Responsible ingredient sourcing is emerging as one of the most critical pillars of a solid sustainability initiative.

Sustainability has arguably been the biggest trend shaping the food industry in recent history, and there’s nothing to suggest this is going to change any time soon. If anything, it is only going to gain momentum as companies, industries and governments work towards ambitious net zero targets.

But what will change is the focus and scope of the food industry’s sustainability efforts, which have, to date, largely been concentrated on the environment.

“In the food industry, sustainability has been – and still is – predominantly a green agenda,” says Monique van de Vijver, Innovation Manager Health at international civil society organisation Solidaridad.

“When we look at how the food industry has interpreted and responded to the sustainability challenge, we mainly see initiatives or products that address ecological challenges, such as climate change, deforestation, plastic pollution and the use of pesticides. This could be through the use of organic, natural ingredients, the avoidance of plastic in packaging or resource efficiency improvements,” she says.

Whilst all of these approaches have a valid role to play, the environment is just one aspect of sustainability, as van de Vijver explains: “Sustainable development is built on three pillars: social, economic and environmental.”

Going forwards, she expects the two hitherto ‘neglected’ pillars of sustainability to climb the food industry agenda, and for operators to broaden their strategies to encompass all three elements.

The regulatory landscape will set the scene for this evolution; after a two-and-a-half year journey through the EU law-making process, the Corporate Sustainability Due Diligence Directive (CSDDD) was published in the EU Official Journal on 5 July 2024. This landmark legislation will impose legal obligations on larger food and beverage operators to conduct human rights and environmental due diligence throughout their supply chains, making them accountable for the impacts of their activities. Modern slavery, child labour, inadequate workplace health and safety and worker exploitation all fall within the remit of the regulation.

Closely related to the CSDDD, the EU Deforestation Regulation (EUDR), which will apply from 30 December this year, provides a legislative framework for ensuring certain commodities traded and consumed in the EU no longer contribute to deforestation. As well as being a major step forward in eliminating products of deforestation from the food production system, this establishes legal requirements for European businesses regarding human rights abuses embedded in their international supply chains.

These two regulations also serve as recognition of the intrinsic link between the three pillars of sustainability – unless all three are addressed holistically, solutions will be limited in their scope.

“The economic and social pillars are very much interconnected, because it is very difficult for smallholder farmers to fully participate in the economy and have access to markets, obtain finance, and command a decent price for their products,” says van de Vijver.

She continues: “We also know that a lot of ecological problems are poverty driven. Although farmers might appear to make choices about how to produce, the reality is that when you are poor you don’t have a choice – you will just take whatever opportunity comes your way and produce as much as you can at the lowest cost possible.

“Many farmers have been pushed towards production methods involving agrochemical inputs that have proved to be harmful to their resources, resulting in a loss of biodiversity and diminishing farm health. In combination with rising input prices and persistent low and volatile prices, this has meant farming has become a losing game for them, and young people have massively abandoned farming altogether. That is why the economic aspect of sustainability is so very crucial – particularly for those at the beginning of the supply chain.”

As the plight of these smallholder producers and its harmful environmental consequences infiltrates the public consciousness, those who can influence the situation face mounting pressure to act. This includes those further up the supply chain, namely food and beverage manufacturers, for whom responsible ingredient sourcing is fast becoming one of the most critical cornerstones of an impactful sustainability initiative.

However, even for companies with the best of intentions, the path to ensuring that ingredients are responsibly sourced is fraught with obstacles. One of these is the lack of transparency that currently exists within most supply chains, which usually involve multiple middlemen.

“Most food and beverage manufacturers buy their ingredients from a trader, who buys them from a supplier, who in turn often buys from even smaller aggregators, so it becomes really hard for a buyer in Europe to understand where their ingredients are coming from; the only thing they can really check is the quality,” says van de Vijver.

