Last Refreshed: 7/23/2021 10:55:23 PM
Last Refreshed: 7/23/2021 10:55:23 PM

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:

  • We will reduce absolute emissions from our own operations (scope 1 and 2) by 50% between 2018-2030.
  • We will reduce absolute emissions from our value chain (scope 3) by 15% between 2018-2030.

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.

OUR APPROACH Scope 1 & 2

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.

Energy

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.

Refrigerants

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.

Owned transport

 Moving toward low-carbon distribution and logistics, our brands will further modernize the fleet and opt for ecofriendly fuels.

OUR APPROACH Scope 3

To reduce carbon emissions along the value chain, we focus on four areas:

Supplier engagement

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. With the announcement of targets for 2030, our brands are beginning the journey to engage with their key suppliers and support them in their transition to less carbon-intensive production.

Waste management

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.

Low-carbon products

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. 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.

  • In general, all physical risks (connected to the direct impact of climate change) and social risks have a similar risk rating in the two scenarios by 2030, but physical risks differ by 2050 for the four-degree scenario.
  • A significant part of our revenue is generated in coastal areas that have a potential risk of sea level rise and flooding by 2030 and come from areas in the U.S. that will be increasingly impacted by hurricanes by 2030. This may lead to supply chain disruption or temporary closure of stores.
  • In the short term, the transition risks of moving to a low-carbon economy will be more impactful to Ahold Delhaize in a two degree-scenario world than in a business-as-usual scenario, due to the accelerated regulatory landscape and behavior of consumers. This could lead to higher raw material prices or a decrease in the sale of products with a high-carbon footprint.

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.