Creating a Circular Solution to Food Loss and Waste

TMNF had already been providing insurance that covers businesses for the disposal costs incurred when FLW is generated. However, we realized such frameworks are not sufficient to effectively curb food waste and reduce its environmental impact. To accelerate initiatives to reduce FLW, it was essential to provide alternatives to disposal and create frameworks that reduce FLW itself.

Our company as a whole is focused on promoting sustainability and a circular economy. The sales department servicing food businesses was already looking for ways to solve problems related to FLW, but it was not until around 2020 that we all began looking for ways to address this issue. Led by the Market Strategy Department, we decided to go full steam ahead in addressing the FLW issue as part of our endeavors to develop products that contribute to solving social issues.

As part of our efforts, we developed a Food Loss and Waste Reduction Promotion Rider; an innovative insurance product that simultaneously promotes corporate sustainability and mitigates business risks. The development of the rider would not have been possible without the invaluable support of our partners, Loss Zero, who collaborated with us on the pilot model in Osaka, as well as Nessu, our partner specializing in food banks. I’m truly grateful for their help.

Loss Zero is a start-up with a vision to find the value in Japan’s abundance of ‘wasteful items’ and transform that waste into smiles. Through our food sharing service, we partner with food manufacturing, logistics, and retail companies to reduce the volume of edible food slated for disposal.

Beyond food sharing, we are also actively engaged in initiatives that generate new value while reducing food waste. This includes promoting businesses aimed at achieving a circular economy, such as developing upcycled products made from unused food ingredients.

In Japan, about 4.72 million tons of FLW is generated each year. That’s the equivalent of over 100 million people throwing away one bowl of rice per day. About half of FLW is generated by businesses such as companies and restaurants, with the remainder by consumers such as households.

Japan’s food-related issues aren’t limited to FLW. The country has a low calorie-based food self-sufficiency rate, below 40%^*2. The environmental impact of food disposal is also a serious problem. Furthermore, there is an imbalance between people who live in relative poverty and are in need food assistance, and those who have surplus food they struggle to dispose of. We need to solve this issue if we hope to achieve a more sustainable society.

Firstly, it covers additional logistics costs and goods damage incurred when utilizing secondary distribution channels, such as resale and donations. If part of a lot (a bundle of packages) is damaged during transport, food manufacturers are typically forced to discard the entire lot. This rider covers secondary distribution costs, assuming quality issues do not prevent resale or donation. It also covers losses from the decline in the value of goods after deducting resale gains from the sale price, helping to create economic incentives for businesses to more easily engage in FLW reduction.

The second point is that we offer services to match businesses with food recycling companies. In the event of FLW, when damage is confirmed and the insurance claim is paid, depending on the type of product and its expiration date, we take an active role in supporting smooth resale or donation by activating our partner network of logistics providers, food recycling companies, and organizations such as children’s cafeterias. In other words, we maximize opportunities for recycling so that food disposal becomes a last resort.

The Osaka Model is a collaboration between TMNF, Loss Zero, and others. We created a one-stop scheme to avoid having to discard the unused food generated by food businesses. Under this scheme, we established a platform where each company has a set role to play in reducing FLW.

Loss Zero’s role is to negotiate directly with food companies to purchase surplus food, which is then sold to general consumers. A portion of the food is also donated to children’s cafeterias, ensuring effective distribution.

TMNF has set up a call center to field initial inquiries from business operators and collect information on the state of FLW, including the amount, remaining shelf life, whether the food has nutrition facts labels, and so on.

To carry out pilot tests of the Osaka Model, these three companies joined forces to establish the Osaka FLW Reduction Consortium. In May 2023, the consortium entered into a partnership agreement with Osaka Prefecture and the Osaka Chamber of Commerce and Industry, leading to the establishment of a public-private initiative aimed at tackling FLW reduction.^*4

There are different kinds of FLW, but the Osaka Model mainly handles processed foods in good condition. Off-spec vegetables from farmers and foods with short expiration dates were more difficult to handle because of a high risk of them spoiling during distribution. In addition, the smooth distribution of chilled and frozen products was a challenge due to high logistics costs.

