One of the most significant projects in sustainable food in 2020 was unveiled last week. The news is important partly because of the company involved: CPG behemoth Unilever, which reaches 2.5 billion consumers every day through 400 brands, which range from Ben & Jerry’s to Hellmann’s and appear on shelves in 190 countries. 

The other reason is that the plan is genuinely ambitious. The company is committing to net-zero emissions from all products by 2039, spending $1 billion on climate and nature projects over 10 years, and planning on labeling each of its products with information about the carbon emitted in the product’s creation.

This last point is particularly significant. Consumers, especially younger adults, consistently say that climate concerns influence their purchasing. Yet this influence is diluted because most people have little insight into the emissions linked to specific products. Clearly communicating emissions on every product could leverage those concerns in a scalable way, boosting sales of low-carbon products and punishing emissions-heavy options.

So will Unilever’s labeling decision change the way people shop? We can’t say for sure, because most consumers have never seen a carbon label. But there’s evidence for optimism.

Clearly communicating emissions on every product could leverage those concerns in a scalable way, boosting sales of low-carbon products and punishing emissions-heavy options.

There’s data on the impact of other kinds of labels, for instance. Over the past five years, several countries, including Chile, Mexico and Israel, have attached health warnings to sodas and other sugary beverages. A meta-analysis of 23 studies of these initiatives, released last month, showed the labels work: Consumers who see them are less likely to purchase high-sugar drinks.

When carbon labels have been deployed, usually in small experiments, they also seem to work. Researchers at Chalmers Technological University in Sweden, for example, looked at the impact of emissions information on meal choices at their institution’s cafeteria. Sales of high-carbon meat dishes fell by almost 5 percent — a modest drop, but significant for an initial experiment based on a simple intervention. 

A final reason for optimism is that while Unilever is by far the biggest food company to roll out carbon labels, it is not alone. Oatly and Quorn recently announced plans to start displaying carbon footprint data on products. Twelve food and beverage brands also have earned the new Climate Neutral certification and began displaying the associated label.

Put all that together, and it looks like Unilever’s move could trigger structural change. But before I get carried away, let’s look at two factors that could undermine its impact.

First up is the label itself. In an email, Rebecca Marmot, Unilever’s CSO, told me that her company is focusing on collecting footprint data and will turn to the labels once that’s in place. How Unilever eventually communicates carbon levels will be critical. How big will the label be? Where will it appear? Will consumers be able to make sense of it? It won’t be an easy challenge. Space on food packaging is extremely tight, and consumers are already exposed to multiple labels relating to sustainability. (457, by one count).

The second issue is cost. Of those 457 labels, organic is probably the most well known. Demand for organic food has shown double-digit growth in many recent years, yet it still accounts for around only 5 percent of U.S. food sales and less than 1 percent of planted acreage. Cost is critical here: Surveys show that organic food has a 7.5 percent premium, with some goods, including milk, eggs and bread, costing close to twice as much. 

This is a reminder that for many consumers, cost trumps environmental concerns. In a way, though, that’s what makes the Unilever announcement so exciting. We’re talking here about the company behind Knorr, Lipton and Magnum. These are not niche brands targeted at affluent, sustainability-minded consumers willing to pay more. By introducing carbon labeling into everyday products found in the biggest chains and the smallest corner stores, Unilever is testing whether environmental concerns resonate with a much, much larger segment of consumers.

This article was adapted from the GreenBiz Food Weekly newsletter. Sign up here to receive your own free subscription.

Now more than ever, companies everywhere must unite in the business of a more resilient, sustainable world. Despite progress made in many areas, we are not on track to deliver on the SDGs by 2030. In fact, the United Nations Global Compact Progress Report 2020 reveals only 39 per cent of companies surveyed believe they have targets that are sufficiently ambitious to meet the Sustainable Development Goals by 2030. Less than a third consider their industry to be moving fast enough to deliver priority SDGs. While 84 per cent of companies surveyed are taking action on SDGs, only 46 per cent are embedding them into their core business and only 37 per cent are designing business models that contribute to the SDGs. 

