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illycaffè on fighting for a bigger cause

Illy

illycaffè Chairman Andrea Illy talks to Global Coffee Report about the race to net zero and why regenerative agriculture is the key to winning the industry’s climate change battle.

On a taxi ride in New York City, fresh from the announcement of the 2021 Ernesto Illy International Coffee Awards in December, Andrea Illy’s pride is palpable as he connects to Zoom, speaking exclusively with Global Coffee Report.

“The awards are the most important time of the year for illycaffè. It’s symbolic. It’s a celebration. But it’s also a statement about our award-winning coffee, which is what our brand is about,” the illycaffè Chairman tells GCR on his way to the international airport.

The 2021 winner was Jumboor Estate in India, voted “Best of the Best” by an independent panel of international culinary and coffee experts. This marked the first time India had won the award, now in its sixth edition and named after Illy’s father, Ernesto Illy, rewarding the best coffee suppliers for their attention and passion to sustainable coffee practices.

“India’s win is significant because its coffee is grown in agroforestry with economical practices that are regenerative by design not by accident,” Illy says.

“If you expose coffee plants directly to the sun it can increase productivity but at the same time you expose the plant to higher stress due to too much light and high temperatures. This is why adapting to climate change requires a milder, smoother agriculture practice, like a regenerative one. The fact that this also creates a premium product is very relevant because the market is more and more differentiated and seeking highly sustainable quality coffees.”

With reports stating that 50 per cent of current suitable land will no longer be viable for coffee production by 2050, Illy says the challenge for coffee agriculture is to reorganise itself in a way that can ensure production for growing demand and at the same time increase sustainability, quality and productivity. The only answer to reduce the global footprint, he says, is a non-conventional approach, such as carbon sequestration, the process of capturing and storing atmospheric carbon dioxide.

“It is imperative that the decarbonisation of our world be done in a natural way. Replanting trees and preserving biodiversity allows us to rebalance. If we can regenerate and enrich soils with organic carbon, which nourishes the soil fragility, biodiversity, and retains hydration, it makes the soil more resilient to erosion,” he says. “It also helps significantly reduce the use of residual fertilisers with microbial ones in plantations instead of mineral fertilisers, which is really needed.”

Illycaffè has taken a carbon free approach to two pilot coffee farms in Ethiopia and Guatemala to generate key learnings. Within the Ethiopia pilot, illycaffè is also working in collaboration with the Coffee Training Center Ethiopia, thanks to a partnership between Associazione Italiana Cooperazione e Sviluppo Addis Abeba, UNIDO Addis Abeba, Fondazione Ernesto Illy, and the Ethiopian Coffee and Tea Authority, to promote the proper processing and exporting of coffee. In the future, this institution could expand its mission and become a centre for disseminating virtuous agricultural know-how for small farmers. Illy says the circularity of this model, if adequately supported by knowledge sharing resources, could become an example for all of Ethiopia and be replicated on a larger scale across the African continent.

“It’s about biodiversity preservation. Maybe the market will not pay for biodiversity but for sure it will pay for carbon insetting and carbon sequestering – an emerging market that will add value to farmers,” Illy says. “Once we generate [this] knowledge, we can transfer it to other growers.”

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Andrea Illy, illycaffè Chairman

Illy says Guatemala – the winning country of the 2021 Ernesto Illy International Coffee Awards “Coffee Lover’s Choice” – awarded to Proyecto Lift Olopita – is also fighting generational climate change, with the younger generation disinterested in continuing their family’s coffee growing legacy. Thanks to illycaffè’s Lift project however, 112 families of coffee producers have received constant training and support on the technical development of sustainably produced coffee.

“That’s why this win for Guatemala is so important,” Illy says. “The only way to motivate the younger generation is to first of all give them a living which will require a higher value added of the coffee they produce and a more stable, less volatile coffee market.”

Beyond economic sustainability, Illy says the younger generations need a sense of purpose, and an understanding on the bigger role coffee can play to help improve social conditions of the coffee growing communities, such as better education and proper nutrition for children.

“With this kind of positive approach and the idea that coffee is good for the environment and health, it’s a decent business. I think it’s proven we will be able to attract the younger generation and perpetrate coffee agriculture because if we don’t do so, besides the environmental hurdle, we will also face a labour one – a lack of competent growers,” Illy says.

Futures and fears

While illycaffè is doing what it can to advance sustainable, quality-based, and ethical business practices, recognised for the ninth consecutive year by Ethisphere as one of the World’s Most Ethical Companies, Illy remains concerned that the farming fraternity will be resistant to change.

“We have a limited amount of time to deploy the necessary changes. The threat before the crisis is very clear. The way to mitigate this risk is equally as clear,” Illy says. “We need to address necessary cultural changes, because in many countries where there is still resistance to coffee agriculture, local communities are driven by cultural values which not always are in favour of change. If we are too slow to change, we may end up short and not be in the condition needed to ensure quality, because the first impact of climate change on coffee is on quality. This is my only fear – that we are running out of time.”

