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Mike Howell (00:08):
The Dirt, with me, Mike Howell. An eKonomics podcast where I present the down and dirty agronomic science to help grow crops and bottom lines. Inspired by eKonomics.com, farming’s go-to informational resource, I’m here to break down the latest crop nutrition research, news and issues, helping farmers make better business decisions through actionable insights. Let’s dig in.
(00:38):
Well, hello again, everyone. Welcome back to The Dirt. We’re going to be wrapping up our series on sustainability this week. To help us do that, we’ve got Mr. Mark Thompson with Nutrien joining us today. Mark, glad to have you with us. If you would, tell our listeners a little bit about yourself and what you do at Nutrien.
Mark Thompson (00:55):
Well, first of all, it’s great to be here with you, and I’m happy to be wrapping up this series with you. I’m the executive vice president and chief strategy and sustainability officer at Nutrien. I’ve been with the company for about 11 and a half years. In my role with Nutrien today, I oversee our corporate strategy globally, our corporate development and mergers and acquisitions teams across the business.
(01:18):
Then directly related to today’s conversation, our global sustainability and ESG team. In a couple of days here, I’ll be changing roles with the company and taking on a new role as EVP and chief commercial officer. Getting to work more closely with you, Mike, and our agronomy team. But our global sales teams, transportation, distribution and logistics and commercial teams, really focusing on serving our customers across the NPK business around the world.
Mike Howell (01:43):
Congratulations on that promotion. Sure you’re excited about that and we’re excited to get to work with you a little closer. Mark, we’ve been talking for several weeks now about sustainability.
(01:53):
You were one of the first ones that I heard actually make this comment in a presentation, that sustainability means something different to different groups of people. That’s one thing that we’ve been focusing on.
(02:03):
We’ve had different people from various regions talk about what sustainability means to them. One thing I’ve asked each of the guests is tell us what sustainability means to you.
Mark Thompson (02:12):
Yeah. Thanks, Mike. I think it’s a great question, because sustainability and ESG and a number of other terms or words that get used a lot around the world and in our industry today. I think they do have different meanings to different people. I’ll tell you a little bit about how I think about those words and what they mean to me. When we talk about sustainability, I think what we’re talking about is long-term viability.
(02:33):
When I say long-term viability, it’s the ability of really a company, a grower, a participant in our value chain, to be around for the long-term. When I think about sustainability, the things that I think about are our impact, as Nutrien is an example, on the world around us. That could be our stakeholders, that could be the environment. All the things that go into making sure that we’ve got a stable, productive and strong operating environment for the long-term.
(02:59):
For a public company like Nutrien, these are absolutely critical things to be thinking about and it’s the same for our customers. We all want to be successful and viable over the long-term. When we think about our impact on the world around us and stakeholders from a sustainability standpoint, what that means is thinking about things like safety. Do we keep our people safe at work?
(03:19):
Do we have an environment that our people want to work in every day, and can be kept safe and go home safe every day? Do we have a business that’s conserving and protecting, and even improving our access to the natural resources we need to run our business? The natural resources like the ones that we make in the NPK business and provide to customers all around the world.
(03:37):
Or the advice that we’re giving to growers on how they steward conservation practices, or look after their land and all the stakeholders around us. I think this general topic of sustainability is really about thinking about the long-term, and how we make our own company and all our participants around us viable over the long-term. I think one of the other things that’s really interesting today, Mike, is how sustainability gets used interchangeably with ESG.
(04:03):
It might be a technical nuance, but I think they’re really different. ESG is really a framework that investors use to look at risks and opportunities in public companies, as an example like Nutrien, with respect to their investments. ESG stands for environment, social and governance. Those are different factors that investors look at, to assess a company’s long-term viability and their value.
(04:28):
What investors are really looking for in my mind, is risks and opportunities that are material. When I say material, those risks and opportunities that can have an impact on the long-term financial performance of a company. In environment, as an example, looking at how companies might be using natural resources like water, or how our impact on the climate could affect the environment around us and the future of our business.
(04:52):
In areas like social, how we deal with customers, how we deal with product stewardship. All things that good companies that manage their business are looking at and managing to create opportunities for themselves, but manage their business over the long-term. While sustainability does mean something different to everybody, I think today for me, that’s what it means. I do think that’s what’s at the core of the word.
