The Business Case for Sustainability in the Food & Beverage Industry

By Lior Torenberg
May 23rd, 2024
Corporations do not always act in the best interests of society — the reality is, there must be a business case for all decisions. There must be ROI and an argument for bottom line growth, risk management, and innovation.

The good news is that the business case for sustainability has become more and more well-established in recent years. The private sector is becoming an engine of competitive solutions for sustainability, and can help finance and address sustainability challenges in the years ahead.

Consider the following statistics:
  • 44% of consumers are more likely to buy from a sustainable brand with a clear commitment to sustainability
  • 50% of investors are increasing their environmental, social, and governance (ESG) investments worldwide
  • 53% of companies that espoused the triple bottom line (defined below) had revenue growth over 10% from 2017-2021, compared to only 19% of those who lagged on ESG principles

With more data, the argument becomes even more evident: we are moving towards a greener future, and companies that fall behind on sustainable practices open themselves up to deep financial, compliance, workforce, and reputational risks.

In this guide, we’ll cover the triple bottom line and compliance side of the equation before diving into the upside: how proper supply chain monitoring, reporting, and verification can unlock a strong business case for sustainability in your organization.
The Triple Bottom Line

Let’s take a step back: the triple bottom line refers to the idea that businesses should look beyond the bottom line (profit) to measure their social and environmental impacts as well. The hypothesis here is that looking at all three measures is a better indicator of business performance, trajectory, and value to stakeholders than profit alone.

This is sometimes called the three P’s: People, Planet, and Profit.

And the business case for the triple bottom line is there. Consider the statistic above about consumer preferences for sustainable brands. According to an IBM consumer report, about 50% of consumers are willing to pay a sustainability premium on products (more on that later).

A company that invests in the triple bottom line is attractive to consumers, investors, and employees, resulting in greater total value generation. In a review of 200 studies on the triple bottom line and stock market performance, 80% of studies showed that stock price performance was positively correlated with sustainable practices.
But it’s not always easy to go green, especially in high-impact industries like Food & Beverage, which accounts for over 33% of human-caused global greenhouse gas emissions.

How Sustainable is the Food & Beverage Industry Today?
Among highly-regulated industries, F&B happens to be a top-performer in terms of sustainability. Though this measure is relative, and still has great room for improvement, research by ESG consulting firm EcoVadis shows that F&B comes in third behind Construction and Finance, Legal, and Consulting on an overall sustainability score.

This score takes into account environmental efforts, labor and human rights, ethics, and sustainable procurement metrics to derive an ultimate sustainability score for a given industry.

At 52.5, the F&B industry had the highest overall environmental score of all industries when this research was compiled in 2020.

There is much more to be done to firm up the triple bottom line at F&B companies around the world. Consider how the following can improve the value created for your customers, employees, investors, and stakeholders:
  • Reducing energy and water consumption
  • Sourcing responsibility
  • Reducing waste in the production process
  • Investing in employee safety, health, and satisfaction
  • And more.

Beyond people and planet, investing in the triple bottom line also supports business goals by mitigating risk, reducing costs, and ensuring compliance with growing sustainability legislation around the world.
Risk Management & Compliance

Climate Regulations for the Food & Beverage Industry
A major part of sustainability’s growing business case is risk mitigation.

Policies tackling sustainability, deforestation, and climate around the world have doubled in the last year. And companies need to put in the work to stay abreast of current and future regulations so they can adjust their processes proactively.

To cover your bases, read our roundup of recent and forthcoming climate disclosure policies affecting Food & Beverage companies.

Depending on where in the world you do business, you may be subject to different regulations. Compliance with these regulations is imperative, and may result in hefty fines and reputational risks if deadlines or data rigor standards are not met.

F&B companies have complicated supply and value chains, and accounting for emissions across hundreds of providers, farmers, manufacturers, and more is not an easy task.

