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Industry Spotlight: Food and Beverage ESG Ratings Analysis

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Food and Beverage: Understanding ESG Reporting Requirements

I conducted an analysis of 117 corporates that are classified under GICS as Food and Beverage or Food Production, utilizing ESG research to inform the analysis and ratings comparison.

Many of the companies analyzed are large companies subject to more stringent ESG reporting requirements.

The geographical breakdown of the companies is as follows: United States (45), United Kingdom (22), France (10), Germany (8), Switzerland (7), Japan (6), and others. For UK companies, there are specific ESG reporting obligations under the Companies Act 2006, which require enhanced sustainability disclosures and stakeholder engagement.

Key insights from the ESG ratings and scores analysis highlight the importance of regulatory compliance and robust ESG practices for improving company performance and investor confidence, as many are trying to navigate various ESG research sources in the sustainability space.

Key Learnings

  • CDP reporting remains strong: nearly half of the countries have a 100% report rate for CDP Climate Change (CC). The US lags slightly with 52%, but that still means 24 US entities are reporting, equivalent to 62% of all corporates in the industry, given the US’s overall footprint. ESG reports, such as CDP and other sustainability reports, play a crucial role in promoting transparency and demonstrating companies' commitment to environmental and social responsibility.
  • Australia has the lowest participation at 33%, among countries with more than 5 corporates. While the US dominates in overall count of responders and top responders, Japan punches above its weight in leadership representation relative to its total number of corporates, with multiple CDP Climate A-List members despite having fewer firms in the dataset.
  • Beverage responders (especially alcoholic drinks groups) were disproportionately represented among high CDP CC scorers.
  • Only a small subset of corporates ranked in the “leadership” tier for more than one ratings provider, suggesting this expected inconsistency has not changed. Many companies with AAA from MSCI did not achieve PRIME status from ISS or a positive score from Sustainalytics, so these scores are far from starting to converge. This inconsistency can be attributed in part to different providers focusing on different material topics, which leads to variations in scores. Not necessarily a bad thing though, as it shows ISS’s recent growth can be tied to bringing something different to the table.

ESG risk ratings and risk ratings are important tools used to assess company performance and exposure, helping investors evaluate how companies manage ESG-related challenges and material topics for investors.

ESG Ratings & Scores Overview

MSCI

  • 10 rated entities received the highest rating of AAA.
  • 45 had an AA or above score.
  • Lowest score overall was CCC, with only 4 listings receiving that score.
  • MSCI uses ESG risk ratings and risk ratings in their ESG research to assess exposure to material issues, helping investors evaluate how well corporates manage key environmental, social, and governance challenges.
  • Over a third are in the Leadership category, with the US leading with 14 of these, followed by the UK with 5; the industry is largely dominated by US-listed firms.

ISS

  • ISS scores ranged from B as the highest to D+ as the lowest.
  • 1 listing scored B (Danone), with 13 scoring D+.
  • ISS evaluates listed entities based on material topics identified through ESG research, ensuring that the most relevant ESG impacts are considered in the scoring process.
  • PRIME Status was awarded to those with at least a C+ (not all though), with 18 receiving PRIME status.

Sustainalytics

  • Scores ranged from 12.5 (best) to 49.7 (worst).
  • The average score was 29.1, with Haleon being the highest rated.
  • Sustainalytics provides ESG risk ratings and risk ratings to help sustainability investors understand the ESG risks associated with each rated entity.

CDP

  • 73 responded to CDP Climate Change. As part of their climate related financial disclosure, companies are required to report on greenhouse gas emissions and climate risks. CDP responses help assessors understand disclosure requirements and demonstrate their approach to managing climate risks, including nature related risks, based on what is material to investors and their sustainability investment strategies.
  • 20 corporates scored A or A- in Climate Change, including: Ajinomoto; Asahi Group Holdings; Barry Callebaut AG; Coca-Cola Europacific Partners; Coca-Cola HBC; Danone; Davide Campari-Milano N.V.; Heineken N.V.; Hilton Food Group; Ingredion Incorporated; Jeronimo Martins; Leroy Seafood Group ASA; Marfrig Global Foods S.A.; Meiji Holdings; Molson Coors Beverage Company; Mowi Asa; Pernod Ricard SA; Remy Cointreau; Salmar; Suntory Beverage & Food Limited.

Companies Considered in This Research

A full list of 117 Food & Beverage companies was reviewed with much more in-depth research, including aligning market cap trends across ESG leaders. This research included analysis of financial information, ESG reports, and supply chain practices to provide a comprehensive view of each ESG performance. The assessment also considered capital projects and financial risks as part of the ESG evaluation. You can contact aakash@nossadata.com if you’d like to see how specific corporates performed relative to the industry or for more detail on any aspect of the research.

