Focus on Food & Beverages:

Closing the loop to create a competitive advantage

State of Play

Today, most businesses and governments follow a linear model of production and consumption, where they take finite resources from natural ecosystems to make products they eventually discard as waste.

In 2021 alone, this model consumed over 100 billion tonnes of materials and wasted over 90% of all materials extracted and used, widening social inequalities, and exacerbating other global challenges such as biodiversity loss, pollution and waste, climate change, and resource scarcity (Circle Economy, 2022).   

Currently, only 8.6% of materials are returned to the economy. Yet, the circular economy could yield up to $4.5 trillion in economic benefits by 2030 (World Economic Forum, 2022).  Companies that adopt circular economy business models stand to maintain or gain a competitive advantage by creating new products and services, lowering costs, and meeting stakeholder expectations.   

With 70% of global GHG emissions released into the atmosphere directly linked to material processing and use (from extraction, transportation, and manufacturing to use of products such as clothing, food, and phones), implementing “closed loop” practices will also be critical in enabling businesses and governments to meet their net-zero targets and in aligning with a 1.5°C pathway.  

What is the Circular Economy and why is it good for your business? 

The circular economy transforms linear models by decoupling growth from extraction and is underpinned by 3 principles:  

1. Elimination of pollution and waste  
2. Circulation of materials and products at their highest value  
3. Nature regeneration (Ellen MacArthur Foundation, 2022).   

It provides solutions for businesses and governments of all sizes to tackle the root causes of global challenges and achieve sustainability targets across all three dimensions of sustainable development:  

• Environment: Different strategies can be adapted to progress towards a circular model, including a) (re)designing products to be easily maintained, refurbished, and disassembled; b) reusing and recycling products and resources (e.g., packaging) which cannot be returned to the environment; c) more efficient use of renewable resources and sharing of resources and services. These strategies help minimise the environmental impacts of the products and services we use and contribute towards GHG emissions reductions, pollution reduction, and waste minimisation.  
  
• Economic: The economic benefits of a circular model include lower production costs, economic growth, reduced investment in resource extraction, lower cost of recycled raw materials compared to virgin raw materials, growth in technological development investment, and creation of high-quality jobs in the new sectors of industry focused on converting the linear model to a circular model.  With consumers and other stakeholders increasingly focusing on the impact of their purchases, incorporating the circular economy into your business model can lead to a competitive advantage.   
  
• Social: With new job opportunities, higher economic stability, and a cleaner and better community to live in, the circular economy increases the standard of living, helps improve the health and wellbeing of workers throughout a company’s supply chain, encourages community development, and creates a pathway towards a sharing social economy. 

Circular Economy and the Food & Beverage Industry  

The current linear food system has fuelled economic development, urbanisation, and population growth, but it has done so at a cost to people’s health, the environment, and the global economy:  

• The food and beverage system is resource intensive: it consumes 70% of global freshwater, 30% of the world’s available energy, and uses 50% of global habitable land (Ritchie & Roser, 2021). It also contributes to 36% of global emissions, with the bulk coming from agricultural production and land use (Falke, 2022).  
  
• Current agricultural practices significantly contribute to the degradation of 39 million hectares of soil around the world each year. Soil degradation leads to desertification, decline of global food production, pollution, and reduces the soil’s capacity to store carbon by 50-75% (Begum, 2021; Sentlinger, 2022). 
  
• Agricultural pollution (e.g., agrochemicals), often discharged into water bodies, is linked to various human health issues as well as the destruction of aquatic ecosystems and wildlife (FAO, 2022). 
  
• Around one third of all food produced each year is wasted, costing AUD$20 billion for Australia and AUD$1.75 trillion globally, and producing 8% of global greenhouse gas emissions (KPMG 2020). 
  
• Food packaging, which accounts for over 66% of total packaging in circulation, is one of the most polluting aspects of the food and beverage industry (Food Circle, 2022). Inadequate disposal of food packaging pollutes land, waterways, and oceans, while manufacturing and transport of food packaging generate emissions that pollute the air (Food Circle, 2022). Additionally, almost all of the food packaging available today is single-use, meaning it cannot be reused as packaging for other food products (Marsh, 2021). While the recyclability of food packaging varies depending on the material (e.g., glass, plastic, cardboard, etc.) or type of plastic used, the truth is that over 80% of food packaging cannot be placed into kerbside recycling bins (WWF, 2021).  

A circular economy for the food and beverage industry mimics natural systems, where waste does not exist, but instead becomes an input for other cycles (Ellen MacArthur Foundation, 2017). Circular food products and food production systems are created by: 

1. Sourcing food that is produced regeneratively, and locally when feasible 
2. Designing and marketing healthier food products 
3. Making the most of food (Ellen MacArthur Foundation, 2020). 

