How sustainability efforts in the food industry are going up in flames

Sustainability chiefs in the food industry are burnt out. Once the flagbearers and pathfinders, they now feel lonely and demoralised. And tired of missing targets due to what they claim is internal corporate politicking, many have given up.

“You’re facing into the realities of environmental anxiety, human rights issues and dietary issues, and all the big systemic challenges that come with food, but your victories are so small,” says one source who used to work in retail but has now left. “You’re told ‘we have this ambition’ but not given the tools to execute it. It’s like being gaslit by your own organisation.”

The problem doesn’t pertain to a single company, let alone one individual. It’s endemic: we’ve spoken to several high-profile sustainability leaders across retail and fmcg, who see the excitement once emanating from sustainability jobs in the food industry now dissolving into a slough of despond.

A former grocery leader described it as “like the house is on fire and we’re all still sitting watching TV”.

Laura* is still in her senior sustainability role, but admits she’s close to giving up. “What me and my team feel is very little has changed. We’ve been talking about these risks for a decade, but often lacking the ability to change anything that might address the root cause.

“I myself am on the fence about whether I can manage to do a role like this for much longer. Probably not.”

But what exactly is leading to this collective meltdown? And as the industry bands together for a new push to develop a cohesive sustainability strategy under the IGD’s leadership, can meaningful progress really be achieved?

Missing targets

Sustainability professionals point to several targets being missed and joint initiatives quietly shelved over the years. Most voluntary programmes on carbon emissions reporting, plastics and food waste reduction, as well as water management roadmaps and nature commitments, have failed to make progress.

Even those that appeared to have the full backing of industry and consumers alike. Take refillable packaging trials. The so-called Refill Coalition, billed as the industry’s best chance of creating a scalable, end-to-end refill solution, has encountered several delays and suffered the exit of high-profile coalition members including Waitrose, M&S, Sainsbury’s and Morrisons. In a further blow to the war on plastic, Asda scrapped its flagship four-store trials of refill aisles and refillable this July, claiming the economics were “too challenging”. Lidl quietly binned its refill trials a month later.

Even Tesco’s “ground-breaking partnership” with WWF in 2017 under former CEO Dave Lewis did not make it. The tie-up produced a sustainable basket metric to track Tesco’s progress in halving its overall impact by 2030. And it gained so much traction that all the major retailers committed to slashing their environmental footprint based on the WWF benchmark. Until Tesco quietly pulled the plug in November last year.

“You’re being asked to represent your organisation, pretend it’s doing enough when it’s not. That’s embarrassing”

The “multimillion-pound” alliance was “unlike anything” in the retail and NGO world, says Trevor*, another supermarket sustainability chief. But the basket initiative was “like herding cats” and WWF was “unable to keep an increasingly big group of different companies with different strategic priorities together”.

That lack of cohesion was plain to see in last year’s WWF basket report, with damning findings showing supermarkets were on course to miss their 2030 targets across key areas of environmental impact, from climate emissions to deforestation, food waste and packaging. The Grocer understands this year’s annual report, out next week, is expected to echo the same findings.

But this is nothing new, according to insiders. “I can’t think of one target in sustainability that anyone’s met in the last 20 years,” claims Laura*. “We set targets, but we don’t put the time and detail into working out how the transition plan is meant to work.”

Andy Young, a consultant and former fmcg sustainability manager, agrees the constant setting and missing of goals is “a continuing challenge, and a lot of people are getting frustrated”.

Around 75% of sustainability leaders now don’t believe they will hit their net zero pledges, a new Leafr survey among sustainability professionals showed.

This is particularly concerning amid growing regulation and legally binding commitments, like the Science Based Targets initiative (SBTi), deforestation and plastic reduction regulations across Europe and, of course, the Paris Climate Agreement requiring emissions to be reduced by 43% by 2030 and reach net zero by 2050.

Susan Thomas, Asda’s former sustainability director – who oversaw its Better Planet and Net Zero strategy from 2020 to 2022 – argues many targets require extensive reporting and getting the data right, leaving sustainability teams “overwhelmed”.

“We spend longer counting what we haven’t done than actually trying to do something. That is really soul-destroying for the team because they want to be making an impact and actually they’re just doing disclosures and diligence.”

Indeed, the same Leafr survey showed sustainability professionals spent 26.3% of their time gathering data and 21.2% reporting – versus 21.2% actually implementing sustainability initiatives.

Trouble is, sustainability strategy is often still operating under the remit of corporate responsibility, insiders say, where it is seen as a ‘nice-to-have’ rather than vital to ensuring food systems can continue producing for the world’s ballooning population.

“What’s happening now is we are considering the impact of this extreme weather through the lens of a more systemic catastrophic risk to our business, and we haven’t yet caught up with the organisational structures to embed this evolving risk landscape and this need to create resilience around our business model,” says one senior supermarket source.

