The story of sustainability at the steelmaking giant ArcelorMittal reads like a years-long courtroom drama. 

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Environmental groups have led the prosecution. ArcelorMittal generated just over 100 million metric tons of carbon dioxide equivalent in 2024, roughly on par with industrialized nations such as Belgium or Chile. Emissions of that size demand urgent attention, argue the company’s critics. Instead, ArcelorMittal has failed to build the green steel plants promised in its decarbonization agenda, while simultaneously returning billions of dollars to shareholders and building high-emissions facilities in India. 

The defense from the company has been steadfast, and often backed by industry insiders. In this view, ArcelorMittal is committed to decarbonization but constrained by the steel market, which is being roiled by over-supply, high energy prices and a lack of government support for low-carbon initiatives. The company would like to decarbonize faster, it and other steelmakers insist, but economic realities make that impossible.

In this installment of Chasing Net Zero, our company-by-company look at progress toward 2030 climate goals, Trellis assesses the dueling narratives surrounding the largest steelmaker headquartered in the Global North. The disputes turn out to have little to do with decarbonization technologies or emissions data. The two sides broadly agree on the challenges the industry, which is responsible for around 8 percent of global emissions, faces in reaching net zero. Beneath the rhetoric, what’s in dispute is something more fundamental: which stakeholders a company should serve and, in the midst of a climate crisis, what constitutes leadership?

ArcelorMittal’s climate commitments

ArcelorMittal’s 2021 Climate Action Report, the origin of most of its current goals, was a feast of commitments:

• Global emissions intensity, defined as the carbon released for every ton of steel produced, would fall 25 percent from a 2018 baseline by 2030.
• A more ambitous 35 percent drop for European operations. 
• Reaffirmation of an earlier promise to reach net zero by 2050.
• A two-year timeline for validation of its targets by the Science Based Targets initiative (SBTi).

The journey to these goals was also mapped out, including plans for more recycled steel and transitioning to clean energy sources. The flagship project would be what ArcelorMittal billed as “the world’s first full-scale zero carbon-emissions plant,” slated to come online in Sestao, Spain, in 2025. 

The total cost: $10 billion by 2030, around a third of which the company said it would deploy by 2025. No small sum, but Arcelor, which is headquartered in Luxembourg, had the clout to follow through. It’s the world’s second-largest producer of steel, according to the World Steel Association. It makes steel in 15 countries, employs 125,000 people and generated $62 billion in revenue in 2024.

Four years later, the future envisioned in 2021 is barely closer to reality. ArcelorMittal’s absolute emissions have fallen by close to half, but almost all of that drop is due to declining production and asset sales. A better gauge of the company’s net-zero transition is emissions intensity, which has dropped by just 5.4 percent globally and 5.0 percent in Europe — well short of the pace required to hit its 2030 targets, which the company said in a November 2024 update that it was “increasingly unlikely” to meet. 

What’s more, ArcelorMittal’s target only covers direct emissions from its steel plants and the electricity they consume — Scopes 1 and 2, in other words. This omits other significant sources, including upstream Scope 3 emissions from mining. When those emissions are added, progress all but evaporates. 

As for plans to work with the SBTi, these also dissolved; the company’s commitment to set a near-term target with the organization was removed last year after the deadline for doing so expired.

In Spain, a critical part of the Sestao project is on hold. So are several other low-carbon projects in Europe, which was to be the focus of the company’s decarbonization push. ArcelorMittal’s total decarbonization spending between 2021 and 2024 was $1 billion — again, far behind the pace envisioned in the company’s climate action plan.

What’s more, the company’s calculations omit emissions from a 2019 joint venture with Nippon Steel in India, known as AM/NS. The company, of which Arcelor holds 60 percent, relies on conventional, high-emissions facilities. AM/NS emissions in 2024 were 17 million tons, placing Arcelor’s share at 10 million tons. That would increase ArcelorMittal’s total emissions by almost 10 percent, were the company to include them in its global total. But while revenue from the joint venture is included in the company’s financial statements, the emissions are omitted from its sustainability report.

