Two years ago, global meat packing giant JBS made a commitment to go net zero by 2040. 

Today, they are under fire for (allegedly) not having a plan in place to back up their target. 

So was it greenwashing? 

Or are we at risk of making perfect the enemy of progress, when we absolutely need bold and ambitious action? 

Either way, it’s clear that companies are facing MASSIVE challenges when it comes to setting meaningful climate targets and determining how to hit them. Questions we commonly hear:

• What’s the difference between target setting frameworks, and why does it matter? 
• Are offsets or insets the future? 
• What technologies can help reduce and draw down emissions in agri supply chains? 

If you find yourself thinking about technology, market, and policy trends that are making it easier or harder for companies to take action–you’re not alone. Check out this video and get in touch, we'd love to chat! 

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Transcript

Sarah Nolet [0:00]

So JBS the global meat processing giant has been in the news recently because a nonprofit, the Institute for Agriculture and Trade Policy, challenge claims that JBS made around their net zero by 2040 commitments.

IATP brought the challenge to the national advertising division of BBB National Programs, another nonprofit that supports industry self regulation and dispute resolution.

This group ultimately recommended that JBS discontinue claims about achieving net zero greenhouse gas emissions by 2040. Because while JBS is setting expectations with consumers, it doesn't actually have a plan in place to achieve this target.

As you might expect, JBS is disputing this recommendation.

We've thought a lot about emissions reductions in food and ag supply chains, and have worked with corporates on strategies for setting and achieving emissions reductions targets.

So I thought it might be a good chance to sit down with Komal and Matthew, Hi, Komal. Hi, Matthew, and ask them what they've taken away from these recent headlines. Komal, let's start with you.

Komal Patel [1:05]

Awesome, thanks, Sarah.

My first reflection was actually on a conversation that came up recently about the difference in attitudes that companies around the world might take to setting targets to reduce their organizational emissions across Scope 1, 2, and 3 (that's the mission that they directly control and own and that are otherwise in their supply chain, both up and downstream of them).

And the reflection that someone was posing towards me was, perhaps that companies in places like the US are more ambitious or bullish in that they might set targets without knowing how they'll get there, but just back themselves, that if we set this target, we'll throw everything we can at the wall, and we'll figure out how to get there.

Whereas perhaps companies in places like Australia might be a little bit more conservative and hesitant to put forward commitments that they don't know with confidence that they can meet yet.

I thought that difference in attitude was interesting, culturally, but also what it means from a greenwashing perspective. And that relates to some of the pushback that JBS is facing right now, like what is made with good intent versus what can reasonably be demonstrably achieved.

I think the other point that it comes to is the reasons behind why and how companies are setting targets.

And that can be really confusing from a consumer perspective on what it means when a company says, Oh, we're carbon neutral, or we're net zero-- what does that mean and how are you doing that?

In the JBS example, in particular, I think a lot of the pushback is coming, because they set specific net zero targets. And embedded within their net zero targets is also a commitment to work with the Science Based Target Initiative, which is also a nonprofit, but they have a framework for how companies can set emissions reductions targets and achieve them, and they have specific rules about what types of activities or what types of removals or reductions can count towards hitting these targets.

The takeaway really there, is that why you're setting a target--is it just to market to consumers, rr is it to satisfy investor demands, or regulatory demands?--the integrity of those claims and the targets that you set, influences whether or not you can use things like offsets to meet your targets and the difference between real drawdown and removal of carbon or things like avoided emissions (which is oh, normally, we would do X, but if we're not doing it, then we can count that on the negative side of the equation to bring our total number down)

So, those were some of the key initial reflections that I had when thinking about what was circulating in the news.

Matthew Pryor [4:26]

I think that last one about how you get there, and the use of offsets are something that's pretty readily recognized.

We've seen plenty of examples pretty high profile examples where ag was on one side, normally on the supply side. So Microsoft acquiring, carbon offsets from agricultural production in Australia was it was a pretty big news item, when it kind of hit the press. And I think that that's in the public mind.

We've all probably ticked the box, you know, for a flight to offset the implied emissions of the jet fuel, etc, that takes us from one side of planet to the other.

And so, we've had this world where, you know, agricultural producers can think about generating carbon offsets through their activity having been recognized and selling them. And that's sort of been a separate activity, right, or like a, almost an uncorrelated source of income compared to their supply chain.

When we look at it in this picture, when JBS look upstream into their Scope 3--so you know, where all of their inputs come from-- I think we tend to think more of something that is referred to as insetting. And that is, if a significant part of the emissions that are in my total Scope 1, 2, and 3 are coming from agricultural production, are there ways that those can be reduced and recognized and I get to count them?

I think, one important consideration there, especially on the agricultural production side is, eventually you probably will have to choose.

So in this world where science based targets are probably taking emphasis away from offsetting your way out of an emissions problem, then maybe the market for offsets disappears.

A second important consideration is, as we've seen, there are different kinds of removals and drawdowns. Vegetation and soil based would be amongst the most common drawdowns in agriculture, and, the science and the market has shifted there quite a bit recently.

And so in a world where maybe soil based drawdowns as a kind of offset to go in the offset market, perhaps is less appealing for some buyers, I think that that will really have agricultural producers thinking a lot more about "gee, I need to be thinking about insetting."

If you look at the Cargill example there from the previous slide, where they  talk about their Scope 3 as a specific reduction on a per kilo of produce. And I think that framing on a dry read feels more informed about the challenges that agricultural producers who are upstream in your supply chain are going to have to work and I think that feels like the future to me.

