Driving Returns from Investments in Sustainability Strategies
Sustainable strategies for the food and agriculture industry
The following strategies were identified by NYU Stern CSB through extensive desk research, interviews, and case studies with food and agriculture companies conducted over several years as part of the development of the ROSI™ Food and Agriculture Sustainability Strategies Framework.
Safe Food Products
Food Safety is the requirement for food companies to safely produce, package, and deliver food to avoid illness or adverse health impacts. Food contamination can happen in various ways, including inadequate handwashing, insufficient storage and cooking temperatures, and contamination of food by animal waste. Cross-contamination can occur when food, kitchen tools, or surfaces come into contact with raw meats and poultry, and then transfer a pathogen to another food product. The CDC estimates that 48 million people get sick, 128,000 are hospitalized, and 3,000 die from a foodborne illness each year.1 Food can also be contaminated by naturally occurring toxins and environmental pollutants.
Sustainable practices can reduce harmful ingredients such as chemicals and contaminants to promote food safety and nutrition. Examples include finding alternatives to artificial coloring and preservatives and implementing robust testing for contaminants.
Critical ROSI™ mediating factors:
- Risk management: reduces regulatory and reputational risk as well as risk from lawsuits
- Operational efficiency: ensuring safety means less waste
- Sales and marketing: customers believe in the safety of the brand
Healthy and Nutritious Products
The degree to which a food is processed impacts its nutrient level. In some cases, nutrients can be almost completely destroyed by over processing. Consistently eating ultra-processed foods or not enough nutrient-dense food can lead to nutrient deficiency and an increased risk of illness such as cancer, diabetes, and heart disease.2 Producing healthy and nutritious products may involve reducing trans fats, salts, and sugars.
Consumers are actively seeking food, drink, and supplements that help address or pre-empt health problems – even if they are not suffering from specific symptoms. With greater consumer interest in ingredients that offer a health boost beyond basic nutrition and products distinguished by health claims,3 there is an opportunity for innovation, as companies seek to develop new and reformulate existing products to meet consumer needs.
To improve and preserve nutrient density, companies can modify processing to preserve nutritional value (e.g., less refinement), add nutrients (e.g., fortifying), and increase access to nutritional proteins (e.g., sustainable beef, plant-based/non-dairy alternatives). Food manufacturers can use whole ingredients to increase nutrient diversity and reduce waste, as well as source locally to shorten the time between harvest and consumption to optimize nutrient density and avoid spoilage. They can also work with their suppliers to encourage regenerative soil practices and harvest techniques that enhance nutrition.
Critical ROSI™ mediating factors:
- Risk management: reduced regulatory risk or risks of lawsuits related to unhealthy food
- Operational efficiency: use of whole ingredients, waste reduction, local supply chains
- Innovation: new products
Sales and marketing: clear market demand for more nutritious products
Climate change affects crop and animal productivity, water and food availability, which in turn destabilizes supply chains, and negatively impacts human health and wellbeing. The degree of impact on food production varies by resource and by region as shown below.4
Increases in climate hazards, such as heavy precipitation, accelerated sea-level rise, acute and chronic coastal flooding, and extreme heat is exposing ecosystems and communities to exacerbated economic challenges. We are already seeing the impacts today as the cost of damages from 2022 climate disasters totaled $165.1 billion,5 and the number of disasters has increased by a factor of five over the past 50 years.6 Failure to limit global warming to 1.5°C above pre-industrial levels will cause irreversible damage.
Climate change creates transition and physical risks. Transition risks are associated with policy and market changes which may increase costs for companies (such as carbon taxes or fines and/or increasing prices for carbon offsets) or risks such as stranded assets (for example, when coal can no longer be extracted, the mine becomes a stranded asset). Physical risk covers asset impairments such as increased frequency of extreme weather disrupting supply chains by requiring relocation or halting production, which can raise operational costs and input prices. The impacts of climate change are already here and are expected to accelerate. Companies across the food sector are responding by setting carbon reduction goals that vary by scope, timeline, and whether they are using a limit of 1.5° or 2°C increase in temperature.
