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#BusinessCase: Report Finds 14:1 ROI for Companies That Reduce Food Waste
March 7, 2017
As has been much discussed here at Sustainable Brands, roughly a third of all food produced in the world is never eaten, which has tremendous economic, social and environmental consequences. Now, new research on behalf of Champions 12.3 - an all-sector collaboration aimed at halving per capita global food waste at the retail and consumer levels and reducing food losses along production and supply chains, including post-harvest losses, by 2030 (Target 12.3 of the UN Sustainable Development Goals [SDGs]) - finds that for every $1 companies invested to reduce food loss and waste, they saved $14 in operating costs – and the report finds that household savings could be much greater.
In a first-of-its kind analysis, The Business Case for Reducing Food Loss and Waste evaluated financial cost and benefit data for 1,200 sites across 700 companies in 17 countries, finding that nearly every site realized a positive return on its investment to reduce food waste. The types of investments companies made include: quantifying and monitoring food loss and waste, training staff on practices to reduce waste, changing food storage and handling processes, changing packaging to extend shelf-life, changing date labels, and other staff and technology investments.
The 14:1 return on investment comes from not buying food that would have been lost or wasted, increasing the share of food that is sold to customers, introducing new product lines made from food that otherwise would have been lost or wasted, reducing waste management costs and other savings.
“A third of the world’s food is wasted – and yet almost a billion people go to bed hungry each night. That simply cannot be right. But even if the moral imperative doesn’t move us, the clear business case should swing people to act. What this research shows is, that there’s now no social, environmental or economic reason why we should not come together and take action to reduce food waste,” said Dave Lewis, Group Chief Executive of Tesco and Chair of Champions 12.3, whose members also include the CEOs of Nestlé and Unilever, along with government ministers, executives of research and intergovernmental institutions, foundations, farm organizations and civil society groups.
Government action saves consumers significant money
The research also finds that savings for consumers could be enormous. From 2007 to 2012, the UK ran a nationwide initiative to reduce household food waste. This included consumer education through the "Love Food Hate Waste" campaign via in-store messaging on proper food storage and preparation and use of leftovers; product innovations like re-sealable salad bags, changes to pack size, formats and date labelling; and financing to establish baseline data on food waste and monitor progress on reduction.
During this period, for every £1 the government, companies and the non-profit organization WRAP invested in these efforts to curb household food waste, consumers and local government saved £250. Over the first five years of this initiative, avoidable household food waste was reduced 21 percent. Figures released for 2012-2015 show that progress has stalled, which emphasizes the need to regularly evaluate, review and adjust approaches to food waste reduction.
At a time of economic strain for many families, throwing away less food is a valuable way to put money back in people’s pockets. In the UK, the average household with children discards approximately £700 of edible food each year. In the United States, the average family of four wastes roughly $1,500 annually on food that goes into the garbage.
“Our experience suggests that there are two main barriers to food waste reduction: a lack of awareness of the scale of food waste in the business and the home, and the business case for change,” said Marcus Gover, Chief Executive of WRAP. “This groundbreaking report we wrote with WRI shows there is a clear business case for tackling food waste for businesses, municipalities and governments. Given this analysis, our message is simple: Target, measure and act. Above all, act. It makes sense socially, environmentally and, above all, economically.”
City investments in curbing food waste pay off
In 2012, six London boroughs piloted a local-level Love Food Hate Waste campaign led by WRAP, ultimately saving local authorities £8 in avoided waste disposal costs for every £1 invested, and an average of £84 for households participating. After just six months, households had reduced their waste by 15 percent. London’s experience indicates great potential for other cities to save money and food by taking action to reduce food loss and waste. Other cities that are starting to tackle food waste, starting with measuring the problem, include Denver, Nashville, New York, and Jeddah (Saudi Arabia).
“The success we saw in the United Kingdom proves that it’s possible to make real inroads in reducing food waste,” said Liz Goodwin, Senior Fellow and Director of Food Loss and Waste at WRI and the new Chair of the London Waste and Recycling Board. “The challenge now is to get every country, major city and company to realise that reducing food loss and waste is a win-win. There are far too many tough, intractable problems in the world – food loss and waste doesn’t have to be one of them.”
In the study, government and business leaders also noted other reasons they find reducing food loss and waste beneficial, including better relationships with customers and suppliers, increasing food security, adhering to waste regulations, upholding a sense of ethical responsibility and promoting environmental sustainability. Since food loss and waste is responsible for an estimated 8 percent of annual greenhouse gas emissions, tackling this challenge can help lower emissions and meet commitments to the Paris Agreement.
The report recommends leaders take a “target, measure, act” approach to reduce the amount of food lost and wasted. First, every government and company should set a target to halve food loss and waste, in line with Target 12.3 of the Sustainable Development Goals. Second, governments and companies need to start measuring food loss and waste so they can identify hotspots and monitor progress over time. The recently launched Food Loss and Waste Accounting and Reporting Standard can help them do this. Third, leaders need to act, implementing programs and practices for reducing food loss and waste.
“This report demonstrates in the most concrete terms that saving food, saving money and saving the planet can be fully aligned: a call to action that no-one can ignore,” said Feedback founder Tristram Stuart. “It’s worth bearing in mind that those causing food waste aren’t always the ones who bear the full cost, so businesses – and policy makers – need to work together across supply chains to truly maximize the potential cost savings and environmental benefits of avoiding food waste.”