Environmental and Social Due Diligence in the Food Industry
With environmental and social jurisprudence garnering attention day by day, businesses are under enormous pressure to adopt sustainable practices across sectors. Whether you are starting a new business venture or managing an already well-established one, incorporating Environmental and Social Due Diligence into your decision-making process has become significant before you make an investment. Our ESDD services have been specially designed to help our clients in the food industry steer through this complex landscape and augment their sustainability performance.
But, what is Environmental and Social Due Diligence? Environmental and Social Due Diligence, commonly referred to as ESDD, is a process that allows you to evaluate and assess the environmental and social risks involved in your business or operations. It includes reckoning the possible cost of waste management, calculating liabilities associated with the project, formulating safe practices for waste that tends to contaminate the environment or cause health hazards, ensuring safe labour working conditions, identifying and correcting occupational hazards, etc.
In light of increased transparency and answerability, businesses are expected to perform environmental and social due diligence in the food industry to augment its overall impacts and repercussions, in addition to already acquainted financial and legal due diligence.
Need for Environmental and Social Due Diligence in the Food Industry
The food industry is essentially a cluster of various small and large-scale businesses that are involved in operations relating to food production, processing, supply, and distribution. The food industry in India is a particularly complex tapestry because of the diverse culinary traditions, dietary preferences, and the vast array of cuisines available, thereby contributing to creating a lot of growth and employment opportunities. The bigger the industry, the greater the capability to cause adverse effects.
Therefore, the Food Industry is expected to comply with the ESDD in order to ensure compliance with their regulatory requirements and, at the same time, contribute to their responsibilities toward sustainability practices.
Let us take a look at some of the reasons that make environmental and social due diligence in the Food Industry an essential avenue to invest in:
One of the biggest concerns associated with the food industry is the issue of food safety, which is also a sustainability issue. Safer food production is an essential aspect of sustainability goals as it improves the economic viability and productivity of the industry. In addition to that, ensuring food safety due diligence enables businesses to reduce environmental damage and waste generation.
Conducting environmental and social due diligence in the food industry helps the enterprise to recognise other potential risks associated with their operations, such as the impact caused on the environment, waste management issues, liabilities related to labour practices, issues concerning human rights violations, etc. Environmental and social due diligence allows us to mitigate these risks and liabilities in time and avoid the unnecessary costs that may arise because of these in the future.
Making a name for yourself can be a huge struggle for any business in any industry. When it comes to the food industry, it is even more important to garner public trust and confidence because, after all, it is one of the essential items that the public is going to buy on a regular basis. Unlike in other industries where people are often confused amongst various brands, in the food industry, the brand value is generated due to the labour of many years, and once customers start associating and trusting your brand, they are highly unlikely to switch.
Thus, conducting environmental and social due diligence in the food industry and publishing such reports becomes even more necessary in the food industry to generate public trust and confidence in your business.
Legal Compliance and Regulations
The exponential growth of the food industry has necessitated the emergence of legal compliances in the food industry. The government has enacted many laws and regulations to ensure food safety and other concerns, which businesses involved in the food industry must navigate through. Some of these laws are the Food Safety and Standards Act of 2006, popularly known as the FSS Act, which has even led to the establishment of the Food Safety and Standard Authority of India, then there are the Food Safety and Standards (Packaging and Labelling) Regulations of 2011 that are needed to be complied with, etc.
These laws and regulations lay down specific standards and procedures that need to be complied with by the businesses involved in the food industry to ensure safety in food manufacturing, sale, and distribution. All these regulations must be complied with, as failure to do so may lead to the imposition of fines or pecuniary penalties or the cancellation of licenses or permits to operate your food business.
What does the Data say?
India is the second largest food producer in the world, and it possesses the potential to become the largest; therefore, naturally, the impact it tends to generate on the environment and society is also going to be large. The government of India has also been making efforts to promote growth in the food industry by adopting various initiatives to strengthen market growth and attract foreign direct investment.
