WEBVTT - Growing Problems: Food Companies’ Environmental Impact 0:00:00.320 --> 0:00:03.440 This is Dana Perkins and you're listening to Switched on 0:00:03.760 --> 0:00:06.440 the B and EF podcast. Today, we're going to talk 0:00:06.480 --> 0:00:10.000 about food companies and how they're looking up their value 0:00:10.080 --> 0:00:13.680 chains to meet nature and climate goals because of how 0:00:13.680 --> 0:00:18.079 their value chains are structured where farming is highly fragmented. Meanwhile, 0:00:18.120 --> 0:00:21.360 there are a few influential private companies in the middle 0:00:21.360 --> 0:00:23.599 of the value chain. It can be pretty tricky for 0:00:23.640 --> 0:00:26.360 food companies and the brands you and I recognize to 0:00:26.440 --> 0:00:30.520 tackle their scope three emissions. Scope three being those indirect emissions, 0:00:30.560 --> 0:00:34.120 the ones that aren't a result of their direct business activities, 0:00:34.240 --> 0:00:37.720 but instead the responsibilities of those they're doing business with 0:00:38.080 --> 0:00:41.440 at various points on this value chain. So what are 0:00:41.600 --> 0:00:45.199 agri food companies doing, What are they measuring beyond just 0:00:45.280 --> 0:00:48.200 emissions when it comes to things like nature, and how 0:00:48.240 --> 0:00:52.120 well positioned are they to make a discernible change. To 0:00:52.240 --> 0:00:55.120 tell us more, I get to speak with Helen Ramsbottom 0:00:55.200 --> 0:00:59.680 and Alistair Purdy from bnaf's Food, Agriculture and Nature Team 0:01:00.040 --> 0:01:03.080 VF Clients will be able to access related research at 0:01:03.160 --> 0:01:07.040 BNF go on the Bloomberg Terminal and at BNF dot com. 0:01:07.120 --> 0:01:11.000 The research notes I recommend include corporate sustainability in the 0:01:11.040 --> 0:01:16.840 agrifood system and sustainable and regenerative agriculture company targets. Right now, 0:01:17.040 --> 0:01:20.800 let's talk about agrifood companies and how they're transforming the 0:01:20.920 --> 0:01:32.880 value chains that bring food to your plate. Ellen, thank 0:01:32.880 --> 0:01:36.400 you for joining us today. Hi Dana, thank you, and Alistair. 0:01:36.480 --> 0:01:37.520 Good to have you on the show. 0:01:37.720 --> 0:01:38.240 Thanks Na. 0:01:38.440 --> 0:01:42.399 So we're here to talk about corporate sustainability in the 0:01:42.760 --> 0:01:45.480 agriculture space and food. I mean, this is something that 0:01:45.520 --> 0:01:48.160 we all very much should care about if we don't already, 0:01:48.200 --> 0:01:52.040 it impacts us every single day. And let's set the backdrop. 0:01:52.120 --> 0:01:54.920 Thinking about food in context of emissions is so important. 0:01:55.040 --> 0:01:59.080 So what impacts broadly speaking, does the food system and 0:01:59.240 --> 0:02:03.080 supply chain have on biodiversity and the environment. 0:02:03.840 --> 0:02:07.120 So, as you mentioned, meeting the nutrient requirements of about 0:02:07.120 --> 0:02:10.320 eight billion people is a hugely difficult undertaking. The system 0:02:10.320 --> 0:02:13.320 itself is responsible for about a third of global emissions, 0:02:13.800 --> 0:02:18.120 ninety percent of forestation, almost three quarters of fresh water withdrawal, 0:02:18.200 --> 0:02:20.880 and four of the top five plastic polluters are from 0:02:20.960 --> 0:02:23.880 that space. So ensuring that the system is well prepared 0:02:23.919 --> 0:02:27.240 and managed in its environmental footprint is absolute essential to 0:02:27.280 --> 0:02:28.919 meeting a lot of our climate and nature goals. 0:02:29.120 --> 0:02:32.480 Yeah, some context on what sort of amount of the 0:02:32.480 --> 0:02:35.240 total emissions from the agrifood supply chain come from and 0:02:35.480 --> 0:02:37.760 sort of energy use further downstream. So, if we think 0:02:37.760 --> 0:02:40.480 about emissions in the agrofood supply chain, it comes from 0:02:40.560 --> 0:02:45.600 manufacturing inputs like fertilizers, actual on farm activity, transporting that food, 0:02:45.639 --> 0:02:49.120 manufacturing food, and food waste from consumers. There's a lot 0:02:49.160 --> 0:02:52.760 of different pockets across the whole supply chain. About seventy 0:02:52.840 --> 0:02:56.400 percent of the total emissions produced by the agrifood system 