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The business case for sustainability in the milling industry

16 March 202417 min reading

Jay O’Nien
Environmental
Impact Services Lead
Bühler AG

Giulia Manzolini
Environmental
Quantification Program Lead
Bühler AG

Thomas Reichert
Head of Sustainability
for the Business Area
Milling Solutions
Bühler AG

Beatrice 
Petit-Conde

Sustainability Officer
Bühler AG

The pressure on companies to quantify and reduce their environmental footprint is increasing. First, a new EU regulation has entered into force – the Corporate Sustainability Reporting Directive (CSRD) – that impacts approximately 50,000 companies in the EU (1). Second, more than 5,000 companies have voluntarily signed up to the Science Based Targets initiative (SBTi) (2) or are setting net 0 (3) goals. In the words of Peter Bakker, CEO of the World Business Council for Sustainable Development: “Sustainability is going mainstream for governments, business, consumers, and financial markets (4).” 

This paper provides an overview of the key sustainability requirements from various stakeholders, including governments, companies and consumers. It considers how environmental sustainability using both greenhouse gas (GHG) accounting and life cycle assessments can be quantified, and the key steps in reducing the environmental footprint of the milling process and in the cereals and grains value chain. By quantifying environmental impacts, companies can create a data-based discussion, enabling them to create a competitive advantage and build a favorable business case for sustainable products. When sustainability is profitable, it will create impact at scale.

Sustainability requirements 

With approximately 2.6 billion tonnes of cereals and grains processed each year (5) and more than 5,000 companies setting science-based targets to reduce emissions, the milling industry has a golden opportunity to lead decarbonization efforts and reduce the environmental footprint of consumer products. Coupled with increasing pressure from governments to report climate action, companies must quantify, understand, report and reduce the environmental footprint of their manufacturing sites and their products. 

Corporate Sustainability Reporting Directive

The Corporate Sustainability Reporting Directive (CSRD) (1) requires that, from 2025, companies that meet two of three criteria – 500+ employees, at least EUR 20 million in total assets or more than EUR 40 million in turnover – “publish regular reports on the social and environmental risks they face, and on how their activities impact people and the environment”. In terms of climate issues, they will have to define their governance structure, climate metrics and targets, reduction strategy and quantified risk management. 

Metrics and target reporting requires companies to:

  •  Calculate the Scope 1, 2 & 3 footprint according to the GHG Protocol
  •  Set targets to reduce emissions
  •  Build a climate transition plan to achieve targets and track progress 

As more retailers and food processing companies quantify and reduce their full GHG footprint, they will look for primary data and reduction measures from their supply chains and encourage suppliers to set science-based targets. 

Science-based targets

More companies are signing up to the Science Based Targets initiative (SBTi), which requires companies to quantify the GHG footprint and set targets that follow the 1.5°C or “well below 2°C” line, with short-term goals to 2030. 

In a typical footprint for food retailers and processors, most emissions come from their supply chain, known as Scope 3 Category 1 Purchased Goods & Services in the GHG Protocol – the raw materials purchased to create food products. Thus, retailers and food processors rely on the milling industry to quantify and reduce their footprint, as this in turn reduces the footprint of the final product provided to consumers. They also form an important link in the chain between farmers who produce cereals and grains and the product used by downstream food processors to create consumer products.

Quantification of the carbon footprint at product level enables a more data-based discussion of reduction measures across the supply chain, and greater opportunity to finance carbon reduction initiatives in all areas of the value chain.

Figure 1:  2100 warming projections (16).

“The ability to transparently show sustainability efforts will only grow bigger in importance. It needs clear metrics to enable a value-add for more sustainable products, as well as strong collaboration with suppliers and partners to identify and implement more sustainable production methods in the future.”

Figure 2: Greenhouse Gas Protocol (17).

Greenhouse Gas Protocol (6)

Scope 1 includes direct emissions by sources owned or controlled by an organization e.g., emissions from combustion of fossil fuels in boilers and vehicles. 

Scope 2 includes indirect emissions resulting from the generation of electricity, heat, or steam that an organization purchases. These are not controlled directly by the organisation, but they can exercise some control by choosing their electricity or heating plan.

Scope 3 includes all other indirect emissions from upstream and downstream activities, such as the production and transportation of purchased goods and services, employee commuting, and waste disposal.

Quantify sustainability in milling 

Two main standards exist to quantify environmental impact: the GHG Protocol and the life cycle assessment (LCA). 

Greenhouse Gas Protocol (6)

A GHG assessment quantifies the CO2e (CO₂ equivalent) impact of the entire business every year by splitting emissions into Scope 1, 2 or 3. This is both a regulatory and an SBTi requirement and can be certified to either the GHG Protocol or ISO 14064.