Mike Howell (05:13):
Mark, we appreciate that and I appreciate you touching on ESG in a little more detail. That’s something we haven’t spent a lot of time talking about on this program. We’ve mentioned it a time or two, but I appreciate you defining that and letting our listeners understand the difference between ESG and sustainability. Mark, we mentioned that sustainability means something different to everybody.
(05:34):
I took the liberty of trying to condense everybody’s statements into an elevator version of this, something that we could share on an elevator, and try to capture everything that I’ve heard over the last few weeks. You can tell me if you agree with this short definition or not. What I came up with was making adjustments to current practices or procedures in a way that will protect and conserve our resources, while at the same time maintain or increase profits.
Mark Thompson (05:59):
I think that’s a really good component of a sustainability definition. When we think sustainability, I mean certainly the environment, natural resources are part of it. But I think if you’re a grower and you’re thinking about the long-term viability of your operations, your impact on the environment and your ability to continue to be profitable while implementing sustainability practices on a farm are critical.
(06:20):
But I think it also goes beyond the environment. We know that access to labor, as an example, is a critical portion of how a farmer manages their business. I think sustainability is even bigger than the environment. It’s thinking about how do farms manage their people resources for the long-term, to make sure they’ve got access to the people and the expertise they need to be around for the long-term?
(06:40):
How do they participate in markets around them, and make sure that the quality of what they’re producing can be substantiated when they’re providing grains and oil seeds further down the value chain? I think that comes back to governance. I think the definition you provided is a great way to think about the environmental portion of that, but I think it’s even bigger than that.
Mike Howell (06:58):
Right. I’m sure if we talked about this long enough, we could keep adding more and more aspects to that as well. You mentioned the sustainability and Nutrien and why we’re concerned about it, but if you would elaborate on that a little bit more, why is Nutrien so concerned about sustainability?
Mark Thompson (07:13):
Certainly we care about sustainability, Mike, and I think rather than saying we’re concerned about it, I think we see opportunities to manage our risks and we see really attractive opportunities here. That’s why we care and that’s why we’re interested as a public company. I think when you go back to where we started the conversation on risks. Really what risks in the sustainability realm or the ESG realm are about for us, is proactively managing those areas of our business that we do see some material exposure over the long-term.
(07:43):
Again, when we look at our business, we know that agriculture does have a material emissions impact depending on what statistics you’re looking at, and what portions of the agricultural value chain you include. Agriculture accounts for, give or take, 20% of global greenhouse gas emissions. We do know that the industry has an impact on the world around us. In an environment where the economy is decarbonizing and we see a price of carbon, there are some risks to manage around ensuring that our carbon footprint continues to be reduced.
(08:14):
That’s one lens you could look at using that example, but I think opportunity is actually more exciting and more important for us in this area. There’s not only opportunity I think for Nutrien, there’s opportunity for our customers, there’s opportunity for growers, there’s opportunity for the ag economy. You touched on profitability in your definition of sustainability. I think that’s really important because our industry does have a critical role to play in a changing economy and supporting global imperatives.
(08:42):
Most importantly, our industry is stewarding to make sure that we’ve got food security across the globe. At the same time, our industry has an ability to reduce environmental impacts and steward natural ecosystems around us, to make sure that we’ve got those resources for years to come. I don’t think there’s many industries out there that can make that claim that they’re impacting two things as important as food security and climate or the environment in the same way that we do.
(09:11):
In that realm of opportunity, when we look at climate, we see immense opportunity. One example I think we’ll get a chance to talk a little bit more about is our nitrogen business. We’re leading the way globally in producing clean ammonia and making investments in that area. Ammonia is going to have continued uses in agriculture as a cleaner source of nitrogen, but also in the industrial economy for moving hydrogen potentially as a marine fuel, as power generation feedstock.
(09:39):
That’s real opportunity for Nutrien and stakeholders around us to create new value. I think for growers, when we look at this same topic on climate, as you’ve talked with some of your other guests about. We’ve got a real opportunity to work with retailers and distributors in the value chain and growers, to implement conservation practices like no-till and cover cropping where that makes sense. Or look at opportunities to make nitrogen use more efficient in the field, and reduce the loss of nitrous oxide as a greenhouse gas.
(10:07):
There are emerging opportunities for growers to profit from those activities, while having a positive environmental impact. That’s an example of something that could be a risk through one lens, and an opportunity through another lens. When we look at those things, they’re very important to the future of our company and that’s why we care about them.
