers — some of whom the company has partnered with for several generations — to make sure the crops are grown using its exact specifications. Once the company provides farmers with crop protocols, it keeps in close contact with producers to offer insight, guidance and help them adjust to conditions like temperature or precipitation to meet these specifications.
Jess Newman, senior director of agriculture procurement and sustainability at Anheuser-Busch, has a 15-member team of agronomists stationed in regions where the commodities are grown — employees are based in Idaho, Montana, North Dakota and Minnesota for barley; a hops agronomist in Washington state and another agronomist in Missouri to support rice farmers.
"Just from the brewing side of the brewmaster's standpoint, understanding where your ingredients come from is an important part of our job. Because we can't make really great beer without having really great ingredients."
Head of North America brewing, Anheuser-Busch
Newman said Anheuser-Busch is vertically integrated into agriculture, owning malt plants, hop farms and rice mills. This gives the company a higher degree of control over ingredient quality, which is critical to beer production.
"Even though we've contracted with them to grow certain varieties with us, we don't actually accept them or say we want to use them until one of our brewmasters and one of the folks on the agronomy team gets to actually evaluate them and rub them, smell them and inspect them," Moore said. "So we do that for every single lot of hops that we use in our process so we don't by chance get a bad hop variety."
The quality check continues away from the farm, too. In St. Louis on an early December afternoon, rice and barley removed directly from railcars sitting on Anheuser-Busch's property are sampled by the brewmaster before a decision is made whether to unload and use them.
In addition to hops, barley and rice, the beer company is heavily dependent on two other ingredients to make its beers: its own proprietary yeast and locally sourced water. In St. Louis, Anheuser-Busch has a partnership with the city and a water treatment facility where it takes the liquid and filters it on its own a few more times before brewing. The water also is tasted and checked by those who oversee brewing before it’s used to make beer or clean out their equipment.
St. Louis also plays a role in yeast distribution: Anheuser-Busch ships from its headquarters more than 300 different yeast strains to brewers around the world — each beer requires a different variety depending on what kind it is, such as an IPA, stout or hefeweizen.
Newman, whose team is responsible for procuring ingredients from farmers, said having a close relationship with growers and maintaining as much oversight of the entire process as possible is crucial. Not only does the company need the right quality, but Anheuser-Busch must ensure it has the right amount.
In addition, Newman said because crops grown for beer are more niche, the company needs to make sure producers are getting a competitive price and receiving the technical support they need tokeep raising them.
Betting big on research for long-term payout
A key part of Anheuser-Busch's ingredients strategy includes investing in research for new varieties that may not pay off for several years. At the company's Fort Collins, Colorado, facility, agronomists are naturally breeding barley varieties that factor things such as stress from drought, shortening the growing cycle of the plant or reducing the need for inputs like water or fertilizer. As organic becomes more coveted by the consumer, researchers are devoting more attention to that too.
"Why do we breed our own barley varieties? Because barley is niche, right? It's not exciting enough because of its market size for independent breeders to be interested," Newman said. "There is a void of others who are interested in these crops and that makes sense for us in the U.S. because barley's really only used in brewing beer."
Once Anheuser-Busch develops a barley variety that it wants to use, the company conducts crop management trials where it grows the commodity for at least three years. During that time, Anheuser-Busch is designing a protocol to help its growers know exactly how to raise the crop, such as how to apply nutrients and irrigate. Those guidelines are given to farmers when they come and pick up their seeds.
"These are not short-term business cycle decisions," Newman said. "We definitely have to think about the long-term because that's how agriculture works."
Beyond its own walls, Anheuser-Busch has turned to partnerships with land grant schools such as the University of Idaho and Montana State University. The relationship has already paid off, leading to the development of a system that delivers water to plants closer to the ground.
"It sounds really simple, but makes a massive difference," Newman said.
The technology, called Low Elevation Sprinkler Application, or LESA, can curtail water use by up to 30% as more of it gets into the ground rather than getting blown away or landing on the leaves of the plant. It also reduces the risk of a disease forming and can curtail energy use in operations where groundwater pumps are in place.
