Food companies struggle to effectively measure and report their environmental performance due to the complexity and labor-intensity of data management. Environmental monitoring, through the use of digital technologies, can improve this process. Standardization of environmental metrics and automation of data exchange can facilitate similar performance measures across companies and reduce data-entry workload. In addition, systemic changes and collaboration within food networks can lead to efficient and transparent environmental reporting. Integrating AI into decision-making processes can also help optimize environmental sustainability. Implementing these strategies will strengthen environmental footprint, thereby making food companies more sustainable and cost-effective.
Despite the growing demand for sustainable food, many companies are reluctant to set ambitious environmental goals, because clearly measuring and reporting environmental performance is time-consuming and expensive. Environmental tracking, which is the ability to track the environmental impact of a product in the supply chain, helps to streamline and improve the process, and we know many strategies that can improve its effectiveness.
The need for better traceability is acute. We recently conducted a survey of 101 companies of various sizes in various subsectors of the food and drink sector in the UK. Our survey found that 79% of the country’s food companies encounter the challenge of measuring and reporting their environmental performance in various parts of the supply chain, from upstream growers and manufacturers to wholesalers and retailers and downstream consumers. For example, companies have difficulty obtaining data on carbon emissions related to purchased materials or the upstream and downstream transportation and distribution or processing of food products. For those who need to meet the environmental data requirements of various stakeholders, including customers such as retailers, restaurants, other food manufacturers, and investors, as well as regulators and standards-setters like the Taskforce on Climate-related Financial Disclosures (TCFD), the resulting data-wrangling involved is extremely labor intensive. British poultry producers told us they spend between 100 and 345 man-days a year entering the same environmental data in different formats via digital platforms or email for different stakeholders. .
Traceability improves transparency and efficiency in environmental reporting by tracking the impact of food products throughout production, processing, and distribution, and automating environmental data exchange between companies using digital technology. . This will help food companies reduce their costs while, importantly, increasing the benefits of improving the environment.
For example, the European Commission started a pilot project in 2022 to develop digital traceability technology for this purpose. This resulted in the creation of Digital Product Passport (DPP), a document that contains unified data for a product (for example, product name, origin of raw materials, ownership and repair data) throughout its life. These DPPs currently focus on the electricity and electronics, battery, and textile sectors, but food products have not been included so far. A working example of this approach for consumers comes from Sweden, where consumers can now scan Zoegas Coffee’s QR code to see the journey of their coffee beans from harvest to on the shelf. In doing so, consumers can see how the coffee brand and their own consumption behavior follow the Rainforest Alliance certificate, which focuses on protecting the environment and the livelihood of farmers and forest communities.
Based on a comprehensive review of environmental reporting, we recommend four strategies that companies can implement to increase environmental footprint and therefore business value in high environmental performance.
Standardizing environmental metrics enables food companies to measure their performance rigorously. Currently, there are many different environmental standards, such as Science-based Targets (SBTs), Task Force on Climate-Related Financial Disclosures (TCFD), ISO 14001, and ISO 14064. While different companies choose in different standards, it is challenging to compare. environmental performance of food companies. Two of us – Lili Jia and Steve Evans, from the Center for Industrial Sustainability, University of Cambridge – developed standardized environmental metrics with consistent assumptions, principles, and frameworks to rigorously measure the environmental impacts of food companies in terms of greenhouse gas emissions, air pollutants, water use, material recovery, and waste . UK policymakers are currently exploring new strategies to use these metrics to provide a reliable method for food companies to demonstrate high environmental performance, as outlined in the United Nations Sustainable Development Goals. .
Automating the exchange of environmental data among different food companies would also help. Based on standardized environmental metrics, the data can then be represented in a unified data description language, such as Extensible Markup Language (XML). It will allow food companies to enter data once and automatically share that data through digital platforms. Different from a manual method of data exchange, automating data exchange can help food businesses reduce the time and cost of data sharing. When a food company shares its data in a standardized XML schema, the data is translated into a format that can be easily changed using the same XML schema among its stakeholders. Therefore, a set of XML-format data can meet the different data structure requirements of different stakeholders. As this method of data sharing does not require a central data platform to host all data, food companies have more control over their data ownership and confidentiality.
Companies should use existing food system networks to help each other leverage business value from environmental sustainability. Retailers and large food manufacturers often make independent decisions on environmental data requests. This leads to inconsistent forms, which in turn discourage their suppliers from sharing environmental data. If food companies take a collaborative approach and adopt a standardized form for environmental reporting, it will increase efficiency and reduce costs while improving data quality.
Doing so could also cause systemic changes in the supply chain and encourage all suppliers to report their environmental impacts, as laggards risk losing customers. By linking SBTs Scope 1 emissions (ie, direct carbon emissions) and Scope 2 carbon emissions (ie, those from purchased electricity and heat) along the supply chain, the quality of data for SBTs Scope 3 carbon emissions (ie , all indirect carbon emissions not included in Scope 2 emissions) will also be improved. Clear environmental reporting will set strict industry standards to facilitate the spread of good environmental practices.
Integrated human-artificial intelligence
Companies can integrate artificial intelligence (AI) into decision-making processes to realize business opportunities in environmental sustainability. In their book Prediction Machines: The Simple Economics of Artificial Intelligence, Ajay Agrawal, Joshua Gans, and Avi Goldfarb point out that AI should be used as a predictive tool in ‘s support companies to make decisions, rather than making decisions for them. For example, UK retailer Ocado uses AI to predict customer demand to inform purchasing decisions, leading to reduced food waste. Farmers can make better crop protection decisions using AI predictions of growth patterns based on sensor data and real-time visual data with drones. AI is also driving flexible automation: With the UK’s growing farm labor shortage, the world’s first raspberry-picking robot can now pick more than 25,000 raspberries a day — 66% more than the average worker.
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By studying and supporting more than 600 companies, we found that sustainable companies were able to internalize the benefits and costs of environmental protection into their business value calculations. By implementing these transparency strategies, food companies can increase their environmental footprint and become more sustainable, ultimately benefiting their bottom line while contributing to a healthier planet.