Food Under Scrutiny: ESG Regulation Moves from Disclosure to Enforcement

Food systems account for roughly a quarter of global greenhouse gas emissions. They consume 70% of the world's freshwater. They employ hundreds of millions of people across supply chains that stretch from smallholder farms in sub-Saharan Africa to supermarket shelves in Stuttgart. And until recently, the regulatory apparatus surrounding all of this was remarkably thin.

That changed fast. A wave of ESG regulation is now bearing down on the food sector with a speed and breadth that has caught many companies flat-footed. From mandatory climate disclosures in Europe to deforestation due diligence requirements, from greenwashing lawsuits in New York courtrooms to value chain reporting mandates in India, the message to food businesses is unambiguous: transparency is no longer optional, and vague sustainability pledges won't cut it anymore.

 

The EU's Regulatory Juggernaut

 

No region has been more aggressive in codifying ESG expectations than the European Union, and no sector feels the weight of that ambition quite like food and agriculture.

The Corporate Sustainability Reporting Directive, or CSRD, is the centrepiece. Replacing the older Non-Financial Reporting Directive, the CSRD dramatically expands the universe of companies required to publish detailed sustainability disclosures. The first wave, consisting of large companies previously covered under the NFRD, began reporting on fiscal year 2024 data in early 2025. The European Commission's Omnibus simplification package, approved by the EU Parliament in December 2025, has since narrowed the scope to companies with more than 1,000 employees and over €450 million in net annual turnover, while pushing later reporting waves back by roughly two years.

For food companies, the CSRD's bite is sharpest around Scope 3 emissions, meaning the indirect emissions embedded across sprawling agricultural value chains. For a typical packaged food company, Scope 3 can represent over 90% of total emissions, driven largely by farming, livestock, fertiliser use, and logistics. The SBTi's FLAG guidance (Forestry, Land and Agriculture) adds another layer, requiring food and agriculture companies to set science-based targets that specifically address land-use emissions.

The sheer complexity is rattling even well-resourced companies. In interviews conducted for a 2025 study in the British Food Journal, sustainability experts from the Danish agrifood sector captured the mood bluntly: "What's the methodology behind it? How do you do it?" That uncertainty is widespread, and it's not confined to smaller players.

Then there's the EU Deforestation Regulation, the EUDR. Postponed twice, the regulation is now scheduled to take effect on 30 December 2026 for large operators, with small and micro enterprises following by June 2027. It targets seven commodity groups: cattle, cocoa, coffee, palm oil, rubber, soy, and wood, along with derived products like beef, chocolate, and leather. Companies placing these products on the EU market must demonstrate, through a due diligence statement backed by geolocation data, that nothing in their supply chain was produced on land deforested after 31 December 2020. For food multinationals sourcing from tropical regions, this demands traceability at a granularity that most supply chains simply weren't built to provide.

 

Beyond Brussels: A Global Patchwork

 

The EU may be leading, but it's hardly alone. California's SB 253 requires companies with over $1 billion in annual revenue operating in the state to disclose Scope 1, 2, and 3 emissions, with Scope 3 reporting beginning in 2027. The companion bill, SB 261, mandates climate-related financial risk reports for companies exceeding $500 million in revenue. These laws apply regardless of whether a company is publicly traded, sweeping in privately held food processors and agricultural firms.

In India, SEBI has expanded its Business Responsibility and Sustainability Reporting framework. The top 1,000 listed companies now report across 140 indicators. From FY 2025-26, the top 250 must also disclose value chain ESG data, initially on a voluntary basis and shifting to mandatory assessment by FY 2026-27, covering partners that individually account for at least 2% of total purchases or sales.

Globally, the ISSB has consolidated TCFD and SASB standards into IFRS S1 and S2, a new baseline that jurisdictions from Japan to Brazil are beginning to adopt. The pattern is hard to miss: what was once a voluntary exercise in corporate storytelling is becoming a legally enforceable obligation.

 

What ESG Actually Looks Like on a Farm and in a Factory

 

Regulatory frameworks tend to speak in acronyms. But for food companies, ESG is viscerally operational.

Environmental: Agriculture accounts for roughly 26% of global GHG emissions. The pressure points are stacking up fast:

• Packaging waste remains stubbornly difficult to recycle at scale
• Water consumption is under scrutiny as drought cycles worsen globally
• Biodiversity loss through habitat conversion is drawing regulatory attention
• Methane from livestock is now a specific disclosure target under multiple frameworks

Companies are being asked to measure and reduce impacts across all of these dimensions, often in supply chains they don't directly control.

Social: Labour conditions in agricultural supply chains, from migrant workers in southern Europe to cocoa harvesters in Côte d'Ivoire, remain a persistent risk. The EU's Corporate Sustainability Due Diligence Directive signals that companies will increasingly be held liable for human rights abuses deep in their value chains. Food safety, community water access, and smallholder welfare are all under growing investor scrutiny.

Governance: Sustainability can no longer live in a CSR silo. Regulators and investors want dedicated board-level oversight of climate and nature risk, executive compensation tied to ESG outcomes, and transparency on lobbying activities. Companies lobbying against environmental policy while publishing sustainability reports are being called out, and it's costing them credibility.

