Supply Chain Decarbonization – Paving way for a Sustainable Future

IPCC’s 2021 report issued a strong warning that climate change impacts are happening at an unprecedented rate which can only worsen if we are unable to reduce the GHG emissions and limit the warming to 1.5˚C. The Corporate net-zero targets will not be achieved without addressing the Supply chain emissions. The food supply chain is a major contributor to GHG emissions and decarbonization of supply chain is vital to address the climate crisis.

According to FAO, the global food systems is responsible for about a third of the GHG emissions, mainly from agriculture activities, transport, packaging and waste. 

Supply chain decarbonization is critical to reduce carbon emissions in agriculture, mitigate the impacts of climate change and achieve the sustainability goals. Let us explore the importance of decarbonizing the food supply chains, challenges involved, the strategies necessary to help in transiting to a sustainable and resilient food system and the benefits of reduced emissions, improved food security and enhanced economic opportunities. 

The Food and Agriculture Supply Chain 

The food supply chain is a complex network of processes that start with production and ends at consumption. The supply chain starts with agriculture production, processing, packaging and retail. All these activities generate GHG emissions and contribute to climate change. 

The key stages that appear in the food supply chain are

Agricultural Production 

This is where the raw materials are sourced, and the food crops are cultivated with practices that ensure food quality and safety. The activities could include crop cultivation, livestock farming and aquaculture. The harvested produce is stored and treated carefully before it goes for further processing. This stage contributes to 11% of global GHG emissions. The main source of emissions are from enteric fermentation, manure management, synthetic fertilizers and rice cultivation. The use of fossil fuels in farm machinery and irrigation also contribute to the emissions. 

Processing and Packaging 

The food is processed and converted to edible form. The processing activities are energy intensive and rely on fossil fuels that contributes to GHG emissions. The processed product is packed to be sent for distribution. Packaging is essential as it helps to protect and preserve food products during storage and transportation. The production of packaging materials like plastic requires energy and resources that contribute to GHG emissions and the disposal of packaging waste can lead to environmental degradation. The processing stage accounts for 15% of global GHG emissions. The packaging stage accounts for 5% of global GHG emissions. 

Distribution 

The packaged food is transported and distributed to retailers or suppliers. Transportation is critical in a food supply chain as it involves the movement of raw materials and finished products from farms to processing units, warehouses and retail outlets. Transportation is normally powered by fossil fuels that contribute to GHG emissions. Some products require cold storage and refrigerants that add to the emissions generated. Transportation accounts for 14 % of global GHG emissions. 

Retail and Consumption 

The final products are sold to the consumer through retail outlets. Retail outlets require energy and resources for lighting, heating and cooling. The food waste generated by retail also contributes to the GHG emissions and environmental degradation. The retail stage accounts for approximately 3% of global GHG emissions.

Climate Impact on Food Systems 

Our food systems are under global threat due to overpopulation, urbanization and climate change. Food insecurity has been on the rise globally due to climate changes. Global warming is influencing weather patterns resulting in heat waves, droughts and floods. The rising prices are pushing about 30 million additional people towards food insecurity. Food production generates a third of global GHG emissions. 

Climate change causes adverse impacts on food supply chains like water scarcity, heat stress and increased prevalence of pests and diseases. Deforestation of agriculture land, excessive usage of fertilizers and pesticides, unsustainable water usage all contribute to GHG emissions, soil degradation and biodiversity loss. The usage of fossil fuels in transportation and packaging contributes to the negative impact on environment. 

There are further negative socio-economic impacts with the vulnerability of smallholder farmers unable to compete with large farms leading to poverty and food insecurity. Food wastage that accounts for 8 % of global GHG emissions is another major concern which results in wastage of resources and increased food prices. Droughts, floods and extremities in weather disrupts food production and distribution leading to food insecurity and market volatility. 

Indian Agriculture battles climate change. The weather events of 2022 and possibility of similar experiences in 2023 poses a threat to the country’s food security. 

IPCC’s Climate Change Report 2022, states that India is one of the vulnerable nations for crop production. Droughts and heatwaves will affect crop productivity and farmer incomes. 

Reducing the carbon emissions in agriculture is essential to mitigate the negative impacts of climate change.  This involves reducing GHG emissions throughout the entire supply chain from production to consumption. To reach net-zero, businesses across the globe must address their Scope 3 supply chain emissions. They need to influence supplier behaviors, operations and investments.

