Why accurate carbon footprint data? Mitigate risk in 3 areas
Quality carbon footprint data isn’t just a nice-to-have but can actually mitigate risk for food & beverage companies
By: Lydia Ashburn
August 31, 2023
August 31, 2023
Risk mitigation is arguably one of the most important reasons to implement a reliable climate reporting system, especially in the food & beverage industry.
While other industries may have the ease of emissions calculations being relatively straightforward, a majority of a food & beverage company’s emissions come from the supply chain, specifically the process of growing raw materials.
This brings nature into the picture. Carbon emissions and sequestration in the field vary based on management practices, region, weather, and other factors.
So, it’s pretty easy for data to be inaccurate if the correct measurement tools aren’t in place. But why does data even need to be accurate?
Inaccurate and infrequent carbon footprint data from your supply chain leads to risk in three main areas:
While other industries may have the ease of emissions calculations being relatively straightforward, a majority of a food & beverage company’s emissions come from the supply chain, specifically the process of growing raw materials.
This brings nature into the picture. Carbon emissions and sequestration in the field vary based on management practices, region, weather, and other factors.
So, it’s pretty easy for data to be inaccurate if the correct measurement tools aren’t in place. But why does data even need to be accurate?
Inaccurate and infrequent carbon footprint data from your supply chain leads to risk in three main areas:
- Consumer Perception
- Sourcing
- Regulatory Compliance
Consumers desire transparency
Environmental sustainability and Net Zero commitments increase brand value in the eyes of many consumers, a significant portion of whom will make purchasing decisions based on stated sustainability commitments.1
But stating a commitment is not enough. Consumers expect companies to present reliable data that backs up claims.
Otherwise, the risk of greenwashing, even if unintentional, is high. This study examining the relationship between greenwashing and purchasing decisions concluded that “when greenwashing is identified in the product, it loses the aspects of loyalty, satisfaction and benefits, as well as becoming a product that causes confusion of consumption.” 2
Greenwashing “harms brand, reputation, and brand loyalty, as well as customers’ purchase intentions and repeat purchases,” according to a study about greenwashing’s effect on the bottom line.3
And because consumers “are highly likely to be aware of the gap between stated goals and implementation,” getting the data right is critical to avoid greenwashing.3
With a majority of food & beverage company’s emissions coming from the supply chain, inaccurate supply chain data opens you up to significant risk for unintentional greenwashing and thus diminished consumer perception and brand value.
But stating a commitment is not enough. Consumers expect companies to present reliable data that backs up claims.
Otherwise, the risk of greenwashing, even if unintentional, is high. This study examining the relationship between greenwashing and purchasing decisions concluded that “when greenwashing is identified in the product, it loses the aspects of loyalty, satisfaction and benefits, as well as becoming a product that causes confusion of consumption.” 2
Greenwashing “harms brand, reputation, and brand loyalty, as well as customers’ purchase intentions and repeat purchases,” according to a study about greenwashing’s effect on the bottom line.3
And because consumers “are highly likely to be aware of the gap between stated goals and implementation,” getting the data right is critical to avoid greenwashing.3
With a majority of food & beverage company’s emissions coming from the supply chain, inaccurate supply chain data opens you up to significant risk for unintentional greenwashing and thus diminished consumer perception and brand value.
Sourcing risk can be managed
“Global farming productivity is 21% lower than it could have been without climate change,” according to a recent study. 4
Climate change puts raw material supply at risk, so a lack of reliable data on the health of supply and practices of suppliers opens food & beverage companies up to risk.
Having a continuous pulse on supplier data helps you notice trends such as decreases in carbon sequestration in a certain region or with a specific supplier, which signals lower ecosystem productivity.
This insight is critical for knowing where suppliers need support, securing your supply in the future, and ensuring you meet stated climate commitments.
Inaccurate data won’t give you this visibility soon enough, or at all, thus risking the supply itself and the sustainability of the supply.
Climate change puts raw material supply at risk, so a lack of reliable data on the health of supply and practices of suppliers opens food & beverage companies up to risk.
Having a continuous pulse on supplier data helps you notice trends such as decreases in carbon sequestration in a certain region or with a specific supplier, which signals lower ecosystem productivity.
This insight is critical for knowing where suppliers need support, securing your supply in the future, and ensuring you meet stated climate commitments.
Inaccurate data won’t give you this visibility soon enough, or at all, thus risking the supply itself and the sustainability of the supply.
Climate disclosure regulations are on the way
You’re probably aware of the Green Claims Directive, the EU Deforestation Regulation, and the SEC’s Climate Disclosure Guidelines. These are just a few examples of recent regulation around climate reporting.
While some may find supply chain monitoring a nice-to-have, it’s quickly becoming a need-to-have as regulation increases.
The EU’s recent Green Claims Directive aims at prohibiting claims such as “net-zero” or “carbon neutral” unless they’re backed by third-party verified data. To comply with the EU’s Green Claims Directive, “a company will need to have a robust environmental claims management framework that focuses on integrity, transparency and verification of data.”
The SEC’s proposed Climate Disclosure Guidelines would require companies to disclose “indirect emissions from upstream and downstream activities in a registrant’s value chain (Scope 3).” If the company has set public climate goals, they must disclose “relevant data to indicate whether the registrant is making progress toward meeting the target or goal and how such progress has been achieved, with updates each fiscal year.”
