The Environmental Challenges and Opportunities Facing Food and Beverage Companies
(3BL/JustMeans) — Food and beverage companies need to buy agricultural commodities to make their products. Commodity sourcing can be very challenging. Agricultural productivity is affected by the increasingly erratic weather patterns that climate change brings, plus groundwater depletion and soil erosion. Illegal and questionable practices in supply chains are brought to light by campaign groups. As a result, there are certain financial materials risks that companies face, such as operational risks that reduce primary crop and livestock production.
It is key for food and beverage companies to develop climate resilient agricultural sourcing strategies that are free from environmental degradation and negative human impacts. A new interactive investor guide called Engage the Chain can help food and agribusiness companies address these risks. Launched by Ceres, it provides an overview of the environmental and social risks and impacts of eight agricultural commodities: beef, corn, dairy, fiber-based packaging, palm oil, soybeans, sugarcane and wheat. These commodities are commonly sourced and are some of the most prominent drivers of deforestation, greenhouse gas (GHG) emissions, water depletion and pollution. The guide identifies the major food and beverage companies based in the U.S. that source the eight commodities, plus cites actions investors and companies can take.
Food and beverage companies are already leveraging their influence to help farmers adopt practices that will create healthy soils, conserve water supplies, respect the rights of workers and support biodiversity, as a report by Ceres highlights. Some companies offer technical assistance and incentives while others develop practice and policies to help farm communities, or work with multi-stakeholder initiatives like Consumer Goods Forum or Field to Market.
General Mills serves as an example of a company leveraging its influence with farmers. The company has a goal to reduce absolute greenhouse gas (GHG) emissions by 28 percent across its value chain by 2025. General Mills has committed to sustainably sourcing its 10 priority ingredients by 2020, which represent 50 percent of what it buys. Almost two-thirds of its value chain GHG emissions come from agriculture. As a result, the main focus of its climate strategy is using multi-stakeholder collaborations to advance sustainable agriculture practices. It works with farmers, NGOs, industry peers, and suppliers to address climate risks and opportunities both within its business and in the food industry.
Unilever has a goal of sustainably sourcing 100 percent of agricultural raw materials by 2020. The company works directly with 30,000 smallholder farmers improve their agricultural practices, which enables them to double or triple their yields. Increasing productivity not only improves the livelihoods of farmers, but the quality and security of Unilever’s key commodity supplies. And that ensures the company has sustainable supplies of the ingredients it needs to make its products.
As more companies engage with farmers and help them adopt sustainable practices, the food and beverage industry can reduce the risks and embrace the opportunities that climate change presents.