Relevant Issues (9 of 26)
- GHG Emissions The category addresses direct (Scope 1) greenhouse gas (GHG) emissions that a company generates through its operations. This includes GHG emissions from stationary (e.g., factories, power plants) and mobile sources (e.g., trucks, delivery vehicles, planes), whether a result of combustion of fuel or non-combusted direct releases during activities such as natural resource extraction, power generation, land use, or biogenic processes. The category further includes management of regulatory risks, environmental compliance, and reputational risks and opportunities, as they related to direct GHG emissions. The seven GHGs covered under the Kyoto Protocol are included within the category—carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), hydrofluorocarbons (HFCs), perfluorocarbons (PFCs), sulfur hexafluoride (SF6), and nitrogen trifluoride (NF3).
- Air Quality
- Energy Management The category addresses environmental impacts associated with energy consumption. It addresses the company’s management of energy in manufacturing and/or for provision of products and services derived from utility providers (grid energy) not owned or controlled by the company. More specifically, it includes management of energy efficiency and intensity, energy mix, as well as grid reliance. Upstream (e.g., suppliers) and downstream (e.g., product use) energy use is not included in the scope.
- Water & Wastewater Management
- Waste & Hazardous Materials Management The category addresses environmental issues associated with hazardous and non-hazardous waste generated by companies. It addresses a company’s management of solid wastes in manufacturing, agriculture, and other industrial processes. It covers treatment, handling, storage, disposal, and regulatory compliance. The category does not cover emissions to air or wastewater nor does it cover waste from end-of-life of products, which are addressed in separate categories.
- Ecological Impacts
- Human Rights & Community Relations
- Customer Privacy
- Data Security The category addresses management of risks related to collection, retention, and use of sensitive, confidential, and/or proprietary customer or user data. It includes social issues that may arise from incidents such as data breaches in which personally identifiable information (PII) and other user or customer data may be exposed. It addresses a company’s strategy, policies, and practices related to IT infrastructure, staff training, record keeping, cooperation with law enforcement, and other mechanisms used to ensure security of customer or user data.
- Access & Affordability
- Product Quality & Safety The category addresses issues involving unintended characteristics of products sold or services provided that may create health or safety risks to end-users. It addresses a company’s ability to offer manufactured products and/or services that meet customer expectations with respect to their health and safety characteristics. It includes, but is not limited to, issues involving liability, management of recalls and market withdrawals, product testing, and chemicals/content/ingredient management in products.
- Customer Welfare The category addresses customer welfare concerns over issues including, but not limited to, health and nutrition of foods and beverages, antibiotic use in animal production, and management of controlled substances. The category addresses the company’s ability to provide consumers with manufactured products and services that are aligned with societal expectations. It does not include issues directly related to quality and safety malfunctions of manufactured products and services, but instead addresses qualities inherent to the design and delivery of products and services where customer welfare may be in question. The scope of the category also captures companies’ ability to prevent counterfeit products.
- Selling Practices & Product Labeling The category addresses social issues that may arise from a failure to manage the transparency, accuracy, and comprehensibility of marketing statements, advertising, and labeling of products and services. It includes, but is not limited to, advertising standards and regulations, ethical and responsible marketing practices, misleading or deceptive labeling, as well as discriminatory or predatory selling and lending practices. This may include deceptive or aggressive selling practices in which incentive structures for employees could encourage the sale of products or services that are not in the best interest of customers or clients.
- Labor Practices The category addresses the company’s ability to uphold commonly accepted labor standards in the workplace, including compliance with labor laws and internationally accepted norms and standards. This includes, but is not limited to, ensuring basic human rights related to child labor, forced or bonded labor, exploitative labor, fair wages and overtime pay, and other basic workers' rights. It also includes minimum wage policies and provision of benefits, which may influence how a workforce is attracted, retained, and motivated. The category further addresses a company’s relationship with organized labor and freedom of association.
