Ahold Delhaize

Ahold Delhaize completed Phase 2 of its TCFD-aligned scenario analysis. The analysis identified the financial risk of high animal protein exposure, specifically detecting dairy as a commodity at risk of carbon pricing and changing consumer preferences. The company shared that it is currently conducting Phase 3 of its scenario analysis, however, it could not confirm whether this analysis would explicitly cover animal agricultural supply chains. Additionally, Ahold Delhaize shared with investors that the company already includes a carbon tax in its investment proposals, mainly focused on store remodelling or other large investment needs, pricing it at €150/$180 per tonne of CO2. Its Dutch brand, Albert Heijn, is a best practice example of a business recognising the material risks of high exposure to animal-derived protein and consequently adjusting its practices to mitigate these risks. In March 2022, the brand set a protein diversification target. It recognised its role as a retailer to drive greater consumption of alternative proteins through (i) engaging consumers, (ii) providing them with more plant-based proteins (iii) ensuring plant-based proteins are affordable. Additionally, in July 2022 its Belgian brand Delhaize committed to doubling its plant-based meat and dairy substitutes, from 400 to 800 SKUs by 2025. However, at the Group level, it has not set a board-endorsed strategy for protein transition. It does not have ambitions to create one inthe short term, despite the company recognising the material risks of high animal protein exposure. Additionally, protein diversification continues to be largely driven by consumer demand. For example, when Ahold Delhaize's CEO discussed the company's role in driving responsible protein consumption he stated that it was not the company's place to directly encourage customers to increase their consumption of plant-based: instead, Ahold Delhaize should inform customers of the benefits through product labelling.

Sales from own-brand products classed as healthy accounted for 53.6% of total own-brand sales in 2021, up from 49.8% in 2020. This enabled Ahold Delhaize to exceed its goal of 51% by 2022. The company has since raised its commitment to achieving 55% of sales classed as healthy by 2025. Ahold Delhaize has made progress on its nutritional profiling system, having introduced Guiding Stars and Nutri-Score labelling on products in the US and Europe. Albert Heijn announced a first-of-its-kind replacement target seeking consumer protein consumption to be 60% from plant-based protein sources by 2030 and publicly disclosed its strategy to achieve this target. Currently, the proportion of protein being sold is 70% animal-derived and 30% plant-based. Additionally, brand Delhaize is committed to making alternative proteins more accessible by doubling the number of plant-based meat and dairy SKUs from 400 to 800 by 2025 and by making the products more visible in stores. This commitment was made to contribute to the Flemish Government’s commitment to have consumers achieve 60% of their protein intake from plant-based products by 2030. However, at Group-level Ahold Delhaize has no ambitions to set a protein diversification strategy in the short term; it is instead focusing on its "healthy and sustainable" strategy. To tackle Scope 3 emissions, Ahold Delhaize is collecting supplier emission data via CDP and its own surveys. So far, they have sent over 200 engagement letters to key suppliers in 2022, encouraging them to set their own net-zero commitments. This covers around 30% of total procurement spend. Albert Heijn has expanded its "Better For" initiative at the brand level, which covers chicken, beef and dairy supply chains. As part of this initiative, the brand will cover the additional costs incurred by farmers so they can rear the livestock responsibly. Albert Heijn has committed to sourcing 90% of its beef from Dutch cows, focusing on ex-dairy cows as they can be of "dual-purpose" and lead to a significant reduction of the emissions linked to beef. At the Group level, key commodities including meat, dairy and eggs continue to be excluded from the company's sustainable sourcing strategy. Additionally, the company set a new 2025 target for addressing deforestation but excluded animal agricultural supply chains.

As part of Delhaize’s commitment to expanding its plant-based range, it plans to double the offering of plant-based meat and dairy substitutes from 400 to 800 SKUs. Additionally, as part of Albert Heijn's protein diversification target, the brand is committed to expanding itsplant-based range by 150 items, adding to the current portfolio of 1,000 items. In addition to new products, novel plant-based proteins will be used, such as field beans, which reduce reliance on deforestation-linked soybeans. The brand also acknowledges that it is important to ensure plant-based products are healthy and nutritious. Albert Heijn disclosed that 80% of own-brand plant-based meat offerings score A or B on Nutri-score, and the brand has fortified products with vitamins to ensure they facilitate healthy diets. At the Group level, there is limited evidence of the company dedicating resources to alternative protein product development, and compared to competitors the company has fewer cross-sector collaborations specific to plant-basedproteins. Ahold Delhaize shared with investors that its plant-based product offering is driven by two factors (i) brand leaders being environmentally conscious(ii) demand in the local market; hence why product offering is higher in the Netherlands and US compared to other markets. Currently, there is no Group-level strategy to increase the product offering of plant-based proteins in markets where there is less demand. The company provided no insights into the proportion of plant-based items relative to animal-derived.

Ahold Delhaize banners continue to promote plant-based products using a multichannel approach. For example, Albert Heijn has launched a YouTube channel, in collaboration with Hugo Kennis, that teaches customers how to cook plant-based dishes. Also, the banner Hannaford has a website called SnackPals that encourages children to eat more fruits and veggies. The company has a strong focus on promoting the health and nutrition elements of plant-based foods, in line with its “healthy and sustainable” strategy. The company is making progress on its labelling of own-brand products with nutritional profiling systems; the company's brand in Romania, Mega Image, is the first in the country to introduce Nutri-Score. However, at the Group level, the company fails to engage consumers on the sustainability benefits of eating a plant-based diet. Albert Heijn now ensures that plant-based products are available within each pricing assortment (i.e. value, standard and premium), however, at the Group level, there is no dedicated pricing strategy for plant-based items. Ahold Delhaize shared with investors that it is increasing its marketing spend on alternative protein products. However, it does not have a dedicated spend allowance for plant-based marketing, nor does it provide details of targeted consumer engagement campaigns for alternative proteins.

Albert Heijn’s current protein split is 70% animal-derived and 30% plant-based. Albert Heijn will not report its protein diversification metrics to the Group. Instead, it will report at the brand level every quarter, however, it is unclear from the dialogue what metrics will be reported. Ahold Delhaize reports a reduction of Scope 3 emissions intensity by 3.8% (2020 vs 2018 baseline), however, the company has increased its absolute emissions by 14%. The company reports that purchased goods and services accounted for 88% of Scope 3 emissions, it did not however provide an updated breakdown of its category 1 emissions (i.e. meat, fish and eggs).

The company attended FAIRR’s technical roundtable on protein diversification metrics and engaged with FAIRR and investors. The company was receptive to the investor’s feedback and transparent about the challenges the company faces. Ahold Delhaize responded to FAIRR’s follow-up questions and provided feedback on its final assessment.