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Science Based Target Initiative for SMEs.

25.01.24 | Jakob Tresch

As of January 2024, a total of 7482 businesses have embraced emission reduction targets in alignment with Science Based Targets initiative (SBTi) guidance. The SBTi officially approved 4471 of these targets (Link). Notably, a third of the global market value has joined this green initiative. Collectively, these companies have committed to reducing emissions equivalent to 1.5 billion tons of CO2 according to SBTi’s guidelines.

SBTi is becoming more present in the food industry due to pressure from retailers, as they are pushing their suppliers to commit to SBTi as well. In this post, we give you an outline of the topics relevant to Small and Medium-sized enterprises (SMEs) in the food industry.

Are you an SME according to SBTi?

According to the SBTi, a company is generally considered a SME if it has fewer than 500 employees. This classification allows for simpler and more streamlined processes for setting and validating science-based targets, acknowledging the resource limitations and unique challenges faced by smaller businesses.

In addition to the employee count, the SBTi considers other factors for defining SMEs. These factors include annual revenues and financial assets. For the most current and detailed criteria, we refer directly to the SBTi’s official website (Link).

SBTi Pathways for SME.

Setting your targets always has to start with a carbon inventory. The data you provide to SBTi has to be based on the GHG protocol accounting standards. Additionally, you must include a confirmation that you did not exclude any scope 1 or 2 emissions that amount to more than 5% of your greenhouse gas inventory.

The next step is to select a scope 1 base year and a scope 2 base year including a method determination (market of location based). Also, you need to confirm to avoid offsets towards your targets, and that you will publish and share progress against your targets annually.

As defined by the SBTI, as an SME you mostly need to focus on scope 1 and scope 2 emissions and set targets accordingly. However, be aware of the Forest, Land and Agriculture Guidance (FLAG), which is likely to affect food manufacturers. To give a rough overview of the targets you can assume the following minimal baseline if you set your baseline to be after 2020:

ABSOLUTE REDUCTION TARGET SCOPE 1&2 = 4.2% (target year – 2020)

ABSOLUTE REDUCTION TARGET SCOPE 3 = 2.5% (target year – 2020)

As an illustration, if you would set a near-term target of 2030 you would have to reduce your emissions in scope 1 and 2 by 42% and 25% in scope 3 to be approved for SBTi. For more information have a look at the Validation Protocol (Link).

Forest, Land, and Agriculture Guidance (FLAG).

The FLAG (Link) guidance in SBTi must be applied by SMEs when their operations significantly involve land-intensive sectors. If an SME’s activities or value chain include notable land use, land use change, and forestry activities, or if they operate in agriculture or related sectors, the FLAG guidance becomes relevant. Specifically, FLAG guidance must be applied when more than 20% of emissions in scopes 1, 2, or 3 are linked to land-related activities and impacts. This means that most food manufacturers are affected by the FLAG guidance due to the high emissions in agriculture.

Net Zero Standard.

A new appearance made the net zero standard (Link) introduced in 2023. SBTi defines a net-zero target as one where a company aims to reduce its GHG emissions in line with what is required to limit global warming to 1.5°C. After achieving deep decarbonization, the company then neutralizes the impact of any remaining emissions by removing an equivalent amount of CO2 from the atmosphere. This approach emphasizes the importance of actual emission reductions within the company’s value chains as the primary effort before relying on offsets for any residual emissions. For a company to align with the SBTi’s net-zero target, it typically needs to decarbonize by 90-95% compared to a base year. This means the company must focus primarily on significantly reducing its greenhouse gas emissions through internal changes and innovations. The remaining emissions (5-10%) can be neutralized with credible carbon removals.

Conclusion.

In conclusion, SBTi’s influence continues to grow, and SMEs, including those in the food industry, have a vital role to play in shaping a sustainable future. By embracing science-based targets, SMEs can make substantial contributions to reducing global emissions and fostering a greener, more environmentally responsible world.

Details in the Dirt.

30.11.23 | Jakob Tresch

Welcome to our deep dive into the world of agricultural emissions and their impact on the environment. In recent years, the conversation around carbon footprints has extended beyond factories and urban settings to the very heart of our food supply – the farms. This post aims to unravel the complexities behind agricultural emissions, focusing on what happens on a farm and how the most commonly known datasets are created. We will explore the key contributors to greenhouse gases (GHGs) at the farm level. Let’s begin by understanding the crucial elements that matter at the farm level.

