Leveraging Regional Supply Chains to Deliver Low-Carbon Coffee

Globally, the number of companies making climate commitments tripled to 3,000 companies in 2021. During the 2021 COP26 climate negotiations in Glasgow, some 450 financial institutions with a combined $1.5 trillion in assets under management committed to stop investing in activities linked to deforestation by 2050. These negotiations mirror the U.S. government’s own climate finance ambitions, laid out in the International Climate Finance Plan. USAID Green Invest Asia demonstrates the utility of carbon-baseline assessments for accurate measurement of progress towards achieving low-carbon commitments.

The Net Zero Tracker found that 622 of the 2,000 largest publicly traded companies that have committed to net-zero strategies do not yet have policies to implement those commitments. Often, these companies have not calculated emissions along their entire supply chains (also called Scope 3 emissions), which typically account for about 70 percent of a company’s total emissions. One challenge is scant greenhouse gas emissions data for specific supply chains and origins. 

Recently, USAID Green Invest Asia brokered an unprecedented industry collaboration between the world’s two largest coffee buyers—Nestlé and JDE Peet’s—along with ten of their main supplier partners, to address this data gap.

Global coffee demand is expected to triple by 2050, raising pressure on forests and other habitats in the tropical regions where it is grown as farmers look for new land to cultivate. Green Invest Asia’s mandate is to lower emissions from agriculture and forestry in Southeast Asia by deploying a cross-border, supply chain approach that traces commodities to sourcing areas.

Through the new arrangement, Green Invest Asia is co-financing an industry-led assessment of the carbon footprint of Robusta coffee cultivation in two key sourcing areas of Vietnam and Indonesia. These areas cover more than 1 million hectares, which produce one-quarter of global coffee supply. Findings will be disseminated to the coffee industry through the Sustainable Coffee Dialogues that Green Invest Asia is co-hosting with Global Coffee Platform. Study participants are expected to apply findings in their other supply chains across Southeast Asia and globally. 

“We are pleased to continue deepening our partnership with USAID Green Invest Asia, and to be part of this unique, industry-led collaboration. JDE Peet’s is committed to tracking and reducing the carbon footprint of our entire coffee value chain, which requires both an accurate footprint baseline, and ongoing reporting tools,” said Simon Fox, who heads JDE Peet’s global carbon accounting and climate strategy for coffee. “We are proud to take part in this joint climate action, and together create a better future for the sector and for the livelihoods of coffee farmers.”

Nestlé and JDE Peet’s have both committed to responsibly sourcing 100 percent of their coffee by 2025.

The resulting open-source greenhouse gas emissions benchmark—calculated from data collected by producers and collaborating partners—will be the first standardized method to assess emissions by and for the coffee sector in Southeast Asia. This carbon benchmark in commercial production areas is needed not only to determine a baseline of supply chain emissions, but also to attract private investment for low-emission business models and interventions to deliver climate benefits.

The USAID-brokered partnership is timely and supports the U.S. government’s plan to mobilize US$150 billion in public and private climate finance by 2030. It is aligned with USAID’s Climate Strategy to work through corporate regional supply chains to reduce deforestation and greenhouse gas emissions, and paves the way for carbon-neutral, or even carbon-negative, coffee.

For more information, visit the Green Invest Asia website.