How investing in sustainability drives value for brands15 Sep 2022
Consumers are increasingly conscious of the environmental, social and corporate governance (ESG) credentials of companies and products they invest in. How can certifications such as B Corp drive value for food and beverage manufacturers?
Increasingly, key players in the food and beverage industry are shifting their corporate strategies to focus less on maximising returns for shareholders, and more on understanding the importance of stakeholder values.
Recently, this growth in ‘triple-bottom line’ thinking has driven several food and beverage giants, such as Nestlé and Danone, to shift attention towards implementing initiatives and attaining certifications to promote sustainable, responsible, and transparent business practices.
Whether driven by concern for the wellbeing of planet and its people, or by the opportunities to grow brand awareness and profit margins, the motivations behind this shift towards sustainability in the strategies of large multinationals remains somewhat ambiguous. Nevertheless, the benefits that certifications such as B Corp can offer to all three are clear.
Nespresso attains B Corp status
Nespresso, Nestlé’s Swiss-based global coffee brand, recently announced that it has achieved certification as a B Corporation.
An indicator of high standards of accountability, transparency and performance, this designation adds Nespresso to a list of some 4,500 purpose-driven companies, seeking to improve their sustainability and corporate responsibility rankings.
The B Corp certification by B Lab measures a company’s performance against a range of variables from environmental impact to employee benefits and community outreach.
To achieve the certification, a company must satisfy a set of criteria which include scoring 80 or above on B Lab’s social and environmental risk review, publicly sharing the analysis online, and legally pledging accountability to stakeholders.
“The B Corp process is a rigorous and independent assessment of a company’s impact on people and planet, from its carbon footprint to the way it empowers its employees. Achieving the B Corp certification is a key milestone in the improvement and collective action journey,” said Johnathan Normand, B Lab Switzerland Founder.
The pathway to B Corp certification
To achieve B Corp certification, companies are required to undertake a stringent analysis process, ensuring all data is transparent and publicly accessible.
Although any business can apply to become a B Corp, the pathway to certification varies dependent on criteria such as revenue, company size, and industry.
Regardless of the dissimilarities between companies, certain steps must be taken by all applicants, which include undertaking the online B Impact Assessment, the Disclosure Questionnaire, and providing documentation and evidence to a B Lab analyst for verification purposes.
As well as the assessment, companies must also legally revise their corporate bylaws to accommodate a model of stakeholder governance. The purpose of this added step is to ensure that B Corps are legally accountable to all stakeholders, not just shareholders.
How B Corp helps food & drink companies become more sustainable
The so-called B Impact Assessment (BIA) grades a company based on five factors: governance, workers, community, environment, and customers.
Across its five global hubs, Nespresso received a total score of 84, with average points ranging from 29.4% in the community category to 92% in the customer category.
As part of its pledge to positively impact the coffee industry, Nespresso has introduced initiatives such as the ‘AAA Sustainable Quality Program’ which, in partnership with the Rainforest Alliance, embeds Fairtrade coffee sourcing and sustainability initiatives worldwide.
Making sustainable production a business priority, Nespresso also previously pledged to invest CHF 500 million into sustainable operations in the six years leading to 2020.
“B Corp certification reflects a 30-year Nespresso commitment to sustainability, transparency and responsible business. We are immensely proud to be joining a community of like minds who share our belief that profit, and purpose go hand-in-hand,” Guillaume Le Cunff, Nespresso CEO said.
Also aiming to become one of the world’s first B Corp certified multinationals, Paris-headquartered food manufacturer, Danone, is currently seven years into its ten-year plan to become fully certified by 2025. As it stands, the company has an average BIA score of 90, with over 60% of global sales covered by B Corp.
As part of its sustainability drive, in 2020, Danone became the first publicly listed company to adopt the ‘Société à Mission’ status. Defined by the French ‘Pacte’ law, this title represents a company whose purpose and by-laws are determined by its social, societal, and environmental objectives.
For Danone, these aims include impacting public health locally, preserving and restoring the planet’s natural resources, empowering employees, and fostering inclusive growth in the wider community.
How sustainability strategies increase value for brands
The question as to what exactly is driving this sustainable strategy shift however, is an interesting one.
In most cases, the benefits of improving ESG business practices are obvious for both the planet and people. Yet traditionally, investing in sustainability has been seen as a financial burden with unworthy rewards.
As consumers increasingly look beyond products and place more importance on companies’ values, purpose and impact, many businesses are now realising the value and profitability that investing in sustainability can bring.
Take Nespresso’s coffee capsule recycling initiative for example, which since 1991 has sought to provide a means for consumers to recycle Nespresso capsules. With over 100,000 collection points across 59 countries globally, the company now operate at a 90% recycling capacity when it comes to coffee capsules.
In addition to offering clear benefits for the environment in reducing waste and preserving resources, initiatives like this one are also effective in boosting brand sentiment and loyalty, as consumers increasingly place importance on the ESG credentials of companies and products.
In this way, it is clear how implementing sustainable business practises and acquiring globally recognised certifications such as that offered by B Lab, can bring added benefits to brands.
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