Scope 3 greenhouse gas emissions account for the lion’s share of the total for the average foodservice business. These are the emissions buried within food and drink supply chains that can be difficult to capture and measure in a consistent way. WRAP has taken on the task of creating a voluntary set of protocols for how food and drink businesses should report their scope 3 emissions. It has just published version 3 of its guidance that includes key changes in areas relating to the quality of data, what should feature within the scope of a company’s inventory, how to approach the task of rebaselining and, most significantly of all, how to account for emissions reduction from land use change and management. In this week’s episode, Hamish Forbes from WRAP joins Nick to cut through the jargon and give The Small Print listeners the lowdown on this next frontier in scope 3 reporting.
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Further reading
Consistency as standard – the drive to define scope 3
Moves aimed at harmonising how food and drink businesses account for value chain emissions have the potential to unlock a range of benefits
Calculating and cutting scope 3 emissions
How foodservice and hospitality companies are beginning to deliver on their scope 3 targets
Transcript
Nick Hughes: The ability to deliver deep cuts in scope 3 emissions is fundamental to the pursuit of net zero. But can businesses keep pace with ever changing reporting requirements? Hello and welcome to the Small Print, a podcast by Footprint Media Group. I’m Nick Hughes, Footprint’s Editorial Director. Each week we delve beneath the headlines of an issue impacting the hospitality and food service sector through our unique lens of environmental and Social Affairs. Scope 3 Greenhouse gas emissions account for the lion’s share of the total for the average food service business. These are the emissions buried within food and drink supply chains that can be difficult to capture and measure in a consistent way. RAP has taken on the task of creating a voluntary set of protocols for how food and drink businesses should report their scope 3 emissions. It has just published version 3 of its guidance that includes key changes in areas relating to the quality of data, what should feature within the scope of a company’s inventory, how to approach the task of re baselining, and most significantly of all, how to account for emissions reduction from land use change and management. In this week’s episode, Hamish Forbes from RAP cuts through the jargon to give the Small Print listeners the lowdown on this next frontier in Scope three reporting. Hamish, thanks for joining us on the Smallprint. You’re here to talk about the Latest update to RAP’s Scope 3 greenhouse gas measurement and reporting protocols. But before we look in detail at what has changed from version 2 to to version 3, let’s zoom out a little and remind us, if you will, why tackling Scope three emissions specifically is so fundamental to food business decarbonization.
Hamish Forbes: Sure. Thanks for having me, Nick. Really glad to be here. So I guess first let’s say, well, what are Scope three emissions? I know many people will know this already. So Scope one is your direct emissions. So that’s things like fuels that you burn, chemical or biological processes that are happening where you control it. Scope two is energy that you purchase. So things like electricity that’s coming from the grid. And then Scope three is everything else that’s in your value chain. So the products you buy, the emissions that are associated with transporting, using and wasting, the products that you sell, employees traveling to work, all the things like that. And so for a food and drink business, Scope three is normally by a very long way, the most significant part of the overall greenhouse gas inventory. So excluding kind of farm businesses, if we’re looking at supply chain businesses, you’re talking 90, 95% of the scope 1, 2, 3 total can often be from just from scope 3. And a really large part of that is due to agriculture and land based processes, products that you buy, so growing crops, raising animals, all of that sort of thing. So it’s really, really critical from a food business perspective.
Nick Hughes: Yes, as you say, it’s that purchased goods and services group, isn’t it? Which encompasses the food and drink you buy essentially, and the emissions embedded within the supply chain that account for such a huge chunk of through business emissions. So, so that’s Scope three. Tell us, what are the Scope three GHG measurement and reporting protocols and also how are they intended to integrate with other reporting initiatives and standards? Because of course we’ve got things like the Science Based Targets Initiative, the Greenhouse Gas Protocol, how does it all fit together?
Hamish Forbes: Yeah, so the rapid Scope three protocols, they are the way to approach Scope three for a food business. So it’s applicable to all food businesses, big and small, whether the start of the supply chain or the end. And the need for it is born from the fact that those bodies you mentioned, things like the Greenhouse Gas Protocol for accounting, Science Based Targets Initiative for target setting and validation, those are really important, critical pieces of infrastructure. They’re equally applicable to all businesses regardless of the sector. So it applies to Hovis Bread and Hilton Hotels just as much as it applies to Microsoft, Manchester United Football Club or Mercedes. So it’s not specific to food. So there’s a lot of information in there which is going to be less of a priority, less relevant for a food and drink business. And there’s also places where they will leave discretion to the reader or the practitioner. And you know, that can lead to inconsistencies between two different businesses reading the same guidance. So what we do with the protocols, and if you’ll forgive me for using a cooking analogy here, is we take the global pieces of guidance and we boil them down. So it’s really concentrated on what is relevant for a food business. We add a bit of a pinch of our own interpretation where it’s needed, dash of, you know, best practice examples from other businesses and kind of serve it alongside some, some signposting of useful resources. All of which is to help making doing that scope 3 assessment easier for a food and drink business ESG manager, you know, and let’s be honest, they’ve got more than enough on their plate at the moment. So it makes it easier, but also makes it more consistent across similar businesses trying to do the same thing.
