INDUSTRY
Consumer Packaged Goods and Distribution
Enabling Product Innovation and Omnichannel Experience in CPG
Highlights
- Upstream agricultural supply chains remain opaque and unmeasured, creating a critical gap between sustainability commitments and provable, field-level performance.
- Regulatory mandates like Corporate Sustainability Reporting Directive (CSRD) and EU Deforestation Regulation (EUDR) require sustainability to be audited, not just reported, increasing financial, legal, and market access risks.
- Current approaches rely on estimation (averages, audits, declarations) instead of continuous, granular measurement-limiting accuracy and intervention capability.
- Competitive advantage will come from transitioning to real-time, verifiable, field-level data ecosystems powered by artificial intelligence (Al), enabling traceable, auditable, and actionable sustainability outcomes.
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Overview
Consider a request your organisation is likely to face—and may struggle to fulfill: : A regulator, an investor, or your largest retail customer asks you to demonstrate—clearly and on demand—that a key commodity in your flagship product is deforestation-free, and that its sustainability claim can be substantiated at source.
For many consumer goods companies, that level of proof is not available. This gap is no longer a reputational risk. It creates direct financial, legal and commercial exposure.
Regulatory frameworks are tightening rapidly. The European Union’s (EU's) Corporate Sustainability Reporting Directive (CSRD) elevates sustainability disclosures to the same levels of scrutiny as financial reporting. The EU Deforestation Regulation requires companies to prove that key commodities are deforestation-free and legally produced.
At the same time, the quality of sustainability claims remains under pressure—many environmental claims are either vague or misleading and also lack supporting evidence. Together, these gaps are increasing regulatory and penalty risks.
What was once seen as a reporting or branding exercise is now a strategic necessity, driven by growing auditability requirements that directly influence supplier eligibility, regulatory compliance, and cost exposure.
For leadership teams, the question has shifted. It is no longer ‘What are our commitments?’ but ‘Can we demonstrate them—consistently, accurately and at source?’
The real problem is upstream
For most consumer packaged goods (CPG) companies, most environmental impact sits upstream—in agricultural supply chains, and not in manufacturing or logistics.
This is where emissions are generated, where land use decisions are made, and where water, soil, and input practices determine the true footprint of a product. Yet, it is also where visibility is the weakest.
Today, upstream impact is largely measured using industry averages, regional benchmarks, and supplier self-declarations. While directionally useful, these approaches fail to capture the variation in real-world conditions. Farming practices differ widely, even within the same crop and geography, making averages an unreliable basis for decision-making.
The result is a clear disconnect. Organisations have set targets and made commitments but lack the field-level visibility needed to track actual performance or intervene effectively.
Three structure limitations reinforce this gap:
- Enterprise systems stop at the farm gate: Once data originates in the field, it typically falls outside core systems and control.
- Measurement is periodic, not continuous. Audits and assessments provide snapshots, leaving long periods where conditions—and risk—are unknown.
- Data is overly aggregated. Even where data exists, it is consolidated to a level that obscures the specific practices driving impact.
In practice, upstream sustainability is still managed as an estimation exercise rather than a true measurement discipline.
Managing upstream sustainability this way is not a measurement exercise but an estimation exercise. As the standards for accountability harden, estimation is no longer enough.
Why the pressure is rising
The tolerance for upstream opacity is rapidly shrinking—and faster than most enterprises expected.
Regulatory expectations are tightening rapidly. Requirements are becoming more detailed, more mandatory, and more consequential. For example, the EU's CSRD demands full value chain transparency with audit-level rigour.
This is being reinforced by a broader set of regulations targeting specific risks and claims. The EU Deforestation Regulation requires verifiable proof of responsible sourcing for certain commodities, while the EU Green Claims Directive will further raise the bar on what companies can say—and what they must substantiate.
At the same time, enforcement against greenwashing is catching up. Regulators across Europe, the UK, and the US are increasing scrutiny of sustainability claims, with penalties for those that cannot be backed by evidence; they are penalising claims that lack verifiable, field-level evidence. What was once primarily a reputational concern is now a legal and financial risk. In response, some are limiting disclosures to avoid scrutiny—highlighting a growing gap between stated commitments and what companies can actually prove.
Investor expectations are also evolving. Access to sustainability-linked financing and environmental, social, governance (ESG)-driven capital now depends on demonstrable performance. Organisations that can demonstrate progress with credible, data-backed metrics are rewarded with better financing terms and greater confidence, while others face higher scrutiny and reduced flexibility.
