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28/09/2016

Food sector looks beyond factory gates for deep CO2 cuts

Agriculture & Food

Food sector looks beyond factory gates for deep CO2 cuts

The European food and drink industry can boast a healthy track record in reducing its carbon footprint ahead of the COP21 conference, which opens in Paris later this month.

But climate campaigners and industry sources alike say a much bigger challenge will be to reduce emissions along the entire food supply chain, from farm to fork.

Industry chest-thumping on the environment has become an inevitable part of the United Nation’s annual summits on climate change.

For the food and drink sector, the occasion this year was best served as an appetiser during Expo Milan, which focused on “feeding the planet”.

In fairness, the achievements do sound impressive. A survey published in July by FoodDrinkEurope, the industry’s main trade body, showed the sector managed to reduce its greenhouse gas emissions by 22% between 1990 and 2012. Fuel consumption was slashed by 65% during the same period, resulting in 4,168 Gg of avoided CO2 emissions, according to stats from the European Environment Agency (EU-15 only).

Industry sources say the bulk of those cuts were achieved at the factory, by the large food and drink companies.

“These reductions come a lot from processing: improvements in energy efficiency and a move towards cleaner fuels — replacing for instance coal and heavy fuels with gas,” said Pascal Gréverath, Head of Environmental Sustainability at Nestlé, and Chair of the Environmental Sustainability Committee of FoodDrinkEurope.

Other improvements included a gradual shift to renewable fuels, such as wood in processing plants and a switch to natural refrigerants for storage and transport, replacing hydrofluorocarbons (HFCs), which have a significant global warming potential.

“We can mention a third one, which is food waste,” Gréverath told EurActiv in an interview, pointing out that 30% of food is wasted worldwide at different stages of the supply chain whether in manufacturing, retail or with suppliers of agricultural raw materials.

Concerns over agricultural supplies

The industry’s achievements were not just motivated by a sudden desire to save the planet. Policy also played a role, says Lars Hoelgaard, a former deputy director at the European Commission’s Directorate-General for Agriculture, who is now a senior fellow at Farm Europe, a think tank.

“Some major food companies which are energy intensive like big slaughterhouses and dairies are subject to the European Emission Trading Scheme,” which puts a cap on greenhouse gas emissions at factory level, Hoelgaard told EurActiv.

By 2020, these factories will have to reduce their emissions by 20%, a target which “well on its way to be exceeded,” Hoelgaard said. The target for 2030 is raised to at least 40% so food companies “will have to continue their good progress,” the former official noted.

Other measures taken by industry were driven by sheer self-interest.

At Danone, for instance, production losses at each stage of the manufacturing process now represent less than 1% of the final product. This means less money spent on agricultural commodities, whose prices have been pushed upwards because of increased global demand and competition for land.

“All aspects of food security are potentially going to be affected by climate change, including food production and price stability,” said Mella Frewen, Director General of FoodDrinkEurope.

“In particular, agricultural production may be hampered by extreme weather events such as droughts and storms, which may affect the long-term supply of safe, high-quality and affordable raw materials,” Frewen said in introduction to the industry survey.

In fact, the agri-food sector as a whole seems genuinely worried about global warming. 86% of respondents to the survey said they were “concerned or very concerned” about the impact of climate change on their business.

Worries about climate change started dawning on the industry in the early 1990s. So the solutions implemented since then have tended to focus on the lowest hanging fruits, mainly at the processing stage where manufacturers have direct leverage.

But the biggest potential for future cuts lies outside of the factory, with suppliers of agricultural raw materials. And those could prove much harder to achieve.

Cutting food losses at the farm

According to the European Commission, the food and drink sector contributes to some 23% of global resource use, 18% of greenhouse gas emissions, and 31% of acidifying emissions.

So making sure none of the crops produced go to waste has become a top priority for the industry because it helps save the energy, water, and emissions which were generated to produce it in the first place.

Food waste or loss may happen due to a lack of storage capacity, or lack of proper transportation means, according to the Food and Agriculture Organisation (FAO). Harvested bananas that fall off a truck, for instance, are considered food loss while a carton of brown-spotted bananas thrown away by a shop is considered food waste.

“So there are losses after harvest but even worse sometimes before harvest. This means there is underperforming agriculture in many countries,” Gréverath said.

The largest European food companies have taken a commitment to cut food waste and improve sustainability upstream in the supply chain. At Nestlé, hundreds of agronomists have been dispatched to assist farmers in the developing world —in areas like dairy, cocoa or coffee.

The Swiss food giant launched an ambitious programme to audit thousands of farmers with the objective of having 100% of cocoa coming from sustainable sources by the end of 2015. “Nestlé doesn’t own any farms but our technicians help farmers directly in the field to improve their efficiency, improve their yields and implementing sustainable farming practices,” Gréverath said.

Mars Inc. also aims for 100% sustainable sourcing of cocoa, but at a later date, in 2020. Unilever, for its part, aims at 100% sustainable sourcing for all its agricultural raw materials by 2020, including palm oil, which has been blamed for deforestation.

For Gréverath, the business case for doing this is clear. “We are all facing risks of having supply challenges, which are exacerbated by climate change. So it’s our responsibility towards our shareholders to identify and address this risk.”

Environmental groups are no fan of Nestlé. But they do agree that agricultural losses are no longer tolerable at a time of high food price volatility and rising competition for land.