Who was assessed in this sustainability research, for risks and opportunities across their capital projects? A2 Milk Company Ltd; AAK AB; Ajinomoto Co., Inc.; Ambev S.A.; American Vanguard Corporation; Anadolu Efes; Anheuser-Busch InBev SA/NV; Asahi Group Holdings, Ltd.; Balchem Corporation; Barry Callebaut AG; Bell Food Group AG; Bellring Brands, Inc.; Beyond Meat, Inc.; BRF S.A.; Brown-Forman Corporation; Cal-Maine Foods Inc.; Calavo Growers Inc.; CARLSBERG A/S; Celsius Holdings, Inc.; CF Industries Holdings, Inc.; Cloetta AB; Cobram Estate Olives Ltd; Coca-Cola Consolidated Inc.; Coca-Cola Europacific Partners; Coca-Cola HBC; Compania Cervecerias Unidas S.A.; Conagra Brands, Inc.; Constellation Brands, Inc.; D.R. Horton, Inc.; Danone; Davide Campari-Milano N.V.; Darling Ingredients Inc.; Diageo PLC; Dutch Bros Inc.; EBOS Group Limited; Embotelladora Andina S.A.; Emmi AG; Ezaki Glico Co., Ltd.; Fevertree Drinks PLC; First Watch Restaurant Group Inc.; Fresh Del Monte Produce Inc.; Fuller Smith & Turner Plc; Greencore Group Plc; Grieg Seafood; Groupe Minoteries SA; Grupa Azoty Spolka Akcyjna; Grupo Bimbo S.A.B. de C.V.; Guzman y Gomez Mexican Kitchen; Haleon; Heineken N.V.; Hektas Ticaret Turk Anonim Sirketi; Hilton Food Group; Hormel Foods Corporation; Inghams Group Limited; Ingredion Incorporated; Intrepid Potash; J & J Snack Foods Corp.; JBS USA Holdings, Inc.; JDE Peet’s N.V.; Jeronimo Martins, SGPS, S.A.; John B. Sanfilippo & Son, Inc.; Keurig Dr Pepper; Krispy Kreme Inc.; Lamb Weston Holdings, Inc.; Lancaster Colony Corporation; Lassonde Industries Inc; Leroy Seafood Group ASA; Lotus Bakeries; LSB Industries Inc.; M P Evans Group Plc; Maple Leaf Farms; Marfrig Global Foods S.A.; Meiji Holdings Co., Ltd.; Mission Produce, Inc.; Molson Coors Beverage Company; Mondelez International, Inc.; Monster Beverage; Mowi Asa; MTY Food Group Inc; Musti Group Oyj; National Beverage Properties; Nichols Plc; Nomad Foods; Oceana Group Limited; P/F Bakkafrost; Orior AG; Pernod Ricard SA; Phibro Animal Health Corporation; Pilgrim’s Pride Corporation; Premier Foods; Remy Cointreau; Ridley Corporation Ltd; Rogers Sugar Inc.; Royal Unibrew; Salmar; Saputo Inc.; Seaboard Corporation; Select Harvests Limited; Seneca Foods Corporation; SLC Agricola S.A.; SunOpta Inc.; Suntory Beverage & Food Limited; Sweetgreen Inc; Takara Holdings Inc.; Tessenderlo Group NV; The Andersons, Inc.; The Boston Beer Company, Inc.; The Hershey Company; The Vita Coco Company, Inc.; Tilray Brands, Inc.; Treasury Wine Estates; TreeHouse Foods, Inc.; United Natural Foods, Inc.; US Foods Holding Corp.; Utz Brands, Inc.; Vina Concha y Toro S.A.; Yakult Honsha Co., Ltd.; Vina Concha y Toro S.A.; Yakult Honsha Co., Ltd.)

A variety of ESG reporting frameworks exist to guide companies in disclosing their sustainability performance, ranging from mandatory to voluntary disclosures. The Task Force on Climate-related Financial Disclosures (TCFD) is a widely recognized framework that helps companies report on climate-related financial disclosures, focusing on both risks and opportunities. In the UK, TCFD-aligned reporting has become mandatory for certain companies, while the European Union’s CSRD requires comprehensive ESG information disclosure across a broader set of companies.

Other prominent frameworks include the Global Reporting Initiative (GRI) and the Sustainability Accounting Standards Board (SASB), which provide sector-specific guidelines for ESG reporting. ESG ratings, such as those from MSCI, play a crucial role in helping investors, financial institutions, asset managers, pension funds, and sustainability stakeholders assess a company’s ESG risk and overall performance. These ratings inform investment decisions and support the management of climate-related risks, ensuring that ESG considerations are integrated into investment strategies and reporting requirements are met. As ESG reporting continues to evolve, companies must stay informed about both regulatory mandates and voluntary frameworks to effectively communicate their sustainability efforts and risks and opportunities to investors (asset owners, financial institutions, asset managers, pension funds, etc.) and other stakeholders.

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