Opinion piece: Fixating on Primary Data Won’t Solve for Change
There’s a growing set of people in the corporate sustainability space that believe universal primary data (ie data gathered from every supplier) must be part of the answer. At the risk of annoying them, I always disagree - and my conviction that this is the wrong answer is growing every week.
I have three reasons for this, all of which I see as particularly relevant for companies with agriculture in the value chain:
Cost. My own estimate is that for the average farm, the cost of environmental data disclosure is $1-5k. I’m factoring in the cost of time, and a minimum level of support and audit. This is a meaningful percentage of net profit for a small farm.
Practicality. Of the ~1 billion people working in agriculture, a majority live in emerging markets and a large percentage of these don’t have a primary school education. Many of them will struggle with surveys of any kind. I hate to be blunt, but this is the truth.
Need. There is a severe shortage of good primary data, which means that secondary data (from modelling) is also poor. But if we can increase primary data coverage to even a significant minority of suppliers (eg 20-30%) with appropriate distribution, secondary data quality can be made more than sufficient for better sustainability decisions.
Data is a means, not an end, and good quality data isn’t free (no matter what anyone with a golden framework/tool/initiative tells you). Let’s spend our capital where it counts, rather than just on counting.
Watch the discussion unfold below:
Pulled from our recent podcast. Listen to the full episode here.
Lessons Learned: A Roadmap for Farm Level Emissions Reduction with Simon Bonnet, Bel Group
This week we sat down with Simon Bonnet, Global Milk Upstream & Sustainability Director at Bel Group. Steering global milk procurement at Bel Group, Simon grapples with an almighty sustainability challenge - dairy, accounting for ⅔ of Bel’s emissions. With a dual responsibility of ensuring quality milk procurement while driving farmers toward lower carbon production, Simon sits at the crossroads of procurement and CSR. In our conversation, we break down how Simon shapes procurement decisions to cut emissions across a portfolio of household cheese favourites, including The Laughing Cow, Babybel and Boursin.
Team Set up: Independentand distributed function At Bel, an 8-member CSR core team shapes the company's mission, formulating global commitments and translating them into actionable local strategies. A pivotal merger in 2021 saw the finance and CSR teams join forces, prioritising a holistic approach to profitability and sustainability.
Alongside the core CSR team, there is a distributed team to implement these commitments, operating across different regions (North America, Europe and Canada) and problem types (e.g., milk, packaging and transport).
The underpinnings of Bel’s methane reduction strategy:
Bel Group has a global SBTi 1.5-degree target to cut CO2 intensity, a net reduction of ¼ of GHG’s throughout Bel’s entire value chain by 2035. in their product portfolio by 2035. With around 4m tC02e emissions and 1/3rd of these emissions coming from methane, methane was highlighted as a critical intervention area.
Simon’s recipe for reduction:
Nurture long-term relationships with farmers: As well as long off-take agreements (5-10 years) Bel invests heavily in up-skilling farmers with new solutions and techniques. Bel follows a local engagement approach, tailoring communication and up-skilling programs to each farm. This forms the cornerstone of building an effective relationship.
Be transparent with mutual data sharing: Bel conducts carbon diagnostics on 80% of its farms, the results aren’t kept in isolation but shared with the farmers to collaboratively explore solutions. Bel reciprocates the data exchange, by sharing their strategy, ambitions, market position and profitability data. This transparent exchange has been instrumental in fostering a strong foundation of trust.
Open source findings: Bel's recent commitment to the Dairy, Methane, Action Alliance involves sharing methodologies and scaling practices in collaboration with industry peers like Kraft Heinz, Nestlé, and Danone, centralising knowledge for widespread adoption.
Simon’s advice for securing buy-in:
Build an internal carbon price: Assigning a cost to each tonne of carbon enables informed decision-making on viable initiatives. For instance, the rollout of Boaver, a methane-reducing feed supplement across all Slovakian farms, proved financially feasible as the initiative cost was less than what the equivalent carbon would cost against their baseline.
Milking Bel’s methane initiatives for all they are worth: Strategically share sustainability initiatives with customers and/or consumers for commercial advantage. For instance, whilst Bel wasn’t able to promote the Boaver methane reduction initiative to consumers (given it wasn’t implemented across 100% of Bel farms), Simon was able to position it to major retailers like Tesco, Lidl and Carrefour to bolster their market position against competitors.
Merge financial and CSR functions: Unifying these core teams helps to streamline decision-making and remove the hassle of internal buy-in, given every decision has to be both sustainable and financially viable by virtue.
Simon’s insights offer a robust blueprint for companies looking to engage at the farm level. Get in touch if you want to pick his brains any further!
Industry Insight: 4 Takeaways and 1 Prediction to Round Off 2023
Takeaways from 2023 vs 2022:
Corporate sustainability survived high interest rates (so far). While many companies reliant on low cost of capital fared badly overall, sustainability programs generally didn’t step back on implementation.
Talent quality in sustainability is improving rapidly. Corporate sustainability professionals today are more likely to have experience implementing change programs within the organisation (and often across multiple organisations).
Law suits, regulation, and bad press made claims scary for businesses. I’ve seen a big decrease in claim proliferation (e.g., net zero ice cream), and higher levels of research within companies before putting claims out there.
Carbon markets were hit hard but are probably better for it. This year brought higher levels of scrutiny on projects, increased competition from in-value chain reductions, and shifts to higher quality carbon investment.
Prediction for 2024:
We expect to see multiple announcements of large scale renewable energy projects to decarbonise export-oriented manufacturing in the Global South. This will be the new frontier for regional competition as the Carbon Border Adjustment Mechanism penalises markets with high grid intensity.
Policy Pulse: UK Reveals Update on Deforestation Risk Laws
2024 promises to be a big year in the fight against deforestation. The UK government revealed a long-awaited update on its deforestation due diligence legislation at COP 28, whilst the EU’s deforestation law (EUDR) came into play at the start of the year.
Similarities between UK and EU Deforestation Laws:
Both laws work by defining a set list of high deforestation-risk commodities and making companies responsible for showing their products are free from deforestation. Companies must conduct due diligence into their supply chains, and make annual reports on their risk assessments. Businesses found to be selling deforestation-linked products are then liable for hefty punishments.
The latest information on the UK law shows it’s far weaker than the ambitious EU version. Here’s why:
Weaker definition of deforestation - The UK version only bans illegal deforestation, compared to the EU which bans any deforestation at all. Further, the definition of “illegal” is deferred to the sourcing country which is often liable to have laxer views on forestry.
Smaller coverage of commodities - It only covers soy, palm oil, cocoa, and non-dairy cattle. This misses out on key high-risk commodities such as coffee, rubber, and all wood-based products.
Applies to a subset of businesses - The EU version covers all companies trading covered products, even SMEs with lighter requirements. The UK version lets off companies with <£50m global revenue and those that use less than 500 tonnes of covered commodities.
Credit where credit is due, the UK’s version is bolder on punishment. Penalties are unlimited in the UK whereas the EUDR caps fines to 4% of revenue.
What does this all mean?
The main benefits of the EU law are two-fold:
It removes any incentive for commodity suppliers to create deforestation.
It drives greater supply chain transparency with strict data requirements - such as on geospatial data.
The UK’s version does not achieve this. By allowing legal deforestation, pointed out, large commodity producers have the incentive to lobby for weaker forestry laws in their country.
Full details of the law are due to be released later this year. We’re hoping for the law to be expanded to more closely follow the strong example set by the EU.