A climate smart business in 5 steps
Wageningen Climate Solutions
Photography: Shutterstock
BY Joris Tielens - September 2019
How can businesses in the agri & food sector reduce carbon emissions and become more resilient in coping with the consequences of climate change? Wageningen Economic Research offers businesses five concrete steps to becoming carbon neutral and climate resilient.
Food processing companies, agri-food traders and food retail businesses are reliant on the purchase of milk, vegetables or fruit from Europe, or tropical raw materials such as coffee, cocoa and palm oil. They know better than anyone else that climate change could disrupt the stable supply of their raw materials. To stay ahead of the competition, they need to adapt to climate change, to be resilient in the face of increasing temperatures, more frequent heavy rainfalls and longer period of drought, all of which seriously affect farm production. These businesses also know that shareholders and investors are increasingly demanding a transformation towards climate-neutral production and value chains.
“Many food-processing businesses already have a plan to reduce the carbon emissions within their own company. But the largest emissions are often elsewhere in the chain,” says Willem Ruster, economist and manager of the sustainability programme in Agri & Food at Wageningen Economic Research. He works with companies that want to make their own business and their supply chain carbon neutral and climate resilient. This involves five concrete steps.
A good understanding of the value chain is important to be better prepared for the consequences of climate change
The sustainability management cycle shows the five concrete steps to becoming a carbon neutral and climate resilient company. Infographic: Content Animators
The sustainability management cycle shows the five concrete steps to becoming a carbon neutral and climate resilient company. Infographic: Content Animators
STEP 1: KNOWING WHERE THE PROBLEM LIES
“The basis of a carbon strategy is a good understanding of the carbon footprint hotspots across the value chain and their key drivers,” says Ruster. Researchers from Wageningen Economic Research create a baseline carbon measurement of a business, or for the entire life cycle of agri & food products covering the complete supply chain. Then, based on these measurements, they identify the hotspots and main drivers of carbon emissions.
“For instance, in the dairy sector methane emissions from cows are a key driver. For businesses that buy palm oil, the problem is that more land is brought into production for palm trees, which involves deforestation.”
It is important to have a good understanding of the value chain in order to be better prepared for the consequences of climate change. “Businesses can see how climate change impacts their procurement.”
“If harvests start failing due to more variability and extreme weather, an industrial fruit-processing factory or potato-product factory will have to deal with limited supplies, or pricier fruits or potatoes,” says Ruster. “We create scenarios for the future, map out potential problems and translate them into financial risks for the business. But besides risks, there are also new market opportunities as a result of climate change. Different agricultural conditions demand new seeds, crop protection methods or precision agriculture techniques, while new areas will also become more suitable for agro-production or alternative crops.”
For businesses that buy palm oil, the problem is that more land is brought into production for palm trees. Photo: Shutterstock
A natural watering irrigation system for crops for efficient use of water. Photo: Shutterstock
STEP 2: AN IMPROVEMENT PLAN THAT WORKS
Monitoring is crucial when bringing focus to impact assessment
The next step is to develop a concrete plan to become carbon neutral and climate resilient. Before measures are implemented, researchers use an impact forecast to estimate the effect on carbon emissions, the costs and benefits, and the support for the measures. Carbon-neutral production cannot usually be achieved just by limiting the emissions; it also requires compensation, for instance through reforestation or other carbon storage measures.
“Becoming climate resilient requires the risk to be spread, and necessitates more collaboration in the chain,” says Ruster.
“For instance, think about new contracts between suppliers and customers in which the risk no longer predominantly lies with the farmer.” An example is a vegetable-processing company that safeguarded its supply of vegetables in the dry summer of 2018 by carrying part of the costs for ad-hoc additional watering. However, long-term solutions are more efficient storage and use of water, the development of climate-resilient plant varieties, and smart measuring techniques for soil health and resilience. “Whereby the costs of improvements are spread across different public and private stakeholders in the supply chain.”
Potato sorting and packing factory. Photo: Shutterstock
STEP 3: MONITORING FOR EFFECTIVE IMPROVEMENT MEASURES
To determine whether measures are effective, targeted monitoring is necessary from start to finish. Monitoring begins when the strategy is formed and continues during implementation. For each measure, indicators are chosen that are quantifiable and that tell you something about the measures that a business can take within a reasonable amount of time.
“You should evaluate what you do, and what you change. This is crucial when bringing focus to impact assessments. Only then will you know if you make progress to become climate smart and if your measures are effective,” Ruster explains.
Expectations are often not met. Which is not a problem, as long as you learn from this
STEP 4: EFFICIENT IMPLEMENTATION
Researchers also provide advice on how to implement the measures efficiently, with the right incentives, stakeholder interaction and system changes (where necessary). In the case of a large dairy company for which Wageningen Economic Research developed a greenhouse gas mitigation plan at the farm level, for instance, the optimal roll-out strategy proved to be focused on training pioneers in dairy farming, who then inspired the other farmers to follow suit.
Researchers can also help partnerships within the supply chain become more climate resilient and safeguard the supply of high-quality agri-food products. The government has a role to play in ensuring climate resilience in the long term as well.
“For instance, by encouraging collaborations in the supply chain, by introducing a carbon tax, or by starting soil health improvement programmes, which can mitigate the consequences of both drought and too much water. Or governments can stimulate the development of improved plant varieties that are better able to cope with the effects of climate change.”
STEP 5: EVALUATION AND MAKING ADJUSTMENTS
To determine whether measures are effective, targeted monitoring is necessary from start to finish
The final step is an evaluation of the impact: what effect have the measures had and what can be improved? “Looking back, it often appears that expectations have not been met. Which is not a problem, as long as you are keen to learn from this.” In this sense, the final step is also the first step. The steps form an ongoing process of continuous improvements in which the strategy and intervention plans are adjusted where necessary.
“We work closely with other WUR research institutes in the fields of the environment, plant and animal sciences, and food technology, in order to offer specific solutions for climate-resilient cultivation, the improvement of packaging and logistics, the smart use of satellite data and circular-economy techniques in the animal value chain,” Ruster says.
Deforestation as a result of intensive palm oil production. Photo: Shutterstock
WOULD YOU LIKE TO BECOME CLIMATE SMART IN THE AGRI & FOOD SECTOR?
Wageningen Economic Research can highlight carbon footprint hotspots and identify links in global and local agri & food chains that are vulnerable to climate change. These are the key ingredients in building a climate strategy (for becoming carbon neutral and climate resilient). Based on this, we can develop and test stepwise improvement plans in sectors such as farm inputs, crop trading and processing, food ingredients and consumer products. These intervention plans for companies are tailored to suit the specific sector, region, supply chain and climate conditions. Ex ante tests are performed to assess the effectiveness, weighing up the financial costs and benefits of carbon mitigation strategies, the level of stakeholder cooperation required, the expected support among farmers and the impact.
For our climate resilience scans, we employ map visualization tools that are used to highlight changes in farm production and feasible improvement options. The aim is to adapt successfully to rising temperatures and the increased intensity of droughts and rainfalls due to climate change.