Decarbonizing the Supply Chain 

Decarbonizing the food supply chain is critical for achieving the global sustainability goals and mitigating the impact of climate change on our planet. This not only provides environmental benefit but also has social and economic benefits. It can promote food security, improve public health and sustain livelihoods of marginal farmers.

Decarbonizing the supply chain requires a combination of strategies to reduce GHG emissions and mitigate climate impact. 

Reducing Food Waste 

Production, transportation, and handling of food generate significant carbon emissions. Food waste represents about half of this footprint and the food that ends up in landfills releases methane, a potent GHG that is 25 times more potent than carbon dioxide. 

The strategies that can be employed to reduce food waste is to improve supply chain efficiency, reduce packaging waste, streamline inventory, real-time track and trace and encourage consumers to make conscious purchase decisions. 

Implementing Regenerative Practices 

Regenerative agriculture practices like No-tillage, Crop Rotation, Cover Crops help to sequester carbon and reduce the GHG emissions. These regenerative practices increase soil health and soil fertility by increasing the soil organic carbon in them and also help in protecting biodiversity and water resources. Healthier soils are resilient to climate impacts and promote increased crop yields thereby improving farmer livelihoods. 

Nestle is investing 1.2 billion CHF by 2025 to spark the regenerative agriculture across their supply chain. It proposes to source 20% of the ingredients through regenerative agriculture methods by 2025.

Improving Transportation 

Transportation accounts for a significant amount of GHG emissions in the food supply chain. Reducing food miles, using electric vehicles and optimizing transport routes can build in efficiency in the system and reduce the emissions. Transit to zero emissions transportation and increasing public transportation can also reduce pollution. 

Walmart operates one of the largest and safest fleets adopting new fuel solutions like renewable natural gas, hydrogen and electric. Walmart has been able to reduce transport emissions by 14%. 

Promoting Plant-based Diets 

Plant-based diets have a lower carbon footprint than animal-based diets since animal agriculture is a significant contributor to GHG emissions. Transitioning to plant-based diets has the potential to reduce diet related land use by 76% and GHG emissions by 49%. Consumers need to be made aware of the benefits of plant-based diets which are good for their health and that of the planet. 

Unilever has been committed to offering products that enable plant-based diets. This has been helping consumers transit to sustainable diets. 

Transitioning to Renewable Energy 

Switching to renewable energy sources like solar, wind and geothermal energies can significantly reduce GHG emissions. Processing and packaging stages that consume a lot of energy from fossil fuels can transit to renewable power. 

General Mills commits to 100 % renewable electricity globally by 2030 as a part of its corporate initiative. 

Companies and organizations that have implemented these strategies and those that plan to do so can be an inspiration for others to take similar actions.

Challenges and Opportunities 

• Economic Challenges 

Decarbonizing food supply chain can be costly as there could be barriers to adoption of regenerative practices and also renewable energy. 

• Social Challenges 

Changes in consumer behaviour towards reducing meat consumption is challenging. People may be resistant to change and purchase locally sourced foods. 

• Political Challenges 

Decarbonization of food supply chains require policy changes at local, national and international levels. There may be resistance from industry groups and lack of implementation policies. 

There are many decarbonization opportunities for food producers, processors and consumers. These need not drive costs up or reduce margins for companies. However, it requires considerable amount of collaboration among the stakeholders in the supply chain. Sustainability soon can drive vertical integration in food value chains. This would entail food brands taking control of the upstream value chain and also farmers moving further down to bring in sustainable food concepts to market ensuring due compensation. 

TraceX is building Carbon management solutions to help companies accelerate their decarbonization journey. Trace CO2 module provides granular level of measurements in Scope 3 emissions, capturing of baseline scenarios and giving accurate insights into the reduction strategies and a robust reporting and verification system. The solutions leverage the power of blockchain to bring accountability and credibility into carbon accounting and management. 

Conclusion 

Decarbonization of the food supply chain is essential to mitigate climate change and achieve the sustainability goals. Reducing the GHG emissions in the supply chain help to protect the planet, improve public health and create a healthy economy. By reducing the emissions at each stage of the food supply chain, we can protect the soil ecosystem and biodiversity. 

Decarbonization of food supply chain can generate economic benefits like increased efficient, reduced food loss and better job opportunities. Prioritizing sustainability gives companies an extra edge in meeting consumer’s demand for environmentally friendly products.