Emissions Reduction and Grain Contracts
Information about field activities can be scored and shared with downstream supply chain partners to create new value for crops.
Let’s get this myth out of the way first…
There is no differentiated market, nor a workable definition, for any farm or farming system that self-declares itself to be sustainable.
There is broad agreement in the food industry that ‘sustaining’ the status quo isn't good enough because conventional farming is highly extractive of natural capital. This is how the term 'regenerative' originated.
The Prairies of western Canada markets significant amounts of food to companies and their customers, all around the world. The businesses that buy these ingredients from farmers and resell them will play a crucial role in providing the transparency that brands are seeking.
New definitions emerge constantly in the world of emissions reductions protocols and climate finance. It’s necessary to evolve the language (carbon sequestration vs. carbon removal, for example) to clean up greenwashing and misdirected payments, but this also makes it hard to keep up!
Because it’s not black-and-white (nor is it no-till), marketing ‘regeneration’ requires new information about field activities to be measured and scored. Regeneration is context-specific and complex, beautiful and life-affirming, and that’s why people get so excited about its potential to solve some of the world’s toughest challenges.
What the Heck Are Scope 3 Emissions?
The most important thing coming in 2023 is Scope 3 emissions reporting by some publicly-traded food companies. Scope 1, 2, and 3 emissions refers to the tiers that categorize greenhouse gas (GHG) emissions in corporate reporting. According to this academic paper on emissions reporting and brand commitments, the definition of Scope 1, 2 and 3 emissions for food companies is as follows:
“Scope 1 emissions are those that a company is directly responsible for, such as those released from their owned and operated plants and factories.
Scope 2 emissions are indirectly produced by the company, such as the emissions generated by the purchased electricity, heating, and cooling required by the company's own plants and factories.
Scope 3 emissions are all other emissions, most often associated with the company's value chain, such as the upstream emissions from growing crops for the product…”
As the report goes on to analyze, most of the world’s food companies are implementing new accounting protocols to validate progress towards stated commitments to decrease GHG emissions from their operations. The urgency to complete this work is higher for public companies (as opposed to private entities) because securities commissions and investment fund asset allocators, all over the world, are now scoring stocks based on environmental, social, and governance (ESG) metrics.
The most startling fact here is that upwards of 90% of a food company’s GHG emissions can happen at the Scope 3 level of their supply chains.
It makes sense when considered alongside the equally-startling environmental impacts of nitrogen fertilizer escape, which we’re learning about this month in the new course Foliar Nitrogen - a must-watch educational resource for farmers and agribusiness professionals alike.
In 2023, there are several initiatives rolling out in western Canada designed to help food and beverage companies gain visibility, influence, field data, and scores around their Scope 3 emissions. Some of the companies that handle grain crops and/or sell them as food ingredients are being asked to provide a lot more information to their customers than just the standardized grade.
The obvious way to compel farmers to report field activities is to require it in the contract, and to pay for it in return.
There are a few successful segregated value chains that have been trading for many years. They are quick and simple to implement. In fact, the ability to offer customers full supply chain transparency and Scope 3 emissions data is arguably the most compelling strategic advantage that a grain company could implement today.