3 ways Big Food is coming to terms with its climate impact

More than one-third of global greenhouse gas emissions come from food production, according to the United Nations. This has raised the pressure on large CPGs to address the issue head on, and set clear goals for minimizing their carbon footprint.

In the days surrounding this month’s UN Climate Change Conference (COP26) in Glasgow, Scotland, several of the industry’s largest food manufacturers re-upped their commitments to tackling emissions, and apply different tools to the problem. From setting more aggressive carbon reduction targets to revamping agricultural and supply chain systems, here are three ways that Big Food is trying to reduce its role in raising global temperatures.

Prioritizing net zero emissions

Among food manufacturers, there’s been a rising chorus around one specific goal: hitting net zero emissions. In the opening days of the COP26 conference, Mondelēz announced a goal of achieving net-zero emissions by 2050 across its full value chain. The company plans to focus on sustainable ingredients sourcing, adopt renewable energy and improve the efficiency of its distribution logistics, among other measures.

Mexican food giant Grupo Bimbo also set a commitment this month to reach net zero emissions by 2050, which it plans to reach through reforestation and carbon sequestration programs. They join other CPGs such as Nestlé, which has set goals of halving its emissions by 2030 and reaching net zero by 2050; Mars, which strives to hit net zero emissions by 2050, emphasizing shifts in its agricultural supply chain; and Unilever, which has set an ambitious target of reaching net zero from its products by 2039.

On the ingredients side of the industry, Kemin Industries also announced its aim to be net zero by 2050. Chr Hansen debuted plans to reduce direct (scope 1) and indirect emissions from its energy sources (scope 2) 42% before 2030, as well as indirect emissions from its total supply chain (scope 3) 20% by 2030.

Revamping the supply chain

About 20% of global emissions each year are caused by the logging of tropical forests, according to the Environmental Defense Fund. Logging for agriculture accounts for anywhere between 60% to 80% of deforestation, according to various estimates. This has given food companies a clear incentive to tackle deforestation within their operations. This month, major commodity producers including Cargill, ADM, Olam and JBS pledged to end the practice within their supply chains.

CPG giant Mars Inc. has invested $1 billion in sustainability, with ending deforestation a key element. CEO Grant Reid told NPR early this month that the company plans to invest another billion dollars going forward. Reid said that Mars has already significantly reduced the impact of deforestation within its supply chain by mapping and monitoring sources of palm oil, for example. Palm oil is considered one of the main crops fueling the issue in countries like Indonesia and Malaysia, accounting for 2.3% of global deforestation, according to an analysis by the European Union. Through this process, Mars has reduced the number of its suppliers of this ingredient from 1,500 to 100 that are based in deforestation-free areas.

This past June, Nestlé pledged to be deforestation-free across its full supply chain by 2025, describing it as a “critical element” of its journey to net zero emissions. The world’s largest food company proclaimed that 90% of key ingredients including palm oil, sugar, soy and meat, in addition to pulp and paper, reached that goal as of December 2020. The company will also be planting 20 million trees every year for the next 10 years. Because cocoa and coffee grow better in shade, this provides an even greater incentive for Nestlé to hit its goal.

Doubling down on regenerative farming

Regenerative farming uses more sustainable growing methods to improve soil and ultimately sequester carbon from the atmosphere. It has the potential to eliminate over 250 million metric tons of emissions per year, according to The National Academies of Sciences, Engineering and Medicine. This has made the practice an attractive tool for food CPGs eager to hit their emissions reduction goals.

Nestlé has pledged to shift 50% of its “key ingredient sourcing” to regenerative farming by 2030. The company also said it is working with 500,000 of the farmers supplying its ingredients on initiatives to enhance biodiversity.

PepsiCo plans to expand regenerative farming across 7 million acres. The company’s chief sustainability officer Jim Andrew said at CNBC’s ESG Impact Conference in October that the investments will make the company’s supply chain more sustainable, but that it also needs to provide incentives to those growing its ingredients “to help reduce risk because farmers are business people.” One such initiative is a gravity-fed drip irrigation system that uses 50% less water than standard flood irrigation.

Unilever has made a broad commitment to regenerative agriculture, stressing the need to “actively improve the local environment” where its ingredients are grown. Last month, its Knorr rice and seasonings brand began a series of 50 projects that will introduce regenerative farming to its supply chain globally, and it set a goal to have 80% of its ingredients grown through the practice by 2026.

Mars CEO Reid reiterated the importance of regenerative agriculture, calling it a “gargantuan” but crucial effort. As part of its 2050 net zero goal announcement, the company said that it will promote sustainable land use among its farmers to increase crop yield potential and improve the health of soil.

“If you use those techniques, not only do you get the yield increase, but you also reduce water usage, use of insecticide and other things,” Reid said.