Ingredient-related data is decarbonising the foodservice industry and offering hope for the future. Stephen Nolan, CEO of food data specialists Nutritics and EY Sustainability Entrepreneur of the Year 2022, explains how to Amy Fetzer
Footprint: Scope 3 emissions – dominated by ingredients – can be between 60 and 90 per cent of hospitality and brewing businesses’ overall emissions. What is the risk for operators who don’t have ingredient-related impact data or who aren’t communicating it effectively?
Stephen Nolan (SN): If you look at the endpoint and work back from there, the risk – and the opportunity – is clear. Everyone needs to get to net zero in a short number of years. Having carbon, water and cost data on your ingredients provides a huge amount of power to address hotspots and provides visibility in your supply chain. It provides a clearer understanding as to how you’re sourcing products into your businesses, reducing cost and protecting your brand. If operators don’t embrace this, they’re way behind their competitors.
Operators are unlocking tangible financial results from investing in sustainability today. Having this understanding of your ingredients and supply chain ensures the long-term viability of your business. You also get a huge amount of credit from a marketing, brand and consumer perspective because consumers want to understand what they’re eating.
Footprint: Why is environmental data so powerful?
SN: The general rule of thumb is: reducing carbon reduces cost. Take fish and chips. We managed to shave 2kg of CO2e, 1,174 litres of water, 1,077 calories, and £2.95 off the dish through reformulation. This included switching the fat used to fry the chips from beef dripping to vegetable oil, substituting half of the ale in the batter with sparkling water and reducing portion sizes. All whilst ensuring the final recipe aligned with industry portion size standards and is consistent with published tested recipes.
Staffing remains a significant challenge for hospitality and foodservice operators. For a majority of your employees, sustainability is important to their values. Having underlying impact data means you can tangibly communicate how you as a brand and a business fit with their values. This helps you attract and retain employees, reducing recruitment and training costs.
Alongside the supply chain and employee piece, there are investment benefits from a debt and equity side. Major banks now offer cheaper funding for businesses that demonstrate strong ESG credentials, again directly benefiting your P&L (profit and loss). On the equity side, ESG fund growth is like no other asset class. Robust environmental data provides the opportunity to appeal to investors with a business that is both conscious of its environmental footprint and acting on it.
The industry is quite advanced now in using environmental data to develop a baseline of the carbon footprint of what they’re buying. A baseline allows you to ask: “How are we going to address this?” This translates to targets set by boards, with management bonuses linked to these targets. This drives the governance approach and the outcomes.
Footprint: Food data systems like Nutritics are based on standardised emission factors. So, if you change the region a product is sourced from, it has a big effect on an ingredient’s impact score. But products from the same region appear equal, so how will producers be incentivised to adopt to environmentally-positive practices?
SN: Our system, Foodprint, has the capability to differentiate between suppliers. If an operator has detail on a particular supplier, we can geotag where a product has been grown as well as to where it ends up and how it is disposed of. We can even drill down to the distance between the distribution centre and the end location, including the specific transport modes to really get granular detail on the impact of that particular product. This ensures suppliers with sustainable practices can be recognized and rewarded.
In an ideal world, operators could have a full lifecycle assessment of every single product they source and we could input those very specific nuances into the system so they could be reflected in a particular dish or ingredient’s eco score. That does exist in some cases, which is fantastic, but it’s more common in retail. Hospitality has a more complicated supply chain which makes it more challenging.
Footprint: How is environmental data influencing recipes and menus, and what are the business benefits of this?
SN: This comes back to governance because data persuades the management team to buy in and support low impact menus as part of their net zero agenda. Without senior support, it won’t translate to the frontline.
Our research suggests you can see a reduction of anywhere between 12-49% in the carbon impact of a recipe when you have transparent data available. This is usually occurs back of house when chefs see significant impacts and reformulate to reduce carbon – which often increases the margin of the dish. Our clients tell us the A-E grading system enables their chefs to create balanced menus that offer more environmentally friendly dishes, in turn helping customers make more informed choices.
This really excites me – this is the future of where the industry will go. If you think how our diet has changed over the past 10, 20 years. We’ve engineered out fat and salt – we’re going to engineer out carbon.
Footprint: Footprint research revealed that 60% of people said eco-labels would influence their choice of food when eating out-of-home or buying a takeaway. How are operators communicating menu-related impact data to their customers?
SN: Traffic lights are very popular as consumers understand them, but they don’t work in all circumstances (such as in steak restaurant, for example). People have an appetite to know the environmental impact of what they’re eating – our research found that 53% said they want to see impact data on menus. But there is definitely still flexibility around how that story is told!
Footprint: So, how can environmental data be communicated effectively and consistently to prevent consumer confusion and to empower people to make planet-positive choices?
SN: We’re extremely open about the process we use and the detail behind it will be published in a research paper making it available for everyone to see. That helps operators have confidence in our scores because they can see they are backed by science, but it also helps with standardization because others in the market can see our methodology and data sources. We’re also joining the industry conversation in forums like Zero Carbon Forum to share, be open and to facilitate conversation and standardization to help the industry to adopt robust and complementary footprinting and labelling systems.
Footprint: Are policy tools such as the Taskforce on Climate-related Disclosures driving the desire for data?
SN: There is certainly a strong awareness of regulation, but the real the driver is the positive impact addressing environmental impacts has on your P&L. That will switch as the regulation comes in. But, if I was an operator, I wouldn’t wait for the regulation – I’d grasp that P&L opportunity now.
We’ve also developed a really novel offering to support the data our systems provide. Our Knowledge Labs give the teams at each site a 12-week training course where, as part of the morning briefing for five or 10 minutes, they also get the some sustainability training, such as covering how a typical carbon footprint is calculated. This helps educate the frontline so they understand what this data actually means, and how it can help customers to be more sustainable. In turn, employees feel they are working for a more environmentally conscious business, which can reduce attrition.
Footprint: Do your systems help to tackle waste?
SN: Waste is a really exciting area. Our system allows you to register any food waste that occurs in your businesses in a couple of clicks. So you can see how waste affects your scores from the impact of ice cream left in the tub to the 10 portions of lasagne wasted through overproduction. It’s a game changer. We’re also working with organisations like WRAP to share insight to help in the development of a harmonised approach to waste management and reporting across the industry to help drive carbon reduction.