The shelves of Aldi in Germany are stocking locally-grown asparagus and strawberries after heat and drought in Spain pushed the buyers for the supermarket group to make a very deliberate change last year.
The retail group founded by the Albrecht brothers in postwar Germany has introduced climate change-related factors to help its buyers choose the goods for its thousands of stores across Europe and in the US.
Several extreme weather events in South and Latin America have also led to difficulties in sourcing fresh produce, and higher prices for coffee and nuts — among the big sellers at Aldi.
In France, customers were shocked not to find Dijon mustard in stores last summer, after high temperatures in Burgundy and a “heat dome” in Canada, the second-largest mustard seed producer in the world, dried crops.
But the consequences of the business disruption induced by climate change are stronger than mustard.
Extreme flooding in Germany last year not only destroyed crops, but also damaged stores. In parts of California, it is so hot that workers and machines cannot cope and harvesting for products destined for Aldi stores has to happen at night.
In the longer term, the retailer expects falling crop yields to result in migration, particularly in the world’s most food-insecure regions. The ability to harvest and manufacture the products consumers want will become harder.
Climate change is a “very clear and present danger”, says Anke Ehlers, managing director of international sustainability at Aldi Sud, which operates more than 7,000 stores across 11 countries.
For the retailer, the change of tack in its sourcing policy was a case of “making our buying teams aware about resilience and supply chain resilience overall, as an element to be considered in every buying decision, and establishing scorecards, incentivising and creating awareness internally,” she told a recent FT event.
Aldi is not isolated. Many companies have been forced to sharpen their focus on supply chains — first because of the disruptions brought by the Covid-19 pandemic, then because of the energy supply crisis that followed Russia’s invasion of Ukraine, and now, even more permanently, because of the ever increasing impact of climate change.
Building business resilience means anticipating the risks, instead of being in “crisis response” mode, notes LSE Grantham Institute professor Swenja Surminski, who is also managing director of climate and sustainability at the world’s biggest insurance broker Marsh McLennan and a member of the UK Committee on Climate Change. An LSE study showed the companies surveyed spent 85 per cent in mitigation after a disaster, and only 15 per cent ahead of the event.
The issue is very slowly but surely rising up the boardroom agenda, Surminski says, as the workforce and physical structures also come under threat.
Regulation is another incentive. New carbon-related taxes in the EU, to be implemented over the next four years, will force companies to account for the entire carbon footprint of their businesses.
For example, Aldi has assessed that 99 per cent of its emissions are generated by its suppliers. It is therefore working with strategic suppliers responsible for three quarters of its product-related emissions to help them cut back.
Building a transport network that is powered by electricity or sustainable fuels is one of the simplest ways to help cut emissions, although availability of cleaner energy powered vehicles remains difficult in some countries.
That means those best-selling packets of cashew nuts will no longer be shipped from West Africa to Vietnam for shelling and roasting, and then back to Europe for packaging, but will stay in West Africa for processing. It also means fewer climate costs. Expect the most global brands to take up the “be local, buy local” slogan.
The writer is the FT’s Climate Editor
Source: Economy - ft.com
