Carbon neutrality is an imperative global goal to halt global warming. But it can also have a significant benefit on a company’s performance, writes Mark Chadwick
The risks of climate change now need little introduction. We are already starting to live with the impacts of a changing climate on communities, businesses and supply chains. Within the food and beverage industry, climate change is already impacting food production, water scarcity and extreme weather events, all which pose huge risks to businesses and future food security.
The most recent Intergovernmental Panel on Climate Change (IPCC) report in October last year delivered the unnerving news that we have less than a 12-year window to act on climate and limit global warming to 1.5 degrees Celsius. It made plain that limiting warming to 2°C will not be enough to prevent the most serious impacts. In order to achieve this goal, we need to reach global net zero carbon emissions by 2050.
And now there’s a more public face to the voice for change. Protests by Extinction Rebellion and school children around the globe have been recently dominating headlines, meaning climate change has suddenly pushed its way to the forefront of public consciousness with pressure for action rising with it.
The UK food supply chain accounts for about 20 percent of UK greenhouse gas (GHG) emissions. This makes it vulnerable to increased demands for climate action particularly in a sector susceptible to changing consumer demands and exposed to NGO pressure. Understanding this, the sector as a whole has already been proactive in emissions reduction efforts. The Food and Drink Federation (FDF) has pledged a 55 percent reduction in emissions by 2025 as part of its Ambition 2025 initiative and has reported impressive progress on targets so far.
What’s in it for us?
The calls for carbon neutrality might appear highly ambitious and even a little doom-mongering at times, but they also present significant opportunities to the food and beverage industry – from meeting increasing consumer preference for low carbon products; costs saved through energy reduction programs; greater innovation to achieve competitive advantage; enhancement of brand reputation; better preparedness for future legislation and the building of more financially, and climate-resilient supply chains. Many stakeholders now want to see that companies have properly accounted for climate change. Consumers are increasingly opting for more environmentally friendly brands, with employees wanting to work for more responsible companies and the investor community making plain their commitment to withdrawing shareholder backing if climate is not adequately addressed. Tackling climate should now be seen as an opportunity to keep stakeholders happy, secure business and safeguard long-term investment.
For any business, ambitious reduction targets – particularly carbon neutrality – is a significant commitment, not least in an industry dependent on complex supply chains and trying to maintain competitiveness in a crowded market. However, it is not insurmountable when undertaken as a journey, and one that can be broken down into achievable stages.
Pathway to carbon neutrality
Before beginning your carbon neutrality journey, gathering reliable data and putting in place systems for collection and monitoring will be vital. This is the only way to have a true understanding of your impact – both positive and negative. This can be a challenge in an industry where the majority of emissions often occur within the wider supply chain. However, isolating emissions within your control (Scope 1 and 2 emissions) should be attainable, followed by prioritising emissions hotspots and then engaging with suppliers to tackle your whole value chain (Scope 3).
Obtaining good data and calculating a footprint using internationally recognised methods will help you comply with both existing and future GHG reporting requirements. It will also give you confidence and credibility in your external reporting.
Consumers are increasingly opting for more environmentally friendly brands, with employees wanting to work for more responsible companies
Target setting best practice now expects science-based targets (SBT), which are specifically aligned to limiting warming to the recommended levels of 1.5°C or well below 2°C. There are already 45 companies from the food and beverage processing industry that have set SBTs. While ambitious, these targets will provide clear goals for reducing emissions in line with the trajectories needed to adequately limit warming.
SBTs are particularly challenging when your suppliers are far removed from your own operations in geography and climate ambition, but you can start by identifying the largest emissions areas and those where there exists the most ability to influence. It then requires engagement with both staff and suppliers to implement procurement criteria and collaborate to find solutions. Working with suppliers to improve their own credentials on emissions can be a mutually beneficial exercise in terms of reputation, innovation and climate resilience.
Improving energy efficiency within your operations will play a significant part and this comes with the potential for substantial financial savings. With the continued rise in Climate Change Levy rates, such savings could also avoid growing taxation costs. Steps to reducing energy intensity can include incentivised energy efficiency measures for employees, replacing inefficient technology such as older refrigerator models and installing better energy management systems. Added benefits will include easier compliance with current legislation such as the Energy Savings Opportunities Scheme (ESOS) and the Streamlined Energy and Carbon Reporting Regulations (SECR).
Renewable energy also plays an important role in a carbon neutral commitment and with cost reductions over the past few years, renewables are now financially viable competitors to fossil fuels. EcoAct research shows 75 percent of FTSE 100 companies now use renewable energy. Investing in onsite renewable energy or purchasing it via assured certificates allows companies to confidently report that the energy used is zero carbon.
As we don’t yet inhabit a zero-carbon economy, achieving carbon neutrality solely through operational changes can be a tall order. Companies are increasingly realising that high-quality, verified offset projects can play an important role in tackling remaining emissions across their value chain. The additional opportunity here is that you select projects which mean most to you and your stakeholders. Verified high quality credits come from a variety of social impact projects, usually in developing countries, which have a real and important effect on peoples’ lives and the environment. Such projects can focus on health, economic empowerment, prevention of deforestation, renewable infrastructure and biodiversity protection. Projects such as these are aligned to the United Nations Sustainable Development Goals and, therefore, enable an organisation to demonstrate their commitment to these global objectives which can be included in their sustainability reports.
Some companies who rely on the sustainability of their food producers might consider the setting up of their own supply chain projects to sequester carbon or reduce emissions. Referred to as “insetting”, it can be reflected on the carbon balance sheet and also have the added bonus, if implemented correctly, of safeguarding sustainability of produce and producer livelihoods.
Turning challenge into opportunity
Carbon neutrality is a significant goal and demands commitment. However, when tackled in more bite-sized chunks and approached as a journey, it becomes a manageable challenge, particularly when commercial benefits are uncovered along the way.
The role of the food and beverage sector is a vital one, not just in reducing its portion of emissions but in helping to safeguard food security for a growing population. The opportunity to demonstrate competitive credentials, to innovate and future-proof our businesses is significant, particularly if taken advantage of now.