Measuring Carbon Footprints of Agri‑Food Products

1. Introduction

Abstract

This chapter explains the growing demand for carbon footprint information, and what would be possible if reliable and widespread carbon footprint information were available.

Imagine a world where reliable information on the carbon footprint of firms and products were widely available. In such a world, it would be easy for producers to find out the carbon footprint of their inputs and their production processes, helping them identify ways to reduce their carbon footprint. It would also be easy for them to communicate the result of those efforts to customers. In turn, consumers, other businesses, or governments could compare carbon footprints of different products or different suppliers when making their purchasing decisions. Governments could link financial incentives to carbon footprints, and carbon footprint information could guide investment and R&D decisions.

There is a growing recognition that widespread, reliable carbon footprint information would form a “data infrastructure” on which private and public actors could build a wide range of mitigation strategies – but achieving this data infrastructure will require more accurate, timely, and granular product-level carbon footprint data (OECD, 2024[1]). Important initiatives are underway in the private sector to improve the use of primary data, to ensure greater reliability, and to facilitate digital exchange along supply chains (OECD/BIAC/WEF, 2023[2]). These include cross-sectoral work (PACT, 2023[3]), as well as sectoral initiatives such as Catena-X in the automotive industry or Together for Sustainability in the chemicals sector.

Building on insights from those initiatives, this report asks what it would take to achieve reliable and widespread carbon footprint information in food systems.

Until recently, the idea would have seemed like science fiction. However, the last few years have seen the “fast and furious” rise of environmental impact reporting in food systems, including for carbon footprints (Deconinck, Jansen and Barisone, 2023[4]). There is a growing demand for information from consumers, civil society, investors, and governments. One example is the rise of so-called “Scope 3” reporting, discussed in Box 1.1. The recently revised OECD Guidelines for Multinational Enterprises on Responsible Business Conduct also call on enterprises to provide relevant and accurate information on their environmental impacts, for example in terms of greenhouse gas (GHG) emissions (OECD, 2023[5]). In parallel with this growing demand for carbon footprint information, it has also become easier to provide, thanks to the emergence of reporting standards, calculation tools, databases, and platforms for data sharing.

As a result, at least some of the necessary building blocks for reliable and widespread carbon footprints in food systems are falling into place. Of course, some building blocks may not yet be available, while others may not yet be sufficiently mature or developed. In other cases, existing elements may need to be modified to be compatible with others. The aim of this report is to identify the necessary elements, provide a first assessment of what is available and what is not, and identify priority actions for policy makers, stakeholders, and the research community.

This report identifies eight main building blocks for reliable and widespread carbon footprints in food systems. A first assessment shows that many elements are indeed already in place, even if progress is uneven:

• Reporting standards and guidelines create a shared understanding of which emissions sources should be included in a carbon footprint calculation, how emissions should be allocated across products in a production process which generates multiple outputs, etc. Reporting standards and guidelines (such as the Greenhouse Gas Protocol reporting standards) are quite well developed in general, although there is a need to ensure greater alignment between standards and guidelines developed by different actors and for different purposes.

• Science-based methods for measuring or estimating emissions are essential. Fortunately, guidance developed by the IPCC provides a useful overview of available methods, as well as default options to use when more sophisticated approaches are not feasible. However, there are several areas where investments in better methods are needed, including for measuring soil organic carbon and for measuring emissions in developing countries. In addition, a practical challenge is that scientific insights continue to evolve, but international guidance is updated only occasionally. Another challenge is that improved scientific insights do not automatically result in improved practical tools for calculating emissions.

• Farm level calculation tools allow the use of primary data on farm activities and management practices as inputs to calculate carbon footprints. There is a particular need for primary data at the farm level given the large heterogeneity in carbon footprints even among producers in the same region. Several farm level carbon footprint calculation tools exist already, but further efforts are needed to ensure these tools are aligned with reporting standards and guidelines. These tools also need to provide greater transparency so that users can assess whether their calculation methods are appropriate and based on the latest scientific evidence. In addition, benchmarking exercises may be needed to compare the estimates provided by different tools. In turn, such benchmarking can help determine the most appropriate tool for a given context and identify areas for improvement.

• Databases with secondary data, to be used where primary data is not (yet) available. Life Cycle Assessment (LCA) databases are well established and cover a large number of products and geographies. Most are consistent with key standards and updated regularly. However, there is room for improvement. Databases can differ in their methodological choices (which influences the results). There are also data gaps, notably for the developing world. The cost and complexity of LCA databases may also make it hard for smaller supply chain actors to access and use them.

• A way of communicating carbon footprint data along the supply chain, so that detailed calculations by producers at one stage of the supply chain can be used as input at the next stage. Several initiatives have emerged to facilitate data exchange, whether between large firms, between farmers and processors, or between farmers and data sources ‘upstream’ from the farm (such as suppliers or government databases). Many of these initiatives are at an early stage but they suggest that at a purely technical level the challenge of communicating carbon footprint data along the food supply chain is largely solved. Yet data exchange depends not only on solving technical questions but also regulatory and governance questions. Many of these are not specific to food systems and will require clarity from policymakers.

