More than two-thirds of food and drink companies have been forced to curtail their sustainability plans amid rising costs and the forthcoming deposit return scheme (DRS).

In a survey of more than 100 businesses by Johnston Carmichael, 70 per cent reported their "sustainability plans have been negatively impacted" by inflation. The accountancy firm's annual Food&Drink report found the rising cost of energy and raw materials, and the implementation of Scotland's DRS scheme in August, are among the top challenges currently faced by businesses.

Fierce Beer founder Dave Grant, who took part in the survey, explained the severity of the impact in recent months.

“Being as sustainable as possible has been a priority of our business since it was founded in 2015," Mr Grant said. "But the reality is that our plans to achieve net zero have effectively been put on hold in recent months because of the current economic climate.

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“It is really unfortunate, but until the wider situation shows signs of improvement, we simply can’t afford to spend significant time and money on progressing sustainability projects, however important they may be.”

Another drinks company asked about the issue replied: “We don’t have a sustainability plan. Right now, our plan is to stay in business.”

Two-thirds of firms interviewed were based in Scotland, with the rest from elsewhere in the UK.

“The journey to net zero is very important for the industry, but it’s clear that for many the issue of rising inflation has negatively impacted these aims, and some have even felt they have had to shelve those plans for the time being," said Adam Hardie, head of food and drink at Johnston Carmichael.

HeraldScotland: Adam Hardie of Johnston CarmichaelAdam Hardie of Johnston Carmichael (Image: Johnston Carmichael)

“Despite this, it’s reassuring to see there’s still a real positivity around this resilient sector as it looks to the future."

A total of 59% of businesses said they were optimistic or very optimistic about their firm’s future growth.

However, three-quarters reported that inflation is also impacting relationships with their customers and suppliers. More than half said they’d seen their largest price increases in raw materials, followed by energy costs and labour.

Allan Wilkinson, head of agrifoods HSBC, said double-digit inflation across the sector has in some instances led to sustainability plans being deliver "at greater pace" than would have otherwise been the case.

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“The inflation which commenced in mid-2021 is of such a magnitude, that many businesses have decided that focussing on the [day-to-day] essentials and their own survival eclipsed long-term goals including their sustainability strategies and action plans," said Mr Wilkinson, whose company was a supporting partner in the Food&Drink report.

“As time has moved along, businesses have made two observations. Firstly, that this inflationary period is far from over and could well exist for quite a while yet, and secondly that plans to drive efficiency to mitigate cost increases have delivered action towards lowering their carbon footprint, which in turn takes them back to their own sustainability ambitions in the first place."