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Sustainability

Q&A on Climate Change with Chris Brown, Vice President, CR&S

(1) Olam is calling for a carbon tax. Based on Olam’s 2015 carbon footprint, what would be the potential tax impact?

Ahead of COP21, Olam called for a tax of between US$35 and US$50 per tonne. We believe that if a resource is free, it is likely to result in its indiscriminate use. If carbon emissions are free and no tax is imposed, indiscriminate emissions will continue – global food security cannot afford this.

If Olam had paid this level of tax for our direct emissions (scope 1) in FY15, we would have paid a tax in the range of US$73-105 million. In addition to a tax on emissions, we also call for incentives to implement the necessary improvements (such as REDD+ and renewable energy), many of which are not currently possible in emerging economies due to financing or regulatory challenges.

We believe that due to the actions we are implementing now, and those we have in the pipeline, we would be better prepared should a carbon tax be introduced. We see carbon tax as a catalyst for innovation and the start of a transition away from a fossil fuel-based economy and help decarbonise the
economy.

(2) How you can tell whether an impact is related to climate change versus cyclical weather occurrences such as El Niño? And are all impacts negative?

I’d to answer using a quote from Gavin Schmidt, a climatologist at NASA’s Goddard Institute for Space Studies: “What matters, is that this decade is warmer than the last decade, and that decade was warmer than the decade before. The planet is warming.”

Primarily the impact we are seeing in the countries in which we operate is negative. Agriculture needs a degree of predictability. Climate change is affecting this predictability, as well as bringing impacts, so we are improving our assessment of future risk to include climate change and incorporate this into our business decision-making.

However, necessity is known as the ‘mother of invention’ and so as we address these issues there can be positives – such as the Glyricidia trees being able to nourish the soil, provide shade cover, prevent weeds and extend the productive life of cocoa trees.

(3) Aren’t all of the mitigation measures too little too late?

For the Agriculture, Forestry and other Land Use sector, there are indeed many barriers to emission reduction. Mitigation measures may not be implemented for several reasons such as economic (e.g. market failures, need for capital investment to realise recurrent savings), or others including risk-related, political / bureaucratic, logistical and educational / societal barriers.

However, we are encouraged that the economic reasons will be overcome by financial commitments from COP21. We also see that technological barriers can be overcome by research and development; logistical and political / bureaucratic barriers can be overcome by better governance and institutions; education barriers – through better education and extension networks; and risk-related barriers can be overcome, for example, through clarification of land tenure uncertainties.

I am pleased to see the INDCsas the aligning force for action and a five-year review process being agreed.  This allows Olam to make better strategic decisions to drive actions.

We will endeavour to build on our reputation as an implementation partner of solutions to support mitigation and adaptation actions in the countries in which we operate. We will continue to do this through partnerships with farmers, technical organisations and customers. Of course, the need for adaptation will remain as important as mitigation and should not be overlooked especially for our smallholder supply chains.

On the demand side, however, I’d welcome more activity. We can play our part by addressing loss of agricultural products in our supply chains but I would like to see the involvement of other players to tackle the challenge of over-consumption and consumer food waste in regions where it is prevalent. We also need to think about the impact of diet generally.  It is estimated that agricultural non-CO2 emissions (CH4 and N2O) would triple by 2055 to 15.3 GtCO2eq / year if current dietary trends and population growth were to continue, so tackling this challenge is essential – adoption of a healthy diet would reduce global GHG abatement costs.

And, finally, we also call on the agri and food/beverage sectors to implement procurement policies and consumer awareness campaigns that help drive the market for sustainable/climate smart crops and products and reduce retail and consumer waste.

You can read more in Olam’s 2°C Call to World Leaders and Industry here.

(4) What are your specific focus areas for 2016?

We will undertake a forward-looking ‘Value at Risk’ approach based on current and future climate risk scenarios.  Specific actions include:

  • Embedding an Olam Climate Smart Agriculture Action Plan
  • Assessing the true potential for carbon sequestration in our own operations
  • Improving impact metrics for supply chain emissions and improvement activities
  • Leveraging Olam’s ability to contribute towards the delivery of the INDCs in the key countries in which we operate
  • Building on the Olam Supplier Code to assess deforestation and afforestation in our supply chains through the use of technology 
  • Improving our ability to measure and reduce post-harvest loss in Olam farms and priority supply chains

Image: coffee farmer in Colombia

*Intended Nationally Determined Contributions

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