We present our analysis in three graphics.
Company performance across multiple issues.
Future-fit companies need to be performing well across multiple issues, rather than focusing only on a few challenges.
Company spider diagram profiles are calculated from performance on metrics within each topic.
Click through to see each company’s profile against multiple issues. Scores closer to the outer ring of the graphic indicate better performance. We also include a potential profile for “2020 Leadership” which takes the best performance across the sector to illustrate what is possible for the sector.
Company focus on products vs supply chains.
Future-fit companies need to focus on developing their products and revenues and ensuring their supply chains are both aligned with a healthy and sustainable food system.
Companies are rated on two dimensions: Products and Supply Chains. Ratings for this are calculated from scores on specific metrics from our analysis that relate to healthy and sustainable products, and to sustainable and equitable supply chains accordingly. Companies should aim to be in the top right hand corner.
Hover over the data points to see how each company performs.
Company traffic light score across multiple issues.
Future-fit companies should aim for green lights across all issues.
Traffic light rankings are allocated from the same data used in the spider diagram profiles.
Click on each issue to see how companies compare on specific topics.
Each individual company scorecard can be downloaded below the three graphics, along with a sector summary.
Last year we found that no retailers had public targets for sales of fruit & vegetables or plant-based proteins, although Marks & Spencer did have a KPI for the % of the average shopping basket from healthier food products. This year we still find that the widespread use of such targets is lacking, although there has been significant movement in that direction (notably Tesco’s inclusion of “sustainable diets” within their overall sustainable shopping basket metric and Sainsbury’s commitment to report on the % of food sales by volume from healthy products). Lidl report a 20% increase in sales of vegetables between 2017 and 2019, claiming that they sell more than any other supermarket by basket proportion.
Investors should engage with retailers to convert internal sales targets around healthy food, fruit & vegetables, and plant-based proteins into public commitments that between them represent a shift away from foods that are high in fats, sugar and salt, towards fruit & vegetables, fibre-rich foods and for a proportionate increase in the sale of proteins that are plant-based.
Concerning climate change, the biggest gaps remain in concrete targets for scope 3 greenhouse gas emissions. Companies need to align their supply chains and food sales targets with reducing the on-farm emissions of their suppliers and shifting their own revenue streams towards lower emission foods such as plant-based proteins and vegetables.
Zero deforestation targets and performance data are widespread throughout the sector, especially for palm oil, although limited to own-brand products in most cases. Soy remains a challenge, although all retailers are taking some action and the majority have at least partial data on the % of soy used in animal feed that is certified according to recognised schemes.
Retailers score well for certified sustainable fish and seafood (both wild-caught and aquaculture) although this primarily relates to own-brand products. Some are also focusing more directly on feed inputs for aquaculture. Targets for sourcing from producers using sustainable on-farm practices are less consistent, reflecting the challenge in defining sustainable on-farm practices, with many different certification, tools and approaches that could be used. An opportunity for progress could emerge from the work Tesco & WWF are doing to include “sustainable agriculture” with underlying metrics such as “% of farmers who are taking robust actions to increase biodiversity and pollinators” and “% of farmers taking robust action to improve soil health”.
Fewer retailers have clear data on their exposure to water scarcity risk and water management in their global supply chains, although both operational and UK supply chain water management is stronger. We expect this to become an increasingly important theme for retailers, as they implement plans to better understand and manage the impact water stress can have on supply chain resilience.
All retailers have made progress on food waste and plastics as the sector responds to public and investor concerns and pressure about these issues.
For a detailed analysis of the sector’s performance on animal welfare and antimicrobial resistance in livestock supply chains, see BBFAW.
Investors are recommended to download the individual company scorecards and engage with each retailer according to the analysis included in the scorecard.
Operationally, retailers’ wages are in line with the national living wage although no retailers are yet signatories to the Real Living Wage initiative, although Coop are now in discussions about moving towards this. We expect recognition of the important role the food retail workforce has in society to increase due to coronavirus.
Regarding human rights in their supply chains, retailers are working towards better understanding of human rights risks and mapping across their global supply chains, although concrete data on the % of supply chains being actively engaged, especially beyond tier one, remains inconsistent.
Remarks on the impact of covid-19
Whilst all food retailers have seen significant sales growth during the lockdown in the UK, the shift to online delivery has greatly benefited Ocado (for whom our analysis finds reporting on health and sustainability to be weaker than many in the sector). Investors looking to engage with companies in downstream food businesses should ensure that the pursuit of market growth or economic recovery does not come at the expense of businesses setting ambitious targets and reporting clearly on their transition to healthy and sustainable food.
The Food Foundation’s covid-19 tracker also shows how different retailer’s share prices have fluctuated during 2020, with most retailers recovering since April, and Ocado (positive) and Marks & Spencer (negative) the outliers.