It is not about the label

Are policy, the expectation for it, and demand always necessary for a business to solve sustainability issues?

More or less. Small measures that do not really affect the producer’s core business may be done anyways without any of these drivers. A consultancy may, for example, work on climate change, because they do not have any emissions related to their core business and don’t have to change anything fundamental; all they have to do is pay a little bit more for their electricity and their transports. They may also have policies for every other of the UN sustainability goals, as do most companies. What about a company with a large climate footprint associated with their core business? If none of these three drivers is present, the company is called to increase the cost of production in a competitive landscape. Such a decision would impact their financial performance to an extent likely to put them out of business. This is an existing, great disincentive to take serious climate action.

Beyond incentives

If the incentive is there, the food producer sees a business-critical reason to start working on climate change. What happens next? They need to find a process to map out their production processes to understand which processes and suppliers cause their emissions. Once they have this information, they can start developing a plan for what to do to get from insight to action and, over time, lower their emissions.

A concrete road forward

When we founded CarbonCloud, our wish was –and is– to provide the tools and information the food industry decision-makers need to get clear insights, and to plan and coordinate their action. CarbonCloud is a platform aimed to enable food producers, who are not experts on climate science, to quickly and easily assess and quantify the climate footprints of their production processes and products, with explicit emission profiles and hotspot identification. The users of the platform rapidly identify which processes require more data and which production steps are crucial to reducing their climate footprints over time.

The platform is there to help these producers become climate experts on their specific products, help them develop more, and more climate-friendly products, procure climate-efficient ingredients, and plan their climate strategy. It is a platform for insight and for action. The platform puts the most up-to-date science and data in the hands of the producers and is built around supply chain optimization. All processes and products are measured using the same yardstick, to ensure that business decisions are based on the best possible information.

So why do we encourage labeling so strongly to our customers?

Is there any point in working actively with labeling if it does not solve the underlying problem? Yes, there is, for several reasons.

Transparency

The main reason we encourage labels is to create a trustworthy information channel from food producers to their consumers, where they can transparently communicate that they work on climate change as well as their progress. The labels are not only participation trophies but quantitative values to facilitate transparency in how well food producers perform. These quantifiable values hold producers accountable and enable consumers to navigate between products on that same ground: Which producer puts little effort into the issue and who is making major investments. The added value of the labels is that food producers leverage the consumer demand for climate-friendly products with a transparent and reliable communication channel; with information that makes a distinction between greenwashing and the real thing accessible to consumers.

In some industries, a consumer can easily tell which product or service solves the climate problem. It is obvious that an electric car does not run on fossil fuels, no further evidence is needed. Unfortunately, food does not work like that and that creates a need for a dedicated, transparent, and trustworthy channel of information. Our labels accompanied by web reports fill that function.

Transparency is followed by accountability. When the company claims to improve or be best-in-class, they need to back it up with data on the consumer-facing front. They can only look the best by being the best. Their consumers can start demanding further improvement and tell when it is delivered.

The labels and the end consumers do, however, play a role to help provide commercial incentives to this value chain by favoring and potentially paying a premium for climate efficient products. Still, putting labels on products does not immediately make a food brand transparent. For transparency to work, these incentives must ripple through the value chain to the players that really can make a difference for the end-product.

The information on the labels needs to be based on open, traceable, and compatible data across the value chain. 85-95% of the climate footprint and consequentially the actions needed to happen for a climate-friendly food industry to become a reality, will need to happen at the supplier level. The value chain is often divided into several steps between agriculture, traders, refiners, etc. This has a serious implication on food brands: 85-95% of the transparency and trust needed going forward has nothing to do with labels and the end-consumer; it lies between business partners in the complex supply chain of the food industry. This is where CarbonCloud provides a unique solution. The labels you see indicate that this process is ongoing.

Commitment

The labels also work to create strong anchoring within the organization. A food brand that decides to put climate labels on their products not only tells their consumers that they work on climate change; they also tell their employees that they are an organization that define themselves as forward-leaning and leading the way towards the future. They show that climate performance improvements will be prioritized in future business decisions. When done right, this permeates the culture of the company and it becomes part of their identity; they start focusing on solutions rather than the problem. They commit to climate change now being part of their revenue machine.

Virality and norm change

A company that builds transparent climate performance into their brand with climate labels tells their competitors and the rest of the industry that solving climate change is consistent with running and growing a business in the food sector. This creates changes in norms and influences other brands to follow suit. Consumers play a part in this development, as they increasingly demand climate footprint information in the name of transparency, similar to nutritional information and comparable prices.

Policy

Politicians usually introduce policies when they perceive that they will get support from the public and the industry. Climate labels on products tell policymakers that the industry takes climate change seriously and that there are companies already committing to a zero-emissions trajectory. This paves the way for the policies needed to get all the not-so-forward-thinking companies to realize that climate change must be taken seriously. Of course, whenever these policies get implemented, the companies that have already let climate change influence their business decisions for years, will get a strong competitive advantage over those that are late to the game.

In summary, it is not about the labels – not at all, but the labels play a part in getting us to what it is all about – a climate strategy taken seriously by the food producers. Food consumers need to take climate change seriously if we are to solve the climate crisis. We cannot underestimate the impact of momentum-creating activities that lead the way for the industry. These activities are showing competitors, consumers, and policymakers that we can do something about the climate crisis – it is just a matter of political will and calmly taking each individual step along the way.