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CSR has made way for ESG and brand owners – not just in beverages – are being closely scrutinised on their environmental, social and governance credentials. In this excerpt from GlobalData’s recently-published ‘ESG – Top Trends by Sector‘ research, we hear more about how technology can leverage ESG efforts as well as which wider trends to target.

Technology

  • Artificial intelligence (AI)

Many areas of the FMCG industry are turning to AI to drive sustainability initiatives, for instance, in supply chain optimisation, the sourcing of sustainable ingredients and minimising food waste.

AI is also being used to analyse historical data and use machine learning (ML) regression algorithms to predict demand. For example, Afresh, a provider of inventory management tool for grocery retailers, has created a demand management platform to forecast demand and avoid waste. The concept assists in predicting demand and has subsequently reduced food waste for Afresh’s clients by 25%.

  • Blockchain

Brand owners are looking to blockchain to help track their stock across the supply chain, allowing better traceability as well as safety and sourcing guarantees.

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Wine monitoring and analysis company eProvenance has launched a blockchain solution with IBM to increase not only traceability but also efficiency and profitability across the wine supply chain.

ESG concerns could be a substantial driver of blockchain uptake, assisting with corporate transparency on sustainable practices.

  • Internet of Things

The IoT can be used to tackle waste, a big problem in the FMCG supply chain. Every year, around 1.6bn tons of food – with a value of US$1.2trn – is lost or wasted globally.

Eseye provides IoT tools to tackle food waste and promote environmental sustainability.  According to CEO Nick Earle: “By connecting every single part of the supply chain, we can grow, pick and ship only what we need, and then better care for that product to ensure it reaches the fork unharmed.”

As part of its global opportunity for ‘Sustainable Development Goals’, the UN targets a 50% reduction of food wastage by 2030.

Trends

  • Ethical consumerism

According to GlobalData’s ‘Market Pulse Consumer Survey 2020’, there is a growing preparedness among consumers to pay a premium for sustainability-aligned causes:  In the Latin America and Asia-Pacific regions, the survey found, around 81% of consumers are willing to pay more for products that support environmental protection.

However, green premiums can exclude lower-income consumer groups, who are also concerned about sustainability. Research & development needs to be undertaken to reduce green premiums and create wider accessibility.

  • e-commerce

One of the major beneficiaries of the COVID pandemic has been e-commerce – and the sales channels heightened profile shows no sign of decline. According to GlobalData estimates, online sales worldwide will reach around $2.7 trillion in 2023, up from $1.6trn in 2019.

Direct-to-consumer (D2C) provides a convenient shopping experience, but the disjointed supply chain results in higher levels of carbon emissions. The move to lots of smaller. ‘to-the-door’ deliveries from fewer large deliveries to established retailers will be the next hurdle for e-commerce to clear.

  • M&A

As well as ensuring their brands offer convenience, FMCG companies have to make sure that convenience is sustainable. One of the easiest and quickest ways to secure best practice is through acquisition. Many consumer goods companies will move to improve their image by purchasing sustainably-run companies in the future.

For more details on GlobalData’s ‘ESG – Top Trends by Sector’ report, click here