Skip to content
HSBC LogoHSBC Logo
Back to Insights
  • Sustainability
    • Understanding ESG

Tackling food and packaging waste

Article

  • Article

Future of Food by Lucy Acton, Associate Director ESG at HSBC Global Research.

The pandemic has highlighted the need for efficient food supply chains, and the importance of food surplus redistribution to the vulnerable.

Household food waste fell during lockdowns as shoppers purchased and consumed more efficiently, but this trend is now in reverse. The movement for addressing plastic waste appears in flux too; bans and charges on single use carrier bags have been lifted in many places over hygiene concerns. Ocean conservationists have warned of the impacts this is having on marine plastic waste.

It is more important than ever that retailers prioritise food waste and packaging waste in their sustainability policies to minimise reputational and regulatory risks. Food and packaging waste are important global themes in the UN Sustainable Development Goals (SDGs) and circular economy plans. The SDGs target a 50% fall in food waste by 2030. 1

We believe that retailers will increasingly be under scrutiny for food waste generation, and that this should therefore form a key part of their ESG risk considerations.

Lucy Acton, Associate Director ESG at HSBC Global Research

“Reducing more than 1 billion tons of food that’s lost or wasted each year would bring big social, environmental and economic benefits – but bringing these benefits to scale requires action across the entire supply chain,” according to Dr Andrew Steer, President and CEO, World Resources Institute.2

Food production is resource and emissions intensive and even more so when it is wasted, where it accounts for c.8% of anthropogenic GHGs (WWF). Intensive agricultural practices lead to loss of ecological services and biodiversity.

As awareness and policy level discussions about circular economies and food waste rise up the agendas of many economies and societies, we believe that retailers will increasingly be under scrutiny for food waste generation, and that this should therefore form a key part of their ESG risk considerations.

The circular economy is a relatively new concept and particularly challenging to implement in an industry such as food retail where the product lifecycle is short and transactions volume are very large. The potential for leakage is significant and infrastructure will be a challenge for retailers. It may well be very hard to gain consumer buy in and establish new behaviours.

There is likely to be consumer resistance to refillables for a range of reasons, including hygiene concerns, convenience, and willingness to pay a deposit for packaging. This is an area of innovation and it is naturally going to take time for the industry to learn the best way of operating and to find balance. In this context, we can only really judge companies on the effort they are making rather than the initial success they have

Sustainability frameworks incorporate packaging and food waste. Retailers suffer increased costs when they generate food waste along the supply chain, and consumer and policymaker sentiment means the pressure is on to burnish credentials in this area to mitigate reputational risk.

For more insights from Lucy or the wider Global Research team: https://www.gbm.hsbc.com/author?author=lucy-acton

How MENAT is forming a food-secure future

Food security has been a perennial issue for Middle East, North Africa and Türkiye (MENAT) countries due to the scarcity of water, arid climate and dependence on imports across the region.

Despite its governments’ investment in agricultural technology and purchase of farmland abroad for food cultivation, the region remains a net food importer. Addressing food security will require stakeholders to focus on three key areas: supply-side issues, societal changes, and the environment.

Food systems during COVID-19

Indeed, supply chain disruptions as a result of the COVID-19 crisis have already led to higher food prices across the world3. And with the global population expected to reach 9.7 billion by 20504, governments, companies and consumers will need to review consumption habits and create a sustainable ecosystem that ensures the availability of affordable healthy food and ingredients to everyone.

The imminent surge in food consumption is in contrast to stagnant production levels. The Global Agriculture Productivity Report 20205suggests the world’s food productivity is growing at 1.63%, which is short of the 1.73% needed to feed the world.

Stocking up

Over the past decades, MENAT countries have invested heavily in boosting local production and committing to local agriculture supply chains. Investments in new agri-tech innovations such as hydroponics and vertical farming is also ensuring that they focus on high-yield crops that don’t stress water and power resources.

As such, the value of agriculture production in MENAT has more than doubled to US$ 37 billion in 2019, compared to US$ 16 billion in 2000, according to FAO6. Meat production also surged to US$ 70.5 billion in 2019, from US$ 31.34 billion nearly two decades earlier.7

Diversification of food imports and ease of access to food are also priorities for MENAT countries, given that many of them will remain net food importers for the foreseeable future.

Reducing Waste and waistlines

Food waste is another issue in many MENA countries The average annual amount of food waste is estimated at 427 kg per person in KSA, 197 kg per person in the UAE and 73 kg per person in Egypt, compared with the 95-115 kg average per person in Europe and North America, according to an HSBC-EY Food for the Future report.

