US-based food companies proving slow to adopt measures supporting forward-looking climate action plans.
Investor network Ceres has published an update to its Food Emissions 50 Company Benchmark, highlighting that assessed companies are increasingly setting Scope 3 decarbonisation targets but have made less progress aligning their future focus with these goals.
The benchmark, first launched in 2021, assesses 50 of the highest-emitting publicly listed companies in North America on the state of their climate action, in particular their consideration of Scope 3 emissions. It initially consisted of two indicators: emissions disclosure and emissions reduction targets.
Well over half (33) of the focus companies have now set 1.5°C-aligned decarbonisation targets that include Scope 3 emissions, according to the benchmark.
“As more companies have now publicly committed to reducing their emissions and published public commitments, external stakeholders are now asking how they are going to achieve those targets,” said Nako Kobayashi, Manager of Food Emissions 50 at Ceres, speaking at a webinar launching the updated benchmark.
The benchmark has therefore introduced six new indicators: disclosure of progress against targets; growth and innovation strategy; corporate procurement strategies and supply chain implementation; operations, waste, and transportation; customer engagement; and quantification of strategy against emissions reduction targets.
“The findings will help inform investors’ engagements related to the Food Emissions 50 investor engagement initiative,” said Kobayashi.
Investors that are part of the initiative include PGGM, AP7 and Impax Asset Management.
Analysis conducted by financial think tank Planet Tracker noted that, increased private investment in the transition of global food systems could cut their total emissions by 60% by 2030, leading to a 20% reduction in global emissions.
Investors have increasingly challenged companies in the food sector on their climate commitments.
Last year, 69.9% of CostCo shareholders voted in favour of a proposal put forward by Green Century Capital Management asking the company to set science-based targets to reduce its emissions.
Room for improvement
Only 27 of the 50 focus companies were assessed against the new indicators.
“These companies have provided full emissions disclosures and targets,” said Kobayashi, adding that companies that are only currently disclosing Scopes 1 and 2 emissions has likely only a climate transition strategy in place that addresses those scopes.
“There isn’t a linear path,” Kobayashi pointed out, noting that some of the other companies intend to publish their Scope 3 commitments in “the near future”, and they will be assessed against the new indicators in the next iteration of the benchmark when they do so.
“Different companies may approach this process in different ways. Some companies may want to develop all their strategies and have that in place before publicly committing to decarbonisation targets, for example.
“But the key message here is that initial disclosure and emissions reduction targets are foundational elements of having a robust plan to align with a 1.5°C future.”
Of the 27 assessed companies, just two have conducted 1.5°C climate scenario analysis and 16 have clearly identified the key drivers of their Scope 3 emissions from purchased goods and services. Only one company has made a “comprehensive commitment” to eliminate deforestation and other land conversion from its supply chain. None of them have set specific targets to address agricultural non-CO2 emissions, like nitrous oxide and methane.
Further, none of the assessed companies have quantified how their climate action plan will lead to the emissions reductions needed to achieve their public commitments. They also haven’t aligned their future expenditure with their climate goals. While ten of the companies have invested in some climate-related R&D, only three have implemented a business-wide strategy to align growth and innovation with emissions goals, the benchmark noted.
“We found generally across all our indicators that current disclosures tend to focus on past and current sustainability performance, rather than their forward-looking action plan,” said Kobayashi.
