Food retailers are finding that they can generate outsized returns by making sustainability investments in five value-chain segments: processing, manufacturing, food services, restaurants and retail, new study from Deloitte and the NYU Stern Center for Sustainable Business shows.
All of the retailers surveyed said that they realized revenue growth as a result of investing in sustainability: 82% reported gains of at least 2%, and 20% of respondents saw gains of more than 5%, the study found.
The study examined 12 sustainability strategies derived from the Center for Sustainable Business Return on Sustainability Investment methodology and framework. and included a 25-question survey completed by 350 executives from the five value-chain segments.
Deloitte also interviewed leaders in the food and agriculture sector to deepen the credibility of its data gathering, Ben Ninio, principal, sustainability strategy & transformation at Deloitte wrote in an article on the company website.
“After publishing our findings for the broader food supply chain late 2024, we set out to understand the specific strategies that drive the greatest revenue gains and cost savings for each segment,” Ninio wrote. “Our resulting findings are clear: Food and agriculture businesses can realize meaningful value from investing in sustainability, especially considering the holistic value impact.”
The study looked at two main reasons food retailers might consider investments in sustainability: revenue growth and cost savings. The top revenue suggestions:
- Sustainable packaging solutions: Some examples of approaches to more sustainable packaging include reducing the use of virgin plastic, designing packaging for reuse and increasing recycled content in materials. Benefits of using more sustainable packaging include boosting the predictability of demand planning, strengthening relationships with suppliers and diversifying the supplier base.
- Sell products with verifiable sustainability claims: This strategy not only can attract new customers, but also can enhance existing brand or customer loyalty, the study found. Verifiable claims (e.g., humane practices or conservation of natural resources) are often communicated to consumers to fetch a premium, potentially leading to incremental revenue on existing purchases.
- Sustainable and responsible supply chain sourcing: Purchasing raw materials from sustainable sources, reducing the carbon footprint of transportation and logistics and ensuring fair labor practices are all examples of this strategy, which builds trust and credibility with consumers, according to the results. Trust and credibility, in turn, can result in greater profitability.
On the cost-saving end:
- Reduce use of harmful chemicals: Retailers found that minimizing the use of harmful chemicals often lowered the overall cost of materials while also decreasing disposal fees and avoiding potential regulatory penalties.
- Raise, treat, and/or source animals responsibly: It’s important to treat animals well by ensuring humane living conditions, minimizing disease, and providing light and dark schedules to regulate normal sleep and wake cycles for animals, the survey found. Also, retailers that doubled down on this strategy, particularly in sourcing, found that their programs helped to reduce supply disruptions, avoided potential fines and decreased their exposure to reputational risk.
- Protect and conserve biodiversity and ecosystems: Protecting biodiversity can lead to more resilient ecosystems and a more stable supply of raw materials, reducing costs of supply chain disruptions.
“While much of the focus is on the sustainability of products that retailers offer, it is also beneficial to consider physical storefronts and footprints,” Ninio wrote. “For example, retailers can achieve cost savings through energy management strategies that reduce their own carbon footprint. As with all things sustainability, often a holistic approach delivers the most potent results.”
Read more: How to invest in the future of food