What Matters at the Farm Level?

Let’s first have a look at the emissions on the farm level. According to the GHG protocol (Link), relative contributions of agricultural sources are split up as follows.

As you can see above two two-thirds of the emissions are made up of Fertilizer and Enteric Fermentation.

  • Enteric Fermentation: Enteric fermentation is a natural digestive process that occurs in the stomachs of ruminant animals, such as cows, sheep, goats, and deer. These animals have a unique stomach with multiple compartments, one of which is the rumen. The rumen hosts a complex mix of microorganisms, including bacteria, protozoa, and fungi, which assist in breaking down and fermenting plant-based feed, particularly fibrous materials like grass and hay.

    During this fermentation process, one of the byproducts produced is methane (CH4), a potent greenhouse gas. The methane is primarily released into the atmosphere when the animal belches. This release of methane is a significant concern, as methane is far more effective than carbon dioxide (CO2) at trapping heat in the atmosphere, despite having a shorter atmospheric lifespan.

    Efforts to reduce emissions from this process involve altering animal diets to reduce fermentation or improve feed efficiency, breeding for animals that produce less methane, and exploring feed additives that can reduce methane production by altering the microbial population in the rumen.

  • Fertilizers: Fertilizers are substances used in agriculture to provide nutrients to plants, enhancing their growth and productivity. They can be organic, derived from natural sources like compost, manure, and bone meal, or inorganic, made from synthetic chemicals. The primary nutrients provided by fertilizers are nitrogen (N), phosphorus (P), and potassium (K), often referred to as NPK. The impact of fertilizers on greenhouse gas emissions in agriculture is significant and multi-faceted:

    • The most direct impact is the release of nitrous oxide (N2O), a potent greenhouse gas, during the process of nitrification and denitrification in the soil. These processes occur naturally as soil microbes break down nitrogen in fertilizers. N2O has a global warming potential of approximately 300 times that of CO2 over a 100-year period.

    • The production of synthetic fertilizers, especially nitrogen-based ones, is energy-intensive and often relies on fossil fuels, leading to carbon dioxide emissions.

    • Although less direct, the use of fertilizers can also influence methane emissions. For instance, increased plant growth due to fertilization can lead to increased organic matter in the soil, which under certain conditions, particularly in waterlogged soils like those in rice paddies, can increase methane production. This is also the main reason why the cultivation of rice contributes 10% to the overall emissions.

    • Excessive use of fertilizers can lead to nutrient runoff into water bodies, causing eutrophication. This process can result in algal blooms that deplete oxygen in the water, harming aquatic life. The decomposition of these algae emits methane and CO2.

      To mitigate these impacts, sustainable fertilizer management practices are essential. These include precision agriculture techniques to optimize fertilizer application, using slow-release fertilizers to reduce N2O emissions, incorporating organic fertilizers into soil management practices, and implementing crop rotation and cover cropping to improve soil health and reduce the need for synthetic fertilizers. Additionally, efforts to develop and use fertilizers with lower environmental impacts are ongoing in the agricultural sector

Assessing your Impact.

The main variable you want to consider to assess a farm’s impact is CO2 flux. In simple terms, CO2 flux encompasses both the release and absorption of CO2 in the environment on a farm. This includes:

  • Photosynthesis: Plants absorb CO2 from the atmosphere during the process of photosynthesis, which is a key mechanism through which CO2 is removed from the atmosphere.
  • Respiration and Decomposition: CO2 is released back into the atmosphere through the respiration of plants and soil organisms, as well as through the decomposition of organic matter.
  • Management Practices: Agricultural activities can influence CO2 fluxes. For instance, tilling the soil can release CO2, while practices like cover cropping or improved land management can enhance CO2 absorption.
  • Combustion of Organic Matter: Burning crop residues or other organic materials on farms releases CO2.

Because we see both emitting and absorbing factors it makes sense to also consider the carbon stock of a farm and calculate the CO2 flux.

Actual Data.

