Food and ag’s journey to net-zero needs detail

Christine Delivanis says corporates need to move beyond lofty target setting and consider how to make their ambitions and promises viable.

With various multi-national net-zero and climate deadlines on the horizon, companies of all sizes and across sectors have set themselves lofty net-zero targets – but detailed plans for reaching their targets are scarce. At best, this is poor planning. At worst, it is greenwashing.

The energy sector, due to its clear links to GHG emissions, has received considerable scrutiny on this issue. However, in other high-emitting sectors, such as food and agriculture, a wide gap remains between corporate rhetoric on targets and exact information on how these will be delivered.

But while these targets are not legally mandated, companies are still being held to account. Consumers are not quick to forget a promise – more than 50 percent of 18- to 24-year-olds would boycott a business if they discovered it was greenwashing, according to a recent OnePoll study. More than one-quarter of this age group would then actively encourage others to do the same.

Food and agriculture companies must therefore begin thinking meaningfully about what steps will be required to achieve net-zero.

It’s all in the detail

Building a technically viable and financially fundable net-zero plan in a high-emitting sector is not a simple undertaking. Thoughtful companies will carefully select the appropriate level of target setting by considering the levers they can pull today, but they will also develop foresight into how the policy environment and emissions-reduction opportunities could evolve over the coming years.

More practically, the steps involved in building a viable net-zero plan for a corporate may include the following:

  • Understanding the base level of emissions a company is responsible for, across all scopes
  • Developing a mathematical understanding of the 2050 and interim (2030-35) greenhouse gas emissions reductions, and knowledge of a company-specific baseline required to be consistent with the Paris 1.5C scenario
  • Cascading a top-down corporate target effectively and proportionately (based on GHG contribution or on relative abatement ease) to business units and geographies
  • Building a bottom-up abatement curve (i.e. information on the types of emissions abatement opportunities available, the GHG impact of these, and the cost) by geography and business unit
  • Understanding how each unit will leverage its specific abatement curve to deliver on its portion of the target
  • Rolling that up again and checking for a shortfall against the original net-zero goal
  • Ensuring that the completed plan is fundable by the business, and cross-checking that it will lead to the reductions required, regardless of the growth the company might experience
  • Putting in place robust governance, accountability, incentives and a measurement system across the corporation to ensure the organization can and will deliver
  • Communicating and disclosing this plan in sufficient detail to gain the confidence of all stakeholders that a technically and financially viable plan exists to deliver on the targets, including a clear perspective on how the plan will survive changes in company leadership (net-zero plan horizons can be decades long, while many chief executives are in their roles for less than five years).

Food and ag’s unique challenge

The food and agriculture sector is notoriously challenging when it comes to emissions, primarily due to the methane associated with livestock and the nitrogen associated with crop fertilization. It faces two additional challenges.

First, full abatement on the existing business model is difficult to achieve. This means that companies operating in the space must find a way to balance abatement opportunities, the use of offsets (inside their supply chains or outside their businesses entirely) and migrating the business portfolio to less high-emitting activity over time (from beef to chicken, for example).

Only by finding the right combination of these three levers will companies in the food and agriculture space achieve net-zero. This is essentially akin to the alternative strategies used in the oil and gas sector.

The second difficulty surrounds cost. How does the transition to net-zero become economically viable in the available timeframe (i.e. the next 10 years) – if not profitable?

The key could lie in government policy and incentive schemes, which could in the future, for example, compensate farming businesses for repurposing agricultural land into carbon sinks.

Some may remember the Stanford experiment in which children were given one marshmallow and told they would get another in 15 minutes if they could hold off on eating the one in front of them. Those that were able to hold out for the second marshmallow supposedly reported better outcomes later in life.

While there is immense immediate gratification to be had in announcing lofty net-zero targets, businesses that decide to set measured, realistic goals and put detailed plans in place to achieve them will have better outcomes down the line.

Christine Delivanis is vice-president at consultancy Charles River Associates