Additionally, food packaging in the circular economy complies with the following principles:

1. All unnecessary packaging is eliminated
2. Packaging is made from renewable materials
3. Packaging in designed to be 100% reusable, recyclable, or compostable
4. Separation and collection systems allow for valuable materials to be recovered and turned into new products/packaging (ACE Hub, 2022).

This redesign of the food products, packaging and production methods will help tackle global challenges, such as biodiversity loss, waste and pollution, and climate change, while reducing overall costs to businesses and society and promoting human health. 

How to get started   

Adopting a circular economy business model will take time. There is no “one size fits all” approach for companies operating in the food & beverage industry and collaboration will be necessary, but following these steps can help you get started:  

Step 1 - Consider the lifecycle of your products and undertake a waste audit (PwC, 2021) – look at your own operations as well as waste generated throughout your value chain (e.g., in food production & processing, and by the consumer).   

Step 2 - Set time-based, measurable targets related to each of the 3 Ps – product, production, and packaging – that will support your transition to a circular economy business model (e.g., regeneratively produced ingredients; waste reduction, reuse, redistribution, and recycling; GHG emissions reductions, and sustainable packaging, etc.) and identify and implement initiatives to deliver on these targets (PwC, 2021). 

Step 3 – Engage your supply chain.  This could include:  

1. Collaborating with suppliers (farmers, manufacturers etc) to create or redesign products or services that include the four pillars of circular design: lower impact, upcycled, diverse, and regeneratively produced ingredients (Ellen MacArthur Foundation, 2021). 
2. Embedding circular economy requirements into your procurement strategy and processes (Bland, 2022) (e.g., sustainable packaging). 
3. Mapping preferred or mandatory supplier credentials to your targets – more on this below!    
4. Educating and incentivising your supply chain to improve sustainability performance by adopting circular methods of production and regenerative farming practices – find out more about how you can do this here.

Step 4 – Educate your consumers. Information campaigns focusing on food sustainability, credentials (eco-labels), and the impact of food waste on the environment can help consumers choose more sustainable food products and reduce food waste (One Planet, 2022). 

Finding suppliers with credentials that advance the circular economy is essential, not only for moving away from the take-make-waste model, but also for ensuring that food is produced regeneratively. The increasing number of sustainability credentials means that it is now possible to set preferred or mandatory requirements and maintain an acceptable level of supply.  It is, however, difficult for companies to know what each credential means.    

givvable is an AI-driven technology platform helping businesses to identify preferred or mandatory sustainability credentials aligned to their targets and discover and track the credentials of their suppliers and trading partners. The platform covers over 1 million credentials across 1,000+ local, regional, and global sources, such as certifications, accreditations, ratings, commitments, and initiatives, automatically mapped to sustainability targets and widely used, global frameworks (such as the UN Sustainable Development Goals).   

givvable helps companies screen existing suppliers for preferred or mandatory credentials and continuously grow pools of credentialed suppliers.    

Credentials that advance or support the circular economy

Many of the credentials related to “closing the loop” will have an environmental focus.  It is important to make sure you also consider social and governance credentials that promote ethical labour practices and help mitigate human rights risks across your supply chain.  Examples of credentials captured, or that suppliers may register, on givvable and users can track in the platform indicating supplier practices or initiatives advancing the circular economy and sustainable food production include:

Rainforest Alliance certified 

Issuing Organisation:   The Rainforest Alliance 

Coverage:  Global 

Category:  Organisation/Product

Description:  Rainforest Alliance certified farms have implemented the sustainable agriculture processes described in the Farm Requirements of the Rainforest Alliance Sustainable Agriculture Standard (E.g., organic waste and manures are composted on site and returned as an input.), helping advance the circular economy in this sector. The Farm Requirements address: Management; Traceability; Income and shared responsibility; Farming; Social; and Environment. It aims to help farmers produce better crops, increase their productivity, adapt to climate change, set goals to achieve their sustainability performance and target investments to address their greatest risks. 

Fairtrade certified 

Issuing Organisation:  Fairtrade International 

Coverage:  Global 

Category:  Product 

Description:  The focus of this certification scheme is on sustainable agriculture. Fairtrade certified products carry the FAIRTRADE Mark and are produced or traded by organisations that have been independently certified against the economic, social, and environmental criteria in the Fairtrade Standards. Different standards apply depending on the nature of the business (e.g., producer or trader) and the type of product. Requirements focus on environmental management, emissions reduction, resource efficiency, human rights and modern slavery, labour practices, and gender equity (E.g., growers are encouraged to utilise organic waste to return nutrients, improve water holding capacity and carbon sequestration). 

