Key insights from the VCI Food and Agriculture Technical Guidance

In 2023, the Value Change Initiative (VCI) published a new Technical Guidance titled Achieving Net Zero Through Value Chain Mitigation Interventions: Exploring Accounting, Monitoring & Assurance in Food and Agriculture. This guidance is the output from the 3^rd Food & Agriculture Working Group which brought together 31 organisations committed to paving the way for meaningful Scope 3 action. It aims to provide sector-specific solutions at implementation level to account for interventions, report impact up and down the value chain, and show progress towards companies’ climate commitments with credible reporting and trustworthy data.

The VCI is actively participating in dialogue and following new developments in the Scope 3 regulatory landscape –  among others the SBTi’s Food, Land and Agriculture Guidance; GHG Protocol’s Land Sector Removals Guidance; EU’s Corporate Sustainability Reporting Directive (CSRD) and the US Climate-Related Disclosures to align its guidance with international best practice. This allows our members to anticipate regulatory changes, as well as feed lessons learned from concrete implementation cases back into upcoming guidance.

In the launch webinar of the VCI’s Food and Agriculture Technical Guidance, Matt Ramlow, Research Associate from GHG Protocol/World Resources Institute and Steven Rosenzweig, Principal Scientist from General Mills shared their ideas on how the Technical Guidance can help companies account for Scope 3 emissions in Food and Agriculture value chains. Here is what we learned.

There’s a need for pragmatic solutions to leverage current implementation capacities

The Technical Guidance takes the current reality as a starting point and offers pragmatic approaches to Scope 3 accounting with concrete examples. This includes questions on how to work with “good enough” rather than perfect data while safeguarding conservativeness, and how to continue to improve current data to make better informed decisions. To this end, the Technical Guidance proposes ways to use existing methods to assess the contextual uncertainty in data and methods to achieve the highest possible integrity.

VCI has identified barriers for companies while tracing products to farm-level in supply chains, and aims to provide actionable solutions to address them. For example, VCI solutions can enable data exchange between value partners, says Matt Ramlow. “While uncertainty in land sector estimates remains a challenge to credibly report Scope 3 emissions, the VCI helps companies evaluate the level of uncertainty they have with the information they are able to collect.”

While uncertainty in land sector estimates remains a challenge to credibly report Scope 3 emissions, the VCI helps companies evaluate the level of uncertainty they have with the information they are able to collect.

The Technical Guidance also prepares organisations for future scenarios, providing a concrete vision for ways of working efficiently with the right safeguards. This includes implementation principles and methods to leverage new technologies and collective action to start accounting and reporting Scope 3 emission reductions. Meanwhile the Guidance still leaves space for companies to articulate solutions to emerging challenges – so they can take action on Scope 3 now, and improve as they go along.

Shifting the paradigm from supplier-by-supplier to landscape-level action

Full physical traceability in Food and Agriculture value chains would often only be possible with huge trade-offs. Instead of focusing on individual suppliers, the VCI proposes working at landscape level by grouping them in a credible and actionable Supply Shed.

The VCI defines a Supply Shed as: “A group of suppliers in a specifically defined market (e.g., at a national or sub-national level) providing functionally equivalent goods or services (commodities) that can be demonstrated to be within the company’s supply chain.”

Supply Sheds have the potential to unlock action in value chains by allowing companies to track, claim and report emission reductions from the sourcing region, rather than needing to know the exact farm that has produced each grain entering the reporting company’s food processing facilities. “The concept of Supply Shed continues to come up in conversations with companies to address issues in Scope 3 reporting,” says Matt Ramlow. “The actionable criteria for a Supply Shed proposed by the VCI helps companies determine a spatial boundary for their sourcing regions, which has previously been hard to define.”

The actionable criteria for a Supply Shed proposed by the VCI helps companies determine a spatial boundary for their sourcing regions, which has previously been hard to define.

Steven Rosenzweig offers a practical example of how General Mills has applied the Supply Shed concept in their work. “We don’t have perfect traceability across many supply chains, and there can often be dynamic shifts between years. The Supply Shed concept can be applied when traceability to farm-level is not feasible.” He further shares that they use satellite imagery and modelling to track agricultural practices and ecosystem outcomes, therefore enabling a dynamic GHG inventory at Supply Shed level. “These tools can give a more accurate estimate of Scope 3 emissions and landscape level progress, as well as identify emission hotspots for future interventions.”

Collaboration and co-investment in the value chain are key

Co-investment in value chain interventions would allow companies to share costs and benefits of emission reductions. Steven Rosenzweig says more collaboration is needed in Supply Sheds shared by different companies. Applying VCI concepts enables co-investment with clients and customers who share value chain emissions, stimulating action and incentivising first-movers. 

Steven Rosenzweig further argues that collaborative investments in the broader ecosystem can help build capacity for wider adoption of solutions such as regenerative agriculture. “While these investments may not lead to directly claimable climate impacts, they build capacity at the community level to help farmers adapt new practices, ultimately benefiting all companies in the landscape.”

Matt Ramlow adds: “The VCI Technical Guidance helps ensure cooperation for solutions, as well as manage allocation of benefits and who gets to make claims on Scope 3 emission reductions.”

Why do we need a Food and Agriculture Technical Guidance in the first place?

Even as more companies are setting science-based targets and increasingly ambitious climate goals, taking action on Scope 3 emissions has remained a challenge. This is partly due to the number of actors involved, each having responsibility over only a part of the value chain. Emission reductions have been slowed down by issues such as the perceived threat of freeriding, low quality of data moving from value chain tier to tier, and lack of clear, common guidance on accounting for interventions together with value chain partners.

The Technical Guidance provides consensus-driven and pragmatic solutions grounded in the reality of complex global value chains. In a context where traceability and data are limited, it enables companies working in Food and Agriculture to take pragmatic action now, and to report on their progress. Scope 3 action can’t afford to wait for perfection, but value chain actors can aim for continuous improvement as new solutions become available.

We are launching our next Food & Agriculture Working Group in November 2023 to address remaining gaps in the VCI Guidance. Join our pioneering work to remove barriers to Scope 3 accounting.