Another major challenge is that quality and price are the criteria that dominate ingredient purchasing negotiations, and that the market has become used to this as well as to certain price levels, she adds.

There’s no denying that these are enormous issues to tackle – as essentially they are systemic failures, rooted in global market forces. However, van de Vijver refuses to accept that they are insurmountable.

“The pursuit of growth through profit has become the prevailing paradigm in our food system, but this paradigm was constructed by humans. Therefore, we are not powerless to deconstruct it,” she says.

“We as a society have put money first, and in doing so, have disregarded people and nature, and in the end it comes back to us like a boomerang. It definitely will not be easy, but we need to revalue some of the things we have devalued.”

From several decades of experience in making supply chains more sustainable, Solidaridad has learned that stimulating cross supply chain communication is key.

“We create multi-stakeholder platforms to discuss the challenges in a pre-competitive environment. The farmers then understand the market’s requirements and the quality that it demands, and manufacturers and buyers understand what farmers need to change their practices. This allows them to collaboratively design solutions,” says van de Vijver.

One example of this approach in action is the Acorn CO2 trading platform established by Rabobank and Solidaridad, which allows coffee farmers who adopt agroforestry to receive money for carbon sequestration. This platform uses satellite systems and algorithms to determine how much carbon individual fincas have captured.

“This scheme is mutually beneficial for manufacturers and farmers. The manufacturer has evidence that its ingredients are sustainably produced, and the farmer is rewarded for adopting regenerative agricultural practices,” says van de Vijver.

Sustainability labels and certification schemes clearly have a role to play and Solidaridad has been involved in the development and implementation of several of these, including Utz Certified for coffee, cocoa and tea, Bonsucro for sugar cane, the Roundtable on Sustainable Palm Oil (RSPO) and the Round Table on Responsible Soy (RTRS).

However, van de Vijver points out that certification does not always lead to the desired impact and is expensive for stakeholders.

“Certification has become a business in its own right,” she says.

Another issue with such schemes is that they encourage dependence on single cash crops, which has a number of drawbacks, including increased vulnerability to market volatility and extreme weather, and negative impacts on biodiversity, she says.

To date, efforts to ‘fix’ ingredient supply chains have focused on high profile commodities such as cocoa, coffee, palm oil and soy. However, van de Vijver says the strategies and principles for ensuring sustainable sourcing are just as applicable to any natural origin ingredient – even those that are less visible to the consumer.

“The supply chains might be different, but the mechanisms at work are similar. If manufacturers want to ensure the ingredients they are sourcing are sustainable, they need to be willing to invest at source and establish long term, equitable purchasing agreements.”

She cites the example of botanicals and medicinal herbs, which are currently enjoying growing popularity as ingredients in functional foods and beverages as well as dietary supplements. Yet most consumers are blissfully unaware of how these ingredients are grown and produced and what their social, economic and environmental impacts are at source.

“Most consumers aren’t aware of the sustainability challenges in these supply chains,” she notes.

However, she points out that, for a long time, palm oil was an ‘invisible’ ingredient, until NGOs started raising awareness about deforestation.

Van de Vijver is concerned that rising demand for botanicals signals bad news for producers and planet, saying: “Once a crop is commoditised, it is ‘raped’, because then the connection with the origin and the dignity of that product and its environment is lost.”

She continues: “I think there is a general trend in society towards losing connectedness; we have lost our connection with nature and we’re losing our connection with each other. Where there are connections, there is care and respect, and when it is lost, these values are lost too. So I believe we should be looking at initiatives that restore connections.”

Sustainability will be a key thread running throughout Fi Europe 2024, which takes place in Frankfurt from 19-21 November, As the event’s sustainability partner, Solidaridad will be present, sharing its expertise on addressing sustainability issues in supply chains. The partnership aims to facilitate knowledge-sharing and collaboration across these markets, and ultimately empower brands source ingredients ethically and sustainably while meeting calls for enhanced supply chain transparency.