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An explosive whistleblowing memo from an anonymous group of food industry executives has today warned the sector is heading for an economic disaster bigger than the pandemic, with companies’ resilience planning based on “wishful thinking” and “false reassurances” to investors.

It claims the UK food industry has “reached a moment of threat to food security like none other we have seen” and warns it is on course for inevitable food shortages, a series of supply chain sourcing collapses and business failures.

The memo, shared with The Grocer, warns food businesses are woefully unprepared for challenges including soil degradation, extreme weather events, global heating and water scarcity and that yield, quality and predictability of food supply are all at severe risk.

It goes on to claim that companies’ risk mitigation strategies are being assured by major audit and assurance firms and giving false confidence to investors, whereas the true threat to the supply chain is far greater than companies have acknowledged.

Today’s memo has been written by a group called Inside Track x Food, made up of around 20 executives who hold or have held senior roles in major UK food manufacturers, retailers and associated businesses.

The group said most of its members had ‘decades’ of experience in the sector but had reached a point where they felt they had to speak out, albeit anonymously, in an attempt to bring the issue to the forefront of debate over UK food resilience.

The shocking claims in the memo come just a week after the first meeting of the Food Strategy Advisory Board, with the UK government having made food resilience a key priority in the plans.

The claims are now set to be raised at a series of forthcoming company AGMs, with shareholder campaign group ShareAction saying it will take them up and demand action.

The document says: “We are releasing this memo because we have reached a moment of threat to food security like none other we have seen.

“Yield, quality, and predictability of supply from many of our most critical sourcing regions is not something we will be able to rely upon over the coming years.

“The data on degrading soil health, water scarcity, global heating and extreme weather events back up what we are seeing from within the system: an interconnected set of crises.”

“These crises will have a meaningful commercial impact on our businesses.”

It adds: “The climate risk reports of major food companies are filled with casual mentions of threats to the viability of our supply chains over the short to medium term. The strategies to mitigate these risks, however, are simply not material compared to the scale of the threat.”

‘Wake-up call to investors’

The group said it hoped the memo would be a “wake-up call” to ministers and companies, as well as investors, who it urged to do much more to explore the resilience and disaster preparedness levels of companies they own.

The memo claims food company boards are too consumed with “immense short-term pressures” to properly prepare for longer-term threats to the industry, where “the culture is anchored to concentrate on the financial and competitive analysis”.

“Issues that present a fundamental threat to our operations in the mid-term are not prioritised.”

It adds the competitive nature of the UK food industry and rules on competition are contributing to the problem, claiming there is a “fear around having ‘real’ conversations connected to these issues”.

“Within retail, the stringent nature of our grocers’ code of conduct, combined with competition law and a highly competitive sector, means that we are often unwilling or unable as a sector to pool our insights and come up with joint strategies.

“There are industry working groups and conferences but they get dragged into the superficial rather than the fundamental.

“There is a bias toward pleasing rather than being honest with our directors, shareholders, owners and creditors.”

In further claims, the memo says auditors are being led to think companies are more prepared than they really are to tackle risk to the supply chain.

“Mitigation strategies, meanwhile, are simply not commensurate with the level of the risk we are facing,” it says, accusing companies of having sub-scale and insufficient planning while making proclamations about transitioning to different products or ingredients without the investment needed to deliver the scale of change.

It concludes: “What was a long-term threat is now a short-term threat. The balance of action needs to change. However, the risk is that we are entering a policy environment where companies are stepping back from rather than into the kind of action that is needed to secure their resilience.”

Ned Younger of Inside Track, who co-ordinated the memo, said: “The food industry is heading into a crisis that those within can clearly see coming.

“If investors want to build resilient portfolios and future-proof their investments – and simultaneously protect the communities major companies source from and the public who rely on them for food – then they are going to have to help drive corporate action on these issues.”

Penny Fowler, head of corporate climate campaigns at ShareAction, said: “The memo suggests that rising food sector risks demand increased attention by investors throughout their voting and engagement activities.

“We urge our colleagues in the investment industry to leverage their unique capabilities as investors to address this otherwise intractable sustainability challenge.

“We’re looking forward to working in partnership to raise these critical questions at the forthcoming AGMs of major players in our food system.”

Amy Browne, director of stewardship at sustainability focused investment house CCLA, said: “The memo suggests that rising food sector risks demand increased attention by investors throughout their voting and engagement activities.

“We urge our colleagues in the investment industry to leverage their unique capabilities as investors to address this otherwise intractable sustainability challenge.”