Measure the Chain: Tools for Managing GHG Emissions in Agricultural Supply Chains
The vast majority of greenhouse gas emissions from food companies come from agricultural production, yet few companies assess and disclose these emissions, let alone set targets to reduce them. Today, Ceres released a new tool to improve disclosure and mitigation of supply chain emissions in the food sector, known as Scope 3 emissions, which are a significant contributor to global climate change.
Measure the Chain: Tools for Assessing GHG Emissions in Agricultural Supply Chains provides companies with an assessment of tools and methods to better manage and disclose Scope 3 emissions generated by food system suppliers. Most supply chain emissions are from agricultural production, such as fertilizer use, and associated land-use change, including deforestation.
Scope 3 emissions from 15 major food companies that disclosed in 2017 totaled 629.9 million tons of carbon dioxide emissions, equivalent to annual emissions from 156 coal-fired power plants or 70.9 billion gallons of gasoline. These indirect emissions accounted for 85 percent of the companies’ total carbon footprints, including Scope 1, 2 and 3 emissions.
“The data is clear that agriculture supply chains are major contributors to climate change,” said Julie Nash, director of food and capital markets at Ceres. “With recent advancements, food companies have guidance and tools to measure these supply chain emissions. Many iconic food brands are already disclosing supply chain emissions and setting targets to reduce them. More companies will need to do the same.”
“Any food and beverage company that takes climate action seriously must set meaningful targets to reduce emissions from agricultural production,” said Kevin Rabinovitch, Global Vice President, Sustainability at Mars, Incorporated. “At Mars, 75 percent of our full value chain emissions come from agriculture and land use. To reduce these emissions, our Sustainable in a Generation Plan includes ambitious, science-based targets.”
A recent survey conducted by Ceres found that less than one-third of the 50 largest food and beverage companies in the U.S. and Canada publicly disclose emissions from agricultural production. Of the 50 companies analyzed, 30 have active, company-specific greenhouse gas emissions reduction targets for their own operations. Among these 30 companies, only 15 provided Scope 3 emissions. And only eight have explicit targets to reduce these emissions.
“We know that the investors and companies that we work with want a better understanding of the risks and opportunities associated with agricultural supply chains. That’s why the CDP climate change questionnaire allows organizations to disclose their Scope 3 emissions and mitigation targets – including those associated with land use and land use change,” said Sultana Bahir, Global Director of Forests at CDP. “Significantly, companies are presented with sector-specific questions that allow further breakdown of this information by business activity – i.e. by agricultural or forestry activities – offering the level of detail needed to really assess and manage impacts.”
In recent years, a variety of methods and tools to aid companies in measuring Scope 3 emissions have become available. Supply chain emissions are challenging to track because most large food companies purchase agricultural products and therefore emissions from farms and forests tend not to be under their direct control. Improvements in methodology are removing these barriers, making disclosure of supply chain emissions easier and more accurate. By measuring Scope 3 emissions, food companies can better assess where most emissions are occurring in their supply chains, identify which suppliers are leaders or laggards in their sustainability performance, and recognize cost reduction opportunities in their supply chains.
Given the magnitude of reductions needed to limit average global temperature rise to below 1.5 degrees Celsius, as urged by the UN Intergovernmental Panel on Climate Change (IPCC) report, measuring and reducing greenhouse gas emissions is critical. According to the IPCC, the agriculture and land-use sector currently produces almost one-quarter of the world’s greenhouse gas emissions -- more than either the industry sector or the transport and building sectors combined.
“It’s clear to us that if a food and beverage company is serious about reducing its climate impacts, it absolutely must be working to reduce the emissions associated with agricultural production of its products,” said Allan Pearce, Shareholder Advocate at Trillium Asset Management. “Working to measure and manage these supply chain emissions will help build supply chain resiliency and preserve shareholder value, which is why we at Trillium are interested in how food and beverage companies are addressing their scope 3 emissions.”
Given the advanced methods and tools, as compiled in Measure the Chain and reviewed by CDP, investors now expect companies to fully disclose Scope 3 greenhouse gas emissions and to have a scientific basis for their disclosure, including evidence on issues ranging from which estimation methods were used to how companies included land-use change in their assessment.
“Food companies can make a major contribution to meeting the goals of the Paris Agreement, and several of them are leading the way by setting science-based targets that include Scope 3 emissions from agricultural,” said Meryl Richards, Science Officer for the CGIAR Research Program on Climate Change, Agriculture and Food Security (CCAFS) and lead author of Measure the Chain. “Transparently measuring progress on these targets sends a signal to investors and consumers that companies take climate change seriously.”
Ceres is a sustainability nonprofit organization working with the most influential investors and companies to build leadership and drive solutions throughout the economy. For more information, visit www.ceres.org and follow @CeresNews.