Consumer Packaged Goods

Risks and Opportunities

The CPG industry is highly diverse and companies typically have extensive product portfolios that sit at the intersection of different sectors. Common items run the gamut from food and beverages to apparel, household and personal care products, health and wellness, among others. While the concomitant sustainability risks vary, some commonalities exist. They all need to be addressed to minimise adverse impacts and harness opportunities for improved supply chain performance.

The high-frequency and -volume consumption of many CPGs puts enormous strain on the environment. But if managed adequately and responsibly, these inherent characteristics can also represent a major lever for large-scale and cross-sector change. Positive knock-on effects can, for instance, be prompted in agriculture, chemicals manufacturing, transport and logistics.

One of the prime challenges across the industry pertains to packaging which entails substantial raw material and fossil fuel extraction, the use of hazardous substances and waste generation. These problems have been linked to reports of child and forced labour, poor working conditions and occupational accidents in developing countries. Land use conflicts, pollution and habitat degradation are further salient risks. Companies must shift away from oil-based plastic packaging, reduce waste volumes and embrace circular design. An increased focus on reusable, recyclable and renewable materials can ease pressures on the environment and result in lower resource consumption. Rigorous due diligence is required to safeguard sound environmental standards and uphold universally accepted human and labour rights in the corresponding supply chains. The same holds true for procured resources, input materials and components contained in the CPGs themselves such as palm oil, cocoa or plastic.  

Concerted efforts are also needed to address Scope 3 emissions which can account for 80% to 90% of a CPG company’s carbon footprint. Raw material extraction and processing as well as upstream transportation, including cold chain shipping, are among the main drivers. Supply chain decarbonisation can go a long way in curbing emissions and enhancing value chain resilience.

Lastly, product safety is of utmost concern. Stringent quality management must rein in the use of hazardous substances in CPG products, in the interest of both consumer and worker safety. Circular design can play a critical role in this regard. Further sector-specific supply chain risks apply depending on the business activity at hand. For more details please consult the respective industry profiles .

How IntegrityNext
can help

IntegrityNext provides a platform for comprehensive ESG supply chain risk management that allows you to meet due diligence requirements and improve your sustainability performance:

1. Carry out a carbon footprint assessment and benefit from enhanced visibility into your suppliers’ emissions, reduction efforts and targets.
2. Analyse the most relevant environmental, social and governance risks as part of a five-step risk management process.

It includes an abstract country and industry risk analysis to deliver initial insights into your supply chain’s risk exposure. Based on more detailed pre-built assessments, which draw on authoritative international standards and conventions, you can monitor your suppliers with respect to the main ESG risks:

We help you identify suppliers with the most severe impacts so that you can develop a coherent strategy and target your preventive and remedial measures accordingly. The results gleaned from the assessments are synthesised in a GRI-certified report that can be readily used for your disclosures.