Resilience: an opaque supply chain

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The food system is a globalised and complex network of interdependent supply chains. Such complexity can often lead to obscurity, hampering progress against targets, undermining assurance and masking issues within the supply chain.

Availability of data

Certain elements of the food and grocery supply chain benefit from abundant and accessible data, especially commercially important matters such as logistics, stockholding and sales performance.

However, other parts of the supply chain suffer from a lack of accessible data. This undermines progress, for example in addressing risks and minimising environmental impacts.

A growth in impact reporting, driven by investor requirements, is increasing both the demand for data and the supply of data solutions.

However, a lack of agreement across the food system on what should be measured and reported, alongside inconsistency in the data itself is slowing progress. The proliferation of methodologies and tools is adding costs for businesses, impacting small businesses and agricultural producers the most.

It is key to be able to measure progress against targets, to ensure that investment is prioritised toward the most impactful actions.

The government’s Food Data Transparency Partnership aims to improve the availability and quality of food data across the supply chain.

The Eco working group is developing a proposed approach to consistently measure and communicate emissions in the food system including:

• Standardising the methodology and data sources used for measuring and reporting Scope 3 greenhouse gas emissions of food and drink

• Establishing a mandatory methodology for food eco-labels

Simultaneously, the Health working group is developing recommendations for voluntary company-level reporting of health metrics.

Building consistency and comparability across data sources in the food system is a huge task, but one that will be transformative in the ability of the system to measure and track progress.

Investors are increasingly making decisions based on progress against sustainability and health targets. Frameworks such as the Taskforce on Climate-related Financial Disclosures and the Taskforce on Nature-related Financial Disclosures are embedding sustainability thinking into the investment landscape.

This landscape is predicated on the availability of high-quality and accurate data. Businesses should expect data and information requirements to grow in the coming years.

Food authenticity

Long and complex food and drink supply chains create opportunities for fraud, which can take several forms, estimated to cost the economy up to £2 billion a year. Food fraud and crime create financial and reputational risks for businesses, may be harmful to shoppers and undermine the food system as a whole.

Types of fraud can include:

• Adulteration or substitution of ingredients - This threat may be greatest when food prices are high or where supplies are limited, risks that drivers such as climate change or geopolitics make more likely – the horsemeat scandal of 2013 coincided with high prices for beef across Europe.

• Counterfeiting – This covers duplication of branded goods by unauthorised manufacturers, often lower in quality.

• Fake credentials – This could include claiming ethical attributes or other attributes which a product does not have, such as passing off conventional products as organic.

• Waste disposal fraud – This could include food which has been disposed of for safety reasons being diverted back into the supply chain.

Labour abuse risks

Labour abuses in supply chains, which may include unsafe working conditions, exploitation and modern slavery are a major risk for businesses of all kinds, but one which is hard to quantify.

It is important to reduce the potential for labour abuses across the food system. There is a risk of labour abuses given the length and complexity of supply chains, which for many products stretches stretch across borders.

Businesses can reduce risk by closely monitoring farms and factories operating both in the UK and in other countries with different regulatory regimes.

There is also a risk of labour abuse caused by the UK’s reliance on migrant workers, particularly in the agriculture and fishing sectors.

Migrant workers are more likely to accept exploitative work conditions, due to the difficulty in changing jobs or fear that visas may be cancelled without the role.

News of labour abuses can be uncovered by parties outside the food system – interest groups, journalists, government officials. This clearly raises a reputational risk for the businesses at the centre of any labour abuses, but it may also create a longer-term problem for the system.

Central to the future success of the food system is changing its perception across the government and wider population. Stories of human rights abuses undermine the whole reputation of the UK food system, eroding valuable, positive work happening elsewhere.