HUNGRY FOR CHANGE

Are companies driving a sustainable food system?

01
 CONTENTS
03 KEY TAKEAWAYS FOR FOOD SYSTEM STAKEHOLDERS

04 KEY ACTIONS FOR COMPANIES

05 INTRODUCTION

10 THE FUTURE OF OUR FOOD SYSTEM IN A

CHANGING CLIMATE

16 WHAT ARE COMPANIES DISCLOSING?

22 H
 OW ARE FOOD VALUE CHAIN COMPANIES

PLANNING FOR THE FUTURE AND CONTRIBUTING

 TO FOOD SYSTEM TRANSFORMATION?

27  A SHOCK TO THE SYSTEM: POTENTIAL IMPACTS TO

THE FOOD VALUE CHAIN FROM DROUGHT

28 CONCLUSION

30 APPENDIX 1. SAMPLE SETTING

33 APPENDIX 2. DATA POINTS AT A GLANCE

34 REFERENCES

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02
 KEY TAKEAWAYS
For food system stakeholders

1
Achieving the Paris Agreement and Sustainable Development
3
Food Value Chain companies face significant impacts and risks,
Goals will only be possible with a transformation of the global food and there may be more lurking than disclosure reveals. But the
system. Scientific consensus confirms this transformation must pathway to a sustainable food system also presents a remarkable
include a transition to more plant-rich diets that include alternative opportunity for companies that take swift, bold action. While there
protein sources (particularly in regions of high per capita meat are promising signs of companies identifying and capitalizing on
consumption), increased agricultural productivity without expanding opportunities, there is a critical shortage of reported opportunities
agricultural land and water use, protecting and restoring natural aimed at increasing resilience in the face of a changing environment.
ecosystems including forests, increased adoption of nature-based
Risk assessment is a vital process that helps companies
solutions and reduced food loss and waste.
understand their vulnerabilities and drive appropriate action
Even with complete elimination of fossil fuels, GHG emissions where it’s needed most. While most companies across the Food
from the food system are on track to prevent the world from Value Chain identify substantive risks from their assessments,
limiting warming to both the 1.5°C and 2°C targets. There is a
1
many others foresee risk but do not think it will impact business.
remarkable opportunity for food systems stakeholders to be a Viewed in aggregate, these risks may be material and suggest
key part of the solution to tackling climate change and that risks to the global food system may be more prevalent and
environmental degradation. severe than corporate disclosure alone reveals.

The next ten years are critical and will require all players Companies are showing signs of capitalizing on opportunities
from across the food value chain to move away from business to implement resilience into their direct operations and supply
as usual. chains. 80% of companies implement management practices on
their own land with a climate change mitigation and/or adaption

2
benefit, and several of those cite benefits beyond climate
mitigation, including benefits to biodiversity, soil, water and their
annual yield. And 78% of companies encourage their suppliers
The global food value chain is a complex system, and impacts at to undertake agricultural or forest management practices with
one level have significant implications for others. COVID-19 has climate change mitigation and/or adaptation benefits. But
demonstrated this, but future climate shocks also present a threat. opportunities to increase resilience are outnumbered more
Companies must go beyond disclosure to monitor and fully engage than two to one by opportunities related to products and services,
their value chains to address critical physical climate and revealing a critical gap to corporate ambition.
environmental risks – but such engagement is lacking.

Companies in CDP’s Food Value Chain sample (FVC) cited value

chain risks from changing precipitation patterns at 4x the rate
of non-food companies (24% vs. 6%). Yet, only 16% of climate
change disclosers and 21% of water security disclosers engage
4
There is an opportunity to drive a shift to a sustainable food system
– but most companies operating in the global food value chain
with all levels of the value chain; about half of forests disclosers
are falling behind on key actions to incentivize sustainable
fail to engage beyond first-tier suppliers to ensure sustainable
best practices.
production and consumption of forest-risk commodities like
cattle. This transparency is important and increasingly being The FVC sets Science-Based Targets (SBTs) and utilizes water
demanded by investors and consumers alike. pricing at a higher rate than the Global Sample, demonstrating
leadership in these key areas.

However, while nearly 90% of all disclosed emissions from FVC

companies come from the value chain, just 16% of companies
have targets that address value chain emissions explicitly.
And just 14% of FVC companies have a water quality target,
suggesting action may be lacking to address discharge,
pollution and other important issues.

03
 KEY ACTIONS
For companies

To ensure they are doing all they can to deliver on the Paris Agreement and Sustainable
Development Goals, companies in the food value chain must strategically assess their role in
a sustainable food future. Some companies are waking up to this transformational opportunity.
The number of companies setting targets, especially SBTs, is increasing year on year, and FVC
companies that assess risk and engage their value chains are finding strategic value in doing so,
particularly around smallholder engagement and opportunities like product innovation to meet
changing consumer demands.

While there are a handful of companies demonstrating leadership in practices that support this
transition, further adoption by the entire FVC is necessary to drive change. There are specific
actions backed by science and research that point to the way forward:

1 MEASURE, MANAGE AND REPORT both the climate and environmental risks
and impacts that FVC companies may be exposed to in their direct operations and
value chains from farm to fork, as well as the impacts that they are responsible for.

2
INCENTIVIZE AND SUPPORT VALUE CHAIN PARTNERS – particularly
smallholder farmers – to support the adoption of productive, resilient and
regenerative agricultural practices.

3
IMPLEMENT FORWARD-LOOKING MECHANISMS TO PLAN FOR THE
LOW-CARBON TRANSITION, including setting verified science-based
emissions reduction targets, along with forests- and water-related targets,
conducting scenario analysis and setting internal carbon and water prices.

4 ALIGN PRODUCT PORTFOLIOS, MANAGEMENT INCENTIVES, R&D AND

MARKETING SPEND with regional variations of the EATLancet Planetary
Health Diet, alongside efforts to build value chain resiliency.

04
INTRODUCTION
Food is a critical environmental, social, and economic issue that
impacts human, ecosystem and planetary health, social and economic
equality and prosperity, urban sustainability and human migration in
every region of the world.

As the global population has grown, so has the demand for food,
and the subsequent staggering expansion of agriculture has
transformed habitats worldwide and caused significant rates of land
and freshwater use. This has contributed to increasing net greenhouse
gas (GHG) emissions, loss of natural ecosystems particularly through
deforestation (also a major driver of food system emissions),
increasing water scarcity and pollution and declining biodiversity.

Our world is facing an unprecedented challenge: sustainably and

healthily feeding a projected global population of 10 billion people
in 2050 while reducing deforestation, cutting GHG emissions and
ensuring water security. Yet alongside this challenge there is a
remarkable opportunity to transform our food and land use systems
such that they play a key part in the delivery of needed emission
reductions and better health through nutritious diets for all, while
significantly improving food security. There is also a significant
opportunity for agriculture to proactively contribute to reforestation
and afforestation, which through early action can deliver short term
emissions reductions and significantly improve habitat and
biodiversity through better agroforestry practices.
 THE CHALLENGE

In 2015, 194 countries and the European Union signed the Paris the targets set forth in the United Nations’ Sustainable Development
Agreementi, agreeing to reduce emissions year on year to limit Goals (SDGs). Many of these goals are intrinsically tied to the food
global temperature rise to “well-below 2°C” and to further pursue system. Goals 2 (zero hunger), 3 (good health and well-being) and
efforts to limit that increase to 1.5°C, the point beyond which the 12 (responsible consumption and production) speak to agriculture’s
Intergovernmental Panel on Climate Change (IPCC) has warned challenge: to provide nutrition and health within planetary
will result in increased frequency and intensity of serious climate boundaries, requiring the reversal of current trends of agricultural
impacts that in themselves affect our ability to grow ample, production.6 Goals 6 (clean water and sanitation), 13 (climate
nutritious food. Since then, however, emissions have continued to action), 14 (life below water) and 15 (life on land) are unachievable
rise, and even if all Nationally Determined Contributions (NDCs) without the transformation of agriculture.7,8 And goal 8 (decent work
are realized, temperatures are still projected to increase to 3.2°C and economic growth) is agriculture’s opportunity to bring greater
by 2100. If we are to be successful in reaching this ambitious
2
equity and parity to the food system by addressing labor
(but critical) target, we will need to halve emissions by 2030, compensation and safety issues.9
reach net-zero emissions by 2050 and become carbon-negative
In its report on land use and climate change, the IPCC was clear
thereafter.3 This will require reductions across all major sectors,
that a rapid change in course — a fundamental change — at a global
including the food system.
scale in how we consume and grow our food, particularly with
Cutting emissions from the food system has received less respect to how we utilize land and water resources, is necessary.
attention than other sectors such as fossil fuels “perhaps because
To meet the challenges laid out by the Paris Agreement and the
these emissions might seem to be an unavoidable environmental
SDGs, systemic and transformational change to our food system
cost of feeding humanity.”4 However, recent research has shown
within the next ten years is critical. It lies at the heart of the
that even if a rapid reduction in fossil fuels were achieved, GHG
necessary solutions to tackle climate change, reduce water stress,
emissions from the food system alone are currently on track to
pollution and deforestation, restore lands and protect the world’s
prevent the achievement of either the 1.5°C or 2°C target.5
biodiversity; and to do so equitably in a way that betters the lives
There is consensus in the research community that achieving the of those people dependent on the food system for sustenance and
Paris Agreement targets will require extensive and unprecedented livelihood. With multiple, inter-related issues, it will not be possible
changes to the global food system — changes that can also advance to pursue one aspect of the solution to the exclusion of the others.

i As
 of November 2020, 194 states and the EU have signed the Agreement. 187 states and the EU, representing 79% of global GHGs, have ratified or acceded the Agreement.
The United States has left the agreement.

06
 ENVIRONMENTAL IMPACTS
OF THE FOOD SYSTEM:
By the numbers

AGRICULTURE AND LAND USE CHANGE

Land use is a key driver of both the emissions generated from food production and the emissions the global food system has
the potential to sequester. Forest preservation is one of the most efficient ways to meet global emissions reductions [Link]
In January 2020, the World Resources Institute (WRI) and the World Business Council for Sustainable Development (WBCSD)
launched the GHG Protocol for Carbon Removals and Land Sector Initiative, which will explain how companies should account for
and report carbon removals and storage in GHG inventories, including emissions and removals from land use, land use change,
bioenergy and related activities, building on the Corporate Standard and Scope 3 Standard.

This report analyzes corporate disclosures from 2019 and as such, there was no clear guidance or expectation for companies
to account for and disclose emissions from land use and biogenic sources.

That said, just one FVC company explicitly disclosed Scope 1 emissions from land use change to CDP, while 40% of primary
producers and 18% of processors and wholesalers said that biogenic carbon pertaining to direct operations is considered
relevant to their disclosure.

