Companies cut food waste to stop wasting profits
Businesses that stop wasting food generate a 14-fold return on investment.
A stellar new report from the World Resources Institute takes a no-nonsense look at the business case for food waste reduction — at the idea that wasting food is an inevitable cost of doing business or that reducing food waste is somehow "too expensive" to make sense. What did they find? That food waste reduction strategies, whether pursued by companies, cities or at the national level offer returns on investment so high that they are difficult to ignore.
"The Business Case for Reducing Food Loss and Waste" was prepared on behalf of Champions 12.3, a global coalition of executives from governments, businesses, international organizations and other sectors striving to accelerate progress toward United Nations Sustainable Development Goal 12.3. That goal aims to slash global food waste in half by 2030. NRDC’s own Rhea Suh proudly participates in Champions 12.3, along with leaders from Nestle, Kellogg, Sodexo, Rabobank, World Wildlife Fund, Oxfam America, Rockefeller Foundation and various national governments, among others.
In the corporate sphere, WRI analyzed food waste reduction efforts at nearly 1,200 business sites across 17 countries and more than 700 companies, including food manufacturing, food retail, hospitality, restaurants and other food services. WRI "found that 99 percent of the sites earned a positive return on investment. The median benefit-cost ratio — where half of the sites achieved a higher ratio while half achieved a lower ratio — was 14:1. In other words, half of the business sites earned greater than a 14-fold financial return on investment."
What’s not to love about investing $1 and generating a $14 return? We should all be so lucky. WRI also found that restaurants typically experienced the highest returns, with hotels, food service companies and food retailers tending to have ratios between 5:1 and 10:1.
WRI reports that by 2012, it had achieved an astounding 21 percent reduction in household food waste relative to 2007 levels.
The report also explores how food waste reduction efforts play out at the city level. While comprehensive city-based data on the financial impacts of food waste efforts are limited, WRI did a deep dive into an initiative by six boroughs in West London. Begun in 2012-2013, the initiative successfully spurred a 15 percent reduction in total household food waste.
Further, WRI found that it had a benefit-cost ratio of 8:1 when only the economic benefit to local governments of avoided waste management and disposal costs and the cost of the initiative itself are taken into account. The benefit-cost ratio hit an eye-popping 92:1 when the financial benefit to area households is included. This reflects the avoided purchase value of food that consumers otherwise would have bought and then wasted. These data make clear that such efforts are beneficial not only to local government but to the residents of their communities.
At the national level, WRI also assessed the United Kingdom’s nationwide initiative to reduce household food waste. At the core of that effort was the "Love Food Hate Waste" media campaign which put food waste front-and-center for consumers through TV, radio print and on-line media.
WRI reported, "By 2012, it had achieved an astounding 21 percent reduction in household food waste relative to 2007 levels. The ratio of purely financial benefits to financial costs attributable to the U.K. initiative was more than 250 to 1."
Far from being a money-losing idea or even a breakeven proposition, food waste reduction efforts are proving their substantial financial benefits. This analysis is both a wake-up call and a source of encouragement for companies and governments searching for a path forward on food waste.
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