Food and Drink Firms Secure £52m in Sustainability Funding

Food and drink companies across the UK have been awarded a significant share of a £51.9 million government grant, aimed at bolstering emissions-cutting projects. This funding comes as part of the government’s broader “Plan for Change”, designed to accelerate the nation’s journey towards net zero emissions and promote sustainable practices within the industrial sector. The Industrial Energy Transformation Fund, which provided the grants, supports businesses of all sizes in their efforts to reduce energy consumption, cut bills, and stimulate local economic growth.

Major Food and Drink Manufacturers Benefit

Several prominent names in the food and beverage industry were among the 25 businesses to receive funding, including Nestlé’s coffee processing site in Staffordshire and Heinz’s baked bean factory in Wigan. These grants signify a major push to integrate sustainable practices into the heart of UK food production.

Heinz’s Investment in Renewable Energy

Heinz, a major player in the food industry, received over £2.5 million and contributed nearly £5 million of its own funding to its project. The company will use the funds to transition from using fossil fuels to heat water to installing heat pumps that reuse waste heat. This move will significantly improve energy efficiency at the factory, cutting both emissions and energy costs. Saji Jacob, head of Heinz’s West Europe supply chain, noted that the grant has enabled this project to happen at their largest European manufacturing site. He also highlighted the project as a crucial step in their journey towards achieving net zero.

Other Notable Recipients

Besides Heinz and Nestle, several other food and drink companies have benefited from this round of funding. Paul’s Malt and Verdant Brewing Company, for instance, are two businesses that are at the forefront of decarbonising the beer production process. Additionally, Novelis, a Warrington-based company, received nearly £14 million to expand its recycling capacity, which will reduce carbon emissions by over 350,000 tonnes as part of a £63 million project.

Government Support for Sustainable Practices

The UK government, recognizing the importance of sustainable practices, has made it clear that helping businesses reduce their emissions is a core component of their “Plan for Change”. Minister for Industry Sarah Jones stated that this initiative aims to achieve net zero while simultaneously growing the economy. This approach underscores the government’s commitment to supporting businesses in their transition to more environmentally friendly operations.

The Urgency for Sustainability in the Food Sector

The food and beverage sector is the UK’s largest manufacturing sector. It is characterized by high energy consumption and is responsible for a significant portion of global greenhouse gas emissions. As a result, the sector is under increasing scrutiny from consumers, investors, and lenders to improve its sustainability. Many large international food and beverage companies are now raising sustainable finance, showing the market and stakeholders that they are embedding ESG (Environmental, Social, and Governance) principles at the heart of their operations.

The Importance of ESG

A company’s ESG status is now impacting its ability to access finance. Lenders are increasingly focusing on the ESG credentials of their borrowers, including mid-market firms, and are keen to see that businesses are monitoring, tracking, and improving their ESG performance. A survey of lenders showed that 93% expect sustainable finance in the mid-market to increase in the next few years. This indicates that businesses in the food and beverage sector should consider sustainable finance as part of their ESG strategy.

Additional Funding and Support Mechanisms

Beyond the Industrial Energy Transformation Fund, there are multiple other avenues through which food and drink companies can secure funding for sustainability projects.

Rural Development Programme for England (RDPE)

The RDPE provides funding for projects that create jobs and growth in the rural economy. There are grants available for business development, food processing, and rural tourism infrastructure. These grants, funded by the European Agricultural Fund for Rural Development, can be used for constructing or improving buildings and purchasing new equipment and machinery.

UK Shared Prosperity Fund (UKSPF)

The UKSPF also provides business sustainability grants to help businesses reduce their energy-related overheads and cut carbon emissions. These grants are specifically targeted towards businesses within certain regions and have a focus on carbon footprint reduction and energy efficiency improvements.

Innovate UK and Small Business Research Initiative (SBRI)

Programs such as Innovate UK’s SMART grants and the Small Business Research Initiative (SBRI) often focus on Research and Development (R&D) for new product development, digital transformation, and energy-efficient processes. These programs can be crucial for businesses in the food and drink sector that are seeking to bring new and innovative ideas to the market.

Wrap and the Courtauld Commitment 2030

Wrap, through the Courtauld Commitment 2030, supports collaborative action to reduce food waste, greenhouse gas emissions, and water stress across the UK food chain. This initiative is crucial in assisting the food and drink sector to achieve its environmental goals through a farm-to-fork approach.

Private Sector Initiatives

In addition to government funding, several private sector initiatives are also supporting sustainability in the food and drink industry.

Coca-Cola System Sustainability Fund

Coca-Cola and its bottling partners have launched a $137.7 million venture capital fund focusing on sustainability investments. This fund is focused on technologies that can reduce the carbon footprint of the Coca-Cola system, specifically in areas such as packaging, heating and cooling, facility decarbonization, distribution, and supply chain.

Other Investments

Companies are also exploring innovative solutions for recycling and transforming waste into usable materials. For example, Ioniqa is developing technology to transform mixed-color, partly contaminated PET waste into clear, food-grade PET, while CuRe Technology focuses on polyester rejuvenation to target plastics that cannot be recycled by traditional mechanical methods.

Challenges and Criticisms

Despite the positive strides, there is a recognition of the challenges ahead. Some critics point out that large drinks companies have a poor record of meeting packaging sustainability pledges. There is also an acknowledgment that many farmers face significant obstacles in adopting sustainable practices, including high upfront costs and policy uncertainty. A recent study found that 76% of farmers haven’t been able to implement all the environmental measures they want to due to financial constraints and policy issues.

Calls for More Support

There are calls for the government to improve funding for sustainability innovation and set common environmental standards. Companies like Tesco are urging the government to provide clearer vision and greater investment to support farmers in their transition to net zero. This includes improving funding for sustainable innovation and setting clear standards that farmers can use to measure progress.

Conclusion

The £52 million in sustainability funding for food and drink firms marks a significant step towards a more environmentally responsible industry. The grants, coupled with other government and private sector initiatives, are aimed at addressing the urgent need for decarbonisation and sustainable practices in the UK food and drink sector. As the industry faces increasing pressure from various stakeholders to reduce its environmental impact, these investments are critical in helping businesses transition to a greener future.

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