Today I am writing about sustainability in the context of food and drink. The same basic principles apply to everyone, whether it’s retail purchasing, a person buying coffee for the office breakroom, or someone buying groceries for their family. However, I will try to focus intensely on the food industry by presenting the problems and risks and how to tackle them.
I know: listing the risks is not very inspiring, but if you roughly remember this checklist, quite many problems can be avoided. Plus, the current reporting requirements and greenwashing sanctions bring huge obligations and risks to businesses. Sustainability directors are talking about “regulatory tsunami” and marketing directors are about to learn about EU Green Claims penalties, which can be as high as 4% of a company’s turnover. So let’s take a deep breath and get up to speed with sustainability dimensions!
The sustainability parameters in the food industry can be broken down roughly as follows:
HUMAN RIGHTS
The main human rights issues relate to the destruction of ecosystems by creating life-threatening conditions. Human rights violations are often indirect and typically occur in fragile economies. Examples include watershed pollution in the tobacco industry (e.g. “blue baby syndrome” is a common respiratory disorder in children caused by nitrate-rich water in tobacco growing areas) or the excessive use of groundwater in, for example, the soft drinks industry. Similarly, forced labour and the exploitation of child labour count as crimes against human rights. The UN’s risk countries index and raw material risk classifications provide some understanding about these. The easiest (but not always cheapest) way to prepare is through third-party certification and audits. Of course, there are different levels of these, but at present, for example, Fairtrade and Rainforest Alliance are becoming more or less equivalent, even though in the past there were significant differences in favour of Fairtrade. This is still reflected at the brand level, so it might be wise to listen to consumers on these issues.
DECENT WORK
This dimension mainly concerns workers directly involved in the manufacturing chain. Long gone are the days when you could think you had European coffee or local cotton towels. The first criminal proceedings are already underway in Europe to challenge the limits of corporate responsibility in the value chain. In Finland, it is pretty much clear that these issues are well considered (of course, the berry-picking cases tell us that we need to be vigilant too). But these are, in a nutshell, the issues for which the trade union movement was set up in the first place: working hours, workplace safety, dealing with exceptional situations (such as, say, a pregnancy, illness or injury), equality issues and discrimination issues. This can be secured at the most basic level, for example, through Code of Conduct-based declarations and through similar agreements with the entire value chain. Of course, a mere agreement is often not enough, but it is a good start.
ENVIRONMENT
The environment as a component of sustainability is as old as the hills. It was not until the Brundland Commission in its 1987 report that social responsibility and the economy were defined as part of sustainable development. In terms of the environment, climate change is of course the biggest challenge, but species loss is also a major threat to humanity – the vertebrate species range alone has shrunk by 69% since 1970. This is due to both habitat loss and climate change. Both are driven by a surge in consumption, fuelled by population growth. Circular economy and the minimisation of monocultural farming are the first solutions that come to mind.
WATER
Engineers have been calculating the water footprint of products for a long time, but it is far from easy. There is not enough information on this in product data, but even with average water footprints, we could all redirect both supply and demand towards less water-intensive products or produce water-demanding products in areas where water is more abundant. This is where even our software struggles: for all other dimensions we can provide visibility, but for this one we are still looking for the right data source set. However, we will get to the country risk classification as soon as we get the permits right.
BIODIVERSITY
This and the environment are very much the same thing. Organic certification is already an important step, so it’s worth pursuing. For example, Fair Trade certification already takes biodiversity into account. Many companies are looking for regenerating farming methods.
CLIMATE CHANGE
Everyone is aware of CO2 accounting and everyone is at least planning to do it. And rightly so. Those of us who have read the newspapers will remember a couple of years ago when everyone was banging on about the 1.5°C limit and thinking of measures to get there. Now everyone is silent because the uncomfortable truth is that we are moving towards even 3 degrees of warming, and the projections for that are pretty paralysing. But we as business leaders just have to accept the facts and get on with the job of both adapting as best we can to the changes and also doing our bit to minimise the negative changes. I really don’t need to list all the issues that climate change will bring – but I predict that we will be talking about this time in the future as an era of climate migrations. Factually large numbers of people will have to find new places to live. This has already started and will accelerate in the very near future. The good news is that consumers are largely aware of the issue and climate-friendly products will absolutely win the market.
THE CIRCULAR ECONOMY
The circular economy is the solution to many challenges and should be advanced in all areas. Extending the life cycle of products is particularly important, but for food, we are mainly talking about packaging and circular economy innovations in transport methods. There is also a lot of hype in this area, for example, take shopping bags made of cotton – they will not save the world, because virgin cotton is almost as bad for the planet as plastic. I exaggerate a little, but because of the proportions, it is sometimes good to exaggerate in the other direction than usual.
GOOD BUSINESS ETHICS
Transparency is of course the most important thing to start with – and the precursor to transparency is of course knowing the value chain. Transparency is an area that is usually well covered in ESG metrics, because of those letters, G(overnance) is the easiest to measure and think about. Environmental and social responsibility are then more difficult. I would also add localism, which in the food industry makes sense from so many points of view – including national preparedness. Healthiness is also a parameter of responsibility, but that would require a blog all its own.
PROMOTING SUSTAINABLE CONSUMPTION
I also believe that we all want to be part of the solution. However, the change in impact has to be real and significant in order to motivate a change. This is why at Infine we have automated the creation of sustainability insight directly from product data in all the dimensions of sustainability mentioned above. In order to make lasting change we need to know our starting point – and also, we do not have time to pick anything else than low-hanging fruits to be quick enough to tackle the wicked problems we are facing. I also believe that if we make sustainability profitable for us all, it will scale much faster.
If you want to talk more about sustainability in your business and how Infine can help you to grow your business, mitigate risks and find new opportunities in sustainability, please contact me as tiina@infine.fi.
