Very often, companies in the food, cosmetics, pharmaceutical and chemical industries overlook their impact on biodiversity. They only assess the operation of their production facilities without paying particular attention to the supply chain. And this is where there can be risks associated with biodiversity impacts, as well as risks arising from climate change adaptation and the loss of biodiversity from which the company benefits. This knowledge is important not only for the purposes of non-financial reporting e.g. ESRS, GRI but also for assessing the company’s further strategic actions.
An example of such a product, often sourced from suppliers, would be citric acid.
And this is not about the impact of lemon cultivation on biodiversity, as citric acid is not made from lemons in the production process. It is produced using molasses from sugar production, e.g. sugar beet or sugar cane, or from maize starch. Its conversion into citric acid is carried out by the mould fungus, the black dot fungus. And it is some of the sugar crops that can be crucial in determining how your suppliers affect biodiversity.
Citric acid is widely used in technological processes in the food, cosmetic, pharmaceutical and chemical industries. So its use is enormous, with Poland in 2021 ranked 5th in the world in terms of citric acid imports, with China being the main world producer.
If your facility uses citric acid in large quantities its origin can be important when assessing the impact of your production and your products on biodiversity. This is of great importance when reporting on the ESRS and analysing risks according to the TNFD methodology.
To be able to predict the materiality of these impacts, it is necessary to analyse the supply chain in detail and, in certain cases, to know the exact place of origin of the substrate for citric acid production. This knowledge can also be helpful in assessing the risks of business operations, including those related to supply chain constraints.
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Business Developmnent and Sustainability Manager
One of the substrates for the production of citric acid is sugar cane, and it is its cultivation that can have a significant negative impact on biodiversity.
The main producers of sugarcane in 2018 were Brazil, India, China and Thailand. It is widely used in the food industry, but also in the production of biofuels.
The high water requirements of sugarcane crops often lead to significant negative impacts on water-dependent habitats. The cultivation of sugarcane in such areas can lead to:
- a large decline in biodiversity and threats to rare and even endemic species as a result of habitat conversion,
- high carbon dioxide emissions and nutrient deposition during stubble burning
- changes in access to groundwater due to the huge demand for water in sugar cane cultivation
In some regions of China, the cultivation of sugarcane on a massive scale in river valleys leads to ecological disturbance of aquatic habitats. In these places, it is becoming a threat to many organisms, including turtle species (e.g. leatherback turtle, green turtle, Karetta). In Brazil, deforestation for sugarcane cultivation has dramatically reduced the area of the endangered Atlantic Forest ecosystem (Mata Atlantica) and the species associated with it.
When indicating in a non-financial report the origin of products used in our industry from such regions of the world, careful consideration should be given to whether their production has a significant impact on biodiversity. It is also worth noting whether the product has the appropriate certification, verifying its origin and impact on biodiversity, such as Bonsucro for sugar cane. Such knowledge makes it possible to transparently make adequate decisions and reduce the environmental impact of our production, and to share such information with stakeholders. Also, this analysis allows us to identify whether the production of a given substrate may be threatened by, for example, climate change or water scarcity – which can clearly disrupt our supply chain, increase the price of these substrates and their availability.
Perversely, it may turn out that by using large quantities of citric acid in our plant, we are indirectly influencing the extinction of rare animals such as the Karetta turtle, which is the only sea turtle species that also reproduces in the Mediterranean.
Therefore, when considering the impact on our company’s biodiversity, it can sometimes be the case that, although we ourselves do not have a significant impact on biodiversity with our direct production, suppliers in our supply chain can have a significant impact on ecosystem services and the natural environment. Thus, by using such sources, we are also indirectly impacting this biodiversity. This insight and analysis of the supply chains and origins of the products used in our production processes is important for ESG reporting according to ESRS and GRI, but also for customers who consciously want to choose products that contribute minimally to the risks of nature. It also allows us to analyse risks to the business, including those related to climate change.
Do you want to find out if your business can affect biodiversity or how dependent it is on biodiversity and climate change? Send us your details here and we will get in touch and guide you through the entire identification process.