Retailers climate targets – What are the requirements dripping down to food suppliers?

When we asked food product and brand owners what their biggest pains are, their response was loud and clear: Retailers. Getting listed, pitching, branding, competitive edge… climate targets and requirements. Climate footprints are already today a foot in the door, but looking at the retailers’ climate targets, tomorrow they will be a must-have. We dug not-so-deep into the sustainability pages of the largest retailers in the US and the UK and saved you the trouble of researching the climate requirements for the suppliers of the largest retailers.

What can you do today to avoid running for your listing tomorrow? Prepare a ready-to-present emissions profile and reduction targets. As you will see from the retailers themselves, a climate strategy is an organized route with continuous landmarks. Before anyone asks you to reduce your climate footprint, they will ask whether you know it. This way, when the time comes for your pitch, you will be apt to present the very important first step, your climate footprint. Continue with locating where the largest impact lies in your supply chain and start with the low effort/high reward parts.

Costco

In its Climate Action Plan, the American giant outlines its holistic approach to sustainability. Notably, Costco says:

While we are committed to urgent actions to reduce carbon emissions, we also understand the importance of addressing other systems change issues that impact our business such as human rights, life above land and below water, water conservation, diversity and inclusion and reduction of waste. Meaningful climate action takes into account all of these issues because all of these issues are interconnected.

Costco’s targets include calculating their Scope 1, 2, and 3 emissions over the course of the next 3 years (2022-2024). Smartly, the focus of the company is on the parts of their value chain with the largest reduction impact.

What does this mean for brand and product owners? Food suppliers to Costco fall under Costco’s Scope 3 emissions. Currently, the company is developing a Scope 3 inventory and will follow up with an action plan. Keep your eyes and ears open for more news by the end of 2022!

Walmart/Sam’s club

Walmart, including its child organization Sam’s Club, has set a net-zero target by 2040 and it is counting on suppliers to get there. Under Project Gigaton, Walmart suppliers will have to reduce their supply chain emissions by 1 billion metric tons by 2030.

Specifically, Walmart breaks down its Scope 1,2, and 3 targets. Regarding Scope 1 and 2, the retailer aims to reduce greenhouse gas emissions by 35% by 2025. On a second axis, compared to 2015 emission levels, the reduction target is 65%. When it comes to Scope 3, Project Gigaton aims to engage suppliers to reduce their emissions. Walmart makes resources available to get suppliers started with climate calculations and set their own goals.

Amazon/Whole Foods

It’s no news that Amazon is more than another e-commerce platform. With the acquisition of Whole Foods in 2017 and with the e-commerce platform Amazon Fresh, Amazon signals a sharp focus on the grocery market; its focus on a quantified climate strategy is present but teetering.

Amazon has formulated its corporate – Scope 1 and 2 – goals in quantified targets. Notably, net-zero across their operations by 2040, 50% net-zero shipments by 2030, using 100% renewable energy by 2025, and an investment pot of over $2 billion for decarbonizing technologies, services, and climate mitigation solutions.

Nevertheless, Amazon’s goals on Scope 3 –the overwhelming majority of their emissions– are rather loose. Amazon “encourages” suppliers to go beyond compliance and minimize their climate impact but “requires” them to follow reporting requirements.

Amazon seems to have some way to go toward supply chain transparency, however, we are staying tuned because the air of a maturing climate strategy is blowing over at Amazon: The company committed to near-term targets with Science Based Targets initiative and is expected to announce its goals and strategy in 2022. 

Kroger

Kroger has set a 30% cumulative emission reduction by 2030. The retailer has an extensive sustainability plan. It focuses on waste reduction, packaging, and a commitment to eliminate deforestation in sourced materials and products by 2025. Kroger is working on more specific Scope 3 emission targets, expected to be announced soon.

Ahold Delhaize

Ahold Delhaize is another retailer with an extensive climate plan. The targets include a 50% reduction of Scope 1, 2, and 3 emissions by 2030. By 2040, the Scope 1 and 2 target is net-zero. The retailer also commits to net-zero in Scope 3 emissions by 2050.

Ahold Delhaize aims to engage suppliers in reducing their climate footprint as well as increase climate transparency at store shelf and in the brand’s loyalty apps. They note:

Our brands can help people further understand the impact of their buying decisions and enable them to make choices that fit their needs, their tastes, and their values.

A detailed action plan regarding their Scope 3 emission reduction will follow within 2022. The action plan will include interesting incentives for their climate-savvy suppliers such as longer-term contracts with concrete environmental requirements and co-investments on supplier farms to reduce emissions for agriculture.

Target

Target is another player who joined Science Based Targets (SBTi) in 2019 with a commitment to reduce its Scope 1, 2 greenhouse gas emissions by 50% and Scope 3 emissions by 30% below 2017 levels by 2030.