“These companies are wholly dependent on the environment, fair point,” said Eve Mitchell, a campaigner at Food and Water Europe, a non-profit consumer organisation based in the US. She stresses however that efforts to cut waste will only be effective if they focus on the whole supply chain from transport infrastructure to storage and refrigeration in order to “ensure the maximum amount of the crop that comes out of the field makes it into somebody’s mouth.”

Still, Mitchell looks at any industry initiatives with a sceptical eye. “All of those things are good, but I would want to see who benefits from those improvements. Because there are more people than Nestlé involved in that field: there is the farmer, his family and the whole government infrastructure which may or may not be benefitting from the income generated.”

At the end of the day, she says “much tougher government regulation” might be necessary to police the food industry’s dealings with famers in Europe and the developing world.

Environmental labels

Whatever the motives, Nestlé is not alone in seeking to improve sustainability in its supply chain. 82% manufacturers surveyed by FoodDrinkEurope said they were implementing a strategy to ensure the sustainable sourcing of their ingredients. And 90% said they were already working actively to reduce emissions along the food chain by working with farmers.

For food companies, one of the key incentives is to polish their image towards consumers by showing off their environmental credentials.

Over the past decade, a wide range of labels have flourished on supermarket shelves, including the European Eco-label, the Fair Trade logo, the Rainforest Alliance logo, and various carbon index schemes, which are now commonplace.

But this has also led to widespread confusion among consumers, which prompted regulators to call for greater clarity.

>>Read: Consumer watchdog slams ‘useless’ carbon footprint labels

“Consumers faced with hundreds of different environmental labels and claims are confused and lose confidence in their credibility,” said Janez Potocnik, the EU’s former Environment Commissioner who steered the European Food Sustainable Consumption and Production Round Table, a joint initiative with industry to harmonise the way labels are elaborated.

“We want to put an end to consumers seeing inconsistent environmental information on products,” said Pekka Pesonen, Secretary General of farmers association Copa-Cogeca, when the forum was launched in 2009.

But progress since then has been sluggish.

The Round Table’s main achievement was the publication of a global methodology for calculating the environmental footprint of food and drink products, which was formally agreed in January 2014. On the regulatory side, the executive followed up by issuing a non-binding recommendation on how to measure and communicate the environmental performance of products.

For environmental groups, this was no less than a damp squib.

To be fair, slow progress was partly justified by the sheer complexity of calculating the environmental footprint of food. The task has proved tricky because it involves measuring greenhouse gas emissions throughout the entire lifespan of a product —from farming to processing, shipment and waste. And there are other factors to consider, like the impact on water or biodiversity, which add to the complexity of harvesting reliable data.

“The challenge is to combine different environmental indicators because you cannot have just one parameter,” said Nestlé’s Gréverath who represents the food industry at the SCP Round Table with the European Commission.

“For electric appliances, it’s energy consumption —easy. But if you take food, there are more parameters: water consumption, biodiversity impact, greenhouse gas emissions. And the challenge is to combine these dimensions which are all relevant, into a simple communication tool.”

Pilots

EU regulators tried addressing the issue by launching some pilots projects to assess the environmental footprint of specific products like beer, coffee, meat, pasta or packed water. Launched in June last year, the pilots are expected to conclude in 2017 with a harmonised methodology for each product category. The Commission will then review the pilots and decide what policy conclusions can be drawn.

Whatever methodology is eventually agreed, the debate will inevitably turn on whether to make it mandatory or not for food companies. And whether to make the information available on the pack in the form of a label.

For environmental NGOs, the answer is clear: governments should take a command-and-control approach. “The majority of labelling confusion could be avoided if the government established labelling requirements and certified that producers met the standards before the label could be used,” says Food and Water Watch.

The European Commission, for its part, has chosen a more cautious attitude, mostly because it fears implementation would be too costly for SMEs, a concern shared by Gréverath.

“This will be voluntary, I believe, not mandatory,” said the Nestlé executive, referring to the Commission recommendation, adopted in April 2013. He also warned against imposing a mandatory certification system, saying smaller food companies would not be able to afford it.

Rather, he believes some kind of grading system can be envisaged, “a little bit like you have already today for electric appliances, a grading from A, B, C to G.”

>> Read: EU wants carbon labels to do what they say on the tin

Gréverath says Nestlé ran a pilot in France two or three years ago, for its Nescafé and Nespresso coffee brands, which could serve as inspiration for a European-wide scheme. “We came up with three indicators: on water, greenhouse gas emissions and biodiversity impact. And we provided the information via a mobile phone application. Because everybody agreed this was too much information to put on the packaging.”

“In Europe, we have to see. I don’t know if it’s feasible to have one single parameter with grading from A to G.”

Background

According to the European Commission, the food and drink sector contributes to some 23% of global resource use, 18% of greenhouse gas emissions and 31% of acidifying emissions.

An EU sustainable food chain roundtable was launched in May 2009, bringing together policymakers, farmers, food and drink producers, packaging firms and consumer organisations to develop methodologies to measure the environmental impact of the food and drinks industry.

The round table’s main achievement was the publication of a global methodology for calculating the environmental footprint of food and drink products, which was formally agreed in January 2014. On the regulatory side, the Commission followed up in 2013 by issuing a non-binding recommendation on how to measure and communicate the environmental performance of products.

A series of pilot projects were subsequently launched by the Commission in June 2014 to assess the environmental footprint of specific products like beer, coffee, meat, pasta or packed water. Those are expected to conclude in 2017 with a harmonised methodology for each product category.

The Commission will then review the pilots and decide what policy conclusions can be drawn.

Further Reading