Given this increase in consumer and investor focus on climate change, companies are adopting strategies aimed at reducing greenhouse gas (GHG) emissions within their own operations, transportation, and logistics activities, as well as within the supply chain. Examples of practices include reducing energy use, prohibiting deforestation, adopting agroforestry projects, using carbon-alternative energy and fuels, and switching from synthetic to biobased fertilizer.
In addition to mitigating risk, climate change can create opportunities for companies. Consumer preference shifts can drive growth in low-carbon alternative products or services.5 Two recent research reports find that investors are directly pricing transition risk into valuations6 and that company carbon emissions are being viewed as a material risk and are reflected in the cost of capital.7
The main challenge in setting and meeting targets for food companies is that the majority of emissions are within the supply chain (scope 3). For food manufacturers, emissions may be tied to multiple commodities used and the supply chains may be simple (such as barley crops for beer companies) or complex (such as soups which may involve sourcing various vegetables, starches, oils, sugars, spices and ingredients for texture, preservatives, etc.). Given the commitment by companies to reduce emissions, significant collaboration across the value chain is required.
Another very important element of a climate change strategy for the sector is adapting to the negative impacts of climate change. There are different mitigation strategies included in the strategies described elsewhere in this section related to soil health, animal stewardship, biodiversity and ecosystem conservation, and sustainable sourcing strategies.
Critical ROSI™ mediating factors:
- Risk management: reduced loss of productivity, carbon taxes, regulatory requirements, insurance problems
- Operational efficiency: reduced energy costs
- Media coverage: positive earned media
- Supplier and stakeholder relations: engagement on scope 3
- Employee relations: employee retention and productivity for a leader on climate change
Sales and marketing: consumers buying and paying a premium for sustainable products
7. Lazard Climate Center 2021
Soil fertility is critical for crop productivity and health. However, according to a 2021 Food and Agriculture Organization report, close to one-third of the world’s cropland soil is degraded due to erosion, nutrient depletion, acidification, salinization, compaction, and chemical pollution.8 Soil degradation reduces biodiversity and the productivity of farmlands. Conversely, healthy soil can protect against drought by absorbing and storing water to deliver to plants and fend off plant disease, weeds, and pests. The minerals and microbes in the soil can filter and buffer some pollutants, helping to manage chemical runoff into crucial water sources.
Healthy soil is able to sequester carbon, but it loses its carbon sequestration properties when depleted. Currently, 23% of global GHG emissions are from agricultural land (much due to deforestation as well as soil degradation). Soil degradation exacerbated by increased water stress and climate change has a negative effect on productivity and quality and can thereby significantly lower farmers’ incomes and can cause companies to take on costly endeavors to shift their operations and supply chains to new geographic areas.9
Regenerative agriculture practices are focused on strengthening soil health and can improve crop health and nutrition, protect yields, and cultivate a more resilient ecosystem to maintain and/or increase its carbon content. Examples of regenerative agriculture practices include reduced tillage, cover cropping, crop rotation, livestock integration, and nutrient management. The Nature Conservancy and International Center for Tropical Agriculture (CIAT) have found that increasing soil carbon in croplands through improved soil management could contribute to carbon emissions reduction of up to 1.85 billion tons per year.10 However, there are hurdles to widespread adoption of soil health practices including initial transition costs, insecure land tenure, difficulty accessing resources and agricultural advisory services, insufficient and unequal private and public incentives, lack of knowledge and practical experience, social resistance of farmers to transition from conventional practices, and time duration needed to see the positive long-term benefits.11
Many companies’ strategies involve encouraging farmers to adopt regenerative practices through sourcing specifications, training and technical assistance programs and value chain partnerships. Currently, only 15% of global farmland is cultivated with regenerative practices, according to the Sustainable Markets Initiative (SMI). This measure needs to scale to 40% by 2030 in order to keep global warming to 1.5° C, the goal set by the 2015 Paris Climate Agreement.12
Critical ROSI™ Mediating Factors:
- Risk management: operational risk such as reduced productivity, regulatory risk, volatility of supply
- Operational efficiencies: less costly inputs needed, less water needed, lower crop insurance costs
- Supplier relations: helping farmers reduce costs, increase productivity
Sales and marketing: promote work on label
10. In the Dirt Beneath Our Feet ,2018
11. IMbow, C. et al. Food Security in Climate Change and Land: an IPCC Special Report on Climate Change, Desertification, Land Degradation, Sustainable Land Management, Food Security, and Greenhouse Gas Fluxes in Terrestrial Ecosystems (IPCC, 2019).