- Employee Health & Safety
- Employee Engagement, Diversity & Inclusion
Business Model & Innovation
- Product Design & Lifecycle Management
- Business Model Resilience
- Supply Chain Management The category addresses management of environmental, social, and governance (ESG) risks within a company’s supply chain. It addresses issues associated with environmental and social externalities created by suppliers through their operational activities. Such issues include, but are not limited to, environmental responsibility, human rights, labor practices, and ethics and corruption. Management may involve screening, selection, monitoring, and engagement with suppliers on their environmental and social impacts. The category does not address the impacts of external factors – such as climate change and other environmental and social factors – on suppliers’ operations and/or on the availability and pricing of key resources, which is covered in a separate category.
- Materials Sourcing & Efficiency
- Physical Impacts of Climate Change
Leadership & Governance
- Business Ethics
- Competitive Behavior
- Management of the Legal & Regulatory Environment
- Critical Incident Risk Management
- Systemic Risk Management
Disclosure Topics (Industry specific) for:
Food Retailers & Distributors
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Fleet Fuel Management
Companies in the Food Retailers & Distributors industry own and operate vehicle fleets to deliver products between its distribution and retail locations. The fuel consumption of vehicle fleets is a significant industry expense, both in terms of operating costs and associated capital expenditures. Fossil fuel consumption can contribute to environmental impacts, including climate change and pollution. These environmental impacts have the potential to affect food retailers and distributors through regulatory exposure. Efficiencies gained in fuel use can reduce costs, mitigate exposure to fossil fuel price volatility, and limit the carbon footprint associated with storage and transportation. Short-term capital expenditures in fuel-efficient fleets and more energy efficient technologies may be outweighed by long-term operational savings and decreased exposure to regulatory risks.
Air Emissions from Refrigeration
Emissions of refrigeration chemicals from equipment used to store and display perishable foods pose unique regulatory risks for the Food Retailers & Distributors industry. International regulations on hydrochlorofluorocarbons (HCFCs) aim to mitigate damage by HCFCs to the Earth’s ozone layer. Additionally, many common HCFCs and hydrofluorocarbons (HFCs) are highly potent greenhouse gases (GHGs), which increases the industry’s exposure to climate change-related regulations. Regulators can assess penalties to companies that violate emissions standards, while companies may be required to upgrade or replace equipment, requiring capital expenditures, to reduce their emissions or replace existing refrigerants with potentially costlier, but less environmentally-damaging alternatives.
Food retail and distribution facilities are typically more energy-intensive than other types of commercial spaces. Energy is used predominately for refrigeration, heating, ventilation, and air conditioning (HVAC), as well as lighting. Companies in the industry generally purchase the majority of consumed electricity, while some are beginning to generate energy on-site or add renewable energy into their energy mix. Energy production and consumption contribute to environmental impacts, including climate change and pollution, which have the potential to indirectly, yet materially, impact the operations of food retailers and distributors. Companies that manage their overall energy use through increased efficiency and use of alternative energy sources can increase profitability by lowering expenses and reducing risk.
Waste & Hazardous Materials Management
Food Waste Management
The Food Retailers & Distributors industry generates food waste at various stages of operation. Food waste includes edible or otherwise useful food that does not reach consumers, as well as foods that spoil or are damaged during transportation or stocking or while on store shelves. Food loss and waste represent loss of saleable merchandise for companies in the industry and more broadly, a loss of resources used in food production, which include land, water, labor, energy, and agricultural chemicals, as well as contribute to food insecurity. Additionally, food waste can generate greenhouse gas (GHG) emissions during landfill decomposition. Effective food waste management can present financial opportunities to reduce costs associated with inventory loss, as well as help improve food security by more efficiently diverting food resources to beneficial purposes.