At the same time, we have been exploring new approaches to reduce FLW. For instance, Loss Zero is developing upcycled products, like products we created that combine off-spec vegetables and surplus chocolate.

TMNF has contracts with more than 30,000 companies across Japan; an extensive network they are leveraging to help us find new partners with whom to collaborate. These new partnerships constitute a major achievement in our development as a start-up.
I’m also truly grateful for the passion of everyone in the Kansai Sales Department, who were instrumental in launching the Osaka Model.

We at TMNF learned a great deal from this pilot experiment. I was particularly struck by the difficulty of handling refrigerated products and the challenges of the secondary distribution of products with short shelf lives. The limitations we face in the scope of our current coverage became clear, and challenges remain in terms of logistics speed and cost.

Moving forward, we will consider ways of addressing these challenges. We also aim to develop a system that makes effective use of food with short shelf lives, and through expansion to other regions, we hope to help reduce more types of FLW.

Nessu is a start-up with a vision of creating a society where children have equal opportunities in life, regardless of the circumstances of their birth. As part of a regional revitalization initiative supporting children, we partner with local municipalities to operate a food bank program and an online supermarket that delivers to daycare centers. By working closely with local businesses and organizations, we aim to eliminate disparities in childrens’ access to food and other opportunities.

We are also actively working to realize a circular economy, reduce FLW and build resource recycling systems, as part of our contribution to a more sustainable society.

When I was young, I knew a child who suffered from an intractable illness. I was made keenly aware of how much of the unfairness we see in society stems from the environment in which we’re born. I began to question whether things had to be this way, or if I could make a change. Eventually, I came to believe that by creating a business, I might be able to reduce these disparities, even if only a little.

My family works in primary industries in Wakayama Prefecture: fishing on my father’s side and farming on my mother’s. Growing up, I often saw imperfect fruit and other produce that couldn’t be sold through conventional markets. The reality that I saw from childhood, where food is thrown out simply because it has a slight defect or is not the right shape, is what motivated me to tackle FLW.

When we were developing the Food Loss and Waste Reduction Promotion Rider, we faced operational issues that were difficult to solve. For example, we didn’t know the most efficient way to implement donation schemes for children’s cafeterias and food banks.

We reached out to Nessu, who we knew to be involved in numerous food bank projects. When we shared our concept for the rider, Nessu strongly resonated with our mission and we agreed to collaborate moving forward.

We play three main roles. First is inspection and storage of food. We collect food products with packaging that has been damaged during transport due to accidents or other reasons, inspect them, and store those we deem safe to eat.

Second is matching with recipients. Leveraging our matching platform and network, we deliver the collected products where they need to go. We then have two pathways: either sales or donations. We select a pathway based on the characteristics of the product, the remaining shelf life, and the intentions of the shipper. Basically, our structure is to sell what we can and donate the rest children’s cafeterias.

The third role is delivery of the products that have been matched to a recipient. By providing a one-stop service for this process, we are able to both reduce FLW and help children. Since we collaborate with support organizations using analog methods in some areas, we’re also working to build a digital platform to further improve efficiency.

First of all, donations support the daily lives of families facing financial hardship, many of whom are unable to eat more than one meal a day. To make matters worse, when schools are on break, school meals are not provided. Food donations help ensure people are getting enough to eat, leading to a more stable life.

Donations also help expand children’s potential. Even in households that are not in extreme poverty, there are many cases where children give up on their dreams because their families cannot afford to support them. For example, a kid might say, “I want to play soccer, but I can't tell my family because of how much it would cost.” We hope that by providing food, we can help reduce household expenses, so that in turn families can use the savings to support their children’s dreams.