Water is essential for growing and processing food. The Food and Agricultural Organization of the United Nations reports that approximately 70% of groundwater withdrawals are used to irrigate food, fiber, and industrial crops, and for livestock.13 Agriculture’s demand competes with the consumer need for drinking water for growing populations. WRI forecasts water demand to increase by up to 30% by 2050, driven by population growth, socio-economic development, and changing consumption patterns.14 The United Nations estimates there will be a 40% shortfall of the available global water supply by 2040 if current consumption and production patterns do not change.15
Risks associated with water stewardship are expected to accelerate as climate change drives water shortages and more regulations are enacted. Short term risks include supply disruptions, higher costs associated with water restrictions, and fines or penalties; while longer term risks include a company’s license to operate. CDP reports there appears to be an increase in awareness of the water crisis (two-thirds of companies in its survey reduced water withdrawals in 2022) but they also state there are insufficient water risk management practices in place.
Water stewardship is a material factor identified by the Sustainability Accounting Standards Board (SASB) across all food companies, but it is particularly relevant to companies that rely on water as in key input such as beverage companies, and companies with operation in water-stressed regions. Risk mitigation strategies represent a lever that can drive value. Companies should understand and value the risks of a business-as-usual scenario compared to a particular intervention strategy. Scenario analysis, varying timing and responses to water scarcity issues, will enable companies to develop both short- and long-term strategies.
Practices to reduce water use include measuring and monitoring water usage installing water heating and cooling efficient technologies, reducing use of plastics that require water in production, minimizing the use of chemicals to improve water quality, improving storm management systems, setting an internal price of water, and identifying critical watersheds to protect. These actions can improve operating efficiencies through reduced water and sewer costs, as well as reduce the risk of losing access to water that would disrupt production and add costs. Other practices such as soil health strategies reduce the likelihood of chemical run-off that negatively impacts water quality, but today it’s difficult to track impacts from the source. As technologies improve and there is a greater likelihood of regulation and associated cost, we expect to see more strategies addressing water quality.
Critical ROSI™ mediating factors:
- Risk management: license to operate in high water risk areas, volatility of access, lawsuits over water quality
- Operational efficiency: reducing water cost
- Stakeholder relations: important issue for local communities which can stall business operations
Sales and marketing: relieve customer concerns about water stewardship
13. https://www.fao.org/3/cb9910en/cb9910en.pdf
14. https://www.unwater.org/publications/un-world-water-development-report-2019
Animal stewardship includes a variety of strategies related to the humane treatment of live animals and their impact on the ecosystem and environment. This includes the responsible management of livestock welfare such as living conditions and handling, reducing impact on natural resources such as reducing pollution created by poor manure waste management, and reducing GHG emissions such as reducing methane emissions, soil degradation and deforestation. Other animal stewardship strategies are related to taking measures to mitigate human health issues due to consuming animals whose diets include growth hormones and antibiotics.