Life cycle assessment 

The second method is the life cycle assessment (LCA), where assessments can be certified to ISO 14067 (7). An LCA measures the impact per unit of the final product, taking into consideration the impact across the entire value chain. 

An LCA requires a functional unit, such as 1 kg of flour. The methodology considers all stages of the value chain, including raw material extraction (in the milling industry this is farming), processing, transportation, consumer use, and end-of-life disposal for this unit of product (it can also be shortened to factory gate, after processing). An LCA can also take other metrics into account, such as water consumption potential and agricultural land occupation.

Figure 4: Flour as the main ingredient in a
downstream product.

TYPICAL LCA FOR FLOUR

Where GHG accounting fulfills legislative requirements, an LCA is a powerful tool in an understanding of carbon hotspots across the value chain, where to focus sustainability efforts and how to communicate sustainability reduction measures to customers, investors and consumers.

Figure 3 shows the typical footprint of flour. The exact figure will change depending on several factors, including the farming methods, logistics routes, storage conditions, milling performance, wheat and flour type, packaging, etc. However, some general assumptions can be made:

  •  More than 60% of flour emissions originate from the grain (8) (e.g. wheat, oat, barley, maize). Therefore, avoidance of waste and optimization of yield in the milling process is critical. 
  •  Unless the grain is dried, cooled/heated, heat treated or extensively fumigated, most emissions for a mill are Scope 2. 
  •  Where the grain is dried, cooled/heated, heat treated or extensively fumigated, Scope 1 emissions can be large. 
  •  Logistics contributes a significant proportion of the emissions per tonne of flour, particularly where there is long transportation by lorries.
  •  Packaging has a small CO₂e footprint, but is important in reduction of waste. 

Another advantage of an LCA is quantification of the impact of multiple metrics. Figure 3 shows a typical carbon footprint of flour. The same analysis method can be used to quantify m³ of water and m²a of land per tonne of product. Multimetric analysis is important in order to ensure that reduction or optimization measures do not negatively impact other categories.

Use an LCA to build a competitive advantage

Flour is used in many products and contributes a significant proportion of the final product emissions. By quantifying the footprint of the product, millers can communicate the benefit of their sustainability efforts in quantifiable terms, and how their product supports the sustainability efforts of the downstream process, such as bread baking.

Reduce the environmental footprint in the milling value chain 

When companies sign up to the SBTi, they commit to measuring and reducing emissions consistent with the level of decarbonisation required to keep global temperature increase to 1.5 degrees compared to pre-industrial levels. 

 

Figure 3: Typical CO₂e footprint of flour, Bühler calculation. Figure 5: Example reduction of the flour footprint.

The following section provides an overview of the key steps required to reduce the environmental footprint across the entire milling value chain. The LCA analysis is a powerful tool in enabling collaboration and data-based decision making for reduction of the environmental footprint of flour, as shown in Figure 5. Where possible, reduction measures that have a return on investment should be made first (example Figure 6). 

Figure 6: Importance of data-based decisions.

1. Reduce Scope 1 & 2 emissions

The CO₂e emissions in the milling process can appear small when compared with the raw materials (particularly when no regenerative agriculture is in use). However, energy reduction measures typically have a fast ROI and should therefore be done first. Actions taken in the mill can also increase yield and reduce Scope 3 emissions. This is covered in the section on Scope 3 reduction. 

Reduce Scope 1 emissions: 

  • Where grain is dried, optimize heating processes using retrofits such as heat recovery or heat pumps to reduce energy use, save cost and emissions. If possible, use alternative combustion sources to natural gas; e.g. electric, biogas.
  • Prioritize food safety and quality to reduce waste and optimize important resources. In particular, optimize pest control to ensure minimum and effective fumigant use. Continuously track quality parameters to identify intake or process changes. Learn more about food safety here.
  • Quantify & manage use of industrial gases (such as fumigants in grain storage) and refrigerants (for example in air conditioning units). Use alternative or modern refrigerants to avoid high environmental impacts, an alternative cooling source in production to avoid refrigerant usage, and ensure constant maintenance and upgrades for reduced energy consumption and leakages.

Optimize Scope 2 emissions:

  • Use smart sensors to measure energy consumption across the entire milling process, avoid energy spikes, minimize machine idling times and maintain an overview of equipment status. Learn more about SmartMill.
  • Use predictive maintenance to ensure operational efficiency, in particular replacing milling rolls before excessive wear in order to reduce power consumption spikes. Worn-out rolls can consume up to 40% more power.
  • Predictive maintenance will also optimize logistics of spare and wear parts, saving money and emissions. For more on predictive maintainence click here.
  • Keep the equipment around the processes also up to date, for example replacing old lighting systems with LED lighting.
  • Optimize air use by installing frequency converters and reducing air speed for pneumatic conveying, air rinsing and aspiration. Also minimize air leakages, improve pipe layouts and reduce bends.
  • Optimize power supply and motors, ensuring that motors operate >60% load and use the most efficient transformers. Estimate your potential ROI for upgrades using this tool. 
  • Manage your production efficiently by optimal production planning, intelligent process routing and automatic process reactions to exceeded values with automation solutions.

