The scandal of food wastage: prepare for regulatory pressure

Worldwide, significant quantities of food are wasted at all points of the supply chain and across all commodities. At the retail level, large quantities of food are wasted due to quality standards that overemphasise appearance.


At the agribusiness level, particularly in Africa, inefficient processing and drying, poor storage and insufficient infrastructure are major contributors to food losses. It is estimated that almost one-third of all food produced in the world (and in South Africa too) is never eaten, representing a huge loss of the resources that went into its production.


It takes an area the size of China to grow the food that is thrown away every year, while food that goes uneaten accounts for 25% of all global fresh water consumption. If food waste were a country, it would be the third-largest emitter of greenhouse gases after China and the US.


Reducing food waste would lower pressure on resources such as land, lower greenhouse gas emissions and water consumption, and lessen the use of fertilisers and pesticides in agriculture. In turn, this would mitigate climate change, conserve freshwater resources, protect biodiversity and reduce pollution.


The current inefficiencies in our food systems are troubling, especially when it is estimated that an additional two billion people will be living on the planet by 2050 and this will require a 70% increase in food production.


However, scientists already note that of the nine planetary boundaries beyond which we cannot push the earth’s systems without putting societies at risk, humanity is already outside the safe operating space of at least four.


This suggests an inevitable reality of greater regulation to ensure that food waste and food loss is reduced, as our planetary boundaries are finite and will require such measures.


Identifying the Global Aim

In 2015, as a “blueprint to achieve a better and more sustainable future for all“, the UN General Assembly launched 17 Sustainable Development Goals (SDGs). These are intended to be achieved by 2030 as part of the 2030 Agenda for Sustainable Development.


The SDG relevant to food loss and waste is SDG 12, which seeks to “ensure sustainable consumption and production patterns”, and includes SDG Target 12.3, which provides that, “By 2030, we are to halve per capita global food waste at the retail and consumer levels and reduce food losses along production and supply chains, including post-harvest losses”.


This establishes the platform for the global community’s collective ambition or aim.


The SDGs, however, are non-binding on national governments and corporations.


Traditionally, pressure on companies to achieve sustainability goals has come from NGOs, but generally, corporates have been unresponsive to such demands, as sustainability and environmental, social and governance-related criteria have been viewed as nice-to-haves rather than business essentials.


What the sustainable finance and environmental, social and governance (ESG) movement has sought to do is bring historic externalities relating to sustainability directly into the decision-making process by focusing on where capital is allocated by institutional investors.


As a result, corporates are beginning to respond to pressure that is now coming not just from NGOs, but from investors as well. This is because the SDG sustainability ideals are being translated into the language that a capitalist system responds to, and that is access to capital itself.


Investors are now under pressure from a broad range of external stakeholders to demonstrate that increasing percentages of their investments are ESG-aligned. Moreover, research suggests that ESG-aligned assets outperform their peers, so investment in them is also being driven internally by investors.


Today, there is general recognition that financing unsustainable enterprises will, over time, create a drag on economic prosperity as basic inputs (water, energy and land) become increasingly scarce and expensive.


Establishing a South African baseline

In October 2018, with financial support from the South Africa-EU Dialogue Facility, the Consumer Goods Council of South Africa (and the Department of Trade, Industry Competition) initiated the development and launch of a food loss and waste agreement and roadmap for the country.


The agreement acknowledges that, as in the rest of the world, accurate estimates of food loss and waste by sector are currently unavailable for South Africa. The main aim of the agreement is to establish a 2022 food loss and waste baseline against which progress towards SDG 12.3 can be monitored. It sets out the provisional trajectory required to meet the SDG 12.3 target based on indicative data.


Establishing a baseline is the first step to understanding the extent of the problem, and we can anticipate greater activity in this area as we head towards 2030 and the target date for the fulfilment of the SDGs.


A regulatory tightening of the screws

In South Africa, aside from the statutory duty of care in the National Environmental Management Act No. 107 of 1998, there is no overarching piece of legislation directing entities to undertake value chain due diligences on their suppliers, as is the case in Germany and France, for example.


In March 2021, the EU Parliament adopted a resolution setting out principles for proposed new legislation on corporate due diligence and accountability for human rights, and environmental and governance impacts within businesses’ operations and through their value chains within the EU internal market. These recommendations are non-binding, and the related EU directive is still to be passed.


Due to the significant importance of the EU as an export market for South African agribusinesses, the directive, once promulgated, will require careful attention, as indications are that it will have extraterritorial application.


This means that both investors and participants along the supply chain are likely to be required to report on a range of ESG-related criteria, from greenhouse gas emissions and water efficiency, to labour practices and human rights issues.


Given the significance of the problem, it can be anticipated that food waste, at retail level, and food losses, at agribusiness level, will be included within the ESG enquiry over time. This will allow a broad range of stakeholders within the supply chain to determine whether the businesses they are investing in or transacting with are operating sustainably and are ESG-aligned.


In South Africa, National Treasury has published a draft Green Finance Taxonomy, which seeks to set technical and legal standards for ESG-related alignment that companies can report on in order to attract investment.


The technical and legal details in respect of crop production and livestock production have been pegged in this taxonomy for future development, but, to date, the technical and legal standards have not been developed.


It therefore remains to be seen whether criteria relating to food losses will find their way into our taxonomy, or whether other regulations will be promulgated in time to address this pressing issue.


In the meantime, participants in the supply chain can anticipate what is likely to come and look to include contractual mechanisms into their standard supply terms that allow for measuring and achieving the parties’ respective food waste ambitions.


Supply chain participants are likely to need considerable data to provide visibility across the global network, enabling companies to optimise efficiency and reduce their environmental impacts.


The sooner South African agribusinesses start on their ESG journeys, the sooner they will be ready to adapt to locally and internationally developing ESG regimes.




Read the original publication at ENSafrica.

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