Key Challenges for Sustainability in the Food & Beverage Industry

Sustainability has been an emerging focus for Food and Beverage (F&B) companies in the current economic climate, with the growing interests of consumers and governments becoming more interventionist. Accordingly, businesses have been tasked with not only focusing on generating profits, but also to respond to the rising promise to consumers. Companies prioritizing social, environmental, and ethical responsibility with transparency are seen as meeting consumer expectations. The F&B industry can build sustainability by focusing on regulations on greenhouse gas (GHG) emissions, waste and resource consumption. This article intends to highlight the insights and opportunities for sustainable practices in difficult areas supply chains, operations and packaging. 

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Transparency in Sourcing 

Sustainability is about business survival and not just for corporate social responsibility. There has been an increasing demand for transparency from F&B brands. Thus F&B procurement is expected to integrate well with environmental, social and ethical components. Governments are introducing new regulations to increase environmental accountability surrounding GHG emissions, waste management, and resource management. F&B companies can no longer be complacent with current regulatory standards. Business model must undergo drastic changes to encompass sustainability, ethical practices which may be exceeding compliance. This requires follow-up planning and action plans that include social, environment and governance criteria. There are practical challenges to sustainability in the F&B sector; specifically changing the business model carries risk. Thus, sustainability, in the sense of not just providing ethical practices, but practices that go beyond simply legal obligation, provides a difficult challenge. Supply chain for F&B sector is expected to integrate well with environmental, social and ethical components. This involves long term planning and action plans that addresses environmental, social and governance factors. F&B companies can no longer be complacent with current regulatory standards and would need to address such issues through transparency in sourcing.  

Lack of Actionable Insight 

A smart sustainability strategy involves identifying and coordinating environmental goals according to the operational capabilities of respective organizations. The most challenging problem for many companies is in identifying gaps in operation and initiating operational changes. Any innovative sustainability strategy typically involves an on-site materiality assessment of the organization. Every business will most likely have issues based on high materiality scoring from an environmental or social perspective. Integration sustainability into corporate governance through key performance indicators and the establishment of cross-functional teams are critical components for the success of such strategies. Smart sustainability strategies should also align the right divisions of the organization to be nimble and responsive to future regulatory changes and consumer expectations. 

Traceability of Ingredients 

The F&B industry supply chain are often extensive and lack transparency. Sustainability at higher levels depends on responsible sourcing can be significant to the overall environmental and social impact of ingredients. The challenge remains in maintaining transparency regarding the traceability of the ingredient source. Traceability and assurance of provenance is often thorough and robust in relation to supplier relationship management. There are standards-based certifications available from other forms of i.e. Fair Trade, Rainforest Alliance, with alternatives that would rely on developing in-house sustainability certification. Companies should also be mindful of the risks related to deforestation and labour induced from the sourcing supplies required for their business. Transparency in supply chains can ultimately aid companies to measure supply chain risk and allow them to meet the environmental in sustainability practices.