To give a rough outline of what data you need to collect we summed up some base factors (Link) that are needed for a calculation at the farm level:

  1. Land Use Information: This includes the size and location of the farm as well as the types of land use (e.g., cropland, grassland, forested areas). Historical land use changes, if any (e.g., forest conversion to cropland) should also be considered.
  2. Crop Production Data: Regarding the production you need to know the types and varieties of crops grown and yields for each crop type. Also relevant is any information on crop management practices (e.g., tillage methods, crop rotation schedules) and ideally dates of planting and harvesting.
  3. Livestock Information: As the impact of livestock is a big contributor, the information on your animals should be quite detailed. This includes the types and numbers of livestock (e.g., cattle, sheep, pigs). But also livestock management practices (e.g., grazing systems, feed types) and manure management details (e.g., storage methods, application to fields).
  4. Fertilizer and Soil Management: As mentioned above, fertilizers have quite an impact. You should know about the types and amounts of fertilizers used (both synthetic and organic), general soil management practices (e.g., no-till farming, use of cover crops), and ideally soil type and condition (e.g., organic carbon content).
  5. Energy Use: Data on fuel consumption for farm machinery and vehicles and electricity usage, including the source of electricity (e.g., grid, renewable sources) are also considered as well as the energy used for heating and cooling (e.g., in greenhouses, animal housing).
  6. Water Usage: Water consumption is often also reported and considered in a holistic analysis. Therefore irrigation practices and the amount of water used should be reported. Optional is a more in-depth analysis of the source of irrigation water.
  7. Pesticide and Herbicide Usage: Report on the types and amounts of pesticides and herbicides applied.
  8. Waste Management: Consideration of practices for handling and disposing of agricultural waste, waste recycling, and reuse practices.
  9. Agroforestry and Forestry Practices: Areas of farm woodland or agroforestry systems should be mentioned including the types of trees and age of stands.
  10. Carbon Sequestration Practices: Practices aimed at enhancing carbon sequestration (e.g., afforestation, use of biochar).
  11. Farm Infrastructure: Buildings and their uses (e.g., storage, livestock housing). including any materials used in construction, and any insulation or energy efficiency measures.
  12. Off-farm Activities: Depending on the scope of analysis transportation of goods to and from the farm and any processing activities that occur off the farm also need to be considered. However often the boundaries are set at the farm gate.

Collecting this data enables a detailed analysis of the farm’s carbon footprint, encompassing both direct emissions and indirect emissions. The assessment can also identify potential areas for emission reductions and enhanced carbon sequestration, guiding the implementation of more sustainable farming practices.

Wrap Up.

In conclusion, assessing a farm’s carbon footprint is a multifaceted endeavor that requires a thorough understanding of various factors, from livestock and crop management to the usage of fertilizers and energy. By gathering detailed data and employing scientifically robust methodologies, farmers can gain insights into their farm’s GHG emissions and identify strategies for reduction. As consumers increasingly seek transparency in their food sources, such comprehensive farm carbon assessments become ever more vital. 

Regulatory Chronicles. ⏳

15.11.23 | Jakob Tresch

Today, we’re diving deep into sustainability reporting, and guess what? It’s not just a buzzword; it’s a roadmap for the future. As a food manufacturer, you might wonder when and how you’ll need to spill the beans on your emissions and supply chain details. From the heart of Europe to the landscapes of Canada, each region has its own set of rules, and we’re here to unravel them. So, grab a coffee, and let’s embark on a journey through the world of reporting and discover what it means for you, and how you can champion sustainability!

We will cover what applies to the European, Swiss, British, American, and Canadian markets. Most regulations demand companies to answer questions on climate risks, climate KPIs or how is management involved. If you are able to answer questions it will be a breeze to write your report.

European Union.

Let’s kick off with Mother Europe. The well-known Corporate Sustainability Reporting Directive (CSRD) is about to become relevant in 2024. It will replace the already implemented EU NFRDs and further extend them. The European Union approaches sustainability by combining environmental, economic, and social sustainability aspects. The mandatory sustainability disclosures will begin in 2024 and will be expanded in three phases:

  • Phase 1:

    In 2024 the CSRD will apply to companies that are already reporting NFRDs. This includes around 12’000 companies listed in stock markets, banks, and insurance companies, who employ over 500 people. It will also apply to non-European companies with a turnover of over 150M EUR in 2023. The regulatory standards for phase 1 will be sector-agnostic.

