Why a focus on ESG could be a competitive advantage in times of uncertainty
Debbie Morrison • March 15, 2023

ESG has become somewhat of a buzzword in recent years and for good reason –  Environmental, Social, and Governance (ESG) factors have gained significant importance in the FMCG and Food and Beverage Industries. But why is ESG vital to gaining a competitive advantage?

Sustainability is no longer an ideal, it is a mainstream concept and companies that prioritise this and other ESG factors are increasingly being perceived as more responsible, ethical, and sustainable. In the FMCG (Fast-Moving Consumer Goods) industry, a focus on ESG over traditional issues such as corporate strategy is emerging as both an ethical and commercial path to securing a competitive advantage in times of uncertainty.


Investors are increasingly assessing how companies behave as well as how they perform.

As investors and corporate boards assess the multitude of risks that could potentially impact their portfolios' returns such as; climate change, labour rights and political risk, how companies behave as well as how they perform is coming under increased scrutiny. Investors want to understand what a company's strategy is in these areas and whether it will provide them with an advantage over their peers or competitors. 

The result is a growing focus on ESG issues such as diversity and gender equality, employee health and safety, sustainability practices and climate risk management. This trend has been driven in part by regulatory changes such as ASIC’s Task Force on Climate-related Financial Disclosures (TCFD) recommendations. Australia's insurance industry can expect an acceleration in climate risk reporting and sustainable finance obligations in 2023. In December, the federal government announced the start of a consultation process that would lead to mandatory climate-related disclosures.

But it's also happening because investors want to know that their money isn't funding unethical behaviour or activities with negative environmental consequences.


Investors want to understand how environmental and social risk is being managed.

ESG is about understanding how to manage environmental, social and governance risks. For board members and business leaders, it's about making sure that a company has good governance structures in place so that it can make decisions in the best interests of its stakeholders.

As we have seen in recent years, ESG factors are increasingly affecting company performance, but they also have the potential to significantly impact an organisation's reputation. In fact, investors are increasingly looking at ESG factors when making investment decisions--and this trend isn't likely to change anytime soon.


Corporate boards are increasingly being held accountable for ESG performance.

Economic pressures, talent shortages, digital transformation and shifting consumer expectations are all pressing issues for FMCG companies. Among the multitude of competing priorities, ESG issues don't seem like they would be at the top of the list.

However, research is finding that those who pay attention to ESG are actually finding themselves in a better position than those who don't. When it comes to ESG, McKinsey found that from 2,000 ESG studies on the impact of ESG on company returns, 68% of companies that prioritise environmental, social, and governance (ESG) concerns achieved positive returns. 

And when it comes to gender diversity on boards, another study by the University of California, Davis found that companies with higher female representation experienced lower costs and greater returns on capital during turbulent times.


How does ESG translate into a competitive advantage, especially in times of uncertainty?


Plagued with significant disruptions in recent years, including changing consumer preferences, increasing competition, and supply chain disruptions the FMCG industry has been hit hard.  These disruptions have highlighted the need for FMCG companies to adapt to changing circumstances and remain agile. 


One might argue that in light of such a challenging backdrop, rapid digital or business transformation may offer the greatest potential for organisations to secure a competitive advantage. Whilst the case for transformative or digital initiatives is indeed strong, factoring ESG into core business strategies can help organisations to better align products, services and business purpose with consumer and employee values, increasing their ability to meet stakeholder expectations. In doing so, FMCG companies can improve their ability to secure a competitive advantage by enabling them to respond to changing market conditions.



ESG can build greater resilience


As business leaders explore the ways in which they can mitigate risk, factoring ESG considerations into corporate strategy can help light the path to better decision-making. One of the key benefits of focusing on ESG is the ability to build resilience in the face of uncertainty. Through the lens of environmental sustainability and social responsibility, boards can better advise and support FMCG companies to build resilience by understanding how future risk can impact their organisation, thereby reducing their exposure to risks such as supply chain disruptions, regulatory changes, and reputational damage. 


Companies that prioritise sustainability by reducing their carbon footprint and implementing sustainable sourcing practices are less likely to face regulatory penalties and reputational damage. Similarly, companies that prioritise social responsibility by investing in their employees' well-being and safety are better equipped to deal with disruptions and the effects of unexpected events such as the COVID-19 pandemic, which highlighted the importance of employee safety and well-being. 


Research from Mercer shows that satisfied employees work harder, stay longer with employers, and seek to produce better results for the organisation. The same research found that companies with highly satisfied employees have, on average, 14% higher ESG scores than the global average.



ESG Improves stakeholder relationships


Secondly, ESG can be a powerful tool in helping FMCG companies build stronger relationships with customers and other stakeholders. A focus on ESG factors can help FMCG businesses to build stronger relationships with customers and other stakeholders. Customers are becoming increasingly concerned about the impact of their consumption on the environment and society. They prefer to buy products from brands that share their values and actively work towards sustainable and socially responsible practices. FMCG companies that prioritise ESG factors are seen as more ethical, sustainable, and trustworthy, which can help them build brand loyalty and customer trust.


