As extreme weather hikes grocery prices and slashes supplies, how can supermarkets accelerate climate action?

Welcome back to the Net Zero Roundup from the Carbon Trust’s Net Zero Intelligence Unit.   

From cabbages to coffee, climate change is wreaking havoc on our supermarket essentials in 2025, threatening supplies and pushing up prices. 

Supermarkets must act fast to limit the damage and in this month’s newsletter, we share our brand new research into the sector. Read on to find out how the world’s 10 largest supermarkets are progressing towards Net Zero and how they can move faster. 

We also provide our usual quick intelligence on key Net Zero developments and share a parting thought on the Net Zero transition in action.  

📜 Policy: Legal battles and market forces could stand in the way of President Trump’s anti-climate agenda 

🏢 Business: Companies tying climate to executive pay and business planning are winning the race to Net Zero 

💡 Parting thought: What can the world learn from Norway’s seismic shift to electric vehicles? 

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Under the spotlight

Supermarkets must leverage their powers of collaboration and influence to protect the food system against unchecked climate change 

Empty supermarket shelves may not be the prevailing image associated with the climate crisis, but shoppers around the world are feeling the impacts. Japan is experiencing a ‘cabbage shock’, with record temperatures and heavy rains ruining harvests and sending prices three times higher than usual. Elsewhere, cocoa and coffee prices are up 163% and 103% respectively compared to 2024, and volatile prices are expected to continue throughout the year as a result of extreme weather.  

By rendering groceries scarce and more expensive, climate change threatens the foundations of supermarket business models: providing a variety of affordable products to consumers. To help the sector strengthen its defences against climate change and fulfil its responsibilities to reducing its own impact, we assessed the Net Zero plans of the world’s 10 largest supermarkets by revenue to understand where progress is being made and where the biggest challenges remain. 

Encouragingly, all 10 have plans in place to reduce emissions from their operations, packaging and food waste. Thanks to emerging regulations and high-profile campaigns there is also a high level of ambition to eliminate deforestation – with 8 of the 10 setting targets for deforestation-free soy and palm oil. There are many examples of leading practices, from piloting low-carbon fertilisers to designing store layouts to display sustainable options more prominently to customers. 

However, there remains a significant gap between the sector’s progress to date and the transformational change needed to deliver Net Zero. Three areas consistently hold supermarkets back.  

1. Agriculture and land use: decarbonising food production, the sector’s biggest source of emissions, is in very early stages, with just four of the 10 outlining detailed plans to scale sustainable agriculture.
2. Lack of visibility into supply chains; not only is this a barrier to implementing deforestation-free supply chains, it also means only half of the ten supermarkets are able to disclose emissions data for the products they buy (60% of their total emissions).
3. The complex topic of customers diets, as demand for variety, convenience and carbon-intensive goods is contributing to emissions. While all ten supermarkets are introducing low-carbon alternatives, just four have detailed plans for increasing demand for them. 

The good news is that there are plenty of solutions available to supermarkets. Leveraging their power of influence over suppliers, policymakers and customers is key. For example, supermarkets can incentivise farmers to adopt climate-smart agricultural practices by offering low-interest loans and early payments for sustainably produced goods. By making sustainable products more accessible, affordable and attractive to customers, they can also help to influence shopper habits. 

Yet the systemic challenges the sector faces are too big for any one company to tackle alone. Supermarkets can achieve much more through collaboration — from sharing supply chain emissions data, collectively calling on policymakers to support farmers in the transition, and pooling resources to address carbon-intensive commodities like meat and dairy. 

For more insights into how supermarkets are responding to climate change, and what they can do to move faster, read our full report here:

 Quick intelligence

Policy: Legal battles and market forces could stand in the way of Trump’s anti-climate agenda 

During the first few weeks of his second presidency, Donald Trump has appeared to make opposition to the climate action agenda a priority. We take a look at the measures the US government has actually taken, the impact they could have and whether there are any reasons to be hopeful the damage done could be limited.  

International climate policy 

On day one, President Trump signed an executive order to pull the US out of the Paris Agreement. By backing out of the agreement, the US will no longer be required to submit or achieve plans for reducing emissions in line with the global goal of limiting global warming to 1.5C.  

Almost 200 countries currently remain committed to the Paris Agreement’s goals. However, these countries are set to submit 2035 climate plans this year, and as the world’s second largest emitter, the US’ departure could dampen the ambition of others at this critical time. Argentina has already indicated it is considering following in the US’ footsteps, however it is too early to tell whether other countries will follow suit, or whether international commitment to the Paris Agreement will hold strong.  

Even if political ambition weakens, this won’t necessarily reverse the positive financial and technology trends on clean energy seen worldwide. The global cost of renewable energy projects is still predicted to fall in 2025 and the energy transition is already well underway, including in the US, where 96% of new power capacity came from clean sources in 2024.  

International climate finance 

As well as international policy, international climate finance has also come under fire, with a 90-day freeze on all USAID spending. This could have a significant impact for developing nations’ efforts to mitigate and adapt to the impacts of climate change. USAID is the world’s largest bilateral donor and directed almost half a billion dollars to clean energy, sustainable landscapes and climate adaptation projects in 2024. 