Research shows that when consumers are aware of animal suffering associated with intensive farming practices, they have a negative response.16 This is consistent with findings that suggest certifications related to animal welfare such as Animal Welfare Approved, Certified Humane, and Animal Welfare Certified, along with other descriptors such as cruelty-free or cage-free have become popular. These certifications vary, but include guarantees of humane living standards related to the ways in which livestock are handled, transported, fed, and slaughtered. According to research, 71% of consumers report paying attention to food labels regarding how an animal was raised. Additionally, 81% of the consumers indicated that they want more products that have higher animal welfare standards, even if it would entail paying a moderate increase in price.17
A common method taken to reduce methane emissions is feeding livestock plant-based diets and including feed enzymes to improve digestibility. For example, Burger King is introducing lemongrass to cattle diets, aiming to reduce 33% of methane emissions daily.18
Manure management can also reduce GHG emissions, although impact and efficacy varies based on livestock type, diet quality, health, and storage and management practices.19 When manure is managed in liquid form, such as in lagoons or holding tanks, it releases significant methane emissions. According to the Savory Institute, when manure is instead added to healthy soil, dung beetles, earthworms, and other soil biota decompose it into soil organic carbon that can be stable for hundreds of thousands of years.20
Soil degradation can occur when cattle overgraze. Grazing practices vary from continuous grazing of one area over a long period of time to intensive rotational grazing on small areas for short periods of time. A rotational system is more sustainable as it provides an opportunity for forage plants to rest so that they can regrow more quickly and provides an opportunity to move livestock based on forage growth, which promotes better pasture forage utilization and extends the grazing season.21
Livestock diets often include hormonal substances and antibiotics that are used legally or illegally to accelerate the growth of livestock animals and to reduce feed costs, thereby lowering the cost per pound of meat produced. Antibiotics used inappropriately in meat production can contribute to antibiotic resistance in humans. According to the Centers for Disease Control and Prevention, more than 2.8 million people develop an antibiotic-resistant infection each year.22 At least 32% of consumers consider meat consumption from animals that are fed antibiotics and hormones a significant health risk to individuals.23 According to research, at toxic levels, antibiotics used in meat can induce antimicrobial resistant bacteria, the disruption of normal human intestinal flora, and health risks related to menopause, uteruses, and menstrual cycles.24 Some companies are eliminating the use of medically important antibiotics on animals such as amoxicillin, erythromycin, and tetracycline, which are critical to care for people.25
Another issue in the industry is processing animal waste, which can be addressed by ensuring all the animal parts are used productively and responsibly. Byproducts may include animal feed, biodiesel/biogas, dietetic products (chitosan), natural pigments (after extraction) and cosmetics (e.g., collagen), as well as medicinal and pharmaceutical uses.26
Meat producers and downstream companies can work with suppliers to implement animal stewardship practices that enhance humane living and slaughter conditions, entail regenerative grazing practices to reduce soil erosion, promote healthy low-emissions diets, improve animal waste management, ensure meat processing by-products are well used, and minimize antibiotic and hormone use. Ensuring humane living conditions minimizes disease and regulates normal sleep and wake cycles and natural growth rates. Additionally, brands seeking to reduce their scope 3 emissions could source animal protein with reduced methane emissions by working with suppliers to ensure animals’ diets are diversified to reduce methane emissions. They can also choose to source from farms that are using proper storage and composting of animal waste and using it as natural fertilizer where possible to promote living soils.
Critical ROSI™ mediating factors:
- Risk management: mitigating regulatory risk such as carbon tax, reputational risk related to animal welfare
- Operational efficiency: using of byproducts, reducing chemical usage, improving animal productivity
Sales and marketing: consumers report willingness to buy and pay more for animal welfare-endorsed products
16. Fonseca RP, Sanchez-Sabate R. Consumers' Attitudes towards Animal Suffering: A Systematic Review on Awareness, Willingness and Dietary Change. Int J Environ Res Public Health. 2022 Dec 6;19(23):16372.
17. ASPCA, Vermont Law School Center for Agriculture & Food Systems: Farm Animal Welfare Certification Guide, 2019.
19. agledx: Manure Management
20. The Savory Institute: An Exploration of Methane and Properly Managed Livestock through Holistic Management, 2015.
22. Cdc.gov Be Antibiotics Aware
24. Jeong SH, Kang D, Lim MW, Kang CS, Sung HJ. Risk assessment of growth hormones and antimicrobial residues in meat. Toxicol Res. 2010 Dec;26(4):301-13.
25. Consumer Reports: What 'No Antibiotics' Claims Really Mean, September 2020.
26. Jayathilakan K, Sultana K, Radhakrishna K, Bawa AS. Utilization of byproducts and waste materials from meat, poultry and fish processing industries: a review. J Food Sci Technol. 2012 Jun;49(3):278-93.
