Increased global awareness of the threat of climate change and of the adverse impacts of some business activities has propelled sustainability to the forefront of the regulatory, public and business agendas. The food industry has a particularly important role to play in achieving progress towards a sustainable future, primarily because it permeates all of our lives, but also due to its significant environmental, social and economic impacts.
Food producers and retailers should not, however, view the increasing importance of demonstrating sustainability as a burden or threat to their business operations. Rather they should see it as an opportunity to realise business benefits, including positive differentiation of both their products and their brand, lower resource and energy costs, access to new markets and customers, enhanced regulatory compliance and, ultimately, increased profitability.
BROAD AND LONG-TERM VIEW
A sustainable approach takes a broad and long-term view of business objectives and impacts, including the following key principles:
- Wealth Creation
- Reduction of greenhouse gases
- Efficiency and waste minimisation
- Fair employment practices
- Health and safety
- Community engagement
- Local economic development
At its most basic, a sustainable approach seeks to actively and demonstrably minimise the adverse impacts of business activities and products on the environment and society, whilst maximising the positive impacts on the economy.
In considering wider impacts, a sustainable approach represents a new way of doing business. It is not at odds with the fundamental business objective of ensuring a return to shareholders on their investment, but instead provides an approach for realising profits that considers external impacts and ensures viability in the long term. In fact, wealth creation is a fundamental and important feature of a sustainable business. If a company is not profitable, it cannot employ local people, source goods from local suppliers, sponsor local charities and events and contribute to local economic development.
DO NOTHING NOT AN OPTION
Businesses across the food supply chain – from farmers to retailers – are increasingly finding that they now have to demonstrate that their processes and operations, as well as their products, accord with fundamental sustainability principles. There are a number of drivers for this trend, which will only accelerate in the coming years.
- Changing consumer demand and awareness – The public is now very aware of the wider impacts of their consumption patterns and behaviours. As a consequence, they expect that the food that they buy – and the businesses that produce and sell them – should seek to minimise any adverse impacts on society, environment and economy. This presents significant opportunities for companies across the food supply chain to add value and improve the attractiveness of their products by integrating a sustainable business approach.
- An expressed requirement of retailers and buyers – Recognising the associated opportunities and risks, major retailers now require their suppliers to demonstrate a commitment to sustainable and low carbon approaches. In particular, many of the big retailers now have sustainable sourcing strategies in place, which set high sustainability standards for suppliers. Producers of food products who want to see their products on major retailers’ shelves therefore now have to demonstrate that their products and operations meet high sustainability requirements, (see table opposite).
- Increasing regulatory pressure – The regulatory and legislative agenda in the UK and globally have shifted significantly towards sustainability and carbon reduction. In particular, the recently passed Climate Change Act commits the UK to a very ambitious target of achieving an 80 per cent cut in CO2 emissions by 2050. For this to be achieved, it is likely that stringent regulatory measures will be introduced in the future to curtail businesses’ carbon impacts. Similar legislation is being planned in the USA and in other European countries, which will have further implications for Northern Ireland food suppliers wishing to export their products to international markets.
- High costs of energy and other resources – Energy and commodity markets are notoriously volatile. Food businesses that employ resource-intensive production methods are therefore financially exposed. Indeed, many food producers were adversely affected by the spike in energy price increases witnessed in the middle of 2008. Whilst prices have receded in recent months, it is likely that they will creep back up in the future. A sustainable approach, with its emphasis on efficiency and optimised resource consumption, can help to reduce costs associated with energy and resource use, and also minimise exposure to volatile commodity markets.