KANSAS CITY — Extreme weather and an alarming United Nations report released this summer on climate change have prompted fresh scrutiny of environmental goals. The coronavirus (COVID-19) pandemic laid bare global inequities. Increasingly, consumers are expecting large businesses to demonstrate leadership and take meaningful steps toward addressing these problems in the world.

“Likely because of this feeling that they have limited ability to impact change, consumers are looking for companies to lead the charge in creating sustainable products,” said Britt Calvert, director of innovation at the market research firm Ipsos.

In fact, in the firm’s research on consumer attitudes toward sustainability, 39% of respondents said companies are responsible for ensuring consumer products are environmentally and socially responsible, compared to 26% who laid that responsibility at the feet of government and 13% who chose the consumers themselves.

But what does environmentally and socially responsible even mean these days? Bakeries and large consumer packaged goods (CPG) companies have had sustainability plans in place for decades, but the definitions continue to expand as new issues arise.

As the news and market research demonstrates, sustainability appears poised to grow in importance and complexity. Sustainability once referred to the energy and water consumption of a plant. Today it touches every aspect of a company and requires coordinated efforts across industry to make a difference. And food manufacturers, bakeries and other CPGs are uniquely positioned to make a significant impact on the problems that fall under the umbrella of sustainability.

Point of no return

Consumers want to support companies that are trying to do the right thing, but the right thing has grown, especially in the past year.

“The scope of what consumers expect from brands has expanded with COVID-19 shining a light on social and economic inequalities,” Ms. Calvert said. “Some consumers are being more thoughtful of what they’re buying and where they’re buying it from, perhaps supporting a local or minority-owned business or using their buying power to support brands with an ethos similar to their own.”

Sustainability now encompasses not just environmental concerns but also issues of economic equity and even access to good nutrition. In fact, Ipsos’ research found that two-thirds of US consumers believe brands that contribute positively to society will be the most successful in the long run.

When it comes to the environmental impact of food and grocery companies, consumers’ top concerns revolve around sustainable packaging and limiting food waste. On a human level, consumers expect companies to offer fair wages and provide safe working conditions for their employees, even more spotlighted due to the pandemic.

Grupo Bimbo SAB de CV, Mexico City, is well-known for its robust, expansive sustainability program. The largest baking company in the world often highlights its efforts to create a sustainable, highly productive and humane company. It does this by focusing on four pillars of sustainability: Community, Associates, Health and Wellness, and Planet. Its planet pillar is aligned to the UN Agenda 2030 and focuses on cleaning up the company’s impact not only through sustainable packaging but also energy consumption, water usage and sustainable sourcing.

In the company’s annual report for 2020, it outlined its commitment to competitive wages and benefits as well as a goal of 25% representation of minority groups among candidates for each vacant position. When it comes to creating a safe workplace, Grupo Bimbo reported that it saw a 22% reduction in the number of workplace injuries in 2020, and days lost due to work injuries fell 8% compared with 2019. The company goes beyond simply protecting employees from injury. It also has programs in place to encourage healthy physical and mental well-being as well as protecting its employees from the coronavirus.

Through Grupo Bimbo’s Good Neighbor program, volunteering and Social Investment programs, the company not only financially invests in its communities around the world but also encourages its employees to get involved.

Having an interconnected sustainability program with measurable results can prove to skeptical consumers that a company isn’t simply “greenwashing.” Ipsos surveys show that a third of consumers don’t believe labels like fair trade, sustainable and organic make a difference or are even true.

“Now with the digitally connected generations, they can just read through marketing campaigns and dissect labels,” said Siobhan Kelly, agribusiness economist, food systems and safety division, Food & Agriculture Organization of the United Nations (FAO). “Companies need to respond to these much more discerning and informed consumers.”

It’s important to point out, however, that while sustainability is important to Generation Z and millennials, it’s not the be-all and end-all. Taste is still king when it comes to decisions around purchasing food.

“The benefits beyond the gustatory are added value for consumers but won’t be the sole reason for buying or re-buying these products,” Ms. Calvert said. “We have research on research that shows when things are held in constant, people are more likely to choose the sustainable option. They’re even willing to pay a little bit more for it. But choices get more complex when more factors come into play.”

Sustainability is a complex challenge for food manufacturers and will only become more important as consumers become more aware of the issues that fall within its scope. Bakers and other food manufacturers might not see an immediate payoff from purpose-driven business strategy, but for the long game, it’s going to be a critical part of business.