Use of renewable energy

The use of renewable energy reduces Scope 2 emissions to 0 and Scope 3 emissions of energy production close to 0. Renewable energy is a critical step in the net 0 (3) journey. Three key methods increase the use of renewable energy:

  •  Produce renewable energy on site (such as solar panels, direct drive from water sources)
  •  Buy renewable energy certificates (from electricity providers or energy brokers)
  •  Develop a power purchase agreement (PPA)

An energy strategy should reduce consumption (e.g. switch off appliances not in use) and optimize consumption (e.g. better machinery) as much as possible. When considering the product and/or procurement of renewable energy, take into account the following key points:

  •  Ability to use on-site renewables (e.g. solar, heat pumps)
  •  Availability of local infrastructure
  •  Costs per tonne of CO₂e reduced
  •  Return on investment using different methods
  •  Business risk (e.g. long-term contracts)

The various methods of producing and/or procuring renewable energy have different benefits, drawbacks and costs. For example, producing energy on-site through renewables guarantees the cleanest form of energy and often has a medium-term return on investment, but will rarely cover the full needs of production.

PPAs often create new renewable energy infrastructure and can guarantee energy prices over the long term, but projects are subject to availability, have long lead development times and are suitable only when procuring enough energy (unless the PPA is split with other companies). (For more information on PPAs click here.)

Renewable energy certificates have been criticized (for example, in the Corporate Climate responsibility monitor (9)). However, their purchase can be an effective method of making up the remaining kWh not covered by PPAs or on-site production.

When communicating the renewable energy strategy, it’s important to transparently report emissions – for example, kWh consumed, kWh reduced, location CO₂e and market-based CO₂e.

Quantify the impact of sustainability measures

By quantifying the impact of sustainability measures (such as cost per tonne CO₂e reduced with renewable energy), the largest carbon savings can be identified. The example below compares the installation of an optical sorter (that reduces waste) with installation of a new grinding system.

The example in Figure 6 demonstrates how the cleaning section in a mill contributes to a reduction in Scope 3 emissions. Often subsidies are available for technology that reduces energy or CO₂e, and these quantifications can be used in applications for subsidies.

2. Reduce Scope 3 emissions – from the mill

The cleaning section of a mill is critical because increasing raw material yield and quality, and reducing waste are the biggest levers to reduce CO₂e per tonne flour.

The cleaning section in a mill does not consume as much electricity (Scope 2 emissions) as the milling section, but improved cleaning improves the quality of the final product (which can reduce waste in the downstream processing, such as baking steps) and reduces the input per tonne of the final product, thus reducing Scope 3 emissions.

Figure 7: Bühler Sortex H optical sorter.

For example, the Bühler Sortex machine, seen in Figure 6, is an optical sorter that pre-cleans grain inputs and enables a reduction of up to 30% in false rejects. The yield increase brought about by accurate sorting improves profitability and also results in up to 649 tonnes of CO₂e saved in a typical milling line with a throughput of 600 t per day per line.

Sustainable packaging

Packaging impacts the footprint of flour in the production of raw materials (paper or plastic), the packaging step in the mill, and in the end-of-life phase (recycling the packaging), and prevents food waste by protecting the food product.

Sustainable packaging, such as recyclable materials, will reduce the CO₂e footprint. However, the material must be well protected by the packaging in order to avoid waste.

3. Reduce Scope 3 emissions – working with suppliers

To address the most significant part of emissions, it is essential to source raw materials sustainably. As shown in Figure 3, the raw materials can comprise up to 95% of the footprint of flour. The key footprint components are fertilizers, pesticides, emissions on the field, irrigation and fuel from farming vehicles. Farmers therefore are adopting more regenerative practices to reduce emissions on the field, such as use of cover crops to fix nitrogen into the soil, more precise dosing of fertilizer, the use of green manure to reduce fertilizer emissions, and minimizing tillage to preserve soil structure and reduce on-field emissions. Such measures are already proven to significantly drop the environmental footprint of raw materials (18).

Traceability and quality

The focus of milling companies should be on gathering data from suppliers to increase the volume of primary data in CO₂e quantification and increasing traceability of the value chain. Connection of the footprint of raw material production to the consumer product creates a data-based discussion on reduction measures, enabling the responsibility and capital available for reduction measures at farm level to be shared among all players along the value chain.

More data on the input raw materials will also improve processing efficiency and thus quality of the consumer product. 

