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The Carbon Footprint of the Food Supply Chain

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carbon footprint food supply chain

Which Foods Have the Greatest Environmental Impact?

The quantity of greenhouse gases (GHGs) generated by our food can vary considerably across the global food supply chain.

In fact, the difference between specific food types can vary by orders of magnitude, meaning what we eat could be a significant factor impacting GHG emissions on the environment.

Today’s modified chart from Our World in Data relies on data from the largest meta-analysis of food systems in history. The study, published in Science was led by Joseph Poore and Thomas Nemecek to highlight the carbon footprint across different food types across the world.

The Foods With the Highest Carbon Footprint

Worldwide, there are approximately 13.7 billion metric tons of carbon dioxide equivalents (CO2e) emitted through the food supply chain per year.

Across a database extending through 119 countries and 38,000 commercial farms, the study found that, unsurprisingly, beef and other animal products have an outsize effect on emissions.

For example, one kilogram (kg) of beef results in 60 kg of GHG emissions—nearly 2.5x the closest food type, lamb and mutton. In contrast, the same weight of apples produce less than one kilogram of GHG emissions.

Food TypeGHG Emissions per 1 kg Produced
Beef (beef herd)60 kgCO2e
Lamb & Mutton24 kgCO2e
Cheese21 kgCO2e
Beef (dairy herd)21 kgCO2e
Chocolate19 kgCO2e
Coffee17 kgCO2e
Prawns (farmed)12 kgCO2e
Palm Oil8 kgCO2e
Pig Meat7 kgCO2e
Poultry Meat6 kgCO2e
Olive Oil6 kgCO2e
Fish (farmed)5 kgCO2e
Eggs4.5 kgCO2e
Rice4 kgCO2e
Fish (wild catch)3 kgCO2e
Milk3 kgCO2e
Cane Sugar3 kgCO2e
Groundnuts2.5 kgCO2e
Wheat & Rye1.4 kgCO2e
Tomatoes1.4 kgCO2e
Maize (Corn)1.0 kgCO2e
Cassava1.0 kgCO2e
Soymilk0.9 kgCO2e
Peas0.9 kgCO2e
Bananas0.7 kgCO2e
Root Vegetables0.4 kgCO2e
Apples0.4 kgCO2e
Citrus Fruits0.3 kgCO2e
Nuts0.3 kgCO2e

When it comes to plant-based foods, chocolate is among the highest GHG emitters. One kilogram of chocolate produces 19 kg of GHGs. On average, emissions from plant-based foods are 10 to 50 times lower than animal-based types.

Bottom line, it is clear that the spectrum of emissions differs significantly across each food type.

Food Supply Chain Stages

The food supply chain is complex and nuanced as it moves across each stage of the cycle.

Although the steps behind the supply chain for individual foods can vary considerably, each typically has seven stages:

  1. Land Use Change
  2. Farm
  3. Animal Feed
  4. Processing
  5. Transport
  6. Retail
  7. Packaging

Across all foods, the land use and farm stages of the supply chain account for 80% of GHG emissions. In beef production, for example, there are three key contributing factors to the carbon footprint at these stages: animal feed, land conversion, and methane production from cows. In the U.S., beef production accounts for 40% of total livestock-related land use domestically.

On the other end of the spectrum is transportation. This stage of the supply chain makes up 10% of total GHG emissions on average. When it comes to beef, the proportion of GHGs that transportation emits is even smaller, at just 0.5% of total emissions.

Contrary to popular belief, sourcing food locally may not help GHG emissions in a very significant way, especially in the case of foods with a large carbon footprint.

The Rise of Plant-Based Alternatives

Amid a growing market share of plant-based alternatives in markets around the world, the future of the food supply chain could undergo a significant transition.

For investors, this shift is already evident. Beyond Meat, a leading provider of meat substitutes, was one of the best performing stocks of 2019—gaining 202% after its IPO in May 2019.

As rising awareness about the environment becomes more prevalent, is it possible that growing meat consumption could be a thing of the past?

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Agriculture

Animated Map: U.S. Droughts Over the Last 20 Years

The Western U.S. is no stranger to droughts. But this year’s is one of the worst yet. Here’s a historical look at U.S. droughts since 1999.

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Animated Map: U.S. Droughts Over the Last 20 Years

The Western U.S. is experiencing one of the worst recorded droughts in the last 20 years.

Temperatures from California to the Dakotas are currently hovering around 9-12°F above average—but how bad is the situation compared to past years?

This animated map by reddit user /NothingAbnormalHere provides a historical look at droughts in the U.S. since 1999, using data and graphics from the U.S. Drought Monitor (USDM).

What is the U.S. Drought Monitor?

Over the last two decades, the USDM has been tracking, measuring, and comparing droughts across America.

While droughts can be difficult to classify and standardize, there are various factors that can be used to gauge when a region is experiencing drought. These include measurements of snowpack levels, soil moisture, and recent precipitation.

To track these conditions (and make sense of them), the USDM synthesizes data from a plethora of meteorological sources, including the Palmer Drought Severity Index and the Standardized Precipitation Index.

From there, conditions are broken down into categories, ranging from D0 (abnormally dry) to D4 (Exceptional Drought). A map is released each week that shows which states are experiencing drought, and to what degree.

Where Are The Most Drought-Prone Areas?

According to a map created by climatologist Becky Bolinger (which is published on Drought.gov), Arizona and Nevada are the most historically drought-prone states—the two have experienced drought more than 50% of the time tracked by the USDM.

Most Drought-Prone States

California is high on the list as well, with the state experiencing drought at least 40% of the time.

As the historical data shows, the West is no stranger to droughts. However, this year’s drought has become particularly worrisome because of its intensity and breadth.

