Recent price increases have put a spotlight on the importance of energy within the food and drink sector. But there are challenging net zero targets to meet, too. It’s never been more important to get the right balance between economic and environment.
We spoke with Emma Piercy, Head of Climate Change & Energy Policy at the Food and Drink Federation (FDF), about the challenges the food and drink sector face in building a resilient and sustainable food system, against a backdrop of widespread volatility.
The food and drink industry has faced a huge number of challenges over the last 2-3 years, with Brexit, COVID and the current geopolitical situation in the Ukraine. But I think it has helped to put a spotlight on the importance of sustainability. Sustainability has three facets: social, economic and environmental. The challenges we’ve faced in recent years has shown why it’s so important that businesses get all three right.
Right now, organisations are looking at how they can address both the challenges of net zero, and the challenges of rising energy costs. They’re more conscious of where their energy is coming from than before; and they’re looking at how they can smooth out risks and build up their resilience for the future. In that sense, sustainability is very much on the agenda – but the real challenge is what to do about it.
When we consider how to make food and drink manufacturing processes more sustainable, the part that organisations have the most direct control over is the energy that’s used onsite. So that’s where we’re seeing a lot of focus. But the challenge of decarbonising these processes isn’t just a technical one – there’s financing and skills challenges that must be addressed too.
96% of the UK’s food and drink industry are small and medium-sized businesses (SMEs). Where do they find new green skills? Where do they get the financing from? These are the parts that are particularly challenges for smaller organisations. We need much more focus on making it easier for SMEs to access to support.
Decarbonisation of heat is another big challenge for food and drink manufacturers. We know that it is technically possible to get to net zero by 2050. But looking at the current policy regulatory framework, there is a different between what’s technically possible, and what’s actually realistic. A couple of years ago, our research found that without further interventions, the sector can only reduce emissions from heat by 64% by 2050 when compared to 2012.
Ingredients make up two-thirds of the food and drink industry’s carbon emissions. Since the level of supply chain emissions are so high, the challenge of addressing Scope 3 emissions is that much harder.
As organisations start to place more focus on their Scope 3 (supply chain) emissions, it’s going to become increasingly important that the food and drink sector has a collaborative interface with retailers. Manufacturers and retailers are already choosing suppliers based on their sustainability criteria, so anyone in the supply chain who doesn’t cooperate risks being left behind.
There are lots of different methodologies available to help companies calculate their Scope 3 emissions. But what we need to work towards is an aligned industry-wide approach. We’ve received quite a few enquiries from manufacturers who are already being asked about their sustainability credentials by retailers. The questions that retailers are asking are similar to each other – but they’re not exactly the same. The administration that’s involved in responding to all these different requests is becoming increasingly complex.
It’s hugely problematic, because it’s so time consuming. But most importantly, if different retailers are asking different things, it doesn’t help consumers to use the information. You could be looking at two products that are exactly the same, but the way that the sustainability credentials are presented and calculated could be vastly different. The supply chain needs to work towards a standardised approach.
A resilient food system relies on three things: energy security, climate security and food security. And this aligns with the three elements of a successful sustainability journey: people, planet and profit.
We’re seeing an increased focus within government around energy efficiency – and of course it makes sense to focus on that first, before you look at energy generation technologies. If you don’t need as much energy as you thought, you don’t have as much to replace with a renewable source.
But different food and drink companies are at different stages of the journeys. Bigger companies often have more resource, so perhaps can integrate sustainability more widely throughout the organisation, and this has a positive impact on their ability to deliver on their goals. But going back to my earlier point around the challenges SMEs face, they often don’t have the same level of resource to dedicate to sustainability, and that makes it much more challenging for them to move forward.
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