Significant changes throughout the agricultural supply chain are needed if global climate targets are to be met and food security uncompromised. Large companies within the agricultural supply chain, such as McDonald’s, JBS, Tesco, and Nestlé, have begun to take action to estimate, report, and reduce emissions throughout their supply chain. This often takes the form of mitigation targets or pledges to reduce greenhouse gas (GHG) emissions beyond a set baseline. Additionally, some companies, such as Coles and Five Founders, have produced carbon-neutral products, offsetting the emissions from food products in an attempt to capture the attention of the conscious consumer.
These targets and claims made by large companies affect the smaller businesses and farms throughout their supply chain, potentially requiring producers to estimate, report, and reduce their emissions. However, the interaction between these different types of targets and claims can be confusing to navigate. Below, we have provided some FAQs to help you understand some of the key terminology used to describe and report different GHG targets and claims.
For those who want to know more about the interaction between estimating GHG emissions and accounting for GHG reduction targets, we are in the process of putting together a discussion paper. It will provide practical examples of overlapping claims and best practice disclosure to avoid compromising the accuracy and integrity of these claims.
What is greenhouse gas estimation and what does it have to do with my farm?
Farmers, just like any other business operator, can estimate the greenhouse gas emissions (GHG) emissions and removals generated by their business activities, such as enteric methane, fertiliser use, or sequestration from vegetation, on a yearly basis. These estimates should be produced by gathering data in accordance with on the appropriate ISO standard [1] or GHG Protocol [2], [3] and/or using approved tools which align with these standards such as the GAF tools [4].
These emissions are broken down in to sub-categories or ‘scopes’.
- Scope 1: all direct emissions from the farms owned and controlled sources.
- Scope 2: indirect emissions associated with purchased electricity.
- Scope 3: all other indirect emissions associated with your business from third-party sources, not owned or operated by your business (up and downstream)
GHG emissions estimates are often referred to as:
- “Gross” = GHG emissions only and/or,
“Net” = GHG emission and removals (annual sequestration of vegetation and/or soils).
Farms can have negative net GHG emissions if annual removals are higher than annual gross GHG emissions.
Synonyms: Carbon footprint, GHG Account, Carbon calculation
What is GHG accounting?
Accounting is the quantification of emission reductions or removals achieved beyond a set baseline resulting from activities intended to reach a mitigation target or commitment, and/or generation of tradable units or carbon credits [5] or simply to track progress towards a self-established mitigation goal [6].
Examples: Science Based Targets, carbon projects and GHG emissions reductions targets.
What are Science Based Targets and what do they have to do with my farm?
SBTs are emissions reductions targets which are in line with what the latest climate science deems necessary to meet the goals of the Paris Agreement – limiting global warming to 1.5°C above pre-industrial levels [7]. The Science Based Target Initiative (SBTi) has created a framework and guidance to support a range of entities to account for progress towards SBT including the forest, land and agriculture (FLAG) guidance for entities in the agricultural sector [8]. FLAG emissions include emissions from land use change (e.g. deforestation, draining of peatlands etc.), land management (e.g. enteric fermentation, fertiliser, manure management) and optionally accounts for emissions removals and storage (e.g. afforestation, improved forest management).
Major food production, processing, and retailing entities such as Coles Group, Fonterra, Inghams, Silver Fern Farms, Synlait Milk, McDonalds, and the Woolworths Group have set SBTi FLAG targets [9]. These entities are required to set near term reductions targets for all sectors and scopes and cannot purchase and retire carbon credits to meet these near-term targets.
For example, Woolworths have committed to a near term FLAG target for their Scope 3 agricultural emissions:
“Woolworths Group commits to reduce absolute scope 3 FLAG GHG emissions 39.4% by FY2033 from a FY2023 base year. Woolworths Group also commits to no deforestation across its primary deforestation- linked commodities, with a target date of December 31, 2025.” [9].
For Woolworths to meet their FLAG reduction target they will need to estimate their scope 3 FLAG emissions and report progress towards this goal.
For a company to estimate these emissions they will need farmers within their supply chain to estimate and report their scope 1 and 2 emissions in line with the SBTi FLAG guidelines and possibly report emissions removals and storage (annual sequestration often referred to as insetting). Suppliers will then need to support farmers to reduce their emissions or increase their removals over time to reach their Scope 3 targets.
What are carbon projects and what do they have to do with my farm?
The Australian Carbon Credit Unit (ACCU) scheme provides methodologies which landowners or ‘project proponents’ can follow to obtain units from reductions or removals beyond a set baseline. If the project is able to demonstrate that it meets the requirements of the appropriate method through third party verification the project proponent can then sell the verified units to allow other businesses to make carbon neutral claims, hold the units like shares, or use the units to offset their own emissions and make Carbon Neutral (or reduced emissions) claims. Once the units are retired against a claim, they are unable to be used again.
Participation in the ACCU scheme or any other voluntary carbon credit programme is voluntary. It is one way that farmers can be rewarded for emissions reductions and removals. However, it is important to note that the units or ‘carbon credits’ are sold they cannot be used to lower the emissions of the farm and should not be reported to suppliers.
Synonyms: Carbon credits, units, ACCUs, offsets
Is my farm Carbon Neutral and does it need to be?
Any business can only claim to be Carbon Neutral through certification by organisations such as Climate Active [10]. To achieve this certification a farm can estimate their yearly emissions including all scopes. They must then retire the equivalent number of carbon credits as their emissions.
For Climate Active certification the sequestration occurring in the vegetation on this farm (often referred to as insetting) cannot yet be counted towards Carbon Neutral certification as guidance for this is still only in draft form [11]. There are integrity issues such as additionality and permanence that must be addressed for this annual sequestration to be equivalent to retiring carbon credits. It should be noted that the Carbon Neutral claim is only valid for the year the farm is certified and the process must be repeated to maintain Carbon Neutral status.
Carbon Neutrality accreditation is voluntary and farmers should weigh up the cost-benefit of this accreditation before seeking it. There is no requirement to be Carbon Neutral if your suppliers have set SBTs – you only need to report you scope 1 and 2 emissions and possibly removals to those suppliers.
Synonyms: Carbon Zero, Net Zero Carbon
Is my product Carbon Neutral?
Products can also be labelled Carbon Neutral if a Life Cycle Assessment of all the emissions in the creation of the product are estimated as defined by the boundary set and equivalent carbon credits are purchased and retired.
For example, the Coles Group became the first major Australian supermarket to launch its own carbon neutral beef range [12]. Coles worked with beef farmers across Victoria and New South Wales to estimate their emissions, from pasture to store, and then Coles purchased the equivalent number of offsets. Their product claim was certified through the Climate Active Carbon Neutral Product Standard [13].
Synonyms: Carbon Zero, Net Zero Carbon