In an ideal world, food and drink businesses would seamlessly transition to a sustainable, low-carbon economy guided by ambitious, cohesive, consistent government policies. Clearly defined targets would drive companies to create tangible, timebound action plans – especially for key commodities like soy, coffee, cocoa and palm oil.
Unfortunately, the reality is quite the opposite. Businesses are constantly having to keep up with an ever-changing regulatory framework due to fluctuating government attitudes to the sustainability agenda.
As a case in point, the European Union has now shared a watered-down proposal of its Corporate Sustainability Reporting Directive (CSRD), Taxonomy, and Corporate Sustainability Due Diligence Directive (CSDDD) in the new EU Omnibus legislative package. Indeed, the Omnibus proposal would remove 80% of companies from the scope of CSRD, for example.
In the United States, the US Security and Exchanges Commission (SEC) had established new climate-related disclosure and ESG rules, only to have these years-long efforts come to a halt with the new administration. Similarly, the US FOREST Act, the American effort comparable to the European Union Deforestation Regulation (EUDR), was gaining momentum and bipartisan support. With major changes in Congress (three of the bill co-sponsors are no longer in office), the FOREST Act now has an uncertain future.
For responsible, forward-thinking businesses committed to helping create a better and fairer economy for everyone, this shifting policy landscape is exceptionally hard to navigate. What is the best way forward?
Accept that change is here
In the face of these global governmental shifts, the best strategy is to remain committed to positive action. The world is changing, and companies must change too. Stability and certainty won’t come from trying to stick to business-as-usual, because it’s no longer an option. We simply can’t keep driving up temperatures, extending deforestation, and disregarding the rights of communities. A world where climate and nature breakdown, alongside greater social inequality and unrest, is a situation in which no business is going to thrive.
All the evidence shows that sustainability is not just the right thing to do for people and the planet, but also the most profitable business strategy.
Get ahead of the game
The best strategy is to get ahead of changes now. One way to do this is by ensuring that all commodities and products have gained well-known sustainability certifications, like Fairtrade, Rainforest Alliance or the standards for palm oil developed by the Roundtable for Sustainable Palm Oil (RSPO). Such certifications contribute to global guidelines – like those of the United Nations or The Organisation for Economic Cooperation and Development (OECD) – but also prepare businesses for the regulation that is inevitably coming.
Global guidelines set by organisations like the OECD and the UN often influence the frameworks set forward in regulations. Since certification standards like the RSPO already take these guidelines into account, businesses that adopt voluntary certification standards are therefore better prepared for future regulations.
Standard-setting organisations work closely with different sectors to understand their specific challenges and work out viable solutions; for example, RSPO unites over 6,000 members across 105 countries and territories in all parts of the palm oil value chain. Policymakers can – and should – use this kind of in-depth information to inform the legislative process.
In a globalised, interconnected world, certifications also underline the shared responsibility of sustainability challenges like deforestation and human rights – by providing businesses with a common language and a set of guiding principles. They ensure the burden of change is not placed solely on producers but is fairly distributed across all links in the value chain.
Sustainability certifications prepare companies for the bumpy road ahead too. If food and drink brands learned anything from Covid-19, it was that comprehensive knowledge of their supply chains is the basis for surviving a crisis. Those with certifications often have a better understanding of their suppliers and have systems in place for exchanging information and verifying best practices – meaning they can be more prepared when global supply chain challenges arise.
Minimise impacts through positive action
Whether the proposed EU Omnibus Package is accepted or not, companies are ultimately solely responsible for the impacts in their supply chain. Forward-thinking companies that lead on sustainability even if regulations aren’t yet in place will be better positioned for success. This means taking the initiative on sustainability ambition through efforts such as certification. Business leaders who prioritise sustainability now will build long-term resilience, ensuring they stay ahead of shifting policies and can adapt swiftly in an unpredictable landscape.
The real risk is in waiting for governments to take action. Businesses must act now, not only because it’s the right thing to do, but also because the future of their operations may depend on it.