The True ROI of Sustainability in Food Businesses

As food businesses navigate increasing environmental regulations and shifting consumer expectations, sustainability initiatives are becoming a key driver of profitability. From lower operational costs to enhanced brand loyalty and regulatory resilience, investing in climate action delivers measurable ROI.

Cost Savings Through Operational Efficiency

A major benefit of sustainability initiatives is improved efficiency, which translates directly into cost savings. In the food industry, Scope 3 emissions—indirect emissions from the supply chain—can account for up to 95% of total emissions​. By identifying and reducing these emissions, businesses often uncover inefficiencies in procurement, energy use, and waste management.

Sourcing lower-emission ingredients is a strategic way to streamline procurement and reduce operational costs. While eating locally can reduce transportation emissions, research from Our World in Data shows that transportation typically accounts for only 6% of food’s total carbon footprint. Therefore, the most significant emissions reductions come from choosing low-impact ingredients rather than focusing solely on local sourcing.

For example:

• Switching from high-emission foods like beef and lamb to lower-emission alternatives such as chicken, pork, or plant-based proteins can reduce a meal's carbon footprint by up to 90%.

• Prioritizing suppliers with sustainable practices and efficient logistics can streamline your supply chain and reduce procurement costs while maintaining low emissions.

Optimizing procurement by focusing on ingredient choice and supplier efficiency delivers both environmental and financial benefits, helping to lower overall costs and improve margins.

Enhanced Brand Reputation and Customer Loyalty

Consumers are increasingly prioritizing sustainability. According to a NielsenIQ study, 73% of consumers would change their consumption habits to reduce their environmental impact. For catering managers and procurement officers, aligning with sustainability is a way to differentiate their services and retain clients. In other words: Transparency in sustainability reporting builds trust. Businesses that provide clear data on the carbon footprint of their meals are seen as more reliable and forward-thinking.

In a competitive industry, where switching costs for clients can be low, sustainability can be a key differentiator for maintaining and growing your customer base.

Regulatory Compliance Protects Against Financial Risks

The regulatory landscape around sustainability is becoming more stringent.  Policies like the Corporate Sustainability Reporting Directive (CSRD) and the Task Force on Climate-Related Financial Disclosures (TCFD) are setting new standards for emissions reporting and transparency.

• Corporate Sustainability Reporting Directive (CSRD): Mandates that large companies in the EU disclose detailed information on their environmental impact. Non-compliance can lead to penalties and reputational damage.
• Task Force on Climate-Related Financial Disclosures (TCFD): Provides a global framework for businesses to report on climate-related risks and opportunities, increasingly demanded by investors.

Ensuring compliance with these regulations isn’t just about avoiding penalties — it’s about protecting your business from financial and reputational risks. Businesses that fail to adapt could lose out on contracts with clients who have strict ESG (Environmental, Social, and Governance) requirements or face exclusion from investment opportunities.

Data-Driven Insights Improve Margins

Sustainability initiatives backed by data enable food businesses to make informed decisions that positively impact margins. Tools that track carbon emissions in procurement and operations can highlight high-emission, high-cost areas and suggest more cost-effective alternatives.

For example, switching high-emission ingredients (such as beef) for lower-emission options (such as chicken or plant-based proteins) can reduce both costs and carbon footprints. According to data from Klimato, such recipe adjustments can reduce emissions by up to 50% while maintaining or improving margins.

Furthermore, data-driven insights can lead to smarter inventory management, reducing food waste. WRAP (Waste and Resources Action Program) estimates that UK businesses lose around £3.2 billion annually due to food waste. By minimizing waste, catering businesses can significantly boost profitability.

Sustainability Attracts Investment and Business Opportunities

Investors are increasingly evaluating businesses based on their ESG performance. According to the Global Sustainable Investment Alliance (GSIA), ESG investments represent 36% of all assets under management globally. Businesses that can demonstrate sustainability through data-driven reporting are more likely to attract investment and secure lucrative contracts.

Furthermore, companies that measure and report on their carbon footprint using frameworks like the Greenhouse Gas Protocol (GHG Protocol) or Science-Based Targets Initiative (SBTi) are viewed as lower-risk, more future-ready partners.

The Bottom Line: Sustainability Drives Profitability

By improving efficiency, enhancing brand reputation, ensuring regulatory compliance, and attracting investment, sustainability initiatives can transform your bottom line. At Klimato, we provide the tools and insights food businesses need to track, reduce, and report their food-related emissions. Our solutions are designed to help you not only meet sustainability goals but also drive profitability.

Ready to get started? Explore our packages and see how data-driven sustainability can maximize your profitability.