0:02:56.440 --> 0:02:59.240 are generated on farm, so that means things like applying 0:02:59.240 --> 0:03:02.000 fertilizer to the land. A huge chunk of that is 0:03:02.120 --> 0:03:05.560 methane emissions from cows, for instance. Now, naturally we're talking 0:03:05.560 --> 0:03:08.400 about this because you spent the time to put this 0:03:08.440 --> 0:03:10.560 in a report and you had to break down this 0:03:10.800 --> 0:03:13.959 entire agricultural food system into different categories. When you think 0:03:13.960 --> 0:03:16.919 about the value chain, there's a lot of different areas 0:03:16.919 --> 0:03:19.120 that you assessed in this report, and I'd really love 0:03:19.200 --> 0:03:22.200 to better understand which of those you really want to highlight. 0:03:22.320 --> 0:03:26.120 So everything from upstream to downstream, what were the aspects 0:03:26.120 --> 0:03:30.040 that you found most surprising and you know how much 0:03:30.080 --> 0:03:33.160 time did you spend on certain parts of the supply 0:03:33.240 --> 0:03:35.880 chain versus others, depending on what it is that you found, 0:03:35.880 --> 0:03:38.840 and you know what really warranted going into more detail. 0:03:39.200 --> 0:03:42.480 Sure, so there's tens of thousands of public and private 0:03:42.520 --> 0:03:45.400 companies operating in this space, and to look at it 0:03:45.440 --> 0:03:47.920 from a higher level, the system is broken down into 0:03:48.080 --> 0:03:51.200 roughly six segments. Upstream, you have the input providers. These 0:03:51.200 --> 0:03:54.800 are companies that provide chemicals such as fertilizers and pesticides 0:03:54.840 --> 0:03:57.200 as well as seeds, and that they supply them to 0:03:57.240 --> 0:04:01.320 the primary producers, the farmers. The farmers them selves highly fragmented. 0:04:01.400 --> 0:04:03.840 There's one hundreds of millions of people engaged in that 0:04:03.880 --> 0:04:07.040 space and they do what you'd expect. They have soy 0:04:07.080 --> 0:04:10.040 and palm plantations, there is cattle, they grow other forms 0:04:10.040 --> 0:04:10.560 of crops. 0:04:10.840 --> 0:04:13.040 So this really is an important part of the value 0:04:13.120 --> 0:04:15.120 chain for us to focus on when you're thinking about 0:04:15.360 --> 0:04:18.880 improving environmental impacts and in some cases also reducing emissions. 0:04:19.120 --> 0:04:21.279 But so we've just talked about improt providers, and you 0:04:21.320 --> 0:04:24.120 are going to come to the next category of companies 0:04:24.120 --> 0:04:26.240 that you looked at when you took a closer look. 0:04:26.520 --> 0:04:29.080 So The next sort of step down the value chain 0:04:29.120 --> 0:04:33.720 would be the wholesalers. So there's really four major agricultural 0:04:33.760 --> 0:04:36.440 wholesalers that control the bulk of the markets. Those would 0:04:36.440 --> 0:04:40.080 be Louis Dreyfus, ADM, Cargill, and Bungie. So there are 0:04:40.120 --> 0:04:43.599 obviously other traders, but this is quite a concentrated group 0:04:43.640 --> 0:04:46.479 of large players that you know, these companies will influence 0:04:46.520 --> 0:04:48.760 a lot of the emissions coming from that group. Some 0:04:48.800 --> 0:04:52.359 of these upstream inputs providers and wholesalers, because there are 0:04:52.360 --> 0:04:55.040 a few degrees removed from the average consumer, may be 0:04:55.160 --> 0:04:57.800 less familiar to people. And then one step down from 0:04:57.839 --> 0:05:00.360 that we have the food manufacturers, so these are large 0:05:00.400 --> 0:05:05.240 publicly traded companies like Nesle, Unilever, donnown and perhaps companies 0:05:05.240 --> 0:05:07.800 that the average consumer is more familiar with. And then 0:05:07.960 --> 0:05:11.040 the final steps sort of connecting the food value chain 0:05:11.120 --> 0:05:14.680 to customers are the retailers, which obviously people are a 0:05:14.720 --> 0:05:17.480 lot more familiar with, being the final step towards the consumer. 