The Current State of Net-Zero in Agriculture

Executive Summary

As of this writing, in mid-2023, Greenhouse Gas Protocol (GHGP) and SBTi are hard at work and introducing significant changes to GHG accounting and reporting standards in the land sector. Some of these changes will be quite significant compared to existing carbon accounting practices in our industry. Such as:

1. New Emissions Source Requirements: Land use change, land tracking metrics, soil carbon emissions, removals/reversals, emissions from fertilizer manufacturing and more have been identified as material and required for reporting emissions from the land sector. In addition, new reporting formats are proposed to separate land emissions from non-land emissions, and emissions from removals. These new reporting formats will facilitate setting separate sub-targets for each category of GHG impact.
2. Removals Modeling: Removals have not been included in inventory accounting to date. The general consensus is that the land sector cannot reach a 1.5 degree C pathway without removals, but GHGP is still developing the fine details of removals accounting and reporting. It appears IPCC Tier 3 approaches like biogeochemical models and remote sensing to monitor practice changes on farms will be critical to meet removals reporting safeguards.
3. Supply Sheds + Interventions: Traceability has been an ongoing challenge for Scope 3 accounting from cropland and rangeland. Standards are introducing flexibility for Scope 3 accounting to adopt “supply shed” or sourcing region approaches for commodities, but this adds complexity in how supply shed + interventions will function in annual inventory reporting. We interpret this as the first time that project and inventory accounting have merged into a single process, which is pretty exciting. VCI has been engaged in organizing working groups to identify the best practice for these efforts.

The challenges of creating and meeting the proposed standards are sizable. However, the opportunities are equally great. Successful implementation will mean companies can invest in their supply chains to incentivize and account for farming practices to be adopted over the long term to increase soil health, reduce emissions, and remove carbon from the atmosphere.

Introduction

To date, over 4,600 companies have pledged to reduce their carbon emissions with a science-based approach. Globally, we must halve our emissions by 2030 and be net zero by 2050 to reach a 1.5 degree C greenhouse gas (GHG) reduction pathway. But how do individual companies in the land sector, specifically those managing agricultural lands or sourcing from those lands, measure the carbon footprint they want to reduce? How should they measure and report their starting place so they can confidently demonstrate progress?

The answer requires a consistent process in measuring and reporting GHG emissions over time. Today, decarbonizing the agricultural supply chain is addressed by voluntary standards. However, these approaches for the land sector are new and still evolving. The content below provides a basic explanation of their current state, and what agricultural land sector organizations need to know to navigate the changing landscape of Scope 3 GHG accounting.

Overview:

• The main voluntary standards bodies addressing the question of how to measure and report emissions and reductions for companies in the ag value chain
• How two of the most important standards bodies are approaching greenhouse gas accounting and target setting
• The largest proposed changes to carbon accounting that may alter companies’ current approach and should be monitored closely by organizations with net-zero targets

Voluntary Standards Bodies

The last few years have been busy with a large number of net-zero commitments (more than a third of the global market capitalization has set  ) and new standards being proposed in the land sector to help achieve those commitments. We have also seen a significant commitment from Nestle, Pepsi, Danone, General Mills, and others to source from acreage following regenerative practices. Companies that work in the agricultural supply chain are committed to reaching net zero via regenerative agricultural practices, but we are still developing a standardized accounting process to reach that goal. In short, we know the goalpost but are still strategizing on the best way to reach it.

The following voluntary standards are working to help create a framework to achieve GHG reduction goals in the agricultural land sector:

1. GHG accounting standards like ISO 14064 part 1 or the Greenhouse Gas Protocol (GHGP) and guidance built upon GHGP principles like the Value Change Initiative (VCI), which pioneered the concept of supply shed accounting to enable companies to reach net-zero targets
2. Reporting initiatives/standards like CDP, the Global Reporting Initiative (GRI), or the Task Force on Climate Related Financial Disclosures (TCFD)
3. Target setting standards like the Science Based Target Initiative (SBTi)

These standards are complementary and provide a framework for companies in the land sector to achieve their net zero goals, as detailed in the figure below.

What are the major opportunities for the Land Sector and Removals Guidance?

The challenges of creating and meeting the proposed standards are sizable. Still, it is important to recognize the tremendous amount of effort that has been invested in these frameworks and in technological solutions available to help inform the frameworks. GHGP, VCI, SBTi, and those that support them have created an incredible amount of guidance in a short timeline (even with regards to GHG accounting timescales) to inform the development of the LSRG. There is a good deal of balancing that is required to develop an accounting system that can be applied to all companies that source products and ingredients from working lands. Once established, this accounting guidance will provide a framework to account for many of the regenerative practices that have a climate benefit.

A successful implementation of the LSRG will mean companies can invest in their supply chains to incentivize and account for farming practices to be adopted over the long term to increase soil health, reduce emissions, and remove carbon from the atmosphere.

What’s Next for Net-Zero Target Setting and Accounting in Agriculture?

GHGP has undergone an extensive outreach process and has collected comments from pilot partners and technical reviewers in Q4 of 2022 and Q1 of 2023. The next steps are for a final version of the Greenhouse Gas Protocol Land Sector and Removals Guidance to be developed and released in 2023. Following the final version of this guidance, SBTi FLAG will be updated to ensure SBTi is in proper alignment with GHGP. At that point, we will have a hard-earned framework to continue supporting the adoption of regenerative agriculture at scale.

What about non-carbon ecosystem services?

The co-benefits associated with the adoption of regenerative agriculture should not be ignored. One could argue soil health is the most critical of these co-benefits, as this will be crucial to prioritize to produce food and fiber for generations to come.

We also know that regenerative agriculture has benefits from water quality/retention to biodiversity. Similar to what we are developing for carbon in our industry, there is a need for standards to measure and report these additional benefits. Once we agree on what we will measure and how, we will report these ecosystem services. CIBO is committed to building a seamless process to report these outcomes. Indeed, CIBO is already leading the way in anticipating and developing forward-looking solutions. CIBO’s supply shed tool already quantifies regenerative practice adoption, tillable acres, and yield (in addition to carbon outcomes). Additionally, CIBO has already incorporated watershed districts for comparisons and quantification in anticipation of adoption of standards such as the Science Based Targets Network Freshwater Guidance.