The Saudi Grains Organisation8 noted that 33% of food in the kingdom is wasted, costing the economy US$ 10.7 billion. In the UAE, it has reached US$ 4 billion.9

Gulf countries have rolled out a number of initiatives and promotional campaigns to raise awareness and promote sustainable consumption. The UAE’s Food Waste Pledge10, for example, helped the country recover nearly 2 million meals in 2019.

The UAE Ministry of Climate Change and Environment deployed digital tools to drive improvements in kitchen production processes and to help cut food waste in half, saving money and reducing environmental footprint at the same time.

Building sustainable networks

Crop diversification that provides more depth to the region’s food stock and leverages technology is another vital tool in the countries’ arsenal to combat food security challenges. The focus on technology is also spurring more entrepreneurial ventures in parts of the region.

In 2019, HSBC teamed up with the International Centre for Biosaline Agriculture (ICBA) to “build sustainable networks and unleash the entrepreneurial potential of farming communities living in the marginal environments of Egypt and the UAE.”11

The desertification of land and changes to the environment have made MENAT’s agriculture and food companies even more concerned of the climate crisis at hand.

The UAE is boosting investment in R&D for sustainable agriculture and agri-tech with a commitment to invest US$ 1.5 billion over five years.

In 2019, Saudi Arabia launched the Sustainable Agricultural Rural Development Program valued at US$ 1.78 billion, in a bid to boost production, processing and marketing of fruit, fish, livestock and Arabic coffee, and the systematic cultivation of rain-fed crop.12

There is a concerted effort to produce durable, healthy and sustainable foods in the region. Tailoring crops to the environment is also crucial to planting the seeds of a more efficient agriculture sector in the region.

All aspects of society – governments, corporations and the wider society will need to play their part to improve food security in the region. And there are clear signs that all three stakeholders are conscious that agriculture produce needs to be seen in a new light in an era of sustainability.

The upside of improving food and agriculture efficiency is huge. It would help lower regional countries’ food import bills, improve health and lifestyles of citizens, inject entrepreneurship and investment opportunities in the sector, and reduce dependence on highly fragile and volatile supply chains.

Footnotes

Analyst Certification
The following analyst(s), economist(s), or strategist(s) who is(are) primarily responsible for this report, including any analyst(s) whose name(s) appear(s) as author of an individual section or sections of the report and any analyst(s) named as the covering analyst(s) of a subsidiary company in a sum-of-the-parts valuation certifies(y) that the opinion(s) on the subject security(ies) or issuer(s), any views or forecasts expressed in the section(s) of which such individual(s) is(are) named as author(s), and any other views or forecasts expressed herein, including any views expressed on the back page of the research report, accurately reflect their personal view(s) and that no part of their compensation was, is or will be directly or indirectly related to the specific recommendation(s) or views contained in this research report: Lucy Acton, CFA

Important disclosures

Equities: Stock ratings and basis for financial analysis
HSBC and its affiliates, including the issuer of this report (“HSBC”) believes an investor's decision to buy or sell a stock should depend on individual circumstances such as the investor's existing holdings, risk tolerance and other considerations and that investors utilise various disciplines and investment horizons when making investment decisions. Ratings should not be used or relied on in isolation as investment advice. Different securities firms use a variety of ratings terms as well as different rating systems to describe their recommendations and therefore investors should carefully read the definitions of the ratings used in each research report. Further, investors should carefully read the entire research report and not infer its contents from the rating because research reports contain more complete information concerning the analysts' views and the basis for the rating.

From 23rd March 2015 HSBC has assigned ratings on the following basis:
The target price is based on the analyst’s assessment of the stock’s actual current value, although we expect it to take six to 12 months for the market price to reflect this.  When the target price is more than 20% above the current share price, the stock will be classified as a Buy; when it is between 5% and 20% above the current share price, the stock may be classified as a Buy or a Hold; when it is between 5% below and 5% above the current share price, the stock will be classified as a Hold; when it is between 5% and 20% below the current share price, the stock may be classified as a Hold or a Reduce; and when it is more than 20% below the current share price, the stock will be classified as a Reduce.
Our ratings are re-calibrated against these bands at the time of any 'material change' (initiation or resumption of coverage, change in target price or estimates).
Upside/Downside is the percentage difference between the target price and the share price.

