Earlier this year, Dutch retailer Albert Heijn made history by becoming the first international grocer to commence sharing the climate impact of some 1,100 private-label food and beverage products, enabling its customers to make more sustainable choices when shopping.
While many retailers have set sustainability targets, reducing emissions linked to food production remains a persistent challenge. With that in mind, Albert Heijn sought to boost the transparency of its supply chain, and teamed up with Vienna-based climate tech startup, inoqo.
The partnership enabled the Dutch grocer to assess and reduce emissions across food supply chains at scale, identifying ‘hotspots’ in its supply chain, and taking actionable steps to addressing them – all the time making progress towards its net-zero emissions goals.
In practical terms, this process has led to the introduction of a new scoring system that reveals the climate impact of products, known as the Product Climate Footprint (PCF), which provides a detailed insight into how each food and beverage product contributes to climate change.
SustainabilityOnline caught up with Markus Linder, co-founder and CEO of inoqo, to discuss how the project came together, and why the sharing of climate footprint data aims to ‘set a new standard’ for transparency and sustainability in the retail sector.
SustainabilityOnline: What were the primary motivations for Albert Heijn to start measuring its Product Climate Footprint (PCF)?
Markus Linder: Many leading grocery retailers recognise the growing importance of sustainability in today’s market. Their primary motivations for measuring their Product Climate Footprint (PCF) include:
- Enhanced transparency. To provide consumers with clear and accurate information about the environmental impact of the products they purchase.
- Regulatory compliance. To stay ahead of upcoming regulations and standards, such as the Corporate Sustainability Reporting Directive (CSRD).
- Sustainable sourcing. To identify and improve areas within their supply chain that can reduce environmental impact, such as packaging, ingredient sourcing, and energy use.
- Consumer demand. To meet the increasing consumer demand for sustainably sourced and produced products.
- Continuous improvement. To establish a baseline for measuring and continuously improving their sustainability efforts over time.
By choosing inoqo as their PCF platform, food retailers gain the ability to calculate an initial PCF using publicly available data and seamlessly integrate additional primary product-level data such as packaging details, country of origin of ingredients, and electricity mix as these data sets become available over time.
This comprehensive and adaptable approach allows them to enhance the accuracy and relevance of their sustainability reporting continuously.
How did the partnership between Albert Heijn and inoqo come about?
Our partnerships with grocery retailers generally arise from a shared commitment to advancing sustainability and setting industry standards. Through comprehensive market research and industry recommendations, grocery retailers recognise inoqo as a premier provider of environmental impact assessment solutions and initiate contact with us.
We typically begin our collaboration with grocery retailers in one of two ways.
We start with a proof of concept to ensure our platform meets the specific needs of our retail customers. During this phase, we evaluate a selection of their products, providing a preview of the solution’s granularity and capabilities. These proofs of concept usually demonstrate the value and precision of our platform, leading to extended and successful partnerships.
We thencalculate category representative emission factors for the retailer’s entire assortment. Without requiring product-level data and with minimal to no investment, grocery retailers can quickly establish an emissions baseline across their entire product range and kickstart their sustainability journey.
Every food retailer is at a different stage in their sustainability journey, so we tailor our approach to their specific needs to determine the best strategy to start.
What methodologies does inoqo use to collect and analyse the ingredient-level data for the climate impact assessments?
The methodological framework for ‘Climate’ is the automated conduction of life cycle assessments (LCA) based on the ISO standards 14040/14044 (International Standards Organization 2006).
Additionally, further guidance is taken from the Product Environmental Footprint (PEF) (European Commission 2021), including default data on transport modes and distances, as well as impacts arising from storing the products in distribution.
Since the food and beverage retail industry belongs to the Forest, Land, and Agriculture (FLAG) sector, elements of the GHG Protocol Land Sector and Removals Guidance draft (World Resources Institute and World Business Council for Sustainable Development) have been incorporated, enabling the inoqo platform to report an SBTi proxy value.
As regards system boundaries, the chosen system currently considers impacts from cradle-to-shelf, plus end-of-life (EoL) from transport, packaging and food waste at both the retailer and consumer’s home, in line with the GHG Protocol Corporate and Accounting Standard (Greenhouse Gas Protocol: Corporate Value Chain (Scope3) Accounting and Reporting Standard: Supplement to the GHG Protocol Corporate Accounting and Reporting Standard 2011).
All life cycle stages – agriculture, processing, packaging, transport, storage, and end-of-life – can be delivered individually, and are even further broken down into substages, allowing for the most granular insights. This allows each customer to assign the individual impact contributors to the specific Scopes, according to the GHG Protocol Corporate Accounting and Reporting Standard.
In addition, unlike other solutions on the market, the choice has been made to create and utilise an in-house proprietary LCI database for food products instead of relying on commercial LCI databases. This strategic decision enables us to cover, in a highly consistent and scientific manner, an extensive array of crops, livestock, fish, and other non-agricultural raw products covering almost every geographic region worldwide.
The inoqo Impact Database comprises data for 10,000+ combinations of agricultural raw products (crops, livestock, seafood) and geographical territories. Together with 100+ localizable food processing processes, the inoqo Impact Database can estimate the impact of virtually every food ingredient on the planet based on tens of thousands of data sets.
What steps are being taken to ensure the accuracy and reliability of the climate impact data provided to consumers?
The inoqo Impact Database undergoes continuous updates by our research team, integrating the latest scientific discoveries and reports.
Each product is automatically reassessed in light of these updates, ensuring the most accurate and up-to-date information is communicated to consumers.
What role, if any, do local or international regulations play in the development and implementation of this initiative?
Local and international regulations, such as the upcoming EU regulations (Green Claims Directive, CSRD, CSDDD, etc.), certainly exert pressure on European grocery retailers to comply. We see this regulatory landscape motivating our clients to start their sustainability initiatives.
However, the real driving force behind measuring and communicating Product Climate Footprints goes beyond compliance.
There is a strong business case for assessing and communicating the Product Climate Footprint. It’s not just a cost – it’s an opportunity. By proactively managing climate risks and utilising renewable energy, companies can achieve significant operational cost savings.
Additionally, transparency in sustainability efforts attracts new customers who value ethical practices. It also helps attract and retain employees who seek employers aligned with their values.
Finally, investors are increasingly scrutinising companies based on ESG criteria, making it crucial for businesses to demonstrate their commitment to sustainability. Thus, while regulations play a role, the broader business benefits are the true motivators for this kind of initiative.
How have consumers responded to the introduction of the climate impact scores – what feedback has been received?
Based on our experience with other clients, we typically see a very positive response from consumers. Many consumers appreciate the transparency and are eager to support brands that provide clear information about the environmental impact of their products.
This often exceeds the retailer’s expectations, leading to increased customer loyalty and engagement.
Why do you think it is important for businesses to start highlighting their climate footprint?
Highlighting the climate footprint can help retailers attract new customer segments, generate additional revenues by shifting their assortment to higher-margin products, and mitigate legal and climate risks. It’s a clear competitive advantage.
Businesses that delay this will likely lose market share and revenue, damage their brand reputation, and potentially lose investor confidence.
However, beyond the business case, there is a moral imperative and an urgency to act for our planet. We must drastically reduce our greenhouse gas emissions, preserve biodiversity, and ensure a liveable planet for future generations. The time to act is now.
Markus Linder is an impact entrepreneur and impact investor. As the founder & CEO of tech startup inoqo, and as an early stage impact investor, he focuses on globally scalable business models tackling the biodiversity and climate crisis. Find out more about inoqo here: www.inoqo.com