Land to Market verified, and Land to Market Australia verified  

Issuing Organisation:  Land to Market 

Coverage:  Global 

Category:  Product 

Description:  Land to Market provides verified regenerative sourcing solutions for raw materials, such as meat, dairy, wool, hemp, wine, cashmere, and leather. It measures multiple components of landscape health including soil health, soil carbon, water infiltration rates and soil water holding capacity, and biodiversity across several spectrums - soil microbiology, plants, and wildlife, with the aim of regenerating grasslands and ecosystems.

Certified Regenerative by AGW  

Issuing Organisation:  A Greener World (AGW) 

Coverage:  Global 

Category:  Organisation 

Description: To receive certification, the AGW regenerative principles and practices are applied, and the applicant also develops an improvement plan, aimed at increasing soil health to the best extent possible for that system and its location, while also managing the holding to mitigate the negative impacts of human and livestock disruption. This includes the positive management of soil, water, air, cropping systems, livestock, biodiversity, wild harvested resources, and human/societal factors. AGW Certified Regenerative is a ‘whole farm’ program, applicable to all on-farm activities. An annual audit is carried out to ensure compliance and measure progress. 

Certified B Corporation   

Issuing Organisation: B Lab 

Coverage:  Global 

Category:  Organisation 

Description:  B Corp Certification is a designation that a business is meeting high standards of verified performance, accountability, and transparency on factors from employee benefits and charitable giving to supply chain practices and input materials.   

To achieve certification, a company must:   

• Demonstrate high social and environmental performance by achieving a B Impact Assessment score of 80 or above and passing B Lab’s risk review. Multinational corporations must also meet baseline requirement standards.   
• Make a legal commitment by changing their corporate governance structure to be accountable to all stakeholders, not just shareholders, and achieve benefit corporation status if available in their jurisdiction.   
• Exhibit transparency by allowing information about their performance measured against B Lab’s standards to be publicly available on their B Corp profile on B Lab’s website. 

Australian Packaging Covenant Organisation member  

Issuing Organisation: Australian Packaging Covenant Organisation (APCO) 

Coverage: Australia 

Category: Product 

Description: Their vision is a packaging value chain that collaborates to keep packaging materials out of landfill and retains the maximum value of the materials, energy, and labour within the local economy. The Australian Packaging Covenant (the Covenant) is a national regulatory framework that sets out how governments and businesses across Australia share the responsibility for managing the environmental impacts of packaging.  The Covenant aims to reduce the environmental impacts of Consumer Packaging by supporting two goals:  

(1) Optimising resource recovery of Consumer Packaging through the supply chain by:  
- adopting approaches that make changes in the way we design, use and buy packaging and packaged products so that packaging uses less resources and is more easily recycled, and 
- enabling packaging materials to be returned to the economy thereby minimising waste associated with the generation and consumption of Consumer Packaging across the supply chain. 
(2) Preventing the impacts of fugitive packaging on the environment by adopting approaches that support new innovations and find solutions to capture packaging materials or waste before it enters the environment or support the adoption of new or alternative types of packaging. 

ANZPAC Plastic Pact member  

Issuing Organisation: Australian Packaging Covenant Organisation (APCO)   

Coverage: Australia, New Zealand, and Pacific 

Category: Organisation 

Description:  ANZPAC is delivered by the Australian Packaging Covenant Organisation (APCO) as part of the Ellen MacArthur Foundation’s global Plastics Pact Network. Members of ANZPAC are expected to support the vision of the circular economy for plastic, and progress toward achieving the regional targets listed below by 2025 and incorporate them in to corporate and organisational goals where possible. 

1. Eliminate unnecessary and problematic plastic packaging through redesign, innovation, and alternative (reuse) delivery models.  
2. 100% of plastic packaging to be reusable, recyclable, or compostable packaging by 2025. 
3. Increase the current volume of plastic packaging collected and effectively recycled by at least 25% for each geography within the ANZPAC region.  
4. Average of 25% recycled content in plastic packaging across the region. 

Biodegradable Products Institute (BPI) certified  

Issuing Organisation:  Biodegradable Products Institute 

Coverage:  Global 

Category:  Product 

Description:  BPI supports a shift to the circular economy by promoting the production, use, and appropriate end of life for materials and products that are designed to fully biodegrade in specific biologically active environments. The BPI certification is open to materials and products that demonstrate (via scientifically proven techniques) that their products are completely biodegradable in approved composting facilities, and are associated with desirable organic wastes, like food scraps and yard trimmings, that are collected for composting. 

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