Finally, procurement standards are tightening. Major retailers and institutional buyers are embedding sustainability requirements directly into supplier contracts. Certification alone is no longer sufficient. Buyers increasingly expect traceable, verifiable, and timestamped data as a condition of doing business.
Together, these forces are closing the gap between what companies claim and what they must prove.
What needs to change
Closing the gap between upstream sustainability commitment and upstream sustainability reality requires a shift in operating model, not just a technology investment.
Annual audits and supplier questionnaires are no longer sufficient. They provide snapshots, not a reliable view of what’s happening on the ground.
Enterprises need a persistent, field-level data layer combining satellite imagery, remote sensing and in-field monitoring capabilities such as internet of things (IoT) sensors and drone-based observation to track vegetation health, soil conditions, land use, and farming practices in near real time.
Beyond improving accuracy, this shift also changes economics. Moving from manual assessment has reduced crop-monitoring cost by 20-30% while expanding coverage. It also enables detection of regenerative practices with over 90% accuracy at the level of an individual plot—turning broad claims into verifiable evidence.
Field-level data at agricultural scale is complex, fragmented and difficult to act on. Its value depends on the ability to interpret it consistently across crops, geographies, and suppliers.
Artificial intelligence (AI) becomes the critical intelligence layer—standardising data, identifying anomalies, quantifying emissions at the level of specific inputs and practices, and generating metrics that can support both operational decisions and external reporting.
This has a direct impact on reporting cycles. What once required three to five months of manual effort can now be done in a matter of weeks—transforming sustainability from a backward-looking reporting exercise into a real-time management capability.
Upstream sustainability cannot be verified through questionnaires alone. It requires suppliers—particularly cooperatives and aggregators—to become active participants in a shared data ecosystem.
This means equipping farmers with tools that provide real value, integrating data flows across the supply chain, and linking incentives to measurable environmental outcomes.
At scale, this model is proven. Verified, input-level traceability has been established across multiple countries and tens of thousands of farmers—tracking millions of crops, irrigation usage, and input application in detail, while reducing associated paperwork by around 40%.
Sustainability measurement is often treated as a compliance cost. That framing is no longer sufficient.
Enterprises that build robust, verifiable upstream data infrastructure unlock value beyond compliance—stronger regulatory standing, deeper retailer partnerships, improved access to capital, and differentiated brand credibility.
In this context, sustainability data is not just a reporting input. It is a strategic capability, and it should be managed with the same rigour as any other core supply chain investment.
Where value is created
When CPG enterprises make this shift, the impact extends well beyond compliance.
- Regulatory confidence becomes a strategic advantage. With field-level, continuously updated data, companies can meet emerging requirements with greater precision and demonstrate compliance in a way that periodic reporting cannot.
- Supply chain resilience improves through earlier risk detection. Continuous visibility highlights deteriorating supplier performance, climate stress affecting input quality, and emerging risks—enabling preemptive action to avoid disruption.
- Commercial relationships become more efficient and confidence-driven. Buyers who require verified performance become long-term partners rather than sources of audit pressure. At that same time, suppliers who gain real value from data-driven tools develop stronger engagement and loyalty, translating into greater supply stability.
- Sustainability becomes a brand asset that withstands scrutiny. As enforcement intensifies and consumers increasingly distinguish between a claim and a credential, the ability to prove upstream performance—not just communicate it—builds trust and premium positioning.
Shaping the path forward
The sustainability gap in CPG upstream is not structural—it reflects a mismatch between the ambitions organisations have set and the infrastructure they have built to support them (see Figure 2).
The capabilities required to close this gap already exist. At the same time, regulatory, investor, and commercial pressures are converging—making inaction increasingly difficult to sustain.
What is required now is a shift in how upstream sustainability is understood and managed.
Upstream sustainability is no longer a reporting or communications exercise. It’s an operational discipline—one that requires the same level of investment in data, infrastructure, and capability as any other dimension of supply chain performance.
Organisations that make this shift—moving from estimation to measurement, building intelligence on top of field-level data, and embedding accountability across supplier ecosystems—will not only meet emerging expectations. They will help define what credible, verifiable sustainability looks like in practice.
The path forward is clear. The advantage will lie with those who move early—and act decisively.
The bottom line
Upstream sustainability is moving from estimation to evidence. What was once a reporting exercise is now a requirement for market access.
Organisations that build verifiable, field-level visibility into their supply chains will move beyond compliance to define the standard for credible sustainability.