The need for increased business ambition is clear but how do companies get started? How do they set ambitious benchmarks in the areas that will have the greatest business impact on the SDGs and accelerate integration of sustainable development into enterprise management processes and systems? In this webcast:

• Learn how to prioritize opportunities for SDG impact through core business activities – operations, products & services, and value chain
• Learn about best practice business benchmarks to gauge whether corporate activities are aiming at the necessary level of ambition to deliver on the SDGs
• Hear how companies can set goals – or level-set existing goals – in line with what is required to achieve the SDGs and about the processes and tools required to meet them
• Learn about SDG Ambition, a new accelerator initiative, in partnership with SAP and Accenture that aims to empower and equip companies to set ambitious corporate targets aligned with the 17 Sustainable Development Goals (SDGs) and accelerate integration into core business management

Moderator:

• John Davies, Vice President & Senior Analyst, GreenBiz Group

Speakers:

• Sue Allchurch, Chief, Outreach & Engagement, UN Global Compact
• Michael D. Hughes, Manager, Sustainability & Responsible Business, Accenture

• Ann Rosenberg, Senior Vice President, UN Partnerships and Sustainability, SAP

If you can’t tune in live, please register and we will email you a link to access the archived webcast footage and resources, available to you on-demand after the webcast.

According to polls, it was mid-March when most of us in the United States understood the severity of COVID-19. At the same time, we collectively were searching for data to drive lifesaving decision-making. Close all business and keep people inside homes? Or allow some degree of freedom? What would be the exact growth curve of virus cases, and most important, how could we flatten it? By early April, a consensus had emerged around the role of accurate data, even if it could not help contain a first wave of infections.

This lesson on the importance of actionable data did not go unnoticed for those of us working on industrial decarbonization. With growing consensus on the gravity of the climate crisis, countries and companies are adopting carbon reduction targets. If we are to learn from the pandemic, there’s one critical element for any effort to have a chance of success. Less catchy than a target reopening date, and perhaps more like an immunologist telling you to get tested: Do we have the right data to act upon?

Pressure is growing to take action

The question is relevant because there is mounting pressure to take action against the climate crisis. Pressure to make emissions visible has been around for a while: Consumers want to know how much carbon is embodied in the products they buy. Investors are concerned about the viability of long-term assets in high emissions sectors at risk of being hit by negative policy or market developments.

For example, one chocolate bar could emit as much as 7 kilograms of CO2, equivalent to driving 30 miles in a non-electric car. Alternately, if the cacao is grown alongside agroforestry or reforestation, the same bar could have zero or even negative emissions via the trees removing carbon dioxide from the atmosphere. If consumers knew the difference, would they pay a premium for the climate-smart chocolate?

A company’s financial accounts are used to make reasonable decisions about how that company will do in the future. Alas, to date the same isn’t true of carbon performance.

This year, Larry Fink, CEO of BlackRock, the world’s largest asset management company, made thundering news in his annual letter to investors, touting, “The evidence on climate risk is compelling investors to reassess core assumptions about modern finance.” Since then, the asset manager backed two proposals at the annual general meetings of both Chevron and Exxon, related to the manner these companies conduct themselves in relation to Paris Agreement targets.

Earlier in the year in Australia, investors at both Woodside Petroleum and Santos passed annual general meetings motions to adopt a “Scope 3” (indirect emissions) reduction target. This trend of shareholder and consumer scrutiny has strengthened in recent months, and most S&P 500 companies — in fact, 70 percent of them — already make climate-related disclosures to the reporting platform CDP (formerly the Carbon Disclosure Project).

Translating demands into dollars

Yet, to date, there is no way to exactly translate these demands for action into dollar figures. You walk around trade conferences (or, more likely these days, Zoom workshops) and everyone is asking: What’s the premium that a consumer is willing to pay for low-carbon products? Is a bank really willing to decline loans for an investment that fails to fulfill certain sustainability standards, for example as pledged by the 11 global banks that signed the Poseidon Principles for shipping finance in 2019? If the European Union agrees on a border price for carbon, what should it be? All of this pricing talk begs the question: How can we have such discussions without clear metrics that everyone can stand by?

A company’s financial accounts are used to make reasonable decisions about how that company will do in the future. Alas, to date the same isn’t true of carbon performance.

For a start, while financial accounts are reported via one of two standards — U.S. Generally Accepted Accounting Principles (GAAP) or International Financial Reporting Standards (IFRS) — a variety of methods can be used for carbon accounting (CDP accepts 64 of them). While financials make the performance of a chemicals company comparable to an iron ore miner, the carbon accounting metrics differ in a way that is difficult to reconcile.

This becomes a problem for an automotive company, which needs to combine the performance of both to make an accurate declaration about the carbon content of a product that has over 30,000 parts. It is also a challenge for a fund manager who needs to combine stocks of different sectors, and has a fiduciary duty to use financially material metrics to do so; or for a commercial banker who lends money to different asset classes, and needs to determine the amount of “climate risk” involved in each investment decision.

From the perspective of the climate crisis, we still haven’t figured out how to attribute the right price to something nobody can see, such as the amount of noxious gases emitted by a factory in a land far, far away.