 

When the Lawsuits Start Landing

 

Perhaps the most dramatic shift of the past two years has been the escalation of greenwashing enforcement, and the food industry has been squarely in the firing line:

• JBS USA (2025): Settled with the New York Attorney General over misleading "Net Zero by 2040" claims. Paid $1.1 million and agreed to reframe net-zero language as a "goal" rather than a "pledge."
• Tyson Foods (2025): Agreed to stop making "Net Zero by 2050" and "climate-smart beef" claims. A court found that Tyson's reduction target was not just unrealistic; it was "impossible."
• Coca-Cola (ongoing): Earth Island Institute alleges its recyclable packaging targets are misleading. A D.C. appeals court ruled the claims could proceed.

These are not isolated incidents. According to a 2023 GITNUX report, 68% of US CEOs admitted their companies had engaged in some form of greenwashing. The European Commission has estimated that over half of green claims in the EU contain misleading or unsubstantiated information. Its Empowering Consumers for the Green Transition directive, which took effect in 2026, requires companies to back up environmental claims with independent verification.

Food companies making bold climate pledges without a credible, documented plan to back them up are painting targets on themselves. Ask JBS and Tyson how that worked out.

 

Biodiversity: The Next Frontier

 

If carbon has dominated the ESG conversation for the past decade, biodiversity is rapidly claiming a co-starring role. The TNFD finalised sector-specific guidance for food and agriculture in mid-2024, and over 500 companies across 54 countries have since committed to TNFD-aligned reporting. More than 70% of investors surveyed by the TNFD want the ISSB to develop a dedicated standard for nature and biodiversity.

This matters to food more than to almost any other sector. Global wildlife populations have declined by an average of 69% since 1970, and the World Economic Forum's 2025 Global Risk Report ranked biodiversity loss as the second biggest global risk over the next decade. Under the CSRD's ESRS E4 standard, companies with material biodiversity impacts will need to disclose their dependencies, risks, and transition plans. Early drafts of the simplified ESRS actually propose making biodiversity transition plan disclosures mandatory rather than voluntary, which tells you exactly where regulatory expectations are heading.

 

Who's Getting It Right, and Who Isn't

 

Nestlé hit its interim climate target, a 20% reduction in emissions from a 2018 baseline, a year ahead of schedule. What's working:

• SBTi-approved FLAG-aligned targets covering agricultural emissions
• Primary supply chains for cocoa, palm oil, soy, and coffee assessed as deforestation-free
• CDP A-list for climate in 2025

But the road ahead is steeper. Nestlé still needs to cut an additional 30 percentage points by 2030, and its reliance on nature-based carbon removals is set to increase eightfold. CEO Laurent Freixe told investors in 2024 that Nestlé has "done the heavy lifting" on sustainability. That's a striking statement given that peer food companies expect to increase climate-related capital spending to an average of 20% by 2030, according to PwC.

Danone took a different route. In 2025, it became the largest company in the world to achieve full B Corp certification:

• 16% CO₂ reduction since 2020
• 25% cut in methane from dairy operations
• 85% of packaging reusable or recyclable
• 39% of key ingredients from regenerative agriculture
• 44% women in senior leadership

Beyond these two, the picture is grimmer. The food and beverage sector ranks second only to oil and gas in reported greenwashing incidents globally, according to RepRisk's 2024 data. The gap between what food companies say and what they do remains dangerously wide.

 

What Food Companies Should Do Now

 

1. Treat Scope 3 as a strategic priority.

• Work directly with farmers to collect primary emissions data
• Deploy satellite monitoring for land-use verification
• Align reduction targets with SBTi FLAG guidance

2. Prepare for the EUDR now.

• Map sourcing back to origin with geolocation data
• Establish segregation protocols for compliant and non-compliant product flows
• Engage smallholder suppliers early; they often lack documentation infrastructure

3. Get ahead of biodiversity.

• Start with one high-risk product line or sourcing region
• Align disclosures with ESRS E4 and the Kunming-Montreal targets
• Set science-based nature targets through the SBTN

4. Stop making claims you can't defend.

• Back every public commitment with a time-bound plan and third-party verification
• If your targets are aspirational, call them that
• Drop vague language like "eco-friendly" or "climate-smart" unless you can prove it

5. Embed ESG into governance.

• Tie executive compensation to measurable sustainability outcomes
• Establish dedicated board committees for climate and nature risk
• Integrate ESG metrics into capital allocation and M&A due diligence

 

No More Runway

 

There is no version of the next five years where ESG regulation gets lighter. The EU has built an interlocking web of disclosure, due diligence, and anti-greenwashing rules that other jurisdictions are openly copying. India is expanding scope. California is forcing private companies into the same reporting ring as public ones.

Forget the polished sustainability brochures. What actually separates the companies that are ready from the ones that aren't is the unglamorous work:

• Wiring traceability into supply chains
• Collecting primary emissions data from farmers
• Pressure-testing public claims against what can actually be proved
• Building governance structures that treat climate and nature risk with the same rigour as financial risk

The food on our plates touches every ESG pressure point there is. The regulatory world has noticed. Whether the industry has noticed quickly enough is a question the next two years will answer.

 

Sources: EU Commission (CSRD, EUDR); CARB (SB 253/261); SEBI (BRSR Core); Nestlé 2025 Non-Financial Statement; Danone 2024 Universal Registration Document; TNFD sector guidance v1.0; RepRisk 2024; Ceres 2025 food sector benchmarking; PwC Decarbonization Report; British Food Journal (Witt et al., 2025); FAO; UNESCO; WWF Living Planet Report; WEF 2025 Global Risk Report.