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Good morning, everyone, and welcome to today's webinar, which is on navigating the regulatory environment for developing sustainable products, which is brought to you by our professional affiliate members Ashbury. First of all, thank you to everyone for coming today.
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We hope that you found the content useful.
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There will be a Q &A at the end of the session, so please put any questions that you have into the questions box, and we'll do our best to go through as many as we can at the end of the webinar.
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At the end of the webinar, we'll be sending an article email in the next couple of working days, and this will contain a recording of the webinar, a copy of the slides, and the contact details of today's presenter.
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So, without any further ado, I will hand you over to today's presenter from Ashbury, Edward Allen.
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Thank you, Luke. Let me just share my screen. Okay. Let's wait for that to come through.
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So, hi, everyone. Thanks for taking the time out of your day to join the webinar.
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So, we As the title suggests, we'll be looking at navigating that environmental regulatory frameworks for the sustainable products.
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It's a big topic, but what I'll do is I'll quickly start off by describing who Ashbury are.
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So Ashbury Global was founded in 2002 by James Post and then still led by him today.
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The team are kind of your trusted compliance partners for many UK retailers and manufacturers.
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And what we do is we ensure that multi-category labeling product compliance, multi-country labeling product compliance for all of the products that we review.
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Our mission really is to protect both brands and consumers by ensuring food information meets that regulatory requirement. We have over 150 global experts. We cover 80 plus markets.
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And within the team, we have 35 plus languages.
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And so that is kind of shown by our global expertise. We understand that business is global.
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We understand that businesses want to move their across multiple markets with the least changes possible or kind of ensuring that supply chain kind of flexibility there.
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So we have done over 200 ,000 approvals without any labeling related product withdrawals or recalls and so kind of you can trust us to make sure we get it right.
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We have offices in Australia and the USA and also as well our kind of head offices here in London.
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And so the services we kind of offer to the food industry is regulatory consultancy, technical services, international compliance, and also we do kind of compliance training, so looking at your system's internal policies, procedures, and all of those types of things.
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But without further ado, let's kind of move on to sustainability in the food system.
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So this is kind of a topic that I have presented on multiple times, so if you've seen me present this topic before, you might have seen some of these slides before.
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But just to kind of give the background is that what is sustainability? So when you look at sustainability, it is kind of environmental, economic and social factors.
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And the only way a product can be truly sustainable is if you consider those three factors typically.
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and that's kind of put into perspective by the United Nations definition which isn't a new definition so back in 1987 this was put together but that is meeting the needs of the present without compromising the ability for future generations to meet their own needs so it's kind of also kind of taking from the the globe or taking from the earth when in terms of food products making sure we replace it.
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And so that's important because sustainable food systems have a multitude of factors to consider.
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So it's kind of food businesses and there's lots of things that go into our products and sometimes it's not always obvious what is contributing to the different agricultural crops, ingredients that we use in our products.
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So probably a one kind of key thing as well with water conservation, we often forget how much water is used within our food chain or food system.
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Although the UK is considered kind of a bit of a rainy nation, it is suggested that it could potentially be water scarcity in some areas by 2050 and I think we're kind of seeing that as well with the at summers that we're seeing particularly at the moment as well which is quite nice.
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We've also kind of got things like biodiversity and looking at kind of soil health, looking at how we ensure that the soil is fertile and has the right minerals, nutrients for the crops that we but also fair kind of labour practices, that kind of CSR, the corporate social responsibility, are we providing the growers, the farmers of our agricultural products with the skills that they need for the future to make sure that their farming practices they're using are sustainable for the future.
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So when we're looking at this global supply chains are really quite complex and I think everyone on this call would know that.
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And there's a multitude of stakeholders within that supply chain.
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So we've got the kind of your packaging partners, you've got our cultural partners, they're pretty obvious ones. But then there's also, as employees, people in your business.
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The employees are becoming more and more attuned to business practices and what a business stands So, it's really important that businesses get that right, so they can attract the right talent and retain the right talent.
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You've got people within your logistics, your supply chain, your partners, and it's making sure you've chosen the right partners right from the outset, particularly when we're looking at product development.
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You shouldn't, in my opinion, shouldn't be onboarding anyone now that doesn't have some sustainability, credentials, vision, mission, or goals kind of associated with their business that align to your business, because it's just going to become harder in the future.
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There's quite a nice diagram here of kind of the various stakeholders, but as you can see in the middle of the joint purpose, all of these people kind of contribute, whether whether it's financial, whether it's your customers, the end product user, or kind of business as well.
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That just kind of highlights the two-way relationship that you'll have with many stakeholders across your business.
