With the rapid rise of the ESG (Environmental, Social, Governance) movement, it’s easy to forget its origins. The concept first appeared in a 2004 UN white paper, Who Cares Wins, which set out convincing arguments for responsible investing. Central to such investments would be businesses that take measures to protect the environment, better society and improve corporate governance, which was summarized as "ESG".

The white paper title is a modern-day alternative to "who dares wins", the motto made popular by the British Special Air Service (SAS), which was itself inspired by the Latin Quem ousa vence. In my view, it’s a combination of these ideas that will lead the fresh grocery supply chain to where we need to be. We should dare to be bold in our actions. And we need to care about the broader impact of those actions – not just on business, but also on our planet and society.

However, boldly embedding ESG principles into an international organization is a complex process and not without challenges.

How do you get the materiality assessment right?

The materiality assessment process helps identify and prioritize the issues that most affect business performance, environmental impact and regulatory compliance. To succeed, it needs to incorporate input from a wide range of perspectives across the entire value chain. Indeed, a comprehensive materiality assessment with a focus on sustainability is really the key to any ESG strategy.

When carried out professionally, the insights gained from the materiality assessment can help determine and define your ESG strategy. In turn, this leads to a much more effective allocation of resources and a business approach that respects shareholders, the environment and our society.

To be truly effective, you need to include both internal and external stakeholders in the process. From employees to key customers, from regional executives to global trade organizations. It’s a huge task that I can confirm requires time, effort and resources, as well as a dedicated team of experts in the field. Most importantly, it’s not a one-off event.

How do you keep up with evolving standards?

As the legislative environment continues to change, ESG reporting standards will evolve. Essentially, ESG reporting is becoming mandatory and therefore mainstream. In the EU, for instance, the Corporate Sustainability Reporting Directive (CSRD), came into force in January 2023, strengthening and expanding sustainability reporting requirements. It will require large and listed companies to publish regular reports, which will need to detail their social and environmental risks as well as the impact of their business activities on society and the environment. Companies will have to apply the rules for the first time in the 2024 financial year, for reports published in 2025.

And then there is the German Supply Chain Due Diligence Act (LkSG) as well as the UK Modern Slavery Act. In effect, we are seeing due diligence obligations for the upstream stages of production are on the increase. In the US, all public companies are required by the SEC to report material risks to the business, which automatically includes ESG-related issues. More specific ESG rules and regulations differ from state to state in the US.

Is greenwashing a problem for ESG?

There is absolutely no place for misleading, vague or inaccurate claims about the environmental or societal impact of a company’s activities in ESG reports or marketing campaigns. Fortunately, it’s becoming more difficult for companies to inflate ESG activities. The regulatory landscape is now tougher, and lawmakers are clamping down even harder on what they see as "greenwashing" practices.

In the EU, for instance, a new directive on regulating While in the UK the Advertising Standards Authority (ASA), the UK’s independent media regulator, is shining the spotlight on ESG-related marketing. More specifically, it is keeping an eye on the use of vague environmental terms, such as "nature positive". When the ASA decides a campaign is misleading, it can impose considerable fines. And such fines usually go together with very public shaming and reputational damage.

New horizons for ESG practices

Responsible business wasn’t invented with the publication of the UN white paper, Who Cares Wins, but it certainly gave it strong impetus. Over the years, ESG has evolved and become more widespread. It now touches every sector of every industry.

At IFCO, we have a strong sustainability heritage, having started our circular business model in 1992. Now, more than ever, the atmosphere at IFCO is one of incredible responsibility. We are more vocal about ESG issues and have embedded ESG into our strategy and our company culture. The result is that all IFCO employees sustain our circular business model and embrace our commitment to ESG. And this is exactly what we need to succeed.

At the same time, we also understand that we still have work ahead to make real our ambitious ESG commitments set out in our ESG report. As the fresh grocery supply chain is made up of complex, interdependent systems, we can understand it better when we look at it through the ESG lens. We’re living our ESG strategy to ensure a thriving business, a thriving planet and a thriving society.

Our industry must continue to adopt and strengthen ESG strategies. And not just because it’s how you can avoid litigation or financial and reputational damage. But because it’s the right thing to do. And because the title of the UN report in 2004 still rings true today: "Who Cares Wins".