Cutting Food Waste Is Saving Companies Money (and Helping the Climate Too)

For every dollar companies spent reducing food losses, they saw a $14 savings in operating costs, report finds.

Food scraps are seen in a compost bin in San Francisco, California. Food companies that control their food waste are seeing major returns, and climate benefits. Credit: Justin Sullivan/Getty Images

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Food producers and sellers have long considered food waste—food that’s grown and processed, but never eaten—a cost of doing business. But companies that are investing in reducing food losses are actually getting a hefty financial boost, according to a report released Monday.

The report by the World Resources Institute analyzed 700 companies across a variety of food industries in the United States and 16 other countries. It found that 99 percent of those business had a positive return on their investments. For every dollar on average the companies spent cutting food waste, they saw a $14 savings in operating costs.

“In other words reducing waste is a real business opportunity,” said Dave Lewis, group chief executive officer at UK-based supermarket giant Tesco, in a call with reporters.

That, researchers say, should motivate more companies and governments to cut food waste, while at the same time cultivating a major tool for stemming climate change. Food waste generates about 8 percent of global greenhouse gas emissions a year in part because much of it ends up rotting in landfills, generating methane.

“If it was a country, [food waste] would be the third-largest emitter in the world. It also consumes a huge amount of resources,” Lewis said. “There are strong social and environmental reasons to reduce food waste, and now there’s also an economic case.”

Companies with the highest returns tended to be restaurants, while hotels, food makers and food retailers had returns between 5 to 1 and 10 to 1. The research, WRI said, was the first of its kind.

The report, prepared for Champions 12.3, a group of businesses and groups working to meet the United Nations’ goal of halving food waste by 2030, comes as the issue has gained traction in the U.S. Globally, a third of all food produced for human consumption never makes it the plate. In the U.S., that figure is as high as 40 percent and represents nearly $220 billion a year.

The U.S. Department of Agriculture and the Environmental Protection Agency in 2015 set a goal of cutting food waste in half by 2030, but it’s unclear whether that effort will continue under the Tump administration.

“I don’t think this is at the top of their agenda,” said Diane Holdorf, chief sustainability officer and vice president of cereal maker Kellogg’s.

The administration, meanwhile, has proposed slashing foreign aid, which could include food aid, to pay for military spending. The move comes as famine from drought—much of it driven by climate change—engulfs as many 20 million people, especially in East Africa. In Sub-Saharan Africa alone, the WRI report notes, post-harvest losses amount to $4 billion a year. Globally, food lost and wasted results in economic losses of $940 billion a year.

In developing countries, more food is wasted because it never makes it to market or into kitchens because of distribution and logistics problems, whereas in developed countries more food waste is generated by consumers, retailers and restaurants, which end up throwing good food away.

The WRI data, the researchers hope, will spur companies to address food waste, even if public policy isn’t as robust as it might be. Last month, U.S. Rep. Chellie Pingree (D-Maine) said she plans to reintroduce legislation this year that would standardize language on date labels. These labels—which include “sell by,” “use by” or “expires on”—end up confusing consumers who toss food away prematurely because they assume the labels are an indication of food safety when they’re not.

A report released last year found that standardizing date labeling could help divert nearly 400,000 tons of food a year from the dump and is the most cost-effective solution for reducing food waste.

Last month, the Grocery Manufacturers Association, which represents the country’s biggest food makers, launched a voluntary program to streamline labels with just two phrases, “Best if Used By,” which indicates optimal quality, and “Best By,” which addresses food safety.

Lewis said that governments and businesses aren’t doing enough to tackle food waste, but are making strides.

“In the U.S. there’s been quite a lot of engagement and progress,” he said,” particularly in the last 12 months.”