Walmart, Lidl, Kroger & Tesco: Supermarkets' Scope 3 Impact

Supermarkets are stepping up their game when it comes to slashing operational emissions, minimising food waste and reducing plastic packaging use.

Despite these endeavours, a report from the Carbon Trust exposes a hard truth: these efforts only make a minor dent in their overall environmental impact.

The real heavyweight in their carbon footprint? Supply chain emissions—constituting 90% of the total impact.

According to theBig changes in store: How can the global supermarket sector accelerate to net zero? report, achieving net zero for the world's 10 largest supermarket chains by revenue demands a far-reaching overhaul.

It examines the mismatch between current initiatives and the deep, system-wide transformations needed, particularly in food production, the largest source of emissions within the sector.

Despite good intentions and various sustainability initiatives, a mere four of these top companies have defined substantial net zero targets.

Challenges in food production processes

Though supermarkets have indeed advanced in reducing emissions associated with their physical operations, transportation and logistics, the sector faces its most formidable challenge in food production — an area still largely uncharted by most.

Agriculture not only contributes considerably to global greenhouse gas emissions but also represents an intricate part of the supermarket supply chain that has been slow to innovate sustainably.

The report stresses the necessity for supermarkets to propel and support food producers in embracing climate-smart agricultural practices such as enhanced animal feed to cut methane emissions from livestock.

Additionally, incentives for farmers, like premium pricing and supportive financing, are suggested to encourage sustainable farming practices.

Supply chain visibility is another critical issue.

While supermarkets rely on a vast network of suppliers, many lack transparency in their operations.

Only half of the top 10 disclose data on the products they buy, making it difficult to track emissions or verify progress towards climate goals.

Without robust data, setting meaningful targets and implementing changes becomes a significant challenge.

Collaboration is key to sustainable progress

A significant theme of the report is the power of collective action.

By pooling resources — knowledge, technology or financial — supermarkets can instigate industry-wide changes.

Shared digital platforms for tracking emissions and deforestation, as well as investing jointly in regenerative farming, can scale up the effectiveness of individual efforts.

Another factor identified as crucial is influencing shopper behaviour.

While there is an evident rise in consumer demand for sustainable products, only four supermarkets have outlined strategies to motivate more environment-friendly shopping practices.

Enhancing consumer communication and providing clear incentives could pivot shopping behaviour towards sustainability.

The advocacy for stronger policy measures also comes under scrutiny in the report.

Only a fraction of the supermarkets examined are actively engaging with lawmakers to champion policies that could aid a swifter transition to net zero goals.

Exploring new horizons

However, the transition to net zero doesn't only pose challenges; it unveils significant business opportunities too.

Moving towards sustainable food systems could not only ensure resilience in supply chains but also allow supermarkets to tap into new markets.

For instance, the alternative proteins sector, now worth a striking US$15bn, provides a tangible opportunity for growth while simultaneously cutting down emissions linked to conventional meat and dairy production.

Simon Retallack, Director at the Carbon Trust, emphasises the role supermarkets can play in reshaping the food system: “With their position at the centre of the global food system, supermarkets have a golden opportunity to use their influence to bring suppliers, customers and policymakers on board in the journey to net zero.

“Supermarkets today are under pressure to provide healthy, affordable and sustainable products. The good news is that there are solutions to achieve that.

"But radical collaboration between supermarkets and suppliers is going to be vital. This will be needed, for example, for delivering shared data platforms to collect emissions data and track links to deforestation, co-investing to scale regenerative agricultural practices and adopting a collective vision and voice to achieve more influence over shopping habits and the policy environment.

“Working together and with their supply chain, supermarkets can unlock a step change in progress, opening up opportunities a net zero economy offers and developing a food system that is resilient for the future.”

The report makes it clear — supermarkets cannot afford to focus solely on their in-store operations if they want to make a real impact.

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