Remember the core of the coronavirus debate: The number of confirmed cases are better known than the total number of cases. This uncertainty generates debatable data, upon which it is difficult to make decisions that will have an enormous impact on the destiny of societies.

From the perspective of the climate crisis, we still haven’t figured out how to attribute the right price to something nobody can see, such as the amount of noxious gases emitted by a factory in a land far, far away. And if the cost of those gases to a community and ecosystem isn’t clearly visible, conversely, how can we measure good interventions so that investors feel confident to put their money toward them?

This is particularly ironic because market demand for product sustainability creates a win-win situation for everyone involved: make a plan to increase product sustainability, shape the world to be a better place. In most cases, low-carbon technologies are either readily available, such as in the case of low-carbon electricity and carbon-neutral concrete, or less than a decade away, such as hydrogen-based trucking. But if it’s so easy, why isn’t it happening? And most importantly, what needs to happen?

Harmonizing the efforts

The current ecosystem of reporting is built on bottom-up efforts that are not harmonized. The previously mentioned CDP has a large database of disclosures. The Taskforce on Climate-Related Financial Disclosures (TCFD) has a widely adopted set of metrics that companies use to report (including to CDP). The Sustainability Accounting Standards Board has — you guessed it — standards solid enough to guarantee “financial materiality,” that is, to allow the analyst in the above example to “buy with confidence” when making investment decisions based on sustainability. The Science-Based Targets Initiative promises to take all this to the next level and link carbon disclosures to the trajectories that companies need to undertake in order to comply with the Paris Agreement.

Companies that need to report emissions lament that this is too complex or that it doesn’t allow apples-to-apples comparisons due to discrepancies in the way different methods prescribe calculations. Investors lament that they can’t base financial decisions on current metrics, because they aren’t reliable or standardized. Consumers still have to see eco-labels that are truly credible.

It is imperative that emissions accounting shifts from a notion of disclosures (a still image of current emissions) to climate alignment, a forward look into a company’s future emissions.

As confusing as it sounds, the good news is that between existing methods, standards and platforms, the elements of a functional system do exist. Despite the gloomy portrait that we often read in the news, of a humankind sleepwalking toward climate disaster due to a selfish inability to act together, this ecosystem actually represents a wonderful testament to the ability of society to recognize a challenge and address it.

The importance of climate alignment

A few years ago, the Smart Freight Center introduced the Global Logistics Emissions Council (GLEC) Framework, creating a common guidance for logistics companies to report in a unified manner. The GLEC Framework is a guidance that specifies how disclosures need to be made in each of the existing methodologies and platforms. Once a company discloses according to the GLEC Framework, analysts will be able to compare a disclosure made for different purposes using different methods, and trace back what it actually means. It is urgent that this expand to supply chains at large.

It is also imperative that the emissions accounting focus shifts from a notion of disclosures (a still image of current emissions) to climate alignment, a forward look into a company’s future emissions. With unified and simplified standards, companies will be able to be easily ranked based on their actual and projected contribution to meeting the Paris Agreement, thus keeping climate change at bay.

Why do this? To reap the benefits of being in sync with what stakeholders request more and ever louder. This is only wise, considering that not even a global pandemic and looming economic recession has silenced these requests. According to a recent Deloitte report, 600 global C-suite executives remain firmly committed to a low-carbon transition. They are perhaps finding opportunity in shifting from risk and need clear data to make their decisions.

First in a three-part series.

The global COVID-19 pandemic is a historic Black Swan event that offers a Green Swan of opportunities to harvest innovation from 50 years of converging exponential technologies. We are presented with a rare opportunity to invest in new innovations, rebuild our data and power infrastructures and supply chains to restore and strengthen the economy while healing the environment.

According to author Nassim Nicholas Taleb, Black Swans are unexpected, hard-to-predict events that result in extreme, unintended consequences. The coronavirus pandemic is a classic Black Swan. Over the past few weeks, we have witnessed countries and states scrambling for personal protective equipment and ventilators. Oil tankers are carrying millions of tons of oil with nowhere to go. Farmers are destroying food and supermarket shelves are missing essential items across the nation. These events, made visible by the COVID-19 virus, have shown us the fragility of systems pushed to their breaking point by design constraints to maximize return on investment in the absence of resiliency. 

Green Swans, according to John Elkington, are positive market developments once deemed highly unlikely, if not impossible. They can have a profound positive impact across economic, social and environmental value creation.

To lessen the impact of current and future Black Swan events, we have Green Swan solutions that are ready to deploy on behalf of preparedness and resilience. Entrepreneurial innovation, new investment and regulatory models must be promoted and accelerated to prepare for future pandemics, climate change and to restore the environment.

