Delivering Net Zero for food and drink
Emma Piercy outlines how the Food and Drink Federation’s new Handbook for Net Zero can help food and drink manufacturers develop strategies for achieving decarbonisation and reaching Net Zero targets
As global warming intensifies, so too will the frequency and intensity of wildfires, flooding and droughts. This will place an increasing strain on food systems with international supply chains coming under growing pressure from regions under greater environmental stress. The global food system already constitutes 26% of greenhouse gas (GHG) emissions worldwide and therefore has a significant impact on the environment and global warming1.
Indeed, as DEFRA recently stated in its 2021 Food Security report, the biggest medium to long term risk to the UK’s domestic food production comes from climate change and other environmental pressures2, reinforcing the imperative to address both the causes and consequences of climate change and to reduce emissions to Net Zero.
Industry recognises this risk as highlighted in the 2020 Sustainability Leaders survey3, where climate change was the highest rated urgent indicator by 94% of experts, closely followed by biodiversity loss and water scarcity (at 86 and 84% respectively) with food security rated by 75% as urgent. COP26 in November 2021 also played a huge role in shining a light on the challenges facing food systems globally and the critical role they can play in helping to achieve the millennium Sustainable Development Goals.
The UK food system employs around 4.3m people covering the whole ‘farm to fork’ supply chain, from the growth of agricultural products on farms and imported foods, to the provision of food in people’s homes. Food and drink is the largest UK manufacturing sector – more than automotive and aerospace combined – accounting for almost 20% of total UK manufacturing.
The fact that food consumed in the UK accounts for 21%4 of our total carbon footprint, illustrates why stakeholders in the sector across the farm to fork supply chain are taking a leading role in responding to the causes and consequences of climate change. The main trade bodies for food and drink demonstrate this well in their shared ambitions: the National Farmers Union, the Food and Drink Federation (FDF), UK Hospitality and the British Retail Consortium have all committed to an Ambition to reach Net Zero by 2040, 10 years ahead of the Government’s 2050 target.
Food and drink manufacturing
So how is the manufacturing sector responding to these challenges? The FDF, the largest trade body representing food and drink manufacturers in the UK, has worked hard over the last two years building a support programme around how the post-COVID recovery can help build momentum behind the green transition5.
In Autumn 2020, we undertook a research project with our members to identify the challenges, barriers and support they sought from government and FDF as their trade body, with the recommendations forming our 2021 work programme. During last year, we started an initiative with our Professional Affiliate members to deliver information and training on carbon management, creating opportunities to share best practice between members; we continue to build on this. Our advocacy work also continues with government and across the farm-to-fork supply chain on the pathway to Net Zero, both through the Food and Drink Sector Council as well as other forums.
Handbook for Net Zero
These green shoots of collaboration and action will drive progress in reducing food sector emissions – and certainly reflect Greta Thunberg’s call for less ‘blah blah blah’ and more action. FDF’s ‘Achieving Net Zero’ handbook, launched at COP26, further demonstrates this approach, providing practical guidance for manufacturers, particularly those at the early stages of developing their strategy on how to address climate challenges. The free-to-download document is specifically aimed at small and medium enterprises, since of the UK’s 10,990 food and drink manufacturing businesses, 97% are SMEs6.
FDF’s ‘Achieving Net Zero’ handbook, launched at COP26, further demonstrates this approach, providing practical guidance for manufacturers, particularly those at the early stages of developing their strategy on how to address climate challenges.
FDF Handbook for Net Zero
The handbook highlights the carbon footprint of food consumed in the UK, for which ingredients make up 66%, with half of this figure coming from imports as shown in Figure 1.
It then provides detailed information, recommendations and checklists in each area in the food and drink value chain, from the ingredients sourced, to manufacturing and distribution operations, right through to preparation in people’s homes and the influence that manufacturers can have as a result of the actions they take to reduce emissions at each of these stages. The role of carbon offsetting and carbon removals is also explored. An overview of these actions is shown in Figure 2.