According to research, the revenue generated from the food market is around US$905.2 billion in 2023, and this is further anticipated to grow by 8.40 % annually by 2023-2028. By next year itself, the market is expected to witness a volume growth of 5.5%. The food processing industry alone is estimated to be around US$322 billion and is further expected to reach US$43 billion by 2025.
These figures are illustrative of the fact that the food industry in India is a profitable avenue and it rightly deserves intensified attention, and with this large share of the market, it is definitely going to need some monitoring. Therefore, investing in environmental and social due diligence in the food industry in time will definitely be beneficial as the industry is only going to get bigger with time.
However, the concern lies with the fact that ESDD is a multifaceted obligation that requires expert knowledge and professional guidance as the same requires undertaking some technical and complicated steps that may be out of a regular business's domain.
Therefore, businesses and enterprises in the food industry often need to outsource their environment and social due diligence services to ensure proper compliance with these obligations and to avoid any inadvertent failures or mistakes in their discharge.
How can businesses prepare for the future of Environmental and Social Due Diligence in the food industry?
Now that we have familiarised ourselves with the growth potential in the food industry and with the importance of environmental and social due diligence, the stakeholders may wonder how to navigate through these obligations to secure their operations in the future. Your competitors are already planning their moves to get ahead in this competitive race, so you cannot afford to be left behind in this fast-paced market.
To outrun your competitors, you can start preparing for the future of environmental and social due diligence in the food industry today by:
- In order to achieve long-term economic viability, you need to take a radically different approach to your business by integrating environmental and social due diligence in your business and operations.
- Further, to improve your regulatory compliance, you are required to allocate your time, finances, and human resources to effectively put a system in place for managing these diligence requirements timely.
- More importantly, you need to make conscious efforts to translate these policies and regulations into practice to allow the concerned stakeholders to witness that you prioritise these values just as much as them and hold them in high regard.
Challenges faced while complying with Environmental and Social Due Diligence in the Food Industry
The requirement of environmental and social due diligence in the food industry may not seem so difficult, but it's easier said than done. The food industry is so vast that its extensive reach and operations can have a significant impact on the environment and society. Thus, due diligence becomes even more essential in this industry to mitigate any adverse consequences of food production, processing, and distribution to promote environmental sustainability and ethical practices. However, businesses involved in the food industry tend to face numerous challenges while endeavouring to comply with their ESDD needs, some of which are:
Limitation of Resources
Performing environmental and social due diligence in the food industry requires a lot of resources to be at your disposal that every other business owner or company may not have access to.
The food industry is a labour-intensive industry, particularly the agriculture and food processing sector. The workers in these sectors sometimes face exploitative practices and unsafe working conditions. The exploitation could be in terms of low wages, lack of job security, other occupational hazards, etc. Ensuring fair labour practices in the discharge of environmental and social due diligence in the food industry can be a complicated task as the same has also been legally mandated by the government.
Health and Nutrition
Environmental and social due diligence in the food industry is even more pertinent and can be even more challenging because food safety is a major concern that just cannot be overlooked, and rightly so; the government has passed legislation and set up bodies to monitor that as the proliferation of unsafe food can cause severe health hazards that may become a huge problem if these concerns are left unattended.
Generation of Food Waste
One of the major challenges regarding environmental and social due diligence in the food industry is the huge quantities of food waste generated. According to the United Nations Environment Programme (UNEP), India generates about 68.7 million tons of food waste per year, out of which 11.9 million tons come from the food service sector. These alarming numbers are enough to draw attention to ESDD concerns in the food industry.
Complex Supply Chains
The food industry comprises several operators involving producers, processors, suppliers, and distributors, which complicates the monitoring process, and it gets extremely challenging for the operators to maintain traceability throughout the supply chain.
Benefits of Outsourcing Environmental and Social Due Diligence in the Food Industry
With changing times, the way of doing business has also changed. We are currently living through such a fast-paced period, where we need to adapt to new ways of doing business lest we be left behind.