• A way to ensure the integrity and quality of the data and calculations, for example through third-party verification. Third party verification of product carbon footprints is widespread, but it does not evaluate the methodology itself, merely that whatever methodology was chosen has been followed. The quality of the databases and farm level tools would be considered part of the methodology, and hence outside the scope of third-party verification of product carbon footprints. This leaves important gaps. New approaches may be needed to verify that farm level calculation tools and secondary databases are compliant with widely used reporting standards and use science-based methods that are reliable and relevant to the specific case in which they are applied.

• A way to scale up carbon footprint calculations while keeping costs low. Food supply chains involve many smaller producers, who generally lack the capacity to engage in complex carbon footprint calculations. Scaling up carbon footprints in food systems will thus require finding ways to make the collection of primary data at farm level as easy and cost effective as possible. Several options exist, such as private sector engagement with suppliers, public-private awareness campaigns, embedding carbon footprint calculations in existing schemes, and providing technical assistance to low- and middle-income countries.

• A way to update these elements as new scientific insights and techniques become available. Reporting standards, calculation tools and databases need to reflect the latest scientific insights. A process is also needed to properly evaluate the impact of new mitigation techniques (e.g. new practices or new technological solutions) and update calculation tools to reflect these new options. Other elements of the “data infrastructure” may also require frequent review to incorporate new insights or techniques. For example, reporting standards may evolve over time to require a greater degree of primary data. At the moment, there is no deliberate approach to updating the various building blocks. In fact, many initiatives do not have a pre-defined process or timeline for updates. Actors should align on realistic timelines to ensure continuous improvement of the overall system. More generally, embracing the principle of continuous improvement might well prove to be the most impactful action stakeholders can take in the short run. Taking such an iterative approach would acknowledge that initial estimates might come with considerable measurement error, but that stakeholders should work together to reduce this measurement error over time. It would also reassure stakeholders that suggestions for improvement can be discussed and incorporated at regular intervals.

Food systems also contribute to other environmental problems such as eutrophication, acidification, or biodiversity loss, and many initiatives seek to quantify these impacts (Deconinck, Jansen and Barisone, 2023[4]). The concept of building blocks as identified in this report could be useful for these other environmental impacts as well.

The question of measuring and communicating environmental impacts such as carbon footprints is especially important in an international trade context, as inconsistent approaches could create unnecessary trade barriers (WTO, 2022[6]) (Deconinck, Jansen and Barisone, 2023[4]). A detailed discussion of trade implications and potential policy options is beyond the scope of this report although the discussion will touch on some of these aspects.

Box 1.1. Developments in Scope 3 reporting and target setting

An important source of demand for more precise carbon footprint information is the growing expectation for firms to report and reduce their so-called “Scope 3” emissions (Deconinck, Jansen and Barisone, 2023[4]).

Whereas Scope 1 emissions are the emissions of a firm's own activities, and Scope 2 are the emissions of a firm's purchased energy, Scope 3 refers to emissions in the firm's supply chains, both upstream and downstream, as well as other emissions indirectly related to the firm, such as those linked to its investments (GHG Protocol, 2011[7]) (OECD/BIAC/WEF, 2023[2]). As an illustration, emissions from the production of wheat are part of the Scope 3 emissions of the industrial bakery purchasing the wheat, as well as of the Scope 3 emissions of the retailer selling the bread. The growing trend towards reporting and reducing Scope 3 emissions thus indirectly affects agricultural producers, as downstream firms may ask more detailed carbon footprint information from farmers to use in their Scope 3 reporting.

In the European Union, the Corporate Sustainability Reporting Directive (CSRD) makes Scope 3 reporting mandatory for many firms. Eventually, the requirement will cover not just large firms listed on EU financial markets, but also other large firms based in the EU and small and medium-sized enterprises listed on EU financial markets, including EU subsidiaries of foreign firms (European Commission, 2024[8]).

The International Financial Reporting Standards (IFRS) Foundation, which develops widely-used financial accounting standards, has recently developed sustainability reporting standards (known as the International Sustainability Standards Board (ISSB) standards). The climate reporting standard, released in 2023, requires Scope 3 reporting. These standards are voluntary, but are expected to be highly influential. In the United Kingdom, for example, discussions are underway on the creation of a UK Sustainability Disclosure Standard, which will be based on the ISSB standards (UK Department for Business and Trade, 2023[9]). Similarly, Japan has established the Sustainability Standards Board of Japan which is expected to develop sustainability disclosure rules by 2025 based on the ISSB standards (EY, 2023[10]).

Other jurisdictions have been considering Scope 3 reporting requirements. In the United States, the Securities and Exchange Commission (SEC) had initially proposed a climate disclosure rule which would include Scope 3 reporting requirements, although this requirement was dropped in the final proposed rule (SEC, 2024[11]). However, in California the Climate Corporate Data Accountability Act of 2023, which applies to large firms doing business in the state, does include mandatory Scope 3 reporting (Engler, 2023[12]).