Nick Hughes: Okay. This is part of the drive to standardize how scope 3 and drink emissions are measured and reported in the context of, I guess historically, a kind of variation in approaches so why is that standardization harmonization piece so important? And what kind of benefits can it unlock?
Hamish Forbes: So yeah, you’re completely right to situate it within a bigger piece. You know, here at rap, we’re really interested in this role of data in driving the food system transition. And this level of standardization is like a foundation for that, which is to say that, you know, Scope three report, it shouldn’t be a box ticking exercise, it should be a tool, it should be information that you can use. And getting to that common foundation helps it realize that for comparable business to business, within the same business over years, tons of information that’s available to outside regulators, investors and customers and all of those sorts of things. But it really fits actually into a wider piece of work around this data standardization question. So there is a government led initiative, the Food Data Transparency Partnership, you might sometimes see it written as the fdtp. So it’s defra led, but it brings together government and industry and at the center of that is unlocking the value of data. And for me, like, how could I summarize that? Really simply, it’s the concept of data efficiency. So get more bang for your buck from the data that you’re collecting and the data that you’re using. And within this broader umbrella we can think of there’s a couple of key areas where emissions data are generated and where they’re needed. So one of them is this sort of supply chain business perspective, which is what the scope 3 protocols and scope 1 and 2 data is all about. One of them is of course farms, primary producers, which is so important for that overall food system impact. There’s various initiatives going on looking at increasing the scale, the amount of environmental data from farms through the likes of HDB and igd, standardization of how that’s calculated and how that’s formatted, and also the governance of that, like who owns that data, on what conditions can it be shared. And then in between that sort of farm and supply chain business is the products. Products are the vector with which that data can move. They’re the things that are bought and sold. And so in other FTTP commissioned research work, such as the Lead4Food project, that includes methodologies for standardizing how that should be calculated with that view of fitting it all together. So what we’re seeing here is that under this FTTP umbrella, we’ve got these various puzzle pieces which are starting to fit together to solve interrelated issues. And the Scope three is, you know, it’s a really crucial part of that.
Nick Hughes: Okay, great. So look, let’s get onto the details of version three of Wraps protocols, but before we look at what’s changed, there may be some businesses coming to this version fresh, having not engaged with previous versions. What can they expect? What are the main elements of this guidance that you’ve put together and how is it structured?
Hamish Forbes: So the good thing is, doesn’t matter if you’ve not read the previous versions, it’s all designed to help, you know, hold your hand along that journey. So we mirror the structure of the greenhouse gas protocols, Scope three protocols and the Scope three standard in terms of the guidance, the steps that it requires of the businesses and we just talk about what that means from a food business perspective and bring that out in very clear boxes with here’s the requirements, here’s the recommendations, here’s the signposts to best practices. So it’s designed to be read from if you’re starting from scratch, but then also providing additional information if you are a bit more advanced. You’ve been doing this for a few years, so yeah, hopefully it will be easy enough to follow from that perspective. And then, yeah, there is lots of added detail, particularly in this version 3 for some of the more complex elements which have, have been addressed in the last few years, particularly relating to land sector emissions. But I think we’ll, we’ll probably come on to that in a moment.
Nick Hughes: We will come on to talk about land use specifically. Is there any, are there any other areas firstly where the guidance has changed in a meaningful way since version two?