With better resources available to companies for understanding and reporting their biogenic and land use change emissions,
we expect this critical element of disclosure to improve and allow for more detailed analysis and evaluation as to how
companies are taking action to meet this part of a sustainable food future.

ii "By the Numbers: The Value of Tropical Forests in the Climate Change Equation." WRI. [Link]
climate-change-equation

CLIMATE FORESTS AND LAND

The food system contributes approximately one quarter of all GHG
Half of the world’s habitable land is used for agriculture, the majority
emissions, with the latest IPCC research estimating Agriculture,
of which (77%) is used to graze livestock and grow their feed.11 The
Forestry and Other Land Use (AFOLU) activities account for 23% of
conversion of natural ecosystems (i.e. permanent land use change)
total net anthropogenic GHG emissions. If emissions associated
through deforestation to produce agricultural commodities including
with pre- and post- production activities in the global food system
beef, soy, palm oil and wood fiber — four of the forest-risk
are included, it is estimated that this share increases to as much as
commodities on which companies are asked to disclose through
37%. Driving up this number are two very potent GHGs, with 50% of
CDP’s forests questionnaire, three of which are analyzed in this
global human-caused methane emissions coming from agriculture
reportiii — has led to over a quarter of global forest loss.12 Forests
(mostly from livestock and rice cultivation) and up to 75% of nitrous
are a natural carbon sink, and their destruction, and subsequent
oxide emissions coming from the use of nitrogen fertilizer in the
release of stored carbon, has a significant impact on the climate.
field. Of the food that is produced, 25-30% is lost or wasted both in
the food production process and by consumers, leading to addition- This is particularly notable in the world’s most biodiverse regions —
al GHG emissions and wasted resources.10 for example, 80% of deforestation in the Amazon is caused by cattle
ranching.13 Research shows that even if we ceased fossil fuel use
immediately and phased out all anthropogenic emissions, we could
still see a 2°C global temperature increase by 2100 if deforestation
continues at its current rate.14 The IPCC has been clear that we
cannot address the climate crisis without ending deforestation,
and, therefore, a necessary shift in the utilization of
deforestation-risk commodities in our food system.

iii This report analyzes 2019 data. As of 2020, CDP’s forest risk commodities also include coffee, rubber, and cacao. In addition, wood fiber is a commodity in 2019 and onward, but is excluded from this
analysis as a non-food commodity.

07
 ENVIRONMENTAL IMPACTS
OF THE FOOD SYSTEM:
By the numbers

WATER SECURITY
Water diverted to agriculture’s roughly 300 million hectares accounts
for 70% of global freshwater withdrawal and 93% of water depletion
globally.15 Growing food is therefore not only a land-intensive, but a
thirsty endeavor. Research by WRI using their Aqueduct Food tool
indicates that water withdrawals are already too high relative to
available supply, with one-third of irrigated cropland located in areas
of extremely high water stress — and this is projected to increase to
40% by 2040.16 Additionally, agricultural effluent is responsible
for 78% of global ocean and freshwater eutrophication.17

BIODIVERSITY
Agriculture is driving the replacement of the natural ecosystem with
one shaped by humans. Forests and grasslands are being converted
to cropland, and natural wetlands — approximately 70% of which
have been lost to agriculture and urban expansion since the 20th
century — are being replaced by rice-paddies and water
storage bodies.18

The loss of habitat to agriculture has major repercussions for

biodiversity. Increased use of pesticides and fertilizer and
monocropping is reducing critical biodiversity in crop fields.19
Beyond the land, aquaculture is heavily impacting already imperiled
coral ecosystems and reducing fish stocks around the world.20
Species in freshwater ecosystems have seen an 84% average
decline in population since 1970, and approximately one-third of
biodiversity loss in rivers, lakes and wetlands globally is estimated
to be a result of excessive algal growth caused by eutrophication
(largely driven by pollution from nutrient-rich agricultural runoff).21

How we produce, process, distribute, market and consume our food is a deeply interdisciplinary environmental issue that
exacerbates, but at the same time is significantly impacted by, climate change and relies on finite natural resources. With rising
temperatures comes increasingly unpredictable precipitation patterns, increased soil degradation and increased frequency of
extreme weather events that can negatively impact yields and production. Farmers and other primary producers are struggling
with these impacts, and evidence suggests a ripple effect is impacting the bottom line of large corporations dependent on
complicated and vast global supply chains.

08
 Feeding the world is a massive undertaking, and how we do so has significant implications for the state of the environment and
natural ecosystems. Different commodities have varying degrees of impact, and so what we chose to grow, and the processes
we use, can dictate the sustainability of the food system.

Most food-related GHG emissions globally (31%) come from But perhaps the most remarkable example of a
on-farm livestock and fisheries, primarily in the form of resource-intensive commodity is cattle. Ruminant livestock
methane emitted through enteric fermentation of ruminant (mostly cattle but also sheep and goats) use two-thirds of
animals (particularly beef cattle), along with manure global agricultural land and consume one-third of all cereal
management. Of the remaining GHG emissions entering crops we produce, translating to a total water requirement
the atmosphere annually, 27% comes from crop production of about 1,800 gallons per pound (by comparison, soybeans
(21% from production for human food and 6% from production require 216 gallons and corn 108). In addition, livestock con-
for animal feed), 24% comes from land use change (16% for tributes roughly half of agriculture's
livestock grazing and 8% for human food production) and production-related emissions, due in part to the high
18% is emitted in the subsequent value chain processes emissions intensity of cattle – approximately 300kg CO2e
like transport, packaging and [Link] per [Link] Yet despite these intensive impacts, livestock
production provides only 20% of global calories.
Some of the crops that the world most relies on for food
are very resource intensive – 700 million tonnes of rice, for
iv, vi Ritchie,
 Hanna (201). "Food production is responsible for one-quarter of
example, are produced annually, contributing 1.3 billion tonnes the world's greenhouse gas emissions." Our World in Data. [Link]
/food-ghg-emissions.
CO2e and a water scarcity footprint of almost 600 billion cubic
meteres. Likewise, the 255 million tonnes of soybeans
harvested annually contribute an outsized 700 million tonnes v Pearl Martinez, Rebecca and Time Gore (2016). Feeding climate change: What the
Paris Agreement means for food and beverage companies. Oxfam International.
of CO2e, and 700 million tonnes of wheat have a water scarcity [Link] [Link]
news/2013/12/why-meat-eats-resources
footprint of over 400 billion cubic meteres.v

09
 THE FUTURE OF OUR FOOD SYSTEM
IN A CHANGING CLIMATE

Companies in the corporate Food Value Chain are in some parts recognizing the challenges they
face, the opportunities available to them and the key role they play in meeting the goals of the
Paris Agreement and delivering the SDGs. But there are also remarkable unrecognized
opportunities for companies and the world in the transformation of the food system.

The Food and Land Use Coalition (FOLU) has estimated that the all strategies are implemented to half completion, global emissions
food and land use systems generate hidden environmental, health from the food system could be reduced 63% from BAU by 2100,
and poverty costs estimated at almost US$12 trillion a year. These giving the food system a 67% chance of meeting the 1.5°C target.
costs are expected to grow significantly with current trends leading Better yet, complete adoption and implementation of these
to irreversible damage to key ecosystems and fundamentally strategies “could result in a food system with marginally negative
undermining food security in certain regions.22 net cumulative emissions because of lowered emissions and net
carbon sequestration on abandoned croplands.”24
Failing to adjust course puts critical climate and environmental
targets out of reach, undermines food security and will lead to The World Resources Institute has similarly put forward a “menu”
market disruption. of actions necessary (see Table 1) to address what they define as
the food, land and emissions gaps that must be closed to achieve a
Various scientists and stakeholder groups have put forward
sustainable food future.25 FOLU also proposes structuring the needed
frameworks, strategies and analyses to determine what actions to
transformation of the food and land systems in ten critical transitions,
deploy in the global food system to drive this critical transformation
covering what we eat and how we grow and distribute foods in ways
and deliver the wide array of [Link] Clark et al. point to five
that also protect nature, expand consumer choice and supply options
specific strategies that in combination can ensure the food system
and make the system fairer, creating opportunities for all (see Table 1).
contributes to the necessary emissions reductions to keep global
warming to 1.5°C.23 These strategies include shifting global diets FOLU estimates that achieving these ten transitions would generate
toward a plant-rich diet that contains moderate amounts of dairy, a societal return of around US$5.7 trillion annually by 2030
eggs and meat (i.e. the planetary health diet); adjusting per capita (US$10.5 trillion by 2050) — more than 15x the investment cost of
calorie intake across the world to healthy, recommended levels; US$300-350 billion per year required for the transformation of the
increasing global yields by 50% above current maximum capacity food and land use system — and create new business opportunities
by improving crop genetics and other agronomic practices; cutting worth up to an additional US$4.5 trillion a year by 2030.26
food loss and waste by half; and reducing by 40% the emissions
While it has been stated by many leaders in this space that there
intensity of certain foods by increasing the efficiency of production
is no silver bullet solution in this transformation, there is broad
through management practices like precision agriculture and/or
consensus and alignment around the necessary transitions.
utilizing technological solutions.
Given the increasing scientific basis calling for food system
Taken individually, the research suggests that the single largest re- transformation, companies must strategically assess their
ducer of emissions from the food system would be from adopting a role in this transformation. This report analyzes the responses
plant-rich diet globally, which could reduce emissions 48% from the from companies who operate within the "food value chain" to CDP's
business as usual scenario (BAU). But although each of these five climate change, water security and forests questionnaires in 2019,
solutions present promising opportunities, none of them alone are in order to establish a baseline of what companies are doing, and
sufficient and their implementation in tandem is necessary. If where the opportunities lie to catalyze this transformation.

vii Note that the magnitude and direction of each strategy or transition will vary depending on various country contexts and nutritional needs.

