The future of this nation depends on our ability to produce food and fibre to sustain the world.
— Phil Bredesen, former governor of Tennessee
A recent report on market updates and insight in the e-Newsletter, Matrade Links, which highlighted the latest trend on food labelling in the UK caught my eye. It’s the subject of this essay.
It was filed by Megat Iskandar, who is the Malaysian Trade Commissioner based in Matrade’s London office, one of the many Matrade offices strategically located around the world dedicated to promoting Malaysian exports to key global markets.
This recent development in product labelling protocol is in line with the latest thinking or evolving consciousness, and an increasingly global movement, on the perceived need for a stakeholder-centric approach to doing business. The subject is encapsulated in the acronym ESG, which is the short form for “environmental, social and governance.”
Any business worth its salt cannot ignore the subject. Malaysian businesses must pay attention to ESG as it is increasingly becoming an important and urgent, or “the top of mind” issue for directors, shareholders, and the general public. It is therefore essential for Malaysian businesses in all fields, not just the food business, to understand ESG considerations and implications to their business.
Traditionally, human rights and labour issues were the major concerns used by NGOs and relevant governments to link to global trade practices. We have read of recent cases reported in the papers of Malaysian products exported to the US market being targeted on such issues. Now the evolving issues of environmental, sustainability and governance criteria are becoming additional layers of complexity and considerations.
The practices, standards, and nuances on ESG considerations may vary from region to region or country to country but to ignore the subject is asking for real trouble. What needs to be noted is that ESG will increasingly drive how businesses should be conducted as the concern for the environmental impact of human activities grows stronger and stronger by the day.
The issues are essentially ethical and moral in nature but are increasingly becoming part of the fabric that envelopes the conduct of trade and commerce, services, and industry. Gone are the days of naked industrial exploitation of the earth’s resources to the detriment of the physical and social environment and with little or no consideration to how the consumers would perceive the impact of such exploitation.
But what are these concerns actually? In essence, companies that adhere to or aspire to live up to ESG standards must agree to conduct themselves ethically in those three core areas, namely the environment (E), social (S) and corporate governance (G) areas.
There are many issues that fit into the umbrella categories of environmental, social and governance or ESG. Those can include the following:
Environmental (Preservation of our natural world)
• Climate change
• Carbon emission reduction
• Water pollution and water scarcity
• Air pollution
• Deforestation
Social (Consideration of humans and our interdependencies)
• Customer success
• Data hygiene and security
• Gender and diversity inclusion
• Community relations
• Mental health
Governance (Logistics and defined process for running a business or organisation)
• Board of directors and its makeup
• Executive compensation guidelines
• Political contributions
Environmental concerns related to food production and processing which require sustainable food production has become a hot topic everywhere, and as highlighted by the Trade Commissioner in London, getting momentum in the UK as well.
The evolving consciousness demands that local food suppliers must promote food products that are being produced using processes and system that are non-polluting, preserve the environment and are produced in a sustainable way. In other words, the production, processing, and handling processes are “in ESG compliance.”
One of the most practical and powerful ways to drive home this message is to use food labelling which brings the issue to the level of the retail customers, influencing their purchasing decision.
According to the report filed by Megat Iskandar, the use of environmental labelling on food products will lead to the growth of sustainable food industry in the UK. He pointed out that it is being explored by major British brands such as Mark & Spencer, Sainsbury’s, the Co-op, and Costa Coffee “in order to give UK consumers a clear information on the food that they purchase.”
Essentially, the labels of food products will rate the environmental impact of food through four key criteria, including water usage, water pollution, biodiversity, and carbon. “The method will determine product’s environmental impact by assessing the farming, processing, packaging, and transport. The impacts are weighted 49 percent to carbon and 17 percent each for water usage, water pollution and biodiversity loss.”
The labels of the food packages are intended to communicate the information “clearly and simply” to consumers via a front-of-pack score which measures the environmental impact of an individual food product and aims to enable consumers to make more sustainable buying choices through front-of-pack environmental scores.
This kind of market intelligence or information are very useful and cannot be ignored by aspiring Malaysian exporters to the UK and other developed markets like the European markets.
According to Megat Iskandar’s report, the major British brands mentioned earlier are among the members of a new non-profit organisation, Foundation Earth, that will roll out front-of-pack eco-scores on food which has started from September 2021.
NGOs and non-profit organisations are at the forefront of the battle on the ESG agenda. Expect more organisations like Foundation Earth to sprout up like mushrooms after the rain. Ignoring these developments in the marketplace is just postponing the inevitable and the eventual clash with NGOs, non-profit organisations, the law and ultimately the ethical consideration and values of the consuming public.
Remember the exploits and activism of Green Peace in the mid-1990s in championing the activism against the Brent Spar demobilisation by Shell.
The key message of this article is that sustainability and environmental impact are important considerations for the future of food production or any form of economic activity. Through that article, Megat Iskandar’s advice to Malaysian manufacturers doing international trade, especially with big multi-national food companies, is “to keep up not only with the standards and requirements, but also with the latest trends in the market. The UK’s environmentally aware consumers would react to the labels and buy only eco-friendly products. When the labelling is launched, it will also disrupt the traditional UK’s supply chain, and promote innovation in the food production to reduce possible environmental impact.”
If that is not a timely reminder, I don’t know what is. We need to thank our trade commissioners out there who are doing their level best to promote Malaysian exports to the world.
The writer also sits on the Board of Matrade.
The views expressed here are those of the columnist and do not necessarily represent the views of New Sarawak Tribune.