“In order to be around for the long run, your business must be sustainable,” Ms. Calvert said. “As a manufacturer, you have a choice. You can decide that you will wait until you are told you need to take more sustainable actions, either by legislation or by your consumers, or you can decide what sustainability looks like for you on your timeline.”

A coordinated effort

Sustainability is so complex because it touches every part of the world. Ms. Kelly offered agribusiness as an example. The agri-food system’s sustainable impact is not simply limited to the environment like soil quality, water usage or greenhouse gas emissions, as important as those aspects are.

“If we think about the agri-food sector beyond the farm, we think about how the farm engages in the rural economy and the direct and indirect jobs that are provided,” she explained. “There are transport jobs, farm processing jobs, retail jobs and even the cultural importance that food has for many communities in many countries.”

During the past decade, one of the more important lessons emanating from the discourse on sustainability, and in particular from the lessons emerging from the Food Systems Summit has been that environmental, socioeconomic and health issues are interconnected, and therefore for a company’s sustainability plan to be effective it needs to be multi-faceted and holistic.

“To address the challenges of the environment and the agri-food sector, it doesn’t work when we look at the sector in silos,” Ms. Kelly said. “This mono-disciplinary silo approach has taken us to a point of climate crisis. So, while it’s extremely complex to do, the more we have a multi-sector and multi-stakeholder guidance and approach, the quicker we’ll advance.”

At the country level that FAO operates, this means coordinating not just with the ministry of agriculture but also the ministry of finance, which invests in agriculture, and ministry of health, which develops nutrition policies, she said. Individual companies can start with a coordinated effort internally, ensuring that every department is on board with the sustainability program.

“Like many companies, our early sustainability efforts were primarily focused on reducing costs,” said Margaret Ann Marsh, vice president, sustainability and environmental, Flowers Foods, Thomasville, Ga. “More and more, our sustainability programs are viewed as an integral part of the company strategy: how we engage with investors, consumers, employees and our community.”

Many bakers and CPGs started their sustainability plans focused on the cost reduction of energy and waste management as that’s easy to measure and see a cost savings. But as Ms. Kelly pointed out, sustainability can no longer be its own department but should be a part of every aspect of a company’s business plan.

“You must develop a sustainability strategy, but not one that works in parallel to the business strategy,” she said. “Both need to be enmeshed. Gone are the days when the sustainability manager would be off in some room on his own trying to badger colleagues to give him data.”

Conagra Brands made that pivot years ago.

“Our sustainability efforts used to live in the manufacturing plant with energy and waste management,” said Katya Hantel, senior director of sustainability, Conagra Brands, Chicago. “Now we have people working with R&D, operations and expanding to sustainability partnerships in procurement, brands and investor relations. We work much more cross-functionally when we tackle opportunities today because the definition has become much more cross-functional and relevant.”

Campbell Snacks, a division of Camden, NJ-based Campbell Soup Co., approaches its sustainability through four key pillars: Trusted Food, Vibrant Communities, Thriving People and a Healthy Environment, which points to how the company has expanded its definition of sustainability to include not only environmental issues but also social and governance issues. Campbell Snacks conducts a materiality survey every two years with both internal and external stakeholders. This survey helps ensure the company’s approach is well-aligned with what stakeholders believe should be prioritized.

“Our approach has become more embedded across the business to help drive progress with internal experts, creating multi-year action plans so that the work is embedded right where it belongs,” said George Vindiola, vice president of R&D for Campbell Snacks.

Energy and other environmental targets are easier than the social aspects of sustainability, Ms. Kelly said, in part because they are so much easier to measure. That doesn’t mean bakers should ignore social targets like fair pay and investing in communities. Such steps pay dividends, too.

“We are only as successful as the communities and industry that we serve,” Ms. Marsh pointed out. “As such, we support and learn from partners in several third-party organizations like Better Plants, Energy Star and the American Bakers Association Energy and Environment Committee.”

Flowers Foods has also invested in community initiatives like its Second Chance Employer program, which seeks out potential employees who have a criminal background and may have trouble finding employment. The company also supports historically black colleges and universities through the Thurgood Marshall College Fund.

A company can use the lessons from its own sustainability program to influence the supply chain. By working with suppliers, customers and associations, food manufacturers can create a coordinated response to climate-related and social challenges and maximize their impact.

An impact across supply chain

The food and agriculture sectors are in a unique position to impact all aspects of sustainability: environment, economic and social. Agriculture contributes 29% of all greenhouse gas emission around the world, and it accounts for 70% of fresh water use and 90% of all land use.