10
 TABLE 1
Frameworks for transitioning to a sustainable food future

WRI's 'Menu for a Sustainable Food Future'* FOLU's Ten Critical Transitions to Transform
*Listed in approximate order of magnitude of impact Food and Land Use

1 I NCREASED FOOD PRODUCTION WITHOUT 1  H EALTHY DIETS

EXPANDING AGRICULTURAL LAND Shifting diets towards local variations of the
Raising productivity through increased efficiency of predominantly plant-based “human and planetary
natural resource use paired with efforts to protect health diet”
forests, savannas and peatlands from conversion
to agriculture 2  RODUCTIVE AND REGENERATIVE AGRICULTURE
P
TO SUPPORT MORE EFFICIENT USE OF
RESOURCE INPUTS
2  EDUCE GROWTH IN DEMAND FOR FOOD
R
AND OTHER AGRICULTURAL PRODUCTS Combining traditional techniques, such as crop
Reducing food loss and waste, shifting to healthier rotation, controlled livestock grazing systems
and more sustainable, plant-based diets, avoiding and agroforestry, with advanced precision
further expansion of biofuel production and farming technologies
improving women’s access to education and
healthcare in Africa (reductions in fertility rates 3 P ROTECTING AND RESTORING NATURE
to replacement rates) Ending conversion of forests and natural ecosystems,
as well as investment in restoration at scale
3  EDUCING GHG EMISSIONS FROM
R
AGRICULTURAL PRODUCTION 4  H EALTHY AND PRODUCTIVE OCEAN
Reducing emissions through improved management Increasing supply of ocean proteins through
practices, more detailed analysis and tracking of agri- sustainable fishing and aquaculture
cultural production systems and improved
technological innovation 5  D IVERSIFYING PROTEIN SUPPLY
Rapidly developing diversified sources (aquatic,
4 R ESTORING NATURAL ECOSYSTEMS plant-based, insect-based and laboratory-cultured)
Reforesting abandoned, unproductive and liberated to support dietary transition
agricultural lands and conserving and restoring
peatlands to offset remaining emissions 6 R EDUCING FOOD LOSS AND WASTE

STRENGTHEN AND SCALE EFFICIENT AND

5 B OOSTING FISH SUPPLY 7
SUSTAINABLE LOCAL FOOD ECONOMIES
Improving wild fisheries management and the IN CITIES
productivity and environmental performance
of aquaculture 8  H ARNESSING THE DIGITAL REVOLUTION TO
INFORM CONSUMPTION AND PRODUCTION
CHOICES AND CONNECT THE VALUE CHAIN

9  S TRONGER RURAL LIVELIHOODS

10  E NSURING EQUAL ACCESS TO RESOURCES FOR

WOMEN AND ACCELERATING TRANSITION TO
REPLACEMENT FERTILITY RATES

11
 DEFINING THE FOOD VALUE CHAIN:
CDP’S “FOOD VALUE CHAIN SAMPLE”
A comprehensive understanding of the flows of production from farm to fork and
of the companies contained therein is necessary to meet the challenges to the food
system. A value chain level analysis can offer insight into key issues and actions for
companies in different food-based sectors and allow policy makers and investors
insight into the levers available to them to drive positive change.

CDP’s Food Value Chain (FVC) is based on previous work Throughout this report, all other companies
conducted by the Food and Agriculture Organization of disclosing to CDP in 2019 that are not part of the
the United Nations (FAO), which defines the food value FVC are considered together as the CDP Global Sample.
chain as “the full range of farms and firms and their
The companies in CDP’s FVC form a diverse subset,
successive coordinated value-adding activities that
spanning multiple sectors ranging from bars, hotels
produce particular raw materials and transform them into
and restaurants to farmers, chemical producers and the
particular food products that are sold to final consumers
multinational conglomerates that move food through the
and disposed of after use”viii. This consists of a ‘core’ and
system, all with primary business activities falling into
an ‘extended’ food value chain with the ‘core’ comprising
the defined FVC for the purposes of this report.
actors that own and add value directly to the product
Representation is notably cross-thematic when compared
throughout the chain. For the purpose of this analysis,
to the Global Sample, demonstrating the cross-cutting
CDP focuses on the ‘core’ food value chain; however,
nature of the food system – 45% of companies that
a subsection of production input companies in the
responded to all three thematic questionnaires in 2019
‘extended’ value chain that provide some basic materials
(climate change, water security and forests) are in the
for crop production (i.e. agrochemical producers) have
FVC. In addition, 40% of all forests disclosures are in the
additionally been included, based primarily on the
sample due to the materiality to agriculture and food of
significant environmental impacts of nitrogen fertilizers
nearly all the forest-risk commodities included in CDP’s
when used at the farm level.
disclosure (palm oil, soy and cattle).
The FVC Sample therefore includes companies
responsible for creating the material and chemical inputs viii N
 even, David. (2014). Developing sustainable food value chains. Food and
Agriculture Organization of the United Nations. [Link]
to agriculture (“production inputs”), farmers, ranchers, [Link]
and aquaculturists (“primary producers”), companies that
gather and refine product prior to its delivery to market ix See Appendix 1 for more information on the methodology
(“processors and wholesalers”) and the stores and food
service companies that sell the finished food
product (“retailers”).ix

12
 HOW DOES THE SAMPLE STACK UP?

1,408 unique FVC companies were requested to Of all the companies that submitted their
disclose to at least one of the three CDP focus disclosure to CDP in the 2019 cycle, the FVC
areas (climate change, water security and sample represents 11% of all climate change,
forests): 31 production inputs; 132 primary 17% of water security and 40% of forests
producers; 1,058 processors & wholesalers; submissions, as well as 45% of companies
and 187 retailers. x
that submitted all three, demonstrating the
cross-cutting nature of food.

Food Value Chain sample coverage

10,000
Percentages in the graph refer to the portion of disclosing companies

8,000
NUMBER OF COMPANIES

6,000

4,000

2,000
11% 18%
17% 40% 45%
0

CLIMATE WATER SECURITY FORESTS AT LEAST ALL

2 THEMES 3 THEMES
All CDP Disclosers CDP FVC sample

Top 10 Companies in the FVC by market capxi Top 10 Companies in the FVC by emissionsxii

1 WALMART, INC.
Retailer
1 WALMART, INC.
Retailer

2 NESTLÉ
Processor and Wholesaler
2 NESTLÉ
Processor and Wholesaler

3 THE COCA-COLA COMPANY

Processor and Wholesaler
3 CARREFOUR
Retailer

PEPSICO, INC. CARGILL

4 Processor and Wholesaler
4 Processor and Wholesaler

MCDONALD'S CORPORATION YARA INTERNATIONAL ASA

5 Retailer
5 Production Inputs

COSTCO WHOLESALE CORPORATION MITSUBISHI CORPORATION

6 Retailer 6 Processor and Wholesaler

ANHEUSER BUSCH INBEV TARGET CORPORATION

7 Processor and Wholesaler
7 Retailer

STARBUCKS CORPORATION COSTCO WHOLESALE CORPORATION

8 8
Retailer Processor and Wholesaler

MONDELEZ INTERNATIONAL INC TESCO

9 Processor and Wholesaler
9 Retailer

10 TARGET CORPORATION
10
PEPSICO, INC
Retailer Processor and Wholesaler

x Of the FVC compaines found in S&P500, the FTSE All World index, and in the top 500 global companiesby market cap, most are processors and wholesalers followed by retailers. The sample's heavy
skew toward processors and wholesalers reflects the material concerns of investors. In addition, by definition the processosr and wholesalers category is broad stroke, including any company involved
in the aggregation or distribution of materials, whereas the other categories refer to unique activities and therefore contain fewer companies. This ensures the breadth of imapct of these aggregator
companies is captured without diluting the data of the other three value chain levels.

xi Data provided by Bloomberg; Market Capitalization as of October 2020

xii Data from CDP’s 2019 Full GHG Dataset

13
14 15
 WHAT ARE COMPANIES DISCLOSING?

Disclosure forms the bedrock of ambitious action. By disclosing on their Food Value Chain responses rates
environmental performance, companies can get ahead of regulatory and
policy changes, identify and tackle growing risks and find new opportunities 80% 77.5%
70%
for action that investors and customers worldwide are demanding. But 62.1%
60%
disclosure forms only the first step in transparency, and not all disclosure 50% 43.3%
is equal. To move from the early stages of transparency to the advanced 40% 37.6%
stages of leadership, companies disclosing to CDP must provide data and 30%

information for the aspects of their direct and indirect operations that are 20%
10%
most critical to the sustainable future of the global food system, and that
0%
provide further insights into their planning and business strategy that are CLIMATE CHANGE
reflective of their position and role in the food value chain. Analysis of
80%
2019 CDP data shows that FVC companies are not adequately disclosing 72.4% 72.2%
70%
in important areas like value chain (Scope 3) emissions, activities in water 60%
stressed areas, and traceability of the commodities on which they rely 50%
for revenue. 40% 38.1%
30%
30.0%
20%

Disclosure 10%
0%
WATER
Broadly, the FVC has a relatively high disclosure rate: 70% of requested
companies disclosed on climate change and 65% on water security — 80%
70%
higher rates than for the Global Sample. However, when analyzed at the
xiii
60%
value chain level, disclosure across climate change, water security and
50% 46.0%
forests lags for production input and retail companies. Disclosure on 40%
forests is best understood at the commodity [Link] Slightly more than 30% 28.4%
17.9%
half of all companies expected to disclose on palm oil in the FVC did
xv 20%
10%
so, leading cattle products (46%) and soy (41%). 0.0%
0%
FORESTS

Essential issue coverage Production Inputs Processors and Wholesalers

Primary Producers Retailers

CLIMATE CHANGE
Emissions are the fundamental driver of climate impacts, and emissions
can only be managed when their sources are understood. Most emissions Food Value Chain emissions by Scope
– 88% – from FVC companies come from sources outside their direct
control (Scope 3 emissions). In every level of the value chain, these
PRODUCTION
Scope 3 emissions account for at least 74% of the total, increasing
INPUTS
linearly through the value chain from primary inputs to retailers where
PRIMARY
it accounts for 92% of total [Link] Comprehensive reporting of these PRODUCERS
emissions is lacking in the FVC: while 81% of FVC companies report
PROCESSORS AND
Scope 1 and two-thirds report Scope 2, less than 60% of companies report WHOLESALERS
Scope 3 emissions for categories relevant to their business. In many cases
Scope 3 emissions are reported by FVC companies at higher rates than RETAILERS

the Global Sample, but the rates of reporting fall below reporting of
0% 20% 40% 60% 80 % 100%
Scope 1 and 2 emissions. It is critical that companies report their
Scope 3 emissions to CDP to ensure full transparency and enable Total Scope 1 Total Scope 2 Total Scope 3
direct action where it is needed most. Emissions (TCO2e) Emissions (TCO2e) Emissions (TCO2e)

xiii For the overall 2019 disclosure cycle, 67% of companies in the Global Sample disclosed on climate and 62% on water security.

xiv Companies requested in 2019 to respond to CDP's forests questionnaire answer questions on one or more forest commodity: timber, soy cattle, and palm oil. Timber excluded from analysis for the
purposes of this report.

xv CDP determines the companies that are expected to use or produce a given commodity based on their assigned business activity (CDP-ACS).

xvi Emissions analysis in this report uses data from CDP's Full GHG Dataset (201), which in addition to raw company-reported data includes estimated emissions at a company-level based in part on
cleaned and modelled data. When calculating emissions, a heirarchy was used to ensure that the best available data is always incorporated into aggregated emissions numbers.