  • Phase 2:

    In 2025 large companies and their subsidiaries currently not reporting NFRDs will have to report for the first time for fiscal year 2024. This includes around 50’000 companies that need to fulfill two of the following three criteria: a balance sheet of over 20M EUR total, a net revenue of over 40M EUR, or an average of more than 250 employees in the fiscal year 2024. For phase 2 you can expect to report sector-specific information according to yet-to-be-published standards.

  • Phase 3:

    The final stage includes all listed SMEs. They will be required to publish a simplified report in 2027 for fiscal year 2026. There exists a transitional opt-out until 2028 and the simplified report has yet to be defined.

The CSRD will need to be published in a section of the Management Report or in a Sustainability Report. CSRD also mentions the level of assurance. Until 2028 when the CSRD is fully implemented, companies only have to provide limited assurance. However, after six years this will shift to reasonable assurance. Limited assurance is to be provided by independent external auditors. The content of the report covers physical and transitional risks, evaluation of the supply chain resilience, scenario-based adaption plans, and a robust strategy to reduce absolute emissions in all scopes. Especially for greenhouse gas emissions you need to show a strategy to reach climate neutrality by 2050 and disclose emissions reduction targets between 2030 and 2050. Those targets include reductions in the value chain also known as scope 3. You can find more information on the corporate sustainability reporting of the EU here: Link.

Switzerland.

In Switzerland, companies with over 500 employees or 20M CHF in assets or 40M CHF turnover need to report in 2024 for fiscal year 2023. Companies that fail to comply may be fined 10’000 CHF. What you need to report is very similar to the EU model and adapted from the CSRDs. 

United Kingdom.

The UK has already implemented climate disclosures for public companies, banks, insurance, and private companies with a turnover of 500M GBP and over 500 employees for the fiscal year 2022. Nevertheless, the Brits have a very ambitious plan, as the mandate is expected to come into effect across the economy in 2025. 

When addressing the report’s content, the United Kingdom provides a thorough clarification sheet alongside comprehensive guidelines that integrate climate-related financial disclosures into the existing strategic report, aligning with the TCFD guidelines. Companies submitting reports need to communicate how they identify, assess, manage, and integrate risks and opportunities into their overall risk management strategy. This disclosure should also specify how these factors relate to a company’s operations, including details on the timeframe and impact. Additionally, disclosed targets must be directly linked to identified risks and opportunities. Companies are expected to transparently communicate the key performance indicators (KPIs) and metrics used to measure progress against these targets, accompanied by clear explanations of metric calculations. 

Looking at metrics, the legislation mandates an emissions data gap analysis and outlines the company’s strategies to address these gaps. In instances of incomplete data, the use of modeling is permitted. Importantly, any disclosed data should be presented in terms of carbon dioxide equivalents and intensity. Furthermore, the report is obligated to incorporate a scenario-based resilience analysis. Notably, at this stage, Scope 1, 2, and 3 are considered optional, providing a favorable aspect for compliance. 

United States of America.

Similar to the CSRDs the American regulations will be rolled out in phases.

  • Phase 1:

    In 2024 companies with an aggregate worldwide public float of 700M USD or more will need to comply.

  • Phase 2:

    In 2025 companies with a public float of 75M USD or more but less than 250M USD in annual revenue or with a public float of more than 250M USD but less than 100M USD in annual revenue will be made compliant.

  • Phase 3:

    The third phase starts in 2026 for the fiscal year 2025. Companies with a public float of less than 250M USD with annual revenue below 100M USD will need to report.

The regulations follow TCFD and GHG protocol guidelines. It is quite strict on metrics. Companies must report on Scope 1, Scope 2, and Scope 3 if the company has Scope 3 targets or Scope 3 is material. You might ask what is material? Well, for food and beverage manufacturers scope 3 is material. Emissions need to be disclosed in absolute terms and in terms of intensity per unit of revenue in USD as well as per unit of product. You also need to cover data sources and provide a breakdown of greenhouse gases. Governance and risk management include specifications we have seen in other markets such as board and management expertise and responsibilities and risk assessments. Companies must also disclose targets and transition plans. 