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So when we look across the EU, the Regulatory Sustainability Frameworks, here are just a couple of examples. There are plenty more which we will kind of go into.
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But you've got things like the EU Omnibus that has been recently published, that combines the CSRD, CS Triple D, and CBAM.
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What it's suggested to do is combine those three and reduce the administrative burden by up to 25%.
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What it has resulted in is an 80% reduction in companies requiring CSRD reporting, and so we'll come on to the impacts of that.
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We'll also come on to EU deforestation, free regulation, PPWR and kind of green claims as well, looking at how all of these impact the product development cycle.
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In the UK, you've also got the Environmental Act, or I should say GB.
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So the Environmental Act has been relatively quiet since it was published and since the new government came in, particularly around their kind of Schedule 17, their use of forest risk commodities in commercial activity.
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But you can see how this act has the ability to kind of frame how sustainable or sustainability regulation is going to influence how the food chain operates in the future and what kind of risks the businesses will have to consider when they're looking at this.
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Things like producer responsibility obligations right at the start of the supply chain, looking at deposit schemes and returning packaging, and then the disposal as well.
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What we're going to look at is those supply chain considerations when you're developing a product.
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So the scopes might sound a bit like a band or something like that, but this is often kind of what is referred to.
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And this is the focus for many, many businesses.
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And sustainability is about the product's complete lifecycle.
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It's not just about one element.
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So it's not just about the farm where it's grown.
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It's about how the product is grown, used by manufacturers all the way through to how it's disposed of.
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And so, scope one and two, you could probably argue have been the easiest for businesses to measure.
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And this is mainly due to the kind of direct control they have over their creation, or the carbon creation of those.
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And also, as well, potentially the ease of being able to them, so kind of emissions per unit of energy.
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And so the way the challenge for businesses probably is scope-free, particularly in a consumer products business.
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And so this is because it's all around how consumers use and dispose of that product.
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And that example I kind of like to use for this is boiling a kettle.
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So when you're making a cup of tea or coffee we there is no definitive way to determine how much water a consumer has boiled to make that cup of tea.
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So we often leave or coffee and so often we will use estimates and so when we're thinking about the regulatory framework particularly around green claims the emissions around that product We really do need to start considering about where we're getting this data from and how it affects maybe claims that are being made in products.
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So I obviously can't get everything all on one slide, but most businesses will use a stage gate process when it comes to food product innovation.
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So you've got gate one, gate two, gate three, all the way to gate five.
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Typically, it's from ideation all the way through to launch and then post-launch review.
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And so for many food businesses, the big ticket items are kind of manufacturing, distribution and kind of consumer use.
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But as we've kind of mentioned already, consumer use is the most difficult of them all.
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And so when you're developing that new product, have you considered all of those kind of areas?
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have you considered both financially and environmentally when we're looking at sustainable business practice or sustainable products that we're launching to market?
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And often we only think about the footprint of an individual product, not its overall journey.
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So when we're talking about ideation, when we're talking about innovation, what emissions have you considered during that stage?
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Have you measured the waste associated with product trials?
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does that come under business use?
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Is that how do we assign that to a particular product? Should we be assigning it to a particular product?
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There's so many different questions around the innovation process and things like as well travel to innovation days, come under business travel, but are we considering those when we're looking at products?
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There's lots of uncertainties I would say, if you're looking at particularly when the marketing claims start coming out.
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Why is this important?
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Well, the EU omnibus is looking to simplify that sustainability reporting process.
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It formally adopted on the 3rd of April and, as I said, consolidates those free regulations. But what it does do is potentially reduce the value chain data obligations.
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And so, why this is important is because those smaller businesses that are supplying larger businesses, technically, under this new rule, aren't required to report CSRD figures on the CSDD and CVAM.
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However, when we're looking at it in practicalities, the larger businesses are going to be requiring that data.
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So just because you might be exempt from this, where it says that kind of excludes approximately 80% of companies, this doesn't necessarily mean you don't need that data to supply forever up the supply chain.
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What we've also seen is there are some legal challenges around this, so this might not be the end goal for the EU Omnibus.
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what the legal challenges are saying is that this amendment waters down the EU's commitment to sustainable or the original legislation, kind of that sustainability framework, and so there is some discussion that you might start to see around whether this needs to be amended.
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And then if we look at the UK and why it's important, so this isn't, this hasn't been published as far along the way yet, it was expected that the UK sustainability reporting standards are intended to be due for consultation.
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And this will require entities to disclose their sustainability-related risks and opportunities, and also their climate-related risks and opportunities.
