Implementing sustainability throughout the food supply chain
As Millennials and Generation Zers begin building their own families and exercise buying power, they’ve shown a propensity for organic, sustainable and locally sourced products, especially when grocery shopping. As a result, many national grocery retailers and food processors have shifted their missions to more closely align with these younger generations. In fact, according to a report released by the Centre for Sustainability and Excellence, Chicago, Millennials and Gen Zers stated that a company’s impact on society affects their decision to work for or purchase from a particular company.
Younger generations also do their research. Being informed of brands and companies that share their same values of sustainability helps make them feel like an empowered consumer, not only making a difference in improving their own lives, but also making a difference in society for future generations. Their research can lead to new brands promoting similar principals or cause them to stay away from brands or grocery stores that may not share the same values. In fact, a study from the Organic Trade Association, Washington, D.C., suggests sales of organic products could see a significant boost as more Millennials have children. For the first time, baby food surpassed fruits and vegetables as the top category in which consumers said buying organic is extremely important. Brands that practice sustainability throughout the supply chain are likely to appeal most to consumers from these generations.
Corporate sustainability programs
As food manufacturers and grocers shift their missions with changing consumer expectations, many companies are implementing corporate sustainability programs to embrace green practices through the entire supply chain, from the manufacturers and test kitchens to warehouses and transportation providers. The ultimate goal of these programs is to improve sustainability by reducing the supply chain’s carbon footprint to meet the companies’ own internal goals.
The investments necessary to implement these programs can have rapid and long-term benefits. Not only do they help increase a company’s sustainability, but implementing sustainability programs can also reduce waste, packaging, transportation, water usage and energy costs. Additionally, these types of programs improve brand loyalty and help attract and retain customers and employees.
There are a wide range of sustainability initiatives that companies can consider incorporating. These can vary based on the physical facility type and the operations performed at the location. For example, efforts at a corporate headquarters could differ from practices implemented at a cold storage facility or a manufacturing plant.
Here are some practices to consider:
- Energy management. Every type of facility can implement energy management practices to help reduce the carbon footprint as well as reduce the electric bill. These practices include automated controls, heat and air flow management, renewable electricity generation, on-site storage for reduction of demand charges and backup energy and LED lights.
- Sustainable packaging. Implementing sustainable packaging is an initiative that provides consumers with visual evidence of a brand’s commitment to sustainability and connects with their shared values. This should limit waste of space in stacking the product, as well as be easily recyclable for consumers at home. Sustainable packaging can also be more economical for the brand. Redesign of the packaging material requires less raw material, energy and transportation and storage costs.
- Transportation to and from facilities. Transporting products from point to point in the supply chain can be accomplished with sustainable electric/fuel cell/diesel hybrid fleets. The routes used can be plotted, so truck fleets aren’t traveling empty between distribution warehouses, suppliers and delivery points to lower fuel costs.
- Recycling. Discarded foodstuff in processing facilities should be recycled, as should any packaging all facilities receive. Depending on the facility, its possible oil, water and hot/cool airflow could be recycled as well.
- Reduction in water usage. If a production facility uses a substantial amount of water, it’s possible the water usage could be reduced through investment in more energy-efficient equipment or different settings on the current equipment.
Implementing renewable energy
Along with implementing the various relevant sustainability initiatives, implementing renewable energy, coupled with energy storage, is the next logical step after implementing energy efficiency, as these facilities are large consumers of electricity. There are several factors companies should consider when deciding to implement a renewable or alternative energy generation source.
Renewable resources are typically local resources. Certain regions may have abundant access to hydro, biomass, geothermal, wind or solar resources. The challenge is selecting the most economical and available renewable or alternative energy source that would be a fit for the local facility. Certain types, such as wind turbines, may only be feasible in rural or coastal areas, while local biomass and others may have continuous resource limitations.
Other constraints may be the physical infrastructure of the facility itself. Most energy generation equipment is bulky and could require prime real estate within a facility. Solar generation, in most cases, is most optimal, as adequate sunshine is available everywhere, and solar can be deployed on building rooftops, over parking lots or on an adjacent field. A flat roof with some load-bearing capacity is optimal for the implementation of on-site solar energy generation. Solar energy is particularly attractive for companies looking to implement renewable energy on their warehouses, distribution facilities or corporate office buildings.
Implementing any new on-site energy generation can require an initial investment. However, the federal tax credits/incentives as well as some state policies can reduce the investment costs and accelerate the ROI, making an investment in your own renewable energy generation source be among the quickest investment returns a company can make (3-6 years payback with a 30-plus-year production life of the system). In some markets, low-interest loans for renewable energy projects are available for a renewable resource like solar. PACE financing is growing rapidly in many local markets, allowing financing for solar projects to be paid back via property taxes, freeing the owner from incurring any debt on their balance sheet and liability. Companies should consider the long-term savings and energy cost predictability a renewable energy source can provide, especially if the source is able to fully power the facility. With a renewable energy resource like solar, for example, energy costs can become more manageable, as the cost would be fairly constant for 20-30 years.
As companies realign their missions and values with consumers’ shifting expectations, they should remember to address sustainability throughout the entire supply chain. From locally sourced or organic options to reducing energy usage in all facilities, there isn’t a part of the supply chain that a corporate sustainability program shouldn’t touch.