“The agriculture sector needs to be a leader,” Ms. Kelly said. “It needs to step up and demonstrate that it sees its negative contribution and is on board to set targets, reach those targets and be held accountable. The agri-food sector more than any other sector has such a widespread outreach in terms of the overall health, wealth and well-being of people globally, so it really does need to be the leader in terms of what types of innovations, technologies and the multi-stakeholder approach it brings to the table.”

It’s important though for companies to identify for their own enterprises where they can make the greatest impact.

Conagra Brands, for example, assesses its sustainability impact every year to prioritize where the company can really move the needle. Topics such as packaging and sustainable sourcing are high on the list.

“We map that against consumer behaviors and what they really want from us,” Ms. Hantel said. “And we look at how can we insert sustainability to meet their behavior.”

On the sustainable sourcing front, Conagra Brands is a member of US Farmers and Ranchers in Action (USFRA), a coalition of farmers, ranchers and food and agriculture stakeholders creating sustainable food systems. Conagra is a co-developer and endorser of the USFRA’s Decade of Ag Vision, which outlines an agricultural system that is resilient, restorative, economically viable and climate-smart. The plan aims to achieve that vision by restoring the environment through regenerative agriculture, investing in the next generation of agriculture systems, and strengthening the United States’ social and economic framework through agriculture.

“It’s an exciting cross-industry movement to tackle climate change and soil health very broadly with great partners,” Ms. Hantel said.

Conagra contributes to this vision with its Birds Eye Good Agricultural Practices Program. These include supporting soil health through crop rotation, cover crops and minimizing tillage; reducing water consumption; reducing fertilizer application; filtering water runoff and preserving ecosystem biodiversity, and supporting healthy pollinator populations by providing farmers access to bee habitat data.

Campbell Snacks has also identified its supply chain as the place where it can make the biggest impact on climate, with a focus on agricultural ingredients and the packaging used to make its products.

“Last year, we announced our commitment to set a science-based target and have been working to baseline our scope 3 emissions; these are the emissions from activities in our supply chain,” Mr. Vindiola explained. “We will be setting new emissions reduction goals in our operations and our supply chain in 2022 that are in line with the latest climate science.”

Campbell Snacks just made the commitment that 100% of its packaging will be recyclable or industrially compostable by 2030, and it will also increase its use of post-consumer recycled content in its PET bottles, with a target of 25%.

As the nation’s second largest baking company, Flowers Foods has determined it can make the most significant progress in its operational footprint.

“We can make progress through technological upgrades in real-time metering, reducing energy and water consumption and allowing us to react quicker,” Ms. Marsh said.

The company uses partnerships with the US Department of Energy’s Energy Star and Better Plants programs to facilitate meeting its goals. In fact, the company’s facility in Lynchburg, Va., was recognized this year by the US Department of Energy with a 2021 Better Project Award. The Department of Energy awarded it to Flowers for successfully converting the facility into an energy-efficient, organic bakery.

Upgrades Flowers made include a high-efficiency oven and heat recovery system, a new refrigeration system that saves on water and energy, an energy-efficient air compressor, and the installation of LED lights throughout the facility. These upgrades and more are expected to reduce annual energy by 22% and water consumption by 64%.

While Grupo Bimbo’s sustainability plan encompasses environmental, human, nutrition and community benefits, its impact on the environment encompasses its entire value chain. From the sourcing of raw ingredients to a sustainable bakery plant to cleaner distribution and low-impact packaging, the company looks for any opportunity to improve its environmental footprint in a way that is a value-add to its business.

In 2020, Grupo Bimbo was able to report that 90% of its packaging is recyclable, 53 of its plants have accomplished zero waste to landfill, a 9% reduction in emissions since 2019, 23.9% more distribution vehicles with alternative fuels and 80% of its electricity is coming from renewable sources. The company continues to reduce its water usage and has converted a third of its refrigerants to natural alternatives. It is also investing in the sustainable agriculture for wheat, maize and potatoes through pilot programs.

The new way of sustainable business requires coordinated efforts throughout an entire company, with all teams working to make a difference. It requires companies to look beyond the environmental impact to the human impact.

“Consumers care about where their food comes from and how it’s made,” Ms. Marsh said. “This drives our commitment to not only operate efficiently, reducing waste and sourcing ingredients responsibly but also providing a safe and ethical workplace operated with integrity.”

Those companies that do will be rewarded with not just loyalty from the next generation of consumers but also a loyal workforce and more sustainable world.