Food companies claim emission reductions this year, experts skeptical

Editor's note:This article is part of a series exploring supply chain opportunities and challenges in 2023.Click here to read other articles in this series。

Last fall, ahead of the United Nations COP27 climate conference, beverage giant Coca-Cola was announced as a sponsor, sparking immediate backlash.

Sustainability activists accused the UN of "greenwashing" because Coca-Cola contributes significantly to plastic pollution, which accounts for 3.4% of global emissions, according to the Organisation for Economic Co-operation and Development (OECD). A petition signed by 240,000 people called for Coca-Cola's sponsorship to be revoked, but ultimately failed.

In an open letter, at least 60 public health organizations called for an end to "corporate capture" of climate negotiations by polluting companies. Coca-Cola told PBS that its participation highlighted the company's commitment to reducing emissions.

The petition and the attention it drew brought into focus the deep rift between activists warning of imminent climate collapse and the food industry.

In response to growing pressure from sustainability advocates and consumers, food and beverage companies have developed plans to reduce greenhouse gas emissions in their supply chains over the next decade. But experts say whether these companies can make substantial progress is a major question.

Some companies, such as Mars, have demonstrated commitment by tying executive compensation to achieving emissions targets. Three major consumer goods giants—Mars, PepsiCo, and Nestlé—all told Food Dive they are on track to meet their respective emissions reduction goals and plan to make significant progress in 2023.

While some experts believe consumer goods companies' efforts so far are a step in the right direction, they doubt the industry can meet time-based targets in the coming years. This could intensify pressure from activists, who blame food and beverage manufacturers for a large share of the climate crisis. According to the UN, the food industry accounts for one-third of global greenhouse gas emissions.

Jim Walsh, policy director at the sustainability advocacy group "Food & Water Watch," said the industry's current efforts will not produce meaningful results in curbing emissions. "This is really big agriculture running a marketing campaign to whitewash a destructive global food system."

Consumer goods companies seek carbon sequestration

According to emissions measurement company Net0, at least 110 countries have agreed to achieve net-zero emissions by 2050—meaning emissions are balanced by the amount removed from the atmosphere. This will require large-scale reforms in how food is produced and consumed by nations, companies, and consumers.

Marketing and new product development have become key components for consumer goods companies to communicate their carbon reduction ambitions to consumers. Some brands—whether traditional products like Bud Light or new market entrants like Neutral Milk—have launched carbon-neutral products, claiming to offset all greenhouse gases emitted during production. This often involves companies purchasing carbon credits or investing in carbon offset projects, such as replanting trees in deforested areas.

Sean Hiatt, associate professor at the University of Southern California's Marshall School of Business, said relying on carbon offset credits could prove to be an ineffective measure and put credibility at risk. "I think they will create reputational threats for themselves because people can say this is greenwashing," Hiatt said. "The field is poorly regulated, so the risk is higher."

Companies are also embracing carbon "insetting" projects—such as restoring forests and agricultural land—which do not involve purchasing carbon credits but are about "doing more good rather than less bad," according to the World Economic Forum.

Focus on regenerative agriculture

The industry distinguishes between Scope 1 and Scope 2 emissions—those from a company's own operations and facilities—and Scope 3 emissions, which come from indirect sources such as supplier production and product transportation. According to the sustainability nonprofit Ceres, Scope 3 emissions account for 90% of food companies' emissions.

In most food companies' emissions reduction goals, "regenerative agriculture" takes center stage as a key solution. These practices are a set of agricultural techniques farmers use to restore soil and water used in production. According to the Chesapeake Bay Foundation, examples include cover crops, continuous no-till, and crop rotation. According to Colorado State University, tillage erodes soil microbes, harming their biodiversity and overall health.

But not all agricultural experts agree with this approach. Walsh of Food & Water Watch said no-till farming requires significant pesticides and fertilizers, making it more harmful than beneficial. "These companies use the term regenerative agriculture loosely, and because the term is largely undefined, it allows them to justify absurd and harmful practices that provide almost no climate benefits."

While some practices under "regenerative agriculture" may be beneficial, Tara Chandrasekaran, senior ESG analyst at sustainable investor group FAIRR, said companies must be more transparent about how much emissions they believe regenerative practices can reduce. She said Nestlé is a company that was fully candid in detailing how its practices would reduce emissions in a lengthy "Net Zero Roadmap" document released in 2021.

"For these actions to be robust and credible, companies must both measure and disclose the extent to which these practices can mitigate emissions," Chandrasekaran said. "The main concern with soil carbon sequestration is the extent to which it can adequately sequester carbon, which may vary by region and soil type."

Nestlé, the world's largest food company, said it has adopted a range of techniques to achieve its goal of halving absolute emissions by 2030. These include regenerative agriculture practices and insetting projects. The consumer goods giant said individual brands in its portfolio can offset emissions by purchasing carbon credits.

In an email statement to Food Dive, Nestlé said one of its brands embracing reduced tillage is pumpkin maker Libby's. The company said it is working with third-party organization Sustainable Environmental Consultants to collect and measure agricultural data to assess its emissions.

