IFRS Foundation

Processed Foods

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Processed Foods industry entities process and package foods such as bread, frozen foods, snack foods, pet foods and condiments for retail consumer consumption. Typically, these products are made ready to consume, are marketed for retail consumers and can be found on food retailers’ shelves. The industry is characterised by large and complex ingredient supply chains, because many entities source ingredients from around the world. Large entities operate globally, and international opportunities are driving growth.

Relevant Issues (8 of 26)

Why are some issues greyed out? The SASB Standards vary by industry based on the different sustainability-related risks and opportunities within an industry. The issues in grey were not identified during the standard-setting process as the most likely to be useful to investors, so they are not included in the Standard. Over time, as the ISSB continues to receive market feedback, some issues may be added or removed from the Standard. Each company determines which sustainability-related risks and opportunities are relevant to its business. The Standard is designed for the typical company in an industry, but individual companies may choose to report on different sustainability-related risks and opportunities based on their unique business model.

Disclosure Topics

What is the relationship between General Issue Category and Disclosure Topics? The General Issue Category is an industry-agnostic version of the Disclosure Topics that appear in each SASB Standard. Disclosure topics represent the industry-specific impacts of General Issue Categories. The industry-specific Disclosure Topics ensure each SASB Standard is tailored to the industry, while the General Issue Categories enable comparability across industries. For example, Health & Nutrition is a disclosure topic in the Non-Alcoholic Beverages industry, representing an industry-specific measure of the general issue of Customer Welfare. The issue of Customer Welfare, however, manifests as the Counterfeit Drugs disclosure topic in the Biotechnology & Pharmaceuticals industry.
General Issue Category
(Industry agnostic)

Disclosure Topics (Industry specific) for: Processed Foods

Energy Management
  • Energy Management

    The Processed Foods industry is reliant on energy and fuel as primary inputs for value creation in manufacturing food products. Energy is needed to operate large manufacturing facilities for cooking, refrigeration and packaging. Energy production and consumption contributes to significant environmental impacts, including climate change and pollution, which have the potential indirectly, yet materially, to affect processed food entity operations. Energy efficiency in production and distribution can mitigate exposure to volatile energy costs and limit an entity’s contribution to direct and indirect greenhouse gas (GHG) emissions. Producers may be able to reduce the risk posed by volatile fossil fuel energy costs—particularly natural gas, which the industry uses heavily—by diversifying their energy portfolio across a range of sources. Decisions regarding alternative fuels use, renewable energy and on-site generation of electricity versus purchasing from the grid, may influence both the costs and reliability of the energy supply.
Water & Wastewater Management
  • Water Management

    Processed Foods entities rely on a reliable water supply for cooking, processing and cleaning finished goods. Additionally, entities in the industry generate and must manage the wastewater discharge from processing activities. As water scarcity becomes an issue of increasing importance, processed foods entities—operating in water-stressed regions—may face increasing operational risks. Entities in the industry may face higher operational costs as well as water shortages because of the physical availability or more stringent regulations. Entities can manage water-related risks and opportunities through capital investments and assessment of facility locations relative to water scarcity risks, improvements to operational efficiency, and partnerships with regulators and communities on issues related to water access and effluent.
Product Quality & Safety
  • Food Safety

    Food safety, as it relates to production quality, spoilage, contamination, supply chain traceability, and allergy labelling, can materially affect processed foods entities. Food safety recalls can happen for numerous reasons, including packaging defects, food contamination, spoilage, and mislabeling. Food safety issues that arise within an entity’s supply chain typically result in recalls of final products and can also influence the brand reputation, operations, and revenue of processed foods entities. Supply chain traceability is a great concern for entities in the industry, particularly amid new regulations. Poor management of food quality and safety may lead to damage to brand value, lower revenues, and increased costs associated with recalls, fines, lost inventory, and/or litigation. Obtaining food safety certifications or ensuring suppliers meet food safety guidelines may help entities in the industry safeguard product safety and communicate the quality of their products to retailers and consumers.
Customer Welfare
  • Health & Nutrition

