As the food and beverage industry faces increasing pressure to decarbonize, understanding and implementing sensible carbon accounting practices has become a critical step for companies seeking to align with global sustainability goals.
Understanding your full emissions profile is essential to making informed decisions along your decarbonization journey. In this article, we’ll break down the fundamentals of carbon accounting, including key standards, methodologies, and the benefits carbon accounting can bring to companies in the food and beverage industry.
What is carbon accounting?
Carbon accounting refers to the process of quantifying the greenhouse gas (GHG) emissions that a business or organization is responsible for, both directly and indirectly. The carbon accounting process can be used to calculate an organization’s carbon footprint and to identify where its emissions stem from.
Carbon emissions are measured across three scopes defined by the Greenhouse Gas Protocol (GHG Protocol):
- Scope 1: Direct greenhouse gas emissions from owned or controlled sources, such as fuel combustion in company-owned vehicles or emissions from on-site facilities.
- Scope 2: Indirect emissions from the consumption of purchased energy, such as electricity or steam.
- Scope 3: All other indirect emissions that occur in the value chain, including upstream activities like ingredient production and downstream activities like product transportation.
By accurately calculating emissions across these scopes, businesses can understand their full corporate carbon footprint and identify opportunities for emissions reduction.
Aligning with carbon accounting standards
Several carbon accounting standards and frameworks provide the foundation for calculating and reporting GHG emissions. These include:
- GHG Protocol: The GHG Protocol publishes the most widely used standards for measuring and managing GHG emissions. It outlines how to account for emissions across the three scopes and provides guidelines for accurate reporting.
- ISO 14064: This international standard, part of the ISO 14000 family of standards, specifies principles and requirements for quantifying and reporting GHG emissions and removals at the organization level. It aligns closely with the GHGP and is often used in conjunction with it.
- Task Force on Climate-related Financial Disclosures (TCFD): The TCFD provides recommendations for companies to disclose climate-related risks and opportunities in their financial reports, including emissions data.
- Partnership for Carbon Accounting Financials (PCAF): PCAF offers a standardized method for financial institutions to measure and disclose their financed emissions — particularly relevant for companies seeking to account for investments or lending-related emissions.
Food and beverage companies should consider which standard aligns with their voluntary or mandatory reporting needs and the needs of their industry. Using these frameworks helps to ensure that businesses can track their carbon emissions consistently, transparently, and in line with international best practices.
👉 Need a quick recap on the regulations? Check out our guides on CSRD reporting and Double Materiality Assessment.
How carbon accounting works
Carbon accounting follows a systematic process to calculate emissions across the supply chain. The key steps are as follows:
Data collection
This involves gathering emissions data related to business activities. This can include energy consumption, transportation logistics, and supplier emissions, and can be based on the amount of materials used (‘activity-based method’) or the amount of money paid for a particular good or service (‘spend-based method’).
This data typically comes from energy bills, production logs, and other operational records, and should include upstream and downstream activities. More often than not, companies will need to engage suppliers to gather all the data required.
Methodology
After identifying all emission sources, they should be categorized under the appropriate scope, and paired with the right emission factors. Emission factors will depend on which methodology is used: activity-based or spend-based. The latter can lack specificity, because these emission factors are built on industry averages. However, activity-based emission factors are not as readily available.
💡 Activity-based vs. spend-based methods
The activity-based method is based on how many units of product or material a company used.
The spend-based method is based on the amount of money paid for a particular good or service.
Emissions calculation
Using emissions factors (standardized data points that indicate the amount of carbon dioxide equivalent emitted per unit of activity), businesses can convert their data into a total carbon footprint. For example, energy use purchased from an outside provider is multiplied by the relevant emissions factor to calculate Scope 2 emissions.
Benefits of carbon accounting
For food and beverage companies, the benefits of implementing carbon accounting are substantial:
- Regulatory compliance: As governments introduce stricter environmental reporting requirements, carbon accounting helps food and beverage companies comply with frameworks such as the EU’s Corporate Sustainability Reporting Directive (CSRD), which requires transparent carbon disclosure.
- Risk mitigation: By understanding their full emissions profile, companies can identify potential risks related to climate change, such as supply chain disruptions or resource scarcity, and implement strategies to mitigate them.
- Operational efficiency: Tracking carbon emissions often reveals inefficiencies in energy use, waste management, or transportation. Optimizing these areas can help you to lower operational costs while also reducing emissions.
- Brand reputation: Consumers and investors are increasingly drawn to companies that demonstrate a strong commitment to sustainability. One survey found that three out of five European consumers consider climate impact when buying food. Carbon accounting enables businesses to showcase their progress and use climate action as a business advantage.
By taking a proactive approach with carbon accounting software, companies in the food and beverage value chain can stay ahead of regulatory demands and industry expectations — while also building long-term value.
Carbon accounting and reporting
Accurate carbon and GHG accounting forms the foundation for effective carbon reporting. CarbonCloud calculates and provides accurate carbon footprint data for companies in the food and beverage value chain so they can improve and report their sustainability initiatives — and then communicate those efforts effectively.
A carbon accounting platform purpose built for companies in the food and beverage industry simplifies the process of collecting, calculating, and reporting emissions data, including supply chain emissions data, ensuring that companies achieve compliance with key standards like:
- CSRD (Corporate Sustainability Reporting Directive): This European directive mandates companies to disclose their sustainability practices, including carbon emissions. For food and beverage businesses operating in or selling to the EU, compliance with CSRD is essential.
- SBTi (Science-based Targets initiative): SBTi provides companies with a framework to set ambitious carbon reduction targets that align with the goals of the Paris Agreement. Many food and beverage companies use SBTi to guide their decarbonization efforts.
And with CarbonCloud, you can build upon your baseline carbon footprint with automated supply chain mapping. While outside of direct operational emissions, accounting for Scope 3 emissions is particularly important for companies in the food and beverage value chain — these indirect emissions account for up to 87% of the food and beverage industry’s carbon footprint.
👉 Read more: How to set SBTi FLAG targets for food companies
Choosing a carbon accounting platform
A robust carbon accounting platform is essential for businesses looking to streamline their carbon management efforts. CarbonCloud offers food and beverage companies the tools they need to automate data collection and supplier engagement, and produce accurate carbon reports and product carbon footprints.
Carbon accounting is a regulatory requirement today — but it’s also a strategic tool for food and beverage companies looking to manage risks and gain access to a reliable emissions inventory. With CarbonCloud, businesses can ensure that their carbon accounting process is accurate, streamlined, and aligned with the latest standards, positioning them as leaders in the transition to a low-carbon economy.
If you haven’t already, now’s the time to get started with carbon accounting. Not just to meet compliance needs, but to build a more sustainable and resilient future for both your company and the planet.
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