Dec. 4, 2016 12:01 p.m. ET
Pork giant Smithfield Foods Inc. plans to cut a quarter of its carbon emissions over eight years, a voluntary move the company hopes will trim costs and burnish its brand.
Virginia-based Smithfield will scale back applications of fertilizer used to grow grain for pig feed and install systems to extract natural gas from manure, among other measures. The Environmental Defense Fund, which worked with Smithfield on the plan, said it is the most ambitious commitment yet by a U.S. meatpacker to curtail greenhouse-gas emissions.
Smithfield Chief Executive Ken Sullivan, a company veteran who took the helm last January, also sees a business case for emitting less. He expects more energy-efficient operations to save money and boost Smithfield’s standing in restaurants and grocery stores. Two-thirds of U.S. consumers will pay more for a product marketed as sustainable, says research firm Nielsen.
“Everyone is more sensitive to these issues these days, including our customers,” said Mr. Sullivan, who estimated Smithfield has already invested tens of millions of dollars in environmental efforts.
President-elect Donald Trump has pledged to roll back environmental regulations he says put U.S. businesses at a disadvantage. But Mr. Sullivan said Smithfield’s emissions plan is “apolitical” and not a response to any regulatory pressure. Rather, it is based on business and the belief it is the “right thing,” he said.
WH Group Ltd., the China-based pork supplier that acquired Smithfield in 2013 for $ 4.7 billion, supports the move. “If you’re going to be the world’s largest pork company, you ought to be a leader,” Mr. Sullivan said.
“If you’re going to be the world’s largest pork company, you ought to be a leader,” he said.
The $ 198 billion U.S. meatpacking industry over the years has been criticized for a range of practices, including its treatment of animals, the use of drugs such as antibiotics and for polluting water sources with waste. Environmental groups also have castigated the sector for its outsize contribution to climate change. The massive farms that each year supply 93 billion pounds of steak, ham and chicken to restaurants and retailers contribute the largest portion of the 36% of U.S. emissions that the White House says arise from agriculture.
Smithfield estimates it emits about 17 million metric tons of carbon dioxide annually, nearly as much as five coal-fired power plants. The company was long vilified as a top polluter. In 2001, former CEO and Chairman Joseph W. Luter III derided Smithfield’s critics as whiny.
But just a year later, Smithfield hired Dennis Treacy, a former director of Virginia’s Department of Environmental Quality, to help make the company more environmentally friendly. Mr. Treacy had sued Smithfield in the 1990s for wastewater violations. At the time, he said, “we didn’t think much of Smithfield.”
In 2010, Wal-Mart Stores Inc. set a goal to eliminate 20 million metric tons of greenhouse-gas emissions from its supply chain, and turned to suppliers such as Smithfield. Mr. Treacy and Kraig Westerbeek, head of Smithfield’s environment and support operations, in 2013 met with the Environmental Defense Fund to draft plans for farmers reduce fertilizer runoff. Those talks led to more ambitious plans.
“We became more comfortable having uncomfortable conversations,” said Maggie Monast, manager of sustainable sourcing at the New York-based environmental group, who helped Smithfield shape the plan.
The company hired University of Minnesota researchers to quantify carbon emissions across Smithfield’s operations. Hog manure contributed the most, as much as 35% of the total. Grain production and processing contributed roughly another quarter, while cooking and refrigeration by customers represent up to another 25%. Transport, slaughtering and power for Smithfield’s plants and buildings make up the remainder.
‘If you’re going to be the world’s largest pork company, you ought to be a leader.’
—Smithfield CEO Ken Sullivan
To cut the total by one-fourth, Smithfield has hired agronomists and purchased sensors to help farmers monitor the content of their soil and avoid applying too much fertilizer, such as nitrogen, which emits nitrous oxide when spread onto cornfields. Some truck routes will be redrawn to reduce driving distances.
The feces-filled lagoons abutting hog farms will be a priority, said Stewart Leeth, who this year replaced Mr. Treacy as chief sustainability officer. Smithfield will cover pools and add systems called anaerobic digesters that convert methane into electricity or natural gas, which can be sold to local power companies. Covering the pools also reduces overflow risks from rainstorms.
Smithfield has invested in such projects since the 1990s, with mixed results. Officials hope heavier investment in the technology will improve its economics. Over the next five years, Smithfield aims to install conversion systems on at least 70 of its 250 company-owned hog farms, up from about 20 currently.
Climate-change critics such as the Environmental Defense Fund see efforts like Smithfield’s as among their best bets to reduce emissions should the Trump administration bring in a less-stringent regulatory regime.
“This shows that companies are looking to the consumer and beyond just election cycles,” said Ms. Monast. “People want to know what’s in their food and what the impacts were.”
Write to Jacob Bunge at email@example.com