Right now, more than a quarter of the West is experiencing a D4 level drought—a new record. To help put things into perspective, here’s a look at how much overall land area in the West has been in drought, since 2000:

West Percent Area in U.S. Drought

When a region is experiencing a D4 drought, possible impacts include:

  • Water Scarcity
    Lower reservoirs, combined with decreased snowpack lead to water shortages.
  • Crop losses
    Water shortages mean less water for fields, which can lead to acres of fallow (unused) farmland.
  • Wildfires
    Dry conditions and lack of moisture increase the risk of wildfires.

Is This the New Norm?

This record-breaking drought is wreaking havoc across the West. In California, reservoirs have about half as much water as they usually do, and crop failures are happening across Colorado.

The worst part? Some experts believe that this could be the new normal if human-driven climate change continues to increase average temperatures across the globe.

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Visualized: The Power of a Sustainable Investment Dollar

Do sustainable investments make a difference? From carbon emissions to board diversity, we break down their impact across three industries.

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Sustainable Investment

Visualizing the Power of a Sustainable Investment Dollar

Sustainable investments are booming.

Between January and November 2020 alone, investments in sustainable ETF and mutual funds grew 96%. The UN Principles of Responsible Investment now has over 3,000 signatories representing over $100 trillion in assets. The U.S. Commodity Futures Trading Commission established a Climate Risk Unit to analyze climate risk across derivative markets, and as of March 2021, new sustainability disclosures have come into effect in Europe.

But how do we know if sustainable investments have made a difference?

To answer this question, the above infographic from MSCI examines the effect of a sustainable investment dollar by looking at real-world examples.

A Sustainable vs. Unsustainable Dollar

To start, investing legend Benjamin Graham has compared the stock market to a “voting machine.” Just as consumers vote with their purchasing decisions, investors vote with their investment dollars. Especially in the short term, as more dollars flow to sustainable companies, this builds their exposure and access to capital.

In the long term, meanwhile, the market can be compared to a weighing machine. The market recognizes companies with profitable business models that improve their intrinsic value over time. Ultimately, this allows sustainable companies to expand and continue operating.

Given the rising momentum in both green assets and climate targets, here is how investment dollars have influenced and driven change across three industries.

1. Clean Energy vs. Fossil Fuel

Over the last several years, the energy sector has been associated with many of the problems causing climate change. For this reason, many investors are seeking out greener energy alternatives. But how does moving investment dollars from an ESG laggard to an ESG leader support the environment and society?

First, here is a brief explainer of ESG laggards and leaders:

  • ESG laggards: companies with the weakest environmental, social, and governance (ESG) performance in their sector.
  • ESG leaders: companies with the strongest environmental, social, and governance (ESG) performance in their sector.
Industry laggard: U.S. oil & gas companyIndustry leader: U.S. utilities company
Scale of carbon-intensive business lines equal to 73% of its operation47% lower CO2 emissions than the industry average
This is the equivalent of adding 26 million cars on the road annuallyThis is the equivalent of removing 9.9 million cars off the road annually
1 of 20 oil and gas companies are responsible for contributing to one third of GHG emissions since 1965Uses 3X as many renewable sources than industry average
3X fewer jobs are created vs. energy efficient sector, resulting in lower productivityThis is roughly the same as saving over 9 million pounds of coal burned
MSCI ESG Rating: CCCMSCI ESG Rating: AAA

Source: MSCI ESG Research

Based on the above example, investors have the ability to finance powerful green initiatives that reduce emissions by almost half, relative to their peers.

2. Safe vs. Unsafe Working Conditions

Weak safety protocols are a key sustainability issue for the industrial sector. Here’s how two companies compare:

Industry laggard: South African mining companyIndustry leader: U.S. mining company
11 fatalities in 2019Zero fatalities in 2019
Faced lawsuits from miners surrounding lung diseases contracted from dust exposure in gold mines
Settlement cost: $350 million
Board-level oversight monitors health and safety performance
Lags behind peers in high incident ratesLeads peers in low incident rates
Lags behind peers in setting incident reduction targetsLeads industry in lost time incident rate & total recordable injury rate
MSCI ESG Rating: CCCMSCI ESG Rating: A

Source: MSCI ESG Research

Despite the risks involved in the sector, investors can choose to support companies that take greater precautions to protect their workers.

3. Building Trust vs. Losing Trust

Over the last several years, the financial sector has faced increased scrutiny over fraudulent activities. Moving investment dollars from an ESG laggard to ESG leader may make a difference:

Industry laggard: U.S. bankIndustry leader: Dutch bank
$3 billion settlement in creating fictitious accounts to meet aggressive sales targetsSustainable finance portfolio valued at over $20 billion
Drop in top-tier bank ratings13% annual increase in climate finance
Board effectiveness questionedIncludes over 60 green loans, mobilizing environmentally friendly projects
Resignation of board membersOver 55% of board is female
MSCI ESG Rating: CCCMSCI ESG Rating: A

Source: MSCI ESG Research

From board diversity to green loans, a sustainable investment dollar supports companies that are actively advancing society and the environment.

Sustainable Investment: The Time to Act

Recently, investor dollars and shareholder activism have been closely linked.

Between 2018 and 2020, large institutional investors filed 217 shareholder proposals on climate change alone, putting increased pressure on companies. Meanwhile, 270 proposals were filed on corporate political activity and 228 on fair labor and equal employment opportunity over the same timeframe. Across all ESG proposals, $2 trillion in assets were pushing for more equitable corporate action.

Through the power of a dollar, investors can send a clear signal to companies: the time for sustainable investing is now.

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