Climate change is impacting how food is grown and will change our business in the years to come. Ahold Delhaize is committed to supporting the well-being of the communities we serve and enabling a healthy, low-carbon food system that secures healthy and sustainable diets for future generations. In line with the latest climate science to limit global warming, we are committed to reducing carbon emissions across our value chain.
As the pace of climate change speeds up, the next decade is critical to ensuring a healthy future. So, we need to challenge assumptions in our current food system, such as the practice of providing large quantities and a great variety of products all year round that, in turn, wastes valuable food and energy. We face the dilemma of meeting customer expectations on variety and availability of food while reducing the cost to the planet. To address this challenge, we are accelerating our actions to engage customers and incentivize them to adopt healthier and more sustainable diets, reduce climate emissions across the entire value chain, promote biodiversity and reduce waste.
In recognition of the urgency of climate change and in support of Sustainable Development Goal 13, Ahold Delhaize adopted science-based climate targets in 2020:
Each Ahold Delhaize brand has dedicated teams working to reduce its climate impact from own operations. These teams consist of associates from departments such as store development and store maintenance as well as sourcing managers.
Reducing carbon emissions in our own operations
The Ahold Delhaize brands continue to invest in energy efficiency, using the best available technologies to reduce energy consumption in stores and distribution centers. This effort includes reducing the energy usage of all lighting, heating and refrigeration. Going forward, our brands will strengthen renewable energy procurement plans and increase energy production on site. Our brands continue to improve their refrigeration systems and accelerate the replacement of hydrofluorocarbons with the latest available alternatives. Where possible, our brands use natural sources for refrigeration. Moving toward low-carbon distribution and logistics, our brands will further modernize their fleets and opt for eco-friendly fuels. In 2021, we will also start including an internal carbon price model into our investment proposals. We believe this model will help us consider the impact our new investments will have on carbon emissions, layering an additional environmental discipline into our framework.
The Ahold Delhaize brands continue to invest in energy efficiency, using the best available technologies to reduce energy consumption in stores and distribution centers. This effort includes reducing the energy usage of all lighting, heating and refrigeration systems. Going forward, our brands will strengthen renewable energy procurement plans and increase energy production on site.
In 2021 our brands consumed 6,714 million kWh of which 21% was coming from renewable energy sources. Total carbon equivalent emissions from energy consumption in 2021 were 1,383 thousand tonnes.
Our brands continue to improve their refrigeration systems and accelerate the replacement of hydrofluorocarbons (HFCs) with the latest available alternatives. Where possible, our brands use natural sources for refrigeration.
In 2021 the average Global Warming Potential of the refrigeration systems used was 2,415 and the leak rate was 11%. This resulted in carbon equivalent emissions of 1,182 thousand tonnes.
At the end of 2021 83% of the installed refrigerant substance by our brands were ozone friendly.
Moving toward low-carbon distribution and logistics, our brands will further modernize the fleet and opt for ecofriendly fuels.
In 2021 our brands consumed 158 million liters of fuel which is resulted in carbon equivalent emissions from owned transport of 262 thousand tonnes.
Key focus areas:
Replacing or retrofitting refrigerator systems with lower greenhouse gas alternatives, installing natural/hybrid systems (e.g., new CO2 systems) and minimizing leakage from all our systems. This action has the potential of reducing our carbon emissions from refrigeration equipment by up to 95%.
Accelerating the switch to renewable power, with a number of brands aiming to convert to 100% renewable electricity by 2023, reducing up to 100% of carbon emissions relating to energy consumption. This will be achieved through renewable energy credits (RECs and GOs), power purchase agreements (PPAs) and energy efficiencies from replaced refrigerants.
Building and remodeling stores in the most energy-efficient way, by installing energy-efficient equipment, such as LED lights, doors on cabinets, heat recuperation, heat pumps, CO2 refrigeration systems (which not only reduce emissions, but are more energy efficient than conventional refrigerators) and improved insulation. While our brands have already started to execute on this action, our net-zero ambition is expediting our work in this area.
Switching to low-carbon heating initiatives, including heat pumps and heat recuperation.
Converting both our light and heavy transportation fleet to zero-carbon alternatives, including battery electric vehicles (BEV), leveraging route optimization technology and improving fill mechanism to reduce overall energy use. The costs for this will be impacted by the ratio of how our brands will make use of short-range trucks (electric) vs. long-range (hydrogen fuel cell) trucks.
