ESG Goals Gain Prominence in Cold Storage Industry
Concerted efforts to enhance food safety has encouraged cold storage industry companies to give importance to environmental, social and governance (ESG) performance. Sustainable development has come into the spotlight to foster eco-friendly refrigeration technology and utilize energy-efficient materials. Food & beverage companies have sought cold storage amidst an increased emphasis on ESG pillars. Cold storage is invaluable in preventing disruptions in food availability and emission-intensive losses of food. Food waste is one of the significant sources of GHG emissions, triggering food insecurity and burdening waste management systems. Increasing access to fresh food and reducing food insecurity can boost social equality.
Advancements in cold storage have provided potential opportunities for industry leaders to expand their ESG penetration. Stakeholders, including hotels, bakeries, stores, restaurants and other businesses, have invested in managing the temperature of perishable goods. Industry leaders have exhibited an interest in social opportunity, health & safety, diversity, product liability, business ethics, transparency and environmental opportunities.
With carbon emissions becoming pronounced across business verticals, state-of-the-art refrigeration control systems have gained ground. Notably, energy consumption has become a major concern at refrigerated warehouses. Efficient cooling equipment and a temperature-controlled supply chain have received an impetus to minimize food loss and GHG emissions. The University of Edinburgh’s Department for Social Responsibility and Sustainability has undertaken cold storage sustainability project to minimize the energy consumption linked with cold storage facilities in Life Science Labs. In 2020, Americold poured over USD 8.4 million to complete 55 sustainability projects. The company installed four variable frequency drive (VFD) controls in four cold storage sites during the same period, saving around 1.5 kWh annually. It is contemplating installing 100% energy-efficient lighting across the global portfolio by 2030.
Global push to minimize the environmental footprint of the cold storage industry has subsequently put the spotlight on the social pillar, including workplace safety, diversity & inclusion and investments in training & education, among others. Barloworld Limited is gearing up for a 50% female representation in leadership roles by 2025. The company has emphasized policies, such as Group Human Rights Policy, Employee Wellness Strategy, Group Talent Management Framework and Policy, Barloworld Harassment Policy and Group Health and Safety Policy. Industry leaders have upped their efforts to adopt a proactive approach to bolster safety management. For instance, the Total Recordable Incident Rate (TRIR) at Americold was 2.29 in 2020. Besides, the company launched inclusive hiring training for HR, talent acquisition and hiring managers in 2022. Stakeholders are poised to further their strategies for maintaining the culture of diversity and safety.
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Good governance has come on the horizon as a torchbearer of innovation, growth and smooth functioning of organizations. Leaders have underscored their policies on ethics, corporate opportunities, zero tolerance for corruption and transparency. Shareholders and other stakeholders have vouched for a sustainable company that recognizes the impact of activities on the environment, society and the economy. To illustrate, executive management at Barloworld embeds an ethical and responsible culture to safeguard the interest of its shareholders and group. The company has also invested in anti-bribery and corruption and due diligence policies. It is slated to include ESG in Executive Performance Management and Remuneration philosophy, policy and practices. The South Africa-based company has furthered its tax strategy with an increased emphasis on Group Tax Risk Management Policy and disclosure and assurance practices in line with global standards and frameworks.
Well-established players and startups have reinforced their strategies on long-term cost savings, managing waste, diversity and sound corporate behavior. In doing so, industry dynamics, such as mergers & acquisitions, partnerships, technological advancements and product offerings, could gain traction. For instance, in June 2022, Burris Logistics acquired R.W. Zant to bolster its footprint on West Coast. The latter deals in the redistribution of diary brands and proteins to retail and food service distributors. These trends suggest the global cold storage market could witness approximately 13.4% CAGR from 2021 to 2030.
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