The industry is off track

From a planetary perspective, ArcelorMittal’s net-zero narrative makes for depressing reading. From an industry point of view, it’s pretty much par for the course.

“We’re not an anomaly,” said Nicola Davidson, Arcelor’s vice president for sustainable development and corporate communications.

Things looked different when the company set its targets in 2021. ArcelorMittal planned to reduce emissions by transitioning existing steel production, which relies on a form of coal known as coke, to newer technology powered by clean hydrogen. Since clean hydrogen remains expensive, natural gas could be used as an interim step. The company also planned on using more scrap steel as an input, which further reduces emissions relative to freshly mined iron ore. To make the economics pencil out, Arcelor said its own investments would need to be accompanied by billions of dollars in government support, together with buyer commitments to pay a premium for low-carbon steel.

Then geopolitics intervened. Natural gas prices in Europe soared after Russia’s invasion of Ukraine, which happened around six months after Arcelor’s plan was released. Margins have been further hit by cheap exports from China, which manufactures around half the world’s steel and has significant excess capacity following a slump in domestic demand. Government support can buffer these forces; Arcelor has been offered around $3.5 billion in subsidies to build green steel facilities in Europe. But the company insists this is not enough, and that it is forced to delay because decarbonization is uneconomic under current conditions.

Another factor is limited demand for green steel, which Davidson says Arcelor can “comfortably” meet with its existing lower-carbon facilities. “Everyone will say they want low-carbon steel,” she said, “but will they actually pay for it? No. And the reality is that it does cost more, and steel is a very low-margin industry.”

Arcelor adds that while progress might not have been as rapid as critics would like, it’s not standing still. Where it’s economic to do so, the company says, it is transitioning away from fossil-fuel powered furnaces to less emissions-intensive electric arc furnaces: In 2024, the latter produced 25 percent of ArcelorMittal’s global output, up from 19 percent in 2018. It’s also processing iron ore using natural gas where it can, rather than using coke.

These initiatives haven’t fundamentally changed Arcelor’s contribution to climate change. But Arcelor is not alone in making slow progress. To hit net zero by 2050, the industry needs to have built around 90 near-zero emissions plants by 2030, according to the Mission Possible Partnership, which brings together companies from emissions-intensive industries. By April of this year, the partnership counted three such facilities in operation, with only another nine having reached a final investment decision. 

As a consequence, emissions intensities remain high relative to net-zero goals. To decarbonize in line with 1.5 degrees Celsius of warming, average intensities should have fallen to 1.46 tCO2e per ton of steel in 2022, the most recent year for which the Transition Pathway Initiative, a research project, has data. The actual figure was 10 percent higher — and had grown over the previous year. 

There are bright spots amid this gloomy picture, but they are exceptions. Four companies have had near-term and net-zero targets validated by the SBTi, for example, including the Swedish steelmaker SSAB. Sweden is also home to Stegra, a groundbreaking facility that will use clean hydrogen and electricity to produce clean steel when it enters service next year. Don’t expect a flood of similar projects, however: Sweden is unusual in having plentiful clean energy — 99 percent comes from low-carbon sources — available at prices that are among the lowest in Europe, together with easy access to iron ore. 

On the other end of the spectrum sits India. The country lacks natural gas, a potentially useful interim decarbonization measure, as well as scrap steel for recycling, buyers willing to pay a premium for green steel and a government willing to fund substantive decarbonization in the industry. Thus ArcelorMittal faces a choice: Grab a share of the burgeoning Indian market using conventional high-emissions technology, the only economically viable method at scale, or stay out. And India is one of the few countries where the industry sees potential for significant growth. 

“If you’re ArcelorMittal, you’re looking at your portfolio and saying, ‘Where do I grow? Where can I be on the offense rather than defense?’ It’s India,” said John Lichtenstein, a managing partner at World Steel Dynamics, a U.S.-based consultancy and analytics firm. 

