Businesses have been mining customer insight data for years but a wave of net-zero commitments has kick-started a new drive for transparent environmental data. By Nick Hughes.
When asked in an interview with the BBC back in 2013 to name the single most important factor in the rise of Tesco, the grocer’s former CEO Sir Terry Leahy had a simple answer: Clubcard.
Tesco did a lot of things right during its ascent to the top of the supermarket tree towards the end of the last century but the introduction of its digital loyalty scheme in 1995 proved a game-changer by allowing Tesco to collect raw data on what people were buying and turn it into personalised discounts and rewards.
Fast-forward a quarter of a century and data is even more intrinsic to the success of modern food businesses. The vast majority of large suppliers, retailers and foodservice operators now boast well-established data insight teams supplemented with paid-for expertise from third party data providers; the theory being that the more you know about how your customers think and behave the more you can entice them to spend.
What’s this got to do with sustainability you may ask? The answer is that in this era of net-zero and the nature crisis, the race is now on to generate high quality data that can serve a more altruistic function beyond simply getting people to part with their hard-earned cash. In recent years, foodservice operators and their suppliers have made bold commitments to slash their greenhouse gas emissions and achieve net-zero. But as our latest Footprint Intelligencereport – ‘A transparent future for foodservice’ – explains, in order to know where you are heading it’s crucial to understand where you are.
Companies are starting to realise that setting net-zero targets was the easy part; delivering against these targets requires them to lift the lid on their supply chains to determine the extent of their emissions and the sources of them. After all, how else can you be expected to meet growing stakeholder expectations for robust ESG reporting and climate action roadmaps without having visibility over your data?
Sourcing success
Carbon or eco-labels may be the public face of environmental data but for most foodservice businesses its real value – both environmentally and commercially – currently lies in the ability to drive decision making in key areas such as supply chain, menu development and procurement.
"Operators are beginning to see how sustainability data can link back directly to benefit the P&L through improved supply chain sourcing," says Stephen Nolan, CEO of Nutritics, the report sponsor.
There are numerous reasons why businesses are investing in more accurate, real-time data. One of these is to get ahead of new reporting requirements that are designed to ensure companies’ net-zero plans are evidence-based and credible. The UK Government is consulting on new Sustainability Disclosure Requirements, which will include expectations for certain firms to publish net-zero transition plans that align with the government’s own 2050 commitment.
Ministers in Westminster are also stepping up efforts to force food companies to report on their health and environmental impact with the launch of a new food data transparency partnership. The aim of the partnership, an evolution of the idea for a national food database proposed in Henry Dimbleby’s national food strategy, is to ensure consistent measurement of key health and sustainability indicators and a system of transparent reporting.
Guarding against greenwash
Businesses are being driven too by the reputational risk that comes with accusations of greenwashing. The Committee of Advertising Practice (CAP) and the Broadcast Committee of Advertising Practice (BCAP) recently published an update to their official guidance on misleading environmental claims and social responsibility in advertising in which businesses will be expected to explain the basis for net-zero claims or face sanctions. The guidance states that companies should avoid using unqualified carbon neutral, net-zero or similar claims and, where they are used, information explaining the basis for these claims should be provided.
Scrutiny is also coming from investors who are ever mindful of the risk of stranded assets. In June last year, investors managing £6trn in assets including Rathbone Greenbank Investments and Legal & General Investment Management (LGIM) called on the UK government to commit to introducing mandatory health and sustainability standards for food companies to help facilitate the movement of capital toward businesses that are supporting the transition to a sustainable and healthy food system.
Targeting net-zero
First and foremost, those businesses that have made stretching environmental commitments are using data to demonstrate progress against their own corporate targets. Compass UK & Ireland, which is targeting net-zero by 2030, recently published its first ever climate impact report showing a total emissions reduction of 6.5% across scopes 1, 2 and 3 from FY19 to FY22.
While generating reliable greenhouse gas emissions data is the immediate priority, companies like Compass are also looking to gather additional data on other indicators to provide a more rounded view of a product’s impact. The company has been working with researchers in the Livestock, Environment and People labelling (LEAP) group at the University of Oxford to rate dishes for their impact across four indicators – greenhouse gas emissions, biodiversity loss, water scarcity and water eutrophication – and display these in sites across its Eurest workplace catering business. Quantitative data from an initial small-scale pilot didn’t show an effect on customer purchasing but the impact on menu design has been significant. “It's making a big difference to how we develop the menu by giving us an internal awareness of the environmental impact of our recipes,” explains Rees Bramwell, head of nutrition and sustainability for Eurest and 14forty.
Aramark is another example of a business using real-time footprinting data to identify areas where it can reduce emissions having recently integrated Nutritics’ Foodprint platform into its menu management system. “It allows us to generate reports on the amount of carbon generated as a result of the food we serve, which in turn means we can see the trajectory of how we can move towards our longer term targets in terms of reducing carbon,” says Aramark director of sustainability Michael Savage. “Moving forward, we'll be able to pull reports on the amount of carbon generated as a result of the food that we serve in total as Aramark or for specific clients.”
Devil in the data
Where things get slightly stickier for businesses is in navigating the line between data accuracy and accessibility. The new wave of carbon or eco-labels, which have been pioneered by the likes of Leon, Wahaca, Benugo, Peach Pubs and Ask Italian, tend to rely on secondary data for their emissions values; in other words data representative of an average product sourced from a certain country or region rather than product-specific primary data. This kind of data can help businesses distinguish between higher and lower impact foods – lentils versus beef for example – but it rarely allows them to distinguish between the same foods produced in different production systems.
Some see this as a problem. CLEAR, the consortium for labelling for the environment, animal welfare and regenerative farming, has long-held concerns about the rigour behind the data being used for eco-labelling schemes. “It's not about finding something that is perfect,” says the organisation’s chair, Fidelity Weston. “But our position is that if you do not distinguish [between] farming systems it is very dangerous and it defeats the whole point of the exercise. You’re not encouraging farmers to change.”
Work is ongoing to generate farm level data for food emissions through projects like the Global Farm Metric. In the meantime, there are those who argue the lack of primary data should not be a barrier to businesses communicating with customers over the environmental impact of their food choices. “This is how solutions are developed, through analysis, creativity and trial and error and we should be cautious about creating a climate in which businesses feel unable to innovate,” says Simon Heppner, executive director at Net Zero Now.
Amid a proliferation of data sets and a dizzying array of approaches to eco-labelling moves are afoot to create greater harmonisation. This includes work by Wrap to develop an agreed standard for quantifying scope 3 greenhouse gas emissions specific to the UK food and drink sector. Grocery industry body IGD has made clear its intention to develop a harmonised environmental labelling scheme for the UK, while the UK Government is also under pressure to take more of a lead following the recent review of the government’s net-zero strategy by Conservative MP Chris Skidmore which highlighted the need for a standardised eco-labelling scheme.
Environmental data will continue to evolve as will the way businesses choose to use it. Whether it will be as transformative for the planet as Clubcard was for Tesco remains to be seen.
‘A transparent future for foodservice’ by Footprint Intelligence in association with Nutritics is available to download here for free.