0:05:17.560 --> 0:05:21.000 And then also restaurants and food services. So restaurants again 0:05:21.080 --> 0:05:23.919 pretty familiar to us, but food service companies tend to 0:05:23.960 --> 0:05:28.760 serve things like other restaurants or hotels and things like that. 0:05:28.880 --> 0:05:31.320 So these companies are maybe a bit less visible, but 0:05:31.800 --> 0:05:35.479 all companies that have a significant emissions impact in terms 0:05:35.480 --> 0:05:38.680 of their Scope three emissions. So this pesky problem of 0:05:38.720 --> 0:05:41.839 Scope three emissions, so those emissions that actually come from 0:05:41.880 --> 0:05:45.160 not your business activities, but the business activities of those 0:05:45.400 --> 0:05:47.960 in the rest of your supply chain you're either selling 0:05:48.000 --> 0:05:49.320 to or are purchased from. 0:05:49.680 --> 0:05:54.160 How does scope three emissions feature in the agriculture value chain? 0:05:54.440 --> 0:05:57.880 So as we move further downstream, scope three becomes a 0:05:57.960 --> 0:06:03.320 larger proportion of companies emissions inventory. That's because embedded emissions 0:06:03.320 --> 0:06:06.480 stag as you move down. So at the furthest upstream, 0:06:06.680 --> 0:06:09.640 the input providers, they have a small proportion of their 0:06:09.680 --> 0:06:12.920 total emissions comprise the Scope three. Those chemicals are those 0:06:12.960 --> 0:06:15.680 seeds are then sold to the farms, and those emissions 0:06:15.760 --> 0:06:18.320 become part of the farmer's mission. This continues as you 0:06:18.400 --> 0:06:20.600 move further down, so that when you're at the retailers 0:06:20.680 --> 0:06:23.040 or the restaurants, their direct operations are only about one 0:06:23.080 --> 0:06:26.039 percent of their total emissions. That's got a couple of points. 0:06:26.120 --> 0:06:28.200 Those companies are able to claim that they aren't able 0:06:28.200 --> 0:06:29.320 to influence very much. 0:06:29.480 --> 0:06:32.919 I think when you think of it from a margins perspective. 0:06:32.960 --> 0:06:36.280 So we think of every dollar generated from the agrifood 0:06:36.320 --> 0:06:39.120 system in the US, and the biggest sort of proportion 0:06:39.240 --> 0:06:42.200 of the profits made goes to food processors, and the 0:06:42.240 --> 0:06:46.240 second largest proportion goes to retailers. So although these organizations 0:06:46.240 --> 0:06:48.640 are further downstream and may sort of claim they have 0:06:48.720 --> 0:06:51.560 less influence on what's going on on farm, the reality 0:06:51.640 --> 0:06:53.919 is they're making the majority of the profits from the 0:06:53.920 --> 0:06:57.760 food system, and therefore you could argue that they have 0:06:58.040 --> 0:07:02.239 more power and frankly more money to influence change on farms, 0:07:02.279 --> 0:07:04.599 whereas as a lot of us know, a lot of 0:07:04.640 --> 0:07:07.919 farmers are operating on very tight margins and simply do 0:07:08.080 --> 0:07:11.960 not have sufficient income to allow them to implement large 0:07:12.080 --> 0:07:15.560 changes in the way they're farming, implement new technologies, new practices, 0:07:15.600 --> 0:07:17.920 pay for consultants to teach them how to farm in 0:07:17.920 --> 0:07:20.600 a different way. So I think the thing with the 0:07:20.640 --> 0:07:24.440 food system is the companies generating the most profits are 0:07:24.440 --> 0:07:27.600 not the companies with the largest direct emissions footprints. So 0:07:27.720 --> 0:07:29.800 there's a bit of a mismatch which is perhaps a 0:07:29.800 --> 0:07:33.480 big difference between the agrifood system and the energy companies 0:07:33.480 --> 0:07:35.200 have been af thinks about normally. 0:07:35.040 --> 0:07:38.960 So upstream much more emissions intensive, but the margins much tighter. 0:07:39.040 --> 0:07:43.480 So then that brings us to solutions and really thinking 0:07:43.520 --> 0:07:46.400 about that from an upstream perspective, right, because that's where 0:07:46.440 --> 0:07:48.520 you're going to make the biggest gains. So what are 0:07:48.600 --> 0:07:51.200 some of the solutions that exist or are merging as 0:07:51.240 --> 0:07:52.320 being the most promising. 