There are six key pillars to developing a corporate social responsibility report: Transparency, Authenticity, Collaboration, Strategy, Measurability, Impact. In a rapidly changing society, it is inevitable that unsustainable practices result in undesired outcomes. Food and beverage production will require more than just a clean label or high ESG rating to appeal to the emerging sustainable consumer. Environmental sustainability addresses reducing food waste, lowering production cost, producing healthier food, efficient land usage and environment-friendly farming techniques. This new wave of consumerism also focuses on social impact, including human rights, and labor working conditions.
The current pandemic scene has fueled a new wave of innovation strategies in the food and beverage industry to enable sustainable food production. Consumers have begun to experience a more environmental awareness surrounding the food industry. It is more pressing than ever that a company’s CSR efforts be transparent, as 47% of millennials are influenced by the real social and environmental impacts of a food product, looking beyond the front of the box. This age group sees a strong correlation between eco-friendliness and having a better quality of life, as one fuels the other. (GlobalData, 2020)
A Multi-Faceted Crisis
The world currently faces two global crises; not only has COVID-19 hit every continent, but climate change has persisted as a pressing environmental emergency. The world must cut carbon emissions by 45% by 2030 and eliminate them entirely by midcentury to curb global warming and the impacts of it. The food and beverage industry accounts for much of the carbon emissions that have yet to be reduced. The journey food takes from the farm to the consumer accounts for approximately 20% of all greenhouse gas emissions. To counter this advancement, 56% of global consumers now believe that ethical and sustainable production methods are now more important to them, or their top priority, as a result of COVID-19. Livestock itself accounts for 18% of the overall greenhouse gas emissions. Additionally, livestock consumes obscene amounts of food that requires more farmable land and thus creates more ecological destruction. Not only does meat production contribute significantly to the carbon footprint, but also increases the chances of future disease spillovers. A disease spillover occurs when a host animal transmits a virus to a different species. The current climate requires that this phenomenon be addressed, as more than 60% of new infectious diseases are rooted in animals.
Despite growing support for environmental protection, the demand for meat products and fast food remains stable. Meat products are demanded more as incomes rise according to the income elasticity of demand, and it is expected that meat consumption will nevertheless rise with it. Biosecurity improvements are necessary in companies around the globe to tackle this issue. Environmental education categorizes people into 5 different phases, including awareness, knowledge, attitude, skills and participation. Many people are still in the awareness stage, and this does not directly produce subsequent behavioral changes. Though the production of meat will persist regardless, it is relevant to note that plant-based products are on the rise. Plant based foods are significantly better for the environment; for example, a Beyond Burger requires 99% less water, 93% less land, 46% less energy and produces 90% less greenhouse gas than a burger made by big brands like Tyson. The protein-alternatives industry is predicted to be 4.15 billion by 2026.
Greenwashing is Not the Solution
Some key claims that encourage consumers to buy products include “from natural sources”, “no artificial ingredients” and “organic”. Though it is essential to use these key words to appeal to a wider customer base, there are limitations to this method of advertising when it is an aversion of the truth. Recently, a lawsuit has been advanced in Massachusetts following the “100% natural” claim by Wesson for their vegetable oil, which clearly contains GMO’s. This practice, known as greenwashing, is more common than one may think, and likely raises questions among both consumers and investors. There is a strong movement to eliminate greenwashing and its disastrous implications. ESG ratings agencies are also increasingly encouraged to make more accurate conclusions. ESG investors hope to make positive impact and seek to see companies implementing practices towards reducing their carbon footprint. Therefore, complications arise rooted in the subjective nature of ESG ratings. When comparing plant-based companies like Impossible Burger and Beyond Meat with conventional meat companies including Tyson and Hormel, it seems obvious which group is more sustainable. When analyzed by Trucost, big meat companies maintain a 99% weighted environmental disclosure ratio while Beyond Meat receives 0%.
Transforming Awareness into Active Participation: Unprecedented Change Breeds Opportunity
The solution to addressing sustainable food production is simple in theory and much more challenging in practice. Companies should strive to become more sustainable, improve biosecurity and reduce overall carbon emissions. Action is needed now in order to fully eliminate them by midcentury. In advertising this transition, total transparency is key. Using a consumer-first marketing approach is necessary as consumers, especially millennials, want to see real change in sustainable production. Companies need to be up to speed with their customers and surpass the ‘awareness’ stage of environmental protection. The opportunity is open to food and beverage brands to rise above their competition by both appealing to the younger generation of environmentalists and simultaneously helping solve the world’s most pressing issues. Vertical growth is necessary; globalization without a priority of innovating current technologies is unsustainable.
Subscribe to Clarkston's Insights
Coauthor and contributions by Alexandra Hatsios.