Concerns over the impacts of climate change are driving demands from governments and consumers worldwide for businesses to make sustainability a priority and commit to a net-zero future. Addressing the issue of net-zero emissions to mitigate climate change isn’t just important for the bigger picture; it can also reap a host of co-benefits for your organisation as well as the environment.
A carefully planned net-zero strategy can deliver a reduction in carbon emissions, and a range of other environmental, economic and social benefits too. Net-zero co-benefits are the additional positive effects that arise from the actions we take to address climate change. These co-benefits can include increased supply chain resilience, savings on energy bills, cleaner air, green job creation, public health benefits from active travel, pollution reduction and biodiversity improvement through expansion of green space.
Net zero in the food and drink sector
Net zero requires a comprehensive reduction in greenhouse gas (GHG) emissions, consistent with pathways that limit global warming to 1.5°C, with any emissions that cannot be eliminated being removed from the atmosphere through offsets. In other words, net zero requires deep decarbonisation throughout the value chain to prevent global climate change from reaching unsafe levels. Within the food and drink sector, achieving net zero is especially complex due to the wide variety of GHG sources from biological processes, manufacturing and retail.
Regular announcements of new corporate net-zero targets by well-known names are a marked change from five years ago, when net zero was a concept discussed predominantly among climate specialists and almost never in the boardroom. It is safe to say that it is no longer just the concern of specialist groups, but sits firmly at the centre of the business sustainability strategy for many organisations.
Understanding the potential for co-benefits allows companies to build on the three pillars of sustainability: maximising economic, environmental and social benefits on the path to lower emissions.
Understanding the value of co-benefits in your industry or supply chain
Implementing a strategy to reduce emissions from energy consumption by reducing demand and switching to renewables can lead to significant economic benefits for organisations, especially in the current economic climate. We have seen clients’ energy prices increasing by more than 50% this year, even in advance of volatile events like the situation in Ukraine, and prices are likely to continue to rise into the second half of 2022 and beyond.
In a recent client project, Ricardo’s team demonstrated that the implementation of a 2MW solar array would produce a £375k annual energy saving, an increase of £120k saving compared to the same proposal 12 months previously. The increased saving is entirely a result of changing energy prices from the traditionally procured supply. Simple payback on the capital cost would be just five and a half years. The array also secured 75% of the power used on site, reducing the client’s risk of brown outs (a period of reduced voltage resulting in reduced illumination) or a failing infrastructure.
With respect to agriculture, co-benefits can be realised through the identification of better efficiencies for farming processes and sustainable use of fertilisers. The borders around a field can be low yielding and often respond less well to nitrogen fertiliser application compared with other parts of the field. A grass or wildflower margin left round the border of an arable field can reduce GHG emissions associated with fertiliser, sequester carbon and save production costs. The presence of wildflowers and other vegetation cover can encourage pollinators and insects, improving biodiversity. The key economic benefit for businesses here is in the prudent use of fertiliser. Russia is a key exporter of ammonia and the sanctions it now faces are likely to have a direct effect on fertiliser prices. Implementing net-zero strategies at farm level is key to building resilience against future price rises.
Moving towards net-zero targets and capitalising on the co-benefits require a thorough understanding of total GHG emissions and total carbon removals throughout the value chain, from raw materials (e.g. fertiliser), land use, manufacturing and retail as a baseline from which to develop action plans. High quality data is essential.
Ricardo’s net-zero experts supported Kellogg’s to understand how a whole farm approach to net-zero would be of benefit to the business. Instead of focusing on the carbon footprint of individual products such as wheat grain, we assessed which actions could be adopted at farm-level to reduce emissions, and the impact this would have on production. The recommended actions included sustainable agricultural practices that growers in the supply chain could adopt to increase productivity and reduce emissions. The combination of recommended measures could result in up to a 60% reduction in net emissions from the farm while significantly reducing fertiliser application and therefore Scope 3 emissions from fertiliser production.
A holistic approach is likely to yield wider benefits
A myopic take on net-zero strategies can exclude opportunities to realise co-benefits and tackle other pollutants at the same time. Ammonia pollution is a prevalent problem in the UK and the improved management of manure and slurry is a key way to tackle it. However, something known as pollutant swapping can occur when actions are focused on a single pollutant. For example, covering slurry stores limits ammonia emissions, but emissions of nitrous oxide (N2O) will increase. N2O is 300 times as potent as carbon dioxide and remains in the atmosphere for a similar length of time, around 114 years. To avoid the pitfalls of focusing on just one pollutant at a time, it is vital that organisations attempting to reduce pollution emissions from their processes consider a long-term strategy that provides a holistic view of all potential co-benefit opportunities, so that businesses can implement a strategy with the best possible, wide-reaching outcomes.
Minimise reputational risk through supply chain integration
Along the supply chain, the co-benefits of net-zero actions can help to minimise reputational risk to food and drink companies. Supply chains in the food and drink industry are complex, often spanning several continents.
The Food and Drink Federation’s (FDF) 2040 Ambition covers farm-to-fork emissions across the whole supply chain. The FDF’s Achieving Net Zero Handbook recommends a three-step process of:
- Understanding the GHG emissions from your product ingredients.
- Engaging upstream suppliers so procurement requirements for climate performance can be introduced or new suppliers identified.
- Updating or reformulating product formulations to bring ingredients emissions in line with net-zero ambitions.
Engaging with upstream suppliers provides opportunities to tackle other environmental and social concerns. For example, the harvesting of some ingredients, including hazelnuts and palm oil, is associated with social and environmental harms like child labour or deforestation respectively. Mapping your supply chains and calculating emissions data provides an opportunity to troubleshoot potential issues before they arise.
A robust strategy can influence consumer loyalty and drive good brand advocacy
Social and environmental issues are higher up consumers and investors' priority lists than ever before. Organisations that commit to net zero are more likely to successfully engage the environmentally conscious consumer and be regarded as a trustworthy brand. Positive customer recognition can be a powerful driver for valuable co-benefits like strengthened brand reputation, improved consumer loyalty and independent brand advocacy – where individuals direct others in their network to use particular products or services.
Any commitments should be well thought-out and incorporate the ‘how’ as well as the ‘what’. Good planning is key. Having a viable plan in place to achieve your commitments is just as, if not, more important than the commitment itself.
Companies that announce a net-zero commitment without having a structured, data-driven roadmap to back it up can rightly be accused of making unsubstantiated claims, no matter the good intentions behind them, and ‘greenwashing’ is a label which, once associated with your brand, is very hard to shift.
The co-benefits of net zero are economic as well as environmental
Companies that invest in gathering high quality data and professional help in developing their strategy are more resilient to future legislation and supply chain disruption, potentially preventing expensive last-minute actions and unexpected costs. Increasing numbers of consumers and investors are seeking organisations with environmental integrity and the validity of net-zero commitments is central to that.
Ricardo has helped provide the highest quality data to numerous organisations to help them develop net-zero roadmaps and strategies, including the Scotch Whisky Association. This has given them and their customers confidence in the steps they are taking towards net zero.