0:07:52.560 --> 0:07:55.600 Yes, So one of the primary tools that a lot 0:07:55.640 --> 0:07:58.400 of agrifood companies are relying on to address the on 0:07:58.640 --> 0:08:01.960 farm emissions, so the emissions coming from actually farming crops 0:08:01.960 --> 0:08:06.440 and livestock, is regenerative agriculture. So regenerative agriculture does not 0:08:06.560 --> 0:08:10.760 have an industry standard definition. What companies usually mean by 0:08:10.760 --> 0:08:14.000 this is improving the health of the soil and improving 0:08:14.040 --> 0:08:17.280 the ecosystem as a whole. So having a healthier soil 0:08:17.320 --> 0:08:20.320 on a farm means you're more resilient to drought and floods, 0:08:20.400 --> 0:08:24.120 it increases the biodiversity on your farm, and in theory, 0:08:24.240 --> 0:08:27.160 a healthier soil allows you to sequester more carbon in 0:08:27.200 --> 0:08:31.800 the soil, which is appealing to agrifood businesses obviously in 0:08:31.800 --> 0:08:35.600 a couple of senses. In that if regenerative agriculture achieves 0:08:35.640 --> 0:08:39.080 all its objectives. You have healthier soil that's more resilient 0:08:39.080 --> 0:08:41.160 to drought and floods, so your yields are likely more 0:08:41.160 --> 0:08:44.120 consistent over time. You're sequestering more carbon in the soil, 0:08:44.160 --> 0:08:48.120 which can reduce your Scope three emissions footprint because you 0:08:48.120 --> 0:08:51.120 can say, although we're releasing x amount of carbon, we're 0:08:51.160 --> 0:08:53.760 capturing this amount of carbon and storing it within the soil. 0:08:54.160 --> 0:08:57.080 And in theory, through healthier soil, you should be able 0:08:57.120 --> 0:09:00.320 to decrease the need for things like fertilizers because because 0:09:00.679 --> 0:09:02.800 a healthier soil will allow you to achieve the same 0:09:02.920 --> 0:09:07.080 yields now. In practice, this may not always be the 0:09:07.120 --> 0:09:10.120 case because there's huge variation in the mineral content of 0:09:10.160 --> 0:09:12.800 soils around the world, depending on what crop you're growing, 0:09:12.960 --> 0:09:15.600 depends on how changes in the soil might impact that. 0:09:15.960 --> 0:09:20.079 And from a company perspective, because there's no industry standard 0:09:20.080 --> 0:09:23.960 for regenerative agriculture, there's no specific mandate on the number 0:09:23.960 --> 0:09:26.720 of practices you have to implement, or how long you 0:09:26.800 --> 0:09:29.400 have to implement them for, or what kind of carbon 0:09:29.440 --> 0:09:32.079 sequestration you need to actually achieve in order to be 0:09:32.120 --> 0:09:34.720 able to label your project regenerative. So a lot of 0:09:34.760 --> 0:09:39.800 companies are claiming their operating regenerative agriculture projects, but unless 0:09:39.800 --> 0:09:43.440 they provide external organizations with more details on what they 0:09:43.480 --> 0:09:47.120 are actually doing, there's no real way we as an 0:09:47.120 --> 0:09:50.720 outsider can determine exactly what is going on on that farm, 0:09:50.840 --> 0:09:54.240 and how much carbon soil is actually sequestering, how much 0:09:54.280 --> 0:09:58.559 they're actually impacting biodiversity, and what the climate in nature 0:09:58.600 --> 0:10:01.360 impacts of that project are as all which really brings 0:10:01.440 --> 0:10:04.800 us to the reporting standards part of this, which you 0:10:04.840 --> 0:10:10.080 know are their targets and really clear reporting standards out there. 0:10:10.080 --> 0:10:12.040 I mean, what you're saying is basically know that the 0:10:12.120 --> 0:10:15.120 reporting standards are a little inconsistent, and so right now 0:10:15.160 --> 0:10:18.680 we're seeing information coming out that may not necessarily enable 0:10:18.760 --> 0:10:21.320 us to compare apples to apples or even really fully 0:10:21.400 --> 0:10:23.880 verify what's happening on the ground. But this is a 0:10:23.880 --> 0:10:26.760 space that is being talked about more and more. You're 0:10:26.800 --> 0:10:30.920 definitely hearing about emissions and a focus on the agricultural 0:10:30.920 --> 0:10:34.240 food system as a whole taking a much more prominent 0:10:34.280 --> 0:10:36.720 place in the discussion around climate. 0:10:36.800 --> 0:10:40.640 You saw last year at cop the agriculture and food 0:10:40.679 --> 0:10:44.280 system actually feature in biodiversity feature at the Climate COP 0:10:44.440 --> 0:10:47.280 not just at the Biodiversity COP. So there is the 0:10:47.440 --> 0:10:50.400 COP focused on biodiversity and then the Climate COP which 0:10:50.440 --> 0:10:53.760 is in its twenty ninth year, both with very important 0:10:53.800 --> 0:10:57.520 dialogues that are increasingly starting to converge. So where do 0:10:57.880 --> 0:11:01.080 the back to reporting, where do you core targets feature 0:11:01.280 --> 0:11:02.920 and how does it work presently? 