Published 6 months ago.
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A new report from WWF examines the efficacy of rewards for climate-smart on-farm practices in getting suppliers’ help in eliminating Scope 3 emissions.
Many food companies have begun looking to their supply chains for help in
reaching their own emissions targets — offering incentives to their suppliers
and, in particular, the farms with which they do business. A new study by the
at World Wildlife Fund provides a landscape analysis of the types of
incentive programs implemented by more than 20 companies across the industry.
With more than 70 percent of food-related GHG emissions stemming from
agricultural practices, companies that have set ambitious climate targets are
increasingly proposing programs designed to shift behavior on farms.
Incentives at the Farm: How Companies Are Moving from Setting Climate Targets to Delivering on Them
draws from interviews with more than 90 experts from corporations, industry
associations and civil society groups. The report describes the variety of
tactics companies are employing to reach farm-relevant sustainability outcomes —
including price premiums,
new products or markets, and contracting. The report does not endorse any
specific tactics or companies, but rather provides a state-of-play analysis to
guide others in similar efforts.
“Farmer-focused incentives are a necessary tool for shifting behavior at the
source of most food-related greenhouse gas emissions,” said Dr. Emily
Moberg, WWF’s Director
of Scope 3 Carbon Measurement and Mitigation, and a co-author of the study.
“With only seven harvests left in which to reach our 2030 climate goals,
companies must deploy effective incentives and retire ineffective ones on a much
broader, faster scale.”
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The study highlights factors such as shareholder pressure and governments
setting climate targets, which have increasingly incentivized companies to
engage in more holistic climate-mitigation tactics. More than 110 national
governments have set climate targets, for example, and shareholders have been
putting forth proposals for environmental disclosures and progress by publicly
General Mills — which is piloting regenerative-agriculture
in areas across the US.
Land O’Lakes — Land O’Lakes collaborated on a program to reward growers
for sustainability improvements through a public-private partnership with
Dubuque County in Iowa. The Truterra™ Insights Engine tool was used to make
a baseline and predict the impact of beneficial practices. The program
rewards Dubuque County farmers for improving soil health and water quality
by leveraging the Truterra sustainability tool and sustainability score. The
carbon program pays farmers based on the amount of carbon stored as
calculated with the Truterra tool, verification with Colorado State, and
McCormick & Co — in 2021, the company joined forces with Mars and
PepsiCo to support Guidehouse in establishing the Supplier
Leadership on Climate Transition
The program is designed to mobilize collective climate action by providing
suppliers with resources, tools and knowledge to support their own climate
Straus Family Creamery — the company, which sources from 12 organic
dairy farms in Marin and Sonoma counties in Northern California,
aims to have all of its purchased milk be climate positive by 2030 via a
collaborative, carbon-neutral dairy-farming model that deploys a combination
of interventions that it has piloted and refined locally: red seaweed feed
additives, biodigester use, electrification of on-farm vehicles, and
regenerative soil management.
Tesco — The multinational retailer offers a preferential payment
condition for suppliers who are willing to disclose their carbon data and
set targets. Depending on the suppliers’ climate performance, they are
distributed in three tiers: bronze, silver, and gold — with the latter being
the most demanding from a sustainability perspective but also the most
attractive financially. The gold tier demands suppliers to submit accurate
carbon data, set reduction targets for their business, and then track these
reductions on a yearly basis. Some of the largest suppliers have saved as
much as €2-3 million a year with these rates, and several other smaller
suppliers have been encouraged to join the race to net zero because of the
ability to get liquidity and fast payment from this program.
Unilever — Unilever’s in-depth sourcing protocols are often cited when
discussing how rigorous supplier vetting can be. The Unilever Sustainable
Agriculture Code (SAC) is a mix of bright-line rules, expectations
(including traceability of materials back to their origin), and leading
practices that encourage suppliers toward continuous improvement. Suppliers
complete certification audits on the farms they source from, and compliance
is reassessed annually. As of 2022, over 80 percent of Unilever’s key
ingredients were sourced sustainably according to this code. Once suppliers
meet the terms in Unilever’s SAC, they may establish programs through the
Unilever Regenerative Agriculture Principles, released in 2021, to address
the continued sustainability challenges in the agricultural supply chain —
from decline in soil health to biodiversity loss.
“McCormick & Company has committed to
achieving net-zero emissions by 2050. In the near term, we have set goals
aligned with the Paris Agreement and verified by the Science Based Targets
initiative, which include a 42 percent reduction in our Scope 3 emissions by
2030,” says Michael
Sustainability Officer at McCormick & Company. “Like many companies with a
global supply chain, our greatest opportunity is Scope 3 emissions — which
account for over 90 percent of our carbon footprint. Since these emissions are
not under McCormick’s direct control, it is imperative for us, and other
companies, to work in partnership with our suppliers to address this challenge.
By incentivizing them to participate, we can drive impact at scale in a targeted
and efficient manner, benefitting all stakeholders including the planet we all
For companies in the food sector, a substantial amount – often more than 90
percent — of their emissions are Scope 3, which means they originate in their
supply chains. For companies with ambitious climate targets, including limiting
warming to 1.5°C by 2030, the big question is how those targets will be
As the report concludes, companies in the food industry and beyond that haven’t
yet engaged in GHG-mitigation efforts with their supply chain need to act now by
implementing these types of incentives for suppliers to do their part in the
climate fight. And for those companies that have engaged with their suppliers,
accelerated efforts to scale them across their entire supply chain — and better
still, across their sector or commodity group — will be critical in meeting
ambitious climate targets.
“Developing and deploying incentives to address Scope 3 GHG
is no small feat, especially for the food sector,” said Katherine
Devine, Director of Business
Case Development at the Markets Institute and a co-author of the study. “With
regional differences, crop and farmer diversity, thousands of products in some
supply chains, and other challenges, there is no one-size-fits-all solution. We
need to learn faster to address climate change’s existing and growing impacts.”
Published Aug 10, 2023 8am EDT / 5am PDT / 1pm BST / 2pm CEST