Supply Chain

Supply Chains Are the Achilles’ Heel of Food Company Climate Action

Companies cannot credibly address climate risk without disclosing and reducing their supply chain emissions. Through Food Emissions 50, investors are issuing an urgent call to action for companies to raise their ambition to disclose emissions, set targets and implement climate-transition action plans.

Brand Provided | By Julie Nash | Published 3 years ago | About a 5 minute read

Image: Valery Fedotov/Unsplash

Our recent analysis of 50 of the highest-emitting North American food companies found that most are not measuring and disclosing supply chain emissions, never mind including them in their targets. 70 percent do not disclose emissions from agriculture, and over 80 percent do not disclose emissions from land-use change. Over 60 percent do not disclose any scope 3 supply chain emissions.

With more companies rolling out net-zero commitments, it is time for businesses to show how they plan to deliver on these goals. Amid growing scrutiny of how seriously companies are taking these commitments, investors are looking for evidence that companies have credible plans and science-based targets to reduce their emissions in the near term, alongside long-term net-zero ambitions.

Few sectors need to do more to address how they are driving climate change than the food industry. The food we eat is responsible for about a third of global greenhouse gas emissions. Ambitious commitments from big name companies such as Starbucks have grabbed headlines and boosted public confidence in the ability of food companies to confront this problem at scale.

Sounds good, right? Unfortunately, the food sector has a long way to go to measure, assess and reduce the impacts of its supply chain emissions. Even as science-based greenhouse gas-reduction commitments have become a new standard for food companies, many of these commitments are limited: They do not seek to measure or reduce the companies’ supply chain — or scope 3 (indirect) — emissions, especially those from agricultural production or those associated with land-use change.

Supply chain emissions are the Achilles’ heel of food-sector climate action. The majority of the sector’s emissions are embedded in the production of key agricultural commodities and fall under scope 3 emissions from the supply chain for companies that source, manufacture, distribute and sell agricultural or food products.

Digging down into the benchmark provides telling details about subsectors in the food industry. For instance, out of the 17 food staples and retailing companies, including Walmart and Costco, not one discloses their scope 3 emissions from agriculture. And large meat companies such as Hormel and Tyson do not disclose their scope 3 emissions at all.

This data is particularly stunning, given just how high the proportion of supply chain emissions is for companies that did disclose. Coffee giant Starbucks disclosed that a stunning 96 percent of its emissions are from scope 3, with chocolate companies Mondelez and Hershey both claiming 94 percent.

This is why companies cannot credibly address climate risk without disclosing and reducing their supply chain emissions. In the past, companies have been able to sidestep the pressure to address supply chain emissions due to lack of consensus on accounting for land sector activities. These methodologies are currently being developed and will become available for use by companies within the next year.

But some leading companies have charged ahead, measuring their scope 3 emissions using existing methodologies — and what they have found underscores the importance of addressing these emissions. For example, in its 2020 sustainability report, Hershey disclosed that 41 percent of its total emissions come from land-use change alone. Beyond this disclosure, Hershey also states that addressing land use will form a significant part of its future actions on climate change, showing that it understands that the scope of the problem will not be addressed by reducing operational emissions alone.

But no one company can do enough to address this sector-wide blind spot. Achieving the Paris Agreement goal of limiting global temperature rise to no more than 1.5°C above pre-industrial levels will not be possible without substantial reduction of GHGs from food and agriculture. Investor action is needed to push laggard companies to catch up and do their part, but they need key disclosure information to do so. That’s why earlier this month, Ceres launched Food Emissions 50.

This new effort will accelerate progress towards a net-zero global economy in the food and agriculture sector by providing support for investors to engage with the 50 of the highest-emitting food companies in North America on disclosing emissions, setting targets, and implementing credible climate transition plans aligned with the Paris Agreement. It builds on Climate Action 100+, the Global Investor Engagement on Meat Sourcing, and other engagements by expanding the list of focus companies and deepening engagements with the value chains and supply chains of those companies to address scope 3 emissions.

Specifically, investors are seeking commitments from the focus companies’ boards and senior management to set emissions-reduction targets and improve the transparency of their actions. The initial benchmark analysis provides a foundational understanding of where companies are in their climate journey to give investors insight into where they need to engage with companies on concrete climate-action plans. It will be followed by further assessments with more ambitious indicators to determine whether companies are making progress on their emissions-reduction strategies.

Food Emissions 50 is issuing an urgent call to action for companies to raise their ambition to disclose emissions, set targets, and implement climate-transition action plans. The future of our planet depends on it.