Sustainability in Food and Beverage

Industry Overview

The food and beverage industry sits at the nexus of agriculture, manufacturing, logistics, and consumer behavior—making it one of the most complex sectors to decarbonize. Food systems account for roughly one-third of global greenhouse gas emissions, spanning agricultural production, processing, packaging, transportation, retail, and waste. For food and beverage companies, sustainability is not a peripheral concern—it touches every aspect of operations from farm to fork.

Consumer expectations are shifting rapidly. Surveys consistently show that 60-70% of consumers consider sustainability when making food purchases, though willingness to pay premiums varies by category and demographic. Retailers are imposing sustainability requirements on suppliers, including emissions data, packaging recyclability targets, and deforestation-free sourcing commitments. Major food retailers like Walmart, Tesco, and Carrefour have set Scope 3 reduction targets that cascade through their supply chains.

Water scarcity, soil degradation, biodiversity loss, and extreme weather events are not abstract risks for this industry—they directly threaten raw material availability and cost stability. Companies that invest in agricultural resilience, regenerative sourcing, and supply chain transparency are building long-term competitive advantages. Those that treat sustainability as a packaging redesign exercise are missing the strategic imperative.

Key Sustainability Challenges

Agricultural Supply Chain Emissions

For most food and beverage companies, 70-90% of total emissions originate in agricultural production—livestock, fertilizer use, rice cultivation, and land-use change. These emissions are diffuse, occurring across thousands of farms with varying practices and data capabilities. Engaging farmers on emissions reduction requires technical assistance, financial incentives, and long-term purchasing commitments that most companies have been reluctant to make at scale.

Packaging Waste and Circularity

The food industry is the largest consumer of packaging materials globally. Plastic packaging waste has become a lightning rod for consumer and regulatory action. The EU's Packaging and Packaging Waste Regulation mandates recycled content minimums, recyclability requirements, and reuse targets. Extended producer responsibility (EPR) schemes are expanding worldwide. Transitioning to circular packaging while maintaining food safety, shelf life, and cost competitiveness requires material innovation and infrastructure investment.

Food Waste Across the Value Chain

Approximately one-third of all food produced globally is lost or wasted—roughly 1.3 billion tonnes annually. Food waste in landfills generates methane, a potent greenhouse gas. For food companies, waste occurs at every stage: agricultural losses, processing waste, retail spoilage, and consumer disposal. Reducing food waste delivers a triple benefit: lower emissions, reduced costs, and improved food security.

Regulatory Landscape

The EU is leading regulatory action on food system sustainability. The Farm to Fork Strategy targets a 50% reduction in pesticide use, 20% reduction in fertilizer use, and 25% of farmland under organic production by 2030. The EU Deforestation Regulation (EUDR) requires companies to prove that key commodities (soy, palm oil, cattle, cocoa, coffee, rubber, wood) were not produced on land deforested after December 2020.

In the U.S., the FDA's voluntary sodium reduction targets, USDA organic standards, and EPA food waste reduction goals provide a lighter regulatory touch. However, California's SB 1383 mandates organic waste diversion, and several states are implementing EPR laws for packaging. SEC climate disclosure rules apply to publicly traded food companies.

Globally, the Science Based Targets initiative (SBTi) has developed the FLAG (Forest, Land and Agriculture) guidance specifically for companies with land-intensive supply chains, providing sector-specific pathways for setting credible emissions reduction targets.

Opportunities

Regenerative agriculture represents both a climate solution and a supply chain resilience strategy. Companies investing in regenerative sourcing programs—cover cropping, reduced tillage, integrated pest management, rotational grazing—report improved soil health, reduced input costs, and more stable yields over time. Early movers like General Mills, Danone, and Nestlé are building regenerative supply chains that reduce Scope 3 emissions while securing long-term raw material access.

Plant-based and alternative protein markets continue to grow, despite recent moderation from initial hype cycles. The global plant-based food market is projected to exceed $160 billion by 2030. Companies that develop or acquire alternative protein capabilities position themselves for a structural shift in protein consumption patterns.

Food waste reduction is perhaps the highest-ROI sustainability intervention available. Project Drawdown ranks reduced food waste as the #1 climate solution by potential impact. Companies implementing waste reduction programs across their value chains report cost savings of 14:1 on every dollar invested, according to Champions 12.3 research.

How Council Fire Can Help

Council Fire works with food and beverage companies across the value chain—from agricultural commodity traders to consumer packaged goods brands to food retailers. We develop Scope 3 measurement programs that address the unique challenges of agricultural emissions, including primary data collection from farm-level operations. Our team supports FLAG-aligned target setting, EUDR compliance, and packaging circularity strategies.

We help companies build regenerative sourcing programs, design food waste reduction initiatives, and develop consumer-facing sustainability communications that are credible and compliant with green claims regulations. Our approach integrates sustainability strategy with commercial reality—because in this industry, the supply chain is the sustainability strategy.

Frequently Asked Questions

What is the EU Deforestation Regulation and how do we comply?

The EUDR requires companies placing relevant commodities (soy, palm oil, cattle, cocoa, coffee, rubber, wood) on the EU market to conduct due diligence demonstrating that products are deforestation-free (no deforestation after December 31, 2020) and legal under the country of origin's laws. Compliance requires geolocation data for production plots, risk assessment and mitigation procedures, and annual due diligence statements. Companies must establish traceability systems linking finished products to specific production areas—a significant operational challenge for commodities sourced through complex trading networks.

How do we set science-based targets when most of our emissions are in agriculture?

Use the SBTi FLAG guidance, which provides sector-specific pathways for companies with significant land-use and agricultural emissions. FLAG targets require companies to set separate land-related and energy/industrial targets. The methodology accounts for the unique characteristics of agricultural emissions—including biogenic carbon, land-use change, and the limited abatement options for certain biological processes. Start by mapping your commodity footprint, identifying hotspot crops and regions, and engaging agricultural suppliers on primary data collection.

What's the business case for investing in regenerative agriculture?

The business case operates on multiple levels. Near-term, regenerative practices reduce input costs (less synthetic fertilizer, fewer pesticides) and can improve yields after a 3-5 year transition period. Medium-term, healthier soils are more resilient to drought and extreme weather, reducing supply disruption risk. Long-term, companies with regenerative supply chains will be better positioned as carbon pricing and agricultural regulations tighten. Research from the Rodale Institute shows that regenerative organic systems match conventional yields after the transition period while generating 3-6 times more profit per acre. For branded companies, regenerative sourcing claims also resonate with consumers and support premium pricing strategies.