Driving Brand Affinity, Consumer Trust, and Business Growth through ESG

By Jim Hardeman

After more than a decade working in the intersection of technology and the food service and hospitality industries, I have witnessed change that ranges from specific, limited, and local to broad, sweeping, and global.

One of the most striking global shifts I’ve observed in this space is that environmental, social, and governance (ESG) initiatives —once thought to be aspirational, perhaps even fringe initiatives — are now moving firmly into the realm of essential and central to long-term business strategy and growth.

ESG initiatives can have significant ramifications: done right, they can increase brand affinity and consumer trust, drive corporate transparency and business growth, and align business and social/environmental goals. When they are neglected or ignored, businesses can face liabilities across each of those areas. And today, merely stating that ESG and corporate social responsibility (CSR) are intrinsic to your mission is not enough; both societal forces and government agencies want proof and transparency.

Recent research backs up this sea change in the implications of ESG. A November 2021 Ipsos report on global trends notes that “Most people across 25 countries [say] now that it is more important that businesses fight climate change than pay the right amount of tax. Seven in ten globally now say that they tend to buy brands that reflect their personal values and that business leaders have a responsibility to speak out on social issues.”1 And an October 2021 report from Deloitte, which labelled the ESG shift “tectonic”, notes that “empowered consumers and more activism-oriented investors are pushing organisations to address ESG issues concretely and transparently… They are fuelled by the transparency afforded to them in the digital age and they are increasingly putting their money where their values are.” 2

In food service and hospitality, the importance of ESG (and CSR) is increasing as consumer demand for transparency grows and expanded regulatory requirements emerge around responsible sourcing, sustainability, and food waste. Some brands are leading the way when it comes to advancing these issues, including one of our company’s larger international clients, which focuses on casual dining across many restaurant locations. They don’t hesitate to donate perishable foods for which the shelf life cannot be extended and their restaurants partner with local organisations to provide food donations, all around the globe.

Many companies are also instituting automated technology solutions for compliance and quality management to address the demands of ESG. As an example, a leading grocery chain my company works with leverages technology and auditing partners to evaluate and monitor suppliers across 16 different ESG, CSR, and animal-welfare-related programmes. Not only does this help them automate data and documentation collection, it streamlines product inspections and the conducting and managing of second- and third-party audits and self-assessments for ESG-related initiatives. Their aim is to ensure compliance, but the data these programmes yields is also demonstrating to their customers that, as a company, they are working ethically and collaborating with responsible partners throughout their entire supply chain.

There are lots of other exciting ways that companies in the hospitality and food service industries are harnessing new technologies to employ ESG optimally, and they can be applied to other industries, too. Here are a few of them:

Empowered consumers

Arm customers with data – and build brand loyalty

We are seeing an increasing number of brands share ESG-related data3 with consumers via QR codes or other digital identification forms on product packaging. Buyers scan those codes using mobile devices to discover a product’s origin and ingredients, along with the places each of those ingredients has stopped along the supply chain. Barcodes could potentially offer more information in the future, ranging from whether (and how) a product has been tested to its temperature during the transport process and whether there have been any related recalls.

Seven in ten globally now say that they tend to buy brands that reflect their personal values and that business leaders have a responsibility to speak out on social issues.”

Businesses must adapt to consumers’ increasing insistence on knowing both what’s in their products and what the company is about as a whole. According to a recent survey4 from Cargill, consumers are loyal to brands that meet their requirements and address these concerns, and “the importance of brands aligning with personal values has been accelerated over the pandemic,” Ipsos reports.5

Prepare for the evolution of EU and commercial regulation

ESG regulations on issues related to sustainability, the climate, clean food, and related concerns are becoming increasingly important. Credit and commercial lending, along with other business and financial metrics, may likewise become more intertwined with ESG.

A February 2022 alert from WilmerHale, “ESG: The EU’s Agenda for 2022 — What You Need to Know”, states that companies “must also do their best to meet requirements to have their businesses qualify as sustainable … Many legislative initiatives are also in the EU pipeline to ensure effective protection of human rights and the environment, involving potential further obligations for companies as well as their supply chains.” 6

quality management

Embrace the keys to quality management

Many of the hospitality and food service brands we work with address these increases in consumer sentiment and government regulation by embracing and further extending tried and true quality management principles. Here are a few of those principles:

  1. Track and continually maintain updated information about ingredients, formulations, packaging, and labelling.
  2. Thoroughly vet and continue to monitor food and ingredient suppliers, including your supplier’s suppliers.
  3. Keep your records on sourcing, traceability, and supplier documentation current and accurate.
  4. Be vigilant about monitoring supplier performance and compliance; take a three-tiered approach, including second- or third-party audits, desk audits, and self-assessments.
  5. Prioritise the safety, quality, and consistency of your products, from the point of sourcing them, to serving and selling them. Monitor these three factors continuously.
  6. Nonconformances are a red flag; resolve them expeditiously and implement corrective and preventative actions (CAPA) promptly.
  7. Have a recall and withdrawal plan that speeds identification and resolution of quality incidents and product withdrawals and recalls.

To implement these principles effectively, especially in industries such as food services where businesses must monitor thousands of ingredients, modern solutions are required. More integrated, agile approaches that enable speed and scale and allow for informed, data-driven decision-making are moving to the forefront as legacy, manual methods like spreadsheets and siloed software systems are being left behind.

Businesses must adapt to consumers’ increasing insistence on knowing both what’s in their products and what the company is about as a whole.”

As the winds of ESG compliance have shifted so completely — and more changes are expected in the coming year from EU regulators — companies can’t afford to neglect or piecemeal their ESG initiatives. By embracing tools and technologies that power smart, comprehensive ESG programmes, organisations will not only be prepared for regulatory evolution but help drive brand affinity and business growth.

About the Author

Jim HardemanJim Hardeman is Chief Marketing Officer at CMX, a leading provider of cloud-based enterprise quality management software (EQMS). Leading brands and service providers, including IHG, Burger King, Outback, Arby’s, Two Men and a Truck, Taco Bell, Pizza Hut, Sonic Drive-In, Raley’s Supermarkets, and Hasbro, trust CMX to help them achieve and maintain quality and operational excellence. Jim’s responsibilities include leading strategic, marketing, and go-to-market initiatives. His 20-plus years of experience in working with and solving the business needs of many of the world’s leading food, hospitality, consumer, retail, and financial services.

References

  1. https://www.ipsos.com/en/global-trends-2021-aftershocks-and-continuity
  2. https://www2.deloitte.com/us/en/insights/topics/strategy/esg-disclosure-regulation.htm
  3. https://www.forbes.com/sites/iedcagtechplus/2021/04/05/heres-how-innovations-in-food-traceability-could-change-the-way-we-eat/?sh=7c0bbf804389
  4. https://www.cargill.com/2022/research-finds-more-consumers-weighing-sustainability-claims
  5. https://www.ipsos.com/en-us/news-polls/global-trends-2021-changing-world
  6. https://www.wilmerhale.com/en/insights/client-alerts/02102022-esg-the-eu-agenda-for-2022-what-you-need-to-know

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