Sustainability is being siloed

All experts agree there needs to be greater collaboration between sustainability and other areas of business, particularly commercial, who are ultimately responsible for making sourcing decisions and planning what companies will be selling years from now, but also finance, who need to model those sourcing decisions into wider business spending plans.

“This is not a CSR agenda” any more, Thomas adds. “It is a survival imperative where there will be no ingredients for your product if you do not take this action.”

Mike Barry, a former sustainability chief who orchestrated the M&S Plan A strategy – an industry-leading environmental strategy launched in 2007, well before most mainstream businesses were even thinking about sustainability – believes equipping entire corporations, from boardroom to shop floor, with those so-called green skills is vital for the future.

“You cannot transform a food and drink business through the actions of three or four people on the edge of the business,” he says. “You need everybody in NPD, in procurement, HR, marketing and retail merchandising, the whole lot to be engaged.”

Instead there is a “disconnect” with “experts who know what needs to happen but are not experts in buying or product development”, says Sarah Wakefield, executive director at the Eating Better Alliance. So sustainability teams are “struggling to go to buyers and say ‘in three to four years’ time, your category needs to shrink in volume despite the fact that your KPI is telling you you need to grow.”

Young believes “until those pieces of the jigsaw come together, it’s always going to be difficult” because “sustainability teams are fighting against all the different engine rooms of the business”.

This tension between commercial and sustainability is one we’ve repeatedly heard from all sources.

“Business and commercial teams think we are naïve as to the challenge,” says one sustainability insider. “And of course sometimes we may not be close to the day-to-day commercial realities. But ultimately we’re in the same organisation and trying to safeguard it for the future. Sometimes what’s missing is a little bit of grace.”

This friction can come to a head when sustainability chiefs are publicly grilled if things go awry – often for reasons out of their control. One source formerly working in sustainability for the mults recalls a time when they were asked to speak to an NGO about why they continued to source from regions in the Amazon linked to human rights violations.

“At that point I said: ‘I’m not prepared to go into that conversation alone without procurement involved’.”

Thomas also recalls her experience of seeing sustainability directors “going to conferences and doing press releases on stuff that was borderline ‘greenwashing’ – I could see how uncomfortable they were. You’re being asked to represent your organisation, pretend it’s doing enough when it’s not. That’s embarrassing.”

Trevor* goes further. The constant feeling of failure “can feel devastating on a personal level – for those of us that have been around long enough, there is a genuine deep-rooted feeling that this is not fixable any more. That takes its toll.”

Thomas notes a lot of sustainability talent is therefore moving to “more non-household names like Greencore, SHS, and Compleat”, where they are “finding they can get a lot more done because their leadership teams seem more free from the relentless expectations, and the emphasis on disclosures is much lower”.

Plus, their diverse portfolios “allow them to flex and shift towards for example, meat-free, organic or clean label more easily because they are less dependent on super-efficient high capex facilities anchored in their mega brands”, she explains. The same can be said of the discounters, whose largely own-label models allow greater control over their supply chains.

Supportive CEOs?

Another key obstacle for sustainability leaders surrounds corporate structure and how little influence they feel they can exert. While chief sustainability officer roles abound, many sit under corporate affairs, marketing, or finance departments, and lack representation at boardroom level.

“Oftentimes the sustainability leader is branded as a chief sustainability officer but sits one or two levels away from the executive team”, says Anna Turrell, ex-group sustainability director at Tesco. “It’s really smart in terms of the optics for the business but not in terms of having the ability to strategically influence.”

What many also found is that, even when they do have higher levels of access, “leadership doesn’t understand the scale of the issue” and “the science that’s being presented”, as one source puts it.

Of course, that is not always the case: fmcg has bred several commanders in chief who were known advocates for sustainability strategy. Thomas recalls joining Asda under the leadership of Roger Burnley, who was “a proper sponsor” for the sustainability cause. “Commercial skills plus sustainability skills were working really well. It was a fantastic experience.”

“The personality of the CEO always plays a massive role in how a company’s sustainability agenda lives and breathes”, agrees a separate Tesco insider, recalling a similar sense of excitement working for Tesco under Dave Lewis, who “brought a supplier mentality” from Unilever focused on a more long-term view to key sustainability challenges than the traditionally “short-sighted” retail sector.

“But equally, it was a time when there was more energy in the system”, they note. “That energy is kind of gone a bit now.”

As well as Lewis and Burnley, sources point to the high-profile exits of sustainability champions such as Danone’s former CEO, Emmanuel Faber, and Unilever’s ex-CEO Paul Polman.

“Leadership doesn’t understand the scale of the issue”

Over the past few years, the ESG agenda across the board “has taken a massive hit”, adds Turrell, as business leadership “has taken a more traditional focus” following particularly disruptive events, from Covid-19 and Brexit, to sky-high inflation, as well as supply chain disruptions and geopolitical shocks.