Prior to this date, HSBC’s rating structure was applied on the following basis:
For each stock we set a required rate of return calculated from the cost of equity for that stock’s domestic or, as appropriate, regional market established by our strategy team. The target price for a stock represented the value the analyst expected the stock to reach over our performance horizon. The performance horizon was 12 months. For a stock to be classified as Overweight, the potential return, which equals the percentage difference between the current share price and the target price, including the forecast dividend yield when indicated, had to exceed the required return by at least 5 percentage points over the succeeding 12 months (or 10 percentage points for a stock classified as Volatile*). For a stock to be classified as Underweight, the stock was expected to underperform its required return by at least 5 percentage points over the succeeding 12 months (or 10 percentage points for a stock classified as Volatile*).  Stocks between these bands were classified as Neutral.
*A stock was classified as volatile if its historical volatility had exceeded 40%, if the stock had been listed for less than 12 months (unless it was in an industry or sector where volatility is low) or if the analyst expected significant volatility.  However, stocks which we did not consider volatile may in fact also have behaved in such a way.  Historical volatility was defined as the past month's average of the daily 365-day moving average volatilities.  In order to avoid misleadingly frequent changes in rating, however, volatility had to move 2.5 percentage points past the 40% benchmark in either direction for a stock's status to change.

Rating distribution for long-term investment opportunities
As of 02 October 2020, the distribution of all independent ratings published by HSBC is as follows:

Buy

56%

( 32% of these provided with Investment Banking Services )

Hold

35%

( 32% of these provided with Investment Banking Services )

Sell

9%

( 25% of these provided with Investment Banking Services )

For the purposes of the distribution above the following mapping structure is used during the transition from the previous to current rating models: under our previous model, Overweight = Buy, Neutral = Hold and Underweight = Sell; under our current model Buy = Buy, Hold = Hold and Reduce = Sell.  For rating definitions under both models, please see “Stock ratings and basis for financial analysis” above.

For the distribution of non-independent ratings published by HSBC, please see the disclosure page available at http://www.hsbcnet.com/gbm/financial-regulation/investment-recommendations-disclosures.

To view a list of all the independent fundamental ratings disseminated by HSBC during the preceding 12-month period, please use the following links to access the disclosure page:
Clients of Global Research and Global Banking and Markets: www.research.hsbc.com/A/Disclosures
Clients of HSBC Private Banking: www.research.privatebank.hsbc.com/Disclosures

HSBC and its affiliates will from time to time sell to and buy from customers the securities/instruments, both equity and debt (including derivatives) of companies covered in HSBC Research on a principal or agency basis or act as a market maker or liquidity provider in the securities/instruments mentioned in this report.
Analysts, economists, and strategists are paid in part by reference to the profitability of HSBC which includes investment banking, sales & trading, and principal trading revenues.
Whether, or in what time frame, an update of this analysis will be published is not determined in advance.

Non-U.S. analysts may not be associated persons of HSBC Securities (USA) Inc, and therefore may not be subject to FINRA Rule 2241 or FINRA Rule 2242 restrictions on communications with the subject company, public appearances and trading securities held by the analysts.
Economic sanctions imposed by the EU and OFAC prohibit transacting or dealing in new debt or equity of Russian SSI entities. This report does not constitute advice in relation to any securities issued by Russian SSI entities on or after July 16 2014 and as such, this report should not be construed as an inducement to transact in any sanctioned securities.

For disclosures in respect of any company mentioned in this report, please see the most recently published report on that company available at www.hsbcnet.com/research. HSBC Private Banking clients should contact their Relationship Manager for queries regarding other research reports. In order to find out more about the proprietary models used to produce this report, please contact the authoring analyst.

Additional disclosures

1

This report is dated as at 02 October 2020.

2

All market data included in this report are dated as at close 30 September 2020, unless a different date and/or a specific time of day is indicated in the report.

3

HSBC has procedures in place to identify and manage any potential conflicts of interest that arise in connection with its Research business. HSBC's analysts and its other staff who are involved in the preparation and dissemination of Research operate and have a management reporting line independent of HSBC's Investment Banking business. Information Barrier procedures are in place between the Investment Banking, Principal Trading, and Research businesses to ensure that any confidential and/or price sensitive information is handled in an appropriate manner.

4

You are not permitted to use, for reference, any data in this document for the purpose of (i) determining the interest payable, or other sums due, under loan agreements or under other financial contracts or instruments, (ii) determining the price at which a financial instrument may be bought or sold or traded or redeemed, or the value of a financial instrument, and/or (iii) measuring the performance of a financial instrument or of an investment fund.