Arcelor’s choices

At the heart of ArcelorMittal’s net-zero journey lies a question about who a company should serve.

For many investors, the answer is simple: shareholders. Companies will rarely advocate for such a narrow framing, or at least not in public. Most feel compelled to subscribe to a broader conception of corporate purpose — think: “stakeholder capitalism” — that encompasses people and planet alongside profit.

One key test of a company’s position is how it allocates capital. It’s here that ArcelorMittal’s claims about economic challenges have attracted particular scrutiny. In 2021, the year it launched its climate action plan, and the following three years, the non-profit SteelWatch estimates that Arcelor returned around $12 billion to shareholders, mainly by buying back its own shares. That dwarfs the $1 billion the company spent on decarbonization. 

Arcelor framed this as returning free cash to investors — a defensible stance when decarbonization projects face so many headwinds. The view is bolstered by signs that steelmakers with more ambitious decarbonization plans are encountering obstacles. Germany’s Thyssenkrupp Steel, for example, is another with an SBTi-approved target; it recently announced plans to cut or outsource 11,000 positions from its 27,000-strong workforce.

“At the end of the day, shareholders, stakeholders, they don’t expect companies and company leaderships to destroy value,” said Davidson. “They expect you to create that.”

“In this environment, the prospect of generous investment in new productive assets may seem irresponsible,” noted Isha Chaudhary, a research director at Wood Mackenzie, a data and analytics provider. “Instead, the priority may be to continue business and eke out a profit margin as far as possible.”

The market seems to broadly agree. ArcelorMittal’s stock is up more than 150 percent over the past half-decade, comfortably outperforming the S&P 500 and in the middle of the pack relative to prices changes at other large global steelmakers, such as Nippon Steel, South Korea’s POSCO and India’s Tata Steel.

If you take a broader view of corporate responsibility, however, the 12-fold difference between funds returned to shareholders and decarbonization spending is a failure of leadership that exposes the company’s claim that it cannot invest more in clean-steel projects. “We believe they have the capital to do it,” said one steel industry analyst, who asked not to be named because they have a direct relationship with Arcelor. 

Arcelor insists that it would not make economic sense to do more, but industry experts who spoke to Trellis cited opportunities. The company could build smaller hydrogen-powered steelmaking facilities than it initially planned. Or do more to transfer lower-emissions processes from Europe and the U.S. to less wealthy nations. “They could be the model of Global North bringing green technologies to Global South,” said Caitlin Swalec, director of the heavy industry program at Global Energy Monitor, a nonprofit data provider. 

“What steelmakers do is start with the question of what’s feasible given today’s bottom line and today’s technology constraints,” said Caroline Ashley, SteelWatch’s executive director. “In a world where climate change is accelerating around us, we don’t actually think that’s the right question. The question should be: ‘What is essential to make our contribution to addressing climate change and where do we have to take new risks?’”

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More than 50 influential climate organizations have come together to promote a vision for a next-generation carbon market. The group, known as the Verified Carbon Market (VCM+) Coalition, aims to mobilize $100 billion in climate finance, which will be used to avoid or remove 5 billion tons of carbon dioxide equivalent emissions by 2035.

At the heart of the coalition’s vision is a market that’s larger and more unified than today’s. Rules for what constitutes high-quality credits in the current market are still emerging, for example. Companies and standard-setters are debating the role of credits in corporate net-zero strategies. The market is also divided between compliance schemes, such as the European Union’s Emissions Trading Scheme, which allow use of credits as part of mandated emissions limits, and the voluntary use of credits by companies.

The coalition will provide “connective tissue” in the form of funding and expertise to organizations working to overcome these and other barriers to scaling the market, said Alexia Kelly, managing director of the Carbon Policy and Markets Initiative at the High Tide Foundation, a coalition member. Others include the Integrity Council for the Voluntary Carbon Market (ICVCM), a leading standard-setter for credits, environmental organizations such as RMI and The Nature Conservancy, and for-profit partners including BeZero, a carbon credit rating agency.