The EU’s regulation on deforestation-free products requires companies to know and provide the exact locations from which they source certain commodities to ensure no deforestation has taken place since December 31, 2020.
The common thread among these regulations is that inaccurate data opens companies up to regulatory risk.
And while much regulation is in the proposal stage, now is the time to get reporting systems into place. Waiting to do so will create a headache, especially for large organizations for whom data collection, reporting, and changes in governance will require significant internal effort.
While some may find supply chain monitoring a nice-to-have, it’s quickly becoming a need-to-have as regulation increases.
The EU’s recent Green Claims Directive aims at prohibiting claims such as “net-zero” or “carbon neutral” unless they’re backed by third-party verified data. To comply with the EU’s Green Claims Directive, “a company will need to have a robust environmental claims management framework that focuses on integrity, transparency and verification of data.”
The SEC’s proposed Climate Disclosure Guidelines would require companies to disclose “indirect emissions from upstream and downstream activities in a registrant’s value chain (Scope 3).” If the company has set public climate goals, they must disclose “relevant data to indicate whether the registrant is making progress toward meeting the target or goal and how such progress has been achieved, with updates each fiscal year.”
The EU’s regulation on deforestation-free products requires companies to know and provide the exact locations from which they source certain commodities to ensure no deforestation has taken place since December 31, 2020.
The common thread among these regulations is that inaccurate data opens companies up to regulatory risk.
And while much regulation is in the proposal stage, now is the time to get reporting systems into place. Waiting to do so will create a headache, especially for large organizations for whom data collection, reporting, and changes in governance will require significant internal effort.
A unique opportunity for the food & beverage industry
As compared to other industries, food and beverage companies have a unique opportunity to communicate positive impact within the value chain in addition to communicating emissions and emissions reductions.
The agrifood industry’s ability to sequester carbon and regenerate ecosystems within the value chain, due to initiatives such as agroforestry, intercropping, low/no till, is a layer of positive impact that brands can communicate. Almost no other industry can contribute to these processes through regular business activities.
But you can’t use inaccurate data to communicate positive impact in a credible way. This opens up significant opportunities for scrutiny.
This isn’t to say the communication shouldn’t be done. It should be! It’s just a matter of doing so credibly.
The agrifood industry’s ability to sequester carbon and regenerate ecosystems within the value chain, due to initiatives such as agroforestry, intercropping, low/no till, is a layer of positive impact that brands can communicate. Almost no other industry can contribute to these processes through regular business activities.
But you can’t use inaccurate data to communicate positive impact in a credible way. This opens up significant opportunities for scrutiny.
This isn’t to say the communication shouldn’t be done. It should be! It’s just a matter of doing so credibly.
What does this mean for food & beverage companies?
So we’ve concluded that inaccurate data creates risk in three key areas and holds you back from communicating positive impact.
But for food & beverage companies whose supply chain makes up most of their emissions, capturing global supplier data is a tough task.
Current methods for supply chain assessment include onsite measurements, sample-based audits, or using industry averages. These methods can hardly scale and don’t provide the specificity of data necessary to mitigate risk.
How can a food & beverage company get reliable land-use data from its supply chain and communicate positive impact?
Use a system that’s:
That’s why we’ve built CarbonSpace, a system with each of these qualities.
Let’s talk about providing you data that helps you reach your climate goals and communicate climate action, all with credibility.
But for food & beverage companies whose supply chain makes up most of their emissions, capturing global supplier data is a tough task.
Current methods for supply chain assessment include onsite measurements, sample-based audits, or using industry averages. These methods can hardly scale and don’t provide the specificity of data necessary to mitigate risk.
How can a food & beverage company get reliable land-use data from its supply chain and communicate positive impact?
Use a system that’s:
- Globally scalable: Can be used across regions and diverse ecosystems
- Automated: Simple to set up and scale, without the need for ongoing supplier input
- Accurate: Peer-reviewed and science-based, using innovative remote sensing technologies
That’s why we’ve built CarbonSpace, a system with each of these qualities.
Let’s talk about providing you data that helps you reach your climate goals and communicate climate action, all with credibility.
References
- Am, J. B., Doshi, V., Noble, S., & Malik, A. (2023, February 6). Consumers care about sustainability-and back it up with their wallets. McKinsey & Company. https://www.mckinsey.com/industries/consumer-packaged-goods/our-insights/consumers-care-about-sustainability-and-back-it-up-with-their-wallets
- Braga Junior, S., Martínez, M.P., Correa, C.M., Moura-Leite, R.C. and Da Silva, D. (2019), "Greenwashing effect, attitudes, and beliefs in green consumption", RAUSP Management Journal, Vol. 54 No. 2, pp. 226-241. https://doi.org/10.1108/RAUSP-08-2018-0070
- How greenwashing affects the bottom line. Harvard Business Review. (2022, July 21). https://hbr.org/2022/07/how-greenwashing-affects-the-bottom-line
- Ortiz-Bobea, A., Ault, T.R., Carrillo, C.M. et al. Anthropogenic climate change has slowed global agricultural productivity growth. Nat. Clim. Chang. 11, 306–312 (2021). https://doi.org/10.1038/s41558-021-01000-1