Sustainability was a key theme at the Australian Wine Industry technical conference with a clear mandate that more and more businesses will need to demonstrate their ESG credentials.
The pressure to do so is no longer confined to retailers, as banks, investors and trading partner nations are all equally interested in the ESG credentials of businesses. When it comes to measuring performance, environmental indicators such as carbon emissions extend beyond the farm gate to packaging, freight and even tourism. Australian Grape & Wine has recently agreed to set optimistic targets for reducing waste to landfill and that 2035 be the target date that we celebrate becoming a net-zero emissions sector.
But we are aware that this mounting pressure comes at a time when rising costs are hitting the bottom line of producers. Demonstrating improvement in the ‘E’ and ‘S’ in ESG, can be difficult when producers are worried about the P (profitability). Sustainable production circles back to the sustainability of the industry as a whole. In the opening address of the technical conference a disturbing statement was made that ‘no political reset will reopen China’. With inventories expected to reach an all time high in 2022 and red wine stock to sales ratios 30% above the 10-year average as at June 2021, the end is not in sight. Without a concerted effort to grow quality over quantity, this unfavourable supply demand balance may continue to tip for quite some time. The loss of China means pursuing new markets, some of which have a much greater focus on sustainability.
Sustainability is no longer a nice-to-have, but a must-have to maintain consumer franchise and the support of banks and customers. The real question is how to achieve this. Australian Grape & Wine plans to advocate on behalf of the sector for Government support to open doors to bring in more innovation in sustainability. We are committed to enhancing our sustainability credentials in a way that doesn’t just become a cost to growers, but provides a positive return to the bottom line.
In the meantime, we encourage wine producers and winegrape growers to consider what ESG will mean for their business and ensure their credentials are fit for a changing future. In terms of promoting a prosperous and sustainable sector, wine producers can ease the burden of over-supply by discussing any changing requirements early and openly with their growers.