The baking industry has woken up to the fact that sustainability is directly tied to business success and is actively adopting initiatives across the three pillars of sustainability: environmental, social responsibility and governance. “The State of the Industry: Sustainability Commitment in the US Wholesale Baking” study, commissioned by Baking & Snack and conducted by Cypress Research, intended to discover how committed the industry is to sustainability and what initiatives companies are investing in to achieve their goals. While findings suggest that the baking industry is behind the broader US manufacturing sector in its commitments, this research showed that the industry is working to close that gap with large baking companies and ingredient suppliers leading the charge.  

“At an industry level, it seems we’re at a breakpoint moment where sustainability is becoming much more central to business success than in the past,” said Marjorie Hellmer, president of Cypress Research.

The comprehensive study surveyed professionals from baking companies, ingredient and equipment manufacturers to get a 360-degree look at the industry’s commitment to sustainability. Survey respondents were asked to gauge their company’s sustainability commitments in terms of environmental, social responsibility and governance, and report on specific initiatives companies were tracking. This revealed a baseline for the industry’s commitment across all sectors. The data represents responses from 131 industry professionals, from baker and supplier companies at different levels of size and scope. 

The survey results were discussed in the “State of the Baking Industry: Sustainability and the Future of Baking” webinar in partnership with the American Bakers Association and sponsored by Corbion, which is available on demand. 

When it comes to prioritizing sustainability for business success over the next five years, the majority of participating baking companies believe it is important. Seventy-eight percent ranked environmental and social responsibility policies as important or extremely important to business success, and 69% ranked governance as important or extremely important. While these three aspects of sustainability fell behind priorities linked to operational success — streamlining operations, increasing market share and improving customer service being the top three — the majority of baking companies do see a link between investing in sustainability and the success of their businesses.

“While this is a baseline study — we can’t go back in time to see how this has changed from five or 10 years ago — for these initiatives to be tied to business success for the majority of bakers, that’s really impressive for the industry,” Ms. Hellmer said. “When we break this data out by size, however, we do see significant differences. Smaller to midsized bakeries indicated that sustainability is a priority, but to a lesser extent than larger companies.”

Eighty-three percent of baking companies with $100 million or more gross annual sales reported environmental policies as important to business success compared to 69% of companies with less than $100 million in annual sales. For governance, that gap was wider, with 57% of smaller to midsize companies reporting these policies as important or extremely important and 76% of larger companies prioritizing it. The two groups prioritize social responsibility nearly equally with 76% of small to midsize companies and 79% of larger baking companies reporting social programs to be important or extremely important to business success. 

Reporting that sustainability is important for business success is one thing. Developing a sustainability program and then setting measurable targets reveals where the baking industry stands on delivering that prioritization. When asked whether their company has sustainability programming in place to help manage business risks and opportunities, respondents said that the industry is experiencing breakneck change, a theme found throughout the study. 

“The findings show that baking companies and their sustainability leaders are being tasked with pivoting, drawing new road maps, and using a broader collaborative perspective between bakers and their supplier partners to transform and grow their businesses,” Ms. Hellmer explained. “This need to continue to redesign business models, in part by expecting greater sustainable impacts, is necessary given back-to-back global crises that have resulted in supply chain disruption and increasing economic certainty.” 

Ingredient suppliers lead the way with 62% having a program in place, 14% currently developing one and 10% considering one in the next 24 months. Forty-three percent of baking companies have a program in place, 33% are developing a program and nine percent are considering one. Equipment manufacturers had the least percentage of respondents reporting no plans at only 6%. Forty-seven percent of equipment manufacturers reported having a program in place and 24% reported a program was under development now or being considered in the next two years. According to research conducted by the National Association of Manufacturers (NAM), 72% of US manufacturing companies reported having a corporate responsibility or sustainability policy, program or goals in place. 

“Even with our group that has the most programs in place, ingredient suppliers at 62%, that’s still a 10-point gap compared to broader US manufacturing, and those large wholesale bakers and equipment suppliers are either at 50% or just under, so the industry has some room to catch up,” Ms. Hellmer said. “And we know from the data that this is because a fairly large proportion of respondents indicate that their companies are still developing or considering initiating a program.” 

The reasons some sectors may be on the growth curve while others have already arrived can be found in the data around drivers for sustainability engagement. When asked what motivates their company to engage in sustainability, wholesale bakers said customer demand (54%) and market/consumer demand (48%), and equipment manufacturers likewise were driven by market/consumer demand (53%) and customer demand (47%). Nearly six in 10 ingredient manufacturers, on the other hand, cited company business model preference as their primary driver followed by customer demand (55%) and market/consumer demand (52%).  

Another key insight into a company’s level of commitment to its sustainability initiatives is ownership: Is there a person at the company whose primary responsibility is sustainability programming? The different sectors of the baking industry were fairly close together on this with 59% of both sectors of the supply chain reporting yes, and 51% of all baking company professionals indicating yes. When baking professional responses were broken out by company size, there was a stark difference, however. Only 33% of smaller to midsize companies reported having designated senior personnel to handle sustainability, compared to 63% of larger baking companies, putting them ahead of their ingredient supplier counterparts.  

While the baking industry as a whole may have some catching up to do with wider manufacturing, the study results show that companies aren’t ignoring this issue. Plenty of respondents reported their companies are working toward having programs in place in the future, revealing that the industry is prioritizing sustainability. 

This article is an excerpt from the October 2023 issue of Baking & Snack. To read the entire feature on Sustainability, click here.