Food firms make 'grave misstep' by ignoring supply chain

25 November 2020

Food companies are making a “grave misstep” by underestimating the need for a more resilient global food supply chain, according to a report.

The report by global environmental non-profit CDP highlighted that food companies are focusing too much on product innovation to tackle sustainability and not enough on mitigating environmental risks in the supply chain.

Many firms are responding to demand for sustainable products, such as plant-based alternatives to meat which produce less greenhouse gas emissions, rather than “sufficiently building resilience against drought and other environmental risks”.

CDP said despite signs of some firms implementing resilience into their direct operations and supply chains, “opportunities to increase resilience are outnumbered more than two to one by those related to products and services”.

One third of all business opportunities disclosed to CDP were found to be related to new products and services addressing sustainable food innovations, such as vegan options.

CDP analysed environmental disclosures from 504 companies within the global supply chain, including producers, buyers, manufacturers and retailers such as Walmart, Nestlé, Target, and Pepsi, to better understand the risks, impacts and future opportunities around climate change, deforestation and water security.

“Companies see more opportunity in ‘green’ products than in true resilience-building – a potentially grave misstep in a warming world that sees more frequent extreme weather patterns each year, which in turn make it harder to grow ample and nutritious food,” the report said.

While some firms assessing vulnerabilities across the foods supply chain are making changes to ensure stronger agricultural and forest management practices, others don’t think the risks foreseen will impact the business.

According to CDP findings, eight in 10 companies used management practices on their own land, benefiting from positive impacts on both climate change mitigation and adaptability, including improved biodiversity, soil, water and annual yield. Over three quarters (78%) encouraged suppliers to implement agricultural or forest management practices.

CDP said disclosure of risks and environmental supply chain data was “the first step” to managing issues across the food system. The report argued that the global food system needs a “rapid transformation”, moving away from business as usual. 

More than two-thirds (70%) of food firms in the supply chain complied with requests to disclose data on climate change impacts in 2019. 

The most transparent firms were processors and wholesalers, with 78% disclosure out of the total, while retailers were least transparent with only 38% of the total disclosing climate change data. 

The report found that there was little engagement across the food supply chain, with only 16% of companies which disclosed climate change engaging with all levels of the supply chain.  

CDP recommended that “effective, concrete” policy was implemented to ensure “sufficient support and incentivisation” to bring about a sustainable food system.  

Bridget Schrempf, manager of sustainable food systems at CDP, said: “Food is a critical environmental, social and economic issue that impacts us all. As the demand for food has grown, so has the resulting surge in emissions, loss of natural ecosystems and forests, increasing water scarcity and pollution and declining biodiversity.

“But a better future is possible. Companies have a remarkable opportunity to build a just, fair and sustainable food system that meets the needs of the world’s population without exceeding our planetary boundaries.”

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