CA100+, Ceres and PRI sector-specific guidance outlines need for food and beverage companies to decarbonise value chains.
To ensure land-based greenhouse gas (GHG) emissions are reduced by 85% to meet Paris Agreement goals, the food and beverage sector needs to reduce Scope 3 emissions produced by its supply chains. This is according to guidance published by investor networks Ceres and the Principles for Responsible Investment (PRI).
The guidance is part of Climate Action 100+’s Global Sector Strategies workstream which aims to coordinate sector-specific investor expectations on company transition plans, such as interim decarbonisation targets on the road to net zero.
“The scale of the food and beverage supply chain means that the sector faces extensive challenges around addressing emissions and moving towards net-zero,” said PRI CEO Fiona Reynolds.
The investor networks note that there is currently “little evidence of specific strategies to measure and reduce Scope 3 emissions” despite the fact that these account for the vast majority of the sector’s emissions.
Sector-specific recommendations for food and beverage companies include: integrating supply chain climate action into corporate decision-making processes; incentivising agricultural producers to reduce climate impact of crops and livestock; transitioning to renewable energy; and partnering with peers, suppliers and policymakers to drive decarbonisation across the sector.
The report determined that eliminating deforestation, restoring previously cleared land and employing low-carbon agricultural practices that take place across corporate supply chains has the potential to mitigate more emissions than implementing renewable energy across all sectors.
“By focusing on supply chains, these companies have a unique opportunity to collaborate on changing producing and sourcing practices to increase the ambition of emissions reduction for the whole sector. Investors will need to see interim targets from companies and then details on how they will deliver these in the short and mid-term, so they can accurately assess how prepared they are for the net zero transition,” said Mindy Lubber, Ceres President and CEO and member of CA100+’s global Steering Committee.
Supply chain companies may include chemical corporates that produce agricultural inputs such as seeds and synthetic fertilisers or farm machinery manufacturers.
To ensure that the sector is taking action in this area, investors should also look to further “[engage] portfolio food and beverage companies on key topics based on the companies’ sourcing and the role they play in the supply chain”, the report noted.
Food sector-specific investor network FAIRR Initiative has noted that G20 governments have failed to include detailed policies to decarbonise their agriculture sectors in updated nationally determined contributions ahead of COP26. Investors have shown increasing appetite to switch capital to sustainable agriculture and alternative protein production.
The CA100+ sector-specific strategies are being developed by the investor networks supporting the initiative: the Asia Investor Group on Climate Change (AIGCC), Investors Group of Climate Change (IGCC), Institutional Investors Group on Climate Change (IIGCC), Ceres and PRI.
“We’re encouraging companies in the sector, and investors working with those companies, to be aware of and take action on addressing emissions throughout these supply chains […] and to work collaboratively to embed climate considerations into their operations,” said Reynolds.
In January, a pilot Global Sector Strategy for the aviation sector was published by the PRI and CA100+. Earlier this month, the IIGCC published guidance for the steel sector. Future strategies will cover electric utilities, trucks and diversified mining.
Including more than 615 investors managing US$55 trillion in assets, CA100+ is one of the world’s largest investor engagement initiatives on climate change.