Delivering sustainability strategy has therefore fallen down the list of priorities, with new research by energy solutions specialist Aggreko revealing that CEOs across Europe are shifting timescales and investment for their net zero goals as they grapple with balancing profitability and sustainability.

Agricultural politicking

This balancing act becomes more complex amid a growing sense the food industry is becoming politically tokenised. Last week, The Grocer revealed that ministers had to put plans for a new National Food Strategy on hold – which would include potential measures to reduce carbon emissions from red meat consumption – amid outrage and protests from farmers over inheritance tax changes in the Chancellor’s October budget.

“The UK domestic agriculture industry is incredibly politicised,”, says Turrell. “Everyone knows UK farming is on its knees. We all want to support, enhance and transform it. But doing that is cost prohibitive without strong action from all sides, and sustainability professionals, business leaders and a lot of policymakers know this.”

This makes conversations on topics such as meat reduction targets, widely accepted as essential for slashing carbon emissions, “extremely difficult”.

“Unless someone regulates this, it is basically impossible [for supermarkets] because you have to ensure you maintain constructive relationships with unions and farmers in your fresh supply chains and also that you don’t destroy your relationship with a good proportion of your customers, who don’t want to be told what to eat or what not to eat.”

In truth, compromise between industry and government is hard to reach on many other areas. Indeed, several major sustainability-related policy moves by government have fallen apart in recent years. As well as food waste reporting and eco-labels, the highly controversial extended producer responsibility scheme has been delayed and amended multiple times while a UK-wide rollout of the deposit return scheme is again in peril after the Welsh government pulled out last week.

“I can’t tell you the number of conversations I’ve had with policymakers in government that are like ‘I get it, but I can’t do anything about it’,” Turrell says.

So, when government fails to intervene, the industry must once again convene. That’s what IGD, in partnership with climate action NGO Wrap and consultancy EY, have set out to do with their Food System Transition Plan – a long-term strategy for the entire UK food industry to hit net zero by 2050, published earlier this month.

It calls for difficult but necessary actions, including a 20% reduction in meat and dairy, though it stops short of setting out a clear timeframe as yet.

“The good thing about the IGD work is that it’s the industry itself saying ‘this is something we need to do’”, Young says. “Up until now, people weren’t ready to have that conversation.”

Turrell agrees: “IGD is stepping in to do something no one else is prepared to do right now. Companies can’t be expected to self-regulate. The grocers ultimately are competitors and don’t all have the same resources and the same sustainability budgets or priorities, so asking them all to voluntarily do the same thing is an impossible challenge.”

“They’re never all going to go at the same speed,” adds Thomas, who also helped with the IGD net transition plan. “Where that really bites is if it actually comes to a price decision – for example, looking at guaranteed zero deforestation for soy in the animal feed supply chain”, which “will come at a price premium” – “all you need is one big retailer undermining that and you risk the whole system collapsing. But we are of the view that any action is helpful.”

So while progress may be moving slower than many have hoped for, there is still hope for those pushing for change in the industry.

In parallel with the IGD’s work, supermarkets are also set to launch a second major push on reuse and refill technology and loose fruit & veg as part of a ‘Plastics Pact Mark II’ being drawn up by Wrap.

Additionally, the industry’s two biggest carbon reporting and reduction platforms, data giant Mondra and Manufacture 2030, partnered earlier this year to offer a mega-quick AI digital solution to help supermarkets tackle their supply chain emissions. Technology like this will hopefully reduce the reporting burden for sustainability professionals, allowing them to focus on implementing strategy instead.

Realistic rather than aspirational

There is also an argument that companies shifting sustainability targets is a positive move, another senior source points out, as they are taking a “realistic rather than aspirational” approach to the work that needs to be done.

Turrell would like to see “the thrust of direction come from investors” too. “Investors will be like ‘oh yeah, ESG – but what’s the bottom line? – and that message is coming through to the companies they invest in.”

And while joined-up plans for the big companies might move at a slower pace, that doesn’t mean all individual companies are slacking off. Lidl, for instance, announced plans to triple its plant-based range, and wants plant-based options to make up 25% of its total protein sales by 2030. Meanwhile, Marks & Spencer has “finally cracked” the marketing piece, Barry believes, with its eco-impact now a key part of the product offer – helping to win shopper buy-in on matters of the environment.

Mammoth shifts like this will require difficult conversations with suppliers, and big changes to NPD and store layouts, warn sustainability experts, further highlighting the importance of having commercial teams fully on board. It will also need sustainability professionals to have a real seat at board level, where their expertise can have an impact as businesses scramble for solutions to the net zero paradigm.

As Wakefield says: food companies have “an exciting opportunity to unleash their creativity”, bringing everyone together to bake sustainable ideas into a robust business strategy. “That would be the dream.”

*Names have been changed for anonymity