Identifying Hotspots and the Disclosure of Non-financial Information: Mitsubishi Shokuhin Co., Ltd.

• Mitsubishi Shokuhin sought to make climate disclosures inline with upcoming reporting deadlines,
• Product categories sorted by respective packaging and ingredient composition,
• Emission data from 240,000 SKUs across 2,000 product categories sorted five times faster than manual processing.

Mitsubishi Shokuhin Co. Ltd. (MSK) is a food trading company that deals mainly in processed and chilled foods, alcoholic beverages, and sweets. MSK believes sustainable practices must be strongly integrated into the value chain of any food company, and its commitment reflects how Mitsubishi Shokuhin is leading the way in Japan’s food industry in its commitment to environmental stewardship.

MSK’s Goals and Objectives

Mitsubishi Shokuhin has made multiple commitments towards climate change mitigation. In line with its self-initiated goals, MSK wants to achieve carbon neutrality by 2050, and to reduce carbon emissions by 2030. It hopes to inspire change throughout the rest of Japan’s food industry towards actionable climate mitigation. 

Having proactively identified its emissions footprint in the past, MSK’s ambitions lie in building climate strategy resilient to regulatory and stakeholder pressure. With upcoming carbon pricing schemes, Mitsubishi Shokuhin’s visualization of Scope 3 emissions would reinforce its ambition to integrate sustainability more deeply in its supply chain – and it has been working with Terrascope to measure Scope 3 emissions, to be disclosed by the end of FY2023.

The amount of CO₂ emitted indirectly by a company, specifically by the supply chain (Scope 3) usually accounts for over 80% of the total CO₂ emissions (Scope 1 + 2 + 3) of a company. Conscious of this and its role in relying heavily on supply chains, MSK aspired to visualize Scope 3 measurement and to derive actionable insights.

How Terrascope Helped MSK Cut through the Fog

Indeed, measuring Scope 3 and the emissions data they create was significant, due to how distributed they were across MSK’s 240,000 SKUs and 2,000 product categories. Terrascope is a carbon management platform, ideal for the kind of holistic Scope 3 emissions management MSK sought to achieve. 

For this, Terrascope has helped MSK by formalizing data methodologies that simplify data collection and standardizing the ingestion of different data formats across numerous stakeholders upstream and downstream to facilitate visualization. These data points often contain nested data points as well, such as operating temperatures as well as stock availability – through Terrascope, MSK was able to harness its AI-assisted EF matching to ingest and process that data efficiently. 

Mitsubishi Shokuhin and Terrascope first classified the over 240,000 SKUs into around 2,000 similar product categories, before calculating each category’s carbon footprint based on their respective packaging and ingredient composition. This data was entered into the Terrascope platform and visualized as below.

• Scope 3 emissions account for around 99% of Mitsubishi Shokuhin's overall emissions (Scope 1 + 2 + 3).
• Over 80% of Scope 3 emissions are derived from Category 3.1 "Purchased Goods and Services.”
• Specifically, the “Frozen Foods and Alcoholic Beverages” product category emits the most CO2.
• The next largest share consisted of Category 3.4 "Upstream Transportation and Distribution, followed by Category 3.12 "End-of-life Treatment of Sold Products", or emissions from the disposal/recycling of food waste and packaging.

Effects and future plans

Through Terrascope's functionality, Mitsubishi Shokuhin was not only able to visualize Scope 3 on a corporate level, but also to identify emissions hotspots on a product category level. In addition to structuring future climate strategy, this partnership has strengthened climate expertise within MSK’s own operations.

For one, the invaluable experience and knowledge provided by this measurement will help reduce the manpower and time needed for calculating emissions. It will also reinforce future measurements taken for FY2022 and beyond.

In addition, MSK hopes to incorporate future primary data based on the hotspots identified, and disclose more accurate data using its new capabilities. With Terrascope, it has built a climate strategy that will lay the groundwork for better, more resilient climate action to come.