Hamish Forbes: Yeah, I’ll highlight a couple of areas which I think are worth being aware of. One of them relates to the scope of your inventory. So what you include, which categories you include. And this is based on changes from the Science Based Targets initiative from their version one to their Corporate Net zero version two draft. So where previously you were expected to cover categories which represent two thirds of your total 67%, it’s now any individual category representation which represents more than 5% of your total footprint should be included. So in simple terms, used to be that if you had, you know, one category was 67%, another category was 20% and everything else was in the remaining 3%, you could have excluded that 20% category, whereas you wouldn’t do that now. In terms of the implications for a food business, what that, what that means, firstly, it means that the screening inventory, so this is the sort of step before you get started where you do a bit of a rougher calculation, often using some quite generic factors based on your spend, just to get a sense of scale that’s going to be more important because it helps justify what you include and what you don’t include. And I think the other implication, and this is probably specifically for your listeners in the hospitality and food service sectors, is that that is actually the sector where it’s almost most difficult to do hard and fast rules because of the different business structures that there are. And so you really need to consider how your business operates and you know what, what that means because there are some categories which will be relevant for some and not for others. Particularly I’m thinking franchises here, you know, obviously likely to be relevant if it’s a franchise model and probably won’t be if it’s not travel of employees. If you’re a sort of catering business that goes to festivals, weddings and that type of thing, that’s, that’s likely to be larger leased assets might be relevant in some cases and so on. And the other category which we’re highlighting, which we hadn’t before, is category two, which is capital goods. And whilst it’s probably not going to be relevant every year, we’re just making sure to call out that if you’re refurbishing, you know, if you’re ripping out some kitchens, building some new sites, it quite likely is going to be relevant in that year. And that’s a really important opportunity to, to change, you know, to change your procurement practices to reduce the emissions at that moment. So I think it’s, we have to take a little bit more of a holistic view really consider all of our categories. Of course the purchase goods category one is still going to be the most important and it’s still where most of the effort should go. But it’s just, you know, go through that process, understand what does this mean for my business structure. My, my way of operating a couple of other big areas where there’s changes. One is in product emission factors. So this is not so much a change of the rules of the guidance, it’s more just that there’s a lot to keep up with. The last few years we’ve seen various attempts at kind of harmonizing methodologies. We’ve also seen a really big growth in third party data service providers. So tech companies that work with food businesses to do their scope three reporting and calculation. So here we’re really trying to guide the reader, just help them make sense of this evolving landscape and what that’s going to mean going forward. The other two, very briefly, one is data quality, which is just where we’re putting a lot more focus on the process of assessing Data quality rather than just what number you get at the end of it. Because through many conversations with food businesses that really drove home that the data quality information needs to be actionable. Scores on the doors, helpful at a quick glance to do comparison. It’s really this metadata, the information about how the data was collected, the sample, the time period, that actually gives you knowledge for where you can make improvements and how. And then the last other significant one is about base year recalculation, which is primarily relevant from a target setting perspective. So it’s that question of what do I do with my historic data, when do I restate my base year and crucially, how do I do it? Because the likes of SBTI are very clear about when you recalculate your base year, when there’s significant changes and structure and methodology. What they’re not so clear about is how you do it in practice. So we looked at some of the best guidance out there from the likes of pact Value Change Initiative and from that we’ve kind of got a flow diagram, a decision tree which helps, you know, in my scenario, what should I do with my historic data? Do I backcast? Do I change it? How do I approach that question?
Nick Hughes: This year sees the launch of the first ever Footprint Festival, a two day experiential and immersive sustainability festival set on a working farm in the heart of the Hampshire countryside. Created for senior leaders across food, service and hospitality, this one of a kind annual event takes place on September 17th and 18th and will blend sensory experiences, transformative content, powerful networking and unforgettable food, drink and entertainment. Tickets are now on sale. Visit footprintfestival.com for more details. As we alluded to earlier, a key development since you published version 2 has been the publication of the final ghd protocol, land sector and removals guidance. So how has that been assimilated into rap’s own guidance and what are the key changes businesses should be aware of?
Hamish Forbes: I mean, yeah, it’s a really massive change. It’s been something we’ve been waiting for in the sector for years. From the Greenhouse Gas Protocol. With this new update, they’ve gone into a lot more detail about some very, very complicated topics. So yeah, the land sector, agriculture, carbon removals and this carbon removals thing is really critical if we want to put the net in net zero, you know, we need to move away from just emissions to thinking about removals as well. Firstly, you know, credit to the team over at Greenhouse Gas Protocol. Done a great job. It’s a surprisingly readable document. I would Say, given the complexity, and it’s a really big improvement on some drafts they had from a few years ago. But it does contain stuff that’s less relevant to food businesses, such as around technical carbon dioxide removal, direct air capture, that type of stuff. So, you know, we’ve digested those updates focused on what’s relevant to food businesses. Our intention here, because it is a complicated area, is to hit the level of detail where the core concepts are understood, that are explained, they’re understood by a food business in enough depth that they know what to look for, they know what questions to ask when they’re dealing with kind of specialist data sources and service providers, they don’t need to know, you don’t need to learn the insights or the ins and outs of, you know, soil science or satellite imaging and all of this sort of stuff. But you need to know what to look out for. And so within this is a few key sections. One relates to land use change and how that is accounted, and the other one, particularly on land management, emissions and removals. So net changes in carbon stocks from land management. And there’s some really critical concepts which underpin both of these, which relate to the traceability and the sort of the chain of custody, the spatial boundary and the level of traceability.