Market-based mechanisms

Some members are known for advocating for greater use of credits to hit net-zero goals. The Science Based Targets initiative (SBTi), which maintains the most widely used corporate net-zero standard, only allows credits to be counted against the small fraction of emissions that remain at the end of a company’s journey to net zero. The initiative, which is consulting on a revision to its standard, is facing calls to relax the rules. Advocates for change say companies should be allowed more freedom to use market-based mechanisms to hit goals.

“You cannot have a target accounting standard that does not include market-based accounting,” said Kelly. “What that means is it’s really expensive and really hard, and you miss out on opportunities to help make a whole bunch of other good stuff happen.”

The coalition will also support work aimed at raising the quality of credits. Confidence in the voluntary market has been undermined in recent years by academic research and investigative journalism that exposed sometimes widespread use of credits that delivered little climate benefit. Newer initiatives, including the ICVCM, which Kelly described as providing “the global threshold benchmark for high integrity,” appear to be helping to rebuild trust. 

Absent from the list of coalition members are Verra, Gold Standard and other major credit registries. Kelly said conversations with other potential partners are ongoing: “We anticipate that we’ll have additional folks joining the coalition down the road.” 

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Honda has opened a circular economy center in the heart of Ohio to recycle and repurpose auto manufacturing components. Opened on Sept. 18, the Resource Circularity Center is located between the company’s Marysville and East Liberty auto plants and is thought to be the first dedicated effort by a carmaker to give a second life to things like wrenches, robotics and office chairs, as well as car parts and aluminum wheels.

“What really excites me the most is how can we learn and even unlearn things that we typically experience throughout our acquisition process,” said American Honda Director of Procurement Sustainability Matt Daniel. “We’re really trying to treat the waste that we have not so much as an end, but as a resource that we can recirculate and move back into our operations.”

The Midwest operation opens at a time of renewed focus by policymakers and business leaders on strengthening domestic supply chains, especially as tariffs stress the import-export webs of manufacturers. As transportation has electrified in fits and starts, so have hopes for hubs to recycle electric vehicle batteries in North America. Yet other circular strategies are moving forward in automakers’ long-term plans to drive down climate emissions from their extractive supply chains.

“For it to be sustainable, it has to be both financially beneficial and good for the environment,” Daniel said. “What we’ve learned through this whole thing, at least initially, is there’s a lot more opportunity than we realized.” For example, typically Honda paid a third party to take spent electronics, but now it has found potential takers for free.

Is there gold in circular supply chains?

The high value of parts for repairs and remanufacturing has enabled an independent automotive recycling and dismantling industry to thrive for generations, noted Emil Nusbaum, vice president of strategy, government and regulatory affairs at the Automotive Recyclers Association in Washington, D.C. Moving forward, recovering critical minerals from onboard electronics and batteries presents new opportunities and challenges.

“It’s a reflection of a changing environment where there really is an emphasis on sustainability,” Nusbaum said. “It’s great to see that car manufacturers are starting to recognize the value in reusing, repurposing, and remanufacturing parts and equipment in their supply chains. This helps maximize existing resources and reduce waste.”

Honda’s news follows a move by Toyota Group’s procurement and logistics house in July to purchase steel recycler Radius Recycling of Portland, Oregon. Radius has sites for self-service automotive recycling as well as scrap recycling and vehicle shredding.

“Building on our longstanding relationship, this acquisition will help expand our circular economy initiatives, enhance the supply of high-quality recycled resources and deliver better solutions for our customers and our planet,” stated President and CEO Naoyuki Hata of Toyota Tsusho, a subsidiary of Toyota Group, whose targets for carbon neutrality by 2050 are validated by the Science-based Targets initiative (SBTi). Toyota aims to reduce climate emissions by 30 percent across its supply chain, logistics and dealerships.

