3 questions food companies must answer to hit their climate target

The tide is finally starting to shift for climate action in the food sector. Key players, including Campbell Soup, J.M. Smucker, General Mills and Kraft Heinz have taken concrete steps to improve their emissions disclosures and targets in the past year.

Cooperation from the food sector is vital in the transition to a lower emissions economy, and these commitments signal a growing willingness by food companies to pivot from business as usual and begin making big changes to reduce climate risk.

Despite this, according to a preliminary analysis of companies tracked by Ceres’ Food Emissions 50, very few of them have taken the next step and disclosed comprehensive strategies and steps for how they will deliver on these commitments. This is where climate transition plans come in.

Climate transition plans translate a company’s global targets for emissions reductions to a concrete plan with specific, measurable and time-bound goals. They constitute a collection of evidence that a company is aligning relevant aspects of its business with its climate-related goals and emissions reduction targets. That makes them a crucial accountability mechanism for companies and their external stakeholders, ensuring that brands move forward to reduce emissions in line with what is needed to achieve the Paris Agreement goal of limiting global temperature rise to no more than 1.5 degrees Celsius.

There is no one-size-fits-all approach to creating a climate transition plan. Instead, it must be tailored to a company’s circumstances, and use specific strategies that address its sub-industry, place in the supply chain, corporate structure, operating regions, and other key factors. This can leave companies struggling to find a foothold to begin their transition.

The fine details

How can food companies get started? To be successful, climate transition plans should inform business decisions at every level of a company’s operations. In a new report, Ceres recommends strategies that address procurement, operations, and growth and innovation for food companies looking to operationalize their climate transition plan. Here are three key questions food companies can ask themselves to guide their transition to lower emissions:

1. Does the company assess its emissions from purchased goods and services to identify the largest categories and sources of emissions from its supply chain and engage with suppliers accordingly? 

For most companies in the food sector, their supply chains account for the bulk of their emissions. A common obstacle to reducing supply chain emissions is the ability to trace the source of the emissions. Companies need mechanisms that enable them to trace where commodities come from so that they can understand the full extent of their emissions and know where to direct strategies for reducing them, since they may differ between commodities and growing regions.

After assessing the source of supply chain emissions, companies should help their suppliers do the same. They should also provide financial incentives and technical assistance to help suppliers shift to practices and technologies that can address key drivers of emissions. To improve accountability to investors and other stakeholders, companies should disclose the percentage of their suppliers who have a reduction target or the percentage of their emissions covered by existing supplier targets.

2. Does the company have a plan to address energy-related emissions associated with its operations, transportation and waste?

As companies reduce emissions from purchased goods and services, much of the remainder will come from their direct operations, transportation and distribution, and waste management practices.

To address the energy used to process food — one of the key emission drivers in the food sector’s direct operations — companies should commit to sourcing 100% renewable energy through initiatives such as the RE100, a group of influential companies that are adopting 100% renewable energy. Companies should also increase overall energy efficiency by improving operational efficiency, optimizing energy consumption during non-production times, and recovering heat energy from production processes.

To reduce the transportation and distribution emissions from company-owned and third-party fleets and distribution services, companies can shift to lower-emissions fleets, pilot lower-emissions heavy duty vehicles, and embed concrete requirements in their contracts with transportation service providers.

By adopting measures to reduce loss and waste along food and agriculture supply chains, companies can reduce their scope 3 emissions while simultaneously reducing their operational costs associated with purchased ingredients and waste disposal. Companies should invest in efforts that prioritize reducing food waste at the source and work to divert remaining food waste from landfills through donations and food recycling programs.

3. Does the company disclose how it plans to align its topline growth strategy, including R&D and product development, with its emissions reduction targets?

It is critical that a climate transition plan guides corporate growth strategy, and that it is part of decision-making across a company’s brands and subsidiaries. Companies can shift their growth strategy so that is in step with climate action by refashioning existing core products to be less emissions intensive, developing new climate-friendly products and services, and through strategic acquisitions and venture capital investments.

Most companies start with innovation of new products with lower emissions footprints. Over time, the share of these products should increase. However, in most cases, new products alone cannot lead to 1.5 degrees. Companies need to look to transform their existing product or service portfolio and strategic acquisitions.

Reducing emissions to meet the goals of the Paris Agreement to avoid the worst impacts of climate change will require major transformations across a company’s business. This will take time, thoughtful planning, diligence and adjustments to strategies along the way. Climate transition plans are the blueprint companies will follow — and adjust — to make the shift to a clean, zero-emissions economy and harness new economic opportunities.