Processed Foods

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Processed Foods industry entities process and package foods such as bread, frozen foods, snack foods, pet foods and condiments for retail consumer consumption. Typically, these products are made ready to consume, are marketed for retail consumers and can be found on food retailers’ shelves. The industry is characterised by large and complex ingredient supply chains, because many entities source ingredients from around the world. Large entities operate globally, and international opportunities are driving growth.

Relevant Issues (8 of 26)

Why are some issues greyed out? The SASB Standards vary by industry based on the different sustainability-related risks and opportunities within an industry. The issues in grey were not identified during the standard-setting process as the most likely to be useful to investors, so they are not included in the Standard. Over time, as the ISSB continues to receive market feedback, some issues may be added or removed from the Standard. Each company determines which sustainability-related risks and opportunities are relevant to its business. The Standard is designed for the typical company in an industry, but individual companies may choose to report on different sustainability-related risks and opportunities based on their unique business model.

Disclosure Topics

What is the relationship between General Issue Category and Disclosure Topics? The General Issue Category is an industry-agnostic version of the Disclosure Topics that appear in each SASB Standard. Disclosure topics represent the industry-specific impacts of General Issue Categories. The industry-specific Disclosure Topics ensure each SASB Standard is tailored to the industry, while the General Issue Categories enable comparability across industries. For example, Health & Nutrition is a disclosure topic in the Non-Alcoholic Beverages industry, representing an industry-specific measure of the general issue of Customer Welfare. The issue of Customer Welfare, however, manifests as the Counterfeit Drugs disclosure topic in the Biotechnology & Pharmaceuticals industry.
General Issue Category
(Industry agnostic)

Disclosure Topics (Industry specific) for: Processed Foods

Energy Management
  • Energy Management

    The Processed Foods industry is reliant on energy and fuel as primary inputs for value creation in manufacturing food products. Energy is needed to operate large manufacturing facilities for cooking, refrigeration and packaging. Energy production and consumption contributes to significant environmental impacts, including climate change and pollution, which have the potential indirectly, yet materially, to affect processed food entity operations. Energy efficiency in production and distribution can mitigate exposure to volatile energy costs and limit an entity’s contribution to direct and indirect greenhouse gas (GHG) emissions. Producers may be able to reduce the risk posed by volatile fossil fuel energy costs—particularly natural gas, which the industry uses heavily—by diversifying their energy portfolio across a range of sources. Decisions regarding alternative fuels use, renewable energy and on-site generation of electricity versus purchasing from the grid, may influence both the costs and reliability of the energy supply.
Water & Wastewater Management
  • Water Management

    Processed Foods entities rely on a reliable water supply for cooking, processing and cleaning finished goods. Additionally, entities in the industry generate and must manage the wastewater discharge from processing activities. As water scarcity becomes an issue of increasing importance, processed foods entities—operating in water-stressed regions—may face increasing operational risks. Entities in the industry may face higher operational costs as well as water shortages because of the physical availability or more stringent regulations. Entities can manage water-related risks and opportunities through capital investments and assessment of facility locations relative to water scarcity risks, improvements to operational efficiency, and partnerships with regulators and communities on issues related to water access and effluent.
Product Quality & Safety
  • Food Safety

    As it relates to production quality, spoilage, contamination, supply chain traceability and allergy labelling, food safety can significantly affect entities in the Processed Foods industry. Food safety recalls can happen for numerous reasons, including packaging defects, food contamination, spoilage and mislabelling. Food safety issues that arise within an entity’s supply chain often result in recalls of final products, with consequences on the brand reputation, operations and revenue of entities. Supply chain traceability is a major concern for entities in the industry. Poor management of food quality and safety may impair brand value, reduce revenues and increase costs associated with recalls, fines, lost inventory or litigation. Obtaining food safety certifications and ensuring suppliers meet food safety guidelines may help entities in the industry safeguard product safety and communicate the quality of their products to retailers and consumers.
Customer Welfare
  • Health & Nutrition

    Nutritional and health concerns such as obesity, ingredient safety and nutritional value are important factors in how entities compete with one another. The health and nutritional characteristics of products and ingredients are of growing concern to both consumers and regulators, increasing the potential for these issues to affect an entity’s reputation and licence to operate. New regulations, including taxes on processed foods, may affect industry profitability and pose long-term risks in the form of reduced demand for the industry’s products. Entities that adapt to changing consumer preferences to promote healthier, more nutritious offerings may be able to address consumer demand in emerging market segments and avoid risks associated with potential regulation.
Selling Practices & Product Labeling
  • Product Labelling & Marketing

    Communication with consumers through product labelling and marketing is an important facet of the Processed Foods industry. The accuracy and depth of information presented in food labelling is important to consumers and regulators. Labelling regulations require specific and detailed product information to ensure food safety and inform consumers of the nutritional content of products. To inform purchasing decisions, consumers may seek additional information about product ingredients, such as the presence of genetically modified organism (GMO) content, or about the methods used in product manufacturing. The marketing practices of entities are another area of public concern, especially those targeting children or presenting potentially false or misleading nutritional information. Product labelling and marketing issues can affect competition among entities, since entities may be subject to litigation or criticism resulting from misleading statements or failing to adapt to consumer demand for increased labelling transparency. Additionally, adherence to product labelling and marketing regulations may introduce near-term costs and may reduce the risk of penalties or litigation. All these factors can impact an entity’s brand value, operating costs and revenue growth.
Product Design & Lifecycle Management
  • Packaging Lifecycle Management

    Packaging materials represent a major business cost and contribute to the environmental footprint of entities in the Processed Foods industry. Each stage of a package’s lifecycle, including design, transportation and disposal, presents unique environmental challenges and opportunities. Entities are also affected by legislation regarding allowable packaging materials or packaging end-of-life management. Entities can work with packaging manufacturers on packaging design to reduce costs, improve brand reputation and reduce the environmental impact of packaging. Innovations such as developing lightweight materials may also result in reduced goods transportation costs. Other innovations can improve end-of-life management of products, such as using recyclable or compostable materials, which may mitigate potential risks related to costs and compliance.
Supply Chain Management
  • Environmental & Social Impacts of Ingredient Supply Chain

    Entities in the Processed Foods industry manage global supply chains to source a wide range of ingredient inputs. How entities screen, monitor and engage with suppliers on environmental and social topics affects the ability of entities to maintain steady supplies and manage price fluctuations. Supply chain management issues related to labour and environmental practices, ethics or corruption also may result in regulatory fines or increased long-term operational costs for entities. The consumer-facing nature of the industry increases the reputational risks associated with supplier performance. Entities can engage with important suppliers to manage environmental and social risks to improve supply chain resiliency, mitigate reputational risks, potentially increase consumer demand, or capture new market opportunities.
Materials Sourcing & Efficiency
  • Ingredient Sourcing

    Entities in the Processed Foods industry source a wide range of ingredients, largely agricultural inputs, from global suppliers. The industry’s ability to source ingredients, and at some price points, fluctuates with supply availability, which may be affected by climate change, water scarcity, land management and other resource scarcity considerations. This exposure may cause price volatility which may affect entity profitability. Climate change, water scarcity and land-use restrictions present risks to an entity’s long-term ability to source essential materials and ingredients. Entities that source ingredients which are more productive and less resource-intensive, or coordinate with suppliers to increase their adaptability to climate change and other resource scarcity risks, may reduce price volatility and supply disruptions.

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Processed Foods
Food & Beverage
Consumer Goods
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