Insights That Matter on Reaching Net Zero
A note from our Global Consumer Products practice lead?Jonathan Greenway:
Is your company on track to achieve net zero? Business executives across industries are committed to reducing their carbon footprints – but often face multiple challenges. The biggest one in the food and beverage (F&B) space is the difficulty in coordinating across different elements of a massive and complex value chain.
But while getting to net zero isn’t easy, it is possible.
This was the message we shared at The Consumer Goods Forum Global Summit last month, where industry leaders came together to discuss common issues and exchange learnings. Sustainability and ESG commitments were top of almost everyone’s agenda. At AlixPartners, we believe that accelerating carbon reduction will require unprecedented levels of collaboration across the industry, and we must continue coming together to turn commitments into action.
This month’s edition of ‘Insights That Matter’ introduces this collaborative approach alongside our latest research and actionable insights on reaching net zero.
Syncing ambition with outcomes across the?CPG value chain
Our research revealed that F&B companies are set to fall short of the 2030 global carbon-reduction goal for the industry. At best, F&B manufacturers, suppliers, and retailers may manage to reduce emissions by 29% by 2030, missing the goal of 37.6% set out in the United Nations 2015 Paris Agreement and by the Science Based Targets initiative. Notably, few executives are confident they will meet carbon reduction goals related to emissions from other companies in their value chains.
This lack of confidence can be attributed partly to the complexity of measuring carbon emissions up and down the supply chain. Another significant hurdle is that while suppliers and manufacturers are responsible for the most carbon, they do not believe they will be well compensated for reducing it by their upstream customers.?
This picture indicates systemic issues across industry supply chains. Companies need to take bold steps and focus on three operational priorities to navigate this complexity.
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Net Zero challenge: Consumer products companies need a supply chain plan
With time running out to meet the Paris Agreement target of 1.5°C reduction, a dramatic shift from intent to action – and ultimately outcomes – is needed. Companies must create a practical and measurable action plan that works in concert with suppliers to improve their directly controlled Scope 1 and 2 emissions and effectively manage upstream Scope 3 emissions.
Our?Should-Carbon?methodology translates carbon measurement into actionable plans at each stage of category planning, procurement, and supplier management processes. This approach accelerates cross-business decision-making to mobilize, speed up, and scale carbon reduction initiatives with the organization’s supplier base.?
Net Zero claims will remain just that without Scope 3 emissions in the equation
There is no shortage of ambition around carbon reduction but translating this into meaningful action is proving hard.
“A number of companies are omitting Scope 3 emissions from their plans, despite these emissions typically making up most of their carbon footprints,” writes AlixPartners’ Anna Del Mar. “Unpacking the complexity of ambiguous standards, tiered supply chains, and wider economic pressures, is key to reducing Scope 3 upstream emissions, where we believe material, enduring change can and should be made.”
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