A new World Economic Forum report reveals the challenges of making the $9 trillion global food supply chain more sustainable, emphasising the difficulties in reducing emissions without compromising food supply and value
The World Economic Forum (WEF) has recently shed light on the complexities of the global food supply chain and the challenges it faces in becoming more sustainable. With the global food industry valued at $9 trillion, its operations are indispensable but also contribute significantly to carbon emissions. The report does not shy away from highlighting the difficulties of decarbonising these supply chains.
The food supply chains that deliver products from farms to tables are notoriously complex, involving numerous upstream, midstream, and downstream actors. These include various tiers of suppliers and firms responsible for transforming raw materials into finished products. The complexity is compounded by increasing global sourcing and outsourcing, leading to both cooperative and adversarial relationships between firms. Many food companies struggle to integrate sustainability into their operations, often finding that it doesn’t align with their bottom line.
The report highlights that becoming more sustainable requires firms to consider their role within a multi-tiered supply network involving multiple supply and demand links, reverse loops, and interactions with numerous actors. These factors can significantly impact economic, social, and environmental performance indicators.
One of the biggest challenges in achieving sustainability in the food industry lies in managing Scope 3 emissions, which stem from upstream and downstream supply and value chains. The report points out that second, third and fourth-tier suppliers, often located in countries with weaker regulations, pose a significant risk to sustainability efforts. These suppliers may lack adequate information or influence, making it difficult for lead firms to manage sustainability effectively.
Additional factors hampering the implementation of sustainable practices include a lack of visibility beyond first-tier suppliers, a lack of trust among actors, and the complexity of managing inter-firm relationships. Power imbalances, typically skewed towards large retail buyers, further complicate efforts. Moreover, the diversity of food product types, seasonality, variability in quality and quantity, and shelf-life constraints add to the list of challenges.
The report also identifies other significant issues such as food shortages, pre-and post-harvest losses, unsustainable land-water-energy use, food waste, food fraud, climate change, forced labour, and unethical trading practices. The inherent complexity and interconnectivity of multi-tier food supply chains mean that there are multiple points where sustainability efforts can fail.
Five Key Strategies for Greater Sustainability
Despite these challenges, the authors provide five key strategies to drive sustainability in food supply chains:
Multi-tier Collaboration and Partnership: Collaboration across multiple tiers allows partners to share ideas with both collective and individual implications. This can include mutual agreements on how to address sustainability interests and needs jointly.
Diffusion of Sustainable Innovation Along the Food Chain: Innovation is needed at every stage of the supply chain, from raw materials to delivery. This can involve improving food quality, reducing emissions from livestock, enhancing soil management, and adopting sustainable farming techniques.
Supply Chain Mapping: Comprehensive mapping of the supply chain is essential to understand the sustainability impacts at each stage. Identifying key sustainability issues faced by each actor and prioritising efforts to address them is vital.
Sustainability Performance Measurement: Implementing codes of conduct and assessing how specific activities, such as food production or labour conditions, meet sustainable standards is crucial for measuring sustainability performance.
Capacity Building on Sustainability: Developing training and capacity-building programmes that address sustainability from environmental, economic, and social perspectives can lead to behavioural changes throughout the supply network.
The report recognises that achieving sustainability in the global food supply chain is a daunting task. Still, with collaborative efforts, innovation, and strategic planning, it is possible to make significant strides towards a more sustainable future.