Growing consumer awareness and increased government initiatives on sustainability and climate change are adding pressure on industries to adopt sustainable practices.
This is particularly true of the food and beverage (F&B) sector, where food production is responsible for a quarter of global greenhouse gas emissions. If left unchecked, this figure will only increase due to the combined impact of population growth and the growth of the middle class – wealthier people are consuming more source foods resource-intensive animal. According to the World Economic Forum, by 2050 the demand for food will be 60% higher than it is today.
It is therefore urgent that the F&B industry takes care of its carbon footprint. According to research, only 15% of F&B companies are on track to meet their sustainability goals.
To address the challenges posed by climate change to food systems, various initiatives have been implemented in the region in line with global sustainability goals. The United Arab Emirates was the first in the region to announce a net zero commitment ahead of the upcoming 2021 United Nations Climate Change Conference (COP26). The UAE has also partnered with the United States to launch the AIM for Climate Agriculture Innovation Mission, a global initiative to accelerate investment in R&D for climate-smart agriculture technologies.
From a regional perspective, other GCC countries have also joined the race for sustainable development. For example, Saudi Arabia and Bahrain have pledged to achieve net zero emissions by 2060. Meanwhile, Kuwait has pledged to create a sustainable living environment as part of its Vision 2030, while Kuwait Qatar has set itself the goal of reducing local greenhouse gas emissions by 25% by 2030.
Due to the urgency of the situation, the region is actively adopting sustainable and climate-smart farming methods and promoting sustainable production and consumption habits. Research shows that 49% of global consumers consider sustainability attributes when purchasing food and beverages.
So how can the food industry evolve its sustainable business models?
Data analysis is a great starting point. Using data generated by food production companies, data analytics tools can be used to define and track metrics that align with an organization’s goals and initiatives. Access to this information helps optimize resource productivity.
Organizations will be able to improve budget certainty, assess supply-side adjustments, identify demand-side actions, and monitor project performance to track and report progress toward their goals .
Second, sustainability is a collaborative effort and the engagement of partners up and down the supply chain is vital. Besides optimizing its production processes, the F&B industry should seek to decarbonize its end-to-end operations by switching to green energy options. Securing renewable energy sources such as solar thermal solutions and on-site generation, among others, will reduce carbon emissions. Research shows that companies that source renewable electricity outperform their rivals financially, with the difference ranging from 0.3 to over 7 percentage points.
Additionally, shifting fleets to low-carbon transport, shifting to low-carbon cold chain technology, optimizing transit routes and modernizing improve energy consumption and of water. Additionally, by integrating energy efficiency into factories, warehouses, and fulfillment centers, manufacturers can cost-effectively extend plant lifecycles while meeting decarbonization goals.
Achieving sustainability goals can overwhelm even well-resourced restaurant giants who prefer to focus on their core business. The outsourcing of energy management services to specialized companies allows food manufacturers to strengthen their economic performance by relying on third-party service providers for a reliable energy supply, the management of multi-technical projects and control strict operating costs.
Most importantly, energy management companies can deploy specialized analytics tools to identify areas for improvement, analyze energy consumption trends, advise on purchasing power, electricity and gas and optimize energy performance. An example of these outsourced services includes tailor-made high-tech financed solutions for carbon footprint reduction. Here, customers only pay for the energy they use while the energy service company undertakes the capital investments. All engineering, procurement and construction and energy performance risks are transferred to the energy service provider.
Another sustainable model is on-site electricity generation, particularly solar, which eliminates the need to transport electricity over great distances, dramatically reducing energy costs and losses. These services are provided in conjunction with traditional offerings, including optimized production and distribution of hot/cold/chilled water, compressed air, compressors for steam, industrial gas, etc., process utilities such as refrigeration, process environment (eg HVAC), heat recovery plants and more.
Technology is a key driver of sustainability, with many digital opportunities to improve process performance and reduce costs. This has led to increased demand for availability and efficient use of data, marked by an increase in applications.
With increased monitoring of food sources, traceability is an important trend in the food industry today. Traceability is the ability to follow the movement of a food product and its ingredients through all stages of the supply chain, both upstream and downstream.
Blockchain has become a powerful and efficient technology allowing consumers to track their food from “farm to fork” through a QR code scan. Demands to reduce food waste have led to apps such as TooGoodToGo, Phenix and Karma, which connect consumers to leftover food from local restaurants, bakeries and grocery stores that sell products at a fraction of the list price.
The climate change discussion is intensifying, increasing demands to reduce energy and water consumption and mitigate carbon emissions. Even the largest players in the food industry would struggle to maintain a cohesive decarbonization strategy while achieving their core business goals.
Ian Harfield is Managing Director at Engie Solutions – GCC