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So if you're already compliant with EU Omniverse, other global regulatory frameworks, it's likely that you will be compliant with the UK SRS.
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However, the UK does have a very ambitious goal of being the leader in climate change and paving the way.
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We do need to be conscious that there may be some UK specific requirements here.
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Global alignment for most companies is really important and makes everything a little bit easier.
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So having UK specific requirements could make that more difficult, so I'd urge anyone that see the consultation should kind of get their viewpoints in there for their businesses.
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If we look at kind of ingredients, probably the key one that is not unfamiliar to everyone is EUDR.
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So we touched on this briefly earlier, but the compliance deadline is fast approaching for those larger medium companies.
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Traceability as well should be for good source after the 31st December.
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It's not yet formally added to the Windsor framework, but as we know, the Windsor framework probably isn't going to be in play for much longer than a year, potentially.
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But that would mean that anyone moving goods into the EU would be required to do the EUDR requirements or traceability due diligence.
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Why this is important is this slide here kind of highlights the different requirements for different actors within the supply chain, so you've got your operators, downstream operators, and traders.
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It's quite a useful diagram to think about which due diligence pieces you need to be doing, what audits you need to be doing, and what your liability is or your responsibility is.
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And recently as well, we've just had the kind of country risk benchmarking come out.
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So we've got low risk, high risk, and then to be assessed.
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As many of you may have noticed, the high risk category is quite short.
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The low risk is quite long and probably the obvious countries are in and then the list to be assessed is rather long as well.
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So it doesn't, we've got kind of a lot of ambiguity there particularly around kind of South American countries which we know are kind of potential high-risk areas for deforestation i.e.
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Brazil and their kind of role in producing beef and then got Malaysia there also as well, quite a big exporter of palm oil.
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So all of these ingredients are important.
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So when we're looking at the, this is another slide that may have seen before, but so coffee roaster example, due diligence and risk assessment depending on who places the product on the market or who is responsible for the supply chain.
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So the top three countries here you can see company is responsible for sourcing and importing or placing on the market.
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So they are responsible for doing the due diligence risk assessment mitigation.
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The bottom two countries, this is all aggregated by a distributor or a broker which many companies use particularly kind of around coffee, chocolate and those types of commodities.
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Although the broker may be placed the raw material or the product on the market, it doesn't mean that a business's responsibility stops there.
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What it means is that they will then need to check the information system, carry out that due diligence, and then kind of roast packages to the consumer there.
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But what this means is particularly around kind of composite products.
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If the composite product, the ingredient is an in scope commodity then also any other in scope commodities within that product will need to be checked.
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I there's an example used by the European Commission around a chocolate bar.
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If it contains palm oil then the chocolate bar and the palm oil need to be checked.
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I'm sorry I said chocolate and the palm oil.
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But for example if a donut contains palm oil then the palm oil that doughnut is not checked providing that it's the doughnuts that is placed on the market.
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So there's some nuances there that I would urge companies to kind of get into the details of and understand to make sure they are compliant with those, with the EUDR, particularly as it is some quite hefty fines and some penalisations there.
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Lastly, once your product hits the market, what are marketing teams looking to do?
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What does that mean in terms of the regulations? We may have seen the DMCC and the green claims.
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The DMCC is a digital markets competition and consumers act.
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This was originally put place to assess or allow the enforcement of Fair Trading Practices reviews, those type of things.
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However, more recently, it's been highlighted that CMA has had a boost in their ability to enforce this regulation.
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And so, although the main focus of the DMCC wasn't Green Claims, these new powers for the CMA mean that they have the ability to enforce Green Claims and approach them, which given their previous CMA Green Claims publication, it really does point in the direction that they may be enforcing these consumer goods are definitely a focus for them.
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That's the UK, but when we as well look at the EU and claims legislation.
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The EU is also clamping down on greenwashing with new requirements for those kind of substantiating green claims.
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So what this means is they're looking to ban those broad environmental claims things like environmentally friendly green and their focus primarily has been of the oil industry, the energy industry, but it doesn't mean that they won't move on to consumer goods given that consumers are really kind of focusing on it as well.
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And what they require for this is robust claim substantiation.
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So when we're looking as well, you may have seen the Ecolabelling that comes on products has been published or promoted in previous years.
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What this has said is this regulation is there's no more Ecolabelling schemes to come on to the market unless they offer something significantly different to the current Ecolabelling schemes and they are supported by an EU member state.
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In addition, you do need to ensure that that ecolabelling scheme is based on ISO 14024, so ensuring that your international standards and where you're getting it meets the requirements of where the data is coming from.