0:11:03.520 --> 0:11:09.439 So there's difference across emissions disclosure and nature biodiversity disclosure. 0:11:09.520 --> 0:11:13.200 Emissions reporting is far more developed than it is for 0:11:13.320 --> 0:11:17.200 nature and biodiversity. That's because a lot of countries and regions, 0:11:17.320 --> 0:11:21.479 namely the EU, have required companies to start disclosing their emissions. 0:11:21.559 --> 0:11:25.120 There's still a lot of inconsistency between companies and how 0:11:25.120 --> 0:11:28.040 they approach this issue. Some are engaged with just with 0:11:28.240 --> 0:11:31.719 pure reporting of information, usually direct emissions, but the more 0:11:31.760 --> 0:11:35.560 progressive players are involved with climate risk and opportunity management, 0:11:35.600 --> 0:11:40.400 which there is report in their annual sustainability reports on nature. However, 0:11:40.600 --> 0:11:43.600 most of this is still voluntary, although things are beginning 0:11:43.600 --> 0:11:46.680 to change in the EU with regulation such as CSRD 0:11:46.840 --> 0:11:50.720 Corporate Sustainability Reporting Directive, and we also have stuff such 0:11:50.760 --> 0:11:54.320 as the EUDR that's the European Union regulation and deforestation 0:11:54.400 --> 0:11:57.440 free products where companies trading in the block now have 0:11:57.559 --> 0:12:00.120 to show that an you have seven soft commodit at 0:12:00.160 --> 0:12:02.960 lease are not connected to deforestation whatsoever, and this will 0:12:02.960 --> 0:12:05.880 apply from December thirtieth this year, and a lot of 0:12:05.920 --> 0:12:07.960 these big food companies are starting to worry along with 0:12:08.000 --> 0:12:12.040 their investors, because there are fairly significant financial poundies for 0:12:12.080 --> 0:12:14.720 companies who don't operate in accordance with the low Up 0:12:14.720 --> 0:12:18.360 to five percent of revenue can be fined per year differences. 0:12:18.679 --> 0:12:20.920 So it seems like there's a fair amount of regulation. 0:12:21.160 --> 0:12:23.120 But because of the way that the market is structured, 0:12:23.160 --> 0:12:25.680 with a number of companies in particular in the wholesaler 0:12:25.720 --> 0:12:30.200 space not publicly listed, you don't have necessarily the same 0:12:30.320 --> 0:12:33.760 movement around financial reporting that you have in other places. So, 0:12:33.800 --> 0:12:37.680 staying on this topic of emissions and acknowledging that this 0:12:37.760 --> 0:12:41.720 is inexact, how closely aligned are those companies that do 0:12:41.840 --> 0:12:46.280 have targets to Paris Agreement goals which are really aiming 0:12:46.360 --> 0:12:50.319 to limit warming to two degrees centigrade from pre industrial 0:12:50.400 --> 0:12:54.560 levels or less. Are they aligned or is it really 0:12:54.720 --> 0:12:57.240 too an exact for them to fall in line with 0:12:57.440 --> 0:13:00.000 what the Paris Agreements actually outlined for the future. 0:13:00.400 --> 0:13:02.520 So It's a really good question, and it's got a 0:13:02.640 --> 0:13:05.080 range of different answers depending on what kind of target, 0:13:05.160 --> 0:13:07.800 the ambition and the scope of those targets. Broadly as 0:13:07.800 --> 0:13:10.520 a whole sector is not aligned with the Paris Agreement. Firstly, 0:13:10.559 --> 0:13:12.560 if we take emissions as a whole, that's including the 0:13:12.600 --> 0:13:15.640 direct and indirect emissions, and we apply all of the 0:13:15.679 --> 0:13:18.000 targets that all of these companies have set to their 0:13:18.040 --> 0:13:20.080 current emissions going all the way up to twenty fifty, 0:13:20.120 --> 0:13:23.240 we'll see only about forty percent decreasing those emissions, and 0:13:23.280 --> 0:13:26.319 that is not in line with the Paris Agreement. However, 0:13:26.600 --> 0:13:29.400 there's some issues here with indirect emissions double counting, like 0:13:29.440 --> 0:13:32.040 we discussed before, as emissions stag up as you move 0:13:32.040 --> 0:13:34.320 down the value chain, so we take away those indirect 0:13:34.320 --> 0:13:37.520 emissions and only look at the direct emissions and scope 0:13:37.520 --> 0:13:40.520 two emissions, which is from companies generating the energy or 0:13:40.640 --> 0:13:43.920 energy procremment. We've seen many companies roll back on their emissions. 