Food and agribusiness financial services provider, RaboBank, has released a sustainability centric report detailing how cutting carbon emissions along the supply chains of the food and beverage industry will also reduce costs.
Conducted by RaboBank’s research and insights team, RaboResearch, the report delves into companies in the agrifood industry that are rethinking traditional business practices and embracing innovative strategies, and finding that sustainability can be a powerful tool for improving operations and boosting the bottom line.
RaboResearch consumer foods & beverages sustainability analyst, Matthew Lewis, said that companies are finding that a focus on reducing carbon emissions is synonymous with cost savings, simultaneously raising margins and embedding sustainability into core business strategies.
“Proactively managing the carbon footprint throughout a firm’s operations can also serve to prevent additional risks from regulations, tariffs, and disruptions to the supply chain, which have been increasingly problematic in recent years,” said Lewis.
“In general, increasing the efficiency of high-emitting processes also results in efficiency gains in areas like energy use, raw inputs, and transportation, clearly showing the link between costs and carbon.
“Not only are these areas correlated with carbon and costs, they are often correlated with price volatility. In this way, food and beverage companies can also think of reducing the two as an exercise in de-risking,” he said.
The report outlines opportunities for reduced emissions and cost savings at each step in the supply chain:
Upstream: Food and beverage companies are identifying low-hanging fruit for simultaneous cost and emission reductions, starting with agriculture. Optimising fertiliser use and employing precision agriculture practices, such as drone technology, are proving to increase yields and reduce input and labour costs, as well as emissions.
On the production line: Local production shifts have shown significant cost savings and emission reductions related to packaging, shipping, and cooling.
Better packaging: Innovative packaging solutions, like reducing bottle weights, have led to substantial annual cost savings and a notable decrease in emissions.
Smarter logistics: Companies are improving logistics through route optimization, bulk shipping, and the use of alternative fuel sources, thereby reducing energy expenditures and emissions. Some are reevaluating the necessity of refrigerated shipping in certain conditions, further cutting costs and emissions.
Creating value from emissions: A novel approach involves capturing CO2 emissions and converting them into revenue streams. Companies can sell the gas to other firms or even directly to consumers.
Retail: Retailers are employing dynamic pricing algorithms to minimise food waste and collaborating with suppliers to reduce scope 3 emissions. Energy-efficient solutions, including renewable energy, are being implemented to achieve long-term reductions in costs and emissions.
For further information, the full report is available to download here.