Moreover, even before recent mandatory reporting rules, Scope 3 reporting was on the rise globally. Among all publicly listed firms worldwide, about 37% of firms disclosed at least some of their Scope 3 emissions as of May 2023, a doubling in three years’ time (MSCI, 2023[13]). Among the 500 largest firms listed in US stock exchanges, 77% disclosed their Scope 3 emissions in 2023, up from 62% in 2021; among the 3000 largest listed firms, 43% now disclose Scope 3 emissions, up from 16% in 2021 (The Conference Board, 2024[14]).

Similarly, a growing number of firms is setting emission reduction targets which include their Scope 3 emissions. The Science Based Targets initiative reported that 4 204 firms had signed up to science-based emission reduction targets at the end of 2023, a doubling compared with one year earlier (SBTi, 2024[15]). For nearly all firms, targets cover Scope 3 emissions (SBTi, 2023[16]). This includes major retailers across OECD countries, such as Aeon (Japan), Ahold Delhaize (Belgium, Netherlands, United States), Aldi (Europe, United States), Carrefour (Europe, Latin America, Middle East and North Africa), ICA (Sweden, Norway, the Baltics), Kesko (Scandinavia, the Baltics), Migros (Switzerland), Tesco (United Kingdom, Europe), Walmart (United States, Canada, Latin America, Asia), and Woolworths (Australia). Food-related emissions tend to be a significant portion of retailers’ Scope 3 emissions, which suggests a growing demand for precise quantification of these emissions.

This report is organised as follows. The next chapter provides some background on GHG emissions in food systems, highlighting four important findings from the literature which should inform the design of carbon footprint measurement in food systems. Chapter 3 clarifies the concept of a system of reliable and widespread carbon footprints in food systems as used in this report and presents the eight building blocks. The following chapters introduce each of the building blocks. Each chapter starts by explaining the importance of the element, followed by a first assessment of the current state, and gaps or inconsistencies to be addressed. The final chapter concludes by bringing together the priority actions for policymakers, stakeholders, and the research community.

References

[4] Deconinck, K., M. Jansen and C. Barisone (2023), “Fast and furious: the rise of environmental impact reporting in food systems”, European Review of Agricultural Economics, Vol. 50/4, pp. 1310-1337, https://doi.org/10.1093/erae/jbad018.

[12] Engler, H. (2023), Companies need to integrate climate reporting across functions to comply with California’s new law, Thomson Reuters, https://www.thomsonreuters.com/en-us/posts/esg/california-climate-reporting-law/.

[8] European Commission (2024), Corporate sustainability reporting, https://finance.ec.europa.eu/capital-markets-union-and-financial-markets/company-reporting-and-auditing/company-reporting/corporate-sustainability-reporting_en.

[10] EY (2023), What’s next for Japanese sustainability disclosure standards, https://www.ey.com/en_jp/sustainability/whats-next-for-japanese-sustainability-disclosure-standards.

[7] GHG Protocol (2011), Corporate Value Chain (Scope 3) Accounting and Reporting Standard, https://ghgprotocol.org/sites/default/files/standards/Corporate-Value-Chain-Accounting-Reporing-Standard_041613_2.pdf.

[13] MSCI (2023), The MSCI Net-Zero Tracker, July 2023 update, https://www.msci.com/documents/1296102/38217127/MSCI-NetZero-Tracker-July-2023.pdf.

[1] OECD (2024), “Towards more accurate, timely, and granular product-level carbon intensity metrics: A scoping note”, Inclusive Forum on Carbon Mitigation Approaches Papers, No. 1, OECD Publishing, Paris, https://doi.org/10.1787/4de3422f-en.

[5] OECD (2023), OECD Guidelines for Multinational Enterprises on Responsible Business Conduct, OECD Publishing, Paris, https://doi.org/10.1787/81f92357-en.

[2] OECD/BIAC/WEF (2023), Emissions Measurement in Supply Chains: Business Realities and Challenges, World Economic Forum, https://www3.weforum.org/docs/WEF_Emissions_Measurement_in_Supply_Chains_2023.pdf.

[3] PACT (2023), PACT Pathfinder Framework: Guidance for the Accounting and Exchange of Product Life Cycle Emissions, Version 2.0, https://www.carbon-transparency.com/media/b13h4b25/pathfinder-framework_report_final.pdf.

[15] SBTi (2024), SBTi doubles corporate climate validations in one year as scale up gathers pace, https://sciencebasedtargets.org/news/sbti-scale-up-gathers-pace.

[16] SBTi (2023), Scope 3: Stepping up science-based action, https://sciencebasedtargets.org/blog/scope-3-stepping-up-science-based-action.

[11] SEC (2024), SEC adopts rules to enhance and standardize climate-related disclosures for investors, https://www.sec.gov/news/press-release/2024-31.

[14] The Conference Board (2024), Time to Step Up Efforts on Scope 3, https://www.conference-board.org/publications/time-to-step-up-efforts-on-scope-3.

[9] UK Department for Business and Trade (2023), UK Sustainability Disclosure Standards, https://www.gov.uk/guidance/uk-sustainability-disclosure-standards.

[6] WTO (2022), What yardstick for net zero? Trade and Climate Change Information Brief n° 6, World Trade Organization, https://www.wto.org/english/news_e/news21_e/clim_03nov21-6_e.pdf.