Disclaimer

Legal entities as at 1 September 2020
'UAE' HSBC Bank Middle East Limited, DIFC; HSBC Bank Middle East Limited, Dubai; ‘HK’ The Hongkong and Shanghai Banking Corporation Limited, Hong Kong; ‘TW’ HSBC Securities (Taiwan) Corporation Limited; 'CA' HSBC Securities (Canada) Inc.; HSBC France, S.A., Madrid, Milan, Stockholm; ‘DE’ HSBC Trinkaus & Burkhardt AG, Düsseldorf; 000 HSBC Bank (RR), Moscow; ‘IN’ HSBC Securities and Capital Markets (India) Private Limited, Mumbai; ‘JP’ HSBC Securities (Japan) Limited, Tokyo; ‘EG’ HSBC Securities Egypt SAE, Cairo; ‘CN’ HSBC Investment Bank Asia Limited, Beijing Representative Office; The Hongkong and Shanghai Banking Corporation Limited, Singapore Branch; The Hongkong and Shanghai Banking Corporation Limited, Seoul Securities Branch; The Hongkong and Shanghai Banking Corporation Limited, Seoul Branch; HSBC Securities (South Africa) (Pty) Ltd, Johannesburg; HSBC Bank plc, London, Tel Aviv; ‘US’ HSBC Securities (USA) Inc, New York; HSBC Yatirim Menkul Degerler AS, Istanbul; HSBC México, SA, Institución de Banca Múltiple, Grupo Financiero HSBC; HSBC Bank Australia Limited; HSBC Bank Argentina SA; HSBC Saudi Arabia Limited; The Hongkong and Shanghai Banking Corporation Limited, New Zealand Branch incorporated in Hong Kong SAR; The Hongkong and Shanghai Banking Corporation Limited, Bangkok Branch; PT Bank HSBC Indonesia; HSBC Qianhai Securities Limited; Banco HSBC S.A.

Issuer of report
HSBC Bank plc
8 Canada Square, London
E14 5HQ, United Kingdom
Telephone: +44 20 7991 8888
Fax: +44 20 7992 4880
Website: www.research.hsbc.com

