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As we start 2024, let's reflect on 2023—a crucial year for consumer brands striving to meet sustainability goals. A year where more consumer goods companies transitioned more of their plan from talk to real action, where action was scaled across more of their extensive supply chains. And although the clock turned and one year became the next, that movement from talk to action is going to continue marching right on. Because although 2030 once felt like a far off year, it’s now only six calendar years away.
Let’s explore three important lessons about sustainability from 2023 and how consumer brands can use these insights in their efforts to be more sustainable.Getting Better, Step by Step
On one of the slides he was presenting at Climate Week NYC in September 2023, Max DuBuisson, the Head of Sustainability and Policy Engagement at Indigo Ag, had one line that continued to resonate: “Continuous Improvement is a Feature, Not a Bug.”
It’s a phrase that hit home because, deep down, many of the biggest CPGs are hard at work making things better and are trying to remain optimistic that they can reach their goals in time. People want to improve the rules, be more accurate, and focus on being sustainable and clear instead of rushing and not achieving the right result. It shows that the industry is committed to using the tools they already have while always working to be more sustainable and transparent. Good things take time.
A parallel tension emerged from the North American Carbon World event, hosted by the Climate Action Reserve in March 2023. The event highlighted the pressing need for collective and coordinated action among companies striving to achieve sustainability goals. It acknowledged the challenges in accounting for carbon insets versus offsets and underscored the complexities corporations encounter in reaching their greenhouse gas reduction targets.
Untangling the intricacies of intervention and inventory accounting within supply chains can be complicated. This complexity is compounded by a lack of understanding of the various terminologies used to describe these processes. Although efforts were made to enhance clarity this year, it remains a work in progress.
On the bright side: Coming out of COP28, it was clear to Indigo’s Meredith Resifield, who focuses on sustainability policy and strategic partnerships, that 2023 represented a major moment for transitioning food systems to regenerative models. Action on food and agriculture had long stood in the shadows of climate negotiations despite accounting for a third of global emissions and being highly vulnerable to climate change. Global policy commitments and announcements of new funding, initiatives and industry coalitions have elevated the topic to a new level on the global climate stage.Teaming Up to Reduce Emissions
For companies that have made progress setting their science-based targets for Scope 3 but are unsure how to turn these targets into an actionable plan, last year was the time of continuing to scale productive partnerships all over their supply chains. It seems the only way to combat uncertainty is to do it as a team. These huge emissions reduction goals won’t happen overnight—and they won’t happen alone.
But let’s back up: why start by reducing agricultural emissions within a company’s supply chain? As Chris Malone, Vice President of Strategy at Indigo points out, agricultural raw materials are a great place for food companies to start. It may seem counterintuitive to start with the emissions furthest from what’s normally thought of as the company’s main operations—where the food and beverages are packaged—but agricultural land is where the greatest opportunity is for impact. There is the potential to dramatically reduce an emissions footprint, and in some cases the agricultural land can even become a carbon sink through carbon removals.
The ideal strategy for encouraging farmers to grow crops more sustainably is to approach the person who already purchases those crops. This person, or their customer further down the supply chain, is actively seeking sustainability attributes. Therefore, the most effective approach is to directly collaborate with the agribusinesses situated at the core of this agricultural ecosystem. This has been a core motivation for successful emissions reductions programs we have seen put to work again in 2023 from Walmart, AB InBev, and Nestlé. Partnering with agribusinesses trusted by farmers is key in building durable, sustainable solutions at scale for food and beverage companies going forward.
Farmers Are the Ones Cultivating Change
The agricultural landscape is unmistakably shifting towards two new and important goals: reducing carbon emissions and enhancing carbon sequestration. This transformation is propelled by the widespread adoption of regenerative farming practices, including no-till methods, cover cropping, diverse crop rotation, and agroforestry.
The adoption of these practices receives substantial support from the significant growth in market opportunities for carbon sequestration available to growers. These opportunities range from earning carbon credits to participating in USDA-funded climate-smart commodity projects and contributing to the reduction of Scope 3 emissions in the supply chain of the world’s leading food and beverage companies.
When companies consider reducing emissions in their supply chain, it's essential to recognize that on the other side, there's a farmer contemplating ways to decrease fuel consumption and input usage on their farm—or undertake other impactful practice changes that lead to healthier land, cleaner water, and more resilient ecosystems. The aspiration is to ensure that the efforts on both ends receive fair acknowledgment and contribute equally to the shared objective.
As Minnesota farmer Tom Cotter points out, “At the end of the day, farmers want to earn fair compensation for the value they provide, rather than a handout. It is still about hard work and a fair share.”
Similarly, farmers seek a clear understanding of the changes that companies desire them to make. They want assurance that these changes will significantly benefit them, encompassing aspects like carbon sequestration, emission reduction, improved water quality, and enhanced wildlife habitat. It needs to benefit both the land and the business, including the farm and the company making food or beverages from the farm's raw materials.
While some farmers are already participating in climate-smart opportunities, the adoption of regenerative practices isn’t progressing rapidly or reaching a broad enough scale (yet) to surpass the impacts of climate change in the agriculture industry. To encourage more farmers to adopt or increase the use of regenerative practices, climate-smart programs need to prioritize the economic and societal well-being of farmers, ensuring that these benefits are at the forefront of their initiatives.
Ariel Kagan of the Minnesota Farmers Union points out, “Farmers want climate resilience—the agronomic and on-farm benefits of climate friendly practices. Clarifying those benefits and how to best achieve them in local settings will help farmers engage.”
As we step into 2024, these insights will serve as valuable guidance for companies with ambitious sustainability goals that might feel overwhelmed. The focus is on making gradual improvements, fostering collaboration, and acknowledging farmers as crucial contributors. The journey to 2030 may seem challenging, but with dedication and teamwork, the consumer goods industry can move towards a greener and more resilient future.