Up until recently, climate policies have targeted end-point emissions—those emitted directly by power plants, vehicles, and other industrial sources. While this approach is essential, it fails to account for the complex scope of emissions embedded within global supply chains. From raw material extraction to manufacturing and transportation, each step in a product’s lifecycle adds to its carbon footprint. This is especially critical in industries like food and beverage, where supply chains are not only complex but also deeply intertwined with environmental factors such as land use, water consumption, and biodiversity.
The EU’s Deforestation Regulation (EUDR) exemplifies this new approach. By targeting products linked to deforestation, the regulation acknowledges that effective climate action must address the entire lifecycle of goods. For food and beverage companies, this shift brings significant challenges. These businesses must now trace their ingredients back to their origins, ensuring that their supply chains do not contribute to deforestation or other harmful practices. Given the global nature of food supply chains—often involving multiple countries, smallholder farms, and numerous intermediaries—this task is formidable.
One of the most pressing challenges is the need to collect primary data from the field. Unlike secondary data, which may be generalized or outdated, primary data provides real-time, location specific insights into agricultural practices, land use, and environmental impacts. For food and beverage companies, gathering this data is essential to comply with new regulations and to create verifiable claims of sustainability. However, this process can be resource-intensive, requiring sophisticated technology and collaboration with farmers and suppliers.
The ripple effects of this policy shift are profound. As companies strive to meet these new regulatory demands, they are driving innovation in traceability technologies, sustainable sourcing practices, and logistics optimization. These advancements do not just reduce emissions; they also lead to more efficient, resilient supply chains that are better equipped to handle the volatility brought on by climate change.
This integration of supply chain management into climate policy also fosters a more holistic understanding of sustainability. It is no longer sufficient to reduce emissions at the factory level; companies must now consider a wide range of environmental and social impacts throughout their supply chains. This comprehensive view aligns climate policy more closely with broader sustainable development goals, addressing issues such as biodiversity loss, land degradation, and the social wellbeing of communities involved in production.
However, this evolution is not without its controversies. Critics argue that the burden placed on businesses, particularly those in developing countries, is disproportionate. Many small producers lack the resources to implement advanced traceability systems or to meet stringent new standards. There is a real risk that well-intentioned policies could create new trade barriers, exacerbating inequalities and disrupting local economies.
For food and beverage companies, the stakes are particularly high. Their supply chains are among the most complex, involving perishable goods, seasonal variability, and a high degree of interdependence among suppliers. Adhering to new climate policies requires these companies to rethink their entire supply chain strategy – such as how they source raw materials and how they engage with farmers and suppliers. Central to this effort is the need for accurate, granular data from the ground. Without it, companies cannot effectively manage their supply chain emissions or demonstrate compliance with evolving regulations. However, the power to lead this paradigm shift rests in the hands of these companies. By embracing this responsibility, they can drive the adoption of sustainable practices across the entire supply chain and enable equal participation for smallholder farmers of all sizes, ensuring that no one is left behind in the transition to a more
sustainable future.
