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Food Brands Prioritize ESG Compliance, but Struggle With Validating Ingredient Suppliers

The Letters Esg Or The Word Environmental, Social, And Governanc

the letters ESG or the word Environmental, Social, and Governance. sustainable organizational development. Sustainable corporate development

Though almost two-thirds (64%) of food brands consider environmental, social, and governance (ESG) compliance essential, 41% say they’re falling short of reaching complete compliance, according to the new “State of ESG Compliance for the Food and Beverage Industry Report” from TraceGains.

The report, based on a survey of 343 food and beverage companies, found that many brands are turning their attention to ESG compliance, driven by a changing regulatory environment (32%), consumer demand (27%), and competitive forces (18%). Half (50%) of respondents would even halt production on a product that they can’t align with ESG goals. 

Nearly half (46%) of respondents are prioritizing working with ESG-compliant ingredient suppliers to reach their goals. But doing so is proving challenging:

Despite these obstacles, 42% of brands plan to increase their use of ESG-compliant ingredients over the next six to 12 months. Many (67%) are also willing to pay more for such ingredients — 35% would pay up to 10% more and 32% would pay up to 20% more.

In addition, food companies are investing heavily in technology, motivated by a need to support supply chain transparency and traceability (55%), manage supplier and vendor standards and compliance (48%), and reduce their carbon footprint and greenhouse gas emissions (43%). 

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