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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 im Dreck.

30.11.23 | Jakob Tresch | Übersetzt mit Deepl

Willkommen zu unserem tiefen Einblick in die Welt der landwirtschaftlichen Emissionen und ihrer Auswirkungen auf die Umwelt. In den letzten Jahren hat sich die Diskussion über den CO2-Fussabdruck über Fabriken und städtische Gebiete hinaus auf das Herz unserer Lebensmittelversorgung ausgeweitet - die landwirtschaftlichen Betriebe. In diesem Beitrag sollen die komplexen Zusammenhänge hinter den landwirtschaftlichen Emissionen entschlüsselt werden, wobei der Schwerpunkt darauf liegt, was auf einem Bauernhof geschieht und wie die allgemein bekannten Datensätze erstellt werden. Wir werden die wichtigsten Verursacher von Treibhausgasen (THG) auf der Ebene der landwirtschaftlichen Betriebe untersuchen. Beginnen wir damit, die entscheidenden Elemente zu verstehen, die auf der Ebene des landwirtschaftlichen Betriebs eine Rolle spielen.

Worauf kommt es auf der Ebene eines Bauernhofes an?

Werfen wir zunächst einen Blick auf die Emissionen auf Betriebsebene. Nach dem GHG-Protokoll (Link) werden die relativen Beiträge der landwirtschaftlichen Quellen wie folgt aufgeteilt.

Man sieht, zwei Drittel der Emission stammen aus der Nutzung von Düngemittel und enterischer Fermentation.

  • Enterische Fermentation: Die enterale Fermentation ist ein natürlicher Verdauungsprozess, der in den Mägen von Wiederkäuern wie Kühen, Schafen, Ziegen und Hirschen stattfindet. Diese Tiere haben einen einzigartigen Magen mit mehreren Kammern, von denen eine der Pansen ist. Der Pansen beherbergt eine komplexe Mischung von Mikroorganismen, darunter Bakterien, Protozoen und Pilze, die bei der Aufspaltung und Fermentierung von pflanzlichen Futtermitteln, insbesondere von faserigen Materialien wie Gras und Heu, helfen.

    Bei diesem Gärungsprozess entsteht als Nebenprodukt unter anderem Methan (CH4), ein starkes Treibhausgas. Das Methan wird hauptsächlich in die Atmosphäre freigesetzt, wenn das Tier rülpst. Diese Freisetzung von Methan ist sehr besorgniserregend, da Methan trotz seiner kürzeren Lebensdauer in der Atmosphäre die Wärme viel effektiver als Kohlendioxid (CO2) in der Atmosphäre bindet.

    Zu den Bemühungen um eine Verringerung der Emissionen aus diesem Prozess gehören die Änderung des Tierfutters, um die Gärung zu reduzieren oder die Futtereffizienz zu verbessern, die Züchtung von Tieren, die weniger Methan produzieren, und die Erforschung von Futtermittelzusätzen, die die Methanproduktion durch Veränderung der Mikrobenpopulation im Pansen verringern können.

  • Düngemittel: Düngemittel sind Stoffe, die in der Landwirtschaft verwendet werden, um Pflanzen mit Nährstoffen zu versorgen und ihr Wachstum und ihre Produktivität zu steigern. Sie können organisch sein, d. h. aus natürlichen Quellen wie Kompost, Dung und Knochenmehl stammen, oder anorganisch, d. h. aus synthetischen Chemikalien hergestellt sein. Die wichtigsten Nährstoffe, die durch Düngemittel bereitgestellt werden, sind Stickstoff (N), Phosphor (P) und Kalium (K). Die Auswirkungen von Düngemitteln auf die Treibhausgasemissionen in der Landwirtschaft sind erheblich und vielschichtig:

    • Die direkteste Auswirkung ist die Freisetzung von Lachgas (N2O), einem starken Treibhausgas, während des Prozesses der Nitrifikation und Denitrifikation im Boden. Diese Prozesse finden auf natürliche Weise statt, wenn Bodenmikroben den Stickstoff in Düngemitteln abbauen. N2O hat ein globales Erwärmungspotenzial, das etwa 300 Mal höher ist als das von CO2 über einen Zeitraum von 100 Jahren.

    • Die Herstellung von synthetischen Düngemitteln, insbesondere von Stickstoffdüngern, ist energieintensiv und stützt sich häufig auf fossile Brennstoffe, was zu einem Kohlendioxid Austoss führt.

