Investors can use the guide to engage companies by emphasizing the importance of disclosing their full-scope GHG emissions and setting 1.5°C emissions-reduction targets — ahead of forthcoming mandates.
A report released today by sustainability nonprofit Ceres reveals that few companies in the US food sector have disclosed their climate transition strategies or concrete actions to achieve them, despite increasing investor pressures and the growing threats of climate change.
The Investor Guide to Climate Transition Plans in the US Food Sector provides comprehensive guidance to help food companies move beyond target-setting to creating and implementing sector-specific climate transition plans that chart pathways to greenhouse gas (GHG) emissions reductions. It outlines how, despite greater corporate climate disclosure and commitments to GHG emissions-reduction targets, net-zero targets and other climate-related goals, many companies fail to adequately disclose sufficient information to investors on how they intend to achieve said ambitions. The quality of consistent disclosure currently varies greatly, due to the high-level nature of existing guidance and a lack of clear consensus on what climate transition plans should include, leading to a clear transition-disclosure gap.
The report also includes in-depth analyses of key food sector sub-industries such as packaged foods and meats, food distribution, food retail and hypermarkets/supercenters and restaurants. It contains a framework to help investors assess corporate climate transition plans in this sector, including guidance on evaluating corporate emissions disclosure, emissions reduction targets and climate transition strategies and actions.
“The food sector is a critical player in the transition to a net-zero emissions economy, but the sector as a whole has been slow to translate emissions reductions targets into action,” said Julie Nash, senior program director for Food and Forests at Ceres. “There is no one-size-fits-all approach to climate transition plans, but this new Ceres report offers the support and context needed by companies and investors alike to move into the next phase of corporate climate stewardship. As momentum grows to standardize climate-related disclosures, such as the proposed rule from the SEC, it’s in everyone’s best interest to get ahead on disclosure and action planning.”
The food sector displays a continued lack of progress when it comes to climate commitment disclosure. As of January 2022, only 21 of the 50 highest greenhouse gas-emitting North American food companies tracked by Ceres’ Food Emissions 50 initiative have set any short-term emissions reduction targets inclusive of scope 3 emissions — the largest source of emissions in this sector; and none has published a climate transition plan. The IPCC recently outlined how global temperature rise will negatively affect the global economy, food security and both human and planetary health; and the global food system is responsible for approximately a third of global emissions.
The report is primarily intended to support investor engagements with companies that have already disclosed their full-scope GHG emissions and have set 1.5°C emissions-reduction targets that cover Scope 3 emissions; without these foundational elements in place, companies face the risk of creating plans that are not ambitious enough to truly mitigate climate change. Investors can also use the guidance to engage companies by emphasizing the importance of getting ahead of forthcoming guidance and standards by preemptively aligning their actions with more ambitious standards.
The report was developed with input from investor signatories of Food Emissions 50, as well as food companies and an expert advisory committee. Food Emissions 50 is Ceres’ strategy for reducing emissions in the food sector as part of its Ambition 2030 initiative — a broader effort to decarbonize six of the highest-emitting sectors in the US by the end of the decade. Investor signatories to Food Emissions 50 seek to move companies to improve their GHG emissions disclosures, set ambitious emission-reduction targets, and implement ambitious climate transition action plans in line with the Paris Agreement.
“As investors wake up to the economic impacts of climate change and treat corporate climate strategies with increasing scrutiny, food companies will need to develop tailored plans that inform business decisions at every level of operations,” said Kate Monahan, a Director of Shareholder Advocacy at Trillium Asset Management. “Companies and investors are actively seeking support and guidance on how to move into the next phase of corporate stewardship. The recommendations contained within this report will help investors — and in turn, the companies in which we invest — create measurable targets against which progress can be tracked and assessed.”
Forthcoming research through the Ceres Ambition 2030 initiative will provide further guidance on climate transition plans for other priority high-emitting sectors.