These advantages have proven attractive for farmers, with some producers initially willing to pay half of the money to install the system with Anheuser-Busch cost-sharing the rest. Increasingly, more farmers are installing the technology on their own as their old irrigation systems age out.
Navigating 'feast or famine' years
The research fromCPG companies such as Anheuser-Busch has become increasingly important as climate change impacts growing conditions. Newman said the biggest impact on its supply chain has been less about warming temperatures and more about greater variability in precipitation. She said the "feast or famine years" for precipitation is the biggest challenge for the company when it comes to sourcing ingredients and controlling sprout in small grains like barley.
"It stresses our procurement, because it stressed our partners (that grow the crops), many of which we've worked with for many generations, she said.
In 2019, barley growers in North Dakota and Minnesota had to delay spring plantings because conditions were too wet, but then rain came around harvest time, causing germination, mold and blight to appear in some areas. With the volatility in rain, breeders at the company are developing barley varieties that are less vulnerable to sprouting or diseases that can happen during harvest. The varieties could be grown commercially within three years, Newman said.
"We're committed to the growing regions where we operate. So, then it becomes a question of, okay, what can we do to lessen this problem?"
Senior director of agriculture procurement and sustainability, Anheuser-Busch
Work is currently being done to breed barley with a shorter growing cycle to reduce the risk of sprout events from late-season rain. Anheuser-Busch also is looking into ways for the brewer to use "slightly out of spec ingredients ... without ever compromising the quality of our beer."
"We're committed to the growing regions where we operate. So, then it becomes a question of, okay, what can we do to lessen this problem?" Newman said.
Anheuser-Busch is working with Indigo Ag to pilot a program with rice suppliers in Arkansas that would require the commodity to be grown with 10% less water, carbon and nitrogen emissions compared to county averages. In exchange, the farmer receives a premium for their crops to cover the risk of trying new practices. Other commodities are being considered for similar environmental specifications in the future.
Craft beers spur ingredients innovation
The environment is not the only factor influencing how commodities are grown. Changes in what consumers look for in their beers plays a large role in how Anheuser-Busch sources its ingredients. The popularity of craft beers — there were 7,346 makers of the specialty brews in 2018 compared to 3,814 just four years earlier, according to the Brewers Association — has spurred brewers to look for new versions of ingredients to get their product to stand out.
"The more choices we give them (when it comes to ingredients), the more the craft brewery can really flourish and push boundaries," Newman said.
Today, Anheuser-Busch purchases up to 30 varieties of hops, many of them in smaller volumes, for its craft partners to use and experiment with — an increase from roughly 10 a few years back. The introduction of organic beers, which includes large brews such as Michelob Ultra Pure Gold, also has prompted the company to explore ways to expand how much of the specialty ingredient it has at its disposal.
To encourage more barley growers in Idaho to switch their conventional crops to organic — a process that can take three years — the company launched Contract for Change, a long-term contract with farmers to provide transitional and organic premiums during the change. The program also provides technical support to these farmers during this transition period.
“A big part of the innovation process is ensuring that what ingredients you plan to use are going to be able to scale with the demand growth of that product," Moore said. "You wouldn’t set out and develop a product that uses something that is not scalable ... You have to take the approach of don’t fall in love with something you can’t have.”
Article top image credit: Anheuser-Busch
Consumer demand for sustainable packaging holds despite pandemic
By: Lauren Manning• Published April 27, 2021
Two-thirds (67%) of consumers consider it important that the products they buy are in recyclable packaging, and the same percentage consider themselves environmentally aware — the same share as before the pandemic, according to Trivium Packaging’s 2021 Global Buying Green Report.
The report is based on a survey conducted with Boston Consulting Group with 15,000 consumers in Europe, North America and South America.
More than half (54%) take sustainable packaging into consideration when selecting a product. Younger consumers — those 44 years and younger — are leading the charge, with 83% reporting that they are willing to pay more for it, compared to 70% of all consumers. However, the pandemic has caused about one in three consumers to lower the importance they place on sustainable packaging.
