Food industries must become more resilient in the face of a changing industry landscape on the back of new sustainability targets and expectations, NIRAS managing director Edward Lynch said.
The United Nations projects an increased demand for food supply of some 50 per cent in coming years simply to accommodate population growth.
At the same time, food industries are trying to become more resilient, consumer-focused and carbon-neutral, while climate change is putting supply chains and vast areas of land used for crops and livestock at risk.
“You can think about, ‘How do we make the food system lower carbon?’ Or you can think about, ‘How do we feed an extra two billion people?’” said Jessica Alsford, Morgan Stanley.
“But you can’t really analyse them in silos, because the two have a real impact on each other.”
Food processors and manufacturers traditionally operate in relative silos, oftentimes struggling to individually implement innovation, increasing their susceptibility to disruption, as evidenced by the recent coronavirus pandemic.
While innovation and application of technology can help build resilience, adoption in Australia has traditionally been slow.
For most companies it’s a challenge of transition. While most can articulate where they want to be, very few can clearly articulate a transition path, taking them from where they are, to where they want to be.
NIRAS is a knowledge organisation originating in Denmark, working globally in the food and fibre industries around the world.
NIRAS is working extensively with Australian and international organisations to plan and implement these transitions to colour a more effective and resilient future.
We discuss here the need for clarity in transition planning to optimise the opportunities that a decarbonised future presents to the Australian food processing sector.
“Climate change is increasingly creating challenges and disrupting business as usual operations,” said Edward Lynch, managing director NIRAS Australia.
“Whether organisations are threatened by environmental risks such as flooding, fires, or disruption to natural and human resource, or organisations are impacted through damage to brand reputation, business models, supply chains and margins, their business are at risk.”
At the same time climate change is creating genuine opportunities for businesses to strengthen brand, reinforce customer loyalty and exert positive influence over supply chains, partners, industries, and society.
Leading producers, processors and manufacturers will embrace the challenge. Those who don’t will be left behind.
The impacts of climate change will likely be far more destabilising than the disruptions of the recent pandemic.
Organisations that respond positively and decarbonise their organisations and their supply chains will build natural resilience and resistance to these risk; creating significant opportunities for their bottom lines.
“Decarbonisation is not just about emissions and resource conservation, it is the future of good food business.” Glenn Jacobsen, sector lead Food and Fiber, NIRAS Australia.
Decarbonisation has the ability in the food processing and agri-sectors to:
- Attract and satisfy investors and key stakeholders
- Grow brand recognition and influence
- Demonstrate industry leadership
- Attract and retain top human talent
- Improve business economic and value
- Conserve resources and improve financial bottom line
- Drive innovation and change
- Differentiate from market and product competitors
Investors, institutions, governance structures and leaders have clearly identified the value in decarbonisation, creating real pressure on organisations and businesses to respond. This is clearly demonstrated through:
- Growing strength and priority of environmental, society and governance (ESG) indices and high performing asset classes
- Almost 200 countries and the European Union have committed to the Paris Agreement to substantially reduce greenhouse gas emissions and control temperature rise to 1.5 degrees Celsius
- European Union leaders, European Parliament and European Commission have committed some 750 billion Euro in funds targeted at ensuring a sustainable and future resilient recovery in Europe
- CEOs from the world’s largest economies believe that climate response will create new opportunities in goods and services
- Institutional investors are mandating sustainability and risk mitigance to climate risk
Consumers are increasingly concerned with the ethics and environmental credentials of the products they purchase. This is forcing manufacturers and producers to shift from product focused to purpose driven.
More civically minded brands are communicating this sense of purpose. When purpose is proven to customers, profits follow.
Manufacturers who control standards and sources across supply chains are meeting customer expectations for companies to be ethically and environmentally responsible.
Manufacturers need take their responsibility to the people, communities, and environments involved in their supply chains seriously. They are hiring employees whose personal values align with business values and extends to using technology to keep employees safe.
Manufacturers are also priortising social and environmental issues beyond the factory floor. At the centre of supply-chain innovation is a quest for fairer materials and more responsible practices.
Increasing successful organisations are realising that:
- Purpose equals profit;
- Success comes through attracting and protecting talent; and
- The future demands responsible resource management.
Decarbonisation is arguably a clear and present objective, however establishing the pathway is full of obstacles and challenges, particularly for operational businesses and their supply chains and partners.
Any such commitment demands technical, financial, organisational and governance capability and capacity which cannot distract from core business activity.
In establishing and implementing a decarbonisation pathway organisations should be asking themselves four key questions:
- What does success look like?
- What targets and goals are appropriate?
- How do we deploy organisational, physical, financial and technology solutions?
- How do we sustain and improve results?
While decarbonation is a circular and iterative process, defining success and organisational aspirations is the first steppingstone on the pathway, requiring alignment on vision and strategy.
NIRAS, through its work globally in food processing industries and our commitment to the green transition, can provide baseline analysis, relevant global industry and market intelligence, and trends, prepare benchmarking and lifecycle and footprint analyses, engage stakeholders, prepare financial analysis, and map the journey.
This work with organisations equally need establish time based goals and targets, crucial to any decarbonisation strategy. In analysing risks and opportunities we can validate target options and scenarios, performance levels and funding structures.
Through this understanding and planning, organisations must them identify solutions, and optimise their procurement and deployment.
NIRAS are working across all sectors of the food and beverage industries in Australia to optimise solution procurement, account for resource use, leverage electrification, source suitable finance and funding strategies and promote suitable and appropriate partnerships and collaborations.
Further in order to sustain results, there needs to be an on-going commitment to track and analyse performance, review operations for continuous improvement opportunities and to openly report and communicate.
The opportunities for new products and services to meet future challenges for the food industries globally and in Australia, are enormous.
The brave will seize these opportunities and increase their resilience.
Those who do not, will be left behind and vulnerable.
Source: foodmag.com.au