Nick Hughes: So let’s try and root this in practical supply chain insights, if we can. So when we talk about land management and removals, are we talking about, for example, businesses investing in regenerative agriculture and trying to demonstrate emissions reduction from, for example, techniques like cover cropping or from a livestock management perspective, shifting towards mob grazing and some of these techniques that have been claimed to store carbon, lock carbon in the soil, if you like, is that what we’re talking about here?
Hamish Forbes: Yeah, exactly. That is what we’re thinking about. So. So if we situate this within this bigger question of, with the farm data, how do I reduce my emissions? Right. When we’re using static emission factors, so thinking averages from academic papers or secondary databases, what that’s really great for is evidencing substitution. So I replace gas with electricity, I change the number, I replace air freight with sea freight, I change the number, chicken with chickpeas and so on. But what it struggles with is when we’re looking at getting the same thing, the same product from the same supplier, but better. So when suppliers have improved their practices, you know, regenerative agriculture, deforestation and conversion, free products, sort of this sort of thing, it’s about how do I track that over time. And if we can only demonstrate product substitutions and we can’t demonstrate product improvements that is the same product, but better. We’re really missing half the conversation. But that’s where the challenge is. Because given that the environmental footprint of the same product can really vary incredibly significantly, sometimes, you know, an order of magnitude, in order to be able to make these claims confidently and robustly, there’s this extra level of robustness which is needed. And that’s sort of what the LSRS provides, is the how do I meet that level of robustness to have some confidence in being able to claim these emission reductions?
Nick Hughes: Okay. For businesses wanting to substantiate claims around emission reduction due to a change in farm level practices, this is essentially giving them the guidance on how they need to evidence that.
Hamish Forbes: Yeah, yeah, precisely. And so, I mean, maybe I’ll come to the core concepts because I think how do I evidence that these two really core concepts throughout are one is the spatial boundary and the other is the level and the type of traceability. These are very related things. So the spatial boundary basically means how precisely do I know where my purchased product, so the food or the ingredient comes from? Is it bought on an open international commodity market where things are blended? Is it from a specific country or jurisdiction? Could I get down to a particular region or even a specific farm? So, you know, tangibly, that’s the difference between knowing the milk in this cheese came from Europe or it came from Germany or it came from farms in Lower Saxony, or actually that I could pinpoint the address of a dairy cooperative 50 km south of Hamburg and say it came from there. And generally speaking, the more precise your spatial boundary is, then the more potential this unlocks in terms of how precise, how accurate your land use change estimates can be and what sort of removals can be included in a footprint, because you actually need to have physical traceability to the sourcing region. So typically, like the first point of aggregation, the cooperative, the mill, for you to be able to be claiming any removals at all, and then the traceability, that’s the ability to identify, to track, collect information, is basically how do I prove that my product came from a certain location or certain production conditions. So for these most precise levels, you need physical traceability. So I need to, it’s relative to the physical material flows. I bought a quantity of product and there’s some credible demonstration that that physical quantity I got came from, you know, the location or the supplier that I think it did. So what your level is in those cases really defines how you engage with the land sector removal standard and all the things about it. So one of the real takeaways from me for this is that investing in these things, investing in traceability systems, is going to be a big theme in the next few years and it will really unlock potentially quite a lot of value in terms of improving reports and improving what can be evidenced and claimed against.
Nick Hughes: So this is really quite technical stuff, isn’t it? And while there will clearly be some businesses who have understood everything business that you’ve just said, there will be others probably thinking, crikey, that flew straight over my head and you know, it feels far removed from where they are in their Scope three journey. Do you feel we’re still seeing a broad spectrum within the food industry from those businesses at the very beginning of their journey around scope 3 measurement and reporting to those grappling with some of the more sophisticated elements of measurement and methodology like you’ve just described?