Despite their willingness to support sustainable packaging, many consumers are misinformed about the recycling rates of different materials. Survey respondents believed that 48% of metal was recycled, when the real rate is 64%, according to figures from Global Recycling and the International Aluminum Institute cited in the report. However, the recycling rates for glass, plastic and liquid cartons were much lower than consumers expected.
In spite of the pressures of the pandemic, sustainable packaging has emerged as a top priority as consumers show more interest in their environmental footprint and that of the overall food system. Trivium’s research tracks with other efforts to quantify consumers’ sentiments during this time. A 2020 Study from Shorr Packaging found that two-thirds of shoppers who have made changes in their purchasing behaviors during the pandemic are paying more attention to packaging. Fifty-eight percent of survey respondents reported being "likely" or "very likely" to select products that use recyclable or reusable packaging.
This is especially true among younger consumers. Millennials are more likely to buy sustainable products than other generations, while Gen Z is emerging as a generation that is willing to spend more for products that meet their sustainability standards.
In response to that unwavering demand, a number of consumer brands have made strides towards more sustainable packaging materials over the past year. Nestlé recently earmarked 2 billion Swiss francs ($2.1 billion) to support eco-friendly alternatives. A range of manufacturers are testing packaging that uses upcycled food, recycled materials and that swaps plastic for paper or other seemingly more sustainable options.
Plastic has been top of mind for many consumers. The report from Trivium — a manufacturer of metal packaging — found that 55% of consumers considered plastic as "harmful," and 63% connected the material with ocean pollution. A number of frozen food manufacturers including Danone and Mondelez have signed on to the Ellen MacArthur Foundation’s Global Commitment to eliminate plastic pollution. This effort aims to achieve 100% reusable, recyclable or compostable plastic packaging by 2025.
Swapping out conventional packaging for eco-friendly alternatives is not an easy task, however. In many cases, switching to sustainable packaging materials can cost a company 25% more compared to traditional packaging. These newer options may not perform like their conventional counterparts, either, especially when it comes to product freshness and being able to withstand temperature changes. Consumers’ willingness to pay more for products with sustainable packaging could help the industry absorb the increased costs around making the switch.
Despite the clear momentum towards sustainable packaging, Trivium’s study suggests that there is still more work to be done in educating consumers — especially about which materials are and can be recycled. The report blamed the misconceptions to mixed messages in labeling and marketing materials around packaging as well as different local recycling practices. Trivium is hoping to resolve some of the confusion through its standardized Metal Recycles Forever logo and other educational resources.
Figuring out the most effective way to help consumers make educated purchasing decisions is not a new endeavor for the food industry. Although consumers report being influenced by sustainability initiatives, many do not notice these claims on packaging, according to a 2018 study from QuadPackaging and Package Insight. Many attribute the ineffectiveness of on-pack sustainability messaging to the serious label fatigue that some consumers suffer. Brands that want to reach consumers through sustainable packaging efforts may need to do more than simply add a label claim or logo to catch consumers’ attention.
Article top image credit: Spencer Platt via Getty Images
Coca-Cola scores highest on sustainable packaging, but most CPGs fall short, report says
By: Chris Casey• Published Sept. 30, 2021
Coca-Cola scored the highest for packaging sustainability among 50 consumer-facing companies in a report from nonprofit As You Sow. The Corporate Plastic Pollution Scorecard 2021 graded companies on factors including their packaging design, the amount of recycled content in their packaging, and their financial support of recycling efforts.
The beverage giant earned a "B" from the nonprofit for its transparency around its packaging use, strong commitment to recycling and its support of producer responsibility initiatives. Other food and beverage companies were graded "C+" — including Keurig Dr Pepper and Nestlé — or worse, with eight earning an "F."
According to As You Sow’s Waste Program Coordinator Kelly McBee, the greatest areas of improvement came with companies' pledges to make packaging 100% recyclable, compostable or reusable by 2025, as well as commitments to improve packaging design.
As You Sow, founded 15 years ago, is used to holding CPGs' feet to the fire to get them to adopt more sustainable practices. After the nonprofit filed a shareholder proposal this year that would compel Keurig Dr Pepper to report how much of its plastic waste escapes into the environment, the beverage company committed to cutting its use of virgin plastic by 25% by 2025. The group triggered similar commitments from PepsiCo and Mondelēz.
