The question was simple, yet profound.
We were at a recent conference where startups were pitching creative products to meet the needs of our changing world. The audience was full of executives and investors with the cumulative financial power to fund those changes.
During a conversation about upcycling, a leader from a global CPG beverage powerhouse raised his hand and asked the speaker, “How do you know what you’re doing is the best possible use?”
At first, a few of us were puzzled. Then he explained it was his job to find the best use of their time and money when it came to environmental, social and governance-related initiatives (ESG).
With more options available today for CPG food and beverage manufacturers to create workstreams and dedicate resources to certain initiatives, how do they choose which ones to green light? How do they know where to start or who to trust? And how do they influence authentic action while operating in times of unparalleled scrutiny?
The business world is becoming increasingly more conscious of the impact of ESG, and the food and beverage industry stands at the forefront of industries that can make a positive impact. Many of these companies want to do the right things, but they’re grappling with a unique set of challenges. They strive to avoid greenwashing. They try to reduce their carbon footprint. They focus on minimizing food waste, ensuring ethical sourcing and fostering diversity all the way back to the farm level.
Their willingness to grow and learn means the stage is set for great ESG growth. However, there are still complex hurdles to clear as they sprint from the desire to change to the finish line of ESG-related ROI.
ESG moves the needle, but is it enough?
The good news is positive consumer sentiment toward sustainability and ESG-related purchases have been growing. But there are still gray areas between how customers say they want to live and shop vs. what they actually purchase. Consider this research:
The ESG-related retail growth stats, while significant, suggest customers don’t always buy sustainable products at a rate that backs up how they say they feel.
So why don’t they? Forty-one percent of NielsenIQ respondents said sustainable products are too expensive, while 35% said it’s hard to find ESG-related products at the store. And perhaps the most telling stat may be who they see as responsible for driving sustainability product changes: 46% said brands were responsible, 40% said local government was responsible and only 37% pointed at consumers themselves.
That misalignment of expectations may further confound CPG executives trying to make the best possible use of their budget when funding ESG products and initiatives. But it does bring one thing into relief: Short of government regulation forcing product changes, evolution in the ESG space rests on CPG’s shoulders.
A framework for vetting potential ESG partners
There are no instant ESG solutions in the CPG space. The sustainability evolution inside your company – and in the market as a whole – requires a staged approach and a fundamental adoption of new ways of working.
That’s why it’s imperative you start your ESG product innovation journey now. Your CPG brand must fully vet, substantiate and compare multiple initiatives to ensure it’s making the right choices.
Savitha Chelladurai, Benson Hill’s Director, ESG & Sustainability, said CPG leaders should think about these five things when evaluating with ESG innovators:
-
Look for partners – not just suppliers: Find innovators who are willing to develop programs or products together to meet your specific needs.
-
Validate affluency in ESG: Look for innovators who show they understand your current state and goals, and can help you lead in the space.
-
Connectors: Find innovators who can bring other partners to the table to jointly develop holistic solutions.
-
A complete view of sustainability: Find innovators who understand how sustainability goals affect your full organization.
-
Identify quick wins: Partner with innovators who can implement solutions that work within the context of your current business model, allowing you to see immediate impact while working through longer-term investment and infrastructure changes.
Food and beverage companies know they must redefine their product offerings for all of us to have a sustainable future. But before they can do that, they need ESG innovators to clearly answer the original, crucial question: Is this the best possible use?