To ensure compliance with environmental sustainability standards, particular attention must be given to the specifications outlined. Companies relying primarily on offsets for emissions reduction are categorized as high-risk. It is imperative to provide a detailed account of the use and quality of offsets, with any discrepancies being incorporated into the overall risk assessment. Transparent disclosure of renewable credits is essential. Furthermore, companies are required to furnish a comprehensive report on revenue generated from low-carbon products, emphasizing the inclusion of such products in their portfolios. Finally, you should also cover the potential of an internal carbon price.

Canada.

Canada will introduce regulations for financial institutions, banks, and insurance companies in 2024. Those need to report on climate-related risks and emissions. The report also needs to assess the reporter’s clients and it is likely that the group of companies will be extended in the following years. 

Your Turn.

Navigating the world of emission reporting and sustainability might seem like a maze. The rules are set from the EU’s game-changing Corporate Sustainability Reporting Directive (CSRD) to Switzerland’s fines for non-compliance, the UK’s ambitious climate disclosures, the phased approach in the USA, and Canada’s upcoming regulations for financial players. Remember, transparency is your secret sauce. 

Answer those climate questions, align with TCFD and GHG protocol guidelines, and showcase your commitment. Whether you’re a big player or a local hero, your journey toward sustainability is not just about complying; it’s about making a positive impact.

Reporting Standards Jungle. 🐒

31.10.23 | Jakob Tresch

In this blog, we look at the state-of-the-art regulatory frameworks to comply with GHG reporting and accounting. Our jungle adventure revolves around the idea that national mandates are designed to standardize carbon accounting and ensure that industries are held accountable for achieving climate targets. The European Parliament, for instance, has made it clear that better data from companies regarding their sustainability risks and impacts is essential for a successful implementation of the European Green Deal.

Furthermore, those standards and frameworks are the foundation for mandatory climate-related financial disclosures in various markets, including Canada, Hong Kong, the EU, Singapore, Switzerland, the UK, the USA, Brazil, and New Zealand. Each market has its own unique timeline and reporting standards that companies need to adhere to and we will cover the timelines in our next blog.

In general, it can be said, that most mandatory regulatory frameworks are based on the TCFD reporting standard. One (big) exception is the European Union, which defined its own standards with the CSRDs. However, there are voluntary standards in place that might suit your company better like the GHG protocol or the SBTi’s which we will cover first.

GHG Protocol.

The Greenhouse Gas Protocol (GHG Protocol) was established in 1998 by the World Resource Institute and WBCSD. The first standard, the corporate reporting standard (Link), was introduced in 2001. It introduced the concept of scopes 1, 2, and 3 and was the first standard to set guidance for corporate-level emission inventories. It has since been extended by the corporate value chain standard (Link), which is used to assess the impact of a company’s value chain, and the product standard (Link), which outlines the emissions of a product.

The product standard is the standard for product emissions. The guidelines set by the GHG Protocol are still pretty flexible. Let’s have a look at what you need to report. First, you need to use an “attributional approach”. This means that all your product’s emissions should be linked to the generating process. Then, you need to precisely define your product, define the scope (cradle-to-gate or cradle-to-cradle), and lay out your greenhouse gases as well as the functional unit of the product (weight or volume). Second, you need to include a definition of the boundaries between life cycle stages and processes, the time period of your assessment, and the underlying methodology. Third, you need to include some quantification for your data. This included the level of uncertainty in your data, the level of assurance, and applying consistent allocation. Further, you need to report global warming potential for 100 years (GWP 100), the percentage of emissions per life cycle stage, land use change impact, and cradle-to-gate and gate-to-gate inventories.

To be compliant with the GHG product standard you do not need to worry, as it is still a very loose standard due to the vague guidelines. 

ISO 14000 Family.

You are probably familiar with the standards set by the International Standards Organization (ISO, Link). The ISO 14000 family is their approach to carbon accounting. Let us first have a look at the whole ISO14000 family:

  • ISO 14001-14015: Implementation, incorporation, assessment, and performance evaluation of environmental management systems (EMS)
  • ISO 14050: Glossary
  • ISO 14020 Subfamily: environmental labels and claims
  • ISO 14063: Internal & external environmental communication
  • ISO 14040-14049: guidelines for life cycle assessment and goal setting
  • ISO 14060 subfamily: Guidance for quantifying, reporting, and reducing greenhouse gas emissions.
 

