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Reality Check – Do Supermarkets' Sustainability Commitments Go Far Enough?

By Steve Wynne-Jones
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Reality Check – Do Supermarkets' Sustainability Commitments Go Far Enough?

In the years to come, we’re going to be hearing a lot more about the ‘Race To Zero’ from retailers and consumer goods firms. but one firm’s definition of that term may differ from another’s. David Burrows reports. This article first appeared in ESM's November/December 2021 edition.

August’s report by the Intergovernmental Panel on Climate Change (IPCC) made for grim reading. The world has already warmed by 1.1°C since the second half of the nineteenth century. Major climactic changes are already happening, and some will stick for hundreds of years.

As Valérie Masson-Delmotte, a climatologist based in France and co-chair of the group that produced the assessment, put it, it was a “reality check”.

All is not lost. Reaching net-zero by 2050 means that temperature rises could be kept within the 1.5°C limit set in Paris in 2015. Thirty years is a long time, but (very) deep emissions reductions are essential in the coming decade.

The IPCC’s experts warned that the climate in the future depends on the decisions made now, but what does this mean for supermarkets? Do the commitments that they are making go far enough and fast enough?

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Food Industry Responsibility

Food didn’t feature all that prominently at the COP26 Summit, but it should have. Research published in Nature Food estimated that food systems account for 35% of global total anthropogenic emissions.

“Much attention [was rightly] paid to energy generation and transport at COP26, but we ignore the food system at our peril,” explains Marcus Gover, CEO at WRAP, a sustainability charity. “It is vital we raise awareness and drive action among policymakers and businesses.”

Cast your eyes across Europe, and the number of supermarkets and food brands joining the ‘Race to Zero’ has snowballed. From Tesco in the UK and Colruyt in Belgium to Kesko in Finland and German giant Schwarz Group, promises to protect the planet have been penned and (heavily) promoted.

Many grocers have doubled down on their environmental commitments, noted McKinsey in its 2021 grocery industry report.

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For example, UK supermarket Coop is investing €2 million to reduce the price of its vegan products, helping shoppers to switch from meat – a particularly high-impact category – as the chain looks to achieve net-zero emissions by 2040. Nestlé, meanwhile, is to fork out €3 billion over the next five years, in a bid to halve its greenhouse gas emissions, and then reach net-zero by 2050.

“This is the decade for us to ignite, test, learn [and] make those big changes we can now,” says Emma Keller, the company’s head of sustainability in the UK and Ireland.

What happens beyond 2030 is far less certain. Still, Nestlé’s plan is more detailed than most. Some commitments extend no further than a press release, and critiquing of the carbon commitments has already begun.

‘We should be sorting the genuine from the greenwash,’ wrote experts from the University of Oxford in a blog for the Conversation, a network of not-for-profit media outlets that publish news stories written by academic experts and researchers.

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A Significant Gap

Some food businesses admit – privately, at least – that they have committed to a distant target, but have yet to come to terms with what that means now (a recognised definition of net-zero has yet to be widely adopted).

Research in which The Consumer Goods Forum (CGF) was involved found a ‘significant gap’ in the retail sector when it came to setting ambitious climate targets.

“Many companies within the sector are not yet on a decarbonisation pathway,” explains Ignacio Gavilan, the forum’s sustainability director.

In September, the World Benchmarking Alliance (WBA) assessed the environmental, nutritional and social impact of the world’s largest 350 food and agriculture businesses. Only 26 had emissions reduction targets aligned to limit global warming to 1.5°C. More worrying still was that 188 companies had no target at all.

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“There is a lot to do,” explains Sanne Helderman, WBA lead researcher, on a call from the Netherlands.

That is, perhaps, an understatement. The benchmark spanned more than 40 sustainability indicators, with companies including Tesco, Coles Group, Sainsbury’s, Orkla, Carrefour and Ahold Delhaize making it into the top 25 overall.

Let’s look at the data on the two indicators relating specifically to greenhouse gas emissions. Of the 62 food retailers assessed, only Tesco, Orkla, Ahold Delhaize and Walmart had set a target aligned with 1.5°C for their Scope 1 and 2 emissions, which cover a company’s direct emissions. None had yet set a time-bound target to reduce Scope 3 (indirect) emissions in line with 1.5°C or set a net-zero target by 2050. Unilever, PepsiCo and Meiji were the only food manufacturers to have done so.

The findings are concerning, but unsurprising. “If you’re a retailer, Scope 3 is 95% of your problem,” explains the CGF’s Gavilan.

The Scope 3 Conundrum

Food retailers recognise that Scope 3 is where the real impact is, and the greatest opportunity for reductions, explains Chris Morris from Anthesis, “but it’s also the place where realising those huge opportunities is the hardest.”