0:13:43.960 --> 0:13:45.839 They were over zalous when they set them in twenty 0:13:45.920 --> 0:13:48.360 nineteen and twenty twenty, and the standard realize that it's 0:13:48.400 --> 0:13:50.680 very easy to set them, but in practice it's very 0:13:50.720 --> 0:13:53.480 difficult to design a roadmap and tangibly reduce them. 0:13:53.640 --> 0:13:56.640 Part of the reason it's so difficult to implement these 0:13:56.679 --> 0:13:59.559 targets is some of these companies further downstream have a 0:13:59.640 --> 0:14:02.319 huge umber of supplieres. So Cargo we mentioned before, a 0:14:02.440 --> 0:14:04.920 large wholesaler. According to their website, they have more than 0:14:04.960 --> 0:14:09.319 two hundred and fifty thousand suppliers. Unilever, big packaged foods 0:14:09.360 --> 0:14:12.199 company we've all heard of, has fifty four thousand suppliers. 0:14:12.360 --> 0:14:15.000 That's a huge number of different companies that in some 0:14:15.040 --> 0:14:17.960 cases it's very difficult to even locate these companies because 0:14:18.040 --> 0:14:19.960 you know, you've got a bunch of small hold of farmers. 0:14:19.960 --> 0:14:22.840 If you're talking a commodity like coffee and cocoa selling 0:14:22.920 --> 0:14:25.880 to a trading house, which then sells onto a wholesaler, 0:14:25.920 --> 0:14:28.000 which then sells on to Unilever, and that's about as 0:14:28.040 --> 0:14:30.600 short as the chain is likely to be. So even 0:14:30.680 --> 0:14:34.520 geolocating exactly which farm they're sourcing from is really challenging 0:14:34.560 --> 0:14:37.440 for companies, let alone trying to influence what types of 0:14:37.440 --> 0:14:40.200 farming practices are going on there. So it is a 0:14:40.200 --> 0:14:43.480 massive challenge for these companies to address their in direct emissions. 0:14:43.720 --> 0:14:46.760 So transparency is not just about it being difficult to 0:14:46.800 --> 0:14:50.000 provide transparency outwardly on what they're doing, but actually have 0:14:50.120 --> 0:14:53.880 transparency within their company on all of the different suppliers 0:14:53.880 --> 0:14:56.800 that they're dealing with because the market is so fragmented. Okay, well, 0:14:56.800 --> 0:14:58.960 then how about the energy part of the pie, which 0:14:59.000 --> 0:15:01.520 is something that we talk of about at BNF quite frequently. 0:15:01.760 --> 0:15:06.400 How much of a role in their emissions footprint comes 0:15:06.400 --> 0:15:09.200 from the energy system. And really where I'm getting to is, 0:15:09.280 --> 0:15:13.480 as we're seeing these climate and biodiversity cops converge and 0:15:13.520 --> 0:15:16.440 the different things that they're both involved in, is greening 0:15:16.440 --> 0:15:19.840 the energy system going to have a positive impact on 0:15:20.040 --> 0:15:21.520 greening the agricultural system. 0:15:21.800 --> 0:15:23.600 It's definitely going to have and it is having a 0:15:23.600 --> 0:15:27.360 positive impact. Although, as we alluded to before, these scope 0:15:27.400 --> 0:15:30.600 to emissions which come from the company's energy comprise a 0:15:30.720 --> 0:15:33.960 very small part of their emissions inventory depending on jurisdiction, 0:15:34.160 --> 0:15:37.960 and we've seen depending on the brand visibility of the 0:15:37.960 --> 0:15:42.120 company commitment, some renewable energy differ significantly. About twenty eight 0:15:42.200 --> 0:15:44.040 of the companies that we looked at at members of 0:15:44.040 --> 0:15:46.720 something called are one hundred and which is a pledge 0:15:46.720 --> 0:15:49.080 to ensure that all of your electricity is sourced from 0:15:49.080 --> 0:15:53.200 renewable sources, usually by twenty twenty twenty five or twenty thirty, 0:15:53.280 --> 0:15:55.320 and so many of these companies are doing well. A 0:15:55.320 --> 0:15:58.560 lot of retailers, restaurants and food services have already achieved 0:15:58.600 --> 0:16:00.840 one hundred percent renewable energy in the UK. We can 0:16:00.880 --> 0:16:03.760 see Sainsbury's and Tescos, two of the largest retailers, reached 0:16:03.760 --> 0:16:05.880 those targets a couple of years ago. So definitely they 0:16:05.920 --> 0:16:08.680 are reducing their emissions, but because it's such a small 0:16:08.720 --> 0:16:11.840 part of their total, how meaningful that is of debate. 