Economic reality has caused some food retailers and processors to recalculate their greenhouse gas emission reduction targets, but that does not mean the issue has gone away, according to a Rabobank strategist.
Cyrille Filott, a consumer food global sector strategist based in Amsterdam in the Netherlands, told Farmers Weekly that the pace of meeting emissions targets has slowed as the dual impacts of covid and the Ukraine-Russia war have businesses focusing on recovering lost margins.
Emissions reduction targets established in 2019 or 2020 are going to be difficult to achieve, he said.
“That doesn’t mean sustainability is off the agenda, but we are seeing a readjustment and things are moving slower.”
Those cost pressures mean solutions such as switching to recyclable packaging are not currently viable, Filott said.
On average, 97% of retailers’ emissions are generated by their suppliers, and the question many retailers are facing is how are they are going to meet their 2030 targets?
“For me 2026 is a very important year because retailers will have to decide if they can make it or not.”
Suppliers and producers will eventually have to reduce their emissions as a requirement of their supply agreements but it will be a mix of carrot and stick.
“Technology doesn’t come for free so who pays for that investment?
“Farming practices will have to change but there is no idea of what that will cost or who will pay for it.”
Already companies like Nestlé and FrieslandCampina are offering incentives to suppliers who meet sustainability targets.
“Initially it will be more incentive but that is likely to change over time.”
Pressure is also coming from financiers, who by regulation have to report progress on meeting sustainability targets including that achieved by their borrowers.
Financiers such as Rabobank also offer access to low-interest loans for sustainability projects.
Filott said the European Union is changing rules to allow businesses to collaborate and use economies of scale to find solutions to resolve major sustainability challenges.
“Individual companies may have a plan but the dairy sector or the retail sector can now come together with their plans, data, pricing or incentives.”
Filott said attributes in food such as taste, price and convenience still rate high among consumers.
“It has to taste good.”
He said this reflects consumer experience with plant-based alternatives which, despite reaching price parity with animal protein, failed to resonate with consumers for taste, texture and healthiness.
At its peak, Tesco stocked 300 alternative meat protein products. Now most of those have disappeared.
“Sustainability on its own will not make you sell a product.”
But the experiment is not over, with Lido, a large German supermarket chain, trialling mince that is 70% beef and 30% pea protein.
“They claim it tastes the same, it’s priced the same as beef mince and it is convenient.”
More: Wallace is visiting seven countries in six weeks to report on market sentiment, a trip made possible with grants from Fonterra, Silver Fern Farms, Alliance, Beef + Lamb NZ, NZ Meat Industry Association and Rabobank. Read more about his findings here.