    Key nutritional and health concerns such as obesity, ingredient safety, and nutritional value are shaping the Processed Foods industry’s competitive landscape. The health and nutrition characteristics of the industry’s products and ingredients are of growing concern to both consumers and regulators, thus creating the potential for these issues to affect a processed food entity’s reputation and its license to operate. New regulations, including imposed taxes on processed foods, may impact industry profitability and pose long-term risks in the form of reduced demand for the industry’s products. Entities that adapt to changing consumer preferences to promote more healthful and nutritious offerings may be better positioned to gain market share in a growing segment while avoiding the risks associated with potential regulation and shifts in demand.
Selling Practices & Product Labeling
  • Product Labelling & Marketing

    Communication with consumers through product labelling and marketing is an important facet of processed foods entities. The accuracy and depth of information presented in food labelling is of importance to regulators and consumers. Labelling regulations require specific and detailed product information to ensure food safety and inform consumers of nutritional content. Additionally, to help inform purchasing decisions, consumers are increasingly interested in further information about the ingredients used in processed foods, such as genetically modified organism (GMO) content, and about the production methods used. Another area of public concern is the marketing practices of processed foods entities, especially those targeted to children or on nutritional claims, and whether they present potentially untruthful or misleading information. Product labelling and marketing issues can affect the competitive landscape of the industry, as entities may be subject to litigation or criticism resulting from misleading statements or failing to adapt to consumer demand for increased labelling transparency. Additionally, regulations on product labelling and marketing introduce near-term costs to adhere and present the risk of penalties or litigation. All of these factors can impact an entity’s brand value, operating costs, and revenue growth.
Product Design & Lifecycle Management
  • Packaging Lifecycle Management

    Packaging materials represent a major business cost and contribute to the environmental footprint of processed foods entities. Each stage of a package’s lifecycle, including design, transportation, and disposal, presents its own unique environmental challenges and opportunities. Entities may be impacted by regulations on allowable packaging materials or end-of-life management of packaging. Processed foods entities can work with packaging manufacturers on packaging design to generate cost savings, improve brand reputation, and reduce their environmental impact. Innovations such as light-weighting materials can also result in cost benefits in the transportation of goods. Other innovations can improve end-of-life management of products, such as through the use of recyclable or compostable materials, which may mitigate potential risks related to costs and compliance.
Supply Chain Management
  • Environmental & Social Impacts of Ingredient Supply Chain

    Entities in the Processed Foods industry manage global supply chains to source a wide range of ingredient inputs. How entities screen, monitor and engage with suppliers on environmental and social topics affects the ability of entities to maintain steady supplies and manage price fluctuations. Supply chain management issues related to labour and environmental practices, ethics or corruption also may result in regulatory fines or increased long-term operational costs for entities. The consumer-facing nature of the industry increases the reputational risks associated with supplier performance. Entities can engage with important suppliers to manage environmental and social risks to improve supply chain resiliency, mitigate reputational risks, potentially increase consumer demand, or capture new market opportunities.
Materials Sourcing & Efficiency
  • Ingredient Sourcing

    Entities in the Processed Foods industry source a wide range of ingredients, largely agricultural inputs, from global suppliers. The industry’s ability to source ingredients, and at some price points, fluctuates with supply availability, which may be affected by climate change, water scarcity, land management and other resource scarcity considerations. This exposure may cause price volatility which may affect entity profitability. Climate change, water scarcity and land-use restrictions present risks to an entity’s long-term ability to source essential materials and ingredients. Entities that source ingredients which are more productive and less resource-intensive, or coordinate with suppliers to increase their adaptability to climate change and other resource scarcity risks, may reduce price volatility and supply disruptions.

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Current Industry: Processed Foods

Food & Beverage
Consumer Goods
Extractives & Minerals Processing
Health Care
Renewable Resources & Alternative Energy
Resource Transformation
Technology & Communications

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