    • Auch der Einsatz von Düngemitteln kann, wenn auch weniger direkt, Methan austossen. So kann beispielsweise ein verstärktes Pflanzenwachstum aufgrund von Düngung zu einer Zunahme der organischen Substanz im Boden führen, was unter bestimmten Bedingungen, insbesondere bei wassergesättigten Böden wie denen in Reisfeldern, die Methanproduktion erhöhen kann. Dies ist auch der Hauptgrund dafür, dass der Reisanbau 10 % zu den Gesamtemissionen beiträgt.

    • Ein übermässiger Einsatz von Düngemitteln kann dazu führen, dass Nährstoffe in Gewässer abfliessen und Eutrophierungverursachen. Dieser Prozess hat zur Folge, dass Algenblüten wachsen, welche den Sauerstoff im Wasser verbrauchen und dem Leben im Wasser schaden. Bei der Zersetzung dieser Algen wird wiederum Methan und CO2 freigesetzt.

      Um diese Auswirkungen abzumildern, ist ein nachhaltiges Düngemittelmanagement unerlässlich. Dazu gehören Techniken der Präzisionslandwirtschaft zur Optimierung der Düngerausbringung, die Verwendung von Langzeitdüngern zur Verringerung der N2O-Emissionen, die Einbeziehung organischer Düngemittel in die Bodenbewirtschaftung sowie die Einführung von Fruchtfolge und Deckfruchtanbau zur Verbesserung der Bodengesundheit und zur Verringerung des Bedarfs an synthetischen Düngemitteln. Darüber hinaus werden in der Landwirtschaft Anstrengungen unternommen, um Düngemittel mit geringeren Umweltauswirkungen zu entwickeln und einzusetzen.

Berechnung der Auswirkungen.

Die wichtigste Variable, die Sie bei der Bewertung der Auswirkungen eines Betriebs berücksichtigen sollten, ist der sogenannte CO2-Fluss. Einfach ausgedrückt, umfasst der CO2-Fluss sowohl die Freisetzung als auch die Aufnahme von CO2 in der Umwelt eines landwirtschaftlichen Betriebs. Dies beinhaltet:

  • Photosynthese: Pflanzen nehmen während der Photosynthese CO2 aus der Atmosphäre auf. Dies ist ein wichtiger Mechanismus, durch den CO2 aus der Atmosphäre entfernt wird.
  • Respiration und Zersetzung: Durch die Atmung von Pflanzen und Bodenorganismen sowie durch die Zersetzung von organischem Material wird CO2 wieder in die Atmosphäre freigesetzt.
  • Praktiken: Landwirtschaftliche Tätigkeiten haben einen Einfluss auf den CO2-Fluss. So kann beispielsweise die Bodenbearbeitung CO2 freisetzen, während Praktiken wie der Anbau von Deckfrüchten oder eine verbesserte Bodenbewirtschaftung die CO2-Absorption verbessern können.
  • Verbrennung von organischen Stoffen: Die Verbrennung von Ernterückständen oder anderen organischen Materialien in landwirtschaftlichen Betrieben setzt CO2 frei.

Da wir sowohl emittierende als auch absorbierende Faktoren betrachten, ist es sinnvoll, auch den Kohlenstoffbestand eines Betriebs wie zum Beispiel bewaldete Flächen zu berücksichtigen, um den CO2-Fluss zu berechnen.

Datenkollektion.

Um einen groben Überblick darüber zu geben, welche Daten Sie sammeln müssen, haben wir einige Basisfaktoren zusammengefasst (Link), die für eine Berechnung auf Betriebsebene benötigt werden:

