Transforming the Food & Beverage industry: From compliance only to business-driven decarbonisation

Decarbonisation is no longer just about meeting regulatory and reporting requirements; it’s becoming a strategic lever for competitiveness and resilience. Too often, stakeholders expect decarbonisation projects to be evaluated only through a compliance lens: “what’s the minimum we need to do to meet carbon targets and regulatory requirements?” – or based on traditional financial metrics: “which projects meet our typical internal payback threshold?”.

This mindset often underestimates the underlying costs of inaction: higher long-term costs, increased exposure to regulatory and market volatility risks, internal and external co-benefits not captured by traditional financial accounting and weakened competitiveness in markets where low-carbon credentials are increasingly part of the buying decision. The risk is then to screen out those projects that may have the greatest impact and long-term value for the business and wider stakeholders.

With voluntary climate commitments facing pressure, reframing decarbonisation as a driver of business value, not just compliance, is essential. This shift enables better decision-making, secures budgets for decarbonisation action and positions companies for resilience and growth.

In the current business environment, the critical questions for executives are: How can decarbonisation become a source of longer-term competitiveness and business value? Which decision frameworks can we apply to decarbonisation initiatives to reflect this expanded view?

What we can learn about decarbonisation from leading companies

Forward-looking companies are redefining the value of decarbonisation by comparing it against a “business-as-usual” baseline. Our joint projects with several of those companies prove that success happens when companies focus on:

• Assessing initiatives based on total cost of ownership over a 10+ year horizon, complementing the focus on short-term payback.
• Mitigating risks through scenario-based analyses that account for potential regulatory changes, energy market volatility, and stranded-asset exposure.
• Weighting sustainability risk factors, including carbon prices, into investment and product development stage-gates.
• Working towards granular, representative, standardised data that more clearly allows carbon and other premiums to be traced through the product life cycle.
• Making achieving their long-term net zero ambitions a part of their near-term plans, using investments to secure favourable offtake agreements to hedge risks.

Beyond financial returns, these organisations try to explicitly recognise the broader co-benefits of decarbonisation; strengthening market positioning, meeting stakeholder expectations, enhancing brand value, building internal capabilities and operational efficiency, and creating more resilient supply chains. 

Concrete case from an international F&B player

Under the direct leadership of its CEO, three years ago a large international F&B company redefined its decarbonisation approach. Recognising that fragmented site-level projects were insufficient and were not driving adequate progress, the company developed a comprehensive decarbonisation programme with clear strategic objectives.

At the corporate level, decarbonisation was reframed as a source of brand value and market competitiveness with a dedicated corporate CAPEX budget allocated to it.

The ambitious operational net zero by 2030 target they set was also leveraged as an opportunity to systematically drive efficiency and standardisation in operations across regions and sites with varying maturity levels from past acquisitions. The net zero objective resonated across functions and provided the organisational mandate and internal buy-in to rally teams into action.

The company then introduced a standardised investment appraisal process that evaluated site energy projects based on only two indicators: total cost of ownership and marginal abatement costs, comparing different site investment scenarios over a 15-year time horizon. The approach incorporated an internal carbon price, factored in replacement cycles of major assets, production growth scenarios, and considered entire solution mixes for a given site rather than single projects.

The company has since made strong progress in firming investments and implementing projects across the sites, and remains on track to reach its 2030 operational net zero goal. Beyond operations, targeted insetting initiatives were launched to turn the scope 3 reduction agenda into an opportunity to strengthen partnerships with key suppliers, mitigate market and regulatory risks, and increase the overall resilience of the supply chain.

Smaller suppliers were supported through multi-buyer power purchase agreements, facilitating access to green electricity they would not have been able to secure alone. Packaging suppliers were offered access to biomethane projects developed from biowaste.

By intentionally making long-term business value creation the key driver of its decarbonisation programme, the company is on track to create a more resilient market position with its customers, employees and suppliers.

Now is the right time to act on decarbonisation

If your organisation is still treating decarbonisation as a cost, rather than a business opportunity, now is the right time to act and reframe how you approach decarbonisation. Evaluate your operations across your portfolio through a business value creation lens, and engage suppliers to build a more resilient value chain. In our daily work with clients across industries, we regularly explore with companies how to best re-embrace the business argument for sustainability.

In the coming weeks, we will share concrete challenges that F&B companies face in advancing a business-driven decarbonisation agenda, as well as highlight successful initiatives that can inspire action—from managing energy costs and volatility to valorising biowaste and exploring innovative CAPEX financing solutions.