18th March 2024
The Food System Can be Fixed Through Improved production and Consumption and a Just Transition. From nutrition and nature to climate to land use, the global food system is facing an array of complex and connected challenges.
It’s impact on climate, biodiversity, waste and health is widely recognised, but businesses are just starting to comprehend the risks that are being placed upon a system on which it, and all of us, depend. The need for systemic change is vital for the global food system to address these complex challenges and continue to sustain our population well into the future.
The Salterbaxter team continues with intelligence gathering to explore future solutions and the opportunities for food and beverage businesses and brands in driving systemic change.
1. The conversation on nature is quickly catching up with carbon
The food system is unambiguously a driver of the climate and nature crises. A recent Global Policy Report on The Economics of the Food System Transformation estimated its environmental costs at USD3 trillion a year.
While the food system’s impacts on climate change have been well documented (and now more than 230 large food businesses have set Science-based Targets for climate) commitment and action on nature started much later and is playing catch-up. The World Benchmark Alliance’s 2023 assessment of food & agriculture companies found that only 2% of them understand their impact on nature, despite their reliance on it to grow crops.
While impending mandatory climate and risk-related disclosures are front of mind for businesses stretching from Australia to Canada, voluntary reporting frameworks such as the Taskforce on Nature-related Financial Disclosures (TNFD)and SBTs for nature will help put nature on the corporate agenda – both within the food industry and beyond. It’s a much-needed move as businesses must begin accounting for what nature has previously given them for free.
The opportunities for businesses lie in identifying and managing the greatest nature risks to improve supply chain resilience and brand reputation. Regenerative agriculture provides a major route into working towards protecting and restoring nature.
2. Too many regenerative ambitions lack implementation plans
Regenerative agriculture is now at the forefront of discussions as food businesses look to take a more holistic approach in reversing environmental degradation at the production end. But a 2023 review (undertaken by the FAIRR Initiative, collaborative investor network that applies ESG in the global food sector) of the regenerative agriculture commitments being set by global food and retail giants casts doubt on the food industry’s ambition on regenerative agriculture. Fifty of the 79 companies assessed referenced regenerative agriculture, yet the majority of these references (64%) were generic statements with only 36% of the companies having quantifiable targets. Only 16% of the companies disclosed data and metrics to track the impact of regenerative agriculture while only 8% disclosed targets to financially support farmers.
Regenerative agriculture is expected to rise in importance with a focus on working more closely with farmers, providing better support and education on the commercial and environmental benefits within a just transition. In the UK, food giant Unilever has just launched its first regenerative agriculture programme to support farms growing mustard seeds and mint leaves for its Colman's brand. The project will Unilever work with farmers to use low carbon fertiliser, adopt improved crop nutrition strategies, plant cover and companion crops to reduce pesticides use, and install new digital water irrigation scheduling systems. It’s part of Unilever’s global push, which has already seen it undertake regenerative agriculture programmes to grow ingredients for its Hellmann's and Knorr products in the US, France, Spain, Argentina, and Italy.
It’s great to see companies embracing regenerative agriculture as part of creating a more sustainable supply chain, we just need to see more widespread targets and commitments to measure progress and impact.
3. Landscape and jurisdictional approaches are opportunities to deliver large-scale impact
More and more companies are looking at adopting a landscape and jurisdictional approaches[1] to mitigate the impacts of agricultural production, and deliver on their environmental and social sustainability commitments. They recognise that the most significant issues including biodiversity loss, living income and deforestation have the potential to be addressed more effectively at a landscape or regional scale, and in collaboration with public and private stakeholders. As no one organisation can do this on their own.
According to the Carbon Disclosure Project (CDP), in 2022, 192 companies reported supporting more than 200 landscape initiatives through investments, decision-making processes, and convening stakeholders.
ISEAL Alliance, Rainforest Alliance and other organisations provide resources for companies to take action, measure and communicate progress. A key first step for businesses is to start mapping their supply chains to understand the risks, landscape priority areas and stakeholders to engage.
4. Sustainable Diets are entering the mainstream
Production improvements will only take us so far and there are increasing efforts on the consumption side. Sustainable diets that promote environmental and health benefits are entering the mainstream.
Alongside ongoing improvements in meat and dairy production, the food sector is responding to and steering changing customer preferences. Plant based options are on the rise but have hit a recent slow down due to such options attempting to match the taste tests of meat-based equivalents through ultra-processed versions.
It is expected these teething troubles will be addressed and the growth in plant-based foods will resume. Some projections anticipate a compound annual growth rate of 12.2%.
5. Consumers need trusted sources to support their healthy and sustainable living ambitions
The health agenda (beyond meat and plant-based issues) remains high in the customer mindset. A 2023 European study by Deloitte found that health and sustainability are both increasingly important considerations for consumers, with health as the higher priority. The study found that 60% of respondents would choose health over affordability but only 30% of respondents would choose sustainability over affordability. This is not surprising, especially in the current economic climate, but conscious consumers and next-gen customers are recognising the links between health and environmental benefits which presents growth opportunities for brands.
The study also found that 64% of consumers have become more interested in learning about the influence of food on their health over the last 12 months. While 17% cited grocery stores as a current source of healthy living information, it was surprising that only 4% perceived grocers as the most trustworthy source for this information.
Healthy living presents significant opportunities for food companies in the business of providing care for families. It also plays into major healthcare issues (see section 6) ahead of obesity, diabetes and other imminent health-related epidemics.
6. Misconceptions around ultra-processed foods
Ultra-processed food are very much part of the health and high-carbon agendas. There have been many discussions around ultra-processed foods (UPFs) which are typically associated with unhealthy foods. It’s a negative association that needs challenging, especially when one considers the diverse foods and beverages that fall into the UPF category – from baked beans and wholemeal bread to ice cream and sausages.
While some UPFs are categorically unhealthy, the use of the term as a catch-all phrase is leading to a dominant narrative that is causing public confusion. What’s more, UPFs have a role to play in society given that they often offer a more convenient and affordable way to access food for many. It’s an issue the discount food retailers could adopt, mapping out their product range and food innovation pipeline to increase their proportion of healthier UPFs that are nutrient dense and affordable.
7. Personalised nutrition a growing opportunity for food businesses
Taking health even further, a personalised nutrition market is emerging, driven by an increase in health awareness amongst consumers as well as an increase in noncommunicable diseases (NCDs) such as diabetes. This market is catered to consumers who want to tailor their nutritional intake to their own physiology and disease predispositions.
To date the commercialisation of personalised nutrition has been slow with only a small number of active companies in this space. ZOE is one example of these companies which offers a personalised dietary plan for users based on at-home gut health, blood sugar and blood fat tests. With healthy diets unsurprisingly captured as one of five key priorities within the Economics of the Food System Transformation’s recent report there is an obvious opportunity for food businesses wanting to take a leading role in healthy diets to lean into personalised nutrition.
Conclusion
Sustainable production, improved meat and dairy and regenerative supply chain pursuits will go far in managing and reversing the environmental damage brought about by the food systems over recent decades. It will also strengthen supply chain resilience and reputations for business. Sustainable diets will also relieve land use pressures and deliver health benefits. Eating a healthy amount of meat and dairy, less processed foods and more fresh fruit and vegetables will help to avert much of the health crises ahead and differentiate businesses from those that show little care form people and planet.