  1. Informationen zur Landnutzung. Dazu gehören die Grösse und der Standort des Betriebs sowie die Art der Landnutzung (z.B. Ackerland, Grünland, Waldgebiete). Historische Landnutzungsänderungen (z. B. Umwandlung von Wald in Ackerland) sollten ebenfalls berücksichtigt werden.
  2. Bepflanzung: Was die Produktion betrifft, so müssen Sie die Arten und Sorten der angebauten Pflanzen und die Erträge für jede Pflanzenart kennen. Wichtig sind auch Informationen über die Bewirtschaftungsmethoden (z. B. Bodenbearbeitungsmethoden, Fruchtfolgepläne) und idealerweise über die Pflanz- und Erntetermine.
  3. Tierhaltung: Da die Auswirkungen des Viehbestands einen wichtigen Beitrag leisten, sollten die Informationen über Ihre Tiere recht detailliert sein. Dazu gehören die Art und Anzahl der Tiere (z. B. Rinder, Schafe, Schweine). Aber auch die Art der Tierhaltung (z. B. Weidesysteme, Futtermittel) und Einzelheiten der Güllewirtschaft (z. B. Lagerungsmethoden, Ausbringung auf die Felder).
  4. Düngemittel und Bodenmanagement: Wie bereits erwähnt, haben Düngemittel einen grossen Einfluss. Sie sollten über die Art und Menge der verwendeten Düngemittel (sowohl synthetische als auch organische), allgemeine Bodenbewirtschaftungspraktiken (z. B. Direktsaat, Verwendung von Deckfrüchten) und idealerweise Bodenart und -zustand (z. B. organischer Kohlenstoffgehalt) Bescheid wissen.
  5. Energieverbrauch: Daten über den Kraftstoffverbrauch für landwirtschaftliche Maschinen und Fahrzeuge und den Stromverbrauch, einschliesslich der Stromquelle (z. B. Netz, erneuerbare Energiequellen), werden ebenso berücksichtigt wie der Energieverbrauch für Heizung und Kühlung (z. B. in Gewächshäusern und Ställen).
  6. Wasserverbrauch: Auch der Wasserverbrauch wird häufig angegeben und in einer ganzheitlichen Analyse berücksichtigt. Daher sollten Bewässerungspraktiken und die verwendete Wassermenge angegeben werden. Optional ist eine eingehendere Analyse der Quelle des Bewässerungswassers.
  7. Einsatz von Pestiziden und Herbiziden: Bericht über die Art und Menge der eingesetzten Pestizide und Herbizide.
  8. Abfallentsorgung: Berücksichtigung von Praktiken für die Handhabung und Entsorgung von landwirtschaftlichen Abfällen, Abfallrecycling und Wiederverwendungspraktiken.
  9. Agroforstwirtschaft und forstwirtschaftliche Situation: Flächen mit Wirtschaftswäldern oder agroforstwirtschaftlichen Systemen sollten mit Angabe der Baumarten und des Alters der Bestände angegeben werden.
  10. Kohlenstoffspeicherung: Praktiken zur Verbesserung der Kohlenstoffbindung (z. B. Aufforstung, Verwendung von Biochar)
  11. Infrastruktur: Gebäude und ihre Verwendungszwecke (z. B. Lagerung, Unterbringung von Vieh), einschliesslich der beim Bau verwendeten Materialien und etwaiger Isolierungs- oder Energieeffizienzmassnahmen.
  12. Aktivitäten ausserhalb des landwirtschaftlichen Betriebs: Je nach Umfang der Analyse müssen auch der Transport von Gütern zum und vom Bauernhof sowie die Verarbeitungstätigkeiten ausserhalb des Bauernhofs berücksichtigt werden. Häufig werden die Grenzen jedoch am Hoftor (at farm gate) festgelegt.

Die Erhebung dieser Daten ermöglicht eine detaillierte Analyse des Kohlenstoff-Fussabdrucks des Betriebs, die sowohl direkte als auch indirekte Emissionen umfasst. Die Bewertung kann auch potenzielle Bereiche für Emissionsreduzierungen und verbesserte Kohlenstoffbindung aufzeigen und so die Umsetzung nachhaltigerer landwirtschaftlicher Praktiken anleiten.

Zusammenfassung.

Abschliessend lässt sich sagen, dass die Bewertung des Kohlenstoff-Fussabdrucks eines landwirtschaftlichen Betriebs ein vielschichtiges Unterfangen ist, das ein gründliches Verständnis verschiedener Faktoren erfordert, von der Viehhaltung und dem Pflanzenbau bis hin zum Einsatz von Düngemitteln und Energie. Durch das Sammeln detaillierter Daten und die Anwendung wissenschaftlich fundierter Methoden können Landwirte Einblicke in die Treibhausgasemissionen ihres Betriebs gewinnen und Strategien zur Verringerung ermitteln. Da die Verbraucher zunehmend nach Transparenz in Bezug auf ihre Lebensmittel suchen, werden solche umfassenden Bewertungen des Kohlenstoffausstosses in der Landwirtschaft immer wichtiger. 

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.