Back to the farm: Companies need to zoom in on climate risks in agriculture, says CDP

Companies say their businesses are vulnerable to climate change, with extreme weather affecting supply chains

Many multinational food and beverage brands are missing their biggest chance to address climate risks, according to the global non-profit group CDP, which says companies need to work closer with suppliers to improve agricultural emissions. 

However, it commends Coca-Cola HBC, Danone and Nestle for being ‘ahead of the pack’ in approaching climate mitigation in their agricultural supply chains.

The report from CDP (formerly the Carbon Disclosure Project) has conducted an analysis among data from 97 major food, beverage and tobacco companies. However, less than a quarter of these reported data on agricultural greenhouse gas emissions in their supply chains.

The biggest source of greenhouse-gas emissions in the F&B industry come from agricultural production. However, less than a quarter of the companies in the survey reported their indirect greenhouse gas emissions from agricultural production.

Given that agricultural emissions account for 10-14% of the total global greenhouse gas emissions, CDP says at least 10% of global emissions are unaccounted for.

“It is clear that businesses need to shift their focus to target agricultural production emissions directly,” says the report, calling on F&B companies to cut emissions from this stage of the supply chain.

It says that there is also a ‘clear business imperative’ for companies to act: with many companies who disclosed data to CDP reporting lower costs, soil quality improvements, water savings and yield increases.

In addition, the agriculture sector is labelled as one of those most at risk to climate change: 90% of companies said their business was vulnerable to impacts such as extreme weather.

So what are companies doing?

  • SABMiller has developed training programmes for barley farmers, helping them use irrigation and fertilizer application more effectively. It reports an average reduction of 16% in CO2 (equivalent) emissions over the past four years.
  • Molson Coors’ showcase farm reports saving 270m gallons of water by improving irrigation techniques between 2011 and 2012. This also cut energy use in half by reducing the need to pump water. Energy costs fell from $50 per acre to $20-22 per acre.
  • PepsiCo is partnering with the World Business Council for Sustainable Development, with a focus on the strategic topic ‘agriculture.’
  • Heineken spearheads the Skylark Foundation, a project with run its suppliers and focusing on sustainable barley cultivation.

However, there are considerable barriers to accounting for and reducing emissions, notes the CDP.

They include the fact that most food, beverage and tobacco companies operate in many different countries and have complex agricultural supply chains.In addition, accounting for emissions in agriculture is challenging, involving modelling processes to assess where emissions are coming from and how to manage them.

“And while there is climate change awareness on some individual farms, there is little to no culture of setting emissions reductions targets or accounting for this sort of information amongst farmers.

“Scaling up existing knowledge and best practice is challenging as the business case is not always obvious to farmers; farming is a high risk activity and farmers will only be willing to run extra risks on behalf of ‘the environment’ if the right incentives are in place.”

However, it notes 64 companies reported engaging with suppliers on greenhouse gas emissions in 2013; a figure which rose to 73 in 2015.

“Signs of change are becoming more and more frequent, with companies overcoming these barriers aided by industry and supplier collaborations,” says CDP.

Ways to improve

Collaboration with suppliers is essential, says CDP. Systemic change to the industry can’t happen without suppliers being a part of it. More than 75% of food, beverage and tobacco companies engage with their suppliers already, so they can develop existing relationships further relatively quickly.

“Companies need to collaborate with suppliers in part because many of the challenges are local. A ‘one size fits all’ approach will not work everywhere because of local differences in environmental and social factors.

“Co-operation throughout supply chains is necessary for companies and farmers to exchange knowledge and learn how well certain mitigation or farming techniques work in their supply chains and by how much they can cut emissions.

Sector leaders must also work together by creating and sharing examples of best practice, encouraging the rest of the sector to follow.

“Food, beverage and tobacco supply chains often overlap, creating an opportunity for several companies to push for change. Data shows that suppliers asked to make changes by many customers perform better than those asked by one customer.”

They should also work with policymakers and other stakeholders to create incentives for change across the value change, adds CDP. 

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