Understanding the Role of ESG in the Nutritional Supplements Industry

Understanding the Role of ESG in the Nutritional Supplements Industry
7 min read
25 October 2023

Robust environmental, social and governance (ESG) performance has become a hallmark of a sustainable-focused nutritional supplements industry. The ethos of sustainability has gradually become interwoven in the corporate environment. The ESG performance has gradually become one of the deciding factors for consumers, including millennials, baby boomers and people of all genders during their buying journey. The strategic approach to meet sustainability goals will foster a responsible business practice to achieve Sustainable Development Goals (SDGs).

Investors, venture capitalists, entrepreneurs and other stakeholders have raised their ESG bar as sustainability has assumed a vanguard position in boardrooms. Green initiatives to create positive change will encourage companies to fulfill their ESG targets, including but not limited to, good corporate governance, healthy workplace, reduced environmental impact of product life cycle and propel diversity.

Nestle Creates Ripple Effect with Bullish Environmental Goals

Amid the knock-on effects of Russia’s invasion of Ukraine, supply chain disruptions and energy shortages, companies have shown a strong commitment to health and nutrition. Nestle is on a path towards net zero emissions by 2050 as it aims to reduce greenhouse gas emissions by 50% by 2030 from the 2018 baseline. The food giant is also committed to sourcing 20% of key ingredients through regenerative agriculture techniques by 2025. The Swiss company has audacious goals to minimize virgin plastics by one-third by 2025 and reduce water use in factories by 6 million between 2021 and 2023.

The shift to regenerative farming and a renewed focus on recycling have become palpable to help farmers protect forests and the ecosystem. The urge to bolster environmental profile has prompted Nestle to not only put a break on scope 1 & 2 emissions but also scope 3, a go-to strategy to bolster regenerative food systems. In 2022, the food & drink company collaborated with farmers to help them store carbon in soil and enhance biodiversity, soil health, water security and quality. 

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Amway Gives Back to Communities

Nutritional supplement manufacturers are navigating opportunities and challenges stemming from the prevalence of malnutrition. UNICEF reported in June 2022 that around 8 million children under 5 were prone to death from severe wasting (in 15 crisis-hit countries). The spiraling global food shortage on the back of climate change, the COVID-19 pandemic and the Russia-Ukraine war have compelled leading players to bolster their commitment to society. 

Amway has joined forces with global organizations and Nutrilite scientists to introduce a micronutrient powder Nutrilite Little Bits, to offer essential nutrients required for proper growth. In August 2022, over 400 Amway employees served 17 non-profit organizations, clocking over 2,700 volunteer hours and underpinning 24 projects, including packing meals for community distribution. Besides, the company has taken a giant leap in bolstering inclusive entrepreneurship, allowing people to build the tools required to establish their businesses. The U.S.-based company has provided digital platforms, tools and free educational resources to over one million Amway Business Owners (ABOs).

Governance Garners Stakeholders’ Attention in Herbalife

Lately, investors and corporates are investing in ESG integration, emphasizing transparency, traceability, risk identification, ethics & compliance and board diversity. In doing so, effective February 11, 2022, Herbalife Nutrition Ltd. announced that the ESG Committee would help the board oversee ESG activities and practices, such as stakeholder engagement and risks, programs, policies and practices. 

The committee would comprise the Board-appointed three directors. Some duties and responsibilities, such as reviewing investor governance sentiment in coordination with the nominating and corporate governance committee, have strengthened the company’s governance pillar. It has fostered its corporate governance policies to further ESG performance. In essence, the director must be deemed independent to be eligible for the Board’s Audit Committee, Nominating and Corporate Governance Committee and Compensation Committee. 

The nutrition company has received bullish support from the board toward digitization. To illustrate, in August 2022, the Board gave a green signal for digital transformation as the American company announced an infusion of USD 400 million to bolster the growth initiative.  

The underlying business trends indicate that brands will emphasize sustainability as ESG emerges as a key evaluation parameter. Predominantly, Glanbia has pledged to minimize carbon emissions (scope 1 and 2) by 31% in manufacturing sites by 2030. The company is also committed to a 50% reduction in food waste by 2030 and zero waste to landfill at operational sites by 2025. The global nutritional supplement market could depict a 6.3% CAGR between 2022 and 2030, infers Grand View Research. 

Key Companies in this theme

    • Amway

    • Nestle

    • Glabania PLC

    • PepsiCo

    • Herbalife International of America

    • Abbott Nutrition

 About Astra – ESG Solutions By Grand View Research

Astra is the Environmental, Social, and Governance (ESG) arm of Grand View Research Inc. - a global market research publishing & management consulting firm.

Astra offers comprehensive ESG thematic assessment & scores across diverse impact & socially responsible investment topics, including both public and private companies along with intuitive dashboards. Our ESG solutions are powered by robust fundamental & alternative information. Astra specializes in consulting services that equip corporates and the investment community with the in-depth ESG research and actionable insight they need to support their bottom lines and their values. We have supported our clients across diverse ESG consulting projects & advisory services, including climate strategies & assessment, ESG benchmarking, stakeholder engagement programs, active ownership, developing ESG investment strategies, ESG data services, build corporate sustainability reports. Astra team includes a pool of industry experts and ESG enthusiasts who possess extensive end-end ESG research and consulting experience at a global level.

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