But technology exists to facilitate this workload. CarbonSpace monitors emissions and sequestration from space, requiring neither site visits nor expensive sampling methods. With the appropriate information about a given plot, the CarbonSpace team can monitor and verify performance on a near-real-time basis, giving you the information you need to comply with current and upcoming legislation.

But proper compliance is not only a form of risk mitigation, it’s also a value-add for investors. Accurate, verified data can help projects find investors, make your company more attractive to investors down the line, and attract customers and employees down the line.

Learn more about what makes CarbonSpace data different.

Look closer: how can supply chain monitoring shield against global warming’s worst impacts?
Consider how rising temperatures will affect the costs of the resources needed to create your product, or how natural disasters like floods and droughts may impact your supply chain.

As an example, major flooding in Thailand in 2011 affected over 150 companies in the textile industry and increased the price of garments globally by nearly 30%.

In 2004, Coca Cola had to shut down one of its plants due to a water shortage in India. It has since invested $2 billion to reduce its water use and improve the water quality in the communities in which it operates.

To protect against the worst effects of climate change, some large F&B companies have invested in Rainforest Alliance certification to increase the resilience of their supply chains.

But this is not purely a mitigation effort. Research shows that sustainable supply chains can also be more productive. Rainforest Alliance shared that certified cocoa farmers produced nearly 2x the amount of cocoa per hectare. An investment in sustainability is an investment in efficiency.

Putting sustainability at the top of the F&B priority list helps reduce regulatory risks, avoid fines, safeguard supply chains, increase investor and stakeholder engagement, and protect and grow your bottom line.
The ROI of MRV

To showcase the business case for sustainability, let’s zoom in on the return on your investment that carbon monitoring, reporting, and verification (MRV) technology can provide.

Put simply, carbon MRV solutions confirm that you’re doing what you set out to do. They enable you to monitor your supply chain, report on emissions and sequestration, and verify that data for reporting and carbon claim purposes.

MRV is the crucial first step towards taking advantage of the benefits of sustainability. If you can’t verify your results, you can’t claim any upside.

And that upside is significant. We covered risk management and compliance, but there is much more worth considering.

Did you know that employee productivity can increase up to 40% when employees feel positively about your company’s mission and sustainability principles?

How about that customers are willing to pay 24% more for consumer goods that are produced sustainably?

Higher employee productivity, higher customer revenue — sustainability is not just a form of risk mitigation, it directly benefits your bottom line: the “Profit” part of the three P’s.

CarbonSpace has supported many of the world’s biggest Food & Beverage companies through the MRV process. Access to direct, high-accuracy, verified data has enabled them to:
  • Source and verify low-carbon suppliers to add to their supply chain
  • Charge sustainability premiums as a result of verified sustainable practices
  • Attract investors for insetting projects along their supply chain
  • Support smallholders in increasing crop production with sustainable practices
  • Encourage sustainable practices by enacting performance-based rates and sustainability incentives for suppliers

Direct measurements (as opposed to literature values or calculators) also come with their own set of sustainability-focused benefits. They facilitate emissions reductions and carbon removal, environmental impact management, soil and plant treatments, urban heat management, air quality management, and more.

Read more about why direct measurements matter to make the most of your sustainability efforts.
Take the first step

The business case for sustainability in the F&B industry is well-established, but how do you actually go about implementing sustainable practices?

Think of your transition as a series of steps to help you cover the three P’s of People, Planet, and Profit.

The first step for each of the three P’s is to understand your current state. Assess your employee composition, satisfaction, retention, and more. Understand how your business is performing from a bottom line perspective.

When it comes to the planet, MRV solutions like CarbonSpace can help you set a baseline to know how the land along your supply chain is performing in terms of emissions and sequestration.

Once you have a baseline in place, CarbonSpace can work with you over time to measure and verify the impact of your farm-level interventions towards a sustainable supply chain.

With the right technology and business case in hand, you are well-equipped to set your company on the right path towards a greener future.