ESG: WHAT IT STANDS FOR
ESG stands for environmental, social and governance. It’s a quantifiable assessment of sustainability and business practices. ESG factors include greenhouse gas emissions, water usage, employee relations and corporate governance.
While ESG, CSR (corporate social responsibility), and sustainability are often used interchangeably, there are important distinctions between the three key words. ESG focuses on reaching certain performance metrics, setting measurable goals, and conducting audits to verify that metrics and related disclosures are accurate; aka, front-facing accountability. CSR is more general in its framework for corporate behavior that aims to improve society and the environment, and it can vary in terms of its implementation. Sustainability can refer to a larger umbrella of things that are relevant to ESG and CSR, but it typically refers to business practices that reduce negative impact on or are good for the environment.
ESG is increasingly correlated with profitability; consequently, investors, consumers and regulators are all putting pressure on businesses to improve their ESG performance.
Consumers Expect More
Modern consumers are prioritizing environmental and social justice issues now more than ever. This is partly due to increased public discussion around sustainability issues, employee pay, sick leave and racial equity in recent years, but also largely because younger consumers are taking over, and they are more intent on advocating for their values. Younger generations are more likely to decide where to dine and how much they are willing to spend based on a brand’s commitment to sustainability and CSR, and they want to hear about restaurants’ sustainability efforts. For example, Chipotle has long stood on the belief that “Good food can change the world”, articulating that real food is better for you, for people, and for our planet. This reflects in Chipotle’s popularity and consumers choosing to maybe even pay more for food they know was responsibly sourced and crafted.
To continue to capture the attention of younger consumers, it’s necessary that your operation is transparent about its environmental initiatives and its dedication to bettering the community.
- 62% of consumers aged 18-34 would be willing to pay a premium for socially responsible practices.1
- 72% of consumers ages 18-34 say they are more likely to dine at a restaurant or foodservice establishment that describes itself as “socially responsible/sustainable.”1
- 90% of consumers ages 18-34 are likely to choose one foodservice establishment other another due to sustainability/social responsibility practices.1
- 70% of consumers say it’s important for restaurants to publicize their CSR/sustainability practices.1
While ESG is a focus that dominates conversation in commercial and noncommercial foodservices alike, it shows up differently between them. Commercial operators are exposed to the public and held accountable by consumers who demand to know where their food comes from, and that it was crafted with intentionality. On the other hand, noncommercial operators are faced with requirements to meet from governing bodies and regulators. It’s important for both operators to not only ensure they are following sustainable practices but find critical ways to communicate those to consumers and/or regulators in an impactful way. An example in the commercial sphere can be seen in Wendy’s ESG tactic of targeting 100% sustainable customer-facing packaging by 2026. As a noncommercial representation, NYC elementary schools have partnered with Cafeteria Culture to eliminate single-use plastic items.2
Focuses on sustainability practices have shown to improve profit, reduce costs, and improve hiring and retention.
- 44% of operators agree that their CSR efforts have increased profitability.1
- 73% of operators believe that their operations’ CSR practices help with employee recruitment/retention.1
71% of operators already depend on suppliers’ sustainability efforts and direction to support their own initiatives1, which means partnering with foodservice manufacturers like Smucker Away From Home—leaders in ESG among food companies. Here at Smucker Away From Home, we are committed to positively impacting the environment and society and are transparent about our ESG performance. Our ESG initiatives include:
Our ESG initiatives include:
• Working with farmers to improve agricultural practices
• Investing in sustainable packaging and renewable energy
• Switching to more sustainable transportation methods
• Reducing food waste
• Giving back to the communities in which we operate
We’ve also established the following environmental impact goals:
• Reduce absolute scope 1 and scope 2 greenhouse gas (GHG) emissions 28% by 2030 from a 2019 base year*. Reduce scope 3 GHG emissions 22% per unit of sold product by 2030 from a 2019 base year.
• Achieve TRUE (Total Resource Use and Efficiency) certification at 100% of sites by 2030.
• Reduce energy intensity and water intensity at company-owned facilities by 5% by 2025 vs. 2019 base year.
• Packaging goals to reduce the environmental impact of packaging: Strive for 100% recyclable, compostable or reusable packaging materials by 2025
• Make How2Recycle® information available for all packaging by 2025
• Ensure 100% of fiber-based packaging is from recycled and/or certified sources by 2025
• Strive to use 30% post-consumer recycled or renewable resource materials in plastic packaging by 2030
We encourage you to follow along on our journey as we continue to reach our goals, as well as observe others in the marketplace for inspiration and guidance in establishing your own commitments. Once your goals are clearly defined, you can craft a communication strategy and properly evaluate your suppliers and ingredients to ensure that their products are helping you with your established practices. Now more than ever, defining your business’s sustainability goals is critical to your success and the success of your community, the consumer, and the planet; and the values that you instill into your business practices now, will make the future a brighter place.
1Technomic Corporate Social Responsibility & Sustainability Multi Client Study, January 2023
2Technomic K-12 Insights 2023 Update Edition