June 8, 2016

A New Report on How General Mills and Kellogg are Tackling Climate Change

In the global effort to limit climate change and reduce greenhouse gas emissions (GHGs), the energy and transportation sectors are the most obvious targets, but perhaps not the biggest. Consider the food business. Agriculture alone – not including the sizable food processing industry — produces up to 35% of the world’s greenhouse gas emissions (and uses70% of the water).

By some estimates, humanity may need to produce as much food in the next 40 years as it did in the last 8,000. And that can’t happen if we don’t get the carbon and water footprint of agriculture under control. With the stakes so high, it’s welcome news that food giants are getting serious about emissions.

Two big companies in particular, General Mills and Kellogg, have set new, aggressive goals. Their targets are important and different than what came before in two key ways: 1) they’re explicitly based on science; and 2) they cover emissions from agricultural suppliers. This latter point is a big deal — General Mills estimates that agriculture is responsible for more than 40% of its lifecycle GHG emissions (and uses 82% of the water).

The companies’ goals as stated, are fairly straightforward:

But the reality of reaching targets like these is much less simple.

First, emissions from food and agriculture stem from a diverse and complicated mixed bag of sources, including clearing land for grazing or crops (often burning trees and releasing the CO2), direct energy use on farms, fertilizer production, and methane from rice fields and from animals (mostly burps).

Second, even if you get the sources right, the state of data collection on farms is mostly nascent. The industry and partner NGOs are building tools and programs to get farms measuring emissions, but the current state of the art is surprisingly simplistic: take your total yield of a crop and multiply it by an estimate of emissions for that crop (taken, most likely, from an academic study of some plot of land or in a lab). It’s a blunt tool since clearly that kind of estimate does not reflect differences in growing region or farming methods.

So given the inherent difficulty of this whole endeavor, it’s important to ask how prepared General Mills and Kellogg are to navigate this tricky terrain. Answering that question was a core reason my firm, at the request of Oxfam International, authored a new report, Evaluation of General Mills’ and Kellogg’s GHG Emissions Targets and Plans.

We were not trying to judge the companies and their goals on outcomes, but rather to assess how their goals line with credible science-based target methodologies, and whether their action plans are robust enough to make achieving the goals likely.

I won’t rehash the whole report – you can check it out here – but in short, the outlook for both companies, for both areas of assessment, is positive. Their goals are clearly connected to science-based methods (leveraging work by NGOs like the World Resources Institute and CDP and working with advisors like BSR). And they both have multi-faceted plans to get there.

Written with my colleague Jeff Gowdy, sustainability consultant and adjunct professor at Vanderbilt’s Owen Graduate School of Business, the assessment suggests five areas to consider carefully in crafting an operational plan to reach science-based carbon reductions:

In essence, we’re saying companies should ask themselves: who’s in charge, how will we spread best practices, how will we know if we’re making progress, how well will we adjust to changing science, and how open are we being with the world?

Given the built-in uncertainty surrounding agricultural emissions, locking down a plan with these elements is important. But it’s only good enough in the short-run. Some additional big gaps need to be closed for the food value chain to slash emissions dramatically. Companies will need much better data at the farm level, expanded industry-wide research and best practice collaborations, and some investment funds to spread technologies.

But thinking even more expansively, the leading companies need to start imagining goingbeyond science-based targets. Climate math is brutal — we only have so much carbon left to emit to keep the planet stable. Thus science-based targets are the minimum — like how much water you need to put out a fire. Leaders should consider setting goals that are even more aggressive to provide some buffer if some best practices fail to live up to their promise, and to help make up for the laggards in an industry. The goal, ultimately, is to prevent the fire in the first place.

Going big is also an opportunity to explore truly cutting edge techniques in what some call “regenerative agriculture”: techniques to use farms and ranches to actually capture more carbon from the air than they produce. The leaders in this exciting new space (often, ironically, using ancient practices) are employing a range of techniques, including grazing animals differently and managing soil smarter so both processes sequester carbon. It’s possible that agriculture could move from being a third of the carbon problem to being the ultimate solution.

For now, though, companies like General Mills and Kellogg are on the right path. Even without completely reimagining food production, these companies are taking a big leap of faith — they’re setting goals without knowing exactly how they’ll get there. But the science of climate change demands that we move quickly and these goals and plans are a very good start.

(This post first appeared at Harvard Business Review online.)

(Andrew's book, The Big Pivot, was named a Best Business Book of the Year by Strategy+Business Magazine! Get your copy here. See also Andrew's TED talk on The Big Pivot.

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