Food companies face sustainability stress tests as demand to rise 50%

Food production companies are likely to face sustainability stress tests, with future global demand for food set to grow by 50% by 2030, according to management and technology consultancy BearingPoint.

The latest BearingPoint Institute Report warns that soaring food output cannot be achieved without dramatic consequences for the environment. The findings are revealed as part of a study entitled ‘Will your company pass the sustainability stress tests?’

The study quotes research which finds that in Europe the greatest environmental impact in the agricultural sector is not from industrial processing (11%) but agricultural production (49%) and the use of products by consumers (18%).

“The growth in world demand for food offers major opportunities for Ireland but the environmen-tal challenges are massive and will require a different approach by business,” said Peter Minogue, managing partner with BearingPoint Ireland, which employs about 200 people.

“In order to survive, organisations need to partner along all stages of the supply chain including protecting natural resources, working with the farming community, triggering product innovation, and responding to the increasing health consciousness of consumers.”

Mr Minogue added that business has entered a new era where “volatility and instability are the norm”. In response, BearingPoint has developed 11 practical ‘stress tests’ for survival for the FMCG, financial services, and B2B sectors.

The paper argues that business must lead and not follow consumers in order to secure a sustainable planet. It quotes a study which finds that while 96% of Europeans say protecting the environment is important, only 75% are prepared to buy products that respect this and just 17% do so regularly.

The stress tests are based on interviews with leaders of 33 international organisations. The findings reveal a fundamental shift in the thinking of CEOs.

“Sustainability is now seen not only as a major facet of their commercial differentiation but, more strikingly, essential for their medium-term survival,” said Mr Minogue. “This is in sharp contrast to previous years where sustainability was a purely defensive play to address greater regulation or ‘greenwash’ their public image.”

Xavier Houot, partner at BearingPoint, and author of the paper, added: “Just like banking stress tests, sustainability stress tests assess the resilience and durability of a company’s economic activity for the years to come. For most companies, viewing their business environment in 2030 has always been a lower priority task with the focus more on addressing short-to medium-term constraints and opportunities. These new tests provide business leaders with a powerful tool to view their mid-to longer-term business environment and to answer the question ‘is my business model compatible with the world of 2030?’”