Kraft Heinz also committed to making 100% of its packaging globally recyclable, reusable or compostable by 2025. However, the company received a "D" score in the As You Sow report for reasons such as limited packaging data transparency and low financial contributions to recycling efforts.
As You Sow's McBee said that there is reason to push companies to follow through on their 2025 pledges and do more.
“I think there is danger there of the public seeing these announced goals and being like ‘Oh that’s great, they’re doing so well,' but not having the context of how much more is needed,” McBee said.
The report details how companies' plastic reduction goals have increased "ninefold" since 2019, when only two had such commitments. However, only 18 of the 50 companies tracked by As You Sow currently have pledges to reduce their plastic.
McBee said that Unilever made one of the best commitments among the 50 CPGs that As You Sow ranked. The food giant, which scored a "C," committed to cutting out a third of its plastic altogether by 2025. However, she disputes the company's claim that reaching its goal would require a 100,000-ton decrease in plastic, saying that this number would only represent one-seventh of its plastic use.
McBee said the nonprofit is also fearful that companies will “kind of overcorrect” in response to consumer demand for sustainable packaging by embracing a type of compostable packaging that is not easy for consumers to process and would end up in landfills anyway. Most recently, PepsiCo announced a compostable bag for its Off The Eaten Path brand.
In the report, the nonprofit lays out recommendations for CPGs to make their packaging less plastic-reliant. These include phasing out flexible plastic, getting their packaging certified as recyclable by a third party, and donating more money to recycling efforts. As a way to show the public their dedication to sustainability, McBee said, the nonprofit encourages companies to donate a specific dollar amount per metric ton of plastic used, and to report those donations.
According to the report, "more than twice as many companies" compared to 2020 participated or financed research into recycling infrastructure, though that total makes up only 5% of the $17 billion in funding the group says is needed.
Article top image credit: Justin Sullivan via Getty Images
Why McCormick is setting 'audacious' sustainability goals
By 2025, the spice company plans to reduce its emissions, solid waste and carbon footprint while sustainably sourcing its top five ingredients.
By: Lillianna Byington• Published Feb. 13, 2020
Going green can come with a major price tag for companies,but McCormick's sustainability leader said the spice maker can deliver top tier financial performance while meeting its sustainability goals by 2025.
"We believe that our consumers are expecting us to really bring this platform of sustainability into the business," Michael Okoroafor, McCormick's VP of global sustainability and packaging innovation, told Food Dive. "We think it is important for businesses, especially key business leaders, to step up in this area. Being the leader in herbs and spices, we feel an obligation to do this. It is about doing the right thing, and it's about doing well by doing good."
In 2017, McCormick pledged that by 2025, the spice company would reduce emissions 20%, lower solid waste by 80% and drop its carbon footprint from packaging 25%. It also committed to 100% sustainable sourcing for its five mainstay ingredients: black pepper, red pepper, vanilla, oregano and cinnamon.
But making pledges isn’t enough, reports have shown. In order to build brand loyalty, consumers want to see that companies are delivering on those targets and are transparent to shoppers about their progress.
"We believe that our consumers are expecting us to really bring this platform of sustainability into the business."
VP of global sustainability and packaging innovation, McCormick
"Building trust and transparency in our entire system, for me and for our company, is paramount," Okoroafor said. "We are confident that, in some cases, we're going to get there ahead of 2025 — make no mistake about it."
So how is the company doing about two years after its initial announcement?
Overall, McCormick's CEO Lawrence Kurzius said in a letter to stakeholders that the report showed "significant progress in sustainably sourcing our key raw materials," but that its efforts are all ongoing.
A closer look at the numbers
According to the report, McCormick has reached 24% sustainable sourcing for black pepper; 0% for cinnamon; 4% for oregano; 60% for red pepper and 60% for vanilla with five years left on the clock.
To keep it progressing on its sourcing goal, the company announced in January that it createdGrown for Good, a sustainable sourcing framework for herbs and spices that includes a new certification standard with traceability and quality requirements, as well as farmer and community resilience criteria.