This isn’t exclusive to customers, organisations that invest in ESG are more likely to attract and retain employees who share their values and are committed to creating positive social and environmental impact. 


Today's workforce is increasingly values-driven, and employees are more likely to work for companies that align with their values and offer a sense of purpose. By prioritising ESG factors, FMCG companies can attract and retain employees who are committed to creating positive social and environmental impact, and who are more likely to be engaged and motivated in their work. 


According to a survey conducted by SEEK in 2021, 79% of Australian workers want to work for a company that is committed to making a positive impact on the environment and society. The same survey found that 74% of respondents are more likely to apply for a job at a company that is environmentally and socially responsible, and 81% said they would consider leaving a company that didn't have a good reputation for corporate social responsibility.



ESG drives innovation and opportunity

Thirdly, a focus on ESG factors can lead to innovation and new business opportunities for FMCG businesses. FMCG companies that prioritise ESG factors are more likely to identify and capitalise on emerging market trends related to sustainability and social responsibility.

By prioritising sustainability, FMCG businesses are better positioned to develop products that are made from renewable materials or that are recyclable, enabling them to tap into emerging markets that promote health and wellness or address social issues such as poverty and inequality. 


Additionally, ESG factors are more likely to attract investment from impact investors, who are looking for companies that generate positive social and environmental impact in addition to financial returns. 


While some FMCG companies may be reluctant to prioritise ESG factors because of concerns they will harm profitability and competitiveness, research shows that companies that prioritise ESG outperform their peers in terms of financial performance and market valuation. A study by Harvard Business Review found that companies that prioritise sustainability outperformed their peers in terms of stock performance and financial performance. In addition, socially responsible investors are more likely to invest in companies that generate positive social and environmental impact.



Moreover, a focus on ESG factors can help FMCG companies to differentiate themselves from their competitors in a crowded market. In the FMCG industry, where competition is fierce, companies that prioritise ESG factors can stand out by offering products and services that are more sustainable, ethical, and socially responsible. This can help to build brand loyalty and customer trust, which can lead to increased sales and profitability.


In fact, ESG factors can be integrated into corporate strategy to create long-term value for the company and its stakeholders. Companies that prioritise ESG factors can use them as a lens to evaluate and inform corporate strategy, identify new business opportunities, and manage risk. 


Business leaders and executives can use sustainability metrics to evaluate the environmental impact of their operations, identify areas for improvement, and implement sustainable practices that reduce costs and increase efficiency. Similarly, companies can use social metrics to evaluate the impact of their operations on employees, customers, and communities, identify areas for improvement, and implement policies and practices that promote social responsibility.



In conclusion, a focus on ESG factors over traditional issues such as corporate strategy could be a competitive advantage for FMCG businesses in times of uncertainty. By prioritising ESG factors, FMCG companies can build resilience, strengthen stakeholder relationships, drive innovation, and differentiate themselves from their competitors. 


Moreover, a focus on ESG factors can lead to improved financial performance, market valuation, and talent attraction and retention. As the business world continues to evolve, FMCG companies that prioritise ESG factors are likely to be better equipped to adapt to changing circumstances and emerge as leaders in their industry.


At ELR Executive we have over 20 years of experience helping FMCG and Food and Beverage organisations identify and attract the right talent to help achieve better business outcomes. If you'd like to learn more about how we can help you hire the right leadership talent, who can help your organisation turn ESG into a competitive advantage, speak to us today.

