Carbon Labeling Part 1 - The Golden Rule of Food
The First Carbon Labeling (13th) Edition of the Negative Foods Newsletter
This is the first of three editions related to carbon labeling. The second edition will shine the spotlight on brands already carbon labeling. The third edition will discuss the picks and shovels of the carbon labeling gold rush.
In this, the first carbon labeling edition, I’ll explain why consumers need carbon footprint labels, why carbon labeling failed in the past, and why carbon labeling will succeed going forward.
I love the Golden Rule of Todd School, but today we’re talking about the real Golden Rule, which is that “whoever has the gold, makes the rules.” The Golden Rule helps explain why carbon footprint labeling will help reverse climate change in the future.
Why Consumers Need Carbon Footprint Labels. In the Case for Being Bullish edition of this newsletter, I argue that growing demand for Negative Foods (foods with carbon negative (or neutral) footprints) will help reverse climate change. Consumers will prefer foods with improved carbon footprints.
But how will consumers know? How do you know if a tomato, a steak, a slice of bread, or a bottle of beer, is a net emitter or sequesterer of carbon? This is a real problem. Unlike organic (a yes or no standard governed by the USDA), there is no standard or widely accepted certifications for food carbon footprints.
I know my marketing friends will say that more labels will confuse consumers. And (this time!) they are correct, as you can see from this overwhelming list. But this is important. We must empower consumers to make informed choices on carbon footprints. Empowerment requires knowledge. Knowledge starts with information. Consumers need carbon labeling for Negative Foods to capture market share.
Why Carbon Labeling Failed in the Past. We’ve had false starts. The behemoth UK food retailer Tesco began carbon labeling in 2007, and dropped the effort in 2012. Japan tried. Even PepsiCo had a carbon label on Walkers potato chips.
Why did carbon labeling fail? When Tesco tried, nearly 15 years ago, to calculate the carbon footprint for each product they sold, the effort took months for each of their thousands of SKUs. If you do the math, you can see that this was a valiant but doomed strategy. Peter Dering, the CEO at Peak Design, a maker of gear for active photography, told me that when, years ago, Peak Design took steps to become carbon neutral, it cost nearly as much to measure, as to offset, its emissions.
So the cost and effort was a big factor in the failure of carbon labels. But mostly it failed because people (and organizations) didn’t care enough to demand it. Nearly all retailers didn’t require it from brands. Investors were at best neutral (and perhaps slightly hostile). And, especially, consumers didn’t care. Carbon footprint labels did not drive demand. Do you green light an ROI when the “I” is large and the “R” is small?
Why Carbon Labeling Will Succeed Going Forward. Today, luckily, the tools to measure footprints are easier and less expensive. Peak Design’s Peter Dering co-founded the non-profit Climate Neutral to help other companies measure their carbon footprints with less cost and effort.
But . . . The Golden Rule is the main difference today. The gold is in the hands of retailers, investors and consumers, who set the rules for food brands.
Retailers. The retailers control the flow of money from consumers to brands, and in my experience retailers tend to get what they want. Luckily, in this case “what they want” is aligned with the interests of humanity (phew!). Kroger has measured and managed its carbon footprint since 2006, and includes responsible sourcing as a pillar of its sustainability commitments. Ahold Delhaize, Walmart and Amazon have all made public carbon neutral pledges. Retailers are increasingly providing helpful “encouragement” to their suppliers. As an example, see Walmart’s Project Gigaton, which aims to reduce emissions by 1 billion metric tons by 2030 from their supply chains. [disclosure: Kroger, Walmart and Ahold Delhaize are customers of BrightFarms]
Investors. The water had been rising for years, and the dam broke when the CEO of Blackrock (the world’s largest investor, managing nearly $7 trillion) stated last year that Blackrock would make investment decisions with “environmental sustainability as a core goal.” Blackrock is part of a growing movement of “ESG pressure” from the world’s largest and most influential investors. Of course, you can’t manage what you don’t measure, so expect to see companies that need growth capital to start measuring (and disclosing) their carbon footprints, which will naturally lead to more carbon labels. Some investors are even asking regulators to mandate climate reporting. This horse has left the barn and will soon be galloping.
Consumer Demand. Today, food brands understand that carbon labels increase demand. And an NYU study demonstrated that sustainability-marketed products are responsible for more than half of the growth in consumer packaged goods from 2015 to 2019. If you are reading this newsletter, you are more likely to choose climate friendly foods. You, my friend, are part of the solution. Taping into increased demand will motivate food brands to adopt carbon labels.
Doing Well by Doing Good. The world’s biggest retailer (Walmart), AND the world’s biggest investor (Blackrock), hold a lot of gold that they are using to set rules that will require carbon labeling. This will happen, and without the intervention of governments.
Who already Provides Carbon Labels? In the next edition we’ll shine the spotlight on brands already engaged in carbon labeling. Send your ideas!
Who are the Enablers? Subsequently we’ll cover the picks and shovels, such as the companies providing measurement tools and services, the certifications, the certifiers, the experts, etc. Examples could include The Carbon Trust, Climate Neutral Certified, Rodale’s ROC, The Sustainability Consortium, HowGood, etc. Send me your ideas!
Russell Pullan let me know that his favorite (low bar) welsh food is laver, which is Scottish traditional kelp and has the beneficial qualities that we explored in the Oyster & Kelp editions of this newsletter.
Tobias Peggs of Square Roots points out that we’ll have fun together investing in carbon neutral food startups. Yes! We will!
Nicolas Jammet of sweetgreen let us know that he really liked the newsletter and the recap edition. Thank you!
Michelle Seaver, one of my favorite humans on earth, sent warm and sweet feedback on the newsletter, which made my day.
For Your Further Consideration:
The views in this newsletter belong solely to Paul Lightfoot (and not to BrightFarms or other organizations). This newsletter accepts no advertising. Learn more about this newsletter at https://paullightfoot.substack.com/about.