Nutritional Supplements Industry ESG Thematic Report, 2023

Environmental, Social and Governance (ESG) in theNutritional Supplements Industry

ESG is a non-financial factor that an investor considers as part of their analysis process. ESG Investing refers to integrating a company's sustainability initiatives into investment decisions. Consumers and investors are becoming more aware of corporate sustainability programs. However, it is important for companies operating within a sector to understand and align their processes with ESG pillars.

In the nutritional supplement industry, 'green' supplements are growing more quickly than sustainably produced food and drink. Despite their many health benefits, supplements do come with an environmental cost that many fear will rise if we do not act. It's no secret that the supplements industry can have devastating effects on the environment, whether it's sourcing ingredients, manufacturing processes, packaging, or distribution. Consumers are demand businesses to adopt good business practices to address global environmental problems.

Using sustainable ingredients allows supplement manufacturers to make substantiated and honest sustainability claims. Additionally, dietary supplement manufacturers can gain a competitive advantage by sourcing ethical ingredients in addition to showing their commitment to sustainability. By launching eco-friendly products first, brands can gain a significant edge over their competitors.

ESG Trends

As a way of reducing the impact on ecological processes, sustainable sourcing is adopted by numerous nutritional supplement companies including the use local ingredients, which not only stimulates the local economy, but also limits the carbon footprint, the importance of channels is promoted throughout every aspect of the crop management process, from selecting plant species to controlling them.

Nutraceuticals are becoming increasingly plant-based, primarily for their effectiveness and naturalness. This is perfectly consistent with the sustainability logic of dietary supplements, so this explains why plants are so successful that 93% of the market's growth comes from plants. Moreover, plant alternatives are replacing traditional ingredients nowadays.

Consumer product manufacturers across industries are moving towards eco-friendly packaging solutions, but the supplement industry seems to be lagging. The packaging of supplements still uses plastic containers, desiccants, cotton balls, labels, outer boxes, package inserts, and tamper-proof seals, which contribute to global warming.

Purchasing supplements instead of traditionally packaged products will encourage manufacturers to use more sustainable packaging. Additionally, many companies are using plant-based packaging material such as sugarcane pulp, molded fibers, and bioplastics like polybutylene succinate and polylactic acid to package their products. Aside from purchasing supplements in bulk, consumers can also choose blister-packed or single-serving packages, which reduces the amount of packaging that is disposed of.

Nutritional supplements provide far-reaching benefits in achieving the United Nations Sustainable Development Goals (UN-SDGs). One of the main SDGs to be targeted is SDG 2 - a global commitment to tackle undernutrition and hunger. SDG 2, whose aim is to “end hunger, improve nutrition, and promote sustainable agriculture”, recognized the need for better nutrition. Despite the significant progress made since 2000, eradicating hunger, food insecurity, and malnutrition for all will require sustained, focused efforts, especially in Asia and Africa.

ESG Challenges

In the supplement industry, there are numerous intermediate processing stages, the intermixing of ingredients, and proprietary formulations or processes that make up the global supply chain. These factors make it extremely difficult to address sustainability challenges within the supply chain. To address these sustainability challenges, it may be necessary to establish industry-wide working groups focused on sustainable initiatives.

Growth of the Nutritional Supplements Market

In 2021, the global nutritional supplement market is expected to reach USD 358.8 billion, expanding at a compound annual growth rate (CAGR) of 6.3% from 2022 to 2030. Global health awareness has increased, allowing the market to flourish because of the pandemic. People are now more aware of the impact of an unhealthy lifestyle because of the pandemic. The supplements industry still has a long way to go when it comes to reducing its environmental impact. Consumers can help by demanding higher standards and voting with their dollars for sustainable products against unsustainable ones. In addition to attracting eco-conscious consumers, nutritional supplement manufacturers can also benefit from demonstrating their commitment to sustainability.

Key Companies in this theme

• Amway

• Nestle

• Glabania PLC

• PepsiCo

• Herbalife International of America

• Abbott Nutrition

Scope of the Nutritional Supplements Industry ESG Thematic Report:

• Macro-economic and ESG-variable analysis of the industry, including regulatory, policy, and innovation landscape

• Key insights on infrastructure developments and ESG issues affecting the theme

• Identify key initiatives and challenges within the industry

• Identify ESG leaders within the industry

• Understand key initiatives and the impact of companies within the sector to fuel an informed decision-making process

• Analysis of industry activities based on multi-media sources, including significant controversies and market sentiment

Key Benefits of Nutritional Supplements Industry ESG Thematic Report:

• Developing a comprehensive understanding of macro-economic, policies & regulations and innovations affecting the nutritional supplements sector, globally

• Key insights into environmental developments and ESG issues affecting the theme

• Identifying ESG risks and opportunities to business among leading players in the nutritional supplements industry

• Obtaining a clear and relevant understanding of company actions, progress, and impact and find opportunities for investment