ESG: Why it matters

Regulation initiatives around ESG in foodservice are gaining traction. Amelia Levin outlines why consultants and other industry players need to pay attention

In the past everything was about ‘sustainability.’ Now, some say ESG – meaning environmental, social, and governance – is one of the most important themes of the decade when it comes to global business and social/environmental stewardship.

ESG gets more specific than sustainability as citizens, governments, regulators, and the media are turning the spotlight on corporations and demanding action when it comes to addressing issues including environmental issues, social inequality, corruption and more. 

“We have to care about ESG because the foodservice industry is a major consumer of energy, a major recruiter and it could determine how we source goods, process them and deliver them,” says FCSI Associate Gil d’Harcour, a consultant, restaurateur, and concept developer. The foodservice industry “is directly related to the issues raised by ESG as the finished product is a sum of activities that should be scrutinized, in the same way as ISO standards are implemented. ESG also audits the way operators source their ingredients, reduce carbon emission, care about their employees and the way they hire.” 

What it means

The Green Business Bureau defines ESG as a third-party verification framework  designed to showcase a company’s completion of key sustainability initiatives. The ‘E’ in ESG refers to a company’s consideration of the environment in its operating practices (climate change, carbon emissions, air and water pollution, biodiversity, energy efficiency, water and waste management). The ‘S’ refers to a company’s social considerations such as diversity, equity and inclusion; workplace comfort; anti-discrimination; human rights; community relations; data protection and privacy. The ‘G’ refers to governance issues; board composition; committee structuring and controls on corruption and corporate greed. 

There are multiple benefits of ESG – it’s not just about obtaining a certificate. Through the assessment process, businesses gain insights into their current sustainability performance across environmental, social, and governance. This fosters a culture of engaging employees and stakeholders in the pursuit of sustainability goals. 

Major global foodservice players like Yum! Brands, Chipotle and Starbucks have implemented initiatives aimed at ESG performance. According to a GlobalData report, Yum! Brands has set a goal to reduce carbon footprint emissions by 46% by 2030, and it also reduced water use by 10% at its restaurants and revamped menus with more plant-based offerings and a 92% reduction in artificial colorings and flavorings.

Chipotle has introduced all-electric kitchens to reduce carbon emissions and launched an initiative for racial and gender pay equity; the company also offers employee assistance programs to address mental health, tuition coverage and childcare. Starbucks also offers a competitive benefits package to employees that includes affordable health insurance and paid parental leave. It’s also targeting a 50% reduction of waste sent to landfills. 

Opportunities for consultants

In January, the EU adopted the Corporate Sustainability Reporting Directive, which requires EU and non-EU companies doing business in Europe to file annual sustainability reports. ESG frameworks and certified ESG consultants can help companies meet these new standards. 

Currently, there are no regulations around ESG or similar sustainability reporting in the US, but experts say that could change. So far, no regulations related to ESG frameworks have been issued in Indonesia, where most of d’Harcour’s work has centered in the last couple decades. “The question is, when will those G20 countries follow the European and US push for transparency and accountability?” he says, ESG’s implementation in Europe sends a message to foodservice operators: ‘profit’ should be ethical and responsible and not only assessed from a financial aspect.”

It’s worthwhile for foodservice consultants to become ESG-certified, says d’Harcour. “As an F&B consultant in an emerging market such as Indonesia, my role has been to educate investors to transparent, honest and professional. I believe that being a certified ESG consultant is an opportunity to search for excellence for our clients and make them understand that their attitude towards the environmental and social issues is their best investment.

Amelia Levin

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