SUSTAINABILITY is important to CBH Group's customers, with meeting chemical residue requirements and traceability the most important factors.
That was the message shared by CBH quality and sustainability manager Jane Wardle at the Grain Industry Association of Western Australia's Barley Forum, held at Crown Perth last Monday.
Sustainability simply refers to ensuring that future generations have access to the same resources as generations previously and when looking at that through a corporate lens, it is often divided into three pillars - environmental, social and governance (ESG).
Speaking at the forum, Ms Wardle said the push for businesses and any sort of human activity to become more sustainable came about in the 1970s.
"That was following some pretty big environmental disasters caused by some high-profile industries and corporations and since then it's continued to become more relevant due to growing populations and further damage to the environment," Ms Wardle said.
"What we're seeing now is that sustainability has become less driven by noisy protest groups and more driven by investors, larger consumer groups and the regulators."
With the demand for sustainability increasing, ESG investments have gone off the charts and 2020 was a pivotal year for that demand.
When surveyed last year, Blackrock, which has investors that represent $25 trillion in managed assets, stated that they were looking to double their sustainable investments over the next five years.
However, the problem with investments is that there is a lack of data, so there is a risk of green-washing and investors are demanding a much better data set about claims relating to sustainability.
Ms Wardle said when it came to consumers, they have followed a very similar trend to investors and post-COVID the demand for sustainability had increased.
"When looking at an IBM survey from last year as a benchmark, of 14,000 consumers over nine countries, 84 per cent of them said environmental responsibility was extremely or moderately important, which was up from 77pc in 2019," she said.
"Plus 93pc of consumers in the survey said COVID had influenced their views on sustainability."
When it comes to governments and regulators, Europe is leading the charge and was set to apply tariffs on imports from businesses and countries with a poor environmental track record or high carbon emissions.
In general, the response from food manufacturers around the world has been to meet these trends, creating a rise in what is known as the 'big pledge era'.
"The largest manufactures in the world are making their aspirations around sustainability be heard quite loudly and the largest brewers in the world are no exception," Ms Wardle said,
"We're already seeing brewers use sustainability as a market differentiator and it's definitely seen as a strong tool for premiumisation in the beer market."
CBH had been following the sustainability trend for a while and had sustainability in its marketing and trading plan for a couple of years, however realised that it lacked data about the customer's needs and understanding of what sustainability is.
In response to that, the co-operative partnered with a United States-based market research firm which was chosen as it had experience in sustainable strategy and had worked with large agrifood business firms.
A digital survey was completed along with a phone interview, the purpose of which was to get more information on what sustainability meant to some of the more strategic customers.
"The companies that we captured represent products that would be found in at least one billion homes around the world - and realistically probably three times that amount - so we felt we had a good spread of customers," Ms Wardle said.
"We found customers' understanding of sustainability was varied a lot - some exclusively saw it as an environmental issue, some saw it as just a customer fad, while others had a very comprehensive understanding of the ESG model."
While some of the results from the survey were expected, such as cost remaining the main decision driver, others were a surprise.
When sustainability was broken down to its various factors - such as climate change, carbon neutrality, human rights - meeting chemical residue requirements was by far the most important to customers, with 91pc rating it either extremely or very important.
That was followed by traceability at 69pc, nutrition at 68pc, accreditation at 43pc and human rights at 39pc.
Out of the 10 sustainability traits customers were polled on, carbon neutrality came in second last at 25pc, however there was still no denying that factor is king when it comes to sustainability, with many customers stating that sustainability could attract a pricing premium.
When it came to sustainability accreditation, 47pc of those surveyed listed International Sustainability and Carbon Certification (ISCC) as their preferred method, which was surprising given that up until recently ISCC was only applicable to canola buyers in Europe.
In the phone survey, 90pc of customers said they had either already received an international sustainability certification or have them in development.
Ms Wardle said CBH would use the information from the survey to help fine-tune its own sustainability plan.
"There is obviously a lot of value in ISCC so we will look to promote that using the data from the survey to get the most value for WA growers," she said.
"In areas such as chemical residues and traceability, CBH is a global leader in our ability to manage both of those and we really need to educate our customers on what Australia can do on that front.
"We also need to continue this research, it's a very rapidly moving landscape so we've set up the tools to get data from our customers and we will continue to do that."
