Good COP—Bad COP?

What does the Paris agreement on climate change mean for the food industry?

picture of tree in two states

What is the Paris Agreement?

Last month, delegates from countries all over the world gathered at the Conference of the Parties 21 (COP21) in Paris. Their goal: to decide how to best fight climate change. In the resulting accord—known as the Paris Agreement—196 countries pledged to take action: to keep a global temperature rise this century under 2°C above pre-industrial levels—the threshold scientists predict will result in irreversible warming and planetary change—and to pursue efforts to limit the temperature increase to 1.5°C. 

Prior to the conference, individual countries submitted INDCs (Intended Nationally Determined Contributions). These outline the climate actions governments intend to take under the new international agreement, with the targets and pledges to be reviewed every five years.

Under the agreement, developed countries commit to providing at least USD 100bn/year from public and private sources to help developing countries mitigate and adapt to climate change by 2020.

COP21 and the Food Industry

The F&A sector is of particular relevance in the fight against climate change—both as source of the problem (It is estimated that roughly a third of annual global greenhouse gas emissions are a result of agriculture, food production and food waste.) and also as one of the victims of climate change. Perhaps no other industry faces as much operational risk from climate change as F&A does.

Numerous F&A companies—including Cargill, Carrefour, Coca-Cola, Danone, Delhaize, Diageo, General Mills, Grupo Bimbo, Hershey’s, Kellogg’s, Mars, McDonald’s, Mondelēz, Monsanto, Nestlé, PepsiCo, Sodexo, Starbucks, Tesco, Tyson Foods and Walmart—made voluntary commitments to decrease their carbon footprints, engage in sustainable resource management and finance climate action.

For food companies, the biggest action points post-Paris include:

Sustainable supply chains

Companies will have to track emissions across their entire supply chain and re-examine the sustainability practices of all the commodities that flow into their products. Steve Peterson, Director of Sourcing and Sustainability at General Mills, stated that: “Two-thirds of our total product carbon footprint resides upstream with our suppliers. That’s why our focus in the next couple of years is around supplier sustainability and sustainable sourcing.”  

Collective supply-chain management can have a hugely beneficial effect when whole industries demand sustainable business practices by commodity producers. A prime example is palm oil production over the last year, where a significant number of food manufacturers committed to zero net deforestation in sourcing their palm oil.

The financial support pledged to help developing countries mitigate and adapt to climate change will help companies to address climate change risk in their agricultural supply chains and drive down their global carbon footprint. But it is clear that additional financing will be required in moving towards the sustainable sourcing of commodities, much of which is in developing countries. 

Energy and fuel efficiency

Companies will have to transition towards renewable energies in their plants and transportation systems. Mars was the first US company to commit to going 100% renewable. Many others are now following its lead, pledging to increase their renewable energy use and increase their energy efficiency. To help in this transformation towards low carbon energy, global financial institutions pledged to make hundreds of billions of investment available over the next 15 years for clean energy and energy efficiency. We can expect a lot of the investments to go not only into generating renewable energy, but also into finding mechanisms to store power.

Waste reduction

Global food manufacturers and retailers will probably feel the influence of the Paris Agreement sooner than later when it comes to food waste. An estimated 1.3bn tonnes of food is lost and wasted annually between farm and fork, producing the equivalent of 3.3 gigatonnes of carbon dioxide each year. The carbon cost of food waste will become increasingly intolerable, and the public and governments will look to food companies for solutions. Many of the companies submitting voluntary commitments include objectives regarding food waste and increasing the number of plants that send zero waste to landfills. But the issue of food waste isn’t limited to the manufacturing process—and companies both upstream and downstream will have to tackle this. 

Product innovation and technology

Much remains to be done in developing products that minimize emissions, improve resource use efficiency or encourage carbon sequestration in the soil. The private sector will play a key role in developing and creating opportunities for transformational products and technologies—from the ability of the Internet of Things to generate efficiencies in the use of energy, water and other resources in buildings, transportation systems and logistics to advanced agricultural techniques that minimise inputs and sequester carbon. As an example, Monsanto recently committed to producing carbon-neutral or carbon-negative agricultural products.

All of these actions are voluntary at the moment, but—as governments translate their emissions reduction plans into concrete policies and regulations—all companies will have to make changes in order to comply. This will be beneficial for those who are making voluntary adjustments today, as it will bring everyone up to the same standards.

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