Building sustainability and resilience in food and beverage

The food and beverage sector is facing material yield and reliability risks due to climate change, nature loss, and supply chain complexity. Rising energy costs and the geopolitical landscape in 2026, however, have driven businesses to prioritise immediate challenges over preparing for longer-term strategic issues.

To build ongoing resilience, businesses must shift their focus to supply chain collaboration and industry coordination. Doing so is critical for managing both current and emerging risks, including those related to water security, raw material availability, and responsible labour practices.

Climate change intensifies exposure to water scarcity

Water underpins agricultural inputs, production processes, and the transport networks that move raw materials and finished products through the value chain. The sector’s reliance on clean processing water and water-dependent agricultural inputs leaves it highly exposed to availability, quality, and logistics disruptions.

Increasing water scarcity, coupled with rising energy prices, is driving up costs across the sector. Droughts, flooding, pollution, and rising temperatures can also degrade water sources, requiring additional treatment to meet food safety and product quality requirements. Addressing these concerns calls for significant expenditure, with food and beverage companies expected to invest over US$112 billion in water management by 2030.

Moreover, environmental factors such as heatwaves are disrupting some of the world's most important inland freight routes. For example, persistently low water levels on the Mississippi River and Yangtze River, along with record-low flow rates on the Rhine in 2026, are restricting the movement of goods.

As a result, companies may need to consider alternative transport modes, but this comes at a price. Replacing just one Rhine barge can require up to 150 trucks, increasing logistics costs and operational complexity.

These challenges emphasise the need to strengthen water management and build resilient supply chains. Through assessing water dependencies across operations and key sourcing regions, businesses can identify where to improve contingency planning and prioritise investment where risks are greatest.

Biodiversity is a raw material security issue

Biodiversity presents a further risk to production. Many core commodities, including cocoa, coffee, palm oil, soy, and beef, depend directly on ecosystem services such as pollination, soil fertility, and natural pest control. At the same time, agricultural expansion linked to these commodities remains one of the leading causes of ecosystem conversion and biodiversity loss globally.

The business implications are already visible in several global commodity supply chains. A 2025 University of Oxford study across Brazil, Ghana, and Indonesia found that insufficient pollination is constraining production, with cocoa yields increasing by around 20% when pollination was artificially enhanced. The same study found cocoa yields were 20-31% lower in warmer sites, highlighting how biodiversity loss and climate pressures create cumulative risk for crops.

Coffee faces a similar challenge. Research led by UCL and the Natural History Museum identified coffee as one of the crops most exposed to future pollinator decline. This is particularly acute in tropical regions, where climate change and land-use change are simultaneously reducing pollinator abundance and diversity. The researchers warned that the resulting productivity impacts could have global consequences through international commodity trade and increased income insecurity for producers.

To protect sustainable access to core commodities, businesses must work with suppliers to support more resilient agricultural practices. These could include improved soil management, habitat restoration, and pollinator protection, alongside measures to protect worker welfare.

Safeguarding workers and consumers

Food and beverage supply chains are also exposed to social sustainability risks due to their reliance on complex agricultural sourcing networks. Often, these networks span multiple geographies, production systems, and supplier tiers.

Many of the commodities underpinning the sector are sourced from regions where concerns about labour rights, worker welfare, income security, and human rights protection remain prevalent. Increasingly, companies are expected to demonstrate that they can identify and manage adverse impacts on workers throughout their value chains.

Greater supplier engagement and targeted assessments of higher-risk sources can help businesses respond to potential issues early. This is especially vital in upstream farming and harvesting activities, where fragmented supply chains can limit visibility.

Alongside labour-related considerations, consumer health and safety are among the most material social issues for the food and beverage sector. The UK Food Standards Agency reported a 14% increase in food and feed safety incidents between the 2024/25 and 2025/26 financial years, while food recall incidents in Canada rose by 41% over the same period.

Product contamination incidents, quality management failures, or inadequate food safety controls can have direct impacts on consumer wellbeing, resulting in significant reputational and financial consequences.

Regular reviews of supply chain risks, food safety controls, and incident response procedures allow businesses to address possible vulnerabilities and maintain consumer confidence.

Collaboration and coordination are critical enablers

While individual measures enable businesses to address specific concerns, building long-term resilience requires a coordinated approach across operations and supply chain management. Finding ways to balance long-term impact reduction with short-term adaptation is key. This can be achieved through investment in traceability, resilient agriculture, long-term contracts, and risk modelling capabilities.

To assess how resilient your business is to longer-term sustainability risks, consider the following questions:

What effects have extreme heat events had on production processes, heat-sensitive equipment, refrigerated logistics, product quality, and food loss?
1. What commercial or financial consequences have resulted from these impacts?
Has water scarcity prompted any changes to where you operate or source key products and materials?
Where are you already seeing evidence of reduced supplier resilience, such as lower yields, declining quality, or supply disruptions?
Which sustainability-related risks are now considered significant enough to be managed through enterprise risk management processes?
1. How have these risks influenced strategic priorities, investment decisions, or financial planning?

By integrating sustainability risks into strategic planning, food and beverage companies are better placed to anticipate disruption and protect long-term business performance.

To explore how your business can strengthen resilience through sustainability-related risk assessments, value chain mapping, resilience testing, or governance reviews, connect with a member of the RSM Global Sustainability team.