Driving decarbonization

Honda’s circularity center is not about car-to-car recycling. However, Daniel is studying alignment with the company’s “horizontal” recycling strategy to recover value for new products from end-of-life vehicles. “Whether it’s an industrial motor, or a robot that we’re focused on on the indirect side of a vehicle,” he said, “in many cases we’re talking about the same raw materials, steel, aluminum, through various grades, copper and plastics.”

The work serves Honda’s corporate strategy of carbon neutrality by 2050. (Honda submitted a net zero target several years ago under an earlier framework of the SBTi.) By that year, the brand also hopes to reach zero industrial waste and purchase 100 percent materials that are either “recycled, reused or otherwise lower-impact.”

The plan’s two phases include acquiring “pioneering capabilities” and preparing circular business models, products and innovations into the early 2030s. That would lay the groundwork for Phase 2, a business transformation.

Evolving circular procurement

American Honda’s CEO Noriya Kaihara two years ago asked Daniel to lead the creation of a resource-circulation “roadmap” for indirect goods. 

“He grabbed a table and a chair in a conference room out in California, and he said, ‘For things like this,’” Daniel said. “And that was basically all I had to work with. I said, ‘Well, that’s great. I’ve got two questions: One, what is resource circulation? And two, why me? I’m a procurement guy and spent my whole career acquiring things, and now you want me to figure out how to get rid of things.’”

That led Daniel and a handful of others to create the circularity center. They prioritized recovering steel, aluminum, copper; equipment and spare parts that service it, as well as parts within its dealer network.

As items arrived in cardboard, polystyrene or plastic bags, the group explored creative and potentially profitable reuses for packaging, too.

More than a century ago, Ford fashioned charcoal from sawmill waste leftover from the hardwood that made up Model Ts. That later spawned the Kingsford brand. “That mindset is what we’re trying to replicate within our circularity center,” Daniel said.

Honda’s center shares elements of municipal sorting plants for curbside-collected bottles and cans. “It’s a little bit cleaner, though,” Daniel said. Nearby logistics company NK Parts handles and sorts materials. An AI tool scrapes data from supplier websites to speed up identification.

If there’s no internal purpose for waste that reaches end-of-use at Honda facilities, Daniel’s team turns to partners, potentially including eBay. The center will also dismantle and recycle service parts from Honda dealerships around the country.

Another Honda project has investigated turning scrap leather from a seating factory in Mexico into new items, like luggage tags. Other circularity efforts involve chemical sorting, nylon recycling, closed-loop plastics and rare earth reuse technologies.

Daniel believes the resource center’s benefits can apply to other industrial goods businesses facing tremendous cost pressures. There’s always more room to shave waste from a supply chain, he said. “Looking across the company for those opportunities to consolidate and have a set strategy is really going to pay dividends in the long run.”

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The opinions expressed here by Trellis expert contributors are their own, not those of Trellis.​

For many companies thinking about climate change, carbon accounting is hot right now. 

But most of the attention focused on accounting is really about improvements to existing carbon reporting frameworks. Both reporting and accounting have important roles to play in the push for decarbonization, but failing to understand the difference between the two will lead to compromised emissions management approaches that don’t stand a chance of arriving at their desired net-zero destinations. 

We know this because reporting has been driving emissions information for the past three decades and yet greenhouse gases continue to rise and carbon markets continue to falter. The distinction may at first appear trivial but when it comes to climate, the difference between reporting and accounting frameworks marks the difference between hitting targets versus simply setting them. 

Terminology 101 

Climate-related reporting is a more general phenomenon than accounting. Reports can be based on qualitative disclosures, quantitative numbers, such as Scope 2 and Scope 3, that have no underlying basis in an accounting-system, or on accounting-based numbers. Greenhouse gas reporting frameworks count emissions according to a standardized set of rules to produce documentation that’s useful for three primary activities:

• Fulfilling a policy or voluntary requirement such as inventories and disclosure
• Enabling advocacy
• Documenting emissions alignment such as matching inventories to targets 

Carbon accounting, on the other hand, requires every anthropogenic emission to be counted and fully allocated. The numbers must be accurate, verifiable, comparable, mutually exclusive across arm’s-length entities, collectively exhaustive and policy agnostic. In fact, only once policy-agnostic accounting has been put in place can emissions information-based laws and regulations be effective in steering high-emitting sectors through a decarbonization transition. 

