March 11, 2024

Don’t Worry About the EU’s Environmental Footprint Programme

March 11, 2024

Don’t Worry About the EU’s Environmental Footprint Programme

March 11, 2024

Don’t Worry About the EU’s Environmental Footprint Programme

March 2024

Don’t Worry About the EU’s Environmental Footprint Programme

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Many expected the EU’s Environmental Footprint “EF” programme to define how product and organisational footprints are conducted. But after nearly 15 years of work, the standards remain incomplete and are, at a push, loosely recommended by the Commission.

The fundamental flaw:

The EF programme has different rules for each product category (called PEFCR’s). To me, this is its fundamental flaw. Important comparisons between different categories e.g., between meat and plant-based foods, are hampered by different calculation methods. Further, the complexity introduced by different category methods means that scaling up foot printing is difficult, preventing widespread use.

Whether you agree this is a flaw or not, on a practical basis, full implementation of the EF is not possible given only a handful of category rules have been created.

Take food: category rules exist for horti-food products, dairy, wine, pasta, beer, packed water, and pet food, but the list of omissions is large (if not huge). There are no rules for major products like rice, sugar, pork, poultry, beef, and oils. Despite a few attempts at cross-category rules, none are yet to graduate past the draft or recommendation stage. Most sustainability professionals therefore disregard the category rules and focus instead on complying with the EF indicator list.

The current requirements:

An EF compliant assessment considers 16 different indicators, including greenhouse gas emissions, terrestrial acidification, and resource use, amongst others. Considering multiple indicators is important, but who can optimise for 16 different indicators, particularly when most of them are entirely new to most people? How many sustainability professionals can define what the “ionising radiation” indicator is? Never mind improve it? Can this many indicators really support consumer and business change?

Further, some of the indicators remain untested and unproven. The EF’s “land use” indicator, for example, attempts to correct for the fact that different land types have different benefits for biodiversity and water filtration. This is important. But it uses data like the pebble count in soils. This is data virtually no farmers have, so it has to be gap-filled using unreliable global maps. Further, the “land use” indicator gives a result in “points”, which cannot be verified against observations and checked for accuracy.

What’s the alternative?

We should stick to a small number of well-tested indicators, e.g., greenhouse gas emissions, and bring in a small but focused set of additional indicators, e.g., land use, water use, biodiversity loss, and pesticide toxicity. 16 indicators are clearly too many. One is too few. But a realistic number of, say, five indicators can cover important issues and trade-offs whilst being manageable. Further, we must enable cross-product comparisons: this supports changes in sourcing, reformulation, and diet change.

In its current form, I do not think the Environmental Footprint Programme will become widely adopted, either in policy or by business. However, if the Commission simplifies it to use a small number of indicators and removes category rules, it could take off and be something to embrace. By doing so, it would create a very different system that is less complex, less intimidating, and cheaper to implement. In either of the two cases - stagnation or simplification - the Environmental Footprint Programme is not something to worry about.

Further reading:

By Dr. Joseph Poore, Director of the Oxford Martin Programme on Food Sustainability and advisor to Altruistiq.

Industry Insight: It's Time to Change your Supply Chain Engagement Programme

If I were to manage a supply chain programme I would do things a bit differently. Before I get to that, I’m currently hearing two conflicting messages about supply chain engagement:

  1. Most supply chain engagement programmes are struggling. Response rates are low, especially when the pool of companies being engaged rises and effort per supplier goes down.
  2. Altruistiq is seeing interest from mid-size suppliers in multiple emerging markets, all of whom are citing demands from their key European customers.

This hammers home a few messages for me:

  • Manufacturing partners and material suppliers are recognising sustainability as part of the hyper-competitive battleground for a share of the wallet with their largest accounts. This dynamic holds true for certain materials globally, e.g. - packaging, food ingredients, textiles, and chemicals.
  • These companies are operationally complex, and will likely need sustainability data solutions that are unique to their needs, rather than a one-size-fits-all all solution defined by any one customer (or even customer segment). What the requestor uses as an interface and what the supplier uses to generate their sustainability data in practice have very different success criteria.