McCormick is also working with suppliers to remove middlemen, often called collectors, to buy its five main spices directly from farmers, allowing the company to help them get better prices for their goods, Okoroafor said. He hopes these efforts inspire other spice companies to do the same.
"We hope that we can lead the way," Okoroafor said. "And we hope that others will see the benefit of doing that."
In terms of its other goals, the company has reduced solid waste by 63%, up from 61% in 2018, decreased its carbon footprint from packaging by 8% and dropped greenhouse gas emissions by 1%.
"You don't get there if you don't make the commitment, and we're not telling you to believe what we are saying. Look at the numbers, look at the metrics, look at our audacious commitment," he said.
Although McCormick still has a lot more work to lower its greenhouse gas emissions, the company reached an agreement with energy company Constellation in September 2019 to buy renewable energy from a solar center being developed in Virginia. The deal is part of Constellation’s largest renewable purchase agreement and will allow McCormick to use renewable energy for its Maryland and New Jersey facilities.
Consumer demand for more alternatives to plastic packaging and recyclable options is also driving some global CPG firms to double down on waste-reduction efforts with their packaging.
McCormick's 2025 goal is to have 100% circular plastic, and its recent report showed that 84% of its plastic is now recyclable or reusable.
"By 2025, none of our packaging design will enter landfill. We design it in such a way that you can either recycle it, reuse it or re-purpose it and that is for all plastics," Okoroafor said. "So that's the level of what I call audacious commitment that we're making, which means we are cognizant of the fact that it will require an investment."
The company, however, is not the only one in the ingredients space making sustainability pledges in recent years. About 51% percent of chocolatier Barry Callebaut's raw ingredients are now sustainably sourced, according to its Forever Chocolate progress report. And global spice company Olam launched a program in 2018 to increase the traceability of its spices by showing the full supply chain.
"At McCormick we know that our sustainability journey is never complete," Kurzius said in his letter to shareholders. "While the 2025 goals we’ve set give us important targets to work toward, we know that our sustainability journey is ongoing."
Article top image credit: Christopher Doering
Breaking down Mars' maverick move for a more sustainable palm oil supply chain
The company is reducing its palm oil mill count from 1,500 to 50 in three years.
By: Emma Cosgrove• Published Dec. 14, 2020
After more than a decade of work intended to rid palm oil supply chains of deforestation, the results don’t match the effort.
Deforestation has increased, despite more monitoring, more certifications, more on-the-ground cooperation and the availability of palm oil certified by the Roundtable on Sustainable Palm Oil for 12 years.
Global land cover decreased from 2000 to 2015, according to The United Nations Sustainable Development Goals Report for 2019. Forest area as a share of total land is still declining, but the rate of decline is slowing, according to the UN. Indonesia, the top global palm oil producer, experienced the third-most forest loss in the world in 2019, according to the World Resources Institute — though it does represent an improvement from previous years.
Companies that depend on ingredients at the center of these stats, namely palm, soy, cattle and wood, have to reckon with the fact that their individual actions to date are not enough to substantially shift the macro trend.
"Through our process of simplification, we're focusing on awarding longer-term contracts and building closer partnerships with the suppliers that are remaining in our supply chain," a Mars spokesperson said via email at the time of the announcement.
Cutting suppliers for violating deforestation policies is not new, Daniel Strechay, global director of outreach and engagement for RSPO, said. Hand picking a small list of mills to partner with is.
Mars' move, and others like it that may follow, supports the most advanced, transparent suppliers and eschews the rest. Working with fewer suppliers makes keeping to its strict standards simpler for Mars, but it also means that it holds sway with fewer mills and therefore farms.
"Anytime you pull out ... and there's no longer the option to do business with you, you lose a little bit of leverage to be that driver for positive change," Strechay said. "What you want to do is to stay engaged, or at least for the organization to have the opportunity to source to you in the future," he said of suppliers cut off in streamlining efforts like Mars'.
"Simplifying supply chains for global customers is not going to clean up the commodities trade. It's like trying to fix a leaky faucet in a burning building."