The ISO 14060 subfamily is what we are interested in the most. Those standards are often used as a basis for regulations. Firstly, ISO does not provide conformity to those assessments. This means that you can do your own conformity assessment or you can outsource it to a third party. ISO 14064-1 is close to the GHG protocol corporate reporting standard. It covers scopes 1, 2, and 3 and provides emissions metrics and data quality clarification. ISO 14067 is the ISO that defines the ISO conforming report (for lice cycle inventory (LCI) and life cycle impact assessments (LCIA)). It defines the application and audience of a carbon footprint study. Further, you are required to define scopes with system boundaries, declare functional units, requirements for data quality, time boundaries, assumptions, and allocations.

Maybe you are asking yourself what the difference is between an LCI and an LCIA. For an LCI analysis, you need to provide quality specification, sensitivity analysis, and alignment with your selected allocation. For an LCIA you asses your impact, and interpret the results for all gates including hotspot identification, completeness and consistency, conclusions, limitations, and recommendations. In other words, an LCI is a report in which you collect data and an LCIA is the interpretation of the collected data including the next steps.

Although, this probably sounds like a lot when you hear it for the first time. The ISO standards still leave a lot to be desired in terms of exactly describing what is mandatory.

Science-Based Targets Initiative (SBTi)

The Science-Based Targets initiative (Link) is the body behind most validations of net-zero statements. It was created in 2015 by the United Nations (UN), the World Wild Fund for Nature (WWF), the Carbon Disclosure Project (CDP, Link), and the World Resources Institute. The thought behind the net zero pledges is to align with all targets of the Paris climate agreement. This means limiting global warming to well below 2°C above pre-industrial levels and pursuing efforts to limit warming to 1.5°C.

For food and beverage companies special criteria are set in place, called SBTi FLAG (Forest, Land and Agriculture, Link) guidance. To implement your science-based targets initiative you need to first commit, then develop, submit, communicate, and finally report your steps. You should report your targets through your sustainability report or through the CDP.

SBTi mostly focuses on Scope 1 and 2 targets. However, for food and beverage companies you’ll also need to implement FLAG targets on scope 3 if they make up over 40% of your total emissions. Therefore, this applies to most food and beverage companies. You also need to implement targets that address at least 67% of scope 3 emissions. Further, you’ll have to calculate your scope 1, 2, and 3 GHG emissions inventory. FLAG commodities (like beef, chicken, dairy, maize, leather, palm oil, pork, soy, rice, wheat, and timber or wood fiber) that make up more than 10% of your emissions, need to be especially addressed. For those, you should set special near- and long-term, absolute as well as intensity targets. Finally, the SBTi requires you to stop deforestation by 2030.

Task Force on Climate-related Financial Disclosures (TCFD)

TCFD (Link) was created by the Financial Stability Board (Link) and it is a straightforward framework that covers governance, strategy, risk management, targets, and metrics. 

Those should be addressed through short-, medium-, and long-term targets. Companies are required to provide detailed information and disclosures on eleven key areas related to climate issues. Concerning governance, they include board oversight on climate-related matters and the role of management in assessing and managing climate issues. Looking at risks and opportunities you should disclose identified climate-related risks and opportunities, the impact of these risks and opportunities on financial planning, the company’s resilience in various climate change scenarios, methods for identifying and assessing climate risks, and strategies for managing and prioritizing climate-related risks. Additionally, the integration of climate risks into overall risk management should be addressed, as well as the use of specific metrics to assess these risks and opportunities, reporting of greenhouse gas emissions in Scope 1, 2, and 3 categories, and setting targets for climate-related risks and opportunities and reporting on yearly performance. 

These areas are crucial for comprehensive climate reporting, aligning with the broader framework of environmental, social, and governance (ESG) reporting, which seeks to promote transparency and accountability regarding a company’s climate change strategies and actions

Corporate Sustainability Reporting Directive (CSRD).

The CSRD is not in effect yet. The first reports will need to be published in 2025 for the fiscal year 2024. But only companies that already need to report non-financial reporting directory (NFRD), will be the first to comply with CSRD. So only the biggest companies have to switch to CSRD soon. 

