Planet Tracker argues failure to disclose food loss and waste-related supply chain emissions exposes investors to heightened financial risk
Europe's largest food retailers are failing to fully disclose the carbon footprint of their food loss and waste, both undermining their ability to tackle the problem and exposing their investors to financial risks, a new report from think tank Planet Tracker has warned.
Between a quarter and a third of all food produced for human consumption ends up going to waste every year, costing the food sector billions of dollars and generating a major chunk of the global greenhouse gas emissions, according to the UN's Food and Agriculture Organisation.
The new report published late last week by Planet Tracker reveals almost half - 44 per cent - of all food loss and waste (FLW) emissions in Europe come from indirect emissions generated across supply chains, but that these emissions are largely absent from retailers' corporate carbon accounting books.
Of Europe's 12 publicly-listed food retailers, it found only one - Finnish brand Kesko Corporation - discloses the indirect emissions generated by wasted, lost, or uneaten food in its supply chains.
Moreover, five of the companies, including British firms Ocado and Morrisons, do not publicly report any Scope 3 emissions generated across their value chains at all, whether from food waste or other activities, according to the report.
Failure to disclose indirect emissions data not only undermines the credibility of food firms' carbon reporting and, therefore, investors' emissions benchmarking processes, but also hampers the sector's ability to get to grips with a problem that costs food retailers across Europe an estimated €143bn each year, it argues.
"For food retailers, FLW not only represents lost earnings potential and reduced operating profit margins, but also contributes towards their greenhouse gas footprint," said Matthew McLuckie, director of research at Planet Tracker. "What's more, the lack of disclosure over these metrics means total FLW and associated Scope 3 emissions estimates are presumed to be significantly underreported."
He added: "This means investors are unable to undertake accurate emissions-based benchmarking, nor aggregate portfolio-based emissions exposure."
As well as commending Kesko Corporation, the report welcomes commitments from Carrefour, Sainsbury's, Tesco, and Dutch retailer Ahold Delhaize to reduce both emissions and food loss and waste from their activities, but cautions there is still "much room for improvement".
Of the 12 companies listed in the report, only Sainsbury's and Tesco have set net zero emissions goals in place, but in both cases these targets do not cover their indirect - or Scope 3 - supply chain emissions. Meanwhile, one of the firms assessed in the report - Belgium's Colruyt Group - has set no emissions targets at all.
Food retailers should therefore act to fill the gaps in their carbon accounting in order to help them reduce food waste across their supply chains, while shareholders should increase pressure on these companies to publicly report their food loss and waste data by volume and to set net zero targets for all of their Scope 3 emissions, the report argues.
It adds that shareholders have a particularly influential role to play in pushing food retailers to take action, as just 10 investors collectively hold $31bn of shares in Europe's top 12 food retailers. Moreover, five of these shareholders - BlackRock, Vanguard Group, Norges Bank Investment Management, Schroders, and State Street Corporation - have pledged their support for the guidelines set out by the Task Force on Climate-related Financial Disclosures (TCFD), as well as making various public commitments to clean up their own investment portfolios.
The report also argues sector-wide greenhouse gas reporting guidelines should be updated to include explicit guidance for calculating and disclosing FLW-based scope 3 emissions, noting that the two market-leading frameworks for the European food sector - the Greenhouse Gas Protocol and Food Loss & Waste Protocol - currently fall short.
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