0:16:12.360 --> 0:16:15.560 So whilst ari one hundred pledgures, et cetera, great and 0:16:15.640 --> 0:16:18.880 a lot of companies further downstream have made significant progress 0:16:18.920 --> 0:16:22.800 with respect to deploying renewables, switching away from using gas, etc. 0:16:23.320 --> 0:16:26.960 That's seventy percent chunk of on farm emissions other than 0:16:27.360 --> 0:16:31.800 deploying these regenerative agriculture projects here, and there're some investment 0:16:31.840 --> 0:16:35.680 into green fertilizers and things like that. Broadly, these emissions 0:16:35.680 --> 0:16:38.400 are not really being tackled. So the seventy percent of 0:16:38.440 --> 0:16:42.960 the whole system's emissions that are not really accounted for 0:16:43.120 --> 0:16:47.400 when thinking about deployment of renewable electricity. Obviously On some farms, 0:16:47.440 --> 0:16:51.160 things like solar panels are being installed anaerobic digestors which 0:16:51.280 --> 0:16:54.720 take the manure and can be used to make fuel sources. 0:16:54.800 --> 0:16:56.960 That's another way you can sort of green some of 0:16:56.960 --> 0:17:00.760 your on farm energy use. But applying fertilized to the land, 0:17:00.960 --> 0:17:04.800 and just the fact that cows, through their existence through living, 0:17:05.040 --> 0:17:07.720 produce a lot of methane, it's a lot more difficult 0:17:07.720 --> 0:17:10.080 to tackle from of those emissions, and obviously with renewab 0:17:10.080 --> 0:17:12.680 electricity won't help you tackle those. So that's where different 0:17:12.720 --> 0:17:14.200 technologies need to be deployed. 0:17:14.359 --> 0:17:17.040 Definitely, on the electrification of the system. If you look 0:17:17.040 --> 0:17:20.000 at a palm producer in Indonesia, how do you electrify 0:17:20.000 --> 0:17:23.360 your operations? But if your TESCO much of your emissions 0:17:23.359 --> 0:17:27.160 is just the store, refrigeration, transport, you can easily either 0:17:27.359 --> 0:17:31.760 procure renewable energy from local sources by evs. It's a 0:17:31.840 --> 0:17:35.040 relatively simple undertaking compared to those primary producers. 0:17:35.119 --> 0:17:37.480 And there's also this degree of our understanding of the 0:17:37.480 --> 0:17:40.840 complexity of the system. And so I'd actually like to 0:17:40.840 --> 0:17:44.719 pivot to the biodiversity question, which is where there is 0:17:44.760 --> 0:17:47.680 so much complexity. So one of the things that comes 0:17:47.760 --> 0:17:50.560 to mind is this meme that I see at least 0:17:50.560 --> 0:17:53.240 in the climate space, of these waves kind of crashing 0:17:53.280 --> 0:17:56.879 in on each other and slowly developing into a tsunami, 0:17:56.920 --> 0:18:00.920 and the tsunami at the very back much more impactful 0:18:01.040 --> 0:18:03.959 than climate because it's going to hit us potentially quite sooner. 0:18:04.119 --> 0:18:07.200 Is this biodiversity loss and species extinction on this plan? 0:18:07.280 --> 0:18:09.080 I mean, we are a part of nature. We are 0:18:09.240 --> 0:18:12.280 living organisms here and very much dependent upon food, as 0:18:12.320 --> 0:18:14.080 we highlighted at the very beginning. 0:18:13.720 --> 0:18:14.160 Of the show. 0:18:14.280 --> 0:18:18.320 So why is it that biodiversity is so important and 0:18:18.520 --> 0:18:20.440 why is it being talked about so much more now? 0:18:20.800 --> 0:18:23.959 From an economic perspective, which is why we're here, one 0:18:24.040 --> 0:18:27.320 hundred percent of economic value generation is to some extent 0:18:27.440 --> 0:18:31.159 dependent on ecosystem services or nature. Around half of that 0:18:31.320 --> 0:18:34.160 is moderate or high dependence. So that means these companies 0:18:34.160 --> 0:18:37.440 will all companies have some reliance and their revenue relies 0:18:37.480 --> 0:18:41.159 on ecosystem services. When they degrade through nature loss or 0:18:41.160 --> 0:18:44.520 biodiversity loss, it means these revenue streams are imperiled. And 0:18:44.560 --> 0:18:47.719 that's what we call