An ESG mindset for food and beverage companies

Canadian food and beverage businesses have been fighting an uphill battle in the face of economic and geopolitical uncertainty. Within the past year, the industry has experienced renewed instability in the form of unpredictable tariffs, shifting trade rules, and rising costs.

While these issues will remain at the top of organizations’ minds for the foreseeable future, it is important to remember another important underpinning of Canadian business operations: environmental, social, and governance (ESG) practices.

ESG is often dismissed as merely a reporting function that consumes valuable time that could be spent on more pressing issues. But when framed correctly, a comprehensive ESG strategy is an invaluable toolkit in fostering competitiveness and resilience.

ESG is not about extra paperwork; it is about protecting supply chains, reducing costs, aligning business practices with consumer expectations, and maintaining access to key markets. Some may think that it increases costs as companies need to make investments in AI and technology to capture data. However, the rewards of compliance can far outweigh that, given the growing demand for products that are ethically produced and focused on sustainability.

The food and beverage industry, as a resource-intensive sector, has a significant opportunity to integrate ESG practices into its operations, particularly in areas such as waste management, water usage, and emissions. Initiatives like sustainable sourcing and food waste reduction programs are increasingly becoming business priorities and may continue to gain prominence as policy frameworks evolve. Recent policies, such as Extended Producer Responsibility (EPR), which shift responsibility for managing end-of-life products to producers, further underscore the importance of paying close attention to ESG practices.

Consumers represent a critical market influence that cannot be overlooked. A 2025 Business and Industry Canada report, Canadian Consumers Are Driving Sustainable Business Growth, notes that recent global studies reveal that 85 per cent of global consumers have shifted their purchasing behaviour towards more sustainable choices in the past five years. Specifically, a 2023 McKinsey survey showed 66 per cent of all consumers, and 75 per cent of millennial consumers, consider sustainability when making a purchase. In Canada, 78 per cent of consumers rank environmental impact as a top factor in their buying decisions, which rises to 85 per cent among millennials and Gen Z demographics. These numbers alone make for a compelling argument for implementing and maintaining ESG compliance.

So, what can organizations do to ensure their ESG practices meet the demands of today’s investors and consumers to sustain future competitiveness?

Why ESG matters in today’s climate

Given the numbers we are seeing, ESG compliance is vital to future-proofing business operations, improving margins, and securing a competitive advantage. “The question isn’t whether sustainability matters to consumers, but how businesses can effectively respond to this growing demand,” notes the Business Industry Canada report.

As the industry faces tariffs and new barriers, food and beverage businesses must find ways to differentiate themselves. ESG practices are one important way to signal credibility and reliability to international and domestic buyers, retailers, and consumers.

Canadians may be more cost-conscious, but they continue to value assurance that food is sourced responsibly. Transparency builds loyalty even in tough times. In fact, the abovementioned report states that 73 per cent of consumers are willing to pay more for sustainable products.

As it stands today, larger domestic and international companies already face ESG mandates. These requirements are cascading down to suppliers, meaning even small food and beverage businesses must show ESG metrics to stay in the game, whether they are mandated by government or not.

ESG as a competitive advantage

ESG practices deliver even more benefits than simply capturing market share and sales. There are a number of key areas where they can play an important role.

• Operational efficiency: ESG metrics help track waste, energy use, and resource efficiency. These are crucial factors when margins are squeezed by inflation and tariffs.
• Risk management: Anticipating climate disruptions, raw material shortages, and regulatory changes can reduce vulnerability.
• Attracting investors and accessing capital: ESG alignment is increasingly linked to access to capital, including investor funding, partnerships, government programs, and bank financing. Some financial institutions may be more willing to lend to companies that integrate ESG considerations into their operations, making this often-overlooked benefit a vital one for SMEs.

Getting started

Taking a proactive approach does not mean having to implement everything at once. It can start with taking a measured and methodical approach that does not burden a company’s resources.

It can be helpful to reframe ESG reporting not as a formal “report” but as a business health dashboard.

This can start with focusing on low-cost, high-impact, easy-to-implement wins, such as energy tracking, waste reduction, and supplier policies. It could be beneficial to leverage the data already tracked where possible. Once those are established, it is possible to begin working on longer-term, more complex initiatives, such as sustainable packaging redesign or product research and development.

Currently, there is an availability of free and accessible frameworks. These include the Global Reporting Initiative (GRI), the Sustainability Accounting Standards Board (SASB), and the International Sustainability Standards Board (ISSB).

It is also important to make your sustainability efforts known. Some companies are choosing to stay silent on the subject to avoid being accused of greenwashing. This “greenhushing” approach can be misconstrued by consumers as a company doing nothing. Companies that do not communicate on ESG can, in fact, alienate customers, especially younger demographics.

Conclusion

The bottom line is ESG is not a distraction from today’s challenges. It is an important strategy to survive and thrive through them and compete effectively. ESG should be a key consideration when obtaining financing, attracting investors, executing a sale or exit strategy, or negotiating a merger or acquisition.

For today’s Canadian food and beverage companies, embracing ESG can mean stronger supply chains, reduced costs, and better positioning in a world where trade, tariffs, and sustainability are shaping the future.

At Fuller Landau, we have wide knowledge and deep-rooted expertise in the food and beverage industry, including retail, wholesale, distribution, and food processing. If you have any questions or need further information, please reach out to the Food and Beverage group at Fuller Landau.

About the authors

Ola Kaluski is a Senior Associate in Fuller Landau’s Audit and Accounting group and a member of the firm’s Food and Beverage group. She can be reached at okaluski@fullerllp.com.

Rosanna Lamanna is a Partner in Fuller Landau’s Audit and Accounting group and the leader of the firm’s Food and Beverage group. She can be reached at rlamanna@fullerllp.com.