Sustainable FMCG: Expert Insights on Ethical Sourcing, Regenerative Agriculture & Food Supply Chains

In an era where sustainability and ethical sourcing are no longer optional but essential, FMCG companies face increasing pressure to evolve their supply chains. From regenerative agriculture and fair labor practices to leveraging technologies like blockchain and AI, the industry is being reshaped by innovation and responsibility.

In a recent interview, Salloni Ghodawat, CEO, Ghodawat Consumer Ltd., shares her insights on how food brands can balance environmental and social impact with cost efficiency and scalability. How has technology helped them ensure transparency, traceability, and consumer trust in food sourcing? Also, how the brand has discovered practical strategies for reducing food waste, supporting smallholder farmers, and meeting consumer expectations for sustainability, all while maintaining profitability and trust

Q. 1. How can FMCG companies integrate regenerative agriculture and support smallholder farmers while maintaining cost efficiency and scalability?

The FMCG companies can advocate and support smallholder farming operations by training them on improved crop rotation, agroforestry practices, affordable equipment, and access to technology for all sustainability techniques. Farmer cooperatives and contract farming can take forms to provide a stable market economy at scale. Precision agriculture and digital marketplaces will make optimal use of resources to lower costs. Rewards, such as prizes for sustainable food and carbon credit opportunities, will encourage farmers to adopt environmentally friendly practices. Companies can balance cost efficiency and environmental impact if they match their effort to the consumer demand for sustainability.

Q. 2. What role can new-age technology (such as blockchain or AI) play in ensuring transparency, traceability, and consumer trust in food sourcing?

New-age technologies such as blockchain and AI are changing the face of the food supply chain through improved transparency, traceability, and consumer trust. Blockchain provides a safe, tamper-proof digital ledger that goes through the processing steps of food items from the farm to the fork. It can thus identify where the contamination or fraud came from and at the same time offer detailed information on a product's farming practices and history of transportation to the consumers. Blockchain further ensures smart contracts that comply with sustainability and ethical sourcing standards.

Similarly, AI plays a pivotal role by using predictive analytics to optimize inventory and ensure waste reduction, guaranteeing efficient supply chain operations. AI-powered tools can improve quality control by detecting defects in raw materials or finished goods, with consistent quality. AI helps brands by aligning their strategic sourcing that evolving ethical and sustainability expectations, which offers deep insights into consumer preferences to build consumer trust.

Q. 3. How can food brands balance the need for ethical labor practices with the complexities of global supply chains and ensure fair wages and working conditions?

Brands work within complex global supply chains characterized by multi-tiered networks, diverse geographies, and sometimes conflicting labor laws. Ethical labor practices can be hard to ensure, but building sustainable and responsible businesses relies on them. Brands can find the balance by prioritizing ethical standards, promoting supply chain transparency, obtaining fair wages, leveraging technology, empowering workers, advocating for legal and policy alignment, engaging stakeholders, and reporting progress. Food brands can dive into global supply chains and be a part of robust business models, gaining fair wages and better working conditions for workers in cases where they are effectively integrated into the core operations with partnerships.

Q. 4. What are the key strategies FMCG companies can adopt to reduce the environmental impact of sourcing ingredients like palm oil, soy, and cacao while maintaining sustainability goals?

FMCG companies can adopt several strategies to balance environmental impact and sustainability goals:

1. Protecting Natural Ecosystems

Ensure ingredients are not sourced from a deforested or converted natural ecosystem. Use globally recognized tools to identify and protect high-carbon stock forests, high conservation value areas, intact forest landscapes, peat soils, and ecologically sensitive landscapes.

2. Sustainable Sourcing Strategies

Implement robust certification standards (e.g., RSPO for palm oil), develop traceability systems, and maintain a clear chain of custody from agricultural origins to manufacturing. Regular supplier audits should be conducted, and suppliers must protect ecosystems, implement no-burning policies, and follow best management practices.

3. Human Rights and Social Responsibility

FMCG companies should respect and promote human rights in their supply chains, protect the land rights of indigenous communities, and adhere to Free, Prior, and Informed Consent (FPIC) principles. Eliminating forced and child labor, ensuring safe and fair working conditions, and empowering smallholder farmers are also essential.

4. Transparency and Monitoring

Conducting risk assessments of sourcing materials, mapping supply chains, and using technology to trace sustainability are necessary steps. FMCG companies should aim for traceability to the farm or plantation level and ensure compliance through independent verification.

5. Regenerative and Innovative Approaches

Invest in projects that restore degraded landscapes, support regenerative farming practices, and monitor risks with new technologies. Focus on restoring soil health, improving water quality, increasing biodiversity, and enhancing climate resilience.

6. Collaborative Ecosystem

Partnering with multi-stakeholder platforms, NGOs, trade unions, academic institutions, local communities, and governments helps us drive industry-wide sustainable transformation. Companies should support and improve commodity standards and advocate for systemic changes in global supply chains.

7. Remediation and Accountability

Develop grievance mechanisms, address non-compliance, take action against suppliers who fail to meet standards, and continuously update policies to ensure long-term progress toward sustainability goals.

Q. 5. What are the best practices for FMCG companies in reducing food waste throughout the supply chain, from production to retail, while aligning with sustainability goals?

FMCG companies can reduce food waste across the supply chain while advancing sustainability goals through strategic interventions. At the production level, smart farming technologies like IoT sensors and AI enable precise resource management, reducing waste and inefficiencies. Companies can also repurpose byproducts for secondary markets or animal feed, minimizing disposal. In the supply chain, advanced demand forecasting powered by AI ensures production aligns with consumer needs, preventing overstocking. Efficient logistics, including cold-chain technologies, reduce spoilage during transportation. At the retail level, practices like dynamic pricing encourage the sale of products nearing expiration, while clear labeling helps consumers make informed decisions and avoid unnecessary waste.

Q. 6. How are consumer demands for sustainability and ethical sourcing impacting food pricing, and how can brands balance profitability with these growing expectations?

The increase in the consumer demand for sustainability and ethical sourcing is altering food pricing and profitability dynamics. Sustainable and ethically sourced products involve higher costs due to environmentally friendly production practices, fair wages, and certifications, leading to premium pricing. Most consumers are willing to pay more for such products, forcing the brands to balance affordability with sustainability. By adopting new technologies like AI, blockchain, and IoT, the process for profitability becomes streamlined and less costly. Another way to justify premium pricing is to communicate the tangible benefits of sustainable practices, such as better health or reduced environmental impact. Finally, scaling up production as demand increases can reduce per-unit costs. Transparent communication about sourcing practices and environment-friendly impact further builds consumer trust.