Scope 3 data and reporting for food and drink companies: What’s changing and where should the focus be?
When it comes to Scope 3 emissions reporting, the landscape is changing. Those particularly affected by the changes include food and drink professionals and Forest, Land and Agricultural (FLAG)-dominated organisations.
This article outlines the changes we're seeing and recommends what to focus on as you move into the next reporting cycle.
Who should be aware of the recent Scope 3 changes?
Food and drink professionals
Manufacturers of food and drink, who are implementing sustainability and decarbonisation plans.
FLAG-dominated organisations
For those setting a science-based target, under SBTi FLAG guidelines, this captures organisations who have 20% or more of their total gross Scope 1, 2 and 3 emissions from Forest, Land and Agriculture in any sector, or if they fall into one of the following sectors:
Forest and Paper Products
Food Production – Agricultural production
Food Production – Animal Source
Food and Beverage Processing
Food and Staples Retailing
Tobacco
For organisations reporting a corporate GHG Protocol inventory, the LSR Standard is intended for those whose agricultural land-sector activities occur within operations or their value chain, or those who choose to account for and report CO2 removals or CO2 capture.
For most food and drink processors, land-related emissions will sit predominantly within Scope 3, however, they may fall within Scope 1 where an organisation owns or controls agricultural operations.
What are the recent changes affecting Scope 3 reporting?
A lot has changed since we analysed Scope 3 trends back in May. Here are a few recent updates you should be aware of, as they affect the requirements for Scope 3 data and reporting:
the companion implementation manual to the Land Sector and Removals Standard (LSR Standard) published at the beginning of the year;
the Land Sector and Removals Guidance (LSR Guidance) published in June;
the SBTi Corporate Net-Zero Standard V2.0 also published in June; and
the GHG Protocol’s Actions and Market Instruments (AMI) consultation feedback.
The LSR Standard sets the GHG inventory accounting requirements and comes into effect from 1st January 2027. The LSR Guidance explains how these work in practice through calculation guidance, worked examples, and case studies. SBTi V2 governs target setting and implementation. Finally, the AMI Standard is still in development, but will provide the GHG accounting rule book for the market-based mechanisms.
What we address in this article
The developments outlined above are reinforcing a shift across the food and drink sector. Before, your focus might have been on improving emissions calculations, but it's becoming increasingly important to also understand where you can:
- influence supply chain emissions;
- achieve reductions; and
- determine what evidence is needed for those reductions to be recognised.
For FLAG-exposed organisations, the challenge is no longer just what to calculate.
The recent changes suggest that we are approaching a new era of ‘multi-statement reporting’, where more activities and metrics must be covered than before.
In light of this, we recommend setting aside some time to understand:
where and how you can influence emissions across your supply chain; and
what that means for your decarbonisation strategy.
Read on to find out more about the changes leading to this new way of reporting.
Land Sector and Removals
The LSR Guidance highlights the importance of traceability within an organisation’s supply chain when it comes to recognising reductions within the physical inventory.
Where an organisation wants to demonstrate physical traceability for a particular boundary, it needs an eligible chain of custody that provides auditable evidence.
Traceability does not itself deliver the reduction, but it helps to determine:
whether the impact of a decarbonisation lever can be attributed to purchases by an organisation; and
whether it’s reflected in its physical inventory.
For more information on the LSR Standard, take a look at our recent article on the topic.
Science-Based Targets and the AMI whitepaper
As for the SBTi V2.0 and the AMI whitepaper, here's a quick summary:
SBTi V2.0 sets out an implementation hierarchy. The AMI whitepaper points towards multi-statement reporting which could allow actions and market instruments to be reported separately from the physical inventory.
And in a little more detail...
SBTi V2.0 sets forth its ‘implementation hierarchy’ which states that organisations should target emission sources directly where possible. At activity level, this could involve changes to farm-level inputs, practices or supplier engagement. It also formalises ‘activity pool’ and ‘sector level’ mechanisms, where action targets emissions within the same shared system or wider sector, rather than within an organisation’s direct supply chain.
Activity pool and sector-level action apply where structural constraints prevent action at the implementation hierarchy activity level above. Examples are where supply chains are long and complex, or where access to growers is not possible.
