Food & Beverage

Environmental Impacts of the Food & Beverage Industry

The Food & Beverage Industry has a tremendous environmental impact as one of the world’s largest sectors that includes the production, transformation and distribution of edible goods.

The Food & Beverage sector is classified as a high environmental impact intensity framework in the NEC metric because the agricultural supply chain and production phase has a strong impact on the affected ecosystems and on climate. Food & Beverage production includes agriculture, fishing, ingredients and animal farming. Transformation includes meat and dairy processing and the fabrication of processed goods. Distribution includes transportation and food & beverage retailers, such as grocery stores and restaurants. This sector is also responsible for 70% of fresh water consumption worldwide.

As global demand is increasing due to a growing global population and rising living standards, the management of the environmental impacts generated by this sector are a crucial component of the environmental transition. An overview of some NECs by product type are shown here.

How the NEC Measures the Impacts for the Food Sector

In brief, the NEC methodology for food is based on the three main arising environmental issues that are “measurable” at product category level: climate, water consumption and biodiversity. The NEC is the sum of these three components, each component being calculated according to a performance indicator:
+ For the climate component: greenhouse gases emissions factor in kg CO2 equivalent per kg
+ For the water component: water consumption factor in liter per kg
+ For the biodiversity component: a qualitative, certification-based assessment scale

The specific case of beverages’ NEC

The framework includes companies involved in producing and retailing alcoholic and non-alcoholic beverages for human consumption. Combined with the complexity of impacts on climate, water and biodiversity, as with food, other key factors have been integrated for beverages:
+ They substitute tap-water, a low-impact solution, rather broadly available
+ They provide hydration
+ They may provide nutrients but also “empty calories” from alcohol or added sugar

For example, water does not deliver any nutrients, but fruit juice does. Hence, they are assessed on separate scales using these types of questions.

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WHAT IS THE NEC METRIC?

Designed to inform and empower investment decision makers, it uses physical data from across the whole value chain to provide a snapshot of an activity’s net environmental contribution and it can be applied at a company, portfolio, index or product/source level.

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The NEC evaluates the impact of industry activities based on environmental issues including climate change, water and biodiversity impacts.
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