The cost of inaction: The commercial impact of climate change and strategies for taking a stand
Climate-driven disruptions are inflating food costs and destabilising supply chains, writes Kati Hermann, Sustainability Manager at SVZ. With crop yields projected to decline 8.3% by 2050, the financial and reputational risks of inaction are mounting. Hermann focuses on the commercial case for sustainability and the very real costof failing to act swiftly. She looks at how responsible sourcing, regenerative agriculture, and cross-sector collaboration offer commercially viable pathways to resilience in an increasingly unpredictable food system.
Two years ago, during the largest surge in grocery prices seen for a generation, consumers became acutely aware that they were paying the price for climate change. [1,2] Food inflation in the UK, for instance, reached over 19% in 2023 – the highest level in 45 years – fuelled partly by extreme weather disrupting global harvests of key crops such as wheat and tomatoes. [3] Rising costs in the food supply chain, driven in large part by climate-related events, show that environmental inaction has real, immediate financial consequences.
While international conflicts, shipping bottlenecks and the lingering effects of the pandemic have all played a part, climate-induced shocks – droughts, floods, wildfires and changing rainfall patterns – are increasingly responsible for reduced yields and volatile raw material prices. [4,5] The evidence of this impact is pervasive and international. In Spain and Italy, prolonged heatwaves in 2023 led to double-digit declines in olive oil and soft fruit production, while this year droughts in South America have pushed up global sugar prices. [6,7]
For the food and beverage industry, these shifts are more than seasonal setbacks: they represent structural change. Climate disruption now poses both financial and reputational risk, testing the resilience of supply chains and the credibility of corporate climate commitments. Sustainability claims, once viewed as a “bonus”, are now an essential element of both external brand narratives and behind-the-scenes business management.
1: The sustainability stakes
Climate volatility and cost escalation – when nature sends the bill
Climate volatility is no abstract concept for the agri-food sector; it’s a concrete line item on the balance sheet. A recent landmark study published in the journal Nature predicts that the world will see an overall 8.3% decrease in staple crop (cassava, maize, rice, sorghum, soya bean and wheat) yields by 2050, or potentially more if global warming moves beyond moderate predictions. [8] The Intergovernmental Panel on Climate Change (IPCC) similarly reports that every fraction of a degree in temperature rise increases the likelihood of simultaneous harvest failures across multiple regions. [9]
For businesses reliant on agricultural inputs, the consequences are twofold: higher raw material prices and greater uncertainty in availability. Unpredictable weather patterns affect not only yields but also input costs such as energy and water. During Europe’s 2022 heatwave for instance, water scarcity drove irrigation costs to record highs, while energy price spikes added further pressure to processors and distributors. [10,11] At the consumer level, these disruptions translate directly to higher food prices. While the cost of many foods has begun to stabilise following the unprecedented peak seen in 2022-23, the World Bank warns that unpredictable weather events and general climate change will continue to make their mark. Inflating and fluctuating prices have also made sustainability more visible to consumers, with the question: “Why are my groceries more expensive?” morphing into “What are brands going to do about it?”
The financial and reputational risks of inaction
As we can see therefore, the potential consequences of delaying climate interventions extend well beyond short-term production losses. Supply chain instability, shareholder scrutiny, regulatory penalties and consumer backlash all await companies that fail to integrate sustainability into core operations.
Financial institutions are increasingly tying lending terms to sustainability metrics. Green loans, environmental, social and governance (ESG)-linked bonds and agricultural finance agreements are incentivising measurable environmental progress. For farmers and manufacturers alike, meeting sustainability benchmarks is also becoming a consideration in credit approval processes.
Ignoring these realities can erode not only brand equity but also competitiveness. Consumers are rewarding authenticity and penalising inconsistency: one misaligned sourcing decision can undo years of trust-building. Yet the good news is that failing to take any positive action at all is now virtually impossible. It all ties back to one of the most fundamental rules of business: return on investment. The process of sustainable transformation may cost food producers billions of dollars, but it will also save trillions in losses due to runaway warming. [12] For brands that recognise this equation, the commercial, reputational and societal benefits of responsible practices speak for themselves.