Mike Howell (10:24):
You gave a couple of examples on that. We’ve had Sally Flis with Nutrien Ag Solutions, we’ve had Michelle Nutting with Nutrien both talk about some of the programs they’re working with, but I know there’s a lot more programs that Nutrien is working on.
(10:37):
You touched on the clean ammonia and I think the term in the popular press is green ammonia. Tell us a little bit about what Nutrien’s got going as far as the green ammonia project, and any other projects that you may want to mention as well.
Mark Thompson (10:50):
Before I jump into the projects, I’ll maybe just step back and talk about how we communicate our strategy in this area, because it’s really important and it’s how we go to the world with a focus on the things that we care about that are important to our business. A couple of years ago, we put out what was called Nutrien’s Feeding the Future Plan. As I’ve talked today about sustainability and ESG, I’ve talked about different factors or topics that we think are material or financially important to the future viability of our company.
(11:17):
The Feeding the Future Plan was really our way to communicate the most significant of those priorities to the world in a way that was understandable, and that people could understand Nutrien strategic direction in this area. Part of the Feeding the Future Plan was establishing a set of 2030 targets in a few critical areas. Given that today’s discussion is really around the agricultural sector and the agricultural value chain in particular, I’ll focus on those. But the two areas in that realm were sustainable and productive agriculture, and environment and climate action.
(11:49):
With respect to sustainable and productive agriculture, our 2030 target in that area was to scale sustainable and productive agricultural practices and products across 75 million acres globally. There’s different levels to that in terms of how we think about scalability of that size and magnitude. I think first what we’re talking about again is those conservation practices, use of technologies that increase efficiency on the farm. And going from not only implementation, but starting to have those practices monitored, measured, having third parties come in, measure performance and audit.
(12:25):
Then the highest quality part of that program, is really creating some sort of asset or credit that recognizes the scientifically validated work that a grower has done. Creates an asset or a credit that can be traded either based on a cost of carbon or some other measure like water to constituents who are willing to pay for those attributes. In that area specifically, we also launched a carbon program, which I know you’ve heard about, in the last 18 months. That program was really focused on North America to start with.
(12:57):
We call it a Comprehensive Carbon Program that’s scaling up through Nutrien Ag Solutions, our retail business. This is really about working with growers, as I said, to implement conservation products, technologies, practices that can reduce the loss of nitrogen in the field to the environment, and reduce nitrous oxide emissions. That program is focused on creating credits either through sequestering more carbon in soils or reducing nitrogen emissions.
(13:22):
As the global economy decarbonizes, there are participants from all kinds of industries. The food industry, the energy industry, the manufacturing sectors who are looking to decarbonize and need carbon credits as part of their path to get there. We really believe that with a program like this, we can provide scientific validation of the great things that will be done in agriculture. Create those credits that will have value as carbon prices potentially increase over time. That industries around us are going to want those carbon credits.
(13:53):
This is one of those opportunities that mitigates risk for our customers and it creates real opportunity over time with dollars in their pockets. That’s why we’re focusing there. In the area of environment and climate action, where we’re really focused in that area is a couple of key things. One, reducing direct emissions from our operations, which primarily come from our NPK manufacturing business at Nutrien. Then investing in low carbon and zero carbon fertilizers. We’ve got a target for 2030 to reduce our Scope 1 and 2 greenhouse gas emissions intensity by 30%.
(14:29):
We’re doing that primarily through investments in our nitrogen business. As an example of that, we’ve implemented a series of about 10 projects within the last 18 months that we’ve invested $50 million in, that we believe will take out close to 10% of the CO2 emissions on an absolute basis from our nitrogen business in Scope 1 and 2. You touched on clean ammonia, Mike, and this is really an exciting area for our industry, I think for our company and for the world.
(14:55):
When we talk about clean ammonia, the project that Nutrien’s looking at today is a project that our Geismar, Louisiana nitrogen production facility. It’s really a combination of things that makes this project potentially attractive for us, and that we’re evaluating right now for final approval from our board sometime in 2023. We’re tied into carbon capture infrastructure on the Denbury system in the southern United States, which allows us to capture emissions from our operation and sequester those.
