The Association for Sustainable Food and Agriculture in Poland, together with Accenture, conducted a survey in the first quarter of 2024, the results of which show what ESG measures are being taken by agri-food companies in Poland to manage their carbon footprint in the supply chain.
The results of the study show that the carbon footprint from direct Scope 1 and Scope 2 emissions is measured by 90% of the surveyed agri-food companies operating in Poland. This may seem like a good result, but the vast majority of emissions in the food industry are generated in the supply chain (Scope 3). On average, these emissions can account for around 90% of a company’s total emissions, and only half (55%) of the companies surveyed reported that they were measured.
In addition, only 17% of companies that claim to measure Scope 3 emissions do so based on actual data from their suppliers. For the rest, this measurement is overwhelmingly based on statistics and estimates rather than information obtained directly from suppliers. Significantly, the Association for Sustainable Food and Agriculture in Poland and Accenture surveyed sustainability leaders in the agri-food sector with annual revenues of more than PLN 200 million. This means that measuring Scope 3 indirect emissions, which account for more than 90% of total emissions, is a challenge even for the largest food companies in Poland.
The results of the survey, together with information directly from companies, show that the majority of agri-food companies do not count their Scope 3 carbon footprint, and those that do rely mainly on statistical data rather than actual data from their suppliers. Statistical indicators change, so it happens that – even if a company’s situation is stable – its reported emissions levels increase dramatically. This is quite a problem for companies that have set emissions targets.
– says Adam Kopyść, board member of the Association for Sustainable Food and Agriculture in Poland.
The challenges of measuring Scope 3 emissions for the food industry are primarily related to the need to obtain data directly from raw material suppliers – farmers and growers. This is an essential first step in determining their own indirect Scope 3 emissions. Without the involvement of suppliers, it will not be possible to collect this information, and as these emissions represent on average around 90% of companies’ total emissions, this is where they can potentially achieve the greatest emission reductions. More than half of the companies surveyed said they had already set emissions reduction targets in their supply chain more than two years ago, but three out of four respondents have no idea what, if any, emissions reduction targets their suppliers have set, and only 9% of respondents say that half of their suppliers have a plan for a low-carbon transition. This means that at this stage of ESG strategy implementation, agri-food companies are still grappling with the issue of measuring emissions themselves, which means there is still a long way to go to reduce them.
One way of dealing with emissions in the supply chain has been through an offsetting mechanism, whereby greenhouse gas emissions are compensated for with so-called carbon credits. However, the European Commission and the European Parliament explicitly recommend that Scope 3 reductions, i.e. reductions in one’s own supply chain, should be prioritised over the use of carbon credits. The former gives greater credibility to environmental measures. Therefore, the future of reduction is primarily about working closely with suppliers to reduce emissions in our own supply chain (insetting) rather than offsetting them (offsetting).
Actual data on, for example, emissions from the farms a company works with is much more reliable and therefore more valuable than statistical data. It provides the opportunity to document real reductions in greenhouse gas emissions. In addition, relying on actual data from suppliers avoids accusations of greenwashing.
– points out Malgorzata Bojańczyk, Director of the Association for Sustainable Food and Agriculture in Poland.
There are significant challenges associated with reporting data from a company’s supply chain. The most important remains obtaining reliable data from suppliers, including farmers. It is therefore necessary to work with suppliers, supporting them with knowledge, tools and incentives to count their emissions. The majority of companies surveyed rely on a variety of digital solutions to report supply chain data. However, only one in four companies surveyed has a fully digitised supply chain, which is unfortunately another barrier to data collection and analysis. The largest players in the food production and processing sector often work with up to several thousand farms scattered across the country. Without appropriate technological solutions, it is difficult to see how emissions data can be collected effectively.
The survey results show that the biggest challenge in reporting supply chain data is the lack of knowledge and motivation of employees and business partners. Obviously, these barriers can be overcome. It is important to raise awareness among the people and institutions involved in the reporting process. Technology can play an important role in helping to collect, interpret and understand data in a structured way. In addition, the use of artificial intelligence solutions can not only speed up the process, but also help define recommendations for necessary actions.
– emphasises Krzysztof Ślęczka, Consumer Goods & Services Managing Director at Accenture.
The reporting of ESG indicators by companies is under increasing scrutiny. This is best evidenced by the European Commission’s legislative initiatives, including plans to introduce financial penalties for greenwashing. However, this is still hampered by low levels of engagement with suppliers, the use of statistics rather than actual data to calculate emissions, the lack of digital solutions, but also – insufficient focus by companies themselves on emissions in their supply chain.
The road to a truly low carbon chain: recommendations:
- Calculate your Scope 3 carbon footprint, which for critical for the agri-food industry, using actual data from your suppliers, not statistics. Start with those suppliers whose operations have the highest carbon footprint.
- Set emission reduction targets in your company’s supply chain and try to get your suppliers to do the same. Support them in doing so.
- Focus on reducing emissions in your supply chain, not on carbon credits.
- Invest in specialised digital solutions and the right expert support to enable faster, more convenient and more accurate collection and reporting of emissions data in the supply chain.
- Don’t forget to educate consumers.
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The research included qualitative interviews with 11 leading agri-food companies from sectors including dairy, butchery, beer, fruit and vegetable processing, food logistics and distribution, and fertilisers, as well as analysis of data from over 80 of the largest agri-food companies in Poland. In particular, information on Scope 3 provided by these companies in their sustainability reports and public communications was taken into account.