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Rabobank highlights how food and beverage manufacturers can cut costs while lowering carbon emissions

New research from Rabobank highlights a number of strategies food and beverage manufacturers can take in an effort to achieve the holy grail of cutting costs while also lowering carbon emissions.

Titled Opportunities to cut costs and carbon throughout food and beverage value chains, the report highlights how sourcing, suppliers, logistics and packaging operations can be tackled. The report also highlights that while risk analysis and additional investment are often necessary, there are several strategies that might involve lower costs and resources to achieve these ends.

Ingredients Network spoke to the report authors, Matthew Lewis, RaboResearch sustainability analyst – consumer foods and beverages, as well as Sanne Wielders, RaboResearch specialist – F&A ingredients & sustainability to find out about the best approaches, the strategies to put in place and the potential pitfalls to avoid.

The best approach for F&B businesses to take

Where to start? The Rabobank team believe that the first place to start is to analyse the main causes of carbon emissions, which implicitly have a relation to costs, too.

“By reviewing a series of successful sustainability initiatives implemented by food and beverage companies, we discovered that examining the biggest areas of carbon footprint can lead to ideas for improving efficiencies and reducing costs,” said Sanne. “While initiatives to reduce both costs and carbon footprints may require additional risks and/ or investments, industry examples show that cost-cutting measures often incorporate sustainability elements. Looking beyond simple tweaks can create opportunities to deliver substantial long-term savings in both costs and carbon emissions. Presenting case studies of other companies could inspire new ideas to reduce costs and carbon simultaneously.”

The team also believes that thinking outside the box is crucial, as often rewards may come from less likely sources, which could even extend to government sustainability initiatives that provide funding.

“If we look at many of the examples in the initial report, as well as other initiatives we are hearing of throughout our network, you see that many were never thought of as ‘sustainability initiatives’ per se,” said Lewis. “Additionally, if you look in state level registries like Washington’s climate subsidies reports, you see companies that have utilised these grants and partnerships to retrofit buildings to be more energy efficient or install on site solar for example but do not even have a sustainability role or any mention of sustainability on their websites. What this tells me is that the best route to convince companies of this approach is financial, it is sort of like doing sustainability without calling it sustainability. Of course, there will be some level of pushback for many of these initiatives, even if a certain change is cost neutral or even saves significantly there is a general risk associated with change of any sort.”

The first steps to take require some obvious and not so obvious steps

Sanne emphasises that first identifying where the biggest costs and carbon emissions originate is a very good starting point. It is also important to not fear challenging the status quo.

“The first step is to undertake a detailed GHG accounting process, you can do this at a company level or even for a certain product line, better yet both. When you compare the largest sources of emissions to the largest cost centers, or a cost of goods sold (COGS) analysis for a given product it will become easier to find the low-hanging fruit,” said Lewis. “Beer is a perfect example. We found that the COGS breakdown and the emissions breakdown for a bottle of beer was almost perfectly aligned, this was across all regions but especially true in North America. After finding these synergies, you can then begin to analyse the processes or inputs behind the numbers and work to bring in efficiencies that will simultaneously reduce both costs and emissions.”

Keep an eye on the carbon footprint to avoid pitfalls

A strong system to constantly ensure that the carbon footprint is being assessed needs to be in place if businesses want to avoid slipups, but retailers are already setting the pace by requiring suppliers to meet their sustainability requirements.

“In the long term, if some food and beverage companies would be lagging behind others, regulations could impose emissions charges based on their reduction targets,”said Sanne. “Proactively managing the carbon footprint throughout a company’s operations can serve to prevent additional risks from regulation, tariffs, and disruptions to the supply chain.”

Lewis believes that bigger companies are already doing the work, but further upstream businesses are facing real potential dangers, particularly as retailers increase the stakes so they can hit their climate change and sustainability targets.

“When retailers look between two suppliers for a given or largely similar product at a similar price, sustainability will be a key differentiator. This dynamic is in play across almost every F&B sector, so whether it is shelf space, key supplier contracts, or larger off take agreements, the downsides of not taking these steps is clear.”