In order to maintain business continuity and remain competitive into the future, a sustainability strategy is crucial for food and beverage companies, enabling them to operate more efficiently and address climate and other environmental risks in their businesses. The food system is particularly at risk from climate change and is already experiencing disruptions due to changes in temperature and precipitation patterns and increasingly extreme weather events. The food system is also a major contributor to climate change, representing about a third of the total greenhouse gas emissions. Growing populations and changing incomes will also further exacerbate the need for increased production, more efficient distribution.

What Sustainability Challenges Is the Food And Beverage Industry Facing Today?

As concerns for sustainability have increased, so has pressure on the $7 trillion food and beverage industry from investors, regulators, and downstream purchasers and consumers to not only enhance sustainability but also provide enough transparency to demonstrate the legitimacy of those efforts. Many companies have already identified the interlinkages, opportunities, and risks associated with climate change and have made strides towards increased sustainability. However, according to ENGIE Impact’s analysis of CDP reporting data, only 15% of food & beverage companies reporting to CDP are on track to meet their sustainability goals. These companies face several challenges necessitating sustainability transformation.

• Transforming Food Production: The majority of emissions in the food and beverage value chain originate from agriculture and associated land-use practices and livestock. According to CDP’s report Fast Moving Consumers, 56% of food & beverage companies have no Scope 3 emission reduction targets even though Scope 3 emissions make up 90% of lifecycle emissions. Maintaining the resiliency of the food system requires addressing these emissions sources, as well as other environmental and social risks. Gaining visibility in complex, global, often fragmented supply chains and engaging suppliers in the sustainability journey will be key to scaling impact within the sector.

• Reducing Resource Intensity: The food & beverage industry is energy and water-intensive. Identifying and implementing opportunities to improve resource use is critical, starting with data analysis for visibility into the use intensity, sourcing, and management of energy, water and waste. Water and energy are closely intertwined in this industry and taking steps to reduce water use can also lower energy intensity used for heating or cooling water.

• Meeting Evolving Consumer Expectations: In this consumer-driven industry, companies must remain responsive to changing expectations to remain competitive in the future. Consumers want more from their food, including convenience, sustainability, transparent and ethical sourcing, and of course, value. Successful companies will increasingly need to show how they are supporting their customers to live according to their environmental and ethical values.

What Should the Food & Beverage Industry Be Thinking About?

Committing to a more sustainable future is essential for food and beverage companies, but a sustainability strategy and an actionable roadmap to achieve those commitments is what will drive value creation from sustainability across the business.

• Develop a zero-carbon roadmap: Because only about 15% of food & beverage companies are on track to meet their sustainability goals, F&B businesses need to leverage strong data analysis and expert insights in order to develop an actionable zero carbon roadmap that will get and keep them on track to meet their targets.

• Resilient value chains: By engaging with partners up and down the supply chain, this industry can significantly scale its sustainability efforts, build more resilient value chains and protect against supply chain shocks. Identify hotspots and work with suppliers to reduce scope 3 emissions. Decarbonize end-to-end operations by shifting fleet to low-carbon transportation, changing to low-carbon cold chain technology, and optimizing transit routes.
• Reduce resource consumption and strive for circularity: Leverage data and analytics to identify and implement retrofitting opportunities to improve demand-side energy and water intensity. Integrate energy efficiency into plants, warehouses, and processing centers. While increasing focus on water and waste, drive innovation toward more circular operations and sustainable packaging.
• Renewable power: Companies that have committed to RE100 are outperforming their peers. After addressing demand-side reductions, companies should transition to green power options to reduce carbon emissions and secure reliable power sources, including thermal solutions, on-site generation, storage, PPAs, VPPAs, offsets and more.