Compass has claimed an industry first with the publication of its first ever climate transition plan. Others will soon be required to follow its lead. By Nick Hughes.
It had the feeling of a landmark moment for the foodservice sector. On a drab February afternoon, in front of hundreds of suppliers, clients and other stakeholders at London’s QEII Conference Centre, Compass UK & Ireland CEO Robin Mills took to the stage to launch the caterer’s first ever climate transition plan.
The plan had been billed by Compass as not only an industry first but the largest food and drink carbon impact assessment undertaken and openly shared by any foodservice provider to date. At over 100 pages in length, and based on over 2 million rows of data analysis of which more than 1.7 million accounts for food and drink, the document sees Compass position itself in the vanguard of a new era of climate transparency.
So what does the plan tell us about Compass’s net-zero journey? And should we expect other foodservice businesses to follow suit in publishing their own climate roadmaps?
Compass’s decarbonisation targets were originally validated by the Science Based Targets initiative (SBTi) in 2021, chief among which was for a 69% absolute emissions reduction across scopes 1, 2 and 3 by 2030. The original targets expired on January 31st this year and Compass recently gained approval to defer their revalidation until later in FY24 in order to increase the granularity of its scope 3 data and ensure emissions from businesses recently acquired are included in a new set of targets. (In January, Compass agreed to buy fellow contract caterer CH&Co, owner of the Vacherin, Gather & Gather and Company of Cooks brands, in a deal reportedly worth £475m.) The business then plans to publish a second iteration of its climate transition plan in FY25.
Achieving climate net-zero requires deep and sustained decarbonisation of the business and will still leave Compass needing to offset its residual, unavoidable emissions in 2030 and beyond in order to meet its goal. To-date Compass has achieved an absolute reduction in emissions of 9.4% across scopes 1, 2 and 3 for FY23 against a FY19 baseline, inclusive of 20% business growth. It said this translated into a 25% reduction in carbon intensity calculated as total emissions for each pound of revenue earned. The biggest reductions were made in scope 1 and 2 emissions which fell 68.8% and 89.2% respectively during the four-year period. Scope 3 emissions fell by 8.5%; these account for the vast majority of Compass’s total with food and drink alone responsible for 62.5% of the caterer’s FY23 footprint.
The transition plan identifies four levers of change to achieve that level of decarbonisation – supply chain, operational, ingredients and culture. It models interventions for the short-term (FY24), medium-term (FY25-29) and long-term (2030) that can reduce emissions, while acknowledging the need for an iterative approach, recognising that future market, political and social developments cannot be confidently forecast. In one section, Compass sets out where regulatory support would help the business drive change faster and more effectively including standardisation of scope 3 reporting and mandatory reporting of food waste.
Low-carbon meals
Ingredients is one area in which progress has already been made. Some of the main scope 3 reductions achieved to-date have come through chef-led reformulation and rationalisation of recipes to reduce their carbon impact. Compass says a quarter of 8,004 centrally analysed recipes now have A and B rated footprints as part of its work with sustainability-focused tech company Foodsteps. The remaining 75% of recipes still have C-E rated footprints and are targeted for reformulation in FY24.
The supply chain will come more closely into focus in FY24 as Compass trials a “net-zero pipeline” in its procurement arm, Foodbuy, designed to help its buyers widen the economic analyses within which they are assessing one product against another by considering indicators such as carbon, biodiversity and water alongside cost.
Economic transformation
Perhaps more significant than the raw data itself is how the plan starts to flesh out what alignment with net-zero means commercially for a business that generated £31bn in revenue at group level and more than £2bn in the UK in 2023. A narrative section notes how: “The impacts of climate change will see the world undergo one of the biggest economic transformations in living memory. Compass’ ability to manage the risks and seize the opportunities presented through this transformation, will determine its future growth.”
Compass explains how its transition modelling is designed to respect both margin and climate science, “to balance short-, medium- and long-term thinking in a commercially sensible, even-handed course of action”. In practice this means that in some instances, reducing emissions or mitigating adverse effects on the environment has aligned with the bottom line (food waste reduction being one example), but in others it has come at a financial cost, presenting a trade-off. One example is Levy UK + Ireland’s recently announced partnership with Notpla, which will see an expected 75 million items of Notpla’s seaweed-based biodegradable food packaging being used by Levy over the next three years at its sports and events venue partner sites. The switch won’t achieve commercial savings but Levy’s third-party analysis found that Notpla’s packaging reduces greenhouse gas emissions by up to 70% compared with conventional alternatives.
Actions targeted squarely at decarbonisation also have the potential to negatively impact other environmental indicators. Speaking at the launch event, Carolyn Ball, Compass’ director of delivery for net-zero, stressed the importance of avoiding “carbon tunnel vision”. She explained that in focusing on carbon, Compass is realising its interconnection with issues like water stewardship, animal welfare, biodiversity, deforestation, food and dietary health, food waste reduction and circular economics. “We will have to balance trade-offs by leaning into the detail,” said Ball.
Mandatory disclosure
As for the question of whether other businesses will follow suit, the simple answer is: they will have to. Under listing rules from the Financial Conduct Authority, the disclosure of climate transition plans is expected to become mandatory from periods after January 1st 2025 for reporting from 2026. On announcing the plans in 2021, the then chancellor Rishi Sunak said the aim was to encourage a shift of investment into the sustainable projects and green technologies that are critical to the UK becoming a net-zero economy by 2050.
The government, through its Transition Plan Taskforce (TPT), has subsequently created a voluntary set of standards for what should be included in transition plans. Compass’ plan is deliberately structured around the disclosure elements recommended by the TPT in its final Disclosure Framework, released in October last year (the taskforce has also produced specific guidance for the food and beverage sector).
Greater focus
By voluntarily publishing the foodservice sector’s first climate transition plan, one could argue that Compass is merely getting ahead of the regulatory curve. But the act of interrogating the data has also allowed it to better focus its decarbonisation efforts. “By strengthening the quality of our insight, we are in a better position to identify the opportunities where we can make the biggest impact as our business continues to grow,” wrote Mills in his foreword to the report.
Speakers in London made the case that planning for a climate transition is fundamental to the future prosperity of all businesses. “[Emissions from] the food system alone would almost certainly push us through 1.5°C, even if we decarbonise everything else,” said Charles Godfray, director of the Oxford Martin School at University of Oxford and an advisor on climate and sustainability to Compass. “The current food system in not sustainable and will have to change. The companies who think about this now will have a competitive advantage.”
Caterers like Compass may, for example, stand a better chance of winning public sector contracts as procurement rules move towards incorporating sustainability criteria. Delivering the ministerial keynote, Baroness Vere of Norbiton, parliamentary secretary at HM Treasury, stressed that “it’s going to be harder to win contracts if you can’t evidence certain things in certain ways”.
Others noted how the food sector is on the cusp of undergoing a low-carbon transition whether businesses like it or not. “Power has gone through it, automotive is going through it and food is about to go through it,” said Mike Barry, a sustainability advisor and speaker.
Barry knows a thing or two about sustainability plans as the architect of M&S’s original Plan A document. Posting on LinkedIn after the Compass event, at which he chaired a panel session, Barry commended the business for its leadership, noting how “a plan is only as good as the commitment by people to action it”.
Several years have now passed since a wave of corporate net-zero commitments were made in the run up to and aftermath of COP26 in Glasgow. The onus is now on all of those businesses to show – publicly and transparently – how their warm words on climate have translated into meaningful action.