16
 WATER SECURITY Beyond direct operations, companies lack information from suppliers
regarding water use, risks and/or management information as just
Put simply, there can be no food without water. Less than one
nine percent of FVC companies adequately request this information
percent of freshwater globally is available for human use, and
from [Link] And only one quarter of the FVC have pollution
70% of that is estimated to be used for growing food and raising
management procedures in place for agricultural activities in their
animals27 and much of the world’s agricultural expansion is taking
supply chains meant to minimize the adverse impacts of potential
place in water stressed regions.28 Further, three quarters of FVC
water pollutants on water ecosystems or human health.
companies are rated Very High or Critical by CDP’s Water Impact
[Link] Therefore it is critical that companies understand their Across important food commodities like palm oil, cattle products
impacts on water quality and quantity and thus monitor water and soy that are also identified as forest-risk commodities,
discharges, total withdrawals, and withdrawals from already disclosure to CDP on water security is lacking in transparency.
water-stressed areas. 79% of the FVC adequately monitorxviii Most companies that cited these commodities as relevant to
total discharge volume from direct operations and 86% adequately their business are unable to determine the proportion produced or
monitor total water withdrawals from direct operations, but fewer sourced from water stressed areas. Rates were lowest for palm oil,
than half of companies do so for withdrawals from water-stressed where 85% of companies were unable to determine if the commodity
areas where monitoring is most important. was produced in a water stressed area and 86% unable to determine
if it was sourced in a water stressed area. Rates were similarly low
It is also increasingly critical for companies to track the quality of
for cattle and soy products. Food companies must continue to look
their water discharge, as water quality has been characterized as
further into their supply chains to understand how production and/or
an “invisible crisis” that is underappreciated and underestimated.29
sourcing of food commodities can further exacerbate water scarcity
Water pollution from farming represents the greatest source of
and stress globally.
pollution in the food system and as such it is critical for primary
producers to reduce the polluting potential of pesticides and other
agri-chemicals and monitor and treat wastewater at the source.
However, just 44% of primary producers are monitoring wastewater
discharges, and just one (10%) had pollution management
procedures in place in their agricultural practices.

Measuring and monitoring: water discharge quality

80% 77.8%
71.6%
70% 66.7%
62.8%
60%
50% 44.4%
40% 33.3%
30%
20%
10%
0%

Measuring and monitoring: total withdrawals from water stressed areas

80%
70%
60% 54.5%
50.0% 48.5% 48.1%
50%
42.0%
40%
30%
22.2%
20%
10%
0%

Production Inputs Primary Producers Processors and Wholesalers Retailers FVC Combined Global Sample

xvii CDP’s Water Impact Matrix is a tool which ranks industrial activities according to their potential impact on water – both water quantity and water quality.

xviii This is defined as monitoring at three-quarters or more of sites/facilities

xix Adequately here means three-quarters of more of total procurement spend is requested

17
 FORESTS Traceability for forest risk commodities
92% of companies in the FVC are rated Very High or Critical 100%
for forest impacts by CDP meaning their business activities
have the highest potential to create detrimental impacts upon
86.4%
forests through the production or use of one or more of the
81.9%
focus commodities. For companies to understand the impacts 80%
of their sourcing on forests, they also need to be able to trace
71.7%
the movement of commodities through their supply chains.
Traceability is an essential management tool to ensure regulatory
compliance and supply chain transparency. Most FVC companies 60%
across relevant forest-risk commodities have implemented a
traceability system to track and monitor the origin of their
products. And most are able to trace more than 90% of the 43.2%
total production and/or consumption of the relevant commodities. 40%
But despite relatively high levels of traceability across commodities, 33.3%
the point to which the commodity is traced lags best practice, 30.1%
demonstrating poor visibility by companies into their complex
supply chains and therefore their capability to implement sustainable 20%

practices in their supply chains. The most common origin of tracing

for palm oil is to the mill (47% of FVC companies) and not further to
the plantation of origin (9%). For cattle products, only 13% of
companies have traced products to the rearing, breeding or finishing 0%

farm, and 26% are traced to the slaughterhouse. And just 5% of soy PALM OIL CATTLE PRODUCTS SOY
is traced to the plantation, compared to 53% traced only to the
Companies with traceability Companies able to trace 100% of
country of origin and no further. system in place production/consumption volume

Impacts, risks and opportunities

Adequate coverage in disclosure is important, but so too is adequate depth. Best practice for transparency requires the assessment
and identification of risks and opportunities, and details about impacts currently faced. This information allows investors and other
stakeholders to understand how companies are currently impacted, how they might be in the future and if they are prepared to realize
opportunities in transitioning to a low carbon, water secure and deforestation-free economy.

Despite mounting scientific evidence that climate change and environmental degradation are already impacting society and the
economy, just one in eight FVC companies disclose current climate-related impacts (concurrent with the Global Sample)xx —
most in relation to the low carbon transition (e.g. increased price of GHG emissions) as opposed to physical climate change.

SIGNALS OF CHANGE: INVESTOR PRESSURE DRIVING CORPORATE ACTION

Major investor networks in addition to CDP's investor signatories are also pushing for corporate transparency and action.
One notable example is the FAIRR Initiative, a collaborative, 256-member investor network with US$25 trillion AUM that analyzes
an index of 60 companies on a yearly basis judged to be the most impactful animal protein companies, and calls for large-scale cor-
porate action such as a moratorium on deforestation for soy production in the Amazon.

Companies are responding to this pressure. In September 2020, JBS SA said "it plans to combat destruction in the Amazon by
monitoring its entire supply chain for deforestation by 2025.” This is a sharp departure from previous efforts to curb deforestation,
in which only final-sale farms were checked, meaning indirect suppliers could still cut down forest with impunity. While this requires
investment and technological development (JBS plans to use blockchains as a monitoring tool), it also can provide benefits by
attracting future investors and avoid losing existing ones -- KLP, Norway's largest pension fund with US$80 billion under management,
has threatened to pull out of Brazil-linked investments unless the country takes action to halt deforestation, and is putting pressure
on JBS' shareholders to hold the company [Link]

This call for transparency is central to CDP's theory of change, and reinforces the call for meaningful engagement with suppliers,
a true up and downstream assessment of risks and opportunities and the translation of that effort into visible markers for consumers.
How companies in the food value chain disclose gives insight into how the system is preparing for the future of food.

xxi Mair, Vibeka (201). "Norways' KLP to firms invovled in Brazilian soya production: "We expect answers". Responsible Investor. [Link]
kip0to-firms-involved-in-brazilian-soya-production-we-expectpanswer

xx Climate-related risks with a ‘current’ timeframe and a ‘very likely’ or ‘virtually certain’ likelihood serve as a proxy for climate-related impacts

18
 One quarter of FVC companies disclosing on water security cite current detrimental Share of companies identifying risks
water-related impacts. This is nearly double the share of companies in the Global in risk assessments
Sample — 24% compared to 13% — but still the most disclosed water-related impact
(drought) affects less than seven percent of the FVC. Similarly, very few FVC 80% 74.2%
70% 69%
companies disclose forest-risk commodity-related impacts. Just 32 total detrimental
60%
impacts were disclosed across palm oil, cattle products and soy. Despite the 50%
40%
potential physical impacts from deforestation that are becoming increasingly
30%
prevalent with the conversion of natural ecosystems — rising mean temperatures, 20%
10%
increased ecosystem vulnerability and land loss to desertification and soil degradation
0%
— the impacts most cited were negative stakeholder feedback and brand damage.
CLIMATE CHANGE
There is, however, a recognition of physical climate impacts in the FVC’s risk assessments.
While FVC companies assess risk at a lower rate than the Global Sample, when they do 80%
assess their risks, they are more likely to identify them compared to companies in the 70% 66.6%
60% 51%
Global Sample. Most notably, companies that were requested and disclosed on climate 50%
change, water security and forests were more than twice as likely to identify substantive 40%
30%
risks in all three issue areas than peers in the Global Sample — 38% compared to 16%. 20%
This suggests that there is unacknowledged risk to the FVC, particularly for those 10%
0%
companies not yet assessing and reporting on the interconnected issues of climate
WATER SECURITY
change, water insecurity and deforestation.

The value chain is a particular source of climate-related risk for FVC companies. 80%
More than one in four FVC companies cited risks to supply chains or customers 70%
60% 54.3%
from changes in precipitation patterns and extreme variability in weather patterns,
50%
compared to fewer than one in ten companies in the Global Sample. And FVC 40%
30%
companies cited a risk from rising mean temperatures at more than three times 16.5%
20%
the rate of the Global Sample. 10%
0%
One third of companies in the FVC disclosing on water security identified risks in FORESTS
both their direct operations and their value chains, but six times more companies
identified risks only in their value chains than identified risks only in direct operations.
80%
Of risks disclosed to CDP, those to both direct operations and the value chain center 70%
on drought, water stress and water scarcity, and are cited at a much higher rate than 60%
50%
in the Global Sample – again demonstrating the critical role of water in the global 40% 38.1%
food system relative to other industries, business activities and value chains. 30%
20% 16.4%
Similarly, risk identification in forests is low across commodities but more 10%
concentrated in the value chain, with about half of companies disclosing on soy and 0%

cattle products citing risks to direct operations, or supply chains or other value chain COMPANIES DISCLOSING TO
stakeholders. Commodity-related risks are much more commonly cited in the supply ALL THREE QUESTIONNAIRES
chain and the rest of the value chain than direct operations, particularly in relation
to increased stakeholder concern or negative feedback. Conagra Brands Inc. stated
Global Sample FVC
that “the potential for unsustainable and unethical practices among palm producers
and related community opposition and grievance procedures threaten the availability,
and stability of palm oil supply and price consistency, all of which are key to [their]
business” — suggesting the importance of engagement beyond direct operations
to manage risk.

RIVER BASIN RISK

In major river basins in some of the world's largest food producing countries, very few impacts and risks were cited by
FVC companies disclosing on water security: just one company cited impacts in the Mississippi and nine companies
cited risks, no companies cited impacts in the Yangtze, and just three cited risks; and no companies cited impacts in
the Ganges-Brahmaputra while just two cited risks.

This raises an important question: is risk being underestimated in areas where much of the world's staple foods
are produced?