The primary purpose of a carbon accounting framework is to inform capital allocation decisions. It serves three critical functions:

• Unlocking investment for decarbonization through performance-based competition
• Facilitating demand for carbon removal through asset-liability matching
• Supporting accountability mechanisms, including governable net zero

Neither good nor bad

Reporting and accounting are neither inherently “bad” or “good,” but their application in specific contexts lead to different outcomes. In the case of greenhouse gases, reporting frameworks allow emissions (and reductions) to be counted multiple times or in some cases, not at all. Such indeterminate overcounting (or undercounting), along with the allowable use of estimates, averages and flexible boundaries, prevent competition for decarbonization while also obstructing the advancement of carbon removal that scientists deem necessary. 

Reporting frameworks, which range from ISO standards to the Greenhouse Gas Protocol, allow emissions to exist on multiple “ledgers” at once and disappear by moving them beyond the reporting boundary. Companies can use reporting frameworks to produce “balance sheets” where emissions are labeled as “assets” and traded in the form of an avoidance. This is what makes the reporting/accounting paradigm so confusing; the terminology sounds the same but their effect on global emissions management is dramatically different. 

In an accounting system, ledgers are used to record all anthropogenic emissions and can be added up to form a single record of global carbon stocks and flows. The E-ledgers Institute’s algorithm (of which I sit on the board) uses three types of journal entries. One to account for purchased emissions that transfer between a seller and a buyer; another for direct emissions transferred between the emitter and a geological carbon equity account; and a third to allocate emissions within a company to its products.

In the E-ledgers framework, emissions are recognized as E-liabilities and only removals can be recognized as E-assets. All emissions are counted only once so that at the geological scale assets = liabilities + equity. 

Implications for carbon markets

Perhaps the most important distinction between reporting and accounting frameworks is their implications for carbon markets. 

Carbon markets built on reporting systems lack integrity and enable a kind of shell game in the form of credit boundary design. That’s because reporting systems lead buyers and sellers to make claims based on reputational authority. Reputational authority is primarily derived from narrative arguments over additionality, permanence and leakage. The result: Carbon markets built on reporting frameworks are self-referential, highly gameable and prone to collapse. 

The voluntary market was designed to be “better than nothing” in the absence of climate regulation. They offered a way to finance mitigation before governments acted, to reward early movers and to mobilize capital around a shared sense of urgency. To drive toward net zero, however, carbon markets can no longer depend on credibility narratives. They need something more stable, such as the laws of physics. 

A carbon market built on an accounting system facilitates instruments with atmospheric authority — verifiable increases in carbon reserves that are tied to durable reduction of atmospheric emissions. Just as important, and more immediately, an accounting-based market facilitates investment in avoided emissions by capitalizing performance improvements in the form of lower E-liabilities. And through the principle of impairment, accounting provides guidance for recognizing and replacing a sudden loss in asset value thereby enabling the pursuit of permanence while opening markets for nature-based carbon removal.

Accountability: The ultimate imperative 

Only an accounting system can provide a true and fair basis against which regulatory and voluntary mechanisms can durably hold emitters accountable. Feasible accountability mechanisms, such as carbon-border adjustments, product-intensity standards, supplier contracts and auditable voluntary net-zero claims, are ready for action. 

Although sustainability professionals working today might not connect the dots to recent history, the U.S. stock market crash of 1929 and subsequent global depression was caused in part by a lack of accountability, as firms reported whatever profits, expenses, assets and liabilities they pleased. Then a group of committed academics, accountants, executives and philanthropists got together to create the Generally Accepted Accounting Principles (GAAP). Financial accounting standards have endured because they enable decision-making and accountability. They allow investors to allocate capital based on accurate and comparable information rather than self-referential reputational claims. 

