Carefully Selected Quotes
by Ye Editor
"Making a box of Cocoa Puffs is a complicated global affair. It could start with cocoa farms in Africa, corn fields in the U.S. or sugar plantations in Latin America. Then thousands of processors, transporters, packagers, distributors, office workers and retailers join the supply chain before a kid in Minnesota, where General Mills is based, pours the cereal into a bowl.
With new SEC rules, carbon footprints matter more now, from smokestack puffs ... Now imagine the challenge that General Mills faces in counting the greenhouse gas emissions from all of these people, machines, vehicles, buildings and other products involved in this Cocoa Puff supply chain – then multiply that by the 100-plus brands belonging to the food giant.
Thousands of public companies may soon have such a daunting task to comply with a new set of climate rules proposed by the Securities and Exchange Commission.
... The most consequential and controversial piece of the SEC’s proposed regulations would require corporations to calculate their total greenhouse gas footprint, including from the supply chain.
... The Chamber of Commerce is calling for flexibility so companies can customize their climate disclosures based on what’s relevant to their businesses and investors. Measuring the global supply chain is a tall order -- "mind-boggling and certainly unprecedented.”
... Big companies have thousands of suppliers operating in hundreds of countries, making the task of coming up with a reasonable accounting enormously complicated.
... many suppliers of products and services are private companies not under the control of the SEC. They may refuse to cooperate in a count because of the costs and the implications that they might have to change their business practices to reduce emissions, said Professor Gerald Patchell, who has analyzed the problems of supply chain reporting.
Another obstacle is that many smaller suppliers, like General Mills’ cocoa farmers in Africa, don’t have the capacity to measure the emissions from their own fertilizers, tractors and farming practices. ...
“The data that companies will be asked to collect from thousands of suppliers is mind-boggling and certainly unprecedented,” said Patchell, who researches environmental policy and business. ...
... For automakers, most emissions come from driving vehicles, not making them. For technology firms, it’s the opposite. Manufacturing devices is a bigger climate issue than using them.
... about 570 U.S. public companies – an estimated 15% of the total – have reported a bit of climate data to London-based CDP (non-governmental environmental organization) , with Intel and PepsiCo among the dozens that earned high marks for transparency.
... General Mills (began( studying its own supply chain to find that farming is by far its biggest emissions hot spot, mostly through the use of chemical fertilizers and tilling of the soil which releases sequestered carbon. ... the SEC now wants to turn this scattershot voluntary reporting into a mandatory regime for most public companies.
The easier pieces force companies to report emissions from operations they own or control such as a corporate headquarters (Scope 1), and the energy they use (Scope 2). Some firms already send this data to CDP without much trouble. The Scope 3 rule on counting emissions from the chain of thousands of suppliers, on the other hand, may be a world of trouble. ...
But since the vast majority of emissions come from supply chains, environmental groups are advocating that Scope 3 remain in the final SEC regulations after the 60-day public comment period. ...
... the Food Industry ... produces a third of all greenhouse gas emissions worldwide, according to a UN agency. For many of these companies, the supply chain generates about 80% of their total emissions.
... Consider how a food company would have to account for beef supplied from Brazil. The cattle may move to five different ranches before reaching the slaughterhouse. The company would need to know precise details of the operations of each of those ranches.
What did the cattle eat at each ranch? How efficiently did the animals turn food into meat? Did their grazing cause the destruction of forests, which store carbon in trees and soil? Each of these factors, which differ depending on the ranch and the country, significantly affects the carbon footprint of cattle.
General Mills won't send bean counters to every cocoa farm in Ghana. Instead it'll use computer models. ... The company’s Scope 3 calculations revealed that 54% of its emissions come from growing and transporting crops and turning them into food ingredients, according to its website.
General Mills breaks out 28 categories of emissions, including packaging at 8%, and consuming its products, such as shopping and cooking, at 17%.
But how accurate are any of these emissions numbers? ... (they) use Life Cycle Assessment (LCA) computer models to tally emissions. But these models, like those used in everything from economics to climate science, are only as accurate as the consultants who design them and the data that’s fed into them.
... Given the difficulties in determining supply chain emissions, the SEC has carved out a few exemptions. For instance small firms, such as those with less than $100 million in revenue, won’t have to comply. The companies also will be shielded from lawsuits for passing on faulty data provided they have a reasonable basis for disclosing it.
... the Chamber of Commerce, a business lobby, says the Scope 3 mandate may leave investors more confused than informed. ... Critics of this principles-based approach say it’s so vague that companies will find ways to avoid any meaningful accounting of their carbon footprint. ... "