Biodiversity refers to the variety and variability of species, including plants, animals, fungi, algae, pollinators, and soil organisms, and can be assessed at the genetic, species, and ecosystem level. Humans depend on biodiversity for survival, yet levels of biodiversity are declining faster than at any other time in human history. Globally, land-use change (due to agriculture, forestry, and urbanization) is seen as a direct driver of biodiversity loss, with the largest relative impact on land and freshwater ecosystems. Climate change, pollution and invasive alien species are also contributors to declining biodiversity, but have had a lower relative impact to date, though their impacts are accelerating.27
Research conducted by the World Economic Forum shows that $44 trillion of economic value generation – over half the world’s total GDP – is potentially at risk because of the dependence of business on nature and its services. The agriculture and food and beverage industries are most impacted (after the construction industry) since they rely on the direct extraction of resources or on ecosystem services such as healthy soils, clean water, pollination, and a stable climate.28 As nature loses its capacity to provide such services, these sectors could suffer significant losses.
Global population is projected to increase by ~4 billion people by 2100.29 In the absence of large-scale conservation actions, extinction rates are projected to accelerate. Biodiversity loss and ecosystem collapse is ranked as one of the top five threats humanity is projected to face in the next 10 years, according to the World Economic Forum’s 2020 Global Risks Report.30
Companies’ impact on biodiversity can be managed through their material sourcing practices. Companies can assess their biodiversity impacts by mapping their supply chains for a given commodity. The more complex the supply chain, the more difficult it is to map, which may partly explain why S&P Global reports that only a small share of companies have set targets to protect biodiversity. And while biodiversity performance is better in Europe, where regulators launched a plan to protect nature and reverse the degradation of ecosystems, still only 29.5% of the largest companies within the S&P Europe 350 Index have set targets.31
In 2023, the Science Based Targets Network32 released the first science-based targets for nature to help companies assess their environmental impacts and set targets. In addition to setting targets and policies to avoid deforestation, promote agroforestry, and protect species habitats, companies can change their product offerings (e.g., by offering plant-based meat alternatives or using biofuels such as ethanol) and improve their product recipes to lessen environmental impacts. Cooperation across the food value chain will be required, including educating consumers on what is at stake and what behavioral changes they can take on to support these efforts.
Critical ROSI™ mediating factors:
- Risk management: farming dependent on pollinators and soil microfauna
- Sales and marketing benefits: can promote to consumers
Media coverage: positive earned media
27. Biodiversity and Ecosystem Services 2019
28. New Nature Economy Report 2020
29. https://www.un.org/en/desa/world-population-projected-reach-98-billion-2050-and-112-billion-2100
30. The Global Risks Report 2020
32. A global coalition of 80+ environmental non-profits and mission-driven organizations building on the work of The Science Based Target Initiative to support companies to go beyond their science-based targets by channeling additional climate finance towards mitigation activities outside of their value chains.
Sustainable sourcing refers to supplier selection practices that address environmental and social issues within the supply chain to protect the environment, workers, and/or communities. Sustainable sourcing initiatives may be supported by formal certification programs that can be established by governments (e.g., USDA Organic certification), firms (e.g., Certified Sustainable Palm Oil), NGOs (Fair Trade, or Rainforest Alliance) or company-designed programs (Starbucks C.A.F.E. coffee sourcing requirement).33 Companies adopting these strategies are seeking to produce or procure products and ingredients that are sustainably farmed and processed. At the farm level, this includes taking on approaches such as regenerative agriculture practices, eliminating destructive land use practices (deforestation-free), limited chemical use (organic) and positive worker welfare (no use of child labor).
Recent regulations are increasing the need for sustainable supply chains. The German Supply Chain Due Diligence Act took effect in January 2023 and requires covered companies34 to conduct human rights and environmental due diligence to identify risks, remedy issues, and establish grievance mechanisms, among other areas. In 2022, the U.S. strengthened its enforcement of laws aimed at restricting imports of goods believed to be made in whole or in part with forced labor. The U.S. Customs and Border Patrol is enforcing 55 active Withhold Release Orders and targeted over 3,500 inbound shipments from 2021 to 2022. Additionally, the EU looks to advance its own human rights through due diligence directive35 and regulation36 restricting goods made with forced labor throughout 2023. Regulatory trends raise the stakes on sustainable sourcing for companies that rely on inputs from high-risk regions.