(15:25):
That facility has access to tide water, which makes it a major hub for sending clean ammonia around the world. Importantly, we’re going to be implementing a technology called autothermal reforming or ATR, that can incrementally reduce the carbon footprint from that facility. When you look at what that could mean for Nutrien, that would be a 90 plus percent potential reduction in CO2 emissions versus gray ammonia or traditional ammonia production.
(15:51):
As I said earlier, we’ve got buyers in places like Asia and other markets that are looking for clean ammonia as a potential source of power generation. We’ve got a pilot with a company called EXMAR, which is one of our vessel partners on creating an ammonia fueled engine that could use clean ammonia to help the maritime industry hit their decarbonization targets. Then there’s been a lot of talk about hydrogen as a future fuel source, and ammonia is one of the more efficient carriers of hydrogen.
(16:17):
We could see clean ammonia emerge as a way to move hydrogen around the world. For an agriculture company that serves agricultural stakeholders, clean ammonia will play a role in decarbonizing and providing environmental benefits for ammonia use in agriculture. These are really exciting projects. Nutrien is the largest producer of low-carbon ammonia today, and we see a real opportunity to continue to make ground in this area.
Mike Howell (16:43):
Mark, you touched on a lot of projects there and showed that we can reduce our carbon footprint, but it sounds like this may just be the tip of the iceberg.
(16:50):
Once we get these projects going, it sounds like there could be room for even more expansion of these projects in the years to come.
Mark Thompson (16:57):
I think that’s right, Mike. One of the really interesting and important things about this whole ecosystem is that Nutrien or the companies around us, we don’t operate in a silo and we don’t operate alone. The journey to create these opportunities for our industry and most importantly our customers and our growers, is really one of collaboration. I talked about Scope 1 and 2, but maybe I’ll talk a little bit about Scope 3 emissions.
(17:20):
Scope 3 emissions come from a variety of places, but they’re typically talked about as indirect emissions. For a company like Nutrien, our biggest source of indirect emissions comes from emissions on the farm. Interestingly enough, when you look down the value chain from an ag and food perspective, at grain companies and food companies that are actually putting food on the shelf for consumers, those companies in their Scope 3 also pick up emissions on the farm.
(17:45):
The grower is really at the center of this equation. As we know, our industry is global, our industry is complex, our industry is deeply interconnected. What’s so exciting about this is there are opportunities to collaborate and partner, and we all have a vested interest in creating these opportunities and managing these risks together. As we see this shaping up, we’ve got partnerships forming today with some of the largest food and beverage companies.
(18:10):
Some of the largest consumer products companies, with grain companies, with other agricultural retailers, with other agricultural fertilizer manufacturers, and most importantly with growers. When you look at consumer preferences and the way they’re changing, I think there’s a real push globally. Not only to address food security and make more food to feed a growing population that we know will be 10 billion people by 2050 based on projections. But people also are becoming more curious and interested in how their food is grown.
(18:41):
All of this collaboration allows us to get more transparency into how food’s being grown, the attribute to that food, and the really advanced practices that our customers are implementing today to grow that food. I think this is just the tip of the iceberg, and I think we’re going to see more collaboration over time, that involves participants from all across the agri-food value chain. That’ll allow us to reduce Scope 3 emissions, create more viability for our growers.
(19:08):
Not only from a sustainability perspective, but from a profitability perspective, and importantly in growing more food in more sustainable ways. I think it’s exciting times. We could probably say this every decade or two, but I don’t think there’s ever been a more exciting time to be in the ag and food industry.
Mike Howell (19:24):
Mark, we really appreciate you taking the time to visit with us today. You’ve brought out a lot of useful information.
(19:29):
Something that we can all take back and apply. If you want to sum this up, what’s your take home message that you want everybody to get out of today’s program?
Mark Thompson (19:37):
I appreciate you having me. I think this is a really important discussion for us to be having as an industry, as a company, and to be having, again, with our customers and participants in the value chain all around us. I just appreciate the opportunity to talk with you. It’s important that you’re providing a platform for us to talk about these things, not only with Nutrien, but also outside of our company.
(19:57):
I think lastly where I’d come back to is just the big themes associated with our industry in that we get to get up every morning and go to work for a company. Importantly, work in an industry that’s impacting the world in extremely positive ways, and plays such an important role in the future of our society and our planet. The topics that we talked about, food security, climate, environment, and biodiversity, to be able to come to work and impact those types of factors.
