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Net-zero notebook: a roasting for carbon reduction plans and voluntary disclosures

Carbon insetting is in vogue but experts have called out the concept as “unregulated offsetting”. And it’s not the only carbon controversy in town. By David Burrows.

The Notebook has been going for almost two years now so imagine our alarm at reading this blog by experts at SLR Consulting titled: ‘You are using net-zero wrong’. It’s a short and sweet reminder “to remember where the term came from”. Marketers, we hear cynics cry with a wink? Of course not. 

The term, as SLR’s net-zero director James Balik-Meacher explains, has been around for some time; it then gained traction after the IPPC’s 2018 report which concluded that to avoid the worst impacts of climate change, we must achieve two things: reduce gross global emissions by 50% by 2030; and achieve net-zero global emissions by 2050 – by reducing as much as possible and removing any residual emissions from the atmosphere.

Food companies were among those quick to jump on (or rather commit to) the second challenge without really thinking through how on earth to meet the first, more pressing one. Emissions at many major food companies keep going up and we are just six years from 2030. Rapid near-term reductions are needed and it seems the low hanging fruit are running out, according to the Engie impact report 2023.

For those in agri-food businesses the challenge is considerable, as the New Climate Institute’s (NCI) 2023 corporate climate responsibility monitor shows. “It is not credible for agri-businesses to claim that they are on a path to deep decarbonisation, without major innovations to drastically reduce the emissions footprint of livestock agriculture, or diversifying away from this highly GHG emissions intensive industry,” warned the report’s authors.

PepsiCo, Walmart, Nestlé, Carrefour and JBS were among the 24 behemoths assessed. Companies’ current plans do not reflect the necessary urgency for emissions reductions, said NCI’s Thomas Day. “Regulators, voluntary initiatives and companies must place a renewed and urgent focus on the integrity of companies’ emission reduction plans up to 2030. The discourse on longer-term net-zero should not distract from the immediate task at hand.”

Consider the assessment of Nestlé: the 50% reduction by 2030 communicated by the company actually translates to a 16-21% reduction of the full value chain emissions in 2019, according to NCI. Nestlé’s head of climate Benjamin Ware contested the findings: “[The report] disregards a major component – the role of carbon sequestration in nature for the food and agriculture sector,” he says. 

The debate will no doubt continue behind closed doors (Nestlé also contested last year’s findings). These analyses, as NCI’s Sybrig Smit told me recently, are making companies more nervous about the claims they make – “and rightly so”, she said.

Carbon neutral neutered

Offsetting has been the subject of some pretty damaging headlines of late which has left the future of ‘carbon neutral’ claims hanging in the balance. The EU’s green claims code proposals, published recently, detail current reservations about the offsetting approach – opaque methodologies, lack of permanence etc – and demands the focus be on reductions. And MEPs last week backed the draft legislation that aims to ban environmental claims based solely on carbon offsetting schemes.

The Competition and Markets Authority in the UK has had similar reservations about the green gloss provided by offsets and the term carbon neutral. The damage may be difficult to undo: 52% of UK consumers think a carbon neutral claim makes a product sustainable, according to YouGov research for Deloitte. Research by the Advertising Standards Authority (ASA) meanwhile showed people tended to believe that carbon neutral claims implied that an absolute reduction in carbon emissions had taken place or would take place. But when the potential role of offsetting in claims was revealed, “this could result in consumers feeling that they had been misled”, ASA noted.

The ASA’s research looked at environmental claims more widely, and there was concern that they are not being adequately policed. As one survey respondent said: “I think this raises a complicated debate – these claims need to be verified and governments need to step in and verify whether these claims are true, and carbon has been offset or removed, etc. At the moment there are no established standards, so people are making up the standards for themselves – therefore the term carbon neutral is open to exploitation and confusion.”

But as interest in terms like carbon neutral and carbon offsetting wane, food companies in particular are gathering behind a new one: carbon insetting. The International Platform for Insetting, a community of businesses implementing insetting projects, sees insetting as “offsetting brought home”, or offsetting within the value chain. It’s about creating carbon removals and emissions reductions in supply chains, mostly through nature-based solutions such as agroforestry, reforestation and regenerative agriculture. Think planting shade trees for coffee plants, for example.  

“With offsetting you can do good carbon things anywhere, [but to achieve] net-zero it has to be insetting,” Nestlé head of green coffee development Marcelo Burity told me recently. It’s not a bad idea but the likes of NCI are worried by how it’s being accounted for and used towards emissions reductions. 

Roasting for Nespresso

NCI roasted the Nespresso owner as well as PepsiCo and JBS for their reliance on insets. This is “a business-driven concept with no universally accepted definition” the think-tank claimed. “Several companies are advocating for ‘insetting’ as an alternative to offsetting, but the insetting measures that we have identified amount de facto to the unregulated offsetting of emissions, usually through biological carbon dioxide removals within the value chain.” 

NCI also had a pop at the science-based targets initiative (SBTi) which allows insetting as part of emission reduction targets (which is contentious) and yet warns that it’s not a substitute for reductions. Confusion reigns. Work to standardise the definition of insetting/supply chain interventions and clear accounting methodologies is “ongoing”, according to SBTi, which has highlighted some of the “methodological differences” used between the experts.

Another initiative that’s currently been forced into a period of self-reflection is CDP. The Guardian reported “raised eyebrows” when Brazilian meat behemoth JBS was given an ‘A-‘ sustainability grade and ‘leadership’ status by CDP. Yes, it’s the same JBS that has previously been linked to deforestation in the Amazon and was recently accused of greenwashing in relation to its net-zero programme. Mighty Earth led a group of 20 civil society organisations, which also included Sustain and the Soil Association, in a call for the score and status to be revoked – and for the whole scoring system CDP uses to be reassessed. “CDP’s contribution to environmental transparency is widely recognised worldwide,” the group noted. “However, it is evident that rather than relying on voluntary self-reporting alone, CDP’s scoring methodology needs to consider the public evidence available to ensure accurate scores are awarded.”

A spokesman for CDP told The Notebook: “[…] we are actively considering the implications of recent questions raised and which, if any, further enhancements may be required to CDP’s methodology.” There are “rigorous procedures” in place for scores appeals and reviews and the scoring “is based on the latest environmental science, balancing between encouraging companies to disclose and act on their environmental impact”. CDP also has to balance that rigour with the fact that 30% of its revenue (according to the NGOs) comes from the companies it appraises. “We need robust rules for corporate emissions reporting and verification that result in independent appraisal and the elimination of conflicts of interest,” said Shefali Sharma from the Institute for Agriculture and Trade Policy.

That sounds like regulation to us. Which begs the question: is the voluntary approach to net-zero reporting fit for the challenges we now face?