Report: Food Companies Gaining Ground on Product Sustainability
by Cheryl Baldwin, PH.D.
19 October 2015
Food production dominates fresh water use and is a primary driving force for soil and biodiversity loss – and food demand is on the rise. The good news is that while faced with such challenges and often considered to be lagging on sustainability, the food and beverage industry stands out as most-improved in a 2015 survey.
In the second Pure Strategies review of product sustainability programs, there was an increase of food companies building their efforts and using environmental and social considerations to inform business decisions across the product life cycle. All of the food and beverage companies engaged in product sustainability in the survey have established goals for their product sustainability efforts, up from 82 percent of respondents in 2013. The impact is noticeable as programs are increasing in depth and breadth, with 95 percent of food and beverage firms evaluating and/or integrating sustainability into product decisions, up from 68 percent in 2013. These efforts across the value chain are providing substantially more business value to food and beverage companies.
Achieving value
Employee engagement was the top benefit in this year’s survey and the number of food and beverage companies reporting this benefit went from 44 percent of those surveyed in 2013 to 63 percent in 2015. Increased employee productivity and other efficiencies are typically among the first benefits earned. PepsiCo achieved $375 million in savingssince 2010 from its environmental sustainability programs at the same time the company experienced double-digit net revenue and operating profit growth.
Risk reduction is another growing benefit from product sustainability for food companies. Supply chain risk reduction was the second-most achieved benefit for food and beverage firms and grew from 20 percent of companies in 2013 to 58 percent in 2015. The notable challenges in the supply are a source of this increase such as water risks driving a 12 percent drop in Cargill’s 2014 fourth-quarter profits related to drought in beef production regions and a 28 percent drop in Campbell Soup Company’s early 2015 profit for California-produced carrots from drought and erratic rainfall.
Consumer demands are a consistent driver for food and beverage firm investment in product sustainability. Importantly, there was improvement related to this with more than twice as many food and beverage companies reporting increased sales from their product sustainability efforts, from 19 percent in 2013 to 46 percent in 2015. Unileverexperienced this with the brands contributing to its sustainability goals, such as Ben & Jerry’s and Lipton, growing twice as fast as others.
Written by Cheryl Baldwin, PH.D.
Cheryl Baldwin, Ph.D., is a Vice President of Sustainability Consulting for Pure Strategies where she partners with corporate clients to develop and execute sustainability strategies to improve performance across retail, food and agriculture, home and personal care, and cosmetics industries. She also leads the firms’ global market research to generate new insights to accelerate business transformation.
Cheryl’s recent projects include helping develop sustainability goals for TAZO, create a sustainable packaging strategy and implementation tools for Walmart, and facilitate the development and implementation of a sustainable chemistry program for Ahold Delhaize USA.
Cheryl authored Pure Strategies’ market research reports: Planet-Forward Strategies, Connecting to the Farm, Reaching the New Corporate Frontier, Advancing on the Path to Product Sustainability, and other reports. She wrote the book, The 10 Principles of Food Industry Sustainability and is the lead author/editor for two additional books on sustainability, Greening Food and Beverage Services and Sustainability in the Food Industry and holds U.S. and international patents.
Prior to Pure Strategies, Cheryl led the life cycle research and sustainability standard program for the non-profit ecolabel organization Green Seal. Cheryl also worked in Research and Development for Kraft Foods, Inc. where she was involved in all phases of R&D from novel ingredient development to global product commercialization. Cheryl holds a Ph.D. and M.S. from Cornell University and a B.S. from the University of Illinois, all in Food Science.
Cheryl has been named one of the Top 50 Women Leaders of DC for the second consecutive year, based on a methodical review of women executives and leaders across the area. She was identified for her career track record, including her leadership position at Pure Strategies. The recognition came from Women We Admire (WWA), a membership organization of over 1,200 of the most accomplished women leaders in business, law, consulting, education, non-profit and other sectors. based on a methodical review of women executives and leaders across the area. She was identified for her career track record, including her leadership position at Pure Strategies. The recognition came from Women We Admire (WWA), a membership organization of over 1,200 of the most accomplished women leaders in business, law, consulting, education, non-profit and other sectors.