Back to normal is not an option

To rebuild the economy, the United States government so far seems to choose to deploy the same playbook it did in 2008: funding legacy companies in industries such as oil and gas. 

History has shown us that government funding of visionary projects can have enormous positive outcomes.

This old playbook will not return us to a pre-COVID-19 “normal.” The price of oil plunged below zero on some days, and customer demand remains at an all-time low. Bailouts paper over the fossil fuel industry’s weaknesses and “will create a zombie industry forever dependent on state aid for survival,” according to Jason Quay, director of the Global Climate Strategy Sunrise Project. 

History has shown us that government funding of visionary projects can have enormous positive outcomes. In the United States, examples include the Transcontinental Railroad, the Manhattan Project, the Interstate Highway System and the Apollo program. 

What if the government were to integrate support for clean energy into its COVID-19 economic recovery program? Renewables would emerge more robust than ever. Utilities already have found wind and solar power are less costly sources of energy. The economics of solar and wind including storage costs are quickly undercutting the economics of oil as a prime mover. According to MIT Tech Review, prices for solar energy have declined by 97 percent since 1980. Government policies that stimulated the growth of solar accounted for 60 percent of that price decline. Even without those policies — they soon expire — renewables are more than competitive against fossil fuels.

The national strategy for re-opening the economy needs to focus on resilience projects and creating an infrastructure that will absorb future shocks. Government must provide the regulatory support to amplify transformative innovation from the intersections of converging exponential technologies. We already have demonstrated the efficacy of investments directed to electrical distribution, water, transportation and renewable energy.

Green Swan solutions are already at work

Entrepreneurs are on the verge of creating an era that will be marked by abundance, sustainability and resilience. The world that emerges from COVID-19 could offer plentiful, zero marginal cost electricity, ubiquitous computing and cheap bio-manufacturing of high-purity drugs and environmentally friendly plastics directly from DNA. 

As another example, the digitization of the electrical grid, is changing the way power is delivered and consumed. Cheap electricity drives electrons across the electrical grid where they become more accessible and offer a more affordable, cleaner and more resilient way to charge electric batteries. Among other benefits, that will increase EV adoption, leading to cleaner air.

Cheap electricity will increase access to clean water. One ingenious company, Zero Mass Water, has repurposed the same solar panels helping create cheap electricity to squeeze potable water from the air — even in desert conditions.

Cheap electricity also will drive synthetic biology — the intersection of information and biotechnologies, where Moore’s Law meets Mendel, the father of genetics.

Synthetic biology already has delivered safe, more economical, cleaner fuels, hardier crops and proteins that are brewed locally to fertilize crops and feed animals — including us humans. Futuristic, sustainable, brewed, high-performance materials already are manufactured locally, disrupting traditional supply chains.

Among the many companies demonstrating the breadth of this industry are Calysta (proteins for food production), Codexis (enzymes for multiple applications) and Geltor (proteins for nutrition and personal care products). These companies are demonstrating their products can be more effective than those developed from petroleum products or requiring the slaughter of animals.

Emerging digital and biological tools for traceability and reliability are helping build supply-chain resilience now when it is most needed. With digital and biological tools, entrepreneurs are mapping supply chains to increase traceability while offering new levels of transparency following goods as they make their ways from manufacturer to consumer. 

Resilience, despite resistance

Entrepreneurs, new business models and investors will show us the way forward. Entrepreneurs have demonstrated time and time again that they can compress a century of progress into a decade. With the support of a community of enlightened venture capital investors, corporate strategic partners, financial institutions and governmental regulatory bodies, entrepreneurs can create exponential change and generate substantial value in short periods of time. With community inputs from technology, financial and regulatory bodies, entrepreneurs can generate greater returns on investment, and their efforts can create a template for the rest of the world.

We need to encourage and fund new business models that leverage converging exponential technologies. In the 1990s, business models were focused almost exclusively on share of wallet. For the past 20 years, digital technology has enabled the emergence of the business models that have driven the circular and sharing economies with their positive benefits. New business models are quickly emerging based on cloud computing, internet of things (IoT), artificial intelligence, blockchain, data analytics, augmented/virtual reality and combinations thereof. No doubt, they will bring countless benefits. Regulatory barriers for new business models should be eliminated or eased.

Don’t bet against America

We know this current crisis is a preview or warm-up act for a climate-changing world. The pandemic demands that business and government leaders be ready, willing and able to respond while building secure and resilient supply chains and infrastructure. The post-pandemic world requires that business and government leaders encourage creativity in preparing for the next crisis. 