Through electronic payment transactions and the sharing of personal financial data, food retailers establish a relationship of trust with consumers. Data breaches can occur through breaches of the physical payment technology, called point-of-sales breaches, as well as through attacks on cybersecurity. Data breaches that result in the theft or loss of customers’ private data can undermine their trust in a company’s ability to securely manage their private information. This loss of confidence could result in reduced number of customer visits, lower revenues, and a diminished brand value. Retailers with strong technological and managerial systems to avoid and respond to data breaches can position themselves favorably with customers and reduce potential litigation and costs associated with data breaches.
Product Quality & Safety
Maintaining product quality and safety is crucial for the Food Retailers & Distributors industry, as contamination by pathogens, hazardous substances, or spoilage can present human health risks. Contamination can occur at any stage in the food value chain, including food production, processing, transportation, distribution, and retailing. While food retail companies may not be directly responsible for all food safety and recall incidents, they are involved in the process and may still experience financial ramifications, damage to brand value, lower revenues, and increased costs associated with recalls, lost inventory, or litigation. Measures to prevent spoilage and contamination include temperature control, frequent food inspection, and supplier selection.
Product Health & Nutrition
Increasing consumer awareness of food content and nutritional value, and the impact these can have on health, is shaping the Food Retailers & Distributors industry’s competitive landscape. Demand for food products that are made with natural ingredients or that are certified to be organic, low-fat, low-sugar, or made without genetically modified organisms (GMOs) has driven industry growth in recent years. Although the links between consumer health and certain foods are not well established, consumers have nonetheless shown preferences for food categories that are perceived to be more healthful. Food retailers that recognize the risks and opportunities presented by consumers’ shifting preferences and adapt to consumer demands are better positioned to capture opportunities for additional revenue and market share.
Selling Practices & Product Labeling
Product Labeling & Marketing
Communication with consumers through product labeling and marketing is an important facet of food retail. The accuracy and depth of information presented in food labeling is of growing importance to shoppers and regulators alike. It is especially relevant for the sale of private-label products manufactured for food retailers, given direct brand reputation impacts. To inform purchasing decisions, consumers today seek additional information about product ingredients, such as genetically modified organism (GMO) content, and other health and nutritional impacts. These issues can affect the competitive landscape of the industry, as companies may be subject to litigation or criticism resulting from making misleading statements or failing to adapt to consumer demand for increased labeling transparency. These factors can have an impact on retailers’ brand value and revenue growth. Additionally, regulations addressing the accurate labeling of products and their ingredients present the risk of penalties or litigation for food retail companies.
The Food Retailers & Distributors industry employs many hourly workers. Low average wages in the industry, which help companies maintain low prices for products, may result in labor-related risks. Worker dissatisfaction with wages and benefits, combined with high unionization rates, have led to employee strikes at major food retail companies, resulting in business disruption and reputational damage. Additionally, companies in the industry have been involved in gender and racial discrimination cases, sometimes resulting in costly financial settlements. Companies may benefit from taking a long-term perspective on managing workers, including their pay and benefits, in a way that protects the rights of workers and enhances their productivity while strengthening the company’s reputation and brand value.
Supply Chain Management
Management of Environmental & Social Impacts in the Supply Chain
Food retailers and distributors source merchandise from a wide range of manufacturers. These suppliers face a myriad of sustainability-related challenges that include resource conservation, water scarcity, animal welfare, fair labor practices, and climate change. When poorly managed, these issues can affect the price and availability of food. Additionally, consumers are increasingly concerned with the production methods, origins, and externalities associated with the foods they purchase, which may affect a company’s reputation. Food retailers and distributors can also work with suppliers on packaging design to generate cost savings in transport, improve brand reputation, and reduce the environmental impact. Companies that can address product supply risks by assessing and engaging with suppliers, implementing sustainable sourcing guidelines, and enhancing supply chain transparency will likely be better positioned to improve supply chain resiliency, mitigate reputational risks, and potentially increase consumer demand or capture new market opportunities.
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