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Ceres warns food and drink brands of 'substantial material risk'; corporate leaders feel pressure to speak up on ethical issues; and methodology found to measure biodiversity risk in Oliver Balch's latest sustainability news roundup
THE FRENCH have always been proud of their haute cuisine. Now, the land of tarte tatin and cassoulet has added another notch to its culinary belt. According to research by the Economist Intelligence Unit (EIU), the French food scene is the most sustainable on the planet. France topped EIU’s analysis of 69 countries worldwide, which collectively represents four-fifths of the global population. Next in the sustainable lunch queue were the Netherlands and Canada. The UK comes in at number 24, just below China and two ahead of the US, in 26th place.
The study considers three main areas: food loss and waste, sustainable agriculture and nutritional challenges. The findings are also broken down by income level, with the top low-income countries named as Rwanda, Uganda and Ethiopia, in that order. At the bottom of the 2018 Food Sustainable Index, meanwhile, languish the United Arab Emirates (high-income), Bulgaria (middle-income) and Sierra Leone (low-income).
It is not just national policymakers that need to sit up and take note of food-related sustainability issues. A new report from US-based environment group Ceres is warning that “substantial material risk” could hit large food and beverage brands from carbon emissions in their supply chain. Research into the practices of 50 leading North American food companies found that only 30% are tracking supply-side, or scope 3, emissions.
Of these, only eight have reduction targets that actually respond to this information. Worryingly, 32% take no account whatsoever of scope 3 emissions, which are generated through agricultural activities such as fertiliser use and land-use change, including deforestation.
Ceres totted up the carbon dioxide emissions of the 15 food companies that do disclose their supply chain carbon emissions and found these collectively amount to 629.9 million tonnes – equivalent to 156 coal-fired power plants.
Indirect emissions are estimated to account for 85% of food companies’ overall carbon footprints, according to Ceres. Its investor-focused Measure the Chain report also includes the alarming statistic that land-use change from commodity crop and subsistence agriculture was responsible for 87% of all tree cover loss between 2001 and 2015. The most affected areas are in south east Asia and Latin America, where production of beef, soya, palm oil and cocoa have skyrocketed.
In a sign that some food companies are paying heed, UK beverage brand Pukka Herbs recently announced its commitment to cut its scope 3 emissions by 50%, from its 2017 baseline. The Bristol-based brand, now part of consumer goods giant Unilever, has already pledged to make all its buildings and vehicles zero-carbon by 2030. It is only the thirteenth UK company to have its climate goal independently validated by the Science Based Targets initiative. Others on the list include multinational food and beverage brands Tesco, Marks and Spencer, and Coca Cola European Partners. The global food industry counts 25 companies (out of a total of 158 across all sectors) with approved science-based targets. This leading group includes PepsiCo, Mars, Kellogg, General Mills, Danone, Walmart. Agricultural producers, however, are notably absent.
In a related development, beverage firm Diageo has strengthened its commitment to source key agricultural commodities directly from farmers rather than intermediary trading companies. Diageo reports that the move, which builds on an existing pledge to source 80% of its raw materials locally by 2020, will benefit at least 100,000 farmers in eight African countries. The announcement coincided with the United Nations’ World Soil Day, on 5 December. According to the UN’s Food and Agriculture Organisation, 33% of the world’s soil is degraded. This is a contributing factor to the 815 million people who are “food insecure”. The UN’s main agricultural body also notes that soil hold three times as much carbon as the atmosphere, meaning soil health is critical to the management of climate change.
CEOs feel pressure to take stand on ESG issues
MARKETING TEAMS, beware. The days of treading safely are on their way out. Today, consumers want their brands to get off the fence and take a stand on the issues that are important to them. Or, at least so the majority of corporate leaders appear to think. According to a new study by communications specialist 3BL Media and consultancy firm GlobeScan, 82% of corporate leaders believe companies have an obligation to speak out on environmental, social and governance (ESG) issues. Nor is it just consumer expectations that they are responding to.
In a tightening labour market, business leaders believe taking a stand on topical subjects gives them a better chance of recruiting and retaining top talent. Moreover, it is corporate leaders themselves that are increasingly expected to take the stump, not the corporate machine that they oversee. According to GlobeScan/3BL Media’s research, 62% of those interviewed felt that advocacy by individual chief executives would grow in the next 18 months.
