The "Best" Kind of Reduction Initiatives

*This newsletter is comprised of insights from our recent flagship SoS event. The event was run under Chatham House rules so no specifics have been shared.*

It was always going to be exciting to bring together 70+ sustainability professionals working on data challenges in the F&B agri-food chain. The insights shared, quite frankly, exceeded all expectations.

With a mixing pot of the world’s biggest ingredient suppliers (Kerry Group, ADM), food brands (Mars, Beam Suntory) and retailers (McDonald’s, Starbucks), it was reassuring (yet not surprising) that everyone in the room was working through similar challenges. Here are our key takeaways from a jam-packed, provocative day:

1. “Action first, reporting second” - a sustainability professional’s lament

The spirit of the discussion was that standards and regulations need to catch up (SBTi, GHG-P and EPR, we’re looking at you). The lack of certainty and clarity led to a strong consensus that we need to just get going and back-solve for measurement later on.

The reality of the discussion was that professionals are reluctant to meaningfully invest in shifting the value chain when there is so much uncertainty. Instead of investing in “scale-ups”, the majority favoured “project-based initiatives”. These “project-based initiatives” allow companies to experiment and gather data on best practices - great knowledge for when regulations and standards finally catch up.

The discussion around supply chain engagement *(scream)* highlighted the existence of two distinct measurement “worlds”:

1. ESG due diligence world: data “good enough” to meet compliance requirements
2. Impact reduction world: granular data to drive effective reductions

Key takeaway?

Get to grips with the data you need to prioritise for regulatory compliance vs actually driving impact. This distinction will help to focus your data strategy on where to invest more heavily in primary data vs where secondary data will suffice.

2. The “best” kind of reduction initiatives

It was agreed that effective decarbonisation initiatives are those that:

• Deliver competitive business value: frame your initiatives around value drivers. For example, keep in mind what your consumer actually cares about e.g., reusable cups have a stronger visual “sustainability” perception than initiatives such as regenerative agriculture (despite having a much smaller material impact).
• Anchor on relationships: look to set up two types of relationships: Vertical: Connect suppliers with customers. This creates opportunities e.g., receiving funding from key customers to distribute to farmers. Horizontal: Practical and interactive ways for suppliers/ farmers to learn best practices from each other e.g., run workshops/ fairs/ show and tell.
• Are simplistic by design: Sustainability interventions that are simple enough to travel through word of mouth, across many “types” of audiences (like procurement, management, and farmers) are more successful. Avoid technical jargon - talking about “enteric methane inhibitors” won’t have as high an uptake as “crop rotation hacks”.
• In the supply shed: As long as you can prove (to a reasonable degree of accuracy) that the supplier is within your supply chain e.g., you can evidence purchasing specific materials from them for several years then any reductions you drive can be reflected in your inventory. The moral of the story: invest time in identifying your supply shed.
• Measurable: Even if you can’t account for initiatives now, make sure you have the tools and resources available to track and evidence progress (across multiple impact metrics). This will help you, further down the line when you’re making the long-term business case.
• Diverse financing: Initiatives don’t need to be financed exclusively by you. Explore alternative financing options like grants and third-party financing e.g., H&M distributing finance from DBS bank into their value chain.

3. Data transparency use cases vary greatly from B2B to B2C

For B2C: Many large CPGs firmly believe that the upside of on-pack sustainability claims isn’t worth the risk. This is because:

• Consumers don’t actually want to pay for sustainability (despite what they say in the surveys).
• Any label will do, whether it be “Fairtrade”, “Gluten Free”, or a carbon label, the consumer doesn’t perceive much of a difference.

So, why put your neck on the line with a carbon label when you aren’t 100% sure about your data? The value of greater data transparency for B2C is the insight derived that can then be used for internal decision-making.

On the flip side, for B2B businesses, granular data offers a competitive edge. Well-evidenced claims and product carbon footprints allow them to differentiate existing products and new product lines to cater to new customer needs focused on sustainability.

Keep these differences in mind when making the business case for more sustainability funding.

To wrap this up, the challenges facing sustainability professionals in F&B industry remain pretty consistent globally. Whether you’re a sustainability professional in the USA or Europe, it seems everyone is crying out for clearer regulation and better data to launch, measure and prove their reduction initiatives. A big thank you to everyone who joined us in Chicago for State of Sustainability Impact 2024. Stay tuned for more events and keep up with State of Sustainability here.

