Supply Chain
In the Race to Net Zero, Ignore Supply Chain Risks at Your Peril

No longer simply the latest buzzword in sustainability, net-zero strategies are dominating the agenda across both private and public sectors. Balancing the amount of greenhouse gases (GHGs) we produce with the amount removed from the atmosphere is increasingly seen as our best chance to avert the most severe impacts of a changing climate.

Fuelling the race to zero is the setting of corporate targets. More than 1,000 companies have set, or committed to establish, a science-based target in alignment with the 1.5°C target of the Paris Agreement. This group of firms make up 20 percent of global market capitalization, and the rate of adoption for such targets doubled in 2020.

A good proportion of these companies are in the food, agriculture or forestry sectors — which collectively represent around 25 percent of GHGs, and are publicly reporting their emissions against their net-zero goals.

However, few of them account for the emissions associated with their land-intensive operations or related supply chains in their targets and disclosures. Many of them do not have zero-deforestation commitments or policies in place to ensure the GHG impact of their land footprint is kept to a minimum.

Protect forests, achieve sustainability

It is clear that if we are to meet our future GHG goals, companies with large land footprints must eliminate deforestation and land conversion immediately. The truth is that protecting forests, ecosystems and land rights in supply chain operations is often the clearest route to achieving a number of other sustainability priorities, such as conserving biodiversity and respecting human rights.

As the Science Based Targets initiative (SBTi) states, companies with net-zero targets should follow a mitigation hierarchy that prioritizes eliminating sources of emissions within the value chain of the company, beyond compensation or neutralization measures. In fact, land-based climate strategies should focus on interventions that help preserve and enhance existing terrestrial carbon stocks, within and beyond the value chain of the company. After all, continued emissions associated with the supply chains of food companies will remain a liability in their GHG calculation and reporting for the next 20 years, at least.

Streamlining the way companies measure and report GHGs

We are working to make it easier for companies to streamline the measurement and reporting of land sector emissions alongside their zero-deforestation commitments and policies. Together with partners, the Accountability Framework initiative (AFi) developed a set of principles, definitions and guidance to help companies achieve ethical supply chains in agriculture and forestry that have already been integrated into major company reporting platforms. AFi offers a clear and consistent way to set commitments, take action and monitor progress on everything from deforestation to human rights violations, and is working with partners to reflect this into key climate and GHG reporting indicators.

For example, AFi’s reporting and assessment working group has been working with both WWF’s FLAG/SBTi team and the WRI’s GHG Protocol technical working group to align guidance on accounting for these emissions. Together, we’ve made sure there is alignment and joint messaging on technical issues such as definitions, identification of land use change, and time horizons. We’ve also developed aligned guidance on the allocation of land footprints along a supply chain with different levels of supply chain traceability.

The plan is for the partners behind the AFi to further integrate the infrastructure for zero-deforestation supply chains more tightly with new sustainability tools that companies will rely on during the next decade. For example, the GHG Protocol’s guidance for land sector emissions, science-based target-setting for climate and nature, and the requirements of the Taskforce on Nature-Related Financial Disclosures will all be increasingly valuable to companies. The interlinked systems will enable firms to make zero-deforestation sourcing and financing “business as usual” — and central to meeting all other sustainability-related targets.

It’s been two years since the Framework was launched. Not only has it been adopted by some of the biggest companies in the world; processors, traders, manufacturers and retailers with total annual revenues of more than US$1.7 trillion are using it to make ethical supply chains a reality.

Get to work, now

Put simply, companies cannot reach net-zero emissions without forest protection. Those with a significant land footprint must act now to eliminate deforestation and conversion, which contribute significantly to overall emissions.

If they don’t, the business risks are long-lasting, with emissions footprints from contemporary deforestation remaining on balance sheets for the next 20 years.

See what sort of impact the Accountability Framework has had in the last two years here; and you can get in touch here.