What is interesting is that Target is asking suppliers to set science-based reduction targets on their Scope 1 and 2 emissions by 2023 – that’s the end of next year!

Waitrose/John Lewis Partnership

On the other side of the pond, John Lewis Partnership, the parent company of Waitrose also signed up with Science-Based Targets. The company has committed to going net-zero across its operations by 2035 – without offsetting! Moreover, John Lewis partnership is looking to reduce its climate footprint beyond its operations and across the value chain, starting with agriculture. Someone knows what they are doing…!

The organization is currently on the risk assessment phase and will follow up with specific metrics and targets.

Tesco

The climate trailblazer among retailers was the first to set zero carbon goals back in 2009. Tesco has since refined its climate strategy and committed to net-zero by 2035 in Scope 1 and 2 and by 2050 in Scope 3.

Tesco has already calculated its climate footprint for Scope 1 and 2, cradle-to-shelf. Additionally, it aims to work closely with its suppliers to reach this ambitious goal. The retailer is preparing to release its Scope 3 climate roadmap to net-zero which will include key actions required in its supply chain.

Co-op

Co-op has ambitious goals with a shorter timeline than most. The short-term goals are a 50% reduction in Scope 1 and 2 and an 11% reduction in Scope 3 by 2025! The long-term goals are even more ambitious with a net-zero target for all scopes by 2040. The retailer already has verbalized its roadmap in its 10-point climate plan. The plan includes a point aiming to make it easier for consumers to choose products with a lower climate footprint.

Moreover, Co-op seems to recognize how critical it is that the climate strategy becomes an integral part of business operations. Two more points listing set financial resources to reduce climate footprint as well as the salary of its Food CEO being linked to achieving climate targets. Talk about serious business!

Sainsbury’s

Sainsbury’s is another retailer with a well-thought-out climate plan. The retailer accelerated its net-zero goal in Scope 1 and 2 by 2035, five years earlier than the previous commitment. Regarding Scope 3, the goal is a 30% reduction of greenhouse gas emissions by 2030 and a net-zero target by 2050.

Already last year, Sainsbury’s reached out to 400 of its top suppliers to disclose their carbon reduction targets.

Morrisons

A similar ambition is present in Morrisons, who also accelerated its net-zero plan in Scope 1 and 2 by five years, now aiming for 2035. The retailer has also committed to supporting its suppliers in reaching the Scope 3 emission reduction target of 30% by 2030.

Moreover, Morrisons has committed to zero deforestation across its supply chain by 2025 and aspires towards net-zero carbon agriculture by 2030.

Asda

As Asda notes in its comprehensive sustainability report, the retailer has eloquent emissions goals in all scopes and shows significant reduction in progress. In Scope 1 and 2, ASDA aims to half its direct GHG emissions by 2025 and has also committed to net-zero with Science Based Targets initiative.

Asda is currently reporting on 4 Scope 3 categories and committed to establishing a measurement methodology, publishing the footprint, and announcing reduction targets along the supply chain before 2025. At the moment, Asda is engaging with key suppliers to map out their emissions.

On the consumer front, Asda ups the ante. One of the retailer’s commitments is to enable its customers to shop more sustainably. This commitment entails partnering with the industry to solve the climate impact measurement problem and find a consistent way to communicate the environmental impact of the products on the shelf. Asda closes with a promise to keep us posted and quantify their goals.

Pssst Asda! How can we tag you in this? Did you know that the reason Initial Mapping was born was to solve the measurement problem? Check it out!

Aldi

Aldi is already calculating its Scope 1 and 2 climate footprint to reach its goal of 26% emission reduction by 2025. The retailer is taking a climate directive with its Scope 3 reduction, asking suppliers to set Science Based Targets by 2024.

A year later, in 2025, selected Aldi suppliers should prepare to implement climate footprint reduction projects in their own operations. Some of Aldi’s high-priority supply chains include cocoa, coffee, nuts, tropical fruit, and seafood.

Where do I, an apt-albeit-somewhat-stressed product owner fall into this?

Excellent question – food suppliers to all the retailers above fall under the Scope 3 targets of each retailer, i.e. their indirect emissions. What should be highlighted here is that most retailers are transparent about the challenges of calculating their Scope 3 emissions but are committed to reducing them. The key to addressing Scope 3 and retailers’ headaches is prepared suppliers, ready to submit their climate footprint – that is the real competitive advantage for a listing and a strong relationship with retailers. After this point, retailers are prepared to incentivize their suppliers to reduce their emissions – and who couldn’t use that help.

The good news for food producers is that getting a start with a climate strategy and having your climate footprints ready for submission is a strong signal and foot in the door of your listing. They don’t call it a strategy for nothing! How’s your climate strategy?