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Sustainability & the Food Industry, in conversation with Juan Aguiriano of Kerry Group

October 15, 2021
Borderless Leadership - article

Click play for the full discussion with Juan Aguiriano

Climate change is affected by a variety of industries, one of which is food and agriculture. Several studies have found that this industry is responsible for approximately 25-33% of total greenhouse gases. So as an industry, we have a big responsibility to improve.

Fortunately, the industry is moving and committing. As an example, McDonald’s and Mars have announced that they will commit to science-based targets of zero carbon by 2050, and with absolute reductions in their carbon footprints by 2030. Also, a coalition of companies has agreed to follow scientifically-based goal-setting to limit the global warming temperature increase to 1.5 degrees as per the famous Paris agreement. These goals are calculated at the global company level and are externally validated, so companies cannot self-declare. Their progress must be validated by this science-based target alliance, which is organized by several prestigious NGOs.

Kerry Group has also signed up to these science-based targets. Interestingly, these targets are broken into several levels. Internal targets belong to scope one, while scope two consists of the fuel consumed to run the factories and the electricity purchased to run electrical equipment. Finally, scope three is the measurement of all the carbon that is embedded in the raw materials purchased.

So, when a company signs up, they are automatically involving all of their supply chains as well. This means all of their suppliers, all the way back to the farm. This is particularly important because the majority of the industry’s climate impact happens at the agricultural/farming level. Agriculture is a heavy user of energy and fertilizers. The livestock industry also causes methane production directly or indirectly, with cows and pigs for example.

In the middle are producing fast-moving consumer goods producers, and producers of food for quick service restaurants, where the ingredients are converted through several steps, and then sold to retailers, and consumers. It’s a very long chain. So, each player has a responsibility to address the difficult questions: how can we commit to reducing 30-50% of carbon emissions at the company level? How can we do the same at the supply chain level? How can we achieve that day-to-day at the product level? And finally: why should our company care?

Beyond the ethical reasons, companies should also care about their environmental impact for the sake of the business. Today’s consumers want to consume more sustainably. Today, half of all consumers polled are proactively researching the impact of the products they purchase. They are making decisions on what to buy based on the responsibility shown by producers. One of the elements consumers are most interested in is carbon footprint.

A great example of this is Oatly, the oat milk brand. Oatly displays a prominent logo on their packaging, which indicates the amount of carbon produced per litre of the beverage. Since doing this, Oatly’s sales have skyrocketed. And today’s new consumers are smart – they won’t stand for greenwashing or misleading packaging. Claims need to be backed up with data.

The industry is working fast with several external partners to help do Life Cycle Assessments, LCAs, which is a precise method for calculating impact. What’s important is to show progress rather than perfection: it’s difficult to determine what is “sustainable,” but companies can offer new alternatives that are measurably more sustainable than in the past (use less carbon and/or water, less of an impact on deforestation, better usage of land, and so on).

So, to summarize the consumer viewpoint, companies have determined that the three main factors that affect consumer decisions are: nutritional, environmental, and social. If a brand can communicate, and prove with data, how they stand in these three areas, this will drive faster adoption from consumers. So, while your company does good for the planet, it’s also forging a competitive advantage.

A great example is the Impossible Burger, a plant-based burger. The company displays all their nutritional information prominently and communicates the social and environmental impact of consuming plant-based burgers versus beef.

In the UK, products use what are referred to as “traffic light labels,” which measure sugar, salt, and saturated fat. At Kerry Group, we have started by analysing our portfolio according to a nutritional profiling methodology, which is similar to the UK traffic light system, which has been adapted to analysing ingredients. We chose the UK traffic light system because it’s very stringent. It looks at the content of sugar, salt, fat, trans fat, and saturated fat. Depending on the threshold of limits that are defined by nutritionists, a product is labelled either red, yellow, or green. But if you exceed the threshold in just one of the five categories, you’re automatically labeled red. It’s a real penalty, that forces the producer to improve in each category – it’s not about averages.

We also calculated how many consumers we reach through our business each day and found that we’re providing 1 billion people with positive and balanced nutrition. Our goal is to reach 2 billion people by 2030. Once we do that and prove that this works as a methodology, we’ll apply this to carbon impact as well, with the ultimate goal of better nutrition, but with less carbon.

Carbon is more complex. For example, Kerry Group produces a sugar replacement solution called TasteSense. With i, we are able to replace about 30% of the sugar content in beverages. And for every kilo of sugar replaced, water usage is reduced by 1200 liters, and CO2 is cut in half. From the nutritional point of view, calories and sugar intake are reduced, a critical factor nowadays, especially when it concerns our children. So, we have a practical example of an integrated solution creating sustainable nutrition.

That’s the biggest challenge the food and agriculture industry has today: how can we provide better nutrition for 6 billion today, 10 billion tomorrow, but with only one planet? And the answer is: by translating these big corporate goals down to the product level.

Interested in discussing the food and beverage industry in-depth? Get in touch with Borderless today.

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