Currently, market instruments do not generally reduce emissions reported in physical inventories. SBTi V2.0 allows actions and market instruments outside the physical inventory to support target delivery where its requirements are met, but these must be accounted for and reported separately to the physical inventory.
The AMI workstream is exploring how this could work within GHG reporting, but its proposals remain subject to change. It is therefore worth building towards these routes but remaining conscious of potential changes.
More information on SBTi Corporate Standard V2.0 can be found in our recent article on the topic.
What trends are we seeing within Scope 3 food and drink reporting?
Organisations are assessing supply chains through the lens of influence
Many businesses approach their agricultural Scope 3 reporting in a similar way across commodities, focusing on improving data quality and increasing the use of primary data. However, we’re now seeing a shift towards understanding the different levels of influence organisations have across their supply chains.
Some sit within direct grower programmes where organisations can influence farm-level practices and collect supplier specific data. Others move through trader-intermediated or pooled supply chains where direct engagement with growers is challenging.
Mapping supply chains in this way allows different commodities, regions, and sourcing models to be treated separately. Rather than applying a single approach, you can begin identifying:
where direct decarbonisation is possible;
where supplier engagement is realistic; and
where alternative approaches may be required.
Where you have access to growers or suppliers at farm level, supplier-specific emission factors, primary data collection, and targeted interventions may provide a route to reducing emissions within physical inventories.
Where access is limited, you may need to consider other approaches (including activity-pool and sector-level decarbonisation mechanisms) to meet targets.
The challenge is now in understanding which route is appropriate for each commodity, geography, and sourcing model.
Accounting can be used to build decarbonisation roadmaps and inform decisions
The value of a GHG inventory is in determining which reduction opportunities are feasible, what evidence is required, and how progress can be recognised within reporting and target setting frameworks.
Though market instruments may play a role in recognising reductions against targets, you still need robust physical inventories to understand what’s driving emissions within your value chain, and where action should be prioritised.
Where possible, you should still calculate inventories using farm-level data, but structure them to align with the requirements of the LSR Standard. This can be done by:
separating land management and land use change emissions; and
accounting for concepts such as land use and leakage where required.
This allows inventories to evolve as data quality improves, whilst providing a clearer link between emissions reporting, decarbonisation planning, and implementation.
What should food and drink companies focus on as we move into the next Scope 3 reporting cycle?
We recommend following these 4 steps as we approach your next reporting cycle:
1. Map the supply chain by traceability and access
Make sure you understand:
which commodities and sourcing regions have direct grower relationships;
which have supplier engagement opportunities;
which operate through pooled systems; and
which are trader-intermediated or otherwise difficult to influence directly.
These parts of the supply chain may require different calculation approaches, different roadmaps, and different decarbonisation mechanisms.
2. Where you have supplier or grower relationships, collect raw data that can be used in the inventory
Ensure data collected at farm level is captured in a format the inventory can use, while developing the traceability and chain of custody required to support its attribution.
3. If you can’t evidence a chain of custody, be clear what farm-level primary data can and cannot be used for
Farm-level data can still be valuable for identifying hotspots, designing and monitoring interventions, engaging suppliers, and building future traceability, even where it cannot yet support reductions within the physical inventory.
4. Even though further SBTi FLAG guidance is expected, organisations should not delay actions
In order to hit 2030 targets, action will need to be taken before the updated FLAG sector guidance (aligned with SBTi V2.0) is published in mid-2027.
Start by:
mapping exposure against the LSR requirements;
identifying priority commodities and sourcing models; and
testing where direct, activity pool or sector level action may be appropriate.
The wait for the updated SBTi FLAG guidance should not delay credible actions that can be taken now. There is already sufficient certainty of the direction of travel of net zero frameworks and the emerging reporting requirements.
Do you want to improve the quality of your Scope 3 reporting and ensure it’s aligned to the latest guidance?
We're here to help you if you're:
working out what LSR Standard and SBTi V2.0 might mean for you and your inventory in practice;
trying to determine what might need to change; or
wondering what your level of data allows for within your roadmap.
We have years of experience helping businesses develop robust, transparent and actionable footprints across complex food and drink value chains. And we'll even offer you a free 30-minute chat, if you'd like to discuss this topic, or our services, further.
Browse our food, beverage and agri-tech services
