New TraceGains Report Shows 64% of CPGs Willing to Prioritize ESG-Compliant Food Production

But the report also shows that companies feel hampered by high ingredient costs, lack of standards and supplier sourcing.


Posted by Posted by Jason Brill

Published August 08, 2023

WESTMINSTER, Colo. — TraceGains, a networked ingredients marketplace for the food and beverage industry, released a new report highlighting the disconnect between well-meaning CPGs and their ability to deliver ESG-compliant products in the context of an increasingly complex global supply chain. Based on responses from 343 food safety and quality professionals, the "State of ESG Compliance for the Food and Beverage Industry Report" report cited loose guidelines for choosing ingredient suppliers, higher ingredient prices and a lack of automation and technology to ensure compliance as roadblocks.

Good News: Commitment to Sustainability

Despite the challenges, most food and beverage brands expressed a strong desire to embrace environmental, sustainability and governance objectives with many seeking the ability to stand behind claims to ensure that ingredients in their supply chains are properly sourced and labeled.
 
  • 64% of brands acknowledge the importance of being ESG-compliant.
  • Nearly half (46%) prioritize doing business with ESG-compliant ingredient suppliers.
  • Key drivers for being more ESG-focused included a combination of evolving regulatory landscapes (32%), consumer demand (27%), and competitive pressures (18%).
  • Half (50%) of all respondents said they'd be willing to stop production on a product altogether if it could not be produced in accordance with ESG objectives.

Bad News: Challenges Sourcing ESG Ingredient Suppliers

Brands have a strong desire to build ingredient supply chains that align with ESG goals, but general market confusion over sustainable food labeling and the lack of formal guidelines to validate ESG partners create barriers to success.

  • 41% feel they are falling short of achieving full ESG compliance.
  • Nearly half (42%) rely on informal methods to select ingredient suppliers like word-of-mouth conversations (23%) or relying solely on suppliers' claims (35%).
  • Only 16% of brands use a formal, technology-assisted selection process for validating ESG partners.
  • 55% demand more transparency into ingredient supply chains, with nearly half (49%) wanting visibility into Tier-2 and Tier-3 suppliers.

The Future: Navigating the Path to Sustainability

Regardless of the challenges, food and beverage brands are intent on becoming more ESG-compliant with some emerging brands committed to sacrificing a profit to do so.

  • 42% plan to increase their usage of ESG-compliant ingredients within the next six to 12 months.
  • One-third (35%) are willing to pay up to 10% more for ESG-compliant ingredients and 32% would pay up to 20% more.
"We applaud the willingness of brands and manufacturers to foster and uphold ethical and sustainable practices, and their commitment to 'walk the talk' to prevent products from hitting the shelves that don't align with ESG goals," said Paul Bradley, Senior Director, Product Marketing. "Our report shows that even with good intentions, actually delivering on ESG promises across the business demands unwavering dedication."

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