The need to pivot to incorporate environmental and social concerns in your commercial plans cannot be stressed enough. It's time to rethink and revamp the entire way business is being done. Allow us to handle this for you while you focus all your energy and attention on core business operations. At Enterclimate, we endorse the ambition to experience transformative growth and, at the same time, contribute to making a real change.
But if you are still unsure, let us chalk out some of the benefits that you can reap by outsourcing environmental and social due diligence in the food industry:
Conducting environmental and social due diligence in the food industry can be time-consuming, and with only limited time in your hands, your organisation should focus on the core business operations. Outsourcing your ESDD compliances helps you delegate and allows you time to utilise your time and resources strategically somewhere even more necessary.
Improved Decision Making
With the time and resources saved in your hands by outsourcing your ESDD requirements, your in-house team can now focus their attention on other significant compliances, which allows for increased efficiency. Furthermore, outsourcing these services allows you to get an impartial perspective on problems towards which you probably turn a blind eye, or they remain in your blind spot. A third-eye view always helps to provide effective insights and a newer perspective on the issues at hand.
Access to Latest Resources
Not all businesses have all kinds of tools and software required to conduct ESDD at their disposal. Thus, outsourcing environmental and social due diligence in the food industry enables the experts with these resources to apply analytical reasoning and extract relevant data, which helps in making reasoned and well-informed decisions.
Hiring an in-house team for environmental and social due diligence in the food industry can be quite expensive in the long run, as you may be required to train them, provide them with employee benefits, etc. You can avoid all this by simply choosing to outsource, which allows you to pay them as and when you need their services, which is much more economical than maintaining an entire in-house team.
If you do not have the required knowledge and expertise to conduct environmental and social due diligence in the food industry in particular, then it may be a concern you need to pay heed to. These compliances require specialised knowledge and experience; otherwise, they may lead to insincere compliances, which may not be good news in the long run. Outsourcing these services to experts who have an understanding of the industry-specific challenges and are well-versed in the best practices of that particular industry is always a wise decision.
Enterclimate has been efficaciously supporting its esteemed clients in achieving their business goals and, consequently, unprecedented growth. Our team of experts has a successful track record of maintaining 99.8% efficiency in conducting environmental and social due diligence in the food industry.
We have extensive knowledge and vast experience in helping businesses and commercial enterprises kick-start their business and formulate growth strategies for them, at the same time ensuring their environmental and social obligations are being discharged as well, which usually get overshadowed amongst a myriad of legal compliances.
We at Enterclimate offer the latest tools and insights for all your business needs. We have a profound presence in environmental and social due diligence across industries and sectors, thereby allowing us the opportunity to help our clients transform and grow.
Our package for environmental and social due diligence in the food Industry offers an extensive assortment of services for your businesses and operations that are provided by our bespoke team of experts. These are:
Risk Identification and Management
Our experts can help you assess and evaluate the risks involved with any business operations that you may plan to undertake. These experts, who have an understanding of the industry-specific challenges and are well-versed in best practices of that particular industry, can further help you formulate a risk management system to mitigate any of these concerns.
Food Safety Assessment
We can guide you through food safety and quality assessments to ensure your business meets the highest standards in the industry. Our bespoke team at Enterclimate is motivated and dedicated to helping our clients improve their food safety programs and fill any gaps that may exist. In addition to that, their keen eye can help you strategise to formulate cost-effective solutions to problems, if any.
Licenses and Permits
The food industry is governed by numerous laws that prescribe stringent compliance and standards to ensure food safety. These keep getting amended and updated with time, and keeping track of these can be a difficult task. With our knowledge of licensing and regulatory compliance, we can cater to getting you appropriately licensed and certified under the relevant laws and governing bodies to avoid attracting any adverse consequences.