Critical ROSI™ mediating factors:
- Risk management: regulatory risk related to human rights and climate change in supply chains; reputational risk reducing market demand; operational risk reducing access to sustainable suppliers
- Sales and marketing/Customer loyalty: studies demonstrate strong and growing demand for sustainably sourced products
Supplier relations: improves supplier resiliency, profitability and market access
33. https://weproudlyservestarbucks.com/ca/ca-en/sustainable-coffee
34. German headquartered companies with at least 3,000 employees, and foreign companies with a German branch and at least 3,000 German employees
Packaging is essential for transporting, storing, handling, and preserving food. Packaging types include plastic, paper, glass, and metal, all of which have a significant environmental footprint. Packaging represents 5% of the energy used in the life cycle of a food product, making it a significant source of GHG emissions.37 The environmental impact from the production and use of packaging materials varies based on what type of material is used, how it’s sourced and disposed of, and whether or not it can be reused and/or recycled. Plastic is used most often due to its light weight, low cost, food safety considerations, and transparent nature.38 The production and incineration of plastic was estimated in 2019 to add more than 850 million metric tons of greenhouse gasses to the atmosphere—equal to the emissions from 189 five-hundred-megawatt coal power plants.39 Approximately 36% of all plastic produced is used by the food industry, including single-use plastic products for food and beverage containers, approximately 85% of which ends up in landfills.40
In addition to carbon emissions, the chemicals used in packaging have been found to transfer into food and beverage, a process called chemical migration. Growing concerns over these health risks has led to chemical restrictions in packaging on Bisphenol A (BPA), perfluoroalkyl and polyfluoroalkyl substances (PFAS), and phthalates. While there’s little regulation at the federal level in the United States, 21 states have begun to regulate some or all these substances.41 For example, Maine has banned PFAs in consumer products by 2030.42 In 2022, the European Commission released its Restrictions Roadmap, which presented a plan for banning a host of harmful chemicals, including PFAS, from use in packaging by 2030. However, a recent study revealed that they have made slow progress towards this goal largely due to a lack of resources and competing priorities.43 However, where there is no regulation, institutional and consumer pressures are forcing companies to ban these chemicals, specifically BPA.
Alternatives to plastic packaging include:
Bioplastics such as biopolymers and polylactic acid (PLA) (plastic materials sourced from renewable biomass sources) are growing in popularity, however they are expensive and have some performance drawbacks.44- Paper packaging is considered sustainable if sourced from sustainably managed forests such as those that are FSC certified.45 While paper is biodegradable and recyclable, a significant amount still ends up in landfills. It can be difficult to recycle paper used in the food industry due to wax, aluminum, or resin coatings.
- Glass packaging is recyclable and reusable and less susceptible to chemical migration. The production of glass however is energy intensive with a significant carbon footprint. The downside to glass is it’s more expensive, it’s heavier, which adds to higher transport costs and related emissions, and is subject to more breakage.
- Metals (steel, aluminum, or tin) are impermeable and provide a barrier to light, humidity, air, and other types of external contamination. They are durable and recyclable, however, there can be issues with poor chemical stability, corrosion impacting food quality, and the upfront investment in machinery and often higher costs of production.
Companies can reduce packaging (such as eliminating single-use plastic packaging material, using lightweight / space-efficient material, or offering customers reusable packaging), improve the circularity of their existing packaging (substitute petro-based with bio based or compostable packaging and/or reduce the non-recyclable content), and explore more sustainable materials.
Critical ROSI™ mediating factors:
- Risk management: mitigate risk of lawsuits due to chemical leaching, plastic waste, regulatory requirements and fines related to packaging
- Operational efficiency: light weighting, materials substitution or reuse etc. may save money
Sales and marketing: customers looking for sustainable packaging
37. Climate Collaborative: Why Commit to the Climate Impact of Packaging?
38. Ibrahim ID, Hamam Y, Sadiku ER, Ndambuki JM, Kupolati WK, Jamiru T, Eze AA, Snyman J. Need for Sustainable Packaging: An Overview. Polymers (Basel). 2022 Oct 20;14(20):4430. doi: 10.3390/polym14204430. PMID: 36298009; PMCID: PMC9609329.