So, what would I do?

  1. Segment supplier cohorts based on size and industry (which inform my archetypes) and then focus globally e.g., top 10 largest glass suppliers. This will probably still bring me down to 10% of overall number of suppliers, but will most likely capture at least 60% of the emissions.
  2. Understand what the best data management solutions look like for individual archetypes, promote those to others in that archetype, and ask all solution providers to prioritise interoperability (if they want to stay part of my recommendation programme)

I’ll be running a webinar on just this in a few weeks with Ilya Kleyner - register interest here.

By Saif Hameed, CEO of Altruistiq

Policy Pulse: The CSDDD Push Back - What it Means for Business

The Corporate Sustainability Due Diligence Directive (CSDDD) has been delayed, and potentially struck down indefinitely. This legislation is a key component of the EU Green Deal, focused on the twin aims of eliminating human rights abuses and raising the ambition of climate action. Germany and Italy indicated they would abstain, with worries about the burden it would put on companies - leading the vote to be pushed by Parliament.

The CSDDD is intended as a key companion to the CSRD. Providing companies with additional responsibility to reduce human right and environmental impacts, where the CSRD asks them to report on the topics accurately. This agenda is now at risk.

What does it ask businesses to do?

This legislation can be seen as more action-oriented than the CSRD, as companies have to identify and reduce any negative impacts in their supply chains. Key impacts this would involve are:

The covered companies are the same as for CSRD (although this scope is being reduced in proposals considered as we go to press). Companies will have to:

  • Identify negative impacts on human rights and the environment. Create due diligence policies and a code of conduct, which set a standard for finding negative impacts in their direct operations and supply chain.
  • Mitigate the risks of negative impact. For identified impacts, create a timed action plan to address them. And adopt contracts with business partners to comply with the action plan and code of conduct.
  • Create a grievance mechanism. Establish a way for stakeholders to raise complaints and grievances if their rights are violated.
  • Change Directors’ responsibilities. Company directors’ duty of care must expand to cover the impact of decisions on sustainability and human rights, with meeting climate transition plan objectives to be considered in executive pay.

The core of CSDDD is on due diligence, with the requirement to set a climate transition plan being tacked on.

What’s does this all mean?

There is a small window for the CSDDD to be passed in this current Parliament, but any plan that gets backing from Member States will likely be significantly watered down. The proposals currently being considered will see fewer companies covered, and a longer period to start complying.

Whilst the delay is a great shame, the CSRD is reason enough for companies to adopt the policies outlined by the CSDDD as it asks businesses to disclose their human rights policies and climate transition plans. Whether companies set these up to disclose will be down to wider stakeholder expectations and pressure.

Learn more

By Dan Enzer, Senior Research Associate at Altruistiq

Other news:

  • European Parliament passes landmark nature restoration law. EU passes “landmark” law to reverse Europe’s natural habitats with an EU-wide target to restore 20% of degraded land and sea areas by 2030. The law stems from the EU biodiversity strategy for 2030 and is a key part of meeting the EU’s climate and biodiversity goals. The goal passed despite farmer protests. The most contentious part of the new law was the restoration requirements for drained peatlands used for agriculture. Critiques argued it would threaten the livelihoods of farmers and decrease food production. Great summary here.
  • EU delays stricter rules on imports from deforested areas. EU plans to delay strict policing of commodities imported from regions suffering from deforestation. This comes after several governments in Asia, Africa and Latin America expressed concerns about the anti-deforestation regulation (part of the EU’s green deal), stating that the rules were “unfair” and would “scare off investors”. Instead of labelling countries as “low, standard or high risk”, every country will be defined as “standard” risk to allow countries time to adapt to the new measures.
  • Google-backed satellite to track global oil industry methane emissions. MethaneSAT was launched (via a rocket operated by Elon Musk’s SpaceX) last week to track emissions from the oil and gas industry. The satellite, which can capture emissions at a far more granular level than previous satellites, will monitor 80% of the world’s natural gas and “name and shame the biggest emitters in the oil and gas industry”.

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