Supply chain emissions
Greenhouse gas emissions are categorised into three groups or ‘scopes’ by the widely-used international accounting tool, the GHG Protocol. Scope 1 covers direct emissions from owned or controlled sources. Scope 2 covers indirect emissions from the generation of purchased electricity, steam, heating and cooling consumed by the reporting company. Scope 3 includes all other indirect emissions that occur in a company’s value chain7. The greatest challenge for food and drink manufacturers – indeed all manufacturers – is that most product emissions occur within the scope 3 realm outside the immediate business, so reducing these emissions is more complex and takes longer than addressing onsite emissions.
For goods consumed in the UK, the largest source of emissions is in the production of raw ingredients. The emissions associated with individual ingredients vary widely, but Figure 2highlights the key actions that manufacturers can take, including measuring the carbon footprint and then procuring ingredients with lower carbon footprints bringing a demand-pull influence on the supply chain. Incorporating carbon targets into product reformulations is another key response. From an international perspective, bringing change through engaging with initiatives, such as the UK Sustainable Palm Oil Initiative and the Forest, Agriculture and Commodity Trade (FACT) dialogue (hosted by the COP26 Presidency to accelerate the transition towards more sustainable land-use practices), will also help accelerate the transition towards more sustainable land-use practices.
The greatest challenge for food and drink manufacturers – indeed all manufacturers – is that most product emissions occur within the scope 3 realm outside the immediate business, so reducing these emissions is more complex and takes longer than addressing onsite emissions.
Since two thirds of emissions come from ingredients and with meat and dairy as part of sustainable healthy diets, carbon-insetting (investment in emissions reduction projects within the supply chain) will also be a very important tool for manufacturers – not only for meeting Net Zero, but also for supporting nature restoration, enabling investment into mitigations for and tackling the consequences of climate change.
Addressing emissions elsewhere in the supply chain, such as packaging and logistics, engaging with suppliers to understand current emissions and working in partnership to reduce them, will be key. From a consumer’s perspective, there is also an increasing demand for lower carbon, more environmentally friendly products demonstrating the influence consumers can bring to bear on developments to product ranges. But the role of consumers in driving Net Zero is not only through demand-pull for lower impact products, but also in the impetus to reduce food waste: approximately one third of food produced globally is wasted at points across the supply chain. Not only must this be paid for, but waste currently contributes around 10% to global GHG emissions. Reducing waste will also bring a downward pressure on prices to compensate for higher levels of investment needed for Net Zero measures and to reduce the overall carbon footprint of the food and drink sector.
Reducing onsite emissions
Whilst manufacturers can bring to bear significant influence on reducing supply chain emissions, there is also a great opportunity to demonstrate leadership in reducing onsite (scope 1 and 2) emissions. It is worth noting that for producers of some food products, such as beet sugar, manufacturing is the largest source of emissions.
Overall, decarbonising manufacturing requires action on electricity procurement, new heating technologies and improvements to processes and efficiency. On energy efficiency and management, the handbook covers general recommendations alongside practical suggestions around electric motors, boilers and flexing demand to coordinate with energy price signals. On decarbonising electricity, advice on power purchase agreements and other green electricity products suitable for onsite applications is given as well as covering the scope for sustainable refrigerants. But the key area in which advice is targeted around scopes 1 and 2, is that of decarbonising process heat.
The handbook incorporates the recommendations published in the FDF/SLR report from June 20208 on how to decarbonise heat, updating the work from the 2015 sector roadmap led by government.
For direct fired equipment, a move to electrification will likely dominate as the grid decarbonises: heat pumps, particularly for low grade heating and alternative electric ovens, may include microwave and radio frequency for example. Where electric alternatives are not available, we expect fryers, grills and ovens to continue using gas – in many cases, existing units are already capable of using biogas and are likely to be capable of running on 20% hydrogen.
But for indirect heat, for example for users requiring steam, hot water or air and utilising CHP (combined heat and power) or boilers, the main option is to decarbonise the gas supply using biogas from anaerobic digestion, gasification/pyrolysis of waste or green tariff gas (renewable gas produced by a third party). Most units can also run on up to 20% hydrogen blend in natural gas and biomass boilers using wood pellets or other solid biomass are another option. The electric boiler market may expand, but currently looks limited by the high relative cost of electricity, typically 4-5 times more expensive than gas. It may also be possible, in addition to hydrogen boilers, to develop hydrogen burners to use on existing boiler plant. In any case, a reliable supply of hydrogen would be needed.