This document is issued and approved in the United Kingdom by HSBC Bank plc for the information of its Clients (as defined in the Rules of FCA) and those of its affiliates only. If this research is received by a customer of an affiliate of HSBC, its provision to the recipient is subject to the terms of business in place between the recipient and such affiliate. In Australia, this publication has been distributed by The Hongkong and Shanghai Banking Corporation Limited (ABN 65 117 925 970, AFSL 301737) for the general information of its “wholesale” customers (as defined in the Corporations Act 2001).  Where distributed to retail customers, this research is distributed by HSBC Bank Australia Limited (ABN 48 006 434 162, AFSL No. 232595).  These respective entities make no representations that the products or services mentioned in this document are available to persons in Australia or are necessarily suitable for any particular person or appropriate in accordance with local law. No consideration has been given to the particular investment objectives, financial situation or particular needs of any recipient.
The document is distributed in Hong Kong by The Hongkong and Shanghai Banking Corporation Limited and in Japan by HSBC Securities (Japan) Limited.  Each of the companies listed above (the “Participating Companies”) is a member of the HSBC Group of Companies, any member of which may trade for its own account as Principal, may have underwritten an issue within the last 36 months or, together with its Directors, officers and employees, may have a long or short position in securities or instruments or in any related instrument mentioned in the document. Brokerage or fees may be earned by the Participating Companies or persons associated with them in respect of any business transacted by them in all or any of the securities or instruments referred to in this document. In Korea, this publication is distributed by either The Hongkong and Shanghai Banking Corporation Limited, Seoul Securities Branch ("HBAP SLS") or The Hongkong and Shanghai Banking Corporation Limited, Seoul Branch ("HBAP SEL") for the general information of professional investors specified in Article 9 of the Financial Investment Services and Capital Markets Act (“FSCMA”). This publication is not a prospectus as defined in the FSCMA. It may not be further distributed in whole or in part for any purpose. Both HBAP SLS and HBAP SEL are regulated by the Financial Services Commission and the Financial Supervisory Service of Korea. This publication is distributed in New Zealand by The Hongkong and Shanghai Banking Corporation Limited, New Zealand Branch incorporated in Hong Kong SAR.
The information in this document is derived from sources the Participating Companies believe to be reliable but which have not been independently verified. The Participating Companies make no guarantee of its accuracy and completeness and are not responsible for errors of transmission of factual or analytical data, nor shall the Participating Companies be liable for damages arising out of any person’s reliance upon this information. All charts and graphs are from publicly available sources or proprietary data. The opinions in this document constitute the present judgement of the Participating Companies, which is subject to change without notice. From time to time research analysts conduct site visits of covered issuers. HSBC policies prohibit research analysts from accepting payment or reimbursement for travel expenses from the issuer for such visits. This document is neither an offer to sell, purchase or subscribe for any investment nor a solicitation of such an offer.
HSBC Securities (USA) Inc. accepts responsibility for the content of this research report prepared by its non-US foreign affiliate. The information contained herein is under no circumstances to be construed as investment advice and is not tailored to the needs of the recipient.  All US persons receiving and/or accessing this report and intending to effect transactions in any security discussed herein should do so with HSBC Securities (USA) Inc. in the United States and not with its non-US foreign affiliate, the issuer of this report. In Singapore, this publication is distributed by The Hongkong and Shanghai Banking Corporation Limited, Singapore Branch for the general information of institutional investors or other persons specified in Sections 274 and 304 of the Securities and Futures Act (Chapter 289) (“SFA”) and accredited investors and other persons in accordance with the conditions specified in Sections 275 and 305 of the SFA. Only Economics or Currencies reports are intended for distribution to a person who is not an Accredited Investor, Expert Investor or Institutional Investor as defined in SFA. The Hongkong and Shanghai Banking Corporation Limited, Singapore Branch accepts legal responsibility for the contents of reports pursuant to Regulation 32C(1)(d) of the Financial Advisers Regulations. This publication is not a prospectus as defined in the SFA. This publication is not a prospectus as defined in the SFA. It may not be further distributed in whole or in part for any purpose. The Hongkong and Shanghai Banking Corporation Limited Singapore Branch is regulated by the Monetary Authority of Singapore. Recipients in Singapore should contact a "Hongkong and Shanghai Banking Corporation Limited, Singapore Branch" representative in respect of any matters arising from, or in connection with this report. Please refer to The Hongkong and Shanghai Banking Corporation Limited Singapore Branch’s website at www.business.hsbc.com.sg for contact details. HSBC México, S.A., Institución de Banca Múltiple, Grupo Financiero HSBC is authorized and regulated by Secretaría de Hacienda y Crédito Público and Comisión Nacional Bancaria y de Valores (CNBV).
In Canada, this document has been distributed by HSBC Securities (Canada) Inc. (member IIROC), and/or its affiliates.  The information contained herein is under no circumstances to be construed as investment advice in any province or territory of Canada and is not tailored to the needs of the recipient. No securities commission or similar regulatory authority in Canada has reviewed or in any way passed judgment upon these materials, the information contained herein or the merits of the securities described herein, and any representation to the contrary is an offense. In Brazil, this document has been distributed by Banco HSBC S.A. ("HSBC Brazil"), and/or its affiliates. As required by Instruction No. 598/18 of the Securities and Exchange Commission of Brazil (Comissão de Valores Mobiliários), potential conflicts of interest concerning (i) HSBC Brazil and/or its affiliates; and (ii) the analyst(s) responsible for authoring this report are stated on the chart above labelled "HSBC & Analyst Disclosures".
The document is intended to be distributed in its entirety. Unless governing law permits otherwise, you must contact a HSBC Group member in your home jurisdiction if you wish to use HSBC Group services in effecting a transaction in any investment mentioned in this document. HSBC Bank plc is registered in England No 14259, is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority and is a member of the London Stock Exchange. (070905)
If you are an HSBC Private Banking (“PB”) customer with approval for receipt of relevant research publications by an applicable HSBC legal entity, you are eligible to receive this publication. To be eligible to receive such publications, you must have agreed to the applicable HSBC entity’s terms and conditions (“KRC Terms”) for access to the KRC, and the terms and conditions of any other internet banking service offered by that HSBC entity through which you will access research publications using the KRC.  Distribution of this publication is the sole responsibility of the HSBC entity with whom you have agreed the KRC Terms.
If you do not meet the aforementioned eligibility requirements please disregard this publication and, if you are a customer of PB, please notify your Relationship Manager.  Receipt of research publications is strictly subject to the KRC Terms, which can be found at https://research.privatebank.hsbc.com/  – we draw your attention also to the provisions contained in the Important Notes section therein.
© Copyright 2020, HSBC Bank plc, ALL RIGHTS RESERVED. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, on any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of HSBC Bank plc. MCI (P) 077/12/2019, MCI (P) 016/02/2020

  • Sustainability
    • Understanding ESG

Need help?

Get in touch to learn more about our banking solutions.