CSRD looks at six environmental objectives: climate change mitigation, climate change adaption, sustainable use and protection of water, transition to circular economy, pollution management, and protection of biodiversity. Each environment objective will have its own standards and the industry-specific regulations are still in the works. This means that as of writing this blog, there is still a lot of room for clear guidelines. A couple of things that are expected to be implemented: Companies will be asked to calculate in full their emissions (including scope 3). They need to apply double materiality, which means that they need to report the risk they pose to the climate, as well as by which risks they are likely to be affected. Finally, ISO 14057 is expected to be an accepted standard for life cycle assessments.

Final Thoughts.

In conclusion, this blog has explored the ever-evolving landscape of climate-related reporting and accounting standards. These standards are fundamental for promoting transparency and accountability in addressing climate change. We’ve discussed key frameworks, including the GHG Protocol, ISO 14000 family, the Science-Based Targets Initiative, and the Task Force on Climate-related Financial Disclosures.

Looking ahead, the Corporate Sustainability Reporting Directive (CSRD) is set to introduce more rigorous reporting requirements on a big scale. In this dynamic environment, businesses are increasingly expected to measure and communicate their environmental impact effectively, this is why we at niatsu focus on scaling carbon accounting to make the necessary data for carbon accounting available.

In the next blog, we will dive into the specific national regulations and show you which timeline is relevant for your business.

Why Carbon Accounting Matters. 💚

25.10.23 | Jakob Tresch

Understanding and managing your company’s carbon footprint isn’t just a trend, it’s a necessity. It not only contributes to a greener future but also significantly shapes your business’s reputation, performance, and financial success. By identifying the areas where your company generates the most emissions, you can set realistic climate goals, create effective reduction strategies, and improve your appeal to consumers and investors.

Understanding Corporate Carbon Footprints.

The term “corporate carbon footprint” might sound like a buzzword, but it’s far from it. In fact, understanding your company’s carbon footprint is the first step towards a greener future and could be crucial for your business’s reputation, performance, and bottom line.

So, what is a corporate carbon footprint exactly? Well, it’s the sum total of all greenhouse gas (GHG) emissions that your company directly or indirectly produces. It includes everything, from the electricity used in your offices to the fuel burned in your company’s cars. The bigger the carbon footprint, the more significant your company’s environmental impact.

Counting each molecule of carbon dioxide might sound like a daunting task, but it doesn’t have to be. There are methodologies and standards to help you calculate your company’s carbon footprint. Once you know where you stand, you can start making meaningful steps towards a more sustainable future.

Business Case for Carbon Accounting.

Let’s get into the details of why calculating your corporate carbon footprint is not just good for the planet, but also for your business.

First off, risk management. Climate change poses significant risks to companies worldwide. By understanding your company’s carbon footprint, you can identify areas most vulnerable to climate-related incidents such as draughts and supply chain interruptions events. Reducing your carbon footprint means to reduce and understand those risks better.

Next up, is brand reputation. In today’s world, sustainability is a major selling point. Food manufacturers with strong sustainability credentials have seen their brand values skyrocket. Customers, especially the younger ones, are increasingly conscious of the environmental impact of their purchases. So, reducing your carbon footprint can significantly enhance your brand reputation and appeal to this growing market.

Let’s talk about financial performance. There are numerous ways to reduce operational expenses while also reducing greenhouse gas emissions. Switching to new technology like e-mobility or investing in clean energy sources can save significant amounts of money in the long term. And even food waste can be turned into a revenue stream.

Lastly, measuring and reducing your carbon footprint drives innovation. Looking for more sustainable ingredients or highly effective processes can lead to the development of innovative new products. So, as you can see, managing your carbon footprint is more than just a moral obligation—it can actually boost your bottom line, improve your reputation, and spark innovation.

How to Calculate a Carbon Footprint?

Let’s dive into the how-to of calculating your company’s carbon footprint. This involves a comprehensive analysis of your company’s emissions within clearly defined system boundaries.

Firstly, you need to understand the three scopes of emissions, as defined by the Greenhouse Gas Protocol. These scopes help categorize where in your company’s value chain the emission-generating activities occur.

Scope 1 covers direct emissions from sources owned or controlled by your company. Think of your company vehicles or any fuel you burn directly.

Scope 2 tackles the indirect emissions linked with the purchase of electricity, steam, heat, or cooling. So, if you flick a light switch in your production site, the emissions from the power station that generated that electricity would fall under Scope 2.

