Supply chain collaboration may be key to meeting carbon-reduction targets

The largest Western food and beverage companies, including manufacturers, suppliers, and retailers, are set to fall more than a third (34%) short of the industry’s 2030 global carbon-reduction goal of 38%, according to research from consulting group AlixPartners, released today.

The survey analyzes the carbon commitments of 235 food and beverage companies in the United States, as well as across Europe, the Middle East, and Africa (EMEA), made as part of the World Benchmarking Alliance’s 2021 Food and Agriculture Benchmark, according to AlixPartners. It also analyzes commitments by the West’s 13 largest food and beverage packaging companies, as part of their effort to assess the entire value chain. The firm also surveyed 200 sustainability and operations executives from food and beverage companies, including retailers, manufacturers, and suppliers.

The data is based on targets established by the 2015 Paris Agreement and the collaborative partnership Science Based Target initiative.

The researchers found that although the food and beverage industry has made progress in cutting carbon since the signing of the Paris Agreement, companies are set to fall short of existing commitments by more than a fifth. Collectively, the largest companies by revenue will have reduced their carbon emissions by 29% between 2019 and 2030, short of their industry target reduction of 38%. To date, they have reduced carbon emissions by about 1%, according to AlixPartners’ data.

The research shows that the gap widens even further due to the companies’ lack of confidence in meeting emissions reduction goals: 49% of suppliers, 36% of manufacturers, and 31% of retailers claim to be confident they will meet goals related to their own carbon emissions. As a result, AlixPartners estimates that the largest Western food and beverage companies will only reduce their carbon footprint by 25% between 2019 and 2030.

The outlook is worse when it comes to the broader supply chain: Just 27% of executives from suppliers, 13% of executives from manufacturing organizations, and 4% of those from retail companies say they are confident that they will meet their carbon reduction goals relating to emissions made by other companies in their value chains.

“A company’s carbon-reduction goals take into account those emissions made by companies further up and down its value chain, as well as the company’s own emissions,” the researchers explained. “For instance, a retailer’s emissions take into account those emissions made by its suppliers and manufacturers.”

Greater cross-industry collaboration on sustainability efforts may be the key to overcoming those challenges.

“While it is encouraging to see the progress that has been made in cutting carbon emissions since the 2015 Paris Agreement, it is clear that greater collaboration is required across the food and beverage industry if its carbon-reduction goals are to be met,” Randy Burt, managing director in the consumer products practice at AlixPartners, said in a press release detailing the findings. “Manufacturers, suppliers, and retailers alike need to look across their entire value chains to understand and exert influence all the way back to the start of those chains, as well as downstream towards the end-consumer, if they are to make truly exceptional progress on this front.”