Food leaders warn resilience risks are being ignored by board members

In a letter to investors, shared by non-profit Insight Track, the group of senior leaders claim their companies are approaching resilience with a lack of foresight, and call on investors to challenge their respective businesses.

They stress the very “real” impacts climate change, biodiversity loss and soil degradation are having on the sector; from reduced yields, to dwindling quality and accessibility.

In response to these combined pressures, the industry is resorting to “quick-fix crisis management” at a time when they need to be making strategic, long-term moves.

“This will exacerbate, not resolve, the challenges we are facing,” the memo reads.

The industry has proven to be adaptable, having managed to just about navigate its way through Covid; but after years of layered volatility, it is now being stretched to unimaginable lengths.

This hasn’t been helped by siloed departments and a lack of support from the government, which has all but left the industry to get on with it, as Clive Black, vice chairman of Shore Capital, told Food Manufacture last month.

The contributors to the memo held similar views, describing both the sector and UK as fragmented, with overwhelmed suppliers keeping their ‘heads down’.

But as the letter warns, if we don’t start to look up and focus on the long-term, there will be a cost: price rises, reduced choice, and struggling sourcing communities – both abroad and in the UK which will lead to knock-on impacts such as reduced animal welfare.

‘CEOs want positive news’

While the memo makes it clear that broader systemic and governmental change is needed, it draws out particular concerns over those working within the industry, namely board members.

It argues they generally lack expertise in climate risk, with insufficient independent advice, modelling, training or recruitment fed into boards.

Where relevant in-house expertise is brought in from team members – including buyers, sourcing leads and sustainability divisions – the letter says it is “filtered through CEOs always wanting to hear positive news and drive short-term results”.

This has led boards to focus too heavily on “unrealistic expectations” from investors for short-term growth; with senior executive remuneration packages and key performance indicators often tied to near-term financial targets that are disconnected from environmental goals.

This is reflected in Lumina Intelligence’s ‘Climate-Smart Resilience’ report published in August, which revealed that although more than half of respondents* consider climate resilience to be either ‘very important’ or ‘extremely important’ to their company, just 6% have embedded in their corporate strategy.

As the letter points out, this approach creates a “huge structural pressure, centring boards’ minds on ”commercial competition instead of the long-term, pre-competitive work" that will be necessary in making food healthier, more affordable and reliable in the future.

Estelle Herszenhorn, director of food system transformation at WRAP, says the “diagnosis is spot on”.

“Inside Track has revealed a failing in many UK food businesses – barriers to shifting from crisis management to structural change. We have two proven levers ready for investment to scale, right now, that will reduce stresses on our food system and create long-term resilience - cutting food waste and protecting water sources,” she said.

“A food system where 10 million tonnes of food is wasted each year, mostly in our homes and costing the average household of four £1,000 a year, simply cannot be resilient in the long term. Every tonne of food we stop from going to waste is land, water and emissions we didn’t burn through, and every litre of water we protect and replenish in key growing regions like Kent, Spain or South Africa is a harvest we didn’t lose.

“What’s missing is the scaled long-term investment and commitment in collective action to match the scale of the problem. This memo makes that call to action and WRAP is ready to support businesses, organisations and investors ready to act.”

*Exclusive research comprising views from 250 senior decision-makers across food, beverage, ingredient and FMCG manufacturers.