19
 Companies reporting risk by forest commodity Percentages in the graph refer to the portion of disclosing companies

100

80

60
68.7%

40
27.7% 43.3%
20 13.3% 25% 34.1%
0
PALM OIL SOY CATTLE

Number of companies that disclosed Number of companies that Number of companies that cited
(expected and not expected) cited risk to direct ops risk to value chain

There may be more risk lurking in the direct operations and value frame, likelihood and financial impact. Yet trends suggest this may
chains of FVC companies than disclosure suggests. Many be important — especially for big ticket commodities such as cattle.
companies that assessed risks and did not identify any with the In July 2020, the FAO released its Biannual Report on Global Food
potential to have substantive financial or strategic impact told Markets, forecasting that world total meat production would be set
CDP that they did identify risks not considered to be substantive to contract in 2020 after being depressed due to animal diseas-
— including 44% disclosing on climate change and 57% on water es, the lingering effects of drought and COVID-19.30,31 Per-capita
security. Though these risks may not be deemed as substantive to consumption of meat is set to fall to the lowest in nine years and
the financial or strategic operations of an individual company, for the three percent drop from last year represents the biggest decline
citizens with a stake in the market as a whole and the planet we live since at least 2000. This has concrete impacts on companies. In
on, these risks in aggregate may in fact be material. early 2020, two of the U.S.’s largest milk processors declared
bankruptcy within two months of each other, citing shifting
One particular risk companies may be overlooking is changing
consumer demand as the cause.32
consumer preferences. While this did appear as a cited risk in
climate and forests disclosure, just 45 companies in the FVC cited While a changing climate, water insecurity and deforestation present
it as a risk. And companies were generally uncertain about its time risks to businesses, they also present opportunities for companies
able to proactively manage and adapt to these changes in ways that
improve financial or strategic performance. Most (nearly 80%) of all
climate-related opportunities are associated with efficiency (such
SIGNALS OF CHANGE
as improved production processes or reduced energy use) and
Declining meat consumption
products and services (product development and shifts in
Meat consumption is declining globally for many consumer preference).xxii Most water-related opportunities are also
reasons, including increasing animal welfare and from efficiency, but conversely, efficiency accounts for just ten
environmental concerns (particularly in Europe), percent of forest-related opportunities and 38% are market-related
emerging health dietary guidelines (China dictates (including access to new markets and public sector incentives).
a 50% reduction per capita), heightened consumer
The opportunity for product development is made clear by the
interest in safety, traceability and sustainability
increasing investment in the space. In the first quarter of 2020,
(especially in Brazil), and as incomes decline in
a record US$930 million was invested in alternative protein
part due to [Link]
development – more than was invested in all of 2019. In addition,
plant-based meat retail sales increased by 18% in 2019 to
US$939 million.33 While this remains only two percent of total
xxiii (2020). “Pandemic to Spark Biggest Retreat for Meat Eating in Decades.”
Bloomberg News. [Link]
meat retail sales, record investment and the declining costs of the
pandemic-set-to-spark-biggest-retreat-for-meat-eating-in-decades technologies used to produce alternative proteins is expected to
grow the market exponentially.

xxii Note that for the purposes of this analysis, climate change opportunities related to energy source were excluded so that the same categories across climate change, water security, and deforestation
could be compared directly.

20
 Disclosed opportunities in the Food Value Chain by type

60%

50.5%
50%

41.8%
39.8% 39.1%
40% 37.7%

30%

20% 18.4%
16.8%
14.2%
9.8% 11.3% 9.6% 10.9%
10%

0%
CLIMATE CHANGE WATER SECURITY FORESTS

Markets Efficiency Products and Services Resilience

Companies in the FVC are not blind to this opportunity, and a number of them report
investment in the alternative protein market. Retailer Tesco, which values its
SIGNALS OF CHANGE
alternative protein line at £572 million (US$750 million), cited financial incentives
Diversified protein supply
but also the opportunity to “[take the] lead in the transition to a low carbon economy”
resulting in both reputational and environmental benefits. Maple Leaf Foods has COVID-19 has demonstrated that
adopted a target to reduce their “environmental footprint (50% by 2025)” to “lessen shocks to the food system can have real
the impact of [their] meat protein (pork and poultry) product portfolio.” implications for markets, especially for
more expensive food options like red
This level of investment is encouraging, but what remains to be seen is if these foods
meat. Should this decline stick, as some
can supersede meat, and in doing so reduce the environmental costs of providing
evidence suggests, companies will be
people with high quality protein. Because companies are citing this opportunity, but
well-served by investing in alternative
not consumer preference as a risk, we are only seeing incentive to expand production
protein and diversifying their product
of alternative product but no incentive to reduce meat production. Likewise, despite
portfolios, while simultaneously
the fact that many of the top risks cited by companies relate to physical impacts
contributing to building resilience
from changing weather conditions and violent storms, there is a critical lack of
in their value chains.
resilience-related opportunities identified across climate change, water security
and forests disclosure. Given the scientific consensus, it would behoove companies
to address this gap.

21
 HOW ARE FOOD VALUE CHAIN
COMPANIES PLANNING FOR THE FUTURE
AND CONTRIBUTING TO FOOD SYSTEM TRANSFORMATION?

CDP data suggests a lack of adequate depth of disclosure across climate change, water security and
forests, as well as environmental impacts hitting corporate bottom lines. Unrecognized risks and
minimal substantial opportunities for adaptation paint a stark picture of our progress toward the
transitions needed to achieve the Paris Agreement and the SDGs.

CDP’s disclosure focuses on the world’s biggest companies, those There are signs that companies are increasingly using the tools
with material importance to CDP’s investor signatories. These available to them to do this. But further utilization is necessary.
companies, in turn, leverage their purchasing power to prompt A lack of action signals maladaption to increasingly difficult
disclosure from their supply chains. These levers are important environmental conditions, and rather than helping to drive the
when considering how these impacts might be mitigated. Preparing shift, positions the FVC as laggards who may be forced to adjust
for environmental risks is important for the corporate bottom line to changes down the road. While many of these actions outlined
but can also help shield small-scale suppliers who might be below help company bottom lines, they are also instrumental in
disproportionally impacted given lack of financial resources, and meeting recommendations of food-system frameworks like those
thus the impetus is on large, multinational corporations to take of WRI and FOLU, and and planetary health guidelines.
action to position themselves as stewards for the future of food
while also bulwarking their own operations and value chains against Scenario analysis
future climate shocks.
Scenario analysis is one of the key recommendations of the Task
Force on Climate-related Financial Disclosures (TCFD) as a
well-established method that aids companies in developing
strategic plans that account for a range of plausible futures,
such as a 2°C world.

Scenario analysis helps companies understand how they will be

impacted under different likely scenarios and recognize and
manage risks in the medium to long term, as well as realize
[Link] Starbucks, for example, in conducting scenario
analysis found climate change-driven pest increases were causing
costs of coffee production to rise as much as 30% for some of their
smallholder suppliers. In response, the company has committed to
provide 100 million healthy coffee trees to farmers, reasoning that
the investment “makes existing lands more productive and keeps
farmers from expanding into forests.” While this is an investment
that helps protect their core business, it also serves to increase
production without increasing agricultural land demands, harming
ecosystems or driving deforestation.

Relatively few (~30%) companies employ scenario analysis in both

the FVC and Global Sample, but those that do can identify areas of
importance to their core business. For example, when FVC
companies disclosed to both climate and water security and
conducted scenario analysis, nearly three quarters identified
water-related outcomes, compared to 58% of companies in the
Global Sample, clearly demonstrating both the importance of water
to food companies and the interconnected relationship between
climate change and water security risks. When employed, scenario
analysis can paint a roadmap toward a sustainable transition.

xxiv For further Information see: [Link]

22
 Carbon and water pricing Although the practice of setting emissions reduction targets has
become standard business practice and is an expectation from
There is growing consensus that carbon pricing is the most flexible, capital market stakeholders, the proportion of companies setting
cost-effective approach to mitigating the impacts of climate change targets to reduce their GHG emissions is low in the FVC: one third
by incentivizing emissions reductions and directing money toward of production input companies, 44% of primary producers, 42% of
sustainable investments such as compensation for ecosystem processors & wholesalers and one quarter of retailers did not set
restoration or avoided deforestation. Companies choose to price any climate-related targets in [Link] For the 58% of FVC
carbon internally for a variety of reasons, one of which is to prepare companies that did set targets, most are insufficient in addressing
for potential regulation on the price of GHG emissions. While FVC the most critical aspect of their emissions — 84% of disclosing
companies are about as likely to disclose that they are currently companies across all value chain levels did not set targets that
subject to or expecting GHG emissions pricing regulation as the explicitly address Scope 3 emissions.
Global Sample, they are less likely to use or plan an internal price on
carbon. In contrast, FVC companies utilize internal water pricing at a Science-based targets (SBTs) further demonstrate corporate
higher rate – almost half of companies report the use of an internal leadership and ensure resiliency, climate change preparedness
water price or plan to implement one in the next two years, and the ability and intention to stay ahead of ever-changing
compared to 38% in the Global Sample. Ultimately, however, an regulatory and business environments. They also align with the
increased utilization of pricing, either by corporate buy-in or public scientific consensus that provides the basis of the Paris Agreement.
policy, is necessary to appropriately capture the environmental A higher share of companies in the FVC commit to and adopt SBTs
externalities embodied in food production and fund sustainable than their counterparts in the Global Sample – as of September
farming practices. By failing to price carbon, companies miss a vital 2020, 75 FVC companies had committed to or adopted an SBT, of
opportunity to mitigate the dangerous impacts of greenhouse gas which 15 approved targets were classified at 1.5º[Link] This is an
pollution and drive investment in sustainable agriculture practices. encouraging trend, especially when coupled with the year-on-year
growth of companies setting SBTs generally. Overall, 15% of all
approved SBTs from CDP disclosing companies are from the FVC.
Target setting Retailers lead the way within the FVC, with one third committing to
and nearly one quarter adopting an SBT. Both food and non-food
Targets are an essential action for companies in the low-carbon companies continue to increase their use of SBTs – over 1,000
transition. Setting emissions reduction targets demonstrates companies with a combined market capitalization of over
ambition and increases transparency for stakeholders and $15.4 trillion USD — including one-fifth of the Global Fortune 500
investors into how companies seek to address environmental — are now working with the Science-Based Targets initiative (SBTi)
impacts. Company-level targets also allow the corporate sector to reduce their emissions at a pace and scale required by scientific
to align with more comprehensive global targets such as those from consensus. However, the rate of SBT setting will need to increase
the Paris Agreement, or set deforestation, water use or more rapidly across both samples if we are to meet the
other targets that prompt companies to look for solutions to requirements of the Paris Agreement.
meet those goals.

Internal water and carbon pricing

65%

60%

55%

50%

45%

40%

35%

30% 28.9%
25%
22.2%
20% 19.8% 19.7%
17.2%
15.4%
15%
12.8%
11.3%
10%

5%

0%

CDP GLOBAL SAMPLE FOOD VALUE CHAIN CDP GLOBAL SAMPLE FOOD VALUE CHAIN

Currently pricing Planning to price water Currently pricing Planning to price carbon
water within two years carbon within two years

xxv Absolute and intensity targets are both included in this analysis. Across the FVC, 11 percent of companies set both an intensity and absolute target.

xxvi This means that the Scope 1 and 2 portion of the approved target is aligned with emissions scenarios to keep warming below 1.5C as classified by the SBTi

23
 Climate target setting
90%

80%

70% 67.0%

60%
57.8%

50%

40%

30%

20% 15.3% 15.2% 15.7%

9.3% 11.9%
10% 6.8%

0%

SET EMISSIONS TARGET ADDRESSES COMMITMENT TO SET APPROVED SCIENCE-

REDUCTION TARGET SCOPE 3 EMISSIONS SCIENCE-BASED TARGET BASED TARGET

CDP Global Sample FVC

Despite the demonstrated importance of water to the food system, Value chain engagement
target setting occurs at low rates within the FVC. While 60% of FVC
companies have some type of water-related target, most relate The food value chain is a complex relationship between inputs,
only to quantity and not quality. Just 14% of FVC companies have a producers, processors & wholesalers, retailers and customers.
water quality target, meaning little action is being taken to address Impacts in one level often reverberate within the companies
discharge, pollution and other important issues. Crucially, there is themselves and between different levels of the chain. Within
little to no correlation between CDP’s Water Impact Matrix and individual companies, there are also complex relationships between
target setting — companies operating in industries deemed a operations, suppliers and other value chain partners. As previous
“critical” risk to water are no more likely than non-critical industries analysis in this report has shown, the primary impacts from and
to set water targets. This is vitally important because nearly three caused by FVC companies often exist beyond their direct opera-
quarters of the companies in the FVC sample are rated ‘very high’ or tions. As such, companies must fully engage their value chains to
‘critical’ in CDP’s Water Impact Matrix — eight percent higher than understand and address risks particularly in their supply chains
the Global Sample. stemming from Scope 3 emissions, deforestation, water pollution
and ecosystem degradation, and to ensure their operations support
With respect to the forest-risk commodities prevalent in the FVC, labor equity and strong rural livelihoods.
60% of companies disclosing on palm oil set a commodity-based
target, while only 40% of soy and less than 35% of cattle disclosing Value chain engagement is not only important to address environ-
companies do so for their relevant commodities. Most cattle targets mental issues – there is also financial incentive for companies to
are for sustainable procurement standards, and most soy and palm employ innovative approaches to their operations and encourage
oil targets are for third-party certification [Link] Across the investment. Investors looking for insight into food companies’ ESG
commodities, very few targets relate to traceability, a vital element performance often encounter issues associated with the complex
to halting deforestation as it allows companies the necessary supply chain-centric impacts of the food value chain. Without
insight into their operations to track the forest impacts of transparency beyond direct operations and first-tier suppliers,
their suppliers. investors do not have the tools they need to make informed
decisions.34 Likewise, consumers are demanding full supply chain
Finally, 14% of companies have a waste target, less than one transparency. Innova Market Insights, a food industry analysis firm,
percent have a land use target, and and one company in the FVC labels transparency their top industry trend in a 2020 report.
has a specific methane target. According to their own research, 3 in 5 consumers worldwide say
that they are interested in “learning more about where food comes
A robust combination of emissions, forest- and water-related
from and how it’s made,” and 75% of consumers say they “expect
targets, beyond what is currently being demonstrated will be
companies to invest in sustainability.” Lu Ann Williams, Director of
necessary to reduce emissions and restore and preserve
Insights and Innovation, states, “transparency throughout the supply
ecosystems in the food system system.
chain will dominate in 2021, with consumers searching for brands
that can build trust, provide authentic and credible products, and
create shopper confidence in the current and post-COVID climate.”35
This transparency can only be established with a credible
understanding of the entire value chain.

xxvii Currently no third-party deforestation certification standards exist for cattle producers.

24
 However, value chain engagement is relatively shallow for the FVC.
While 75% of companies engage in some way with their value chain SIGNALS OF CHANGE
on climate change, just 15% engage with all aspects of the value Nature-Based Solutions
chain (e.g. suppliers, customers and other partners). Water value chain
engagement is higher among FVC companies: 60% of companies Companies with a full understanding of and
compared to 45% of the Global Sample engage in any way with their engagement with their value chain are finding
value chain. However, just 43% of the FVC engages suppliers on innovative, collaborative ways to improve the
water-related issues, and just 21% engage with all value chain sustainability and resilience of their supply chains
aspects. And companies lack information from suppliers through the adoption of nature-based solutions -
regarding water use, risks and/or management information as just and by doing so are realizing benefits to their
nine percent of FVC companies adequately request this information bottom lines.
from suppliers. Furthermore, only one quarter have pollution
management procedures in place for agricultural activities in their
water and their annual yield. And 78% of companies encourage their
supply chains meant to minimize the adverse impacts of potential
suppliers to undertake agricultural or forest management practices
water pollutants on water ecosystems or human health. Forest
with climate change mitigation and/or adaptation [Link]
engagement is high with direct suppliers — more than three quarters
When managing for climate impacts, companies are finding
of companies across all three forest risk commodities analyzed here
synergistic benefits to their business.
do so. However, engagement beyond that is limited; across
commodities, about half of food companies do not engage beyond On water-related issues, FVC companies are engaging on innovation
their first-tier suppliers to manage and mitigate forests-related risks. and collaboration at more than twice the rate of the Global Sample,
but just one in ten FVC companies are incentivizing suppliers and
When engaging value chains, companies commonly seek to
other partners to improve water management and stewardship.
influence compliance and onboarding procedures, collect
information on behavior, change behavior through incentives or To manage upstream supply chain disruptions, some companies
change markets via innovation and collaboration. The most are proactively engaging their suppliers – processor and wholesaler
common type of engagement on climate-related issues is information Consetllation Brand, Inc stated that they “request [their] primary
collection to understand supplier behavior. Just 11% of FVC suppliers to undertake their own assessment covering water and
companies utilized innovation and collaboration in their engagement climate change to understand their risk and how best to manage it
practices, meaning most companies miss out on integrating their to help reduce the risk of impact to the company's supply chain. For
suppliers and other partners into larger conversations about how to suppliers in water stressed areas Consetllation Brands, Inc request
change markets. Most companies (80%) disclose that they that they actively manage their water use and find ways to increase
implement management practices on their own land with a climate efficiencies and build resilience.” In this instance, engagement
change mitigation and/or adaption benefit, and several cite benefits is beneficial to managing risk – but it also serves to advance
beyond climate mitigation, including benefits to biodiversity, soil, sustainability and equity in agricultural production.

xxviii N
 ote that only companies responding to sector-specific questionnaires received this question, therefore the sample size is smaller than for other data points in the report.

25
 Nature-based solutions CDP disclosures also provide examples of companies looking to
nature-based solutions.
Engagement also opens pathways for implementing sustainable
farming practices like regenerative agriculture, which can help make Danone employs regenerative agriculture as a mean to reduce
corporate supply chains more resilient, less intensive and more GHG emissions and restore natural ecosystems while reducing
attractive to investors and consumers. This is a substantial their risk exposure to climate impacts: “Agriculture…is of paramount
opportunity economically, but it also supports the shift to productive importance for Danone, as it represents the most significant
and regenerative agriculture. Nature-based solutions such as contribution to the company full scope carbon footprint…with
regenerative agriculture — in which farming and grazing practices almost 60% in 2018. Danone is thus strongly engaged into the
are implemented that rebuild soil organic matter and restore implementation of regenerative agriculture (RA) practices within
degraded soil biodiversity — have synergistic benefits to the its supply chain. RA aims at protecting soils and water and restoring
environment and the corporate bottom line, and can contribute to biodiversity and sequestrating carbon in the soil. Danone's supply
carbon drawdown and soil health, protect biodiversity and habitat, chain will become thus more resilient to climate change, ensuring
contribute to afforestation and protect watersheds from agricultural sustainability of supply of agricultural products and reducing
run-off and pollution. exposure to price volatility.” The Danone Ecosystem Fund supports
the transformation of agricultural practices in the company's supply
In Australia, the National Farmers’ Federation (NFF) is supporting chain. As of December 31, 2018, the Danone Ecosystem Fund has
the country’s economy-wide goal for carbon neutrality by 2050. 45 active projects worldwide; Lait Pieds sur Terre, for instance, aims
To achieve this, they are looking to invest in nature-based solutions to help farmers in France reduce their carbon footprint while
such as soil management and afforestation, and they are looking increasing revenue and leveraging innovative financing tools.
to public policy to provide the financial impetus by way of carbon
and natural capital markets, and compensation for agricultural land And General Mills is investing in the switch to organic agriculture
devoted to sequestration. By doing so, the NFF hopes to continue
36 in response to shifting consumer demand, investing in a
to see a viable and robust agriculture industry, but to find a balance “multi-pronged strategy, including the following: 1) Supplier
between the sizeable externalities of production, especially for partnerships: An example is our Cascadian Farm organic brand
intensive industries like cattle, and nature. partnering with Grain Millers, the largest organic oat supplier in the
U.S., to promote continuous improvement within organic farming;
2) Industry collaboration: In 2017, we launched and hosted two
COVID-19 meetings of the Organic & Regenerative Agriculture Transition
Council. We are a founding member of the U.S. Organic Grain
Collaboration and support the Prairie Organic Grain Initiative.
"The COVID-19 pandemic has revealed how fragile,
3) Research: We support the Organic Farming Research
lengthy, and complex supply chains can be - and
Foundation's efforts to encourage widespread adoption of organic
how much society has riding on their continued
farming practices through research, advocacy and education;
smooth functioning."
4) Large-scale land conversion: In fiscal 2018, General Mills and
MACKINSEY GLOBAL INSTITUTEXXIX
Gunsmoke Farms LLC signed an agreement to convert 34,000
acres of conventional farmland to certified organic acreage
The onset of the COVID-19 pandemic has revealed the
by 2020.”
vulnerability of our global supply chains, seventy-five
percent of which rely only on 12 plant and five animal Of note is the method these companies employ to implement
species. It has also demonstrated the dramatic nature-based solutions. They are doing so with supplier engagement
implications of our continued disruption of natural sys- throughout their value chains, in recognition that the brunt of their
tems, increasing human exposure to disease impact is embedded therein.
through habitat destruction and climate [Link]

Nearly overnight, the pandemic caused the global economy

to grind to a halt as supply chains were disrupted and
consumers were confined to their homes. The shock of
COVID-19 has reverberated through society, particularly "...Ripple effects [of COVID-19] into that previously balanced
for vulnerable populations and low-wage workers that system have become clear. Distribution channels have been
support the global economy, and it is both demonstrative upended, with food stranded upstream, creating food-security
and symptomatic of the compounding impacts of an risks for vulnerable populations. Companies that produce,
extractive and exhaustive economic system. convert, and deliver food to consumers and businesses face
a web of interrelated risks and uncertainties across all steps
in the value chain – from farmers to end-customer channels.
xxix, xxxi Sneader, Kevin and Susan Lund. 2020. "COVID-19 and climate change
expose dangers of unstable suppply chains." McKinsey Global
MCCKINSEY & COMPANY XXXI
Institute. [Link] business-functionsoperations/
our-insights/covid-19-and-climate-change-expose-dangersofunstable-
supply-chains

xxx Keesing, F. et al. (2020). "Impacts of biodiversity on the emergence and

transmission of infecitous diseases." Nature 468,647-52. [Link] xxv Ignacio, Felix et al (2020). "US food supply chain: Disruptions and implications from
org/10/1038/nature09575 COVID-19." McKinsey & Company. [Link]
packaged-goods/our-insights/us-food-supply-chain-disruptions-and-implications-
from-covid-19

26
 A SHOCK TO THE SYSTEM:
Potential impacts to the food value chain from drought

If COVID-19 serves as an example of what can happen to the global food value chain when a shock
is introduced nearly overnight, environmental degradation presents a useful counterpoint: what can
happen to the food value chain if repeated warning signs about the effects of increasing emissions,
reduced water quality and quantity and deforestation go unanswered?

The world is already seeing environmental shocks to the food supply Reduced yield results in reduced sales for producers.
chain: in 2007 and again in 2009, regional droughts and heatwaves Marfrig Global Foods S/A, a livestock producer, disclosed to CDP
in the Ukraine and Russia damaged wheat crops and caused a that drought which they acknowledge “may be attributed to climate
substantial global jump in wheat prices. In the U.S., a 2012 heat change,” has caused some of their production units to suffer from
wave and drought reduced national corn, soybean and other crop a reduction in water availability,” and as a result, those production
yields by as much as 27% in some places. These are just two
37
units “had to reduce operating activity levels during scarcity period.”
examples, but on our current course, climate change and While the producer can attempt to compensate with increased
environmental degradation will continue to affect the amount of pricing, that can in turn impact processors and wholesalers as
food produced worldwide, directly and indirectly via impacts on well as retailers downstream from production. Additionally, reduced
water availability and quality, pests and diseases. 38
operating activity means fewer work hours for farmers, many of
whom already enjoy the least profits of the food system.
One shock that emerges in corporate disclosures of risk and impact
Furthermore, reduced operations means less purchasing of the
— surfacing both in climate change and water security disclosures
inputs necessary to grow food – an upstream impact to production
as a top-ranked risk in the FVC — is drought. Almost one in five
input companies who rely on the success of producers to support
companies cited drought-related risks in water disclosures and
their core business.
15% did so in climate disclosures, compared to just nine percent of
all other disclosing companies. And drought impacts every level of When a large producer like Marfrig reduces production due to
the FVC. Production input companies cite drought as a risk in 44% drought conditions, it often limits the buying power of processors
of climate and 33% of water disclosures. Primary producers are and wholesalers. In their climate change disclosure, Archer Daniels
concerned with yield and production capacities and physical Midland states that a “reduced supply of agricultural commodities
impacts to their business. Downstream, one in five processors and could adversely affect the Company's profitability by increasing the
wholesalers cite drought-related risks, and most of those see risks cost of raw materials and/or limiting the Company's ability to
to their raw materials and supply chains. They also look further procure, transport, store, process and merchandise agricultural
downstream, acknowledging policy regulations and consumer commodities in an efficient manner.” They cite drought in
preference for responsibly produced goods. Similarly, nearly 20% Argentina in 2017/18 which “reduced the availability of
of retailers cite drought-related risks to production capacity of their corn and soybean inventories while prices increased.”
suppliers as well as consumer preferences.
The ripple effects of climate shocks are felt through the food value
What is clear from the disclosure is that shocks to the food system chain. Whether disease, drought or another catastrophe, shocks to
rarely stand in isolation: even when initial, physical impacts are felt the food system have wide-reaching implications. What remains
only by one value chain level (often at the producer level), the ripple to be seen is how companies can adapt to deal with the increasing
effects touch companies upstream and downstream of the point variability, intensity and unpredictability of climate-related impacts
of impact. In their 2019 disclosure, The Spar Group Ltd., a retailer, in the future.
wrote, “In 2018, South Africa experienced drought and five provinces
were declared agriculture disaster areas. This drought had a
significant impact on the agricultural sector. Increased cost of
production as a result of reduced yield has been partially absorbed
by SPAR's suppliers, direct operations, retailers and customers.”

27
 CONCLUSION

As the world prepares to convene for the UN Food Systems Summit, COP26 and the UN Biodiversity
Conference (CBD COP 15) in the midst of a global pandemic, it is clear that we are on the precipice of
change. COVID-19 has destabilized traditional economic systems built on globalization, extraction and
commoditization. While this has had tremendous impact on people and planet, it also offers an
opportunity to change course. Rather than return to business as usual, we can ensure green recovery
plans work to safeguard against deforestation, water pollution and depletion, and climate change, and
reshape our world to be more resilient in the future. The food system plays a key role in this and the
next ten years are critical to ensure our capability to meet global goals including the Paris Agreement.
The science is clear that this will not be possible without transformational changes, tailored to regional
contexts – from how we grow, harvest, distribute, market, eat and dispose of food to how we improve
food security, make supply more resilient and decrease the negative environmental and social impact
of the food system.39 This includes:

Transition to more plant-rich diets that include diversified,

alternative protein sources particularly in regions with high per
capita consumption of meat from ruminant animals including beef,

Increased agricultural productivity (above historical rates) without

expanding the agricultural land footprint,

Increased adoption of nature-based solutions – agroecological

farm management practices such as regenerative and precision
agriculture that support more efficient use of critical resources
and provide ecosystem services,

Protection and restoration of forests and natural ecosystems, and

Significant reduction in food loss and waste.

Analysis of 2019 CDP disclosure data suggests that some

companies are waking up to this transformational opportunity.
The number of companies setting targets, especially science-based
GHG emissions reduction targets, is increasing year on year.
And companies that assess risk and engage their value chains
are finding strategic value in doing so, particularly around
smallholder engagement and opportunities like product
innovation to meet changing consumer demands.

But there are still barriers to overcome in creating the necessary

transformative shifts, and the economic benefits of transition have
not been widely recognized. FVC companies lag peers in the Global
Sample in risk assessment practices, and cite very few current
detrimental impacts across climate change, water security and
deforestation despite mounting scientific evidence that people and
planet are already feeling the consequences of a changing climate
and a degraded environment. And there is a clear gap in resiliency
opportunities cited by companies – instead, companies have
focused on reaching new markets and developing new products and
services. This, however, must be coupled with transformative action
in line with scientific frameworks for transition.

28
 All players in the food value chain must strategically assess their disclosure. Increasingly, investors are looking beyond disclosure
role in sustainable production and consumption, requiring they move to action and engagement, calling for increased transparency into
away from business as usual. According to the suggested research companies’ long-term risk planning, stakeholder and supply chain
and frameworks discussed in this report, this means working with transparency. While some companies are responding to investor
their value chains to support reform and transition that incentivizes requests for environmental disclosure, most do not engage beyond
productive and regenerative agriculture and the establishment of their first-tier suppliers, meaning the capacity for companies and
transparent and deforestation-free, water-secure supply chains. investors to understand risks to their value chain is limited.
They can do so by shifting procurement and prioritizing deployment Companies that are not responding to this push face the potential
of innovative financing to reach underfinanced parts of the supply of sizable losses of investment capital.
chain. Tools include setting internal standards and targets to
Companies in the FVC, with support and collaboration from food
reduce GHG emissions aligned with science, particularly in
system and value chain stakeholders, must move to proactively
resource-intensive sectors, and reduce food loss and waste.
measure and manage risks to their direct operations and value
To incentivize necessary dietary shifts – the key demand-side
chains from farm to fork. In doing so, they can minimize risk to their
intervention for a sustainable food future – companies,
operations, improve resiliency and build opportunities in service of
particularly processors and wholesalers as well as retailers, can
the planet as well as their bottom line.
work to redesign product portfolios and product offerings based on
regional variations of the Planetary Health Diet, and all businesses A sustainable food system is one that works for people and planet
can work to increase R&D spending in alternative protein innovation. by using low- and no-carbon inputs, conserving water and other
resources and decoupling commodities from deforestation to
But existing market mechanisms — translating environmental
provide ample, nutritious, low-carbon food to the world’s
impact into financial impact (e.g. pricing environmental
population without exceeding the Earth’s planetary boundaries.
externalities) — are not sufficient and thus, effective, concrete policy
Without meaningful action in the near term, the global food value
is also necessary to shepherd system-wide change. Financial tools
chain will serve as an impediment to progress rather than as a
are available, including subsidies and trade deals, to serve important
catalyst for a sustainable future. Companies have a clear choice –
goals around ecosystem conservation and restoration. Other
they can help shape the future of food, or they can be left behind.
financial mechanisms could also be deployed with the collaboration
and support of investors and the financial services industry. The CDP Sustainable Food Systems initiative will track this progress
– and help drive this change by working to support companies in
One of the biggest levers incentivizing action from companies is
transition and raise awareness of the impacts and risks to business,
pressure from capital markets, and CDP’s 515+ investor signatories
making the economic benefits of transition clear and recognized.
representing US$106 trillion in assets are critical to driving corporate

29
 APPENDIX 1
Sample setting methodology for the CDP Food Value Chain

The CDP Food Value Chain (FVC) sample was defined based on previous work conducted by the Food and Agriculture Organization of the
United Nations (FAO). The FAO defines the food value chain as “the full range of farms and firms and their successive coordinated val-
ue-adding activities that produce particular raw agricultural materials and transform them into particular food products that are sold to
final consumers and disposed of after use.”40 Drawing from this definition, the FVC sample includes companies responsible for creating the
material and chemical inputs to agriculture (“production inputs”), farms (“primary producers”), companies that gather and refine product prior
to its delivery to market (“processors and wholesalers”) and the stores and food service companies that sell the finished food product
(“retailers”). This definition excludes end users (consumers) and companies involved in waste disposal, as well as transport and storage
companies that work with food but do not produce or sell it.

The CDP-ACS methodologyxxxii was used to sort activities into value chain levels. Each activity listed in CDP-ACS was assigned to a value chain
level (e.g. production inputs, primary producers, processors and wholesalers, retailers) or was excluded from the FVC. The full list of activities
for each value chain level is below:

PRODUCTION INPUTS

 Agricultural chemicals  Nitrogenous fertilizers  Non-nitrogenous fertilizers

PRIMARY PRODUCERS
 Cocoa bean farming  Other crop farming  Soybean farming  Cattle farming
 Cotton farming  Other oilseed farming  Sugarcane farming  Fishing
 Fruit farming  Palm oil farming  Vegetable farming  Poulty and other
animal farming
 Grain and corn farming  Rice famring  Aquaculture

PROCESSORS AND WHOLESALERS

 Alcohol beverages  Fruit, nut and vegetable  Oilseed processing  Sugar
 Animal processing processing
 Other food processing A
 gricultural products
 Baked goods and cereals  Grain and corn milling  Palm oil processing wholesale

 Chocolate confeciton  Non-alcoholic beverages  Seafood processing  Animal products wholesale

 Dairy and egg products  Non-chocolate confection  Soybean processing  Food and beverage wholesale

RETAILERS
 Fast food  Food and beverage  Hypermarkets and  Supermarkets, food
amenities superstores and drugstores

There are two notable omissions from the FVC:

B
 iofuels: Despite being agriculturally intensive, biofuels themselves are not food items and do not meet the threshold for
inclusion as mentioned earlier in the report and appendix;

Industries: Such as hotels and casinos and airlines. These industries are related to the food system but not as a primary
business activity.

xxxii The ACS methodology can be found at [Link] -

[Link]?1520244912

30
 Every company in CDP’s database is classified according to the Sample size breakdown
CDP-ACS methodology. Activities were tagged with the appropriate
value chain level per the process outlined above. Companies The tables below details the final CDP Food Value Chain sample
were then sorted into value chain levels based on their primary for each CDP questionnaire. Note that the sample size of the FVC
activity. Only companies with a relevant activity listed as their for response rate purposes includes all companies regardless of
primary activity are included in the sample. This is to prevent tier, whereas the sample size for analysis includes only companies
inclusion of companies that may have one activity responding to the full questionnaire tier in a given theme.
in the value chain but many others not within the value chain,
Note that there is considerable overlap between the themes and
thereby ensuring that the sample is not diluted by companies only
the thematic numbers cannot be summed to reach a total number
tangentially related to the food value chain and more appropriately
of companies.
classified as non-food companies based on their primary business
activity (e.g. airlines, hotels).

Companies that disclosed to CDP using minimum tier questionnaires

are included for the purposes of general sample information
(e.g. disclosure response rates, sample coverage) but were omitted
from question-level analysis to avoid high rates of non-responses
and thereby ensure consistent sample sizes to all data points
included in the report. This created two distinct samples: the
coverage sample and the analysis sample. More information
on each can be found below.

FVC analysis sample

Production Primary Processors and SFS VC CDP Global

Retailers
Inputs Producers Wholesalers combined Sample

Climate change analysis 9 29 384 57 479 4,443

Water security analysis 6 10 178 22 216 1,389
Forests analysis 0 13 93 23 129 218
Forests analysis PALM OIL 83
Forests analysis CATTLE 44
PRODUCTS

Forests analysis CATTLE 60

PRODUCTS

FVC coverage sample (response rates)

Production Primary Processors and SFS VC CDP Global

Retailers
Inputs Producers Wholesalers combined Sample

Climate change 13 64 760 62 899 7,461

all submissions
Climate change all requests 30 103 981 165 1,279 11,132
Water security 8 21 364 24 417 2,016
all submissions
Water security all requests 21 29 504 80 634 3,234
Forests all submissions 0 19 173 26 218 325
Forests all requests 1 67 376 145 589 1,053

31
 Producers of Physical Production Inputs

Transport and Manufacturers providing basic material for crop production including seeds or propagation
storage excluded materials, fertilizers, crop nutrients and various plant protection products
*FAO EXTENDED FOOD VALUE CHAIN - INPUT PROVISION
Excluded are machinery and packaging inputs

FAO CORE FOOD VALUE CHAIN

Primary Producers

Transport and Farmers, ranchers and aquaculturists - Primary producers of raw agricultural commodities
storage excluded that can operate as independent enterprises or together as co-operatives or producer
organizations
*FAO CORE FOOD VALUE CHAIN - PRODUCTION
Excluded are biofuel producers, however,
note potential crop competition

Processors and Wholesalers

Transport and Processors take raw agricultural material to manufacture a finished food product in a basic
storage excluded
or highly processed form. Packers and wholesalers are traders, buying from the farmers
and processors and distributing the product for onward sale to the retail sector.
*FAO CORE FOOD VALUE CHAIN - AGGREGATION, PROCESSING, DISTRIBUTION

Retailers

Supermarkets, restaurants, food service, as well as smaller independent traders selling

food product directly to the final consumers, closely following and adjusting to their
needs and tastes.
*FAO CORE FOOD VALUE CHAIN - AGGREGATION, DISTRIBUTION

Consumers

32
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DISCLOSURE

Total requests: All tiers 11,132 1,279 30 103 981 165 3,234 634 21 29 504 80 N/A N/A N/A 511 298

Total submissions: All tiers 7,461 899 13 64 760 62 2,016 417 8 21 364 24 N/A N/A N/A 182 150

Response rate 67.0% 70.3% 43.3% 62.1% 77.5% 37.6% 62.3% 65.8% 38.1% 72.4% 72.2% 30.0% N/A N/A N/A 35.6% 50.3%

Analytical sample size (full tier submissions) 4,443 479 9 29 384 57 1,389 216 6 10 178 22 83 44 60 134 84

Companies expected to disclose on commodity N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 195 121 145 N/A N/A

Companies disclosing on commodity that were expected N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 99 55 59 N/A N/A

Response rate for expected companies N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 50.8% 45.5% 40.7% N/A N/A

COVERAGE

Share of emissions from Scope 3 79.2% 87.5% 73.7% 81.7% 86.4% 91.5% N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A

Share of companies monitoring/measuring withdrawals from

N/A N/A N/A N/A N/A N/A 42.0% 48.1% 50.0% 22.2% 48.5% 54.6% N/A N/A N/A N/A N/A
water stressed areas at +75% of sites/facilities

Share of companies with a traceability system in place at commodity-level N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 81.9% 86.4% 71.7% N/A N/A

Share of companies for which biogenic carbon pertaining to

N/A N/A N/A 40.0% 17.6% N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A
direct operations is considered relevant disclosure

TARGETS

Share of companies with emissions reduction, water,

68.2% 60.0% 66.7% 55.6% 57.6% 76.8% 56.4% 59.3% 66.7% 20.0% 61.2% 68.2% 80.7% 34.1% 40.0% 16.4% 22.6%
or commodity-level forests target

Share of targets set that cover Scope 3 15.3% 16.2% 16.7% 13.3% 15% 23.3% N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A

Share of companies with water quality targets N/A N/A N/A N/A N/A N/A 49.0% 55.6% 66.7% 20.0% 56.2% 63.6% N/A N/A N/A N/A N/A

Share of companies with water quantity targets N/A N/A N/A N/A N/A N/A 11.3% 13.9% 0.0% 0.0% 16.3% 4.5% N/A N/A N/A N/A N/A

Share of companies with a commodity-level traceability target** N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 15.7% 7.5% 6.1% N/A N/A

Share of companies committed to / have an approved

9.3%/6.8% 15.7%/11.9% 22.2%/11.1% 6.9%/6.9% 13.8%/10.7% 31.6%/22.8% N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A
Science-Based Target (9/15/2020)

VALUE CHAIN ENGAGEMENT

Share of companies engaging with suppliers 49.7% 55.5% 77.8% 55.2% 51.3% 80.7% 32.5% 43.5% 33.3% 20.0% 42.1% 68.2% 82.3% 76.2% 74.5% 14.2% 33.3%

Share of companies engaging smallholders N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 62.5% 55.6% 35.7% N/A N/A

IMPACTS, RISKS AND OPPORTUNITIES

Share of companies assessing risks 82.6% 77.3% 88.9% 68.0% 74.8% 94.7% 73.9% 75.5% 100.0% 60.0% 74.2% 86.4% N/A N/A N/A 70.1% 59.5%

Share of companies identifying risks 67.1% 72.0% 88.9% 68.0% 69.5% 87.7% 60.0% 66.7% 66.7% 60.0% 67.9% 59.1% 73.5% 47.7% 51.7% 16.4% 38.1%

Share of companies identifying opportunities than can be realized 66.2% 64.1% 88.9% 65.5% 60.4% 84.2% 52.7% 59.9% 83.3% 40.0% 60.3% 59.1% N/A N/A N/A 47.8% 27.4%

Share of companies identifying detrimental impacts* 11.8% 12.5% 11.1% 10.3% 11.2% 22.8% 13.0% 23.7% 66.7% 10.0% 19.7% 50.0% 15.9% 15.9% 17.2% 2.2% 1.2%

STRATEGY

Share of companies conducting climate-related scenario analysis 33.1% 29.4% 11.1% 17.2% 29.4% 38.6% N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A

Share of companies that identified water-related

N/A N/A N/A N/A N/A N/A 58.0% 73.9% 66.7% 66.7% 74.6% 75.0% N/A N/A N/A N/A N/A
outcomes from scenario analysis

33 34
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36
 DISCLOSURE INSIGHT ACTION

A
B
G
S
AUTHORS
L
Bridget Schrempf (CDP SFS)
S
Gabriel Herrera (CDP SFS)
C
Stephan Schmidt
C
C
LEAD DATA ANALYSIS
Stephan Schmidt

CONTRIBUTORS
Christina Copeland (CDP Water Security)
Catherine Moncreiff (CDP Water Security)
Viera Ukropcova (CDP Forests)

For more information contact:

CDP Sustainable Food Systems CDP Communications

BRIDGET SCHREMPF LIZ POSNER

Manager, Sustainable Food Systems Manager, Content & Communications

CDP Climate Change

GABRIEL HERRERA
Senior Project Analyst, Sustainable Food Systems
NICOLETTE BARTLETT
Global Director, Climate Change
CDP Corporates and Supply Chains

CDP Forests
DEXTER GALVIN
Global Director, Corporates and Supply Chains
MORGAN GILLESPY
Global Director, Forests
CDP Capital Markets

EMILY KREPS
CDP Water Security
Global Director, Capital Markets
CATE LAMB
Global Director, Water Security

@CDP cdp-worldwide [Link]@[Link]

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