Like it or not, climate reports and emission tracking have become a crucial aspect of modern business, particularly within the food industry. Recent peered review studies revealed that global food systems are directly implicated in some of the most pressing sustainability challenges, contributing to 60% of biodiversity loss (1), 78% of nutrient overloading (2), and 34% of climate change (3).
For food businesses, climate reporting has a twofold advantage: it helps reduce climate impact and boosts financial performance. Whether or not your organization is legally required to report its climate impact, taking proactive steps toward climate reporting can offer many benefits, from better branding to smarter decision-making.
Here’s our roadmap on how to navigate the complex regulatory landscape and get off on the right foot with climate reporting.
Before diving into climate reporting, it's vital to determine the metrics that matter most to your organization.
These metrics often revolve around carbon emissions, energy usage, transport, packaging, food waste, and resource consumption. However, the specific numbers you need to report on can vary depending on factors like industry regulations and stakeholder expectations.
First, you should establish whether your business is legally obligated to report on certain environmental metrics. Legislative requirements can differ by region and industry, so it's essential to understand which specific obligations affect you.
Even if you're not currently obligated to report, it's essential to understand that climate reporting is rapidly becoming a standard practice across industries. Starting early cannot only ensure compliance in the future and avoid legal action, but also offer a competitive advantage as an early-mover.
Most importantly, the cost of Net-Zero transition will be higher in the future and past upfront costs will begin making savings. For example, an analysis suggests that a carbon price in the range of £40-100 per tCO2e in the short term could be consistent with the UK’s net-zero commitments, with the required carbon price potentially rising to £100-£300 by 2050 (2).
Once you've decided to dive into climate reporting, the next step is figuring out what to measure. Kick things off by examining your production processes and supply chain: what ingredients are you using, and where do they come from? Knowing the climate impact of each ingredient is key to accurate reporting.
To simplify the process of measuring and understanding your carbon emissions, consider leveraging powerful, industry-specific tools like the Klimato calculator.
Our tool allows you to assess the climate impact of each individual ingredient used in your recipes as well as of the whole recipes, providing invaluable insights into ingredient hotspots and making it easier to make climate friendly adjustments to your food offering.
Additionally, the Klimato reporting function streamlines the process of compiling and submitting your climate reports, helping you share your climate data with stakeholders, make better decisions, and reduce costs seamlessly.
Klimato's reporting function streamlines the process of compiling and submitting your climate reports. You can use this feature to:
1. Submit to stakeholders: Share your climate data with investors, customers, and regulators to demonstrate transparency and compliance.
2. Make better decisions and reduce costs: Beyond compliance, using climate reporting data to inform your decision-making can lead to significant operational improvements. It helps you identify ways to reduce carbon emissions, optimize resource usage, and enhance sustainability throughout your organization.
3. Food waste: Klimato’s served and procurement reports can be used in reverse for raw ingredients or dishes wasted, meaning that Klimato reports help you measure CO2e emissions for food waste too.
The EU’s Corporate Sustainability Reporting Directive (CSRD) will have a major impact on many businesses across the EU’s food industry.
This directive makes sustainability reporting mandatory under an extensive set of European Sustainability Reporting Standards (ESRS). If you work in food in the EU or supply an EU food company, you must get ready to meet the new sustainability reporting challenges imposed by CSRD.
This directive, which will replace the Non-Financial Reporting Directive (NFRD), aims to standardize sustainability reporting across the EU, making it more consistent and comparable.
Under CSRD, companies will be required to report detailed information on environmental, social, and governance factors (ESG). For food businesses, this means a heightened focus on transparency and accountability in their sustainability practices - pushing organizations to implement robust reporting processes.
When it comes to climate reporting for food businesses, Scope 3 emissions represent one of the most challenging yet essential areas to address. Scope 3 emissions are all indirect emissions from an organization's value chain that don’t fall under Scope 2 - thus not including energy. They are not produced by the reporting organization itself, but therefore by suppliers, customers, and employees of the reporting organization.
One estimate suggests that up to 90% of food company emissions come from the value chain, making it a priority to address them urgently. It’s no surprise that, before long, many food companies will be required to report on this emissions data (3).
Accurately measuring Scope 3 emissions requires a comprehensive understanding of your entire supply chain and often involves collaboration with suppliers to gather necessary data. Addressing Scope 3 emissions not only enhances the completeness of your climate reporting but also helps identify significant opportunities for emission reductions.
Whether driven by legislation, market competition, or a desire to reduce business costs, embracing climate reporting is not only a regulatory requirement, but also a strategic imperative. By understanding the metrics that matter, identifying what to measure, and utilizing tools like the Klimato calculator, you can embark on your climate reporting journey with confidence. The road may be bumpy, but with the right support, your food business can fearlessly navigate the regulatory maze and contribute positively to our planet's future.
Sources
Poore and Nemecek, 2018