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As kind of said, we're similar to EUDR, 4% fine on global turnover and kind of exclusions from public procurement processes, so really significant fines for businesses if they kind of get caught greenwashing or don't have the data to support your green claims.
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So looking at all of this, we kind of look at what the summary is here for kind of businesses to consider.
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So we have got some really indirect risks, consider when you're looking at sustainable product development.
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We haven't kind of mentioned these but these are all things that businesses really do need to think about.
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We've got things like allergen management, so when we're looking at the agricultural practices that are being used on farms, that are being used by growers, are they introducing new allergens into the food chain, particularly when you're looking at those bulk commodities, things like legumes, things like lentils.
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When we're looking at the wheat, has there been co-cropping with peanuts, or has the soil been co-cropped with peanuts over the winter or something like that, and has that been introduced in the supply chain?
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Also kind of as well packaging reuse.
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So when consumers go to the shop and they refill their containers, what controls are in place to stop that cross-contamination of that when they're reusing packaging?
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And same for kind of the also as well when we're looking at recycling, how do we know that the plastic for example being used is food safe, meets the regulations, those type of things and how do we ensure that we have suitable recycling facilities to enable that to use recycled content, particularly with regs like PPWR.
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Food fraud is also another risk for businesses.
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So as we start to look at these regulations, the requirements for businesses to report may increase, the investment required at local level increases, therefore commodity pricing is going up. We've seen it with coffee and chocolate already.
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What this means is that companies need to ensure they've got food defence plans in place.
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Are they effectively monitoring them?
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Are they confident that they can stop contamination, stop that food fraud, that adulteration of foods that they're using?
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Because then it results in a misleading, if you're misleading consumers into what is actually in your product or potentially a non-compliant ingredients being used or allergens being introduced.
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We've kind of got packaging reuse as well so we mentioned that around material availability, material safety and then also kind of green claims which we touched on already. Another area which is quite an interesting one is food waste.
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A lot of retailers are looking into kind of food waste, we're also looking into factories and kind of manufacturing level And so what is the food safety of that food waste and how can it be reused if you include an animal feed as that animal welfare issues kind of all of these type of things to consider is not always as simple.
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And so when you're looking as well as sustainability reporting and businesses must gather from the whole product life cycle and also as well their business operations, all of that type of thing.
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So, does your company monitor or ask for data from employees and how they commute to work?
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When you're looking at your kind of company cars and things like that, are we looking at kind of EV, company EVs and how they're being charged when they're on the road?
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What energy is used there?
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We've talked about the consumer, the consumer use of products and kind of boiling a kettle, also as well looking at kind of palm oil, chocolate, CO2 emissions of kind of your factories, all of those types of things, all the considerations, and sometimes it just feels so overwhelming to even think about what you're looking to achieve.
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But the best place to start is internally, is just get started. Start collecting that data.
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We spoke about the start kind of stakeholders and understanding who owns the data that you need.
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It might not necessarily be within your business.
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So then what kind of stakeholders and what service providers do you need to with and build a plan for that internally.
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I have a look at the governance structure as well around this. What are your data sources? Where are you taking data from? Is that data reliable?
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And does it have the kind of regulatory framework around it to kind of ensure that you're complying with the risks that are coming out?
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And also as well, not all sustainability legislation apply to your business.
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So make sure you understand, but also then as well understand how it affects both upstream and downstream.
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So if you're a manufacturer in the middle, you need to engage with your supply base, which we've got there in the middle, and then kind of also think about the data that the people upstream from you in your supply chain will be requiring.
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Looking as well at embedding that digital technology, there's lots of talk around AI, there's lots of talk around digital systems.
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Sometimes it can be quite negative, but ultimately we need to really embed that digital technology because it's just kind of uneconomical to get all of that sustainability data and compute it in a way that allows businesses to move forward.
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And ultimately collaboration kind of across your category.
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So places like FDF will offer that really great sounding board with your peers across your categories and also as well who are those key collaboration partners and reducing the amount of trips required with lorries with small loads those type of things trying to reduce your emissions by partnering with everyone sustainability is not going to be solved by one person, it needs collaboration, it needs everyone involved.
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And also as well, it's important that businesses start engaging with kind of government, but also NGOs and other organizations that are applicable to your category.
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So with that, thank you very much.
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Here are my contact details.
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And if you want to, then feel free to scan the QR code and connect on LinkedIn.
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But thank you very much.
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think passing over back to Luke for a Q &A. Cool, thank you very much for that.
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We've had a few questions which have come in already for the Q &A.
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The first question which came in was do you anticipate a UK deforestation policy coming soon and is it likely to be very different to EUDR?