SoS Events:

In-person: Women In Sustainability Breakfast, London, 9th May, 8.30 - 10:30 am. Register interest.

Industry Insight: How to Bring your Sustainability Function Closer to the Action

Every sustainability function is set up a little differently. But I typically see two models playing out:

• ??????????????????????: This is a classic starting point, where a dedicated sustainability team acts as the central driver and knowledge centre. This is great for building momentum and attracting sustainability talent (professionals who want to move from being ‘lone operators’ to being embedded into a team).
• ??????????????????????: The ultimate goal for many companies is to have sustainability fully integrated into every existing function e.g., procurement specialists considering sustainability in decisions, R&D focusing on eco-friendly materials, and operations prioritising energy efficiency. This involves embedding sustainability champions within each function.

The challenge with the centralised approach is that the sustainability team can struggle to drive action and get overwhelmed.

The challenge with the decentralised approach is that there is a huge amount of up-skilling needed to make good decisions.

There's often a "middle ground". This involves embedding sustainability individuals into specific functions - in some ways a stepping stone, but a great mechanism to bring sustainability closer to where the action is.

Policy Pulse: Mission Possible Partnership - Decarbonising Industry

The Mission Possible Partnership (MPP) is an alliance leading the decarbonisation of the world’s most heavily polluting industries. This covers 7 industries, collectively representing 30% of global emissions: aviation, shipping, trucking, steel, aluminium, cement/concrete and chemicals.

They bring together a multi-disciplinary group of experts to develop a transition strategy for each industry. Creating:

• Decarbonisation pathways in line with 1.5 degrees
• Roadmaps of actions for industry leaders and governments to take
• Eco-systems of cross-sector actors that can drive this change

What you need to know

It’s all in the name. Decarbonisation is challenging but fully possible — the technology to achieve it exists already. For key sectors:

• Steel - green hydrogen or electric arc furnaces are nearly commercially deployable
• Logistics - there are pilots for electric and fuel-cell trucks with sustainable aviation fuels
• Chemicals - energy electrification and biomass can lower carbon inputs for ammonia

MPP’s sector transition plans then outline a roadmap for how to translate this technology into decarbonisation. The Partnership helps follow this all through by:

• Securing commitments from industry leaders to follow their roadmap actions
• Facilitating the market infrastructure needed to track and support ongoing decarbonisation

Steep reductions in emissions are key to each of these hard-to-abate sectors. So the MPP’s aim is that by 2030 each sector has deployed its zero-carbon solutions at scale.

What businesses outside the 7 heavy industries can do?

Mission Possible Partnership has published a tracker for how sectors are bringing decarbonised tech to market. This shows 68 decarbonised plants are live of the 700 needed by 2030 to be on a 1.5-degree pathway. New project announcements making it to market will fill the gap - with policy and finance being key levers for more progress.

Companies outside the 7 heavy industries can:

• Switch demand to low-carbon solutions - buying inputs with a green premium now like zero-carbon steel will help scale up the technology.
• Encourage suppliers to sign up to MPP - more commitments help with signalling action, this applies especially to the transport sectors that supply many businesses.
• Take inspiration from the collaborative approach - bringing together finance, policy, academia and business can translate well to finding actions for any sector.

Other News:

• EU parliament approves CSDDD: The CSDDD is a key companion to the CSRD, requiring large companies (with a turnover of more than €450m and >1000 employees) to identify and disclose all negative impacts on human rights and the environment in their direct operations and supply chains. For identified impacts, a timed action plan to address these impacts is mandated. For more details on CSDDD, read our previous Policy Pulse.
• Mandatory approach to eco-labels on food and drink scrapped by the government in the latest climbdown on the environment under PM Rishi Sunak, claiming that there was “limited” evidence such labels had an impact on consumer behaviour or that they encouraged food and drink companies to reduce their carbon footprint.
• EU parliament approved new rules to reduce packaging waste through reuse and recycling programs. Single-use bans and recycling requirements will come into action from 2030.

Related Resources:

• Guide: A Guide to Supply Chain Engagement
• Podcast: How to Set up Your Carbon Inset Projects with OFI
• Podcast: Sustainability on a Budget: How to Do More with Less

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