Developing Effective Monitoring Plans
Due to the complex supply chain involved in the food industry, it can be difficult to monitor the entire chain and trace issues. Our team can help you establish a detailed monitoring plan that will provide you with a structure of parameters that require monitoring and guide you with the techniques and methods to do so.
Solutions for your Environmental Concerns
As discussed, waste generated in the food industry has to be specifically catered to in order to discharge ESDD obligations. Enterclimate excels in offering exclusive services relating to the environment and social domain, and our experts can guide you on how to get authorised or registered to manage the waste generated by your business.
At Enterclimate, we understand that unique problems require unique solutions. The environmental and social risks involved in a project can differ across sectors depending on the industry type, size of your business, and many other factors. Our experts can help you design ESDD Plans exclusively catering to your individual business needs that will perfectly align with your long-term goals.
Additional Key Benefits:
In addition to catering to specific Environmental and Social Due Diligence needs, we can also assist you in the following ways:
Our experts can steer you through all the complex procedures involved and also help you understand the intricate requirements for Environmental and Social Due Diligence in the food industry as per your individual business needs and goals.
There is no way around the red-tapism prevalent in the public sector, which further requires you to submit a lot of documents. In order to discharge ESDD obligations, various drafts and documents have to be prepared and submitted, some of which are an EIA Report, SIA Report, Health and Safety Plan, etc. Al, this can be too overwhelming, so allow our professionals to lead you through all this.
We can be your One-stop Solution platform to fulfil all your ESDD or other business needs; from finding the necessary licenses to timely submissions of reports, we can help you with this.
The expectation to keep track of the entire process is often placed on the client, however, we provide follow-up services to our esteemed clients on our own, which are often ignored by many service providers.
If you would like to discuss more about Environmental and Social Due Diligence Services, please get in touch with us.
Begin your Environmental and Social Due Diligence journey with a single stride by reaching us at 7838390340, and we will appoint a dedicated expert to understand and discuss your needs.
We are eager to help you tread on this path that will help you flourish in your industry. Join us today, and let's build a profitable and socially responsible future together.
Frequently Asked Questions
Environmental and Social Due Diligence, popularly known as ESDD, is a process by which an enterprise evaluates the environmental and social liabilities associated with its business or operations.
Conducting Environmental and Social Due Diligence (ESDD) involves various steps, including identifying the risks and liabilities attached, analysing the scope of assessment, data collection, formulating risk mitigation strategies, preparing reports, and finally, implementing the strategies so formulated.
Environmental and Social (E&S) risks are the latent adverse consequences that may arise while undertaking an activity or operation and the anticipated impact on the environment, such as on air, water, or land, and on the overall social community, such as on customers, employees or staff, nearby residents, etc.
The E&S Risks can be classified into High Risk, Substantial Risk, Moderate Risk and Low Risk.
ESG due diligence helps businesses enhance their performance by allowing them an opportunity to perform a risk assessment before undertaking any operations and thereby giving them ample time to mitigate them to avoid any adverse consequences.
The purpose of due diligence is to exercise due and reasonable care and conduct a careful investigation of the legal, economic, and social risks involved in any business activity. This enables businesses to have risk and compliance checks in place and, thereby, enabling them to protect themselves in the long run against unidentified liabilities and risks.
The 3 common types of due diligence are Legal Due Diligence, Commercial Due Diligence, and Financial Due Diligence.
Before undertaking any project or undertaking, its environmental and social due diligence is expected to be conducted to assess the hidden risks it may pose and liabilities that may arise in the future regarding this. For every such project or undertaking, eventually, an environment and social due diligence report is prepared, which usually contains a detailed review and the assessment done in relation to the environmental clearances and social safeguards followed.
The environmental due diligence audit is a process to evaluate the actual and potential risks and liabilities associated with the business operations or the project, the objective of which is to provide the client with a better and clearer picture before making any final monetary or investment decisions.
The ESG due diligence in M&A involves performing a detailed assessment of the target company's performance and analysing any hidden or potential environmental or social risks that may affect the merger and acquisition.