Food and drink leads on sustainable supply chains

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The food and drink sector has the highest proportion of organisations (32 per cent) with sustainability goals fully embedded in their supply chain management, according to a study of mid-tier business by Grant Thornton.

This focus reflected the connections between consumer demand, food production, packaging and transport and the strategy of major retailers, the report said.

The study commissioned by Grant Thornton looked public and private sector organisations in the UK with a turnover of £250 million to £1 billion.

Over 80 per cent of companies with a turnover between £250 million and £1 billion have board-level accountability for sustainability reporting, with over half (51 per cent) of CEOs taking this on personally. Up to 70 per cent of these organisations also state that sustainability is either ‘fully’ or ‘partially’ embedded in their corporate financial targets and 92 per cent state that sustainability performance is either ‘very important’ or ‘important’ to the overall success of their organisation.

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As the largest listed companies look to reduce their own carbon impact by choosing suppliers offering more sustainable products, services and raw materials, mid-market companies recognise this will impact their business – 84 per cent cite customers as a key audience to communicate the business implications of their sustainability efforts, second only to policy makers.

Despite recognising the commercial impact of carbon reporting, mid-tier organisations face challenges embedding sustainability targets throughout their business.

The departments with the lowest score for ‘fully’ or ‘partially’ embedding sustainability in their function are sales, human resources, and research and development. Given consumer concern about sustainability is growing and increasingly features in corporate purchasing decisions, these are areas for mid-tier organisations to focus on to generate revenue from sustainable products and services.

A large percentage of respondents (67 per cent) already include sustainability information in some form of external reporting – either as a standalone sustainability report or within their annual report however less than half (43 per cent) are using independent external verification of their sustainability efforts to ensure it is accurate, complete and balanced.

The study also asked mid-tier organisations what they felt were the most significant sustainability risks for them over the next two years. In order of importance, respondents cited carbon regulations; energy prices; water scarcity; environmental regulations; rising commodity prices; extreme weather and the risk of their products being substituted for more sustainable competitor offerings.

With these risks in mind, the key areas for capital investment over the same period are onsite renewable energy; video conferencing technology; projects to make buildings more energy efficient; data centre improvements; electric vehicles for the company fleet; software for energy and carbon management and finally, equipment to reduce industrial emissions.

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