Lastly, Scope 3 is a bit tricky. It covers indirect emissions from activities happening across your company’s supply chain, but outside of its direct influence. This could include emissions from the production of ingredients or packaging you use or waste disposal. For food and beverage companies scope 3 emissions represent the majority of greenhouse gas (GHG) emissions.

Split up into scopes of emissions for food and beverage companies.

Your company’s carbon footprint is the sum of these three scopes. You calculate emissions using available data and then allocate them to different parts of your organization like production sites or external suppliers.

One crucial point to remember: calculating your carbon footprint isn’t a one-time task. Instead, it’s a journey. You update this data every year with the goal of progressively reducing emissions. This makes it your foundation to implement climate protection measures.

Standards in Carbon Footprinting.

So, how do we ensure that these calculations are accurate and consistent across the board? Well, the answer lies in following internationally recognized standards for carbon footprints. These standards provide a comprehensive, robust, and transparent framework for calculating and reporting GHG emissions.

One of the most well-known standards is the GHG Protocol Corporate Standard (Link), which classifies emissions into the three scopes we discussed earlier. It’s widely used by businesses and organizations around the globe. This standard was developed to address the need for a consistent corporate carbon accounting and reporting approach.

Another necessary standard is ISO 14064-1 (Link). It’s part of the ISO series of International Standards for Environmental Management and provides guidance on the principles and requirements for reporting GHG emissions. It also gives additional guidance on verification, required levels of data validation, and external reporting frameworks.

When it comes to product emissions, standards like GHG Protocol Product Standard (Link) and ISO 14067 are often used. They provide guidelines for assessing GHG emissions associated with the whole supply chain of your products products.

A product carbon footprint by niatsu.

Future Benefits.

So far, we’ve discussed the what, why, and how of measuring your company’s carbon footprint. Now, let’s talk about the benefits. Measuring your carbon footprint isn’t just about reducing your environmental impact. It also opens up a world of opportunities for your business.

Firstly, let’s talk about efficiency. Knowing your carbon footprint allows you to see where your processes are most energy-intensive and where there might be waste. Are your company vehicles relying on gas? Perhaps you could consider electric ones. By identifying and tackling these inefficiencies, you can reduce your operating costs and ramp up your profit margin.

Secondly, measuring your carbon footprint gives you a competitive edge. More and more, customers and investors are making choices based on how eco-friendly a company is. When you measure and share your carbon emissions and reduction goals, you show your commitment to preserving the environment. This transparency can boost your reputation, make your brand more attractive to customers, and even bring in more investors. Plus, who wants to be known as something other than a leader in sustainability?

Thirdly, being aware of your carbon footprint can improve commitment within your company. Employees and shareholders appreciate when a company upholds values that improve life overall. Studies have shown that sustainability initiatives can influence job choice and long-term commitment to a company. And happy, committed employees often mean a thriving business.

Finally, with increased regulations on the horizon. If you start out today, you will be ready for all upcoming regulations. Measuring your carbon footprint can be simple and uses data most businesses already collect, like energy consumption and material resources.

Enhance your Climate Strategy with niatsu.

Now you better understand the necessity to calculate your company’s carbon footprint. Here is how niatsu can assist you on your sustainability journey.

Niatsu offers software to calculate product carbon footprints (PCFs) in the food and beverage industry. We believe in transparency and the power of knowledge to drive change. We provide real-time data on CO2 emissions and help businesses make better decisions about their environmental impact.

At niatsu we focus on building a scalable solution. By adapting to changes in product recipes, our calculations always deliver up-to-date data. Therefore, our solution is suitable for thousands of food products and includes seasonality. So, whether you’re a small business or a large corporation, you can rely on niatsu to analyze your supply chain for emissions.

Another attribute of niatsu’s platform is the use of machine learning. By aggregating data from several leading databases, we deliver quantified data that enables you to improve your supply chain data and explains how PCFs were calculated.

Finally, we work hard to bring you a solution, where you don’t need to be an expert in carbon accounting but you still get results like you were one. We understand that carbon accounting is not your main priority you thrive at delivering the best food products. With our transparent framework, you can use our results to compare between products and learn about the impact of your portfolio. So, if you’re looking to reduce your environmental impact and save some money while you’re at it, niatsu has got you covered.