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For Every $1 Spent On Reducing Food Waste, Companies Save $14

To help curb the billions of tons of food discarded across the globe each year, here’s the business case.

For Every $1 Spent On Reducing Food Waste, Companies Save $14
[Photo: Furyoku/iStock]

Compare all the wasted food in the world to the world’s nations, and that pile of food would be the third largest emitter of greenhouse gasses in the world. It would also be roughly the size of China: That’s how much land is required to produce the amount of food we discard each year.

For Dave Lewis, the CEO of international grocery-store chain Tesco and the chairman of Champions 12.3–a group of 40 leaders across the public and private sectors committed to reducing food waste by advancing the U.N. Sustainable Development Goal 12.3–those facts are reason enough for curbing the amount of food we discard without thinking. There’s also the fact that more than a billion tons of food goes unconsumed each year, while one in nine people across the world are malnourished.

“But to speak candidly,” Lewis said in a press call hosted by the World Resources Institute (WRI), “there are still too many inside business and government who are unaware or unsure of the impact they can have by reducing waste, and who are not doing enough to help tackle it.”

[Photo: Astrid860/iStock]

Lewis attributes this inaction to a lack of clear data and published economic analysis that CEOs can use to demonstrate what, exactly, their companies stand to gain by curbing waste. It makes intuitive sense–“anyone who runs a business knows that waste is drain of money and resources,” Lewis said–but Champions 12.3 recognized that to effect change in corporations, they would need to provide the data.

A new report prepared by WRI and the Waste & Resources Action Programme (WRAP) for Champions 12.3 sets out “the clear investment case for reducing food waste to help urge more businesses to take action to tackle it,” Lewis said. The existence of a solid business case for curbing waste, the report found, is something few CEOs are aware of. “The associated costs of food loss and waste may be buried in operational budgets, accepted as ‘the cost of doing business,’ or considered not worth the investment needed to achieve reductions,” the authors write.

But the report found that, on average, for every $1 a company invested in food loss and waste reduction–through training programs, providing equipment like scales to quantify food, and improving storage and packaging–they received a $14 return on investment. The WRI and WRAP researchers analyzed more than 1,200 business sites across 17 countries and more than 700 companies representing a whole range of sectors, from food manufacturing, retail (grocery stores), hospitality (hotels), and food service (cafes and restaurants). Around 99% of the business sites saw a positive return on investment; those that received the greatest benefits were mostly restaurants. Some of the noted benefits to companies were reducing the need to buy food, increasing the share of purchased food that’s then sold to customers, and reducing food-waste management costs.

The authors write that in addition to the compelling finances, government and business leaders expressed that there were a number of strategic reasons for reducing food loss and waste, ranging from environmental sustainability, stakeholder relationships, and ethical responsibility. “Although these benefits may be hard to quantify in monetary terms, our interviews indicate that these nonfinancial reasons are an important part of the business case for action,” the authors write.

The report found similar benefits to countries and cities that ramp up food-waste reduction efforts: A U.K.-wide initiative to reduce household food waste that launched in 2007 resulted in a benefit-to-cost ratio of 250:1; an initiative in six West London boroughs saw a 92:1 ratio, from factors like savings in waste management from cities and household savings on food

While food-waste-reduction efforts are taking off in cities like Chicago, Denver, and Nashville, getting the private sector on board, Lewis said, is essential for meeting the Sustainable Development Goal 12.3: To halve food waste per capita by 2030 and reduce food waste worldwide. In additional to the societal benefits, Lewis said, reducing waste “presents a real business opportunity for manufacturers, retailers, restaurants, and the hospitality business.”

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