Food processors: How to find returns on sustainability investments

Context

To better understand the financial drivers for investing in sustainability strategies across the food and agriculture value chain, Deloitte worked with CSB to leverage its Return on Sustainability Investment (ROSI™) methodology and framework.

The joint study focused on 12 ROSI™ strategies and included a 25-question survey completed by 350 global executives from five segments across the food value chain: processing, manufacturing, food service, restaurants, and retail. We supplemented the research by interviewing leaders in the food and agriculture sector.

Our research findings demonstrate a business case for investing in sustainability strategies across the food and agriculture value chain, especially considering the holistic value impact.

Here we highlight key findings for processors.

Processor value chain overview

Their unique position in the value chain allows food processors to act as a bridge between producers, such as farmers and ranchers, and manufacturers. They connect supply and demand, partnering with producers to confirm the availability of sustainable products while also meeting consumer demand for new ingredients and products.

Top three revenue growth strategies

What follows are strategies that led to revenue increases for processes:

1. Improve food loss and waste management: Some processors have found success in reducing waste and improving inventory management at the source. When that’s not an option, excess food can be used to feed people (via donations) or animals (by creating feed for livestock) or in other alternative applications (such as biofuels or energy recovery). This has helped to open access to new markets and drive incremental revenue. 
2. Improve soil health with climate smart agriculture: Some processors that design or invest in programs incentivizing farmers to adopt climate-smart agriculture practices that improve land use, productivity, and nutrient management have also realized revenue gains. These practices may include adding cover crops or reducing tillage.
3. Improve energy management: By adding more renewables to their energy mix, some companies have not only reduced their carbon footprint, but also created new commercialization opportunities such as selling excess energy back to the grid or marketing low-carbon products to sell at a premium.

Top three cost-saving strategies

What follows are strategies that led to revenue increases for processes:

1. Sustainable and responsible supply chain sourcing: Some processors that have adopted this strategy have experienced fewer supply disruptions, while also mitigating exposure to risks related to regulatory non-compliance or negative publicity. 
2. Buy and/or sell insets and/or offsets: By generating and selling carbon insets, some processors have created new revenue streams and achieved cost reductions thanks to improved supply chain resilience and supplier relationships, along with risk mitigation. Nature-based, scalable climate solutions can also drive ecological benefits. 
3. Reduce use of harmful chemicals: Some processors that purchase fewer chemicals have reduced both their material costs and waste disposal expenses while also avoiding regulatory penalties from harming the soil or other natural resources. 

A path forward

Processors have an opportunity to advance sustainability efforts both in their own organizations and throughout their value chain. They can help accelerate the transition to sustainable food systems by collaborating with partners to create better incentive programs that scale the adoption of regenerative agriculture practices and generate financial value across the value chain.

*All charts are based on data taken from the NYU Stern Center for Sustainable Business (CSB) report published in October 2024