Increasingly, primary sector companies face pressure from consumers, clients, and regulatory bodies to decarbonise their supply chains. But the good news for New Zealand primary sector businesses is that the secret to solving your Scope 3 emissions is hiding in plain sight — right within your supply chain.
Carbon removals from native forests on private farmland in New Zealand represent an enormous opportunity for primary sector businesses to decarbonise their supply chains, reduce their scope 3 emissions footprints, strengthen supplier relationships, and make a positive environmental impact in their own backyard.
Here, we dive into ten reasons you should invest in carbon removals within your own supply chain.
1. The best place to decarbonise your supply chain emissions is at the source
The agriculture and food and beverage sectors make up roughly a third of global greenhouse gas emissions; and for most of these businesses, Scope 3 emissions are simultaneously the largest portion of their footprint and the hardest to decarbonise. Roughly half of the companies that had their SBTi net-zero targets removed claimed that reducing Scope 3 emissions was simply too hard.
But it shouldn’t be too hard for primary sector businesses in New Zealand. Some 25-35% of New Zealand’s native forests are located on privately held land, the majority of which is farmland. With the right technology, partners, and supplier engagement, you can start capitalising on the carbon removals that already exist within your supply chain, lowering your Scope 3 footprint right from the source.
Why bother? Well, we’ve seen what happens publicly to companies that don’t take their Scope 3 emissions (which are almost always material) seriously. But beyond reputational damage, while many climate disclosures and regulations currently only call for Scope 1 and 2 emissions reporting, Scope 3 is an expected addition to many regulations at some point in the future. Rather than be surprised when it happens, we recommend that primary sector businesses get on the front foot now, giving themselves time to work out the kinks and capitalise on potentially lower prices.
2. Carbon removals within your own supply chain help to strengthen supplier relationships
If the pandemic taught businesses anything, it was that your supply chain can be your biggest advantage or your weakest link. In a post-COVID world, many companies are diversifying and strengthening supplier relationships.
Ultimately, the best way to sweeten the deal with suppliers is to help them increase revenue. Carbon removals can open up a brand new revenue stream. Even if your company doesn’t buy all the removals suppliers can offer, they can still opt to have these removals recognised through other mechanisms, like the NZ ETS or voluntary carbon markets. It’s a win for you, and a win for them.
3. Nature-based carbon removals go beyond climate benefit
At the global climate level, we need to radically increase investment in carbon removal to stabilise the planet. But nature-based carbon removals offer so many environmental benefits beyond carbon.
At the local level, native forest preservation and restoration helps to improve biodiversity by protecting and restoring habitats and wildlife corridors for threatened native species. It can improve the quality of local waterways, increase water security, and boost soil health. Intact forests can have a modulating effect on local climates.
All of these benefits also carry over to the human populations living nearby, who benefit from better water quality, cooler temperatures, improved soil quality, and improved air quality. With many corporations making the full spectrum of ESG (environment, social, and governance) a priority, these co-benefits can mean carbon removals also contribute to your social goals.
4. Staying local reduces the need for international carbon offsets
Let’s face it — 2023 was a trying time for companies with international carbon offsets. The voluntary carbon market took a major reputational hit in 2023, with numerous projects (and the brands that invested in them) criticised for over-crediting and, by extension, greenwashing.
This is just about every company’s worst nightmare — but primary sector businesses in New Zealand can reduce their exposure to these reputational risks by focusing closer to home. The potential of the native forest that lies within their supply chains means they could source a considerable amount of their carbon removal needs on land with suppliers they already know and trust. With the right technology partner, you can essentially take your carbon investments in-house, knowing that you are making a genuine climate impact, reporting accurately and credibly, and channelling revenue and co-benefits back into your own supply chain.
5. Addressing Scope 3 emissions can help to de-risk changes to market access
Market regulations around carbon and deforestation are changing rapidly, particularly in the EU. Given that most New Zealand primary sector businesses rely heavily on exports, paying attention to early trends and requirements is a critical move for de-risking market access and being able to access new markets.
6. Build brand trust through transparency
Avoiding greenwashing is top of mind for companies on a climate journey — and rightly so. It’s critical that your company and its stakeholders can feel confident about the environmental impact of your carbon investments, but that can be difficult to assure when you’re purchasing carbon credits from third parties.
Investing in carbon removals within your supply chain puts you in the driver’s seat. With the right platform to manage the carbon accounting and monitoring (really, you don’t want to DIY this with a spreadsheet), you can be sure you have the data to back up your climate claims and tell your decarbonisation story with pride.
7. Stay nimble with key customer reporting requirements
Governments and regulators are not the only source of climate reporting burdens. For many companies — New Zealand’s primary sector included — a large share of the reporting burden comes from their own customers.
More and more international food companies, from Nestlé and Unilever to Mars and Tesco, are intensifying their climate commitments and creating their own carbon programs. It doesn’t take long for this to trickle down to suppliers, and many companies are now faced with mandates to improve data collection processes and shrink carbon footprints in order to keep existing (or acquire new) clients.
8. Improve supply chain resilience and climate adaptability
Investing in the restoration of existing forest, and planting new vegetation, helps to improve the resilience of land and its ability to handle adverse weather events. With more and more extreme weather events disrupting supply chains (in the primary sector in particular), improving resilience should be top of mind. Take Cyclone Gabrielle as an example, which virtually wiped out one of New Zealand’s largest food-producing regions in February of 2023. The farmers in these regions, and the supply chains they’re part of, are still recovering.
9. Get access to new financing opportunities
Capital isn’t always easy to come by, but improving your climate performance and disclosures can help companies secure sustainable loans at lower interest rates. Reducing your Scope 3 footprint through high-quality, in-supply-chain removals is a great place to start boosting your climate profile.
10. Boost rural economic development
Changes in land ownership can be particularly disruptive to primary sector supply chains, so it’s in these companies’ best interest to minimise land ownership changes. One way to do this is to make the alternatives — for example, selling a farm for pine plantation conversation — less desirable financially. Farmers are less likely to sell their land if they are more financially resilient and can employ more staff. The additional revenue stream from carbon credits can ensure farmers are happy and sustainably managing their land. Carbon credits can even support the creation of new services and employment — for example, pest control is necessary to keep native forests thriving and removing carbon.
Don’t sleep on your supply chain’s carbon removal potential
The opportunity that New Zealand’s native forestland offers primary sector businesses is enormous. The climate and environment potential of this rich native land is second to none, and in the climate economy, these climate benefits can translate to important revenue gains for your suppliers.
For primary sector businesses in New Zealand, the ‘challenge’ of Scope 3 emissions is now an opportunity to improve the climate and environment (both globally and locally), reduce their supply chain impact, strengthen supplier relationships, and improve brand reputation by investing in local, high-quality removals.
What’s not to love?
Say hello to CarbonCrop
At CarbonCrop, we don’t want carbon removals to give anyone a headache. CarbonCrop lets you manage carbon removals in your own metaphorical backyard without resorting to DIY. Our MRV software helps sustainability teams measure, track, and monetise their supply chain carbon removals in near real-time.