A version of this article was published in the August edition of Natural Products Entrepreneur Today.
Consumers are increasingly interested in what the food and beverage companies they buy from are doing to protect and preserve the planet.
They’re no longer only looking at products — consumers are also seeking to learn about the company that produces them. A company’s overall business plan can play a large part in this process, and as such, should outline any environmental impact and safeguard efforts.
As your food and beverage company builds its brand and tells its story, taking steps to define, start, and talk about your sustainability efforts can prove immensely valuable.
How are sustainability and business risks intertwined?
Managing environmental resources can help a business avoid interruptions, much like managing a workforce helps to avoid turnover. Whether through a reduction of recall risk or the avoidance of potential lawsuits for unsubstantiated claims, understanding the supply chain can help reduce the risk of brand damage and unnecessary expenses.
For this reason, large retailers are staying attuned to suppliers’ practices to help lower business and sustainability risks as well as ensure all claims are validated.
Who’s the best person to lead an investment in sustainability?
A CFO works at the intersection of sustainability and financial performance, which means he or she is best suited to define and communicate how a company’s management of environmental, social, and governance risks contributes to value creation.
Additionally, the CFO is closest to a company’s measurement and reporting of financial metrics, two items that naturally help provide effective oversight of sustainability efforts.
How does a company get started?
Building a sustainability program from scratch can seem daunting. It comes down to finding an internal team that’s passionate about the company’s sustainability efforts. From there, that team can take these steps:
- Identify which key performance indicators (KPIs) are most important to company stakeholders, including customers, investors, and employees
- Determine baseline metrics for identified KPIs
- Begin tracking data
Companies can’t manage what they don’t measure, which makes securing good baseline data a critical step in working toward any sustainability goal. It’s also essential to implement internal controls to ensure the data being reported on is accurate.
The best part of this process occurs once the data is gathered: telling the company’s story. There are various models and frameworks available for building a corporate social responsibility (CSR) report. The Global Reporting Initiative and Sustainability Accounting Standards Board both offer resources.
How does a business talk to different stakeholders about what it’s doing?
Determining what information stakeholders are most interested in can be the most challenging part of sustainability reporting. It comes down to a company’s core values and where it wants to dedicate resources and focus.
CSR reporting is a great and effective way to tell a company’s story. In terms of delivering the message, companies can use a variety of forms:
- Infographics
- Website statements
- Product certifications
- Full CSR reports that cover social, environmental, and financial information
What matters most is the authenticity of the message. When a company is passionate about its vision, stakeholders are more likely to buy into it. Some companies go a step further and obtain third-party assurance over parts of their report to further demonstrate their commitment and the credibility of their claims.
What business value can be created from sustainability efforts?
The value of sustainability efforts is often substantial. Studies have shown consumers are willing to pay more for sustainable brands and products from companies that place importance on CSR. Consumers aren’t basing their food and beverage purchases solely on taste and price — environmental impact is factoring into buying decisions as well.
Recent surveys have also shown that most young professionals entering the workforce prefer to work for an environmentally friendly employer. These workers are looking for information from prospective employers on their sustainability efforts.
From increased employee engagement to decreased turnover, the potential value of these efforts is significant. Combining this with additional cost savings from energy and waste reduction as well as available tax credits, it makes sense to prioritize sustainability efforts.
The information provided here is of a general nature and is not intended to address the specific circumstances of any individual or entity. In specific circumstances, the services of a professional should be sought. Tax information, if any, contained in this communication was not intended or written to be used by any person for the purpose of avoiding penalties, nor should such information be construed as an opinion upon which any person may rely. The intended recipients of this communication and any attachments are not subject to any limitation on the disclosure of the tax treatment or tax structure of any transaction or matter that is the subject of this communication and any attachments.