The Future of Business Is Waste

NBS Thought Leaders offer guidance on sustainable business models for the 21st century. Thought Leaders are leading academics and practitioners: world experts on sustainability issues. Here, Guy Morgan, Director at Business for Social Responsibility, identifies emerging solutions to the challenge of food waste. He describes the opportunities to be found at every stage of the food value chain.

Approximately one in three food calories globally is wasted between “farm and fork.” Food spoilage and waste occurs during crop growth, harvesting and processing; in retail and restaurants; and in the home. As a result, millions of tons of food waste are generated annually, with the majority ending up in landfills or incinerators. In the United States, food scraps represent more than 14 percent of the total municipal solid waste stream.Such waste means the loss of a tremendous amount of potential value.

But companies are beginning to understand the social, environmental and economic costs of food waste and recognize the benefits of reducing the waste or diverting it to better uses. These opportunities can be pursued through innovation, collaboration, and leadership.

Innovation: Waste means energy

Many innovations are emerging to capture value from food waste. For example, some vehicles can be powered by grease and vegetable oil from quick-service restaurants. There’s also a smart phone app called FlashFood, through which restaurants send an alert to volunteers who can pick up leftovers and distribute the food to those in need.

On a larger scale, anaerobic digestion, a process used to break down biodegradable material, produces relatively cheap biogas that can be used as a source of energy similar to natural gas. While not a panacea, it is potentially an attractive alternative, especially in Europe where electricity and gas costs have increased dramatically recently. Finnish researchers have demonstrated biogas’s viability at industrial sites. Companies could pipe excess biogas to other industrial energy users and households, or for vehicle use. For households, individual biogas plants offer a cost-effective, less carbon-intensive source of energy. The Appropriate Rural Technology Institute (ARTI) in India, for example, calculated payback for a US$200 biogas plant to be two years, with additional carbon savings.

More food waste-energy solutions will emerge as cost pressures shift developed markets toward sustainable lifestyles (one such pressure is rising landfill taxes in the U.K.). Companies must watch for such technologies, some of which may be found in less developed markets at the bottom of the pyramid.

Collaboration: Scaling solutions

Because food waste is so pervasive, making real progress on tackling it requires shifts in consumer behaviour, public policy, and market incentives globally. Collaborations are needed both vertically in the food value chain and horizontally into other value chains, often with atypical bedfellows.

Some companies are already participating in powerful multi-stakeholder initiatives in Europe and North America. For example, the European Union (EU)’s FUSIONS project, established in 2012, involves more than 80 groups from business, government, and civil society. It’s aimed at developing strategies to reduce food waste. WRAP, a U.K.-based business coalition, issued the Courtauld Commitment, a voluntary “responsibility deal” in which more than 50 grocery retailers, brands, manufacturers and suppliers agree to improve resource efficiency and reduce food and drink waste. And in the U.S., the Food Waste Reduction Alliance (FWRA) — a three-year effort launched in 2010 by the Grocery Manufacturers Association, Food Marketing Institute and National Restaurant Association — is focusing on solutions to food waste generated by manufacturers, retailers and restaurants.

In the future, multi-stakeholder efforts like these will increase in importance for companies, both to respond to regulation (the EU has issued a directive on decreasing biomass waste to 35 percent of 1995 levels by 2020) and to develop “circular models” that increase the net value per ton of food.

Leadership: Understanding complexity

Given the complexity of the global food waste challenge, leadership is required from all parts of society, including business.

Today, major retailers such as Ahold, Sainsbury’s, and Tesco, among others, are testing new choice editing strategies with their consumers. “Choice editing” steers consumers to environmentally-friendly alternatives. Through on-product messaging and recipes, stores are helping to cut out unnecessary waste and increase awareness of food waste reduction practices in the home.

The biggest leadership challenge, however, is to design food waste out of the entire food chain, from farm to fork. Businesses must take a holistic approach to food value chains, understanding and addressing both the technical and cultural barriers to eliminating food waste. As consumers in the high-growth markets of Asia and Latin America increase the volume of food they send to landfills, businesses supplying to and sourcing from these countries must understand the challenges, convene the right civil society and business partners to surface solutions, and provide the resources to implement them.

Ending waste, finding value

Through innovation, collaboration and leadership, businesses can reduce food waste in ways that benefit their bottom lines. Businesses in multiple sectors and across the globe can build on the promising models described to help ensure the journey from “farm to fork” is less wasteful.

The issue of food waste provides insights for other sectors as well. As we’ve seen, there are at least three ways for companies to capture value currently being thrown away:

• Watching for new technologies, especially in less developed markets at the bottom of the pyramid.

• Leading or participating in vertical collaborations in your own industry and horizontal collaborations across industries.

• Uncovering the technical and cultural barriers which produce waste in your industry.

Collaborating with suppliers, partners, competitors and government is key to managing waste. Stay tuned for NBS’s systematic review of best practices for Sustainability Collaborations – coming Fall 2013.

About the author

Guy Morgan is Director, Advisory Services, at BSR in Paris. Guy leads client engagements with companies from the manufacturing, food, agriculture, and beverage sectors, among others. Guy also leads BSR’s sustainability reporting practice, working with companies to increase disclosure of their material sustainability impacts and improve performance measurement. Prior to joining BSR, Guy worked as a senior consultant at the think tank and consultancy AccountAbility, where he led CSR strategy design and implementation work for clients in the Middle East and the United States. Guy also spent four years as a research manager at the Boston College Center for Corporate Citizenship, working with member companies from the ICT, extractives, and food and agriculture sectors. Guy holds an M.B.A. from the Carroll School of Management at Boston College in the United States, and a B.A. in History and French from the University of Birmingham, U.K. He can be reached at: gmorgan@bsr.org.

Collaboration is a key element of managing waste. To learn more, stay tuned for NBS’s comprehensive systematic review on collaboration for business sustainability, to be released fall 2013.