Senior palm oil campaigner, Greenpeace USA
Mars says it does have a plan to maintain influence in producing regions.
"We don't stop at our own direct supply chain," Child said.
Mars says it is continuing work with smallholder farmers to transition to sustainable practices and working with local governments, NGOs and other buyers to further local initiatives on the ground in producing countries.
Clarisse Chang, operations manager and senior sustainability analyst at EcoVadis, called the move "drastic," adding that Mars was clearly trying to be a leader in the space. But as Mars is the first major purchaser to streamline its supply chain in this way, the macro outcome is unknown.
And Diana Ruiz, Greenpeace USA senior palm oil campaigner, is uncertain Mars' move to reduce suppliers will bring large-scale results in the palm oil market.
"Simplifying supply chains for global customers is not going to clean up the commodities trade. It's like trying to fix a leaky faucet in a burning building," Ruiz said in a statement reacting to the news in October. The way to bring about change, according to Ruiz, is to source only from "clean" suppliers and reduce overall buying volume.
Mars' "radical simplification" strategy, as Child called it, is the result of two years of thought, following the realization the company needed to take a clean-slate approach to palm oil.
"It became clear that buying anonymous commodities through complex supply chains with a sole reliance on certification would not suffice to effectively address deforestation," Child said.
The suppliers Mars sticks with will be those "who can commit to Mars' environmental, social and ethical expectations, and commit to driving positive improvements throughout their extended supply chains — and they must have the infrastructure and capacity to do so," he said.
"It became clear that buying anonymous commodities through complex supply chains with a sole reliance on certification would not suffice to effectively address deforestation."
Global Vice President of Sustainability, Mars Wrigley
Mills that can provide full transparency into their own tiers and facilitate Mars' methods of mapping and monitoring will stay. Those that can meet these standards will be rewarded with long-term contracts, according to the company.
"We talk about vendor consolidation a lot," said Jessica Kirshenblat-Gooderham, customer success team leader for sustainable procurement at EcoVadis. It's a tactic across sustainability and ethical supply goals to make complex supply chains easier to manage.
With a short list of approved suppliers, Mars is confident it will have a deforestation-free supply chain long-term.
Shifts in the palm oil supply base
The status afforded to the suppliers of a major global palm sourcing organization is a powerful force in the field, said Strechay.
"People want to work with the best of the best. And they want to work with large organizations that have footprints across the globe, because other organizations see them, working with them doing business with them, and that helps them reputationally," he said.
Suppliers who make Mars' elite list will likely gain status, and business, because of it.
But what about the hundreds of suppliers it will no longer purchase from? How would moves like Mars' at greater scale affect palm-producing regions and the remainder of the overall palm oil supply?
"Radical simplification" could also leave hundreds of suppliers without ample reason to improve if the practice spreads to other sourcing organizations.
"There's two sides of the coin. Do you continue to engage with other suppliers and try to get them up to your standards, while you have leverage? Or do you work from outside?" Strechay asked.
A similar but less dramatic shift at work among other palm oil buyers may offer some context. Some deforestation-conscious brands are slowly moving away from what’s called "mass balance" purchasing to a segregated deforestation-free supply.
Mass balance is the term used when deforestation-free palm oil is physically mixed with conventional palm oil. The sellers know the percentage of each type but mix them together and charge a rate based on the percentage. When deforestation-free palm oil is kept physically separate from conventional and processed in certified mills, it's called segregated supply.
Mass balance purchasing, intended to make space for infrastructure development, can allow a brand to display certifications to the consumer without converting to 100% segregated supply. "There’s good evidence … that smallholders rely on the mass balance supply chain," said Strechay.
The suppliers of segregated palm oil tend to have more mature businesses than those participating in the mass balance markets. It could be concluded that the market is moving away from the most vulnerable farmers, but Strechay said this isn't the case, yet.
"I wouldn't call it disruptive at this point, because we do have an abundance of material that's going unsold as certified sustainable palm oil. So we actually have a need for greater uptake," he said of the segregated supply chains. "I'm not worried about that just yet. I think that would be a good problem for us to have."