physical nature related risk, very similar 0:18:47.720 --> 0:18:52.240 to climate sides, where you have increasing instances of wildfires 0:18:52.320 --> 0:18:55.280 or floods or droughts that can likewise imperil company cash flow. 0:18:55.400 --> 0:18:58.280 At the same time, we're seeing shifting regulation. And when 0:18:58.320 --> 0:19:01.919 companies operations, and the interaction with nature are misaligned with 0:19:02.000 --> 0:19:05.720 shifting regulation, then that also puts future cash flows at risk. 0:19:05.840 --> 0:19:09.360 So through these two different understandings of nature, we can 0:19:09.359 --> 0:19:12.840 see companies need to be better aware of their impacts 0:19:12.880 --> 0:19:15.760 and dependencies on nature and manage the risks and opportunities 0:19:15.760 --> 0:19:16.520 that stand from them. 0:19:16.560 --> 0:19:20.600 And Agrifood businesses are an example of companies that are 0:19:20.640 --> 0:19:24.960 obviously highly dependent on nature. If our soils are degraded 0:19:24.960 --> 0:19:26.919 to the point that we can no longer grow crops 0:19:26.960 --> 0:19:30.880 with them due to application of fertilizers reducing the bio 0:19:30.960 --> 0:19:33.880 diversity in the soil, that generally means the soil structure 0:19:33.960 --> 0:19:37.040 is less compacted and it can be more easily effectively 0:19:37.200 --> 0:19:39.520 blown away by the wind for lack of a better word, 0:19:39.600 --> 0:19:42.040 leading to things like desertification. But you know, if we 0:19:42.080 --> 0:19:44.000 are no longer able to grow crops in the ground, 0:19:44.080 --> 0:19:47.159 that is obviously a big problem for food systems, and 0:19:47.160 --> 0:19:49.200 then all the animals that eat the crops we grow 0:19:49.200 --> 0:19:51.400 in the ground, and so on and so on, And 0:19:51.720 --> 0:19:55.240 in examples of marine systems. We can quite easily see 0:19:55.280 --> 0:19:59.960 how ocean acidification and ocean warming will reduce fish populations. 0:20:00.119 --> 0:20:03.479 That in many cases means that young fish can't survive. 0:20:03.640 --> 0:20:06.040 So if you think about it in terms of where 0:20:06.080 --> 0:20:08.560 do we source our food from, the agrifood system is 0:20:08.640 --> 0:20:13.080 highly dependent on nature, but the emissions resulting from agriculture 0:20:13.280 --> 0:20:16.359 are incredibly damaging to nature, as well as the land 0:20:16.480 --> 0:20:18.480 use change that results from agriculture. 0:20:18.680 --> 0:20:21.480 What are the data points then that people are rallying behind, 0:20:21.640 --> 0:20:25.680 because if we think about climate, it's about carbon emissions 0:20:25.680 --> 0:20:28.320 and everything is then put into carbon equivalent, so we 0:20:28.359 --> 0:20:31.240 can all get behind this one data point within biodiversity. 0:20:31.359 --> 0:20:34.119 What are the leading data points that are focused on 0:20:34.600 --> 0:20:37.399 the most so that companies have something to focus on 0:20:37.480 --> 0:20:38.840 when they think about their impact. 0:20:39.200 --> 0:20:41.879 That's a really good point and a question that's often 0:20:41.920 --> 0:20:44.520 brought up in this nature discussion pointing to climate and 0:20:44.560 --> 0:20:47.560 the center. The universal metric of CO two E is 0:20:47.840 --> 0:20:51.760 relatively quantifiable. When you consider nature, it's very multifaceted, so 0:20:51.760 --> 0:20:53.879 there's several different approaches. One is to look at the 0:20:53.920 --> 0:20:57.560 five different drivers of nature loss, our biodiversity loss, and 0:20:57.720 --> 0:20:59.919 one of those is climate change. So we can consider 0:21:00.119 --> 0:21:02.159 all the work being done on climate as part of 0:21:02.200 --> 0:21:07.240 a broader nature space. Another pretty famous or respected framework 0:21:07.359 --> 0:21:10.920 is as something called the planetary boundaries framework. Whether essentially 0:21:11.200 --> 0:21:14.280 nine different indicators that show the state of Earth systems, 0:21:14.320 --> 0:21:17.199 and presently six of these have been transgressed. These are 0:21:17.200 --> 0:21:20.360 things like land use change, the integrity of the biosphere 0:21:20.400 --> 0:21:23.840 as Helen mentioned, ocean acidification. These are indicators of how 0:21:23.880 --> 0:21:26.920