Hormel sets ambitious climate goals, but can the company act fast enough?
“Our team is constantly looking for ways to do things better and making commitments to improve sustainability practices across the company. This is not a small commitment.”
— JENNIE-O PRESIDENT STEVE LYKKEN
MONTEVIDEO, Minnesota — Solar-powered turkey burgers can help fight climate change.
That’s part of Hormel’s solution, anyway.
Outside of a Jennie-O Turkey Store plant in western Minnesota, an 8-acre solar farm recently started delivering energy to the slaughterhouse and the surrounding community.
“It makes sense from an environmental standpoint, and it makes sense from a business standpoint to offset inflationary energy costs,” Hormel’s head of sustainability, Tom Raymond, said in an interview. “This is just a win for the team and the community to get this green power here.”
The celebration can’t last long though as the solar garden is one of many projects the company will need to pursue to meet its climate goals.
Hormel Foods plans to cut its greenhouse gas emissions in half and help make a big dent in its suppliers’ emissions by 2030. Those goals were recently validated by Science Based Targets Initiative (SBTi), a group that thousands of companies rely on to standardize climate reporting in the absence of federal regulations.
“That has some rigor to it, and it is important for organizations to think about,” Mallory Thomas, a partner and ESG expert at Baker Tilly in Minneapolis, said. “Now as we see companies signing up for all these sustainability goals, how are they going to align that with their operations?”
Hormel is matching all of its domestic energy use with renewable-energy credits already. But the company’s own emissions account for just 10% of the greenhouse gases it is accountable for, as is typical for food companies that rely on suppliers.
Supply-chain emissions, known as Scope 3, include all the agriculture and transportation it takes to make products such as Spam, bacon, Planters nuts and turkey. By 2030 Hormel intends to cut those emissions 27.5% from a 2019 base year. So far they have continued rising.
If Hormel can meet its targets, SBTi says it will be enough action by the company to do its part in keeping global temperatures from rising more than 1.5 degrees Celsius in the near-term.
“We don’t set goals without the intention of fully meeting them,” Raymond said. “We know it’s a journey, and everyone is on it.”
Luke Wilcox, head of Minneapolis-based data firm Ethos ESG, said the number of companies making “credible” pledges backed by third-party verification and action has significantly risen even as environmental, social and governance (ESG) issues face political backlash.
“I would commend them — it’s a pretty strong commitment relative to peers in the food industry, and relative to all companies,” Wilcox said of Hormel’s climate goals, pointing to the high targets and SBTi validation. “There aren’t a lot of leaders in the meat and dairy industry.”
FROM PLAN TO ACTION
There is no legal mandate that Hormel or any other company trim its climate impact, though it is increasingly demanded by investors. Experts say it’s time for companies to move from goals to action when it comes to reducing greenhouse gas emissions, especially as 2030 — a milestone date established for many corporations’ environmental commitments — inches closer.
“In the food sector, there are a number of actions companies need to be taking — such as changing product mix and investing in research and technologies — where we might not see the impact for several years,” said Meryl Richards, acting program director for food and forests at the nonprofit Ceres.
This week Ceres released a guide to tackling agricultural emissions that said reducing ag’s effect on the environment could take “significant investments and possibly a fundamental redesign of the food system,” and those steps need to be taken now.
“Disclosure is very important, but actions are also very important,” said Nako Kobayashi, a program manager at Ceres. “Hormel has not been super detailed on what they’ll actually do to achieve their goals.”
Within its own operations, Hormel intends to cut half a million metric tons of carbon dioxide-equivalent emissions by 2030. Raymond, Hormel’s sustainability director, said the company will “pull all the levers we already know.”
“We’ll be driving energy efficiency within our operations through production changes, engineering, different ways to reduce our energy use and increase the efficiency of the production process,” he said, “while increasing our onsite renewables, looking for partnerships and then looking at projects within our supply chain.”
SCOPE 3
Animal agriculture is proving a difficult industry to decarbonize, in part because demand for meat keeps rising globally and some of the biggest sources of emissions are from animal gases and manure, which are difficult to affordably mitigate.
Ceres found that current regenerative agriculture practices can only go so far: “Companies will not achieve reductions in line with a 1.5°C future by relying on existing technologies and practices alone.”
As Hormel looks down its supply chain to the farms raising hogs and turkeys, there is only so much it can do to demand suppliers help the company meet its goal.
“How do you deal with backlashes in rural communities if you push too hard for Scope 3?” University of Minnesota Carlson School of Management Prof. Jiao Luo said. “It requires changes in farming practices.”
In about six years, Hormel plans to prevent 3.3 million tons of carbon dioxide-equivalent emissions across its supply chain to meet its Scope 3 goal. That’s the equivalent of taking 700,000 gas-burning cars off the road.
The 8-acre solar farm in Montevideo produces energy equivalent to about 500 cars, to compare.
“Our team is constantly looking for ways to do things better and making commitments to improve sustainability practices across the company,” Jennie-O President Steve Lykken said. “This is not a small commitment.”
The long-term payoff in efficiency and stability will be worth the upfront costs for companies, Jiao said. Customers, employees and especially investors will reward companies showing progress toward climate goals and punish those who don’t.
“One of the biggest forces would be institutional investors,” she said, “and it’s clear to me they’re going to keep pushing.”