Materials. Materials (Basel). 2020 Nov 6;13(21):4994. doi: 10.3390/ma13214994. PMID: 33171895; PMCID: PMC7664184.
40. UN Environment Programme: Our Plant is Choking on Plastics
41. Safer States: Food Packaging
43. The Guardian: EU plan to ban up to 7,000 dangerous chemicals failing badly, says new study, April 2023
45.FSC:What the FSC Labels Mean What the FSC Labels Mean
Chemicals are used in the production of food (fertilizers, pesticides, herbicides, and fungicides) and food packaging, as well as in food processing to preserve quality, improve texture and appearance, extend shelf life, and protect against pathogens. Other chemicals may enter the food supply through naturally occurring environmental contaminants such as mercury, arsenic, lead, and aflatoxins. When any of these chemicals are carelessly applied or overapplied, or when banned chemicals are used, there are significant environmental and health consequences.
The overuse and misapplication of chemicals puts at risk the long-term resiliency of the ecosystem. Research has shown that pesticides can lead to a decline in biodiversity, including a decline in beneficial insects, birds, and amphibians. Use of the insecticide neonicotinoid, for instance, leads to the decline of pollinators. When pesticide drift happens, non-targeted species are damaged, hurting the broader ecosystem. For example, Dicamba, an EPA-approved pesticide for attacking glyphosate-resistant superweeds, was found to have damaged 3.6 million acres of non-resistant soybeans in neighboring fields, as well as vegetables, fruits, and trees in 25 states.46
Pesticides also affect the health of humans - from farmers to consumers. While the federal government regulates the use of pesticides, farm workers might not use personal protective equipment (PPE) or have the proper training to remain safe. Exposures can lead to long-term effects including neurological disorders, cancer, and fertility issues.47
Manufacturers use chemicals to improve food texture and appearance, add nutritional value, extend shelf life, and protect food from pathogens to prevent contamination. Common additives include artificial flavors (e.g., aspartame), colors (e.g., Red 40, Yellow 5), and preservatives (e.g., BHA, BHT, sodium benzoate). Researchers warn they can pose health risks, for example, artificial food colors have been found to increase attention deficit hyperactivity disorder (ADHD) symptoms in children and nitrates, common preservatives found in processed meats, can interfere with the thyroid and increase the risk of some cancers.48
To reduce the use of harmful chemicals, companies work with their growers to identify and monitor the use of chemicals and adopt practices that lead to less chemical use such as organic farming, nutrient management best practices, integrated pest management, obtaining reduced chemical use certifications, and use of bio-based alternative products.
Companies also address the use of chemicals in their operations, by eliminating all phthalates and fluorinated chemicals in food packaging and eliminating food dyes and additives that lead to health concerns. To ensure safe use of chemicals in their own operations, they can train workers on safe and efficient transport, provide PPE, and use signage to indicate application of chemicals.
Critical ROSI™ mediating factors:
- Risk management: reduced chance of lawsuits, regulatory fines
- Operational efficiency: lower input costs, insurance costs related to worker safety
Sales and marketing: organic products command a premium and more loyalty
47. FoodPrint: Pesticides in Our Food System, February, 2021.
48. Harvard Health Publishing: Common food additives and chemicals harmful to children, July 2021.
All food companies’ success depends on the knowledge, skills, creativity and productivity of its own employees and supply chain workers. There are international, federal, state, and local regulations that aim to protect employees from discrimination based on race, gender, or disabilities; injury (OSHA) and cost of related healthcare (worker’s compensation); human trafficking; abuse of migrant workers; environmental impacts (EPA); hate crimes; and loss of privacy. Key workforce challenges within company supply chains including labor shortages, reliance on temporary workers (particularly for harvesting), job safety, poor worker living standards, low wages, and exploitation (including sexual harassment, forced labor, and child labor).
