Overlooking Scope 3 emissions will see beverage sector miss 2050 goals

23 August 2023 Consultancy.uk 4 min. read

The global beverage industry has fallen dangerously behind with its transition to net zero operations, with the sector likely to still be generating 1.2 tonnes of carbon emissions by 2050. However, a new report suggests that if a clear plan were implemented taking aim at Scope 3 emissions, the industry could meet current targets as early as 2028.

As consumers increasingly demand that the companies selling them products and services take more effort to do so without negatively impacting the planet, businesses around the world are looking to reduce their carbon footprints. Even as businesses look to prove their sustainability credentials to increasingly discerning customers, many are failing to track the largest source of their emissions. While companies appear to be acting more consistently on Scope 1 and Scope 2 emissions (direct emissions from buildings or assets owned or controlled by a company; and the use of electricity, heat or steam), many are failing to bring the bigger challenge of Scope 3 emissions to heel.

Indirect Scope 3 emissions occur as a result of the activities of an entity, but from sources not owned or controlled by that entity’s business. A study by Capgemini in 2023 found that while these estimated emissions account for up to 95% of a company’s carbon footprint, and disclosures of them to carbon monitoring schemes rose by more than 50% in the last year, only a third of admitted Scope 3 emissions are actually accounted for in corporate decarbonisation measures – showing a gap between firms’ stated intentions, and their actions.

Overlooking Scope 3 emissions will see beverage sector miss 2050 goals

A new report from Kearney suggests that the impacts of this are particularly evident in the beverages industry. While a growing number of producers in Europe are adopting the continent’s ‘On the way to PlanetProof’ labelling, for example, which is used to certify the use of ‘more sustainable agricultural production’, it is evident most producers are not far enough on that ‘way’. Kearney found the beverage industry emitted 1.5 billion tonnes of CO2 in 2021 – a 2.5% reduction over the course of the previous three years; but that progress will be much too slow to meet the sector’s 2030, or even its 2050 net zero targets.

Currently, the beverage industry – which includes alcohol, soft drinks, hot drinks, dairy and its alternatives – accounts for 3.8% of all global CO2 emissions. At the present rate of reduction, this is unlikely to change in the coming decades – with greenhouse gasses resulting from the industry only plateauing at around 1.2 billion tonnes by 2050.

The targeted 0.2 billion tonnes of CO2 which the beverage sector needs to attain to help put the planet on course for climate change with global warming beneath 1.5C seems a distant prospect already, then. But it needn’t be. According to Kearney, changing course sooner, rather than later, is essential to the sector reaching its targets on time. By 2030, the present path of action will see it 13% behind on targets – but by 2050, it will have fallen short of its goals by 87%.

Overlooking Scope 3 emissions will see beverage sector miss 2050 goals

Acting coherently now could see the beverage sector meet its net zero obligations by 2028, the researchers claim – if organisations take aim at their as-yet overlooked Scope 3 emissions. In particular, focusing on reducing emissions related to raw materials and packaging materials could have a huge impact on the industry’s net zero progress.

Kearney’s researchers suggest that emissions from raw materials account for more than a third of beverage companies’ greenhouse gas output – while only 2% of that comes from in-house Scope 1 & 2 emissions. At the same time, almost one-quarter of emissions come from packaging materials, and 96% of that is from Scope 3 emissions. Accounting for these emissions quickly, with comprehensive planning, presents a huge opportunity for beverage operators.

Angela Hultberg, Kearney’s global sustainability director, explained, “It can be easy for companies to become disheartened when they see how much more work there is to do to achieve their net zero ambitions. But there is still much room for optimism, and beverages companies should instead be focusing on the fact that acting now could mean achieving their green objectives ahead of time. Implementing a clear emissions reductions strategy with industry and consumer collaboration at its heart will help not only a business bottom line, but consumers’ pockets too.”