Interested in knowing more about your footprint? Scan the QR code to contact the experts: ((QR code))

Local sourcing

Sustainability is not only about environmental impact, but also entails a balancing act between the three pillars of sustainability – economy, nature (climate and biodiversity) and humanity (also known as social). As the industry faces more critical decisions, such as when to source local or imported grains, how to reduce products that go to animal feed or increase wholegrain flours, environmental metrics such as CO₂e per tonne of flour can used as key decision-making criteria.


CONCLUSION

The race is on to 2030. Many governments and companies have made bold commitments to quantify and reduce carbon emissions, and to avoid an increase in global warming of 1.5°C. With more than 2.6 billion tonnes of grain processed globally, the milling industry has an important role to play in the fight against climate change. 

Regulatory requirements demand that companies have stronger oversight and communications in four key focus areas: governance, strategy, risk management, and metrics and targets.

Metrics and targets require a robust quantification and pragmatic reduction plan, identifying the initiatives with the fastest ROI first. LCA assessments are a powerful tool in identifying carbon hotspots, and can focus reduction efforts and capture the value of sustainability by supporting downstream food processors. This will enable companies to create a competitive advantage and build a favorable business case for sustainable products. When sustainability is profitable, it will create impact at scale.

References

1. European Commission. Corporate Sustainability Reporting Directive. [Online] 5 January 2024. [Cited: 6 June 2024.] https://finance.ec.europa.eu/capital-markets-union-and-financial-markets/company-reporting-and-auditing/company-reporting/corporate-sustainability-reporting_en.

2. Science Based Targets. Science Based Targets. [Online] [Cited: 6 June 2024.] https://sciencebasedtargets.org.

3. United Nations. Net-zero commitments must be backed by credible action. United Nations. [Online] 2022. [Cited: 20 June 2024.] https://www.un.org/en/climatechange/net-zero-coalition.

4. WBCSD. WBCSD steps up the course for systemic business transformation. [Online] World Business Council for Sustainable Development, 28 October 2021. [Cited: 6 June 23.] 8. https://www.wbcsd.org/Overview/News-Insights/General/News/WBCSD-steps-up-the-course-for-systemic-business-transformation.

5. Internation Grains Council. Supply & Demand, Wheat. International Grains Council. [Online] [Cited: 6 June 2024.]

6. GHG Protocol. Greenhouse Gas Protocol. [Online] [Cited: 6 June 2024.] https://ghgprotocol.org/.

7. International Standards Organisation. Greenhouse gases — Carbon footprint of products — Requirements and guidelines for quantification. International Standards Organisation. [Online] 2018. [Cited: 6 June 2024.] https://www.iso.org/obp/ui/#iso:std:iso:14067:ed-1:v1:en. 14067.

8. European Flour Millers. Flour milling environmental footprint is mostly impacted by cereal production. European Flour Millers. [Online] 2024. [Cited: 6 June 2024.] https://www.flourmillers.eu/page/carbon-footprinting/.

9. New Climate Institute. Corporate Climate Responsibility Monitor. 2024.

10. FAO. FAOSTAT. Rome : Food and Agricultural Organisation, 2021.

11. Task Force for Climate-related Financial Disclosures. TCFD Recommendations. TCFD. [Online] 15 June 2017. [Cited: 6 June 2024.] https://www.fsb-tcfd.org/recommendations/.

12. Carbon Cloud. The Complete Guide to National Climate-Related Disclosures. Carbon Cloud. [Online] 8 September 2022. [Cited: 6 June 2024.] https://carboncloud.com/2022/09/08/mandatory-climate-disclosures/#:~:text=Which%20markets%20are%20making%20climate%20disclosures%20mandatory%3F&text=Other%20countries%20have%20also%20announced,2%2C%203%2C%204%5D.

13. International Standards Organisation. Greenhouse gases — Part 1: Specification with guidance at the organization level for quantification and reporting of greenhouse gas emissions and removals. International Standards Organisation. [Online] 2018. [Cited: 6 June 2024.] https://www.iso.org/obp/ui/#iso:std:iso:14064:-1:ed-2:v1:en. 14064.

14. Climate Reality Project. Climate Reality Project. [Online] [Cited: 7 June 2024.] https://www.climaterealityproject.org/.

15. Cool Farm Alliance. Top Practices and Systems in Regenerative Agriculture. Cool Farm Alliance. [Online] March 2021. [Cited: 7 June 2024.] https://coolfarmtool.org/2021/03/top-practices-and-systems-in-regenerative-agriculture/.

16. https://climateactiontracker.org/global/temperatures/

17. https://ghgprotocol.org/blog/you-too-can-master-value-chain-emissions 

18. https://link.springer.com/article/10.1007/s13593-016-0404-8

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