2: Strategies for taking a stand
Building resilience through responsible sourcing
So, we understand the costs at play – now it’s time for action! The first step towards improved resilience for companies navigating climate uncertainty is responsible sourcing. By embedding climate-smart practices throughout their supply networks, businesses can reduce exposure to future price shocks and supply interruptions.
SVZ is an organisation deeply invested in the foundational power of ethical, eco-conscious sourcing. Our overall sustainability strategy is guided by three interconnected pillars: Sustainable Agriculture, Efficient Operations, and Valuing People. The first pillar, Sustainable Agriculture, commits us to maintaining close partnerships with partner growers, particularly across two of our sourcing regions; Poland and Spain. Through our Farmers Fund, we actively support the adoption of regenerative agriculture practices that protect
and restore natural resources and biodiversity. In delivering the projects made possible by the SVZ Farmers Fund, we take a holistic approach, one that considers the economic, social, and environmental dimensions of sustainability. By improving farming conditions and management practices, providing enhanced training, and promoting farm diversification strategies, we help farmers strengthen their resilience and achieve more stable, sustainable incomes. By 2030, our ambition is to have directly supported at least 4,000 farmers, and a further 1,000 farmer families through indirect initiatives. We’re also committed to achieving 100% sustainable sourcing for our core ingredients by 2030, as part of the Sustainable Juice Covenant. This represents more than just “putting our money where our mouth is” regarding grower-producer relationship building – it’s an investment in resilient agriculture we believe will pay dividends for years to come.
Proactive sustainability in practice
Another key aspect of safeguarding supply is integrating sustainability from the ground up – literally. A notable example from SVZ’s sustainability archives is our collaboration with Innocent drinks, Gabinete de Iniciativas Europeas – GIESA, and Cuna de Platero to install HIDRIX irrigation systems at three strawberry farms in Doñana, Spain. This on-demand technology is designed to optimise water and fertilizer use in strawberry cultivation by tailoring water delivery precisely to crop needs. In its first season alone, the project reduced water and fertilizer consumption by 12% and 7% respectively – an outcome that benefits growers, processors and consumers alike. The initiative is expected to scale up over time, delivering further reductions in water and fertilizer use, and expanding across additional hectares. In its second year, Wageningen University also joined the project to assess how regenerative agriculture practices can be adapted for soft berry farms. This type of proactive investment delivers compound value: reducing operational costs, strengthening farmer relationships and demonstrating environmental leadership to customers. Waste-reduction efforts can equally be designed with this philosophy in mind. Each year, vast quantities of edible produce are discarded for cosmetic reasons – deemed too “ugly” for supermarket shelves. Instead of accepting these losses, at SVZ we rescue “imperfect” fruits and vegetables and transform them into premium purees, concentrates and NFC juices. In 2023, in Belgium alone, we diverted 468 tonnes of surplus local tomatoes from landfill and repurposed them into delicious ingredients for soups, sauces and pastries. The peels, pulp and pips left over from processing all our fruit and vegetable ingredients are also given a second life as fuel for fermentation or biogas production. Initiatives like these exemplify a core belief more food industry players must adopt – that what others view as waste, we see as opportunity.
Collaboration as the catalyst
No company can solve climate challenges alone. Sustainable agriculture depends on collaboration between growers, suppliers, manufacturers, brands – and the natural world itself. In practice, this translates into a continuous search for new partnership projects that drive innovation, reduce environmental impact, and strengthen resilience across the value chain.
Another recent example is our partnership with one of our valued customers, along with the sustainable chemistry department at BASF, aimed at testing compostable biofilm mulching as an alternative to the usual plastic covers used in strawberry cultivation. After early experiments with paper-based materials yielded mixed results, for the 2022-23 season we switched to BASF’s Ecovio biofilm – a durable, compostable solution that maintains crop quality while reducing plastic waste. The 2024–25 season marked a new
stage of collective action, with SVZ, BASF and the customer scaling the project while monitoring water consumption and soil impact.
The cost of inaction is far greater than the cost of transition
The evidence is clear: the financial, operational and reputational cost of inaction on climate change already far outweighs the investments required to act. Every season of delay compounds risks – from disrupted harvests to volatile input prices and shrinking consumer trust. On the flip side, companies that embed sustainability now are not only reducing future liabilities but also unlocking innovation, efficiency and serious boosts to brand value.