Article top image credit: Permission granted by Mars
Nestlé, Campbell Soup 'highly exposed' to climate risks, investor group warns
By: Chris Casey• Published Sept. 29, 2021
Major food players including Nestlé, Campbell Soup, Nissin Foods, Ajinomoto and Kerry Group ranked among 50 large companies that are "highly exposed" to the physical effects of climate change relative to other businesses in the sectors and regions, according to the Institutional Investors Group on Climate Change (IIGCC).
The IIGCC, which represents over 50 global investors representing $10 trillion in combined assets, published a set of expectations it wants these at-risk businesses to implement to protect their operations from the effects of climate change. This includes setting up a climate risk assessment to identify the significance of potential climate-related effects on their products, developing strategies to handle the material and financial risks, and locating adaptation solutions.
As extreme weather events like droughts and wildfires have increased in recent years, this report shows that investors see many food companies as largely unready to handle the ingredient shortages, price hikes, and supply issues caused by climate change.
A drought across Canada and Europe caused a poor 2021 harvest season for durum wheat, whichhas the potential to spur a shortage of pasta. Prices of crops impacted by dry weather conditions, such as wheat, corn and soybeans, have surged, which manufacturers have had to pass down to the consumer. And consumers are noticing: In a survey by Inmar Intelligence, over 84% of shoppers said they observed an increase in prices for groceries and household items that they regularly purchase.
These issues come at the same time as labor and freight issues that are stressing food supply chains.
In its report, the investor group says that even if global temperatures do not exceed 1.5 degrees Celsius over the next 20 years, there will be tangible effects for businesses. For example, the average length of droughts will increase by two months.
The IIGCC expects investors to engage with those companies that ignore the impacts of climate change.
"It is more important than ever that investors are able to understand the risks and associated financial impacts that companies are facing when it comes to the physical effects of global warming," Stephanie Pfeifer, CEO of IIGCC, said in a statement. "This means that they can effectively identify sectors and individual businesses that are resilient or well-placed to adapt, and increase engagement with those that don’t have an effective risk management strategy in place.”
Nestlé — the largest food company in the world and considered "highly exposed" to climate change by IIGCC — has made moves to protect its operations from the effects of climate change. The food giant told Reuters in a statement that it will "assess physical impacts on our value chain over a longer time horizon.” In its 2020 Task Force on Climate-Related Financial Disclosures report, Nestlé said it has simulated different climate scenarios with physical impacts, including raw material shortages and facility disruptions, in order to track the potential financial impact on the company.
Nestlé has also invested in efforts to tackle the causes of climate change in its own operations. It announced that it is investing $1.29 billion in regenerative agriculture to lessen its carbon footprint while also providing a way to conserve the soil in which it grows food. It has also invested heavily in R&D to develop higher-yielding cocoa and coffee varieties that can produce more with the same or less amounts of water.
Campbell Soup has released a set of climate provisions that it has implemented in order to lessen its carbon footprint such as lessening emissions and fighting deforestation.
Other large food and beverage companies have made moves to cushion their supply chains from the effects of climate change. Nestlé, Danone, Kellogg, Mars Wrigley and others have focused on increasing biodiversityand resilience in products so that they are not reliant on the same crops. Two-thirds of the world's crop production is made up of just nine plants, including wheat, soybeans, sugar cane, maize, rice, potatoes, palm oil fruit, sugar beet and cassava.
Article top image credit: Scott Olson via Getty Images
Inside the growing demand for food sustainability
As studies show that shoppers care about sustainability more than ever before, food and beverage companies are pledging to make their portfolios more eco-friendly. From packaging and food waste to green investments, there is much pressure in the CPG space to achieve sustainability.
included in this trendline
How Unilever is turning sustainability into opportunity
Progress report: Brands face increasing pressure on recyclability claims in 2021
Coca-Cola scores highest on sustainable packaging, but most CPGs fall short, report says
Our Trendlines go deep on the biggest trends. These special reports, produced by our team of award-winning journalists, help business leaders understand how their industries are changing.
Davide SavenijeEditor-in-Chief at Industry Dive.