Resource shortage and an understanding that “good business is good business” mean that the discourse around sustainability issues have entered the mainstream and will continue to demand the spotlight in 2014. Ben Cooper examines the key themes likely to emerge in the coming year.
If one wants to know which way the corporate wind is blowing at the beginning of a new year, a good place to start is Switzerland, more specifically Davos-Klosters, where the 44th World Economic Forum (WEF) Annual Meeting took place last week.
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The WEF Annual Meeting is something of a circus, and it is often said that the really interesting discussions, those between business leaders and high-level government, are conducted behind closed doors, while the open sessions give the conference its rather unfair reputation for being a talking shop.
However, with some 30 heads of state or government and 1,500 business leaders representing the WEF’s 1,000 member companies in attendance, the event demands – with some justification – not to be ignored. Moreover, the overall theme this year, The Reshaping of the World: Consequences for Society, Politics and Business, speaks to how issues once siloed under the banner of “sustainability” are now firmly in the mainstream.
Indeed, if there is one over-arching prediction for 2014, and beyond for that matter, it would be that it will become increasingly difficult – not to mention pointless and unhelpful – to separate “sustainability issues” from core discussions about business and its relationship with governments and consumers.
It would therefore be nigh impossible here to list, let alone evaluate, the events and discussions last week with a bearing on what might be the key social and environmental challenges facing food companies in 2014.
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By GlobalDataOf particular note, however, for its sheer ubiquity, was food security. In fact, one of the four “programme pillars” of the conference was “Sustaining a World of 9 Billion”, underlining how global food security will continue to be a prevailing concern in 2014. WEF also launched a report, coauthored with Bain, at the beginning of the week, examining supply chain efficiency with food loss one of the key issues addressed.
As seen in 2013, the broader discussion of global food security has only intensified scrutiny on food companies’ agricultural supply chains, and this will certainly continue and increase in the coming year. Food waste and loss was a major issue in 2013 and will continue to be in 2014. Indeed, multiple concerns around food supply chains – from farm to fork – may well be the pre-dominant issues of 2014.
While 2013 closed with positive news on the sustainability of palm oil, when palm oil giant Wilmar International announced a major commitment to sustainable sourcing, the agri-food industry will need further such positive developments, in palm oil and other key agricultural commodities, such as soy, cocoa and sugar, during 2014 in response to an increasingly confident, vocal and media-savvy campaign community.
Staying with agricultural supply chains, this year has opened with further activity in the GM debate in the US. With numerous states pondering the introduction of GM labelling legislation, the pro-GM lobby is seeking ownership of the GM labelling issue by pushing for federal legislation.
While Louis Finkel, executive vice president of government affairs at the Grocery Manufacturers Association (GMA) says the US should “not be making food safety labelling decisions through a patchwork of state laws”, it is not just standardisation that the GMA and its allies are advocating. The national regulation they are seeking would also allow GMO foods to be described as “natural”.
Meanwhile, the fact that US food manufacturers, most recently General Mills and Post Cereals, are including products specifically labelled as GMO-free in their ranges, suggests that the noise around GM in the US is borne out of more than shrill activism. One undeniable truth about major food companies is that they know their customers, and if they sense that there is concern about GM – particularly with foods they might be giving their children – it is there.
The US food industry has already spent an estimated US$70m lobbying successfully in state ballots on GM labelling in Washington and California. With campaigners able to build on underlying consumer concerns, further debates likely in other individual states and lobbying activity on Capitol Hill, this could be a preoccupying as well as costly issue for the industry in 2014.
Consumer concerns in the US are borne out of the same instinctive suspicion of GM, albeit stirred up significantly by somewhat sensationalist media coverage, that is seen in Europe. And it will be interesting to see what happens to the GM debate in the EU following the actively pro-GM position taken by UK Secretary of State for Environment, Food and Rural Affairs Owen Paterson in 2013.
For electoral reasons, the Conservative party certainly needs to flex its muscles in EU debates, and at first glance Paterson’s criticism of what he sees as an overly cautious EU position on GM, which potentially stifles innovation and might block positive solutions on food security, seems a tempting battleground.
Food, however, is a dangerous area to be advocating deregulation, particularly in Europe, and particularly now. With the ink hardly dry on the government-commissioned inquiry into the horsemeat scandal, led by Professor Chris Elliott of Queen’s University Belfast, the integrity and safety of UK and European food supply chains will continue to be a hotly debated subject in the coming year.
In what will be a long lead-up to the 2015 UK General Election, the Labour Party is seeking to “shine a light” on instances where market failure has harmed consumers. When launching this aspect of Labour’s fledgling manifesto, which would empower regulators to act when markets fail to act in the public interest, party leader Ed Miliband focused on the financial sector but given the events of last year the food sector could well come under similar scrutiny in due course.
Interestingly, the lack of public trust in companies and markets was explored at a panel discussion on the second day of the WEF Annual Meeting. Entitled Doing Business the Right Way, the discussion explored how trust in business had been eroded during the financial crisis and was now at an all-time low, and how this situation might be addressed.
It is pleasing to note that while no representatives of the financial sector appeared on the panel, there were two leading executives from the food industry, namely PepsiCo CEO Indra Nooyi and Richard Goyder, CEO of Australian retail group Wesfarmers. There was universal agreement among the panellists that consumer trust was intrinsically linked to companies taking a long-term view regarding economic, social and environmental sustainability.
Indra Nooyi maintained that “90%” of companies were already doing business the right way. Implicit in that, however, is that the good have much more to do to engage consumers regarding the communication of their long-term view of sustainability, though Nooyi also pointed the finger at selective reporting on these issues in the media.
Given the reams of copy companies publish on their websites and through other channels about sustainability, it seems strange to suggest companies have to do more to communicate what they are doing.
Also, given the tendency for so much communication around sustainability to be branded as PR puff or worse ‘greenwash’, companies have to tread carefully. Perhaps they actually have to say less but what they say must mean more. Whichever may be the case, it is certain that consumer engagement on sustainability will be a key priority for food companies during 2014.
More specifically, it is consumer responsibility that governments, NGOs and the private sector all want to encourage, for example around food waste and recycling. And nowhere is the importance of boosting consumer responsibility more crucial for food companies than in diet and health.
With the issue of nutrient taxes again taking centre stage following events in Mexico towards the end of 2013, and the launch of a major international campaign to lower levels of sugar added to processed foods, food manufacturers will come under increasing pressure on diet and health issues in the coming year, across a raft of developed and developing countries.
Consumer engagement by food companies on diet and health in 2014 may well focus on encouraging consumers – who now have better on-pack information on the nutritional content of the food they buy than ever before – to use that information to achieve a balanced diet. In the UK, for example, this may take the form of an expansion of the Change4Life programme but there is clearly potential for food companies to do much in this area on an individual basis. This may be seen as a more positive response to the inevitable pressure from campaigners than tit-for-tat argument over the technicalities, challenges and costs of reformulation.
