Walking the Talk
Report:
Food & Beverage Sustainability Plans Missing Critical Levers

Quantis, a BCG company and leading global sustainability consultancy driving sustainable transformation to align businesses with planetary boundaries, has released Recipe for Transformation — a report assessing the efficacy of sustainability strategies across the global food and beverage industry. The report surveyed more than 600 professionals and C-level executives across multiple business functions in the food and beverage industry. Respondents work in large companies within retail, wholesale, consumer packaged goods, commodities and agriculture subsectors.

76 percent of respondents reported some level of confidence in their sustainability roadmaps and ability to achieve environmental goals by 2030; but Quantis identified critical components for success missing from many of their action plans. And despite having the greatest potential for radical transformation at scale, product portfolio redesign, regenerative agriculture and plant-based initiatives were cited as the lowest three priorities for the next year. Clear action plans are the second-most important success factor (38 percent), but they are lacking — and 26 percent of respondents still view them as a challenge.

Other key findings include:

• The supply chain remains the top challenge: 42 percent of respondents cite its complexities as the largest barrier to success.

• As departmental budgets reflect, financial investment remains a barrier: Cited as the second-largest barrier to success, allocating funds remains a struggle: The average percentage of annual budget allocated to reducing environmental impact is just 12.5 percent across departments.

• Chief Sustainability Officers need more interdepartmental buy-in: Company commitment and culture set by leadership were the largest drivers of sustainable practices across departments, but the two biggest barriers to success (supply chain and budget allocation) sit largely outside their control — proving the importance of aligning the strategies of sustainability and finance.

• Packaging is priority: Most respondents have tools and budget in place to make packaging more sustainable, and 62 percent cited it as a top priority for the next year; this is a clear starting point across brands, but critical levers for scaling and implementing these efforts are missing.

• Consumers are ready — the industry just needs to deliver: Even in the current economic climate, 100 percent of marketing respondents have seen changes in consumer behavior regarding sustainable purchasing habits. More than half cite that their customers are more interested in sustainable products and willing to spend more to get them.

“Though food and beverage sector leaders are making progress, the path to alignment with planetary boundaries and resilience will require a shift from sustainability in a silo to sustainability embedded across business functions,” said Charlotte Bande, Global Food & Beverage Lead for Quantis. “Estimates show that food and beverage organizations could lose up to 26 percent of their value if they don’t act quickly, but much still stands in the way of doing so effectively and efficiently. Securing more budget and driving impactful transformation will require collaboration, both throughout departments internally and with strategic partners across the value chain.”

5 areas of focus

Quantis highlights five key themes to guide companies, and the industry, toward a future in which both business and the planet can thrive:

1. Increase resilience in the food supply chain

In the face of potential financial crises and unforeseen environmental shocks, companies must invest in supply chain programs that foster business resilience. Increasing investments in regenerative-agriculture programs can ensure long-term commodity supply, nurture farmer and grower relationships, and increase resilience by helping companies adapt to disruptions and contribute to a more robust, sustainable food ecosystem.

2. Transform product portfolios

What are the highest– and lowest-performing products across environmental, nutritional, quality and profitability metrics? A forward-thinking approach to sustainability involves a comprehensive assessment of alternative ingredients, recipes, packaging design and portion sizing. Scaling sustainable practices requires pragmatic piloting and collaboration within the industry. Innovation in product portfolios should be driven by both the desire to reduce environmental impacts and risks while also meeting consumer demands for quality and diversity.

3. Shift focus from reducing emissions to supporting nature

To effectively transition our food systems to align with a planetary economy, companies must broaden their efforts beyond purely reducing carbon emissions. Given the food and beverage industry’s heavy dependence on agriculture, nature has a crucial role to play. While leaders may be overwhelmed by the idea of adopting a nature strategy in addition to climate initiatives, prioritizing both can fuel progress toward climate goals and ensure long-term resilience.

4. Drive consumer behavior changes.

While setting nature and climate strategies can help lead companies in the right direction toward holistic, sustainable transformation, it’s just as important to engage stakeholders — especially consumers — in sustainability goals. Companies must remind consumers of their direct impact on planetary boundaries and how to positively contribute to corporate sustainability goals through responsible consumption, reducing food waste and encouraging more sustainable diets.

5. Prepare for the upcoming regulatory landscape.

Preparation is key when adapting to ever-evolving regulations. Companies should hold C-suite, board members and functional leaders accountable to ensure compliance with upcoming regulations related to deforestation, packaging, ecolabeling and broader ESG reporting. Staying ahead of regulatory changes in end markets and supplier regions will not only avoid incurring the cost of inaction but also position companies as sustainability leaders.