Another benefit we’ve found is that food donations can prevent isolation among parents raising children. We ran a survey of the families we support, and more than half of the respondents told us they had no one to consult with in times of need. If our donations help open more local children’s cafeterias and help stabilize those already in operation, parents who send their kids there will have more opportunities to share their concerns with one another, and with the local staff running the cafeterias. We hope these interactions will become a catalyst for strengthening ties within local communities.

To reduce food waste throughout Japan, it is vital to go beyond the initiatives of food businesses and promote awareness across society and local communities about the social benefits of reducing FLW. One way we hope to contribute is by spreading information about the rider.

When we tell prospective participants that their donations will directly support local children, many of them express interest. In my opinion, to drive broader social awareness and change, we need to help people recognize that FLW reduction not just a way to cut waste, but a means of supporting the future of children in our communities.

To help build momentum, we aim to create community recycling models by leveraging our strengths, namely our nationwide sales network, our relationships with local governments and other regional players, and the synergies we are able to create thanks to the expertise of secondary distributors.

At Loss Zero, we aim to instigate change in both consumer awareness and business initiatives. Japan is a country with limited natural resources. Rather than be a society that buys large quantities of new products and discards them when they are no longer usable, we believe it is essential to realize a circular economy that makes effective use of limited resources and minimizes waste.

Furthermore, the social issues we seek to address are not limited to FLW. We would like to contribute to achieving a circular economy in Japan and around the world through innovative ways of creating new value for used items, with the goal of passing on more resources to future generations. Making the most of what we have will also allow us to reduce our environmental impact and make greater progress toward a decarbonized society.

We hope that by further strengthening our collaboration with TNMF, we can keep expanding our initiatives nationwide.

Our mission at Nessu is, through collaboration with different stakeholders, to create and provide greater opportunities for children. We are also working to ensure our assistance is sustainable by promoting digital transformation and building efficient logistics systems, with a strong focus on maintaining economic viability.

Through our partnership with TNMF, we expect to reduce FLW by more than 100 tons per year and expand our food assistance activities. In addition, our initiatives contribute to the reduction of greenhouse gas emissions by more than 220 tons^*5.

Going forward, we plan to leverage the power of the private sector in order to further strengthen our partnerships with companies and create new child assistance platforms. For example, currently, a lot of the support operations at children’s cafeterias are handled by senior citizen volunteers. With the rising prevalence of dual-income households, we are concerned there may be a shortage of people to take on these roles in the future. Therefore, we are considering ways to create more sustainable systems by adopting a business perspective, such as establishing children’s cafeterias in collaboration with companies. Through our cooperation with TMNF and many other partners, we are moving forward step by step toward the realization of a circular economy.

Our partnerships with Loss Zero and Nessu represent a key inflection point in the nationwide expansion of our rider. We are working along two tracks to develop new strategies for future roll-outs and create more effective systems.

The first is to strengthen local community initiatives. Since FLW issues differ from region to region, we believe our response has to be tailored to the local characteristics of each community. Therefore, with the help of Nessu’s nationwide network, we are looking to create FLW reduction ecosystems optimized for local communities.

The second is a bespoke approach for major food businesses. Since each company differs significantly in their scale and the nature of the products they handle, a uniform framework often falls short of directly addressing their issues. That’s why we fine-tune the value we provide to align with each company’s intrinsic needs and issues, enabling us to drive more effective, actionable FLW reduction initiatives.

Our common goal is to build a sustainable system that simultaneously addresses the environmental issue of FLW reduction and the social issue of food assistance. We aim to roll out frameworks like the Osaka Model nationwide, but also establish original models tailored to the local issues of each prefecture.

In order to realize a sustainable society, whatever systems we develop need to provide a multitude of benefits to diverse stakeholders. Through our collaboration, we are trying to create unprecedented new value and spread a model that benefits both Japanese businesses and the whole of society.