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So, and I suppose the question is do I have a crystal ball, and I would, given the UK's kind of climate, the UK government's climate leader ambitions, as we say, I'm not sure when it will come, but I would imagine that the UK forest policies will come into play some point, but I don't see it being very near in the future.
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I think that the UK-EU trade deals and the SPSS is going to take priority and that might actually frame how the UK decides to move forward with the deforestation and maybe alignment to EU.
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Hopefully we can all cross our us. Thank you very much.
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Following on from that last one on sustainability regulation, the next question which is which sustainability regulation do you think will be the most transformative for the food and drink industry in the next five years? That is a big question.
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The next five years I think the sustainability reporting and with the way in which our supply chains have grown, it's a food industry, they're far reaching.
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And when we look at agricultural commodities, there are so many kind of small holders, so many farmers along those supply chains and being able to get data from them, I think is gonna be the biggest challenge for businesses.
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But once that we've got things Data Transparency Partnership within the UK.
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And once those kind of data sources can start to feed in, you might start to see a really accurate or good picture of the kind of food supply chains, but it's going to be a real struggle.
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And I think that is something that's going to require a lot of business transformation and a lot of collaboration from businesses in the category, but also across supply chain. Thank you.
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We have another question which has come in which asks, how is it best to stay informed about the changes in sustainability legislation?
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What are the best resources or strategies for this?
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So I think when we're looking across the board, you really need to work out what your priority markets are.
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So for like most FDF members, you might say that UK and EU are kind of your priority markets and in which case then you need to ensure that you're signed up to government alerts, you start engaging with your local government representatives, whether that be the MP in your business's constituency or whether it actually be trying to reach out to contacts of DEFRA and other cultural agencies within the UK government or Department of Business Trade making sure you've got those connections so that when you know or when you think there might be something coming through the pipeline you can kind of sound board off them and go have you thought about this have you thought about that and really try and I think it's important that industry shape the regulation or help shape the regulation because if we're completely honest, the people making policy might not always have that on the boots knowledge, boots on the ground knowledge that we all have here.
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We have got one more question which has come in, so if anyone's got any others, please pop into the questions box.
36:17
But the final question we have for now is how do you balance the cost implications of sustainability regulations with maintaining competitive pricing?
36:31
Competitive pricing is always a challenge, I think, in the food industry because we've got lots of different influencing factors, particularly, obviously, it's got kind of cost of living, those types of things, being healthy.
36:45
I think, And you really, when you're speaking to your senior teams, when you're speaking to kind of directors, CEOs, the one thing you need, what we need to be very clear on is this isn't an issue that is going away, it will continue to ramp up.
37:09
and a lot of our products that we sell rely on crops being grown and crops being high yields, economic yields that supports the farmers and things like that.
37:25
Once if we don't address this now then they will not have products to sell in the future, we might be able to adapt but sustainability is key for kind of maintaining that agricultural supply chain to continue manufacturing and innovating products for consumers.
37:48
Thank you. We're not done yet. We have a question coming.
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I'll let you go shortly, don't worry.
37:56
The question is, do you think businesses are able to reuse the product level data across CSRD, CBAM and EUDR or are they still approaching these in silos like building a set of data separately for each regulation?
38:17
So if a business is tactical about the types of data they gather then there's nothing to stop you reusing data across different regulatory frameworks.
38:32
I would agree the challenge is that different regulations require different amounts of data, so it becomes an expanding list.
38:41
I would say that until we get full alignment on exactly, I don't think they are approaching these three insilent anymore.
38:53
I think they've pulled them all together like the EU universe to try and make it simpler for businesses.
39:00
I think it's something along the lines of they've suggested that 6.3 billion euros would be saved in administrative burden.
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What that actually means in practical, we'll kind of have to see it as it starts to develop within businesses, but I think there is opportunities to reduce your administrative burden by collecting data that's applicable across all those three regulations.
39:27
Brilliant. Thank you. And that is it for the questions now.
39:30
So thank you very much, Ed, for the work put into the webinar and for answering all the questions that we've had.
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We have been recording, so if anyone would like to rewatch, we'll be sending you a link to the recording and a copy of the slides in a follow-up email in the next couple of days.
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If you have got any other questions, please feel free to get in touch with Ed and F3 team. We'll be sending overhead contact details after the webinar as well.
39:53
So yeah, unless there's any closing remarks from you, Ed? No, that's it.
39:58
Thank you very much for having me and good luck with your sustainability journeys, everyone. Brilliant. Thank you very much.
40:05
See you later, everyone.