The cost of food waste to global businesses

With the climate crisis climbing to the forefront of business risks, the environmental impacts of global food waste is surging greenhouse gas emissions, air pollution, and resource waste. As the hunger crisis worsens and mass food waste becomes consistent, households and businesses alike suffer the environmental consequences.  

In this article, we explore the environmental impacts of food waste around the world, and the cost to businesses operating in the food industry and beyond.

What is food waste?

Food waste, quite simply, is food that we don’t eat and throw away. It’s split into edible food and inedible food (for example: teabags, eggshells, bones from meat).  

Food waste mostly comes from supermarkets, restaurants, and households. Supermarkets must dispose of food once it’s expired or reached its shelf life date; restaurants throw away fresh food at the end of the day and discard leftovers from diners’ plates; and households use and discard the food they’ve bought from shops or, perhaps, even grown themselves.  

There’s a slight semantical difference between food waste and food loss. The former describes food that’s thrown away once it’s reached supermarkets and consumers, while the latter refers to food that’s lost during the production process.
 

How is food waste and food loss produced?

From farm to fork, the food production process is as follows: 

• Ingredients are grown in farms, gardens, allotments, and factories 

• Once ripe, they’re processed and packaged (mostly in plastic, cardboard, and metal) 

• The food is transported to local supermarkets, regional grocery stores, or shipped to other countries 

• Finally, the food is marketed, priced, and sold 

Throughout each of these stages, food waste is present, thus wasting the resources used in the production of those ingredients from the beginning of the lifecycle. The later the food is wasted in this process, the higher the environmental impact, as more resources and time were wasted to get it to a later destination.  

In a 2013 report by the Food and Agriculture Organisation of the United Nations (FAO), it was found that middle to high income countries contribute to food waste nearer the end of the cycle, where the food is marketed and sold. Developing countries, on the other hand, tended to waste (or lose) food during the earlier stages of production — largely due to lack of refrigeration and storage facilities to keep food hygienic, and technical or economic constraints in harvesting and farming the ingredients.
 

Food waste statistics around the world 

In March 2024, the UN released its Food Waste Index Report, which measures food waste around the world in an effort to catalyze action towards reducing this waste. They conclude the following findings: 

• In 2022, 1.05 billion tons of food was wasted globally, which amounts to one fifth of food available in retail, food services, and households  

• 13% of the world’s food was lost in the supply chain (in the lifecycle of production) from post-harvest up to retail stages 

• Households are responsible for the most amount of wasted food
   

• Hotter countries have more food waste per capital, potentially due to higher temperatures and droughts making storage more difficult 

• Very few countries have obtained food waste data 

Other statistics show that China currently ranks the highest for most amount of food wasted, with approximately 91.6 million tons discarded annually.

How does food waste affect the environment?

Food waste triggers a whole host of challenges, from food insecurity and poverty, to pollutive emissions, land degradation, and resource waste.
 

Resource waste 

When food is thrown away or lost, we lose more than just the resources put into producing the food — we also lose the time, effort, and money that contributed to the production of that food. 

To produce food, we mostly draw upon water, energy, and fuel… 

Water is needed to spray plants and crops, feed cattle and poultry, and to house fish. The Natural Resources Defense Council (NRDC) reported that food waste results in nearly one quarter (21%) of our water supply being wasted, which equates to USD 172 billion in wasted water. 

Energy and fuel are both required to operate the machinery and facilities processing and packaging food to the transportation vehicles taking the food to its final destination. Fuel in itself pollutes the environment.  

With the threat of land degradation rising as more non-arable land (land that can’t grow crops) is converted for livestock, our natural landscapes are being destroyed to make room for more agriculture, eliminating natural resources.
 

Greenhouse gas emissions 

The FAO reported that one third of human-caused greenhouse gas emissions is generated by food waste, which accounts for 8% of all greenhouse gases (GHG) per year. When food is disposed of in landfill, it can generate these harmful greenhouse gases which pollute the air. 

Air pollution, in turn, has drastic consequences for our climate, increasing the global temperature and resulting in melting sea ice, increasing sea levels, increasing the likelihood of floods, damage to marine life, acidification of oceans, and wildfires — ultimately contributing to the climate crisis.

How does food waste affect businesses?

Food waste undoubtedly has a huge impact on businesses operating around the world. Those working in the food sector can suffer both financial and reputational damages from the rising cost of food waste.
 

Financial loss 

Globally, it’s reported that the annual financial losses from food waste amount to USD 680 billion in industrialized countries and USD 310 billion in developing countries. In the US alone, businesses lose an estimated USD 161 billion. 

The Business Case for Reducing Food Loss and Waste report identified that for every one dollar (USD) companies invest in measures to reduce food waste and loss, USD 14 is yielded in return. That investment can be used to develop waste measurement and management methods, educate staff, improve existing policies, and changes to packaging. Analyzed by the World Resources Institute, the report estimates that USD 14 can be used to create plans to sell imperfect produce, create new products, reduce the total cost of waste management, and avoid the cost of losing food.  

