Are higher prices, more consolidated supply chains and a reliance on offsetting on the cards? By David Burrows.
1. Net-zero’s nightmare. When it comes to net-zero it is scope 3 emissions that are keeping food businesses awake at night. “Once you get into scope three, it becomes very difficult for us because it's not completely within our control,” explains Sodexo chairman Sean Haley. “You really are within the control and the environments of our clients, customer sites, and indeed our supply base.” These indirect emissions up and down the supply chain can account for more than 90% of a company’s total footprint. At Sodexo they account for 99%, at Costa the figure is 95% for example. They are tough to track and in the case of agricultural products even tougher to reduce. As one expert suggests: it is hard to know what your end game will be if your business model relies on burning oil or belching cows. There are of course opportunities too. “We know that for a catering operation, anywhere between 50% and 70% of the footprint is usually carried within the food itself, meaning that the menu is a massive ally for meaningful change,” notes Compass net-zero lead Carolyn Ball.
2. Suppliers in scope. To keep on track with net-zero, emissions must fall by around half come 2030, so focusing on scopes 1 and 2 just won’t cut it if you’re a food company. Businesses have to start tackling scope 3 emissions now. Some are. The likes of Apetito, Sodexo, Compass, Punch Group and others have already started to engage suppliers. At first this is to determine their emissions but soon enough they will want to see reduction plans in place. There will be debate over where one company’s responsibilities end and another’s start. Big companies could well consolidate their supply chains(that is rely on fewer, bigger suppliers) to make the task of measuring and minimising scope 3 more manageable. What does this mean for smaller suppliers and (further) consolidation of the food system into the hands of fewer companies using fewer suppliers?
3. Big data debate. There will also be debate over the data: companies will want to compare products. British producers for example will need to prove the low carbon claims they’re making for their milk, cheese and meat products in particular. Standardisation of scope 3 emissions measurement is needed, with Wrap on the case in the UK. “There is currently no consistent way of quantifying supply chain emissions and businesses either have to commission expensive life cycle analysis for each ingredient or use average values from a variety of contrasting public data sets. This is a burden for suppliers and makes it impossible to compare the information provided by different businesses,” explained Wrap chief executive Marcus Gover.
4. Carbon costing. The cost of tackling scope 3 emissions will, initially, be high. Returns on investment may not be quick (especially with few regulatory sticks), and though there could be savings (think fewer fertilisers, for example) these are far from clear-cut. Will the costs of action be passed onto consumers? “At the end of the day, it’s of course the consumer that needs to be able to pay for the things we are doing,” admitted Ulf Jahnsson from HKScan, a Finnish meat producer, in an interview with Just-Food recently. “First, we pay the producers but, in the end, we need to have the consumers paying the extra for what the farmers will do in the future, concerning emissions on farms.” Does that mean the pioneers - those investing hard and big in schemes throughout their value chain (from regenerative agriculture to eco-labelling) will be selling pricier goods in the short- to medium-term as the laggards dither and continue to undercut 'sustainable businesses'?
5. What’s left? Which brings us to those residual emissions and how big that pile will be. No company knows exactly what the figure will be come 2040 or 2050 (it’s impossible currently to account for new technology, consumer shifts and so on) but some have had a stab at it, or are working on it with the Science-Based Targets initiative. Others are looking at controversial offsetting plans. Many have perhaps fanciful projections on the role of carbon sequestration. “The arithmetic on supply chain emissions is pretty solid now, but the answers are incompatible with current business models,” says Duncan Oswald, head of climate science at carbon accounting firm Spherics. More sleepness nights on scope 3 are a certainty, it seems.