A federal judge ordered the funding freeze to be reversed for existing projects, but new funding will be harder to protect. At COP29 in 2024, the global community agreed to find $300bn per year to help poorer nations tackle climate change and pursue efforts to meet the full $1.3tn needed. Last November, we emphasised the importance of mobilising private finance and empowering local financial institutions to close this gap. With the US out of the picture, these two steps become all the more essential. 

Domestic US climate policy 

Turning to domestic climate policy, there have been over 50 instances of federal climate measures being scaled back since the start of the second Trump presidency. Two notable examples relate to cleantech funding and wind leasing. 

One of President Trump’s executive orders placed an immediate pause on disbursement of funds from President Biden’s flagship climate policy, the Inflation Reduction Act (IRA). Among other measures, the IRA offers incentives for the manufacturing and adoption of clean technologies, such as tax breaks for electric vehicles. 

During this freeze, organisations across the country have been unable to start work on planned projects – from securing low-emissions school buses to providing access to solar energy for low-income households.  

However, all is not lost just yet. For one thing, over 90% of IRA funding for clean energy projects has either been spent or is legally obligated to be spent. Permanently blocking disbursement of these funds would require approval from Congress, which is unlikely to be quickly or easily won. As well as legal challenges, attempts to withdraw funding for clean energy and infrastructure projects could prove unpopular among President Trump’s own party and voters. 85% of IRA investments have gone to Republican States, with communities benefitting from funding, jobs and manufacturing opportunities.  

Another executive order targeted the regulatory landscape for wind energy, calling for no new permits or leases to be awarded for projects in federal waters or lands. The impacts are already being felt in the US, with offshore wind developers delaying projects and reducing investments. However, some remain optimistic about the long-term picture. Speaking at the Carbon Trust’s Energy Transition Acceleration Forum, former UK Special Representative for Climate Change Nick Bridge emphasised that the rest of the world will continue to embrace offshore wind and as these countries demonstrate the benefits of flourishing offshore wind industries, the US’ anti-wind stance could be short-lived.

Business: Companies tying climate to executive pay and business planning are winning the race to Net Zero 

New research from CDP finds that almost 80% of companies on track to meet their climate goals have tied them to executive pay, amid reports of companies removing climate performance criteria from bonus schemes. 

While these sustainability-linked bonuses are just one example, governance structures which create accountability for delivering against climate targets are essential for enabling progress to Net Zero. Structures that help embed sustainability within business planning are particularly effective. The same research finds that companies making most progress in emissions reduction targets are also more likely to be using environmental data to inform business decisions. 

Businesses should use data insights to engage senior decision-makers on the topic of climate, in order to build the business case for Net Zero. In particular, putting a price on climate risks allows CFOs, boards and other decision makers to understand the cost of climate inaction and the importance of embedding Net Zero into strategic decisions. Our recent analysis of the world’s top supermarkets revealed a correlation between companies that have assessed the climate risks impacting their business and those with more effective plans to finance the company’s transition to Net Zero. 

From the Net Zero Intelligence Unit 

Catch up on the latest publications from the Net Zero Intelligence Unit and our Carbon Trust colleagues: 

🛒Where does the supermarket sector stand on its journey to Net Zero? What is holding supermarkets back, and how can they overcome these barriers? Read our latest report to find out:

🪴Many European companies– including vertically integrated supermarkets – will need to be mindful of new EU rules for importing fertilisers. Take a look at the Carbon Trust’s latest insight from Veronika Thieme, Director of Carbon Trust Europe:

Parting thought: What can countries learn from Norway’s seismic shift to electric cars? 

By the end of this year, sales of new petrol and diesel cars in Norway are on track to end. Norway has been racing ahead of any other country when it comes to the uptake of electric vehicles (EVs). In 2024, nine in ten new vehicles sold in Norway were electric, and in January, the country inched even closer to its target, with EVs making up 96% of new car sales. How has the country managed such a speedy transition to EVs? 

Norway has taken a different approach to the EU and the UK, choosing not to ban petrol and diesel car sales outright. Instead, government policies made EVs an increasingly attractive choice. Until recently, EVs were exempt from taxes, import duties and even toll charges and parking fees. At the same time, the government continually hiked up tax and registration fees for fossil-powered vehicles.  

Undoubtedly, Norway benefits from certain significant advantages. The country has a strong supply of renewable energy, with hydropower accounting for almost 90% of electricity generation, which has allowed the grid to cope relatively easily with the addition of large numbers of EV charging points. As a wealthy country, it also isn’t heavily dependent on tax and toll revenue from vehicles. 

Nevertheless, there are important takeaways for other countries looking to phase out petrol and diesel vehicles, including the UK. Clear, consistent policy has proven instrumental in developing cleantech markets all across the world. Norway’s success demonstrates the value of this long-term policy certainty in relation to EVs. EVs were import and purchase tax-free in Norway from as far back as 1990, and subsequent incentives have reinforced the government’s unwavering commitment to enabling the EV transition.

Thanks for reading. This edition of the Net Zero Roundup was written by Chloe St George . To ensure you don’t miss out on future monthly Net Zero Roundups, click subscribe.