Ceres’ New Guide to Aid U.S. Food Sector’s Climate Transition Plans
The report is part of the Ceres Food Emission 50 initiative, an effort focused on decarbonizing the nation’s food sector as investors ramp up pressure.
A new report recently released by the sustainability nonprofit Ceres reveals few companies in the U.S. food sector have disclosed their climate transition strategies nor concrete actions to achieve them, despite increasing investor pressures and the growing threats of climate change. The Investor Guide to Climate Transition Plans in the U.S. Food Sector provides the most comprehensive guidance to help food companies move beyond target-setting to creating and implementing sector-specific climate transition plans that chart pathways to greenhouse gas emissions reductions.
It outlines how, despite greater corporate climate disclosure and commitments to greenhouse gas emissions reduction targets, net zero targets and other climate-related goals, many companies fail to adequately disclose sufficient information to investors on how they intend to achieve said ambitions. The quality of consistent disclosure currently varies greatly due to the high-level nature of existing guidance and a lack of clear consensus on what climate transition plans should include, leading to a clear transition disclosure gap.
The report also includes in-depth analyses of key food sector sub-industries such as packaged foods and meats, food distribution, food retail and hypermarkets/supercenters and restaurants. It contains a framework to help investors assess corporate climate transition plans in this sector, including guidance on evaluating corporate emissions disclosure, emissions reduction targets and climate transition strategies and actions.
“The food sector is a critical player in the transition to a net zero emissions economy, but the sector as a whole has been slow to translate emissions reductions targets into action,” said Julie Nash, senior program director for Food and Forests at Ceres. “There is no one-size-fits-all approach to climate transition plans, but this new Ceres report offers the support and context needed by companies and investors alike to move into the next phase of corporate climate stewardship. As momentum grows to standardize climate-related disclosures, such as the proposed rule from the U.S. Securities and Exchange Commission, it’s in everyone’s best interest to get ahead on disclosure and action planning.”
The food sector displays a continued lack of progress when it comes to climate commitment disclosure. As of January 2022, only 21 of the 50 highest greenhouse gas-emitting North American food companies tracked by the Ceres’ Food Emissions 50 initiative have set any short-term emissions reduction targets inclusive of scope 3 emissions, the largest source of emissions in this sector. None have published a climate transition plan. The global food system is responsible for approximately one third of global emissions and the Intergovernmental Panel on Climate Change recently outlined how global temperature rise stands to negatively affect the global economy, food security and both human and planetary health.
The report is primarily intended to support investor engagements with companies that have already disclosed their full-scope greenhouse gas emissions and have set 1.5°C greenhouse gas emissions reduction targets that cover Scope 3 emissions; without these foundational elements in place, companies face the risk of creating plans that are not ambitious enough to truly mitigate climate change. Investors can also use the guidance to engage companies by emphasizing the importance of getting ahead of forthcoming guidance and standards by preemptively aligning their actions with more ambitious standards.
“Decarbonizing the U.S. food sector is key in our efforts to limit global temperature rise to no more than 1.5 degrees,” said Mary Beth Gallagher, Director of Engagement at Domini Impact Investments. “It is not a simple matter of just purchasing renewable energy, we need to see clear evidence of how companies are scaling their climate ambitions and actions. This report gives a framework to help investors evaluate the credibility and authenticity of the full business model alignment to a net zero emissions future, including through procurement, operations, and capital expenditures.”
The report was developed with input from investor signatories of Ceres Food Emissions 50 initiative, food companies, and an expert advisory committee. Food Emissions 50 is Ceres’ strategy for reducing emissions in the food sector as part of the Ceres’ Ambition 2030 initiative, a broader effort to decarbonize six of the highest-emitting sectors in the U.S. by the end of the decade. Investor signatories to Food Emissions 50 seek to move companies to improve their greenhouse gas emissions disclosures, set ambitious emission reduction targets, and implement ambitious climate transition action plans in line with the Paris Agreement.
“As investors wake up to the economic impacts of climate change and treat corporate climate strategies with increasing scrutiny, food companies will need to develop tailored plans that inform business decisions at every level of operations,” said Kate Monahan, a Director of Shareholder Advocacy at Trillium Asset Management. “Companies and investors are actively seeking support and guidance on how to move into the next phase of corporate stewardship. The recommendations contained within this report will help investors – and in turn, the companies in which we invest – create measurable targets against which progress can be tracked and assessed.”
Forthcoming research through the Ceres Ambition 2030 initiative will provide further guidance on climate transition plans for other priority high-emitting sectors.
Ceres is a nonprofit organization working with the most influential capital market leaders to solve the world’s greatest sustainability challenges. Through our powerful networks and global collaborations of investors, companies, and nonprofits, we drive action and inspire equitable market-based and policy solutions throughout the economy to build a just and sustainable future. For more information, visit ceres.org and follow @CeresNews.