For the food sector specifically, food waste has huge impacts on finances, as they waste vital money and resources on harvesting, packaging, and transporting food across areas. Further, restaurants and other businesses operating in the food sector can suffer further financial loss through legal costs for non-compliance. Failure to comply with food waste regulations can land companies with fines and litigation.  

Additionally, establishing waste disposal methods can be costly — especially if a business generates excessive food waste.
 

Reputational damages 

Following a failure to comply with regulatory expectations for food waste and food waste management, companies face reputational damages if they’re known to waste food unnecessarily. They may lose consumer trust if they appear to be unsustainable.

How can businesses manage food waste?

Addressing food waste is a vital action companies should take to reduce environmental impact and business risks. There are a number of measures businesses can put in place to mitigate food waste: 

• Educate — educate staff and consumers on food storage and preservation, meal planning, using unsold products, and waste-reduction initiatives to prevent food loss 

• Contribute — restaurants, cafes, and other food establishments can contribute to local and regional schemes which aim to reduce food waste. One such example is the initiative “Too Good to Go”, where customers can pay a discounted price for products that would otherwise be thrown away either due to expiring that day or being “imperfect” or “wonky” 

• Implement — in addition to existing schemes, food businesses should implement their own waste management frameworks to track their personal food waste, financial loss, and compliance. The Food Waste Index encourages methodologies to measure and tackle food waste in households, food establishments, and retail 

• Comply — finally, complying with regional regulations on food waste will ensure businesses are playing their part in reducing food waste and subsequent pollution

Regulations addressing food waste

The EU, UK, and US all have implementable frameworks and initiatives for managing food loss and food waste. Read on for a brief summary of the regulations and schemes food industries are expected to follow to maintain compliance and join the fight in tackling this socio-economic and environmental issue.
 

Europe 

Farm to Fork Strategy

An addition to the goals laid out in the European Green Deal, the Farm to Fork Strategy was devised to support a healthier and more environmentally-friendly food system in Europe. The strategy aims to achieve a sustainable food system by: 

• Ensuring the EU has either a neutral or positive environmental impact 

• Mitigating the impacts of climate change 

• Reversing biodiversity loss 

• Ensuring everyone has access to safe and sustainable food, reducing food insecurity, and supporting nutritional health 

• Preserving the affordability of food
   

Waste Framework Directive

Also in Europe, the Waste Framework Directive establishes principles for companies to manage waste in the EU without endangering human health, water, air, soil, plants, animals, the countryside, or places of interest.  

The Directive defines waste, creates a hierarchy of disposing of waste, and introduces the concept of extended producer responsibility (EPR). Under this law, EU countries are expected to prepare business operations to increase the reuse and recycling of municipal waste by 55%, 60%, and 65% by 2025, 2030, and 2035 respectively.
 

United Kingdom 

How food businesses must dispose of food and former foodstuffs

In the UK, guidance on how businesses in the food sector should dispose of their food was published in 2014. The online guidance details the following for industry: 

• Defining when food becomes foodstuff and should no longer be up for sale 

• Defining risk groups for foodstuffs remaining on the market or being sent to waste: higher risk, medium risk, lower risk 

• How to handle and dispose of catering waste 

• How to manage sending food to landfill 

• Returning food to depots or distribution centers 

• Loading, unloading, and storing food at supermarkets
   

The Environment Act 2021 (Commencement No. 9 and Transitional Provisions) Regulations 2024

A new law on food waste is expected to come into force from March 2025. This regulation will mandate separating food waste in bins from other waste sources so food waste is collected independently. In separating the waste, the UK government hopes less food waste will be sent to landfill.  

The proposed rule was triggered by Defra’s plan to improve recycling rates and contribute to the UK government’s target to eliminate food waste from landfill by 2030. It will apply to domestic and non-domestic sites across the UK.
 

United States 

2030 Food Loss and Waste Reduction Goal

In September 2015, the US Department of Agriculture (USDA) and US Environmental Protection Agency (EPA) announced the 2030 Food Loss and Waste Reduction goal to cut food loss and food waste by 50% by 2030. Further, the scheme aims to reduce the impacts of climate change, food insecurity, and unaffordability.
 

National Strategy for reducing food loss and waste and recycling organics

Leading on from the 2015 announcement of the 2030 goal to reduce food waste, the national strategy was published in June 2024 to accelerate efforts to prevent food loss, manage waste, and recycle organic waste.  

The objectives are stated as followed in the published documentation: 

1. Prevent food loss 
2. Prevent food waste 
3. Increase the recycling rate for all organic waste 
4. Support policies that incentivize and encourage the prevention of food loss and waste and organics recycling