For food manufacturing, which is characterised as a ‘dispersed manufacturing sector’ meaning its locations are across every region and nation of the UK, there are significant challenges in being able to electrify or switch fuel due to the necessary grid infrastructure reinforcements. However, for those lucky enough to be located within one of the industrial clusters, changes will be much quicker: government has announced that the first low carbon cluster will be in place by 2030 and the first zero carbon cluster by 2040.
But where to start?
Whilst the Net Zero timeframe and the pathway for achieving this is beyond the horizon of what can currently be envisaged, we can take significant steps towards developing the long-term policy framework. Within our own organisations, setting the right foundations for the sustainability agenda is critical to long-term success.
Understanding market dynamics
Building these foundations starts with understanding the overarching context in which the business operates. Looking at this through the lens of a ‘STEEPLE’ analysis would cover the following areas:
- Social Factors e.g. a growing population alongside levels of social inequality and food poverty
- Technology e.g. growth in plant based and alternative proteins and new seed development to strengthen biofortification in crops
- The economy e.g. the increase in global food commodity prices alongside energy prices with energy a critical input at each supply chain stage
- Environmental factors e.g. impacts of climate change on agriculture
- Politics e.g. trade deals and food standards
- Legal Factors e.g. data reporting requirements and targets for businesses
- Ethics e.g. reducing ‘food miles’ and ‘food waste’ has significant public support.
Applying this overarching perspective together with a review of how competitors are responding to these challenges, allows businesses to create a SWOT analysis – thus presenting the perspectives around the strengths, weaknesses, opportunities and threats the business faces, in the light of the Net Zero targets set by government.
This baselining activity is essential for obtaining buy-in by internal stakeholders to secure the commitments and contributions required from across the business: transformation must be supported by all staff and employees for full successful implementation.
Of course, change can come from anywhere, but for the drive to Net Zero to be entirely embedded, it must also be led from the top of the business, with clear internal accountabilities. Figure 3 shows different functions common to many manufacturers and how they can influence an organisation’s strategy for achieving Net Zero.
Planning for Net Zero
Delivering a Net Zero strategy requires an overarching strategic framework. The Institute for Grocery Distribution in the UK sets out a guide for industry leaders in its July 2021 publication entitled Building your Net Zero roadmap9, which highlights the stages of measuring, targeting, implementing and financing Net Zero policies alongside communication and advocacy. For food businesses in the UK, each sub-sector will of course have different characteristics, but nevertheless the common strands around actions for reducing emissions are as follows:
- Understanding baseline sources of emissions
- Identifying key carbon hotspot areas
- Setting carbon reduction targets
- Decarbonisation plans
- Data to support reporting.
The effects of climate change and its impacts on food production are already being felt at a global scale, driving the transition to Net Zero emissions. Whilst the sheer size of this challenge is daunting in ensuring the resiliency of a healthy and affordable food system, if all stakeholders focus on actions however large or small, then over time great progress will be made.
Individually, developing our own narrative and storytelling capabilities on why actions to decarbonise are necessary will be a key tool, driving the momentum at all levels in an organisation. Communicating and collaborating top-down, bottom-up, laterally with peers, both internally and externally is essential for achieving that critical success factor of obtaining stakeholder buy-in, both within organisations and across supply chains.
Emma Piercy, Head of Climate Change & Energy Policy, The Food and Drink Federation will be joining the Ambassadors’ Day: Corporate Net Zero on 19 January 2023 held at British Antarctic Survey in Cambridge.
The Food and Drink Federation is the trade association for food and drink manufacturing in the UK. Food and drink is the largest manufacturing sector in the UK (accounting for 20 per cent of the total manufacturing sector), turning over more than £112billion per annum; resulting in Gross Value Added (GVA) over £30billion and employing over 478,000 people across every region and nation.