The winds of change are whipping through the grocery industry, as supermarket chain Sainsbury’s recently announced its commitment to Science Based Target initiatives (SBTi) validated goals.
This commitment includes a 68% reduction in greenhouse gas (GHG) emissions and a net-zero target by 2035.
A seismic shift is underway, and food and beverage (F&B) partners need to get on board – or risk getting left behind, writes Richard Singleton, Finance & Sustainability Director at Menzies LLP.
This isn’t just a one-off move, and we’re seeing Sainsbury’s and Tesco represent a growing trend of major retailers taking a proactive stance on environmental responsibility. Sainsbury’s commitment will undoubtedly trigger a ripple effect as they reevaluate their procurement processes to prioritise sustainable partners throughout their supply chain. Only by aligning with these net-zero goals can F&B businesses become valuable partners to grocery giants and others following their footsteps, unlocking new avenues for growth.
Decoding retailers’ priorities
Forging successful partnerships with grocery giants requires F&B companies to understand their priorities. It’s about building a mutually beneficial bridge, not exclusion. Three key goals remain paramount for retailers: profitability, consumer demands and operational efficiency. By aligning with these goals, F&B companies are also directly addressing consumer demand. When they understand retailer priorities and offer solutions that benefit both parties, they unlock the door to successful and sustainable partnerships within the grocery trade.
Shifting gears for sustainability – starting small
Significant strides can be made towards sustainability when F&B companies move beyond simply “considering” to embracing a transparency-driven mindset. This means being upfront about practices, such as publishing sustainability reports where possible, and clearly outlining sourcing strategies.
Businesses can start by taking stock of current practices, identifying areas with the most significant environmental impact, such as energy usage or waste generation. While extensive data tracking might not be immediately feasible for all, even basic estimations can be valuable. Companies can focus on easy-to-implement improvements where simple changes can make a big difference. Changes such as switching to energy-efficient LED lighting, clearer initiatives on reducing plastic use or exploring local sourcing options to reduce transportation emissions are all steps in the right direction.
Retail decision-makers will value demonstrated efforts, even on a smaller scale. F&B players should strive to communicate sustainability initiatives openly across channels such as social media, website or even product packaging labels. An example of a company that has done well includes Danish dairy company Arla. The company has done an excellent job clearly demonstrating their sustainability efforts. They can serve as an inspiration as companies refine their unique approach.
Beyond the environment: The double materiality approach
While environmental impact is a crucial aspect of sustainability, forward-thinking F&B players would embrace “double materiality”. The concept goes beyond looking at traditional sustainability metrics by acknowledging two deeply interrelated dimensions a business has on the world from an environmental and social perspective.
The double materiality framework helps companies understand the two-way street between businesses and the environment. On one hand, it helps them assess how a changing climate, water scarcity, or resource depletion could disrupt their supply chains, increase costs, and impact the availability of key ingredients. On the other hand, it allows them to see how their operations affect the environment and communities.
It can seem daunting for smaller F&B players with limited resources, especially considering how it is derived from the European Union’s Corporate Sustainability Reporting Directive (CSRD) which initially focuses on larger businesses. However, the double materiality offers a surprisingly accessible framework for smaller businesses, and even small steps towards embracing this approach can yield significant benefits.
Start by identifying processes and operations with the biggest environmental and social impacts, and where the company can make the most genuine change. This would include areas like sourcing practices (think fair trade certifications for key ingredients) or labour practices (consider fair wages and safe working conditions).
Forging strong partnership
Sainsbury’s commitment to net-zero is ultimately another wake-up call for the wider industry to take proactive steps towards their sustainability efforts. In doing so, F&B companies can move from just mere suppliers to strategic partners to grocery giants on the net-zero journey, riding the wave of change.
Going beyond supplier status requires proactive relationship building. Smaller F&B players can leverage their agility by focusing on local stores and chains to identify areas where products or practices can genuinely complement their goals.
Successful partnerships are built on mutual benefit, where grocery stores gain access to suppliers aligned with their sustainability goals, while smaller F&B companies gain or maintain a wide and discerning customer base and potential for growth. By taking these steps toward sustainability and building partnerships, F&B partners of all sizes can play a vital role in shaping a more sustainable future for the entire grocery ecosystem.
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