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The Growing Importance of ESG in the Bakery Product Industry

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Embedding the value of environmental, social and governance (ESG) in the bakery product industry has become a vital cog in augmenting revenue growth and bolstering employee productivity. A strong ESG performance can help industry leaders tap into new markets and attract customers to pay more. That said, status brings responsibility and challenges—air pollution and waste from bakery manufacturing have become pervasive. Oven produces volatile organic compounds (VOCs), including ethanol, while food waste in the landfill releases methane, aggravating global warming. Amidst criticism, buoyant ESG policies could be the silver lining. In 2023, the U.K. Environmental Act 2021 came into full effect, which fosters the U.K. government’s commitment to eliminate food waste in landfill by 2030.

The food industry has an overarching impact on the planet, society and governance. Reduction of ecological footprint has become instrumental in underpinning the sustainability profile. One of the most rapidly rising segments in the bakery industry is that which offers sustainably raised products. Besides, robust ESG policies can help deal fairly and ethically with stakeholders, deliver value to customers, reinforce communities and provide value for shareholders.

An increasing chorus of stakeholders has pushed for publishing sustainability/ESG reports and fostering transparency and ethical standards. In the same breath, questions arise:

1. Which ESG issues have garnered headlines among forward-looking companies? 

2. Are companies ramping up efforts to underpin employee safety, reduce carbon footprint and accentuate transparency? 

Kraft Food Bolsters Environmental Stewardship

Climate risks have posed risks as the increasing number of days with extreme heat has led to reduced productivity. Moreover, changing rainfall patterns and scorching heat have triggered wildfires, disrupting economies and killing citizens. ESG goals, including minimizing waste, reducing GHG emissions and making sustainable packaging, have become invaluable to stay ahead of the curve. Kraft Heinz has set an audacious goal of a 20% reduction in waste-to-landfill intensity across manufacturing facilities by 2025.

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In 2021, the American food manufacturing company pledged to attain Net-Zero greenhouse gas emissions by 2050. Kraft Heinz collaborated with seven companies in Canada to minimize food waste by 50% by 2025. The company will emphasize regenerative and sustainable practices, procure most electricity from renewable sources and shift to more circular and recyclable packaging. It will also further its efforts to propel scope 3 emission minimization strategies across ingredients, upstream and downstream transportation, packaging, end-of-life and sold products.

Is your business one of participants to the Bakery Product Industry? Contact us for focused consultation around ESG Investing, and help you build sustainable business practices

Bimbo Bakeries Gains from DEI Initiatives

Stakeholders’ actions on social factors, including conditions employees work under, pay parity and diversity, equity & inclusion, can notably impact shareholders’ returns. Bimbo Bakeries is gearing up to ensure 50% diverse candidate slates—at least 25% racially diverse and a minimum of 25% women; the company laid down the goals to be achieved from 2022 to 2024. The company also requires associates to complete at least 1.5 hours of Racial Equity Strategy Training (REST) annually.

It has established the 2030 ambition to bolster underserved communities, emphasizing economics, education and health assistance. In 2021, Bimbo Bakeries USA (BBU) committed USD 1 million to national and local organizations to propel the financial well-being, education and health of Black and minority Americans. The company provides scholarships and internships through collaboration with the United Negro College Fund.

The reputation of companies largely depends upon their social credibility. In 2020, BBU donated half a million dollars to the COVID-19 Relief Fun of Feeding America. The company donates around 20 million pounds of food to local food banks annually (collaborated with Feeding America). Across the U.S., the bakery firm chooses ten food banks to receive a donation of 5,000 pounds of bread. The prevalence of a safe and inclusive working environment, along with economic assistance, will add value to ESG goals.

Transparency Pivotal for General Mills to Create Synergy

The financial impact is largely driven by the impact the firm has on the environment and society. In the realm of ESG factors, investors, managers, communities, employees and suppliers have furthered governance pillar to adhere to the law, make effective decisions and keep up with the demand of stakeholders. Consumers are eager to know what is in their bakery products, how they are prepared and where they came from.

General Mills has fostered ingredient sourcing by disclosing information about purchasing Roundtable on Sustainable Palm Oil (RSPO) certified palm oil volumes. The website also includes an updated list of all palm oil suppliers. As of 2022, the company has listed around 1,900 products on smartlabel.org, 319 topics were covered on askgeneralmills.com and 600 products were enrolled in the U.S. Non-GMO Project, according to its 2023 Global Responsibility Report.

A strong ESG proposition warrants the assessment of climate-related risks, opportunities; relationships with the society they do business; and investments in corporate governance that encapsulate firms’ long-term success. Grand View Research indicates that the global bakery products market size could reach USD 251.1 billion by 2025. The billion-dollar industry will emphasize ESG reporting to undergird sustainable bakeries.

Browse more ESG Thematic Reports from the Consumer Products Sector, published by Astra – ESG Solutions

About Astra – ESG Solutions By Grand View Research

Astra is the Environmental, Social, and Governance (ESG) arm of Grand View Research Inc. – a global market research publishing & management consulting firm.

Astra offers comprehensive ESG thematic assessment & scores across diverse impact & socially responsible investment topics, including both public and private companies along with intuitive dashboards. Our ESG solutions are powered by robust fundamental & alternative information. Astra specializes in consulting services that equip corporates and the investment community with the in-depth ESG research and actionable insight they need to support their bottom lines and their values. We have supported our clients across diverse ESG consulting projects & advisory services, including climate strategies & assessment, ESG benchmarking, stakeholder engagement programs, active ownership, developing ESG investment strategies, ESG data services, build corporate sustainability reports. Astra team includes a pool of industry experts and ESG enthusiasts who possess extensive end-end ESG research and consulting experience at a global level.

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