Supply chains can now be tracked externally, exposing companies’ environmental impacts

Planet Tracker joins with Vizzuality for a “nature footprinting” study which highlights the urgent need for corporations to improve supply chain traceability

• Investing in supply chain traceability is essential for corporations due to technological advancements, external tracking methods, and heightened regulations.
• Growing availability and effectiveness of external traceability systems expose corporates to heightened risks if they fail to adapt.
• Planet Tracker’s report, in partnership with Vizzuality, focuses on food industry leader Nestlé (NESN) and reveals how external analysis can highlight a company’s environmental risk hotspots, even in absence of complete procurement data.
• By consolidating and enhancing traceability systems through ”nature footprinting”, corporations can link raw materials to sourcing origins, quantifying their impact on the environment.

London, October 16, 2024: Planet Tracker’s latest report, ‘Tracking Nature Impacts’, developed in partnership with Vizzuality, the impact-driven change agency, highlights the importance of supply chain transparency. As technology advances, companies which fail to adopt sophisticated traceability systems expose themselves to significant risk.

To mitigate logistical challenges and comply with new regulations, such as the EU Deforestation Regulation (EUDR), businesses must invest in advanced traceability solutions. By integrating procurement data with geographical information systems (GIS), companies can accurately trace and analyse their supply chains and environmental impacts – a process known as “nature footprinting.”

Featuring Nestlé as a case study, the report illustrates what external organisations can learn about a company’s supply chain using publicly available data. By connecting raw materials to their sourcing origins, companies can better quantify their environmental impact. Supply chain software like Vizzuality’s LandGriffon offers both corporations and external organisations unprecedented visibility, fostering accountability and enabling improvements in sustainability practices across the industry.

Giorgio Cozzolino, Quantitative Investment Analyst at Planet Tracker, comments:

“We are reaching a point where only limited supply chain data is needed by external observers to estimate the environmental impact of these food businesses and identify potential risk hotspots and locations where companies are at risk of not adhering to international regulations.”

“Corporates that implement advanced traceability systems and improve their environmental disclosures will not only mitigate risks but also gain a competitive advantage.“

‘Tracking Nature Impacts’ analysed Nestlé ‘s supply chain disclosures for the following key commodities: coffee, cocoa, fresh milk, and palm oil. The study revealed several insights including:

• Fresh milk and coffee are generally associated with the highest absolute environmental footprints, particularly emissions (milk) and unsustainable water use (coffee).
• Cocoa displays the highest deforestation footprint per tonne sourced.
• Palm oil disclosures seem to be of much higher quality than the rest of the group, providing the ability to geo-locate over 80% of Nestlé’s suppliers.

Planet Tracker’s research urges:

• Investors to demand more in-depth supply chain disclosures from their investees.
• Corporates to engage with supply chain traceability tools, like Vizzuality’s LandGriffon tool.
• Lenders to financially support companies in their traceability journey.

When carried out effectively, enhancing traceability and transparency can also improve a company’s bottom line. Earlier research from Planet Tracker shows that improving traceability not only benefits the planet but also contributes to business success. As highlighted in Planet Tracker’s “How to Trace 600 Billion” report, a 1% investment in supply chain traceability could unlock a USD 600 billion-dollar increase in the global seafood industry’s enterprise valuations.

Read the full report here.

For more information, please contact:

Izzy Schaw Miller, ESG Communications | t: +44 7905 619881 | izzy@esgcomms.com

About Planet Tracker

Planet Tracker is an award-winning non-profit financial think tank aligning capital markets with planetary boundaries. Created with the vision of a financial system that is fully aligned with a net-zero, resilient, nature positive and just economy well before 2050, Planet Tracker generates break-through analytics that reveal both the role of capital markets in the degradation of our ecosystem and show the opportunities of transitioning to a zero-carbon, nature positive economy.