A 2023 global study across several industries conducted by Developmental Dimensions International (DDI) found CEOs' top concern was attracting and retaining top talent (59%) followed by developing future leaders (50%) and keeping their workforce engaged (45%). These concerns outweighed those relating to digital transformation (40%), a global recession (37%), and competitiveness (34%).49 Recent research results reveal positive and significant relationships between employee wellbeing (measured using the Indeed Work Wellbeing Score, an index combining survey responses on levels of work happiness, purpose, job satisfaction, and reverse-coded stress) and firm performance. Companies with higher average levels of wellbeing have greater returns on assets and report higher annual profits, and company wellbeing levels are predictive of future firm performance.50
Companies across the value chain are investing in employee and supplier wellbeing by prioritizing practices such as increasing wages and benefits and working with suppliers to implement living wages, eliminate forced labor, and improve working conditions.
Critical ROSI™ mediating factors:
- Risk management: reduced employee lawsuits, reduced human rights abuse risk
- Operational efficiency: better productivity
- Employee relations: higher retention
Media Coverage: positive earned media
50. De Neve, J-E., Kaats, M., Ward, G. (2023). Workplace Wellbeing and Firm Performance. University of Oxford Wellbeing Research Centre Working Paper 2304. doi.org/10.5287/ora-bpkbjayvk
Roughly one-third of food produced for human consumption is lost or wasted globally, which amounts to approximately 1.3 billion tons per year.51 Around 14% of food produced is lost between harvest and retail, while an estimated 17% of total global food production is wasted after purchase (11% in households, 5% in the food service and 2% in retail).52 This degree of inefficiency in the global food system has significant economic, social, and environmental impacts resulting in economic losses of close to $1 trillion.53 Additionally, despite the high volume of wasted food globally, hunger is on the rise in many regions of the world including Western Asia and the subregions of Africa.54
Food loss refers to loss at the farm level and in the supply chain, for example, during harvesting, storage, or transport. Food waste occurs at the retail level, in hospitality and in households. There are a wide range of causes, from crop damage due to weather or disease, poor storage, poor inventory planning, outdated equipment, inadequate training on food handling, technological challenges, to consumer behaviors across the food value chain. When food is wasted, the resources used to produce this food – including water, land, energy, labor, and capital – also go to waste. Sending waste to landfills also creates methane, a dangerous greenhouse gas that is 28x more potent than CO2 at trapping heat in the atmosphere55. Globally, food waste accounts for 8% of all anthropogenic greenhouse gas emissions.56
At the farm gate, solutions include working with farmers (directly, through suppliers, or with civil society partners) to find markets for food not sold through traditional retail channels such as animal feed, or for “ugly” products. Training on proper storage and handling practices, as well as developing technologies to reduce food loss at the farm level (such as bio-controls) can help reduce waste.
For downstream companies, some key remediation solutions include measuring food waste in their own operations, investing in food waste tracking technologies, and training and rewarding employees on reducing food waste. Additional approaches include repurposing excess food (for instance as additives, animal feed, or for use in anaerobic digestion); investing in technologies to extend shelf life (such as packaging and alternative ingredients); and ensuring adequate storage facilities (including storage for transport).
Food service companies and restaurants can reduce food waste by monitoring and managing food usage and ordering through installing a food waste management information system. They can also avoid super-sized portions, focus on a smaller range of menu offerings to better forecast supply ordering, and donate excess food to charities.
Reducing food waste can drive operational efficiencies throughout the value chain, thereby reducing costs, as well as increase the volume of food consumed in a growing population, and creating opportunities for increased revenue. Finding ways to sell food waste byproducts as well as increasing shelf-life can also drive additional revenue.
Critical ROSI™ mediating factors:
- Risk management: mitigate regulatory risk fines
- Operational efficiencies: reduce food waste, use byproducts and waste
- Sales and marketing: increased sales from customers concerned about the topic
Supplier relations: helps farmers reduce waste and generate more income
The strategy narratives were developed by NYU Stern Center for Sustainable Business in collaboration with Deloitte Consulting LLP.