A recent Wall Street Journal survey examined the top 5,500 publicly traded companies purely on environmental, social, and governance (ESG) metrics. Surprisingly, only one food brand (Nestle) scored in the Top 100. This is especially concerning since the food industry accounts for 70% of global fresh-water withdrawal and nearly a quarter of global greenhouse gas emissions. As an industry, we must do better!
The good news is that some food brands are working diligently to become more sustainable. For instance, spice brand McCormick has been repeatedly recognized for their commitment to sustainability and diversity. They vow to continue “doing what’s right” for people and the planet. Some of their recent initiatives include increasing the representation of women and ethnically diverse talent throughout their organization, focusing on human rights, ensuring fair labor practices, and educating people about nutrition to help them live healthier lives.
Dine Brands, which owns IHOP and Applebee’s, is another company that’s committed to ESG efforts. The organization has set ESG priorities that include minimizing food and packaging waste, working with a more sustainable supply chain, donating food to the food insecure in their communities, reducing their carbon emissions, and increasing diversity and inclusion initiatives.
Increasingly, we’re seeing more food businesses embracing (or amplifying) ESG initiatives, a trend that will hopefully continue. As your food brand works to become a more responsible ESG steward, consider doing the following:
- Assess your supply chains’ ESG practices. Your business might be doing all the right things to be more sustainable – like reducing waste, switching to recycled packaging, and eliminating single-use plastics – but are your suppliers equally committed to ESG initiatives? As the old saying goes, we’re only as good as the company we keep. Therefore, it’s essential to examine the quality of your supply chain and work with suppliers who are committed to ESG efforts. Use innovative digital tools to get a better handle on your supply chain and determine whether they prioritize ESG, as well as safety, quality, and compliance. Now, it’s simple to organize supplier certifications into a system you can see and manage. Today’s game-changing software tools are accessible, affordable, and user-friendly – and are disrupting traditional market software. These tools allow companies to track which suppliers have environmental, sustainability, and compliance certifications. They also allow food brands to learn more about where their raw materials are coming from, who is processing them, and what practices they follow. By learning which suppliers are committed to strong ESG goals and practices, you can choose to stop working with vendors that are not.
- Reduce waste. Food waste is a $408 billion annual problem in the US. “The scale of this problem is huge—and it’s actually a really stupid problem,” according to the faculty director of the Harvard Law School Food Law and Policy Clinic, Emily Broad Leib. She added, “The fact that there are so many people in this country going without food and at the same time, we are wasting so much? It needs to change.” Food businesses – and their suppliers – must make every effort to reduce the amount of waste they produce. Here’s an eye-opening exercise: conduct a food waste audit so you can see where you’re wasting food (and money), then adjust based on your findings. Stop ordering more food than you can reasonably use. Buy local to reduce transportation emissions and support your local economy. Use the latest tech tools to help reduce food waste through better inventory, ordering, sales forecasting, etc.
- Be more sustainable. Many food businesses (and their suppliers) are successfully eliminating single-use plastics (e.g., packaging, plastic utensils, straws) for more sustainable options, like silverware, metal straws, and reusable (or disposable) packaging. Stop using paper towels and transition to reusable, washable cloth versions instead. Use eco-friendly cleaning products. Improve energy and water efficiency. Buy energy-efficient equipment. Go paperless. Donate, reuse, recycle, and repurpose. Many seemingly “small” acts will add up to be significant over time.
- Embrace vertical farming. Did you know that “traditional” farming is not always environmentally friendly? Some farmers destroy soil, use harmful pesticides, contribute to high emissions from truck transport, waste significant water, etc. Therefore, some businesses are opting to work with suppliers that have switched to vertical farming. As compared to traditional farms, vertical farms use fewer resources, lower emissions, and reduce transportation by locating operations near the point of consumption. Shockingly, the U.S. uses more than one billion pounds of pesticides annually in traditional farming, which negatively impacts ecosystems. In contrast, vertical farms grow pesticide-free produce in controlled, protected environments. Vertical farms also use up to 98% less water than traditional farms. As brands work to become more responsible environmental stewards, they’ll depend on alternative (more sustainable) farming options.
- Commit to ethical practices. Increasingly, consumers want to give their business to ethical companies. People are angry about many social injustices, including income inequality, lack of action around climate change, unethical product sourcing, and more. Consumers are doing their research and are favoring businesses that prioritize ethical and environmental practices. They want to see organizations commit to the sustainable and ethical sourcing of raw ingredients, safe and transparent supply chains, reducing their carbon footprint, using sustainable packaging, and treating employees fairly.
- Replicate other brands’ ESG initiatives. Chipotle is a brand that goes the extra mile with bold ESG goals. Their real ingredients are responsibly sourced and prepared with people, animals, and the environment in mind. They bought 35.7 million pounds of local produce – an investment of more than $40.2 million in support of local food systems – and will continue relying on local, sustainable farmers. They’ve also identified key water risk areas in their supply chain to inform their water conservation strategy. And ice cream icons Ben & Jerry’s are well-known and respected for their social responsibility stance. They prioritize environmental and social endeavors, donate a portion of their earnings to social causes, and use eco-friendly production methods. Replicate what companies like these are doing. Hold yourself – and your suppliers – accountable for cultivating a better world.
- Attract key audiences through your ESG focus. Increasingly, key audiences – including consumers, employees, and investors – are demonstrating that ESG factors are important as they decide where to purchase, work, and invest. They’re investigating companies’ behaviors and attitudes around issues like climate change, deforestation, human rights, and equality, and using this information to determine whether they want to align with a particular brand. As sustainability moves to the forefront for many audiences, they’re demanding more traceability around the products they buy and companies they support. This has led to more informative labeling, more detailed information around foods’ origins, as well as rising demand for safety and ESG certification and standards. As people become more vocal about the practices that they find appealing – or unacceptable – food brands are learning that they need to act – or get left behind.
- Prioritize your people. When setting (and achieving) ESG goals, prioritize your people. If you aren’t already doing so, implement fair and equitable labor practices, and increase your commitment to diversity, equity, and inclusion. These practices can positively impact retention, brand perception, customer service, guest satisfaction, consumer loyalty, and overall business performance. Investing in your workforce and providing a safe, fair, equitable place to work is always the right way to operate.
As an industry, we must address environmental issues like soil degradation, water, and energy waste, the use of harmful pesticides, climate change, and deforestation. We should also prioritize ESG issues like racial and gender equality, DEI, sustainable business practices, and fair trade. Our leaders must step up to be part of the solution. Doing so has many benefits: positively impacting brands’ bottom-lines, attracting new customers, employees, and investors, and helping the planet. It’s also, clearly, the right thing to do.