The Association of Sustainable Agriculture in Poland “ASAP” conducted a study of companies from the agri-food sector and identified a group of “leaders” – defined as companies where sustainable development is an integral part of their organization and investment priorities.
A study commissioned by ASAP and conducted in cooperation with Accenture entitled; “A turning point in the food industry. About how sustainable development allows you to build business resilience in unstable times” –
shows that three times as many companies that implemented a sustainable development strategy reported an increase in operating profit than companies that did not.
The study also showed that 25% of the surveyed companies are leaders in sustainable development, half of the respondents are just at the beginning of their way, but have already started implementing some solutions, such as sustainable investment strategies, and 25% are “latecomers”.
The agri-food industry is currently preoccupied with ongoing problems related to cost and price increases and their effects. Revenues and profits of companies in the agri-food sector have been under pressure for years. In addition, the lockdowns and then the outbreak of war in Ukraine brought a number of new challenges destabilizing the financial situation of these entities.
Today, producers and processors face e.g. with:
- broken supply chains,
- consumer panic phenomena,
- double-digit and still growing inflation,
- uncertainty regarding the prices or availability of agricultural raw materials and other means of production.
Leaders create the supply chain in terms of sustainable development – they source sustainable raw materials, take responsibility for the development and transformation of suppliers, but also verify how sustainable they are and use certification themselves.
Sustainable food production, including cooperation with farmers who use the sustainable agriculture model, plays a key role in reducing indirect emissions. They are often much higher than direct emissions – we are talking about 5.5 times higher greenhouse gas emissions on average (average for all industries). In the case of food production and trade, this result is even more alarming: 5.9 and 10.9 times more, respectively1.
The current situation means that companies from the broadly understood agri-food industry have even less space for investments in sustainable development. They operate in the short term and make ad hoc decisions. This has happened before, but the current environment has reinforced this attitude. Entrepreneurs do not think about long-term investments, but focus on waiting out more difficult times. They also postpone adapting to the legislative changes of the European Union for later.
Despite the market challenges, as many as 66% of organizations intend to maintain a similar investment budget for sustainable development, and 29% intend to increase investments in sustainability.
The current crisis is an opportunity to change the way we operate, and sustainable production means, among other things, closer cooperation with suppliers, a better understanding of their situation, the use of local raw materials, shortening the supply chain and greater control over it. An additional stimulus for sustainable development is the dynamic increase in costs.
In three years, almost half of the raw materials used for food production in Poland will come from sustainable or organic farming. However, today some companies use only raw materials produced in this way.
The most important conclusions:
- Companies don’t change by themselves. The motivation for transformation towards sustainable development is external (legislation, the need to build a positive image).
- Despite the lack of intrinsic motivation, or for this very reason, companies plan to make employees and culture one of the first areas of investment.
- The food industry is most concerned about inflation and rising energy prices due to Russia’s invasion of Ukraine. 55% and 48% of respondents, respectively, believe that these will be the biggest areas of influence on the organization for the next year.
- Despite this, many companies do not reduce their budgets for sustainable development: As many as 65 percent. of the organization intends to maintain a similar investment budget in this area in the coming years.
- There is no sustainable development without an economic justification, our research has shown the enormous power of finance departments. 75.5% of respondents believe that the finance department has the greatest impact on sustainable development in the company.
- Leaders measure change, 68%-70% of leaders measure greenhouse gas reductions.
- Leaders support themselves with technology, save time and budgets thanks to digitization, analysis and automation.
1. Source: https://cdn.cdp.net/cdp-production/cms/reports/documents/000/004/072/original/CDP_Supply_Chain_Report_2019.pdf?1550490556