Perhaps nowhere are these factors playing out more strongly than in the agricultural supply chains where these companies source their ingredients.
Globally, agriculture employs over 1 billion people, many of whom are food insecure; consumes 70 percent of our freshwater; and is estimated to contribute nearly a fifth of total global carbon emissions.
More than ever, investors and consumers are looking for companies to demonstrate that they are sourcing their ingredients in a way that respects people and the planet.
Long-term investors increasingly expect companies to manage and disclose environmental, social and governance (ESG) impacts as evidence of effective corporate governance, and investors are showing particular interest in how the food and beverage sector is responding to agricultural supply chain challenges.
That’s because drought, extreme weather, poor working conditions and land disputes are already driving financially material business risks for food and beverage companies, such as price volatility, inconsistent quality and supply of ingredients, damage to brand equity from advocacy campaigns, legal sanctions and seizure of goods.
As sustainable sourcing strategies and supply chain transparency become essential practices for the food and beverage industry, investors seek to examine the agricultural supply chain risks and corporate responses more deeply in order to make informed investment decisions.
That’s why Ceres just released "Engage the Chain: An Investor Guide to Agricultural Supply Chain Risk" to help investors understand the challenges businesses face, how those translate into financial risks and how those risks can affect investor portfolios.
These commodities are among the most prominent drivers of deforestation, greenhouse gas emissions, and water depletion and pollution.
Some major U.S.-headquartered food and beverage companies already are taking action.
Because nearly two-thirds of its total GHG emissions occur in agriculture, a key focus of the company’s climate strategy is advancing sustainable agriculture practices through collaboration.