(20:24):
It’s such a gift and it’s such an opportunity, and I know it’s hugely motivating for me and the over 25,000 employees at Nutrien, and all those that work in the ag and food industry. My second take home message would be that we’re serving a noble purpose and that what we do every day matters. That collaboration that I talked about in support of those goals is really, really important.
(20:44):
Then I think the last message would really be keeping that definition of sustainability front and center in our minds when we talk about these topics. I think it’s easier for these topics to get political or for the definitions to get confused. But at the end of this conversation, it’s all about creating long-term viability, long-term viability for our industry, for our customers.
(21:04):
We all want to be around over the long-term, and we want our planet to be around over the long-term. We want our growers to be viable, profitable, productive, and so everything we’re doing in support of this comes down to that. I think if we can all unite around that objective, great things are going to happen.
Mike Howell (21:20):
Well said, Mark. Once again, thanks for joining us for this program. Well, listeners, it’s that time again where we start talking about our tailgate for the week. Mark, is there a favorite football team?
(21:30):
I know you’re from Canada and y’all have Canadian football. I don’t follow Canadian football like I do American football, but do you have a favorite football team?
Mark Thompson (21:39):
Well, Mike, growing up in Canada, I think this does have a bit of a different angle to it, but I grew up in Saskatoon and Saskatchewan. Saskatchewan Roughrider fans are seen everywhere around the world.
(21:51):
I’ve got a colleague that jokes with me that no matter where you go in the world, you always see somebody with a Saskatchewan Roughriders hat on. I think that’s the only appropriate answer for someone like me.
Mike Howell (22:00):
Very good. Do you get to do any tailgating? I know it’s a little cooler up in Saskatchewan than it is down here in South Mississippi, but we like to tailgate and get out and socialize before the ballgame. Do y’all get to do any of that?
Mark Thompson (22:13):
We do do some of that in Saskatchewan. I think, as you said, the weather conditions can be a little less friendly. I’m not sure tailgating looks the same in Canada as it looks in the United States all the time.
(22:23):
But the Saskatchewan Roughriders have a huge following and they’re some of the funnest sports games you can ever go to in Canada and maybe anywhere in the world. The atmosphere is just outstanding.
Mike Howell (22:34):
What’s your favorite tailgate food?
Mark Thompson (22:36):
For me personally, I’ve always been a big hamburger and hotdog fan. I think those are basics. Those are also products that if you think about our discussion today, ultimately they’re coming from a grower or a farmer somewhere in our network or somebody else’s network.
(22:50):
I think you can see the fruits of everyone’s labor in action when you think about those type of tailgate products.
Mike Howell (22:55):
Well, this week we’re going to do a little something different for our tailgate. The kids have all been after me they want to do hibachi. That’s something I’ve been putting off just because it takes a lot of time, a lot of effort. But we’re in the playoffs and then we’re going to kick back and have a big hibachi dinner. We’re going to have the fried rice. We’re going to do the stir-fry vegetables with the zucchini and the onions, and some carrots and some broccoli in that.
(23:18):
We’re going to have some rib eyes that we grill up. We’re going to do the grilled chicken and we’re going to stir-fry some shrimp. Get all that mixed together and have a good hibachi dinner before the ballgame this Friday night. This week, the Hornets played host to the Pass Christian Pirates, a team that they played in the regular season. Had a little bit of struggles this week, just weren’t able to get things clicking, but still ended up winning the ballgame by a score of 40 to 12.
(23:43):
Hope we got all of those mishaps out of the way this week and ready for the next round of the playoffs. Next game coming up is going to be against Newton County, and that’ll be next Friday night, going to be another home game for the Hornets. Listeners, we have really enjoyed bringing these episodes to you each week during the year, but it’s getting close to the holiday season and we’ve decided that it’s time to take a little break.
(24:10):
I’ve got a lot of traveling to do here in the next few weeks, and everybody’s going to be out celebrating the holidays. We decided it’s just time to take a break. We will have one final episode, we’ll bring that to you next week. That’s going to be our special Thanksgiving episode. You don’t want to miss that one, so make sure you tune in next week for the Thanksgiving episode. Then we will start back the first Tuesday in March.
(24:32):
We’ll start releasing every week again, a new episode of The Dirt. We appreciate everyone taking the time each week to tune in. And while we have this break in action, I want to remind everybody that they can always go back and listen to past episodes. Until next time, this has been Mike Howell with The Dirt.
