As described in the Plating up Progress 2019 reports (part 1 & part 2), multiple nutritional, societal and environmental issues are connected with our food systems, concerning the way we produce food and both how & what we eat:
- dual global nutritional challenges of obesity and hunger
- poverty and human rights issues across the food industry
- 30% of human-made greenhouse gas emissions
- 70% of freshwater withdrawals
- terrestrial and marine biodiversity loss through land conversion for agricultural purposes
- biodiversity loss and land degradation through unsustainable food production practices
- antimicrobial and zoonotic disease risk
- 30% wastage and loss across the food system
- heavy reliance on plastics in packaging
These challenges are complex and formidable, but not insurmountable. ‘Fixing food’ is possible with a transition that involves the protection and restoration of natural habitats, widespread adoption of sustainable farming practices, tackling global food waste and, crucially, dietary shifts. We need to eat ‘less and better’ meat, more plant-based food, and less energy-dense, nutrient-poor food.
Supermarkets, contract caterers and restaurant chains are in a unique position to influence the required transitions in consumption and production, being both gatekeepers to our diets and the funnel through which most commercially produced food is channelled.
Plating Up Progress focuses on these key sectors, focusing currently on 26 major UK-operating businesses, of which 21 are publicly listed or owned by publicly listed companies. See the full company list here.
In 2019 we found significant gaps in commitments, targets and reported performance data across the sectors, most significantly relating to
- targets for shifting business models towards sales of healthy and sustainable food (impacting both nutrition and global issues such as climate change and deforestation)
- targets for scope 3 greenhouse gas emissions
- evidence for zero deforestation due to soy production for animal feed
- targets for sustainable water use within supply chains
- targets for human rights in supply chains.
These represent a range of physical and transitional risks and opportunities for investors including but not limited to:
- food supply & price volatility
- water scarcity in key supply lines
Transitional risks & opportunities
- policy impacts (mandatory labelling, taxes on unhealthy and environmentally-damaging food or other fiscal policies)
- shifts in consumer demand towards healthier and sustainable food
- reputational risk and opportunity (for example deforestation, human rights)
Impacts of Covid-19
The Covid-19 pandemic has further exposed societal issues around inequality that have been directly seen through food poverty (see the Food Foundation work on how Covid-19 has impacted economically vulnerable groups within the UK). All the while the key issues listed above remain unresolved or, in the case of deforestation and climate change, have potentially worsened.
The economic impacts of Covid-19 on the food industry has been significant, although uneven. Focusing on our key Plating Up Progress sectors, our share price tracker shows that retailers generally recovered from early impacts in March, seeing significant growth in food sales. Those able to capitalise on demand for online ordering, home delivery and convenience benefited most. Quick service restaurants and caterers experienced more acute negative impacts, with restaurant chains only able to reopen (where drive-through and takeaway is possible) in June and the casual dining sector only really able to reopen in July, under social distancing restrictions. Catering companies have been able to remain open in some sectors (notably for the health sector) but with most schools and most business offices remaining closed into the summer, recovery opportunities are challenging.
Opportunities for investors to shape the future
A number of companies have sought to increase their cashflow during this period, notably Compass Group and Whitbread, raising £2 billion and £1 billion respectively, and Ocado looking to raise £1 billion to fund future growth capacity. This presents an opportunity for investors to prioritise expectations for a more sustainable, healthy, just and resilient food system as a condition of capital investment. It makes our Plating Up Progress 2020 analysis both timely and relevant in the context of the dialogue around “building back better”.
Our 2020 analysis documents the current commitments, targets and performance of these sectors and maps them against specific issues of concern, risks and opportunities. We provide the following analysis:
- a sector overview for retail, quick service restaurant, contract caterers and the casual dining chains
- downloadable detailed company analysis showing where companies are making progress or lagging behind, whether they are addressing issues relating to both their products and supply chains, recommended investor asks, and documentation of the supporting evidence.
- a fully transparent methodology (including mapping each metric to the Sustainable Development Goals).
The key issues we assess in our 2020 analysis are:
Nutritious products & services
Are companies setting targets and reporting on sales-weighted progress towards healthier food, including fruit & vegetables and plant-based proteins, and away from food that is high in fats, salt and sugar?
Encouraging healthy diets
Do companies have clear policies that prioritise marketing, pricing and communication of healthy food? (This year for supermarkets we are using the ATNI Supermarket Spotlight as the data source.)
Are companies setting targets and reporting on scope 1 & 2 and scope 3 greenhouse gas emissions?
Are companies setting targets and reporting on their links to biodiversity loss through land use conversion and deforestation? (This year we are focusing on three key food commodities: palm oil, soy and beef.)
Are companies setting targets and reporting on sales-weighted progress towards food that is produced in a sustainable way? This includes on-farm production of crops and livestock, aquaculture and wild-caught seafood.
Are companies setting targets and reporting on water use and exposure to water scarcity? This includes operational water use and whether companies are managing risk due to sourcing food from regions where there is water stress or scarcity.
Food loss & waste
Are companies setting targets and reporting on their operational food waste, as well as their actions to help customers and suppliers to reduce food waste and losses?
Are companies setting targets and reporting on performance to increase how much of their packaging is recyclable and to reduce single-use plastics?
Animal welfare & antibiotics
How do companies perform on the Business Benchmark on Farm Animal Welfare? Do they report on antibiotic use in their livestock supply chains?
Do companies pay their workforce a real liveable wage? How much of their global supply chain is being engaged and audited for human rights?
We are very grateful to the following sponsor for supporting the Plating up Progress project: