Dairy Sector Climate Change Group: report

8. Collective Drive for Change

All sectors of agriculture need to work together; this is a collective response to a global problem. The complexity of the issue needs collaboration. Government has a direct role in influencing farming businesses, but similarly regulation and consumer pressure on the supply chain is also generating change. Within the dairy sector there are many drivers for carbon efficiencies on farm, as illustrated in Figure 11.

8.1 Processors and Retailers

The dairy supply chain, most notably through retailer-aligned contracts, has been a forerunner in delivering carbon reduction on farms in return for premium price. There are lessons which can be learned from the delivery of such initiatives, and through collaboration and sharing of best practice it could help shape delivery going forward and reduce duplication. Increased returns to the producer for delivering the carbon reductions should also be delivered to all producers.

The requirement for increased carbon efficiency from processors and retailers will increase with the UK Government policy on Streamlined Energy and Carbon Reporting (SECR) which was implemented in April 2019. The SECR requirements mean that there has been an almost seven-fold increase in the number of companies required to comply with energy and carbon reporting legislation (c.11,900). SECR involves 3 scopes of reporting – Scope 1 includes direct business GHG emissions, Scope 2 covers indirect emissions and Scope 3 covers all emissions in a company's value chain that they do no own or control^[56].

Presently under Scope 3, it is only mandatory to report energy use and emissions from business travel. Whilst it is voluntary to report other Scope 3 emissions, it is strongly encouraged where this is a material source of emissions. Many large food businesses and retailers are focussing on voluntary Scope 3 data collection with a view to future annual reporting (and improvements)^[57]. However, there is no standardised methodology or reporting guidelines, which could lead to different reporting for each retailer/processor, with competitive advantage prioritised over collective industry response.

Recommendations:

• Improved climate collaboration within the dairy supply chain, with government facilitation, to deliver greater transparency and sharing of best practice to deliver improved carbon efficiency.
• Collaboration within the dairy supply chain to try to standardise Scope 3 reporting to ensure aligned objectives and the avoidance of duplication, working with the proposed Centre of Excellence to ensure it is informed by the latest scientific advice.

Refer to Annex 4 – Recommendations and Support Required

8.2 Financial Sector

The Task Force on Climate-Related Financial Disclosures (TCFD) was created in 2015 by the Financial Stability Board (FSB) to develop consistent climate-related financial risk disclosures for use by companies, banks, and investors in providing information to stakeholders.^[58] The TCFD recommendations and its framework are now universal across the financial sector as the method for embedding climate change into governance, strategy and risk management.^[59] In November 2020, the government announced that from 2025 the UK will be the first G20 country to require mandatory reporting aligned with the TCFD^[60]. Many UK banks have made commitments to work with customers, government and the markets to reduce carbon emissions. This will feed through to lending to farming businesses, with climate reporting and improvements a likely requirement in the future.

Recommendations:

• Collaboration within the banking sector on TCFD reporting to ensure aligned objectives and the avoidance of duplication, working with the proposed Centre of Excellence (Section 9.1) to ensure it is informed by the latest scientific advice.

Refer to Annex 4 – Recommendations and Support Required

8.3 Farm Suppliers and Advisers

There is also a role in bringing together the suppliers to dairy farms, for example agronomists, nutritionists, vets, machinery manufacturers, to ensure their service innovation and delivery is working towards the same objective. This should also be included with the scientific community to deliver fast and practical roll out of research outcomes. (See 9.1 - A Centre of Excellence)

8.4 Public Private Partnerships

Collaboration between private business levering support for public benefits delivered by farmers and land managers can deliver opportunities. UK Projects such as the LENs (Landscape Enterprise Networks) programme^[61], pioneered by Nestle, links management and investment in landscapes to the long-term needs of business and society. It does this by helping businesses to work together to influence the quality and performance of the landscapes in which they operate. Business interests can range from resilient crop production, flood risk, carrying capacity of water catchments, management of carbon or biodiversity, to health and quality of life for their workforce. LENs mobilises those business interests by building a series of place-based chains of transactions which enable groups of businesses to co-procure landscape outcomes from land-based organisations that can make things happen on the ground.

Recommendations:

• Further exploration of opportunities for public private partnerships through supply chain collaboration and the Centre of Excellence (see 9.1 - A Centre of Excellence)

Refer to Annex 4 – Recommendations and Support Required