One more view of, you know, how am I going to be measured? Okay, yes, I could get a credit and sell it in an offset market, and I get some money. And that's great. I could also start getting pretty specific demands on me saying, we assess that, you're so many kilos of CO2e per kilo of produce, and we need you to be at half of that on a per kilo basis. And that just feels a lot more like the conversations will be that we're having more and more and more of in the future.

Sarah Nolet [8:22]

Yeah, it's interesting to me the perspective of the processor, or of the food company, and they're thinking about marketing claims and consumers and you know, who's financing them their share price, etc.

When you think about producers, they're asking questions, kind of like you alluded to Matthew, like, what happens if you sold your credits to a tech company, but then your supply chain comes knocking saying, "Hey, you can't sell to us unless we have these guarantees from you or you can't access these premium programs or parts of our our supply chain."

I think it also raises questions about the additionality: some of these schemes will only count if you're doing new practices that you wouldn't otherwise have been doing.

And so I heard the other day from a colleague in the red meat industry. "Well, what kind of producers are we then working with if the "good ones", which is a gross oversimplification, have already been doing a lot of these practices because it makes good economic sense and good sense for resilience? What part of the market are we really trying to move?"

Komal Patel [9:29]

Yeah, for sure. And I think that taking the producer perspective also sheds light on some pretty key differences between livestock and cropping industries.

When you think about from where the producer sits what do emissions look like and what are the drivers of emissions across Scope 1, 2, and 3?

One of the notable differences is that in livestock, a significant proportion of the emissions are too tied to the product itself, right? It is the herd that is producing the emission. So what does that mean for the tools in the toolkit to reduce emissions?

Whereas for cropping industries, a lot of it is actually tied up in their Scope 3 emissions: it's the energy intensity of producing fertilizers and things like that.

So that just comes back to, what are the levers that you can actually pull to influence the emissions profile?

And then for a company, like JBS, when they think about the actual roadmap to hit these targets that they're setting-- what are they going to do if they can't rely on offset markets, and they have to work within their supply chains? Where are those emissions reductions going to come from?

Matthew Pryor [10:52]

In reading through all this stuff, at one point, I was like, that's tough, you know, because the whole point of part of this is to set an aspirational target.

And we know, because we've looked, that removal of emissions from Scope 3 of a red meat supply chain is going to be very tough, and the tool chest doesn't have a lot in it.

We already talked about the fact that offsets, there will be times when they can and can't be relied upon. But I think, increasingly the trend is down, the demand for them will go down-- the viability of them or the quality of them, and Sarah, you touched on additionality. I think permanence is also a really big deal.

Our view on permanence has been, it's easy to understand why it's there, why it's important, but it's not as easy to understand why it's treated as such a black and white conversation. And at the moment, it is causing significant challenges for recognition of credits in a soil based system.

So on the one hand, we've kind of got this idea of these of are agricultural processes, and so when you look upstream, you see the process of producing this product emitted it this much, drew down this much, the net balance is here.

So in one way, you will want to champion setting a really big, aspirational target, where it's like I don't quite know how we're going to do it, but we're big enough that we believe we can. So, I found myself with a lot of empathy there.

But on the other hand, the things around setting consumer expectation, and how realistic is it. I think that's one thing, maybe that was missed a little bit.

We have looked at this, and we know that there are a lot of interventions out there. There there was a piece of research the other day about using droppings from baby kangaroos to source different ruminant bio populations to generate acetic acid rather than methane. And so it's also true that there might be big step changes, right?

So if we're really pushing people to big scientific breakthrough, like a big step change, you know, rapid genetic improvements, some kind of inoculant style intervention, those could all still be there. So, I think that finding the balance here is, is a bit tough.

Thinking about it from a risk point of view does also make sense. If you're in that supply chain, how much do you need to think about enteric emissions? Obviously, if it's red meat, you know, beef, in particular, what if this trend of a more and more rigid view of the permanence of soil based sequestration really plays out, if we don't get better tools in the reduction of methane emissions, space and recognition of offsets that are soil based gets smaller and smaller, there could be a tight squeeze, to be in.

And I think, on the one hand, that can be a tough spot to be in as a producer, on the other hand, we need organizations like JBS tackling those big problems because individual organizations, small organizations won't be able to do it on their own.

Sarah Nolet [14:37]

We absolutely can't make perfect to the enemy of progress here.

I thought it was interesting that the SBTi framework says once you make the commitment, you've got two years to set out a plan. And it was timely that it had been two years and half a month when this criticism of JBS came out. Clearly, people were watching and wanting to slap wrists where they felt like they could.

So, definitely hear the point that big companies need to be moving the needle and teasing out what you've said, Matthew, treating carbon potentially different than methane is going to be really important here given how it acts in the atmosphere, its potency and its ability to contribute to hitting a 1.5 or two degree target, which we've started to see with companies like Danone and making methane specific pledges, something I think we can expect to see more of.

That last point you made around "what if the landscape shifts and offsets are less viable" is one that we will continue to be exploring and for anyone listening, we'd love to hear your thoughts on this next week at World AgriTech where we will actually be running a shock scenario workshop to say what if that was the only possible future? What would it mean?

So for anyone at World AgriTech join us and anyone listening, we'd love to hear your thoughts.

Thanks, Komal and Matthew, for joining me.

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