By Terence Jeyaretnam, non-executive director Food Frontier
In the last six months, we’ve heard a lot more about the role food systems play in climate change and the need to reduce its impacts. COP has even started to put it on their agenda, food is now central to sustainability discussions. In Australia, there’s a lot of talk, but there still doesn’t seem to be significant action, especially when you consider that the new federal legislation that is just around the corner, starting 1 January 2025 for some, will mandate that large companies disclose their climate-related financial risks and climate-related plans and strategies.
The new legislation is aligned with countries around the world and is designed to help Australia meet the Paris Agreement goals of limiting global warming to 1.5 degrees Celsius and decreasing greenhouse gas emissions to 43 per cent lower than 2005 levels by 2030, aiming to achieve net zero emissions by 2050. The Australian Government says it will provide the public and investors with greater transparency. The new legislation will also make businesses scrutinise their operations, including their supply chain. This will help them be safer and more robust and ensure Australia doesn’t lose out on markets and remains a food supply leader.
It will require businesses throughout the value chain to implement new systems, technologies, and collaborations to ensure compliance and prepare for increasingly stringent regulations in the future. While the reporting requirements should change the way many large companies across energy, resources, and food do business, flaws in the legislation might mean it’s too little too late to mitigate global warming.
Why? Simply put, the legislation calculations are based on the greenhouse gas emissions generated by a business in about 100 years, not what its actions emit initially. Let’s look at one of the emissions, for example, methane. When methane is released into the atmosphere it’s 120 times more potent in the first year than CO2. Methane’s intensity declines each year—in the second year, it’s about 100 times more potent, third year less so, and so on. In 100 years, it’s 28 times. The calculation businesses are required to use to demonstrate their climate-related financial risks is 28, the extreme lower end of their emissions potential. This is worrying, particularly when you consider that, according to the Boston Consulting Group, Australia has been underreporting methane from fossil fuels for a long time. We are already behind.
One hopes that once companies start scrutinising their exposure to climate risks, they will naturally look at improvements that go above and beyond what’s required.
The first thing we should be doing is cutting methane from human-influenced sources—60 per cent comes from agriculture, fossil fuels and the decomposition of landfill waste. Global food systems are thought to be responsible for a significant portion of methane, ranging from one-quarter to one-third of all greenhouse gas emissions. This share is so substantial that even if fossil fuel emissions were halted abruptly, the emissions from food systems alone could render it exceedingly difficult to cap warming at 1.5°C and would pose challenges in meeting the 2°C Paris target. And agriculture as a whole contributed 17.7 per cent of Australia’s greenhouse gas emissions in 2023—more than three-quarters of this figure attributed to methane emissions from ruminant livestock.
Unlike some countries such as the United States, our region is making it mandatory to report scope 3 emissions (those generated by sources that aren’t owned or controlled by the large company), which is an advantage for businesses that don’t rely on animal-based proteins.
Even though the new laws have some flaws, like not accurately counting methane emissions, they will still make companies look closely at what they’re doing. This careful examination will push them to make improvements, especially when it comes to reducing methane emissions.
The increase in talks about food systems, along with rules requiring companies to be transparent about their impact on the climate, is putting more pressure on the market. With all this pressure, it’s harder for companies to avoid making necessary changes. And if they don’t, perhaps then the market—consumers, buyers, investors—will decide if what they’re doing is good enough.