To hit net zero targets, firms need GAAP for climate. Those defending carbon reporting frameworks are understandably afraid and skeptical. But steering with reporting frameworks won’t drive down emissions in the real economy. For that we need accounting. It’s a boring, centuries-old technology — but it’s the only one capable of filling the gap between ambition and action. 

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Companies from across the food and agriculture sector unveiled new initiatives this week in a bid to boost the already substantial expansion of regenerative agriculture across North America.

Regenerative methods offer huge potential benefits. By reducing tillage, changing grazing patterns, planting cover crops and deploying other techniques, producers can boost yields and save on fertilizer costs. And because the methods also cut farmland emissions and sequester carbon in soils, food companies and retailers see reductions to Scope 3 inventories, which include upstream emissions from producers.

Adoption is growing but varies widely. While just over a quarter of cropland acres were managed using no-till in 2022, the year of the most recent Department of Agriculture census, cover crops were planted on less than 5 percent of that same area. Two key barriers to further scale, cost of deploying regenerative methods and a lack of expertise among producers, were among the focus areas for the partnerships announced this week.

The new initiatives

• McDonald’s is investing more than $200 million over the next seven years to accelerate regenerative grazing and wildlife conservation on ranches spanning 4 million acres and up to 38 states. A group of McDonald’s suppliers, including Cargill and Coca-Cola, will provide additional funding to the National Fish and Wildlife Foundation, a conservation organization that will award grants to support ranchers.
• PepsiCo, Unilever and others will provide financial and strategic support to farmer organizations working to scale regenerative methods among local producers. Phase one of the program, known as Supporting Trusted Engagement and Partnership (STEP) up for Agriculture, includes three groups assisting farmers in Canada and the U.S. Two philanthropic funders, the Platform for Agriculture and Climate Transformation (PACT) and the PepsiCo Foundation, will also provide backing.
• Danone and Ahold Delhaize U.S.A., a retailer that owns Food Lion, Giant Food and other chains, are investing an undisclosed sum in supporting dairy farmers in Danone’s supply chain to reduce methane emissions. The Nature Conservancy, a nonprofit, will contribute technical and financial expertise.

Why the investments make sense

The multi-party nature of these collaborations reflects a growing awareness of the potential of regenerative agriculture to safeguard food production, reduce emissions and benefit farmers. Agriculture giant ADM, for instance, said earlier this month that it hit its target of deploying regenerative practices on 5 million acres a year ahead of schedule. PepsiCo’s support for STEP up for Agriculture is linked to its commitment to scale regenerative agriculture to 10 million acres by 2030.

For Ahold Delhaize U.S.A., the Danone partnership is an opportunity to learn about specific interventions that reduce methane emissions from dairies — including better management of manure — and the extent to which those methods can reduce the retailer’s Scope 3 numbers. 

“Part of the learning is how do we translate what we do on farm into our reporting,” said Kendrick Repko, vice president for health and sustainability at Ahold Delhaize U.S.A. “Because currently we use a spend analysis type of calculation. So as our sales grow our emissions grow, and we don’t have a good mechanism at the moment to translate the on-farm reductions into our overall emissions. That’s something our team is evaluating and seeing how we can get a better tool to get to that more granular level.”

On the Danone side of the partnership, the work will help underpin an industry-leading target of reducing methane emissions 30 percent by 2030. “We really need to work across the value chain and collaborate in order to get right our minus 30 percent goal,” said Melanie Chow Li, the company’s vice president for mission and sustainability.

Working with North American farmers is another benefit, she added: “Over 90 percent of our ingredients are sourced from U.S.-based farms and 100 percent of our milk is U.S.-based. By working on regenerative agriculture practices through this partnership, we’re strengthening the domestic supply chain and finding a way to build long term resilience in these locations. I think that’s ultimately where multi-faceted value-chain partnerships have a lot of value.”

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