Illy says the next 10 to 15 years are crucial. The world’s largest producer Brazil experienced two frosts and one drought in 2021, with subsequent impacts on supply, prices, and the value chain. Illy says such events will become more frequent as temperatures continue to rise.

“People have the tendency to forget that the impact of climate change is not linear but exponential. Each 0.1°C more in the average temperature doesn’t increase the impact of climate change proportionally, but exponentially. This is why we must have it clearly in mind that the impact of climate change on coffee agriculture will become worse and worse every year,” Illy says.

As such, Illy adds that agronomical practices must change to be more reliable and robust. New varieties and climate-resistant cultivars must continue to be explored, and plantations renewed. He credits Colombia as a successful example of an origin country that, thanks to its government’s “bold effort” to finance the development of new cultivates and replant at least 50 per cent of its coffee trees, will see the country’s production expected at around 50 to 60 million bags in 2022.

Investment, Illy says, is key to helping prepare plantations to be more resilient to climate change.

“Investments are one third of what they should be,” he says. “It would be great if someone took the lead to create or aid a large fund investing in producing countries or a financial scheme that allows us to de-risk investments made by western companies, which have a much lower cost of capital in producing countries where the cost of capital is much higher and there are many hurdles to making investment easier.”

Illy attended 26th United Nations Climate Change Conference of the Parties (COP26) in Glasgow in 2021. He says while the forum did prove strong commitments to investments in ambitious sustainability programs, such as those initiated by the UN and United Nations Food and Agriculture Organization, there are still political limitations hindering the possible impact and effectiveness of institutions’ “top down” approach.

“We need a very strong effort complimenting the top-down approach, and the bottom-up effort from the private sector. I already see this happening. Companies are under pressure from consumers, particularly the younger generations, who don’t tolerate unfairness, unsustainability, and non-inclusiveness. There is equal high pressure from the financial sector, protecting Environmental, Social, and Corporate Governance otherwise they don’t finance investments,” Illy says.

 

“There is also some pressure from institutions who are introducing tighter regulations and limiting whatever environmental impact and social injustice, and last but not least, they are under pressure from competitors because more and more they understand that this is an opportunity than a threat and they take the lead of being sustainable and are also getting a response which eventually makes them more competitive compared to the laggers.”

Illy notes the efforts of international peak bodies such as the International Coffee Organization, World Coffee Research, Work Bank, and many other regional systems and promising investments made in the private sector, but welcomes more institutions that can approach, not divide, the two sides of the value chain.

 

“Up until a few years ago, the perception or the reality was that the coffee market was divided in two parts: growers and roasters. It’s impossible to win a battle like the challenge of adapting to climate change by being in two different camps,” Illy says. “The market is one, and we have to play together. We must tear down this wall represented by the equator, and work together hand in hand, growers and roasters, for a better coffee sector.”

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Jardines De Babilonia in Guatemala.

Roadmap to reduction

Illycaffè has set the ambitious goal to be carbon neutral by 2023. Illy says the 13-year roadmap is on track to align with its centenary celebrations. Already for scope 1, Illycaffè has addressed the issue of factory emissions, with its facility running on 100 per cent renewable power and producing one megawatt of photovoltaic solar energy. Scope 2 is focused on complete decarbonisation, and scope 3 will see Illycaffè strengthen agronomical practices that allow the roaster to offset some of its residual emissions.

“As far as renewable fuel for transportation – with both maritime and road – we are in the process of talking with our logistics partner how we can decarbonise, but in the meantime, we signed the First Movers Coalition, presented by [US Special Presidential Envoy for Climate] John Carey and the World Economic forum at COP26 to collect negotiating power of corporations to buy carbon free resource,” Illy says.

“I hope in one way or another to get enough renewable fuel so that we can fully decarbonise. By completing the energy transition, 70 per cent of factory emissions will be gone, and the rest will be a matter of getting rid of fertilisers, the industry’s second largest emitter, which we are working on through sharing knowledge with growers.”

In order to reach the 2050 net-zero emissions goal set by the Paris Agreement, Illy says there is no doubt the industry will need to rely on technological breakthroughs which are not known, in the areas of carbon storage, sequestration, nuclear energy, and packaging. What he is sure of, however, is that the fight for sustainability must be a pre-competitive one.

“This is an endless and limitless battle,” Illy says. “We must share efforts, knowledge and resources collectively in order to make the overall coffee industry more sustainable and resilient. We can continue to compete for the taste of our coffee, but not when it comes to sustainability.”

For more information, visit www.illy.com.au

This article was first published in the March/April 2022 edition of Global Coffee Report. Read more HERE.

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