The Quiet Collapse of Australian Vegetable Farming

By John Elliott • June 26, 2025
You don’t hear about it on the nightly news. There’s no breaking story. No panic. No protests. Just rows of vegetables being pulled out of the ground with no plan to replant. Just farmers who no longer believe there’s a future for them here. Just quiet decisions — to sell, to walk away, to stop. And if you ask around the industry, they’ll tell you the same thing: It’s not just one bad season. It’s a slow death by a thousand margins. 1 in 3 growers are preparing to leaveIn September 2024, AUSVEG released a national sentiment report with a statistic that should have set off alarms in every capital city: 34% of Australian vegetable growers were considering exiting the industry in the next 12 months. Another one-third said they’d leave if offered a fair price for their farm. Source: AUSVEG Industry Sentiment Report 2024 (PDF) These aren’t abstract hypotheticals. These are real decisions, already in motion. For many, it’s not about profitability anymore, it’s about survival. This isn’t burnout. It’s entrapment. Behind the numbers are people whose entire identity is tied to a profession that no longer feeds them. Many are asset-rich but cash-poor. They own the land. But the land owns them back. Selling means walking away from decades of history. Staying means bleeding capital, month by month, in a system where working harder delivers less. Every year, input costs rise, fuel, fertiliser, compliance. But the farmgate price doesn’t move. Or worse, it drops. Retail World Magazine reports that even though national vegetable production increased 3% in 2023–24, the total farmgate value fell by $140 million. Growers produced more and earned less. That’s not a market. That’s a trap. What no one wants to say aloud The truth is this: many growers are only staying because they can’t leave. If you’re deep in debt, if your farm is tied to multi-generational ownership, if you’ve invested everything in equipment, infrastructure, or land access, walking away isn’t easy. It’s a last resort. So instead, you stay. You cut your hours. Delay maintenance. Avoid upgrades. Cancel the next round of planting. You wait for something to shift, interest rates, weather, prices and you pretend that waiting is strategy. According to the latest fruitnet.com survey, over 50% of vegetable growers say they’re financially worse off than a year ago. And nearly 40% expect conditions to deteriorate further. This isn’t about optimism or resilience. It’s about dignity and the quiet erosion of it. Supermarkets won’t save them, and they never planned to In the current model, supermarket pricing doesn’t reflect real-world farm economics. Retailers demand year-round consistency, aesthetic perfection, and lower prices. They don’t absorb rising input costs, they externalise them. They offer promotions funded not by their marketing budgets, but by the growers’ margins. Farmers take the risk. Retailers take the profit. And because the power imbalance is so deeply entrenched, there’s no real negotiation, just quiet coercion dressed up as "category planning." Let’s talk about what’s actually broken This isn’t just a market failure. It’s a policy failure. Australia’s horticulture system has been built on: Decades of deregulated wholesale markets Lack of collective bargaining power for growers Retailer consolidation that has created a virtual duopoly Export-focused incentives that bypass smaller domestic producers There’s no meaningful floor price for key produce lines. No national enforcement of fair dealing. No public database that links supermarket shelf price to farmgate return. Which means growers, like James, can be driven into loss-making supply contracts without ever seeing the true economics of their product downstream. But the real silence? It’s from consumers. Here’s what no one wants to admit: We say we care about “buying local.” We say we value the farmer’s role. We share those viral posts about strawberries going unsold or milk prices being unfair. And then we complain about a $4 lettuce. We opt for the cheapest bag of carrots. We walk past the "imperfect" produce bin. We frown at the cost of organic and click “Add to Cart” on whatever’s half price. We’re not just bystanders. We’re part of the equation. What happens when the growers go? At first, very little. Supermarkets will find substitutes. Importers will fill gaps. Large agribusinesses will expand into spaces vacated by smaller players. Prices will stay low, until they don’t. But over time, we’ll notice: Produce that travels further and lasts less. Fewer independent growers at farmer’s markets. Entire regions losing their growing identity. National food security becoming a campaign promise instead of a reality. And when the climate throws something serious at us, drought, flood, global supply shock, we’ll realise how little resilience we’ve preserved. So what do we do? We start by telling the truth. Australia is not food secure. Not if 1 in 3 growers are planning to exit. The market isn’t working. Not when prices rise at the shelf and fall at the farmgate. The solution isn’t scale. It’s fairness, visibility, and rebalancing power. That means: Mandating cost-reflective contracts between retailers and suppliers Enabling collective bargaining rights for growers Building transparent data systems linking production costs to consumer prices Introducing transition finance for smaller producers navigating reform and climate pressure And holding supermarkets publicly accountable for margin extraction But more than anything, it means recognising what we’re losing, before it's gone. Final word If you ate a vegetable today, it likely came from someone who’s considered giving up in the past year. Not because they don’t care. But because caring doesn’t pay. This isn’t about nostalgia. It’s about sovereignty, over what we eat, how we grow it, and who gets to stay in the system.  Because the next time you see rows of green stretching to the horizon, you might want to ask: How many of these fields are already planning their last harvest?

Recession Is Coming for FMCG and Most Leaders Are Pretending It’s Not

By John Elliott • June 20, 2025
If you're leading an FMCG or food manufacturing business right now, you're probably still talking about growth. Your board might be chasing headcount approvals. Your marketing team’s pitching a new brand campaign. Your category team’s assuming spend will bounce. But your customer? They’ve already moved on. Quietly. Like they always do. The illusion of resilience FMCG has always felt protected, “essential” by nature. People still eat, wash, shop. It’s easy to assume downturns pass around us, not through us. But this isn’t 2020. Recessions in 2025 won’t look like lockdowns. They’ll look like volume drops that no promo can fix. Shrinking margins on products that no longer carry their premium. Quiet shelf deletions you weren’t warned about. The data’s already there. According to the Australian Bureau of Statistics, consumer spending is slowing in real terms , even as inflation eases. The Reserve Bank confirmed in May: household consumption remains subdued amid weak real income growth . And over 80% of Australians have cut back on discretionary food spending , according to Finder. They’re still shopping, just not like they used to. A managing director at a national food manufacturer told me recently: “We won a new product listing in April. By July, it was marked for deletion. The velocity wasn’t there, but neither was the shopper. We’d forecasted like 2022 never ended. Rookie mistake.” That one stuck with me. Because I’ve heard it before, just in different words.