As the food and beverage industry stands at a crossroads, one path leads to reactive crisis management; the other, to proactive sustainable growth. The window for cost-effective action is narrowing, but opportunities are still very much waiting. Those who choose to act – measuring, mitigating and collaborating – will safeguard their supply chains and earn the enduring consumer trust they need to navigate a climate-challenged future.
References
1. Kornher, L., Baležentis, T., & Santeramo, F. (2024). EU food price inflation amid global market turbulences during the COVID-19 pandemic and the Russia–Ukraine War. Applied Economic Perspectives and Policy. https://doi.org/10.1002/aepp.13483.
2. Dao, M., Gourinchas, P., Leigh, D., & Mishra, P. (2024). Understanding the international rise and fall of inflation since 2020. Journal of Monetary Economics. https://doi.org/10.1016/j.jmoneco.2024.103658.
3. BBC News. Food prices: Climate change and poor harvests blamed for shortage of salad and vegetables. London: BBC; 2023 Apr 20 [cited 2025 Oct 31]. Available from: https://www.bbc.co.uk/news/uk-northern-ireland-65317256
4. Intergovernmental Panel on Climate Change. Climate Change 2023: Synthesis Report. Geneva: IPCC; 2023.
5. Food and Agriculture Organization of the United Nations. The State of Food Security and Nutrition in the World 2024. Rome: FAO; 2024. https://openknowledge.fao.org/server/api/core/bitstreams/39dbc6d1-58eb-4aac-bd8a-47a8a2c07c67/content/state-food-security-and-nutrition-2024/executive-summary.html#gsc.tab=0
6. Jones L. Olive oil industry in crisis as Europe heatwave threatens another harvest. London: The Guardian; 2023 Jul 17 [cited 2025 Oct 31]. Available from: https://www.theguardian.com/business/2023/jul/17/olive-oil-industry-in-crisis-europe-heatwave-threatens-another-harvest-spain-prices
7. Rio Times. Global sugar prices climb as Brazil drought and India production concerns intensify. Rio de Janeiro: The Rio Times;
2023 Sep 21 [cited 2025 Oct 31]. Available from: https://www.riotimesonline.com/global-sugar-prices-climb-as-brazil-drought-and-india-production-concerns-intensify/
8. Hultgren A, Carleton T, Delgado M, et al. Impacts of climate change on global agriculture accounting for adaptation. Nature. 2025;642:644–52. doi:10.1038/s41586-025-09085-w.
9. Bezner Kerr R, Hasegawa T, Lasco R, Bhatt I, Deryng D, Farrell A, et al. Food, fibre, and other ecosystem products. In: Pörtner H-O, Roberts DC, Tignor M, Poloczanska ES, Mintenbeck K, Alegría A, et al., editors. Climate Change 2022: Impacts, Adaptation and Vulnerability. Contribution of Working Group II to the Sixth Assessment Report of the Intergovernmental Panel on Climate Change. Cambridge (UK) and New York (NY): Cambridge University Press; 2022. p. 713–906. doi:10.1017/9781009325844.007.
10. EEA, Water scarcity conditions in Europe, published 17 January 2025, available from: https://www.eea.europa.eu/en/analysis/indicators/use-of-freshwater-resources-in-europe-1#:~:text=Water%20scarcity%20affected%2034%25%20of,to%20ensure%20sustainable%20water%20use.
11. European Council, Council of the European Union, Energy price rise since 2021, available from: https://www.consilium.europa.eu/en/infographics/energy-price-rise-since-2021/#:~:text=In%202022%2C%20Russia’s%20war%20on,electricity%20too%20in%20the%20EU.
12. Food and Agriculture Organization of the United Nations. The State of Food Security and Nutrition in the World 2024. Rome: FAO; 2024, available from: https://openknowledge.fao.org/server/api/core/bitstreams/39dbc6d1-58eb-4aac-bd8a-47a8a2c07c67/content/state-food-security-and-nutrition-2024/executive-summary.html#gsc.tab=0