Hamish Forbes: Yes, I think there is and I think to some extent there always will be this spectrum because there’s always going to be businesses that are just getting started on Scope three, including new businesses in the uk, internationally, and there’s always going to be trailblazers. So I think that dynamic will, will always exist to some extent. Particularly as, you know, SMEs start doing scope three more and more are brought into the fold. What I think we can help or what would help is making that gap smaller. So it’s not saying that it doesn’t exist, but making it smaller and making it so that even those at the beginning have access to the necessary insights and tools. And that’s really thinking about this broader data ecosystem. So it comes back a bit to mention the Food Data Transparency Partnership earlier. You know, what quality of openly accessible data is available, what quality of calculators or third party providers that really defines how a business can engage with this. And as these improve, as more is available publicly or open source, we do have the possibility to close that gap and ensure that even for someone more time pressured, their assessments are meaningful and useful for their decision making. And I think we’re increasingly seeing movements towards that. Things like the HESTIA platform, all open access, basically the most robust source that we have for global agricultural, particularly crop data. We’re seeing in the land use change space, we’re seeing open access satellite based data through the likes of the World Resources Institute or Orbe by Ad Astra, where you can actually go, you know, down to a subnational level. So I think we’re starting to see that and I think that’s, that’s what we want to encourage and that’s the trend that we’ll hopefully see in the next few years to, to kind of level the playing field a bit.
Nick Hughes: Yes, it’s clearly important that methodological approaches continue to evolve and, and ever growing rigor is applied to the business of measuring Scope three emissions equally. I find as a, as a journalist, it’s often quite challenging to deduce exactly how much progress a company is making towards its net zero target when, you know, businesses seem to be constantly re baselining and altering their approach to measurements. And every data table in a sustainability report seems to come with at least two or three asterisks alongside it. You know, is there a trade off to be managed between on the one hand, the desire for ever more complete and robust data with on the other hand, the need to track and compare emissions reductions over time so that you’re, as a business, you’re demonstrating meaningful progress against your targets?
Hamish Forbes: Yeah, I mean, you know, I sympathise with you in sometimes the difficulty of looking at this information. It does change a lot. Spare a thought for the ESG managers who have to explain why that’s happening to others in their organization who don’t know much about Scope three. It is a challenge and I think there’s going to be tensions going forward on this. I think the key principle that we work towards and that many others that we’ve spoken work towards is about data which is good enough. It’s not about perfect, it’s about good enough. And when we say good enough for what? Good enough for decision making. And what is needed to use data for decision making is going to depend partly on the company. I would love it if businesses were making decisions regardless of whether that showed up in their scope 3 inventory just because it’s the right thing to do. But we know that that isn’t the case and that for many the ability to trace, the ability to demonstrate that investing in this change will lead to X reduction in our footprint that we put out and that our investors see that can be the deciding factor between does it go ahead or does it not? So that’s where operationalizing meaningful tracking data which is good enough, not perfection for perfection’s sake, that’s where it’s important. I think there’s a bit of businesses define that themselves because it will depend on them. But that’s our end goal and I think we’re getting closer to that. But you know, there’s going to be evolving methods, there’s going to be restatements for, you know, for quite a while we just Want to make sure that that’s not deferring or delaying action because, you know, time. It’s critical to be acting now, really.
Nick Hughes: So let’s start to wrap up a pun not intended there, by the way. Um, how, how. How do you intend for this latest version of the guidance to be used by businesses? And also what are the next steps for consultation? Because I believe it is still out for company consultation, is it not?
Hamish Forbes: Yeah, it is. So the current version that was released the other week is out as a draft, so we are receiving feedback on that until the 15th of June. The feedback form is very flexible. If you just want to read one section of feedback on that, that’s fine. You don’t have to do everything, but please do if you’d like to. But we’ll be taking back, taking all of that feedback on form on board. Sorry. Over the summer. So, yeah, seeing what people have said, seeing what makes sense, what doesn’t, have we hit that level that we want to of it being clear and useful for businesses. We’ll also use that opportunity to suggest any other relevant pieces of information. So we are expecting that the Greenhouse Gas Protocol will do an additional guidance document for the land sector removal standard. So we’ll try to ingest some of that if it’s available. And then the full version 3, the final version 3 will be published in the autumn. So, you know, the draft one will be there. And please engage with it, use it as a way to understand the key requirements. And if there’s any places where you think I don’t quite follow it or this could be clearer, then, you know, use the opportunity to feedback so that we can improve it for everybody.
Nick Hughes: Well, Hamish, it’s been really helpful to have you demystify for us quite a complex area of sustainability reporting. I particularly like the observation about data being good enough and not necessarily obsessing over perfect data. I think that’s a really useful takeaway for businesses. Thanks so much for joining us on the Small Print.
Hamish Forbes: No, thank you for having me, Nick.
Nick Hughes: We’ll be back next week with another episode of the Small Print. If you like what you’ve heard, please take a moment to rate, share and subscribe.