The findings reflect a growing trend among leading brands. Take Nike. A long-standing trendsetter in all things marketing, the iconic US sportswear brand has just been crowned Ad Age’s Marketer of the Year 2018. Nike was picked out for the coveted award for its campaign with Colin Kaepernick, the NFL star who knelt during the national anthem to highlight racial inequalities in the US. The brand’s high-profile campaign kicked off with the tweet “Believe in something, even if it means sacrificing everything”. The company’s net income for the third quarter (when the campaign ran) jumped to $1.1bn, up 15% on the same period in 2017, while its online sales jumped by 31% in the three days immediately after the Kaepernick advert first ran.
Another global brand that has never been shy of wearing its principles on its sleeve is Patagonia. Famous for its Black Friday stunt in 2011, when it took out a full-page advert in the New York Times saying ‘Don’t Buy This Jacket’, the US outdoor clothing firm recently courted headlines again for donating $10m to environmental causes. Described as an “urgent gift to the planet”, the donation provoked comment because it represented the money saved from President Donald Trump’s decision to reduce corporate tax levels. Rose Marcario, the chief executive of Patagonia, which describes itself as an activist company, used the occasion to describe the cuts as “irresponsible”. Since 1985, Patagonia has given $89m to various grassroots environmental groups and actively encourages its customers to campaign on green issues through its Patagonia Action Works initiative. Among the campaigns it is currently supporting are the prevention of oil and gas exploration in Alaska and a ban on offshore drilling.
Brand activism doesn’t necessarily mean going it alone. An increasing trend is for businesses to link together in campaign coalitions, giving them strength in numbers as well as a collective voice. A topical example is the UN Fashion Industry Charter for Climate Action, which is due to launch on 10 December and is understood to have the backing of several high-street fashion brands. The move follows a similar collective effort by 25 B Corp-certified firms to persuade US residents to become more engaged as citizens by exercising their vote. The Vote Every Day campaign counts the likes of Ben & Jerry’s, Danone North America and Kickstarter among its supporters.
Banks adopt methodology to measure biodiversity
YOU LEND money to someone and they return it at a later date, with a little extra. That, in essence, has been the basis of banking for centuries. It remains so. Only now banks and financial institutions have become more conscientious about what happens to their money in the interim. Hence, the decision by three financiers – CDC Biodiversité, ASN Bank, and ACTIAM, supported by Finance in Motion – to devise a methodology for measuring the impact of different types of investment on biodiversity.
An initial scoping report by the alliance asserts that “many financial institutions do not yet have an understanding of their sustainability performance, let alone insight in the risks and opportunities associated with biodiversity”.
As yet, no accepted metric for measuring a financial organisation’s biodiversity footprint exists. According to the Convention on Biological Diversity (CBD), predicted global habitat losses will amount to 20% by 2050, with warm mixed forests and savannas – typically found in Africa – suffering the largest losses. The CBD’s executive secretary Cristiana Pașca Palmer is calling for at least 50% of the planet to be more “nature-friendly” by mid-century.
The alliance might well take inspiration from the Natural Capital Finance Alliance (NCFA), which has launched a new web-based tool to help financial institutions assess their exposure to risks related to environmental degradation. Three years in the making, the Encore tool generates its findings from a database that covers 167 economic sectors and 21 “ecosystem services”, such as water provision, climate regulation and flood protection.
As a test case, NCFA assessed the exposure of 13 of the 18 sectors that make up the FTSE100. The results revealed that a total of $1.6trn in net market capitalisation is currently associated with production processes that have high (or very high) material dependence on nature. The three highest-risk sectors are agriculture, aquaculture and fisheries, and forest products. More than one quarter (28%) of the FTSE100 was shown to have no highly material dependencies on nature.
In related news, the European and North American real estate associations, EPRA and Nareit, are warning that investors in the real estate market are materially exposed to both physical and regulatory climate risk. In a new report, the associations note that fewer than half of listed real estate companies disclose carbon emissions data for their portfolio.
Only one in five, meanwhile, is currently able to collect and disclose asset level data for 100% of their holdings. Real estate is the world’s largest asset class, with an estimated value of $280trn – more than the value of all bonds and equities combined. Greening the sector is a “major challenge”, however. Globally, buildings account for some 28% of global carbon emissions, more than 10% of potable water consumption, and over half of global electricity usage.