Sustainability in the food chain: how should your business respond to new risks associated with your green ambitions?

The regulation, which came into force on 11 February 2025, replaces the previous legislation (Packaging and Packaging Waste Directive 94/62/EC). Its aim is to minimise the environmental impact of packaging by setting stricter rules on the composition, design, recyclability and reusability of packaging. One important difference is that a regulation applies directly in all EU member states, without national governments being able to come up with their own interpretations. This ensures a uniform approach throughout the EU.

Food companies are faced with the challenge of maintaining efforts to increase sustainability in their packaging process. This challenge also brings opportunities. Businesses have the chance to stand out from their competitors, increase brand value and gain entry into new markets.

All these green ambitions are naturally coupled with new risks that merit careful consideration. Here are three of them:

• Complexity of traceability
  
  Traceability is crucial to sustainability. Consumers want to know where their food comes from, how it was produced and what impact this has on the environment and local communities.
  
  Implementing a watertight traceability system is a complex matter, especially in a global supply chain with countless links. Businesses need to invest in technology, processes and cooperation with suppliers to ensure a transparent and reliable chain.
  
  Failure to do so can lead to reputational damage, recalls and legal claims.
  
• New materials
  
  The search for sustainable packaging materials has led to innovative solutions such as bioplastics, compostable packaging and recycled materials. Many food companies are real pioneers in this area.
  
  Promising though these alternatives are, they also bring new risks with them. For example, bioplastics can place specific demands on processing and recycling, while compostable packaging is not always suitable for existing waste processing systems. What’s more, the leaching of chemicals from recycled materials into food products can pose a risk to food safety. The basic function of packaging, of course, is still to protect the product against mould, bacteria and other forms of contamination.
  
• Climate vagaries
  
  Climate change is a serious threat to the food industry. Extreme weather conditions such as droughts, flooding and heat waves can have an adverse effect on agricultural production, potentially leading to shortages, price rises and supply chain disruption.
  
  Businesses need to prepare for these uncertainties by investing in climate-resilient agricultural practices, diversification of supply sources and risk management strategies. The last two of these in particular will often have a major impact on the survival of a food company when disaster strikes.
  
  In addition to the effect on production and supply, climate also has a tangible effect on the commercial property market. It goes without saying that the damage caused by climate change affects the profitability and continuity of food processing companies and suppliers. Owners, operators and managers should therefore be aware of the new risks. What is and isn’t insured in the event of flooding, extreme precipitation, drought and storms? It could be useful, for example, to perform a climate analysis and modify existing or future construction plans in light of the results.

Investing in sustainability is essential for the food industry’s future, but it is also important to identify and manage the associated risks. This calls for thorough risk management and the introduction of new emphases for preventive measures.

A suitable insurance solution is vital here. Has your business ever considered the following risks?

• Product liability: Are the risks of new ingredients or packaging materials covered properly by your product liability insurance?
• Product contamination: As well as your liability to third parties, are you also insured for the damage you yourself incur in the event of contamination?
• Loss of profits: Are you prepared for the financial consequences of supply chain disruption caused by climate change? Or after a cyber attack? Or due to a malfunction in your cooling installations?
• Environmental liability: Are the risks of environmental damage resulting from new production processes adequately covered?
• Reputational damage: What are the potential consequences of negative publicity about the sustainability of your products or business operations?

It is crucial to evaluate your company’s risk management strategies and insurance solutions on a regular basis and adapt them to the changing risks of sustainable business activity.

It is advisable to conduct a thorough risk assessment together with an experienced insurance broker to make sure that you have proper protection against the financial consequences of possible damage claims, recalls and other incidents. So that you can invest in a sustainable future with confidence.

More info?

Would you like more information or tailor-made advice with a view to adapting your insurance to the risks arising from your sustainability initiatives? Contact us today at