A report from The Consumer Goods Forum and AlixPartners crunches the data from leading companies in the FLW reduction movement
One trillion dollars a year. That's the accepted ballpark figure for the value of food loss and waste (FLW) around the world each year. It factors into how companies prioritize and resource their waste-reduction efforts—so what happens when the actual cost is much higher?
A new report from AlixPartners in concert with The Consumer Goods Forum, Driving emissions down and profit up by reducing food waste, uses data from leading consumer packaged goods companies and manufacturers to look at the hidden costs of FLW. Our key finding is that the cost of hidden food waste and surplus is likely 25-50% higher than historical measures. Meanwhile, the future cost of GHG emissions could be anywhere from 3x to 5x current costs in 25 years as municipalities, states, and nations implement stricter reporting requirements and emissions caps.
"Business leaders are aware that the costs of emissions are set to grow steeply, but our research shows that—even at the leading edge—food loss and waste is being only partially captured in reporting, with much higher costs than previously thought," says Andy Searle, Partner & Managing Director and EMEA Leader for Consumer Products at AlixPartners. "The implied cost benefit of action on this front shifts the calculus for industry: tackling food loss and waste is not only crucial from a sustainability standpoint, but should be driven by the ever-stronger business case."
AlixPartners used data from 16 members of the CGF Food Waste Coalition for Action to create benchmarks for manufacturers and retailers. The coalition reported 2.1 million tonnes of food waste and an additional 1.9 million tonnes of surplus in 2021. This translates to an estimated hidden financial impact of $10 billion for the 16 coalition members, with $9 billion attributed to productivity losses and $1 billion to carbon value.
The report provides insight on emerging and leading best practices in this space, and the accompanying FLW Capability Assessment allows companies to map their progress.
The bottom line is that FLW reduction efforts are both under-resourced and under-valued from a financial standpoint. Leaders among CPGs and retailers should be quantifying the full GHG and P&L impacts of FLW. A realistic and full report of all forms of loss will drive increased prioritization and investment in this area, and push companies closer to environmental, sustainability, and financial goals.
View the report on The Consumer Goods Forum's site.
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