"By adopting sustainable reduced tillage practices, Libby's farmers saved the equivalent of about 43 dump trucks of soil—694 tons of soil per year—from being lost to erosion in the first year of data collection, unlike conventional tillage," Nestlé said. "We are leveraging our scale and global reach to find innovative ways, using farmers' unique expertise in the field, and working with third-party experts and industry leaders to ensure our efforts are effective."

"For reduced tillage in row crops, there is no consensus on whether it can achieve the level of carbon storage often claimed."

— Jason Hill, environmental expert and professor at the University of Minnesota

Candy giant Mars Wrigley—which has committed to achieving company-wide net-zero emissions by 2050—said it is on track to meet its goal of reducing total operational emissions by 42% by the end of 2025, based on its work in eliminating deforestation and adopting "climate-smart" agricultural practices, particularly in cocoa.

"We have many forward-looking projects, such as our farm-level cocoa initiatives at Mars La Chola in Ecuador and Bacao Farm in Colombia, where we optimize inputs like fertilizer and water, use renewable energy, and harness the power of trees to sequester carbon in soil and biomass," Chief Sustainability Officer Alastair Child said in an email statement to Food Dive.

Beverage and snack giant PepsiCo views its regenerative agriculture approach as key to transforming its supply chain and achieving its goal of net-zero emissions by 2040. Roberta Barbieri, the company's vice president of sustainability, said in an email statement that the company believes it has a solid foundation to further reduce emissions in 2023.

Some new initiatives the company has adopted include a project to decarbonize a snack factory in the Netherlands by storing and converting renewable energy, and installing biodigesters—which break down substances like fats and oils—at a PepsiCo facility in Portugal.

But Barbieri said there are difficulties in getting supply chain partners to deploy new technologies that require more investment. Another challenge hindering the company's regenerative agriculture goals is the ability to manage data on project progress, which she said still has room for improvement.

"Beyond some large suppliers, there is generally a need for more education and capacity building to address climate change," Barbieri said. "Small and medium-sized suppliers also face a lack of personnel needed to lead the scale of change required."

Skeptics raise questions

While companies focus on these goals, experts doubt whether companies can achieve them within the expected timeframe, as global supply chains require significant and costly reforms.

Jason Hill, environmental expert and professor at the University of Minnesota, said some practices under the "regenerative agriculture" umbrella are questionable. First, the term itself faces "greenwashing" accusations from some activists due to its lack of clear definition. Additionally, there is the question of whether agricultural methods reduce emissions as effectively as the industry claims.

"For reduced tillage in row crops, there is no consensus on whether it can achieve the level of carbon storage often claimed," Hill said.

According to the UN Food and Agriculture Organization, the meat and dairy industry accounts for 14.5% of anthropogenic emissions. The sector faces particular scrutiny for its methane production, a greenhouse gas that is at least 300 times more potent than carbon dioxide, according to the Environmental Protection Agency.

FAIRR, a sustainable investor group tracking livestock company emissions, said meat giant Tyson will fail to meet its goal of reducing emissions by 30% by 2030. FAIRR said the target is outdated compared to its peers, and its operational emissions have increased by 7% over the baseline goal. Tyson said in a 2021 statement it planned to update the baseline of its emissions targets by the end of 2023.

To track emissions, many companies rely on third-party organizations to accurately understand their carbon output.

Climate Trace, a nonprofit tracking livestock company emissions, said companies struggle to determine progress on their emissions reduction goals due to a lack of accurate data sources to determine whether companies are successful. The nonprofit estimates farm emissions by calculating methane from cattle belching and manure, rice cultivation, and synthetic fertilizer application.

"The Environmental Protection Agency does not regulate or monitor greenhouse gas emissions from animal feeding operations; in fact, there isn't even a complete national inventory of feedlots," said Leka Sridhar, partnerships manager at Climate Trace. "We apply satellites, other remote sensing technologies, and artificial intelligence to independently observe global emissions in as much detail as possible."

Can policymakers and investors drive industry change?

While consumer goods companies express confidence in their ability to reduce emissions, sustainability groups believe this is not enough. These groups strongly advocate for US lawmakers to regulate the carbon footprint of large food companies.

Senator Cory Booker, a Democrat from New Jersey, introduced a bill in 2021 aimed at reforming the agricultural system to improve its sustainability.

Walsh said passing Booker's bill is Congress's primary initiative to both reduce industry emissions and add more structural security to the supply chain during a crisis—especially regarding factory farm systems.

"Factory farms are creating a food system that is unsustainable and lacks resilience to various supply chain shocks," Walsh said. "When there are large-scale agricultural entities and food giants, a problem within these institutions can have ripple effects around the world."

FAIRR and its investor network representing $70 trillion in assets believe its reporting on supply chain carbon emissions can be used by investors to pressure companies to set stronger emissions reduction targets, said Talia Wronaki, senior manager of research and engagement at FAIRR. "We have this information, and the dataset is available for investors to use in their respective engagement activities."