ESG Indicators: When sustainability assessment becomes an opportunity

It’s quite evident that sustainability is a topic that companies cannot avoid addressing today. But what does sustainability mean for a company, particularly in the agri-food sector?

Corporate sustainability is an approach that aims to integrate environmental, social, and economic considerations into an organization’s operations and decisions to pursue a positive long-term impact. In practical terms, it means balancing economic growth with social responsibility and environmental protection. Measuring a company’s sustainability can be done through various criteria that define its environmental, social, and economic impact.

Environmental sustainability considers the company’s impact on the ecosystem. This includes responsible natural resource management, reducing greenhouse gas emissions, adopting sustainable energy practices, and sustainable waste management. Companies often measure their ecological footprint and seek to implement strategies to reduce it.

Social sustainability concerns how a company manages its relationships with employees, the local community, and the supply chain. Social criteria include promoting ethical working conditions, diversity and inclusion, workplace safety, and making a positive impact on the local community through social and philanthropic initiatives.

Economic sustainability refers to a company’s ability to generate long-term value. This includes responsible financial management, creating stable jobs, generating profits ethically, and promoting transparent business practices.

ESG Indicators for measuring a company's sustainability

To evaluate all these different aspects, ESG  indicators (Environmental, Social, Governance) can be used, allowing for the measurement of a company’s sustainability against a set of objective and shared standards.

In the environmental aspect, agri-food companies oriented toward ESG are adopting sustainable agricultural practices, promoting biodiversity, reducing the use of pesticides and synthetic fertilizers, and working to minimize carbon footprints along the production and distribution chain.

From a social perspective, applying ESG criteria in the agri-food sector involves attention to working conditions in fields and supply chains, promoting food safety, and supporting local communities. This can include initiatives aimed at improving the quality of life in rural areas, ensuring ethical working conditions, and fostering diversity in food production supply chains.

Regarding governance, agri-food companies oriented toward ESG strive to adopt transparent and ethical management practices. This includes proper disclosure of information, the adoption of ethical and anti-corruption policies, as well as the promotion of responsible corporate leadership.

Sustainability Reports: Concrete actions in the spotlight

In recent years, large companies have started publishing their sustainability reports, allowing anyone to verify the actions taken by these companies to achieve a higher level of sustainability.

For example, in its 2022 Sustainability Report, Granarolo highlighted a series of actions aimed at contributing to sustainable development goals. Granarolo is committed to raising animal welfare certification standards, reducing plastic use by increasing recycled plastic, and reducing food waste by promoting a circular economy. In addition, they invest in community support projects.

Barilla, among various actions, has implemented physical and nutritional education projects for children aged 5 to 14, focusing on promoting healthy lifestyles, balanced eating habits, and responsible diets.

Ferrero is also highly committed to sustainability. Their responsible cocoa sourcing program supports farmers in adopting sustainable cocoa cultivation practices, increasing productivity, and improving living conditions. Additionally, Ferrero is dedicated to defending children’s rights by combating child labor in the cocoa supply chain, improving access to education, and providing essential services like healthcare and proper nutrition.

Not Just Sustainability Reports: Diverse actions with a common Goal

Since 2011, the Ministry of Environment and Energy Security has initiated the VIVA program, promoting sustainability in the Italian viticulture sector, representing the public standard for measuring and improving sustainability performance in Italian viticulture. Hundreds of companies have joined the program, including the Campania winery Mastroberardino.

Through the identification of four indices (Land, Air, Vineyard, and Water), Mastroberardino can measure the impact of its production in terms of sustainability and continuously work on improving its processes.

However, it’s important to note that actions aimed at achieving sustainability objectives in line with the UN’s 2030 agenda are not exclusive to well-known brands. There are lesser-known companies and entities that demonstrate excellence in sustainability.

An example is Girolomoni, an agricultural company from the Marche region in Italy. It started as a small organic farming enterprise and has grown into a cooperative that includes 400 agricultural companies. While they offer various organic products, their flagship is pasta made from 100% organic wheat through a very short supply chain, which they refer to as “0 km.” In 2020, Girolomoni was named among the Ambassadors of Civil Economy, and in 2023, it became the first 100% Italian agri-food supply chain to join the World Fair Trade Organization (WFTO), one of the most authoritative international organizations for fair and sustainable trade.

ESG as an opportunity for development

A sustainable approach not only contributes to mitigating climate change and preserving natural resources but can also enhance the brand’s reputation, increase consumer trust, and create a conducive environment for long-term investments. In this way, ESG criteria are becoming a crucial element in shaping the sustainable future of the agri-food sector.

Companies must reckon with the need to revise their production models. The transition to more sustainable practices requires investments and a reorganization of value chains. The introduction of ESG criteria also requires a cultural shift: understanding the value of sustainability and translating it into concrete, measurable actions. It necessitates ongoing training and updates, as well as the adoption of appropriate tools to monitor and measure progress. Despite these challenges, many companies in the agri-food sector are showing that it’s possible to combine profit and sustainability, indicating that the transformation of food systems inspired by ESG criteria represents a significant development opportunity.