Many commitments from food companies therefore encompass only Scopes 1 and 2. Picking this low-hanging fruit can help reduce emissions fast – FoodDrinkEurope (FDE) has drawn up 90 measures that could help cut emissions from food and drink manufacturing by 92%, come 2050. Technologies are readily available, in some cases – decarbonisation of manufacturing that requires high-temperature heat, for instance – but others, like hydrogen, require further research, investment, and new policies.

Still, the 94 million tonnes that FDE has targeted represents only 11% of the entire food value chain’s footprint. The other 89% is far harder to measure, let alone tackle.

“Scope 3 is beyond our control, but that doesn’t mean we can’t influence it,” explains Jeroen Theys, MD of Smart Technics, an entity of Colruyt Group.

Many food companies have begun targeting both their suppliers and their customers. Unilever has announced that it is to work with 300 suppliers that ‘contribute most significantly to our overall greenhouse gas footprint’. Frozen-food specialist Nomad, meanwhile, is to help its ‘top 75% of suppliers by emissions’ to develop carbon reduction targets.

Supermarkets have argued that their job is even trickier. ‘Unlike manufacturers, retailers [like us] sell thousands of branded and own-label products to our customers,’ Tesco explained in an email. ‘Every product has a footprint, and we are dependent on working closely with our suppliers to understand and reduce the environmental and emissions footprint of all the products we sell.’

The narrative is currently one of support and collaboration, but make no mistake: suppliers need to show sharp carbon reduction plans or risk being dropped.

Competitive Advantage

Indeed, the carbon footprint of products is already being used for competitive advantage. Danish-based dairy company Arla has collected data from almost 8,000 farms to prove that it has some of ‘the most climate-efficient dairy farmers in the world’. Their average footprint is 1.15kgCO2e per kilo of milk (the Food and Agriculture Organisation’s global figure is 2.5kgCO2e). ‘The number is not a result – it’s a baseline for how to improve,’ Arla notes.

Reducing emissions in food production could attract investors, insulate companies from future carbon taxes, and bleed into marketing opportunities on shelf. After all, shoppers are seeking out sustainability.

Some 88% of European consumers think that sustainability information should be compulsory on food labels, according to a 2020 Eurobarometer survey. The European Commission has announced that it will look at a voluntary approach in due course, but the ‘Race to Zero’ has already sparked a rush on ecolabels. Some focus purely on carbon, but, increasingly, they amalgamate a number of metrics, both environmental and social.

Eco-Score, for example, grades products from A to E, based on a life cycle assessment of environmental impacts and then a bonus-malus system, wherein points can be won and lost. Carrefour has labelled thousands of products in France with the device, Colruyt is trialling the approach in Belgium, and so too is Lidl, which has launched pilots in the Netherlands, Germany and Scotland.

A competing label run by Foundation Earth has been launched involving Mondra, a UK data company, Belgium’s Leuven University, and Spanish research agency AZTI. This boasts of more specific data, and a number of big players are involved, including PepsiCo, Morrisons, Danone, Lidl and Aldi. That the discounters are embracing the concept is significant, according to experts at Rabobank.

A Need For Standardisation

These labels could prove powerful at the point of purchase, but also drive emissions down on everything from production to packaging – few brands will want a worse score than their competitors. The danger is in the emergence of various approaches that are not comparable and have the potential to confuse consumers.

“We really need a standardised system,” says Sarah Blanchard, a sustainable food consultant based in Germany.

Susan Thomas, senior director for commercial sustainability at Asda, adds that competing companies collaborating on an industry level is helping drive faster development of meaningful environmental metrics.

Carbon Offsetting – Yes Or No?

One area in which companies could get tripped up is around the area of carbon offsetting – an approach that has a reputation for being a quick-fix, cash-led solution that allows firms to ignore reducing carbon – but achieving net-zero without some form of carbon capture or sequestration is impossible for supermarkets. Some are biding their time, as work continues on the development of a more effective and efficient voluntary carbon market.

Others have pressed on. Colruyt recently announced an ambitious plan to plant 12 million trees in the Democratic Republic of Congo, in a bid to capture 120,000 tonnes of CO2 that it can’t immediately reduce.

“We don’t want to buy carbon credits. We just want to absorb CO2,” explains Colruyt’s Theys.

That doesn’t mean that efforts to reduce emissions will come to a halt, however. In terms of emissions per customer, “we are well below all other retailers,” Theys claims, “but we are continuing to invest.”

This competitive edge to net-zero is welcome. Laggards will be exposed, but the leaders deserve recognition, too, says the WBA’s Sanne Helderman. They provide the inspiration for what is possible. [Main image courtesy Nestlé]

© 2021 European Supermarket Magazine. Article by David Burrows. For more Retail news, click here. Click subscribe to sign up to ESM: European Supermarket Magazine.

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