As we try to anticipate a resilient, reliable, secure, sustainable and prosperous future, we also have the chance to incubate and create that future. We can apply what we have learned from the past 50 years of entrepreneurial innovation, from Moore’s Law (semiconductors, information technologies and the Internet) and the mapping of the human genome, and their positive impact on global GNP. It is up to us to innovate and advocate to make the right choices.

In a letter to Berkshire Hathaway shareholders, investor Warren Buffett wrote, “America’s economy will continue to grow and prosper for generations to come.” He finished by saying, “For 240 years, it’s been a terrible mistake to bet against America.” 

Applying our know-how and ingenuity to prepare for the next crisis is the right place to start.

Regenerative agriculture practices have received a lot of attention in recent years, and much of the focus has been on food production. But more companies outside of the food space are figuring out how they can invest in or use regenerative practices in the supply chain for their products. 

One of those companies is Timberland, which in late May announced a new partnership with the Savory Institute, a nonprofit focused on the large-scale regeneration of the world’s grasslands. The move comes on the heels of Timberland’s announcing a collaboration with Other Half Processing, which sources hides from Thousand Hills Lifetime Grazed regenerative ranches, to build a more responsible leather supply chain.

The new partnership with the Savory Institute is two-pronged. One of those prongs is Timberland’s move to co-fund the Savory Institute’s ecological outcome verification (EOV) programs on all ranches within the Thousand Hills Lifetime Grazed network, made up of early adopter regenerative ranches across the United States. The investment is part of a larger sustainability strategy at Timberland that is focused on three pillars — better products, stronger communities and a greener world. 

This offers an opportunity to actually source in a way that can help restore the environments that we sourced from, and actually have a net positive effect of giving back more than we take.

“What’s so exciting about the regenerative agriculture opportunity is basically that it’s a way that we can hit on all three of those pillars with one project,” said Zack Angelini, environmental stewardship manager at Timberland, the outdoor apparel and footwear manufacturing company, which uses leather for much of its outdoor wear. “This offers an opportunity to actually source in a way that can help restore the environments that we sourced from, and actually have a net positive effect of giving back more than we take.”

The funding, which Timberland shares with Thousand Hills, will help the EOV program collect data about the ranches with helping them continually improve their regenerative practices and outcomes. The program collects information about soil health, biodiversity and ecosystem function, which is related to water cycle, mineral cycle, energy flow and community dynamics.

Additionally, the funds will support network ranchers with resource development and getting more trainers trained, as well as covering typical administrative and marketing costs to help explain the message of what regenerative is and why it matters.

The second prong of the partnership is the opportunity for Timberland to test and learn and build a new supply chain from the ground up. This fall, Timberland plans to introduce a collection of boots using regenerative leather sourced from Thousand Hills Lifetime Grazed ranches. Angelini said this effort will serve as a proof of concept that can show what can be done. 

“But definitely our long-term vision is to really get to the wide-scale adoption of these materials, both in our own supply chain, but also getting it to be industry-wide,” he said.

Scaling up and reaching critical mass

Chris Kerston, chief commercial officer for the land-to-market program at the Savory Institute, said that around the time the institute was reaching critical mass in its food work — where consumers are able to access options that were produced regeneratively at similar price points and with similar quality as conventional options — it decided to start working with apparel companies.

For the apparel industry, critical mass would look like mass adoption of using natural materials and natural fibers. “So much of what we wear, if we think about it, is really just repurposed oil,” Kerston said. “And I think that the next generation, the millennials and [Gen Z] are saying, ‘Is that really what we want?’”

“We think we have a big opportunity in front of us to … bring this to the mainstream and help drive towards that tipping point,” Angelini added, noting that this work has been in the pipeline for Timberland for over a decade.

So much of what we wear, if we think about it, is really just repurposed oil.

“It actually dates back all the way to 2005 [when] Timberland co-founded a group called the Leather Working Group (LWG), which basically was formed to address the impacts of the tanning stage of leather production,” Angelini said.

Through the working group, Timberland was able to revolutionize the sustainability of the tanning of its leather by going down to that stage in the supply chain. LWG also helped to bring other players in the industry along. Now a not-for-profit membership organization that has developed audit protocols to certify leather manufacturers on their environmental compliance and performance capabilities, LWG counts other apparel brands such as Adidas, Eileen Fisher and VF, Timberland’s parent company, as members. 

Now, Timberland hopes to move the industry forward even further.

“We’re kind of excited about this next opportunity to basically help change the industry again, but this time, I’m going a step even further down the supply chain to the farms [where] the leather actually comes from,” Angelini said.