Applying an internal carbon price model to investment proposals from the local brands. This was implemented in 2021 but going forward We continue to fine-tune the model and further develop climate criteria for CapEx proposals.
COLLABORATING ACROSS THE VALUE CHAIN
The scope 3 emissions from our value chain mainly from purchased goods and services, waste management and franchise operations represent approximately 95% of our total carbon footprint. Calculating scope 3 emissions is complex. Our brands have hundreds of thousands of products on their shelves supplied by thousands of direct suppliers. All of these direct suppliers source materials and ingredients from their own suppliers, resulting in complex supply chains covering all areas of the world. As a result of this complexity, actual data on our scope 3 carbon emissions is currently not consistently available, and we continue to work to improve this. As our brands keep reaching out to their suppliers, we expect our access to data will increase, making our numbers more accurate.
To reduce carbon emissions along the value chain, we focus on four areas:
As most of the greenhouse gas emissions from our value chain are embedded in the products our brands sell, engaging with suppliers to reduce their emissions is where we will have the biggest impact. The food industry is already taking action to reduce emissions, and some of the world’s largest food manufacturers have adopted science-based targets. Our brands have a further opportunity to reduce scope 3 carbon emissions in agriculture, through their focus on partnering with farmers in the transition to low-carbon products. For example, Albert Heijn incentivizes sustainable change through longer term contracts including premium pricing and with concrete environmental requirements and co-investments on farms.
Every year, around one-third of all food produced for human consumption globally is lost or wasted. According to the World Resources Institute, if Food Loss and Waste were its own country, it would be the world’s third-largest greenhouse gas emitter, surpassed only by China and the United States. Our target to reduce food waste by 50% by 2030 also contributes to reducing carbon emissions, in addition to the other benefits of improving food security and conserving natural resources.
Customer demand for healthy, low-carbon diets, including plant-based proteins, is on the rise in many of our markets. Building on a history of product innovation, our brands continue to increase the number of low-carbon products in their assortments and, together with suppliers, bring new alternatives to the market. Our brands can help people further understand the impact of their buying decisions and make choices that fit their needs, their tastes and their values. To achieve this, our brands will use the latest technologies, such as blockchain and artificial intelligence, to bring customers more transparency – starting with fresh fruits and vegetables and then moving to the seafood and meat supply chains. By giving customers access to personalized information – for example, through loyalty apps or online advice – our brands will empower and enable customers to make better choices.
Outsourced transport services
Roughly half of our transportation today is handled by third-party service providers. Our brands will use service procurement policies to encourage service providers to reduce their emissions. These policies will reduce emissions associated with the delivery of the goods to stores as well as emissions related to associates’ business travel.
Climate change is making it more difficult to farm, fish and raise livestock; it’s changing what and how we can feed ourselves – at a time when our global population is growing. Climate change will have an impact on Ahold Delhaize with the potential to disrupt our business model.
In 2020, Ahold Delhaize conducted its first global analysis – in line with TCFD recommendations – of climate-related risks and potential material impacts on our business. The TCFD provides a framework to improve the disclosure of consistent, comparable, reliable and clear climate-related financial information to help investors make better capital allocation decisions in support of the transition to a low-carbon economy. We have adopted the TCFD’s recommendations and are reporting in line with its recommendations, where possible. We took fresh products as the scope for this first assessment, given their vulnerability and relatively short supply chains, and looked at our major markets in the United States and Europe.
Leveraging existing climate modeling, we developed two climate scenarios in line with two degree and four-degree Celsius trajectories based on RCP 2.6, RCP 6, IEA Sustainable Development Scenarios, IEA NPS, Irena and message-globiom assessing political, economic, social, environmental, and technological trends.
17 vulnerabilities applicable to Ahold Delhaize were identified, including physical, regulatory, technological, market, reputational and social risks. For example, we identified a vulnerability to a changing regulatory environment in which we could see the introduction of labeling or carbon taxation. We applied a regional lens to the possible financial impact these risks could have on Ahold Delhaize.
The next steps we will take include further analyzing the results in order to more narrowly define the scope of risks and perform more detailed assessments at brand level. We will also start integrating climate risk assessments and monitoring into our business operations at brand level.