A first step in the harmonisation of carbon reporting for the dairy sector

28th November 2022

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The dairy sector recognises the need for an
industry aligned approach for delivering
measurable GHG reduction, removals,
and resilience building initiatives.

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There is a growing ambition across the food and drink industry to take action on climate change. Many of SAI Platform’s 170 member companies have already committed to ambitious GHG targets in line with science-based targets.

Aligning on how to quantify GHG emissions and potential removals is critical for the dairy sector’s journey towards Net Zero and throughout 2022, SAI Platform has been developing a carbon reporting tool, based on the International Dairy Federation’s Carbon Footprint Guidelines. The Carbon Module will be integrated into the Sustainable Dairy Partnership (SDP) Reporting Hub in January 2023.

We recently met with two instrumental players in this exciting development for the sector to hear more about the Carbon Module and how it will support dairy sustainability. Anna Flysjö, Scientific Lead on Climate & Environment at Arla Foods and Khaoula Essoussi, Milk and Dairy Ingredients Sustainability Manager at Danone are active members of SAI Platform’s Dairy Working Group.

Why is the Carbon Module relevant for the dairy sector?

Khaoula Essoussi: Dairy buyers are under increasing pressure from external stakeholders, value chain partners and end consumers to reduce scope 3 emissions, in line with science-based targets. At present, our suppliers are using a varied range of tools and methodologies, making aggregation near impossible as you cannot sum up things that aren’t comparable.

To accurately measure our scope 3 emissions and reach our CO2 reduction and climate mitigation targets, we need to increase transparency in the way our suppliers and the upstream value chain are calculating their carbon footprint. A standardised, harmonised approach to determining the carbon footprint and what is included/excluded will enable the whole industry to monitor progress in a consistent way.

Anna Flysjö: From a dairy processor’s perspective, we see huge value in having an aligned approach for the industry. This will increase credibility and allow for greater efficiency. At present, we are faced with numerous buyer’s requests for varied and complex reporting on carbon footprint. Industry agreement on one reporting platform, like the SDP Carbon Module will help avoid duplication of effort, freeing up valuable time currently spent on reporting, to be spent on actions to reduce the carbon footprint.

Harmonisation in carbon footprint tools and methodologies is one of the biggest challenges for the dairy sector. How will SAI Platform’s Carbon Module contribute to solving this?

Anna Flysjö: The sector acknowledges that making fair comparisons of carbon footprint results is not yet possible due to the use of different tools and methodologies for carbon accounting. The first step on the road to harmonisation is creating transparency. For this reason, the overall goal with the development of the Carbon Module was to facilitate dialogue between dairy buyers and processors and to co-build a tool that creates more transparency in the calculation methods and assists with comparison and aggregation.

An important goal of the project was to create transparency in scope by building in the ability to breakdown the carbon number in terms of the different emission sources at farm level and the different GHGs. What is in scope, namely land use, peat soils emissions and/or carbon sequestration has a big impact on results and encouraging dairy processors to provide this breakdown is key. The tool also provides the ability to recalculate the Global Warming Potential (GWP). This allows dairy buyers to aggregate results based on the GWP relevant to their business, marking another important milestone towards harmonisation.

How can alignment between the work of the IDF and SAI Platform’s Dairy Working Group add value for the dairy industry?

Anna Flysjö: Having carbon experts sitting across the two organisations is key to ensuring the two-way dialogue necessary for the two organisations to complement each other in their approach. The IDF develops the scientific framework. SAI Platform is a unique forum bringing together the dairy processors and the dairy buyers in a pre-competitive space to develop a practical solution for the industry. Through its Dairy Working Group members, SAI Platform can promote the IDF methodology and encourage organisations throughout the value chain to adopt it.

What are the key success factors for the Carbon Module to deliver value?

Khaoula Essoussi: It is no longer a top-down approach. The tool has been built in collaboration between buyers and processors resulting in reciprocal value for both parts. In the development phase, the buyers came with their critical needs and the processors had the opportunity to present their challenges. Together we defined a common understanding of the needs verses the challenges and co-built a solution that can be realistically adopted by both sides. The team was made up of carbon and LCA accounting experts who understand the needs and challenges, saving time and allowing for a quick rollout.

For dairy buyers, the SDP Carbon Module is the first step in increasing transparency. Buyers can now understand what is behind the numbers, what is considered in the calculation and how the data is collected.

Anna Flysjö: The SDP is built to be able to adapt to the developments of the industry. The inclusion of the Carbon Module is a good example of how new modules can be added to meet the needs of processors and buyers. We made a collective decision to start simple and not aim for perfection so we could roll out the tool as quickly as possible. After piloting the module, it will be launched and integrated into the SDP Reporting Hub in Jan 2023. This will enable processors and buyers to engage with the tool and regular revisions will be made based on feedback and new methodologies as they become available.

What are the potential challenges and how are you preparing to tackle them?

Khaoula Essoussi: The biggest challenge at present is the data collected at national level that companies need to refer to. We need to have one common international standard for the dairy sector and I see an opportunity to collaborate as an industry and exert pressure for global alignment. While the Carbon Module is the first step towards achieving transparency in the numbers, we need to take this further and encourage the integration of this level of transparency into the numerous GHG inventory tools on the market. It is the industry push via SAI Platform that will accelerate the move towards one common standardised methodology.

Buyers at the global level need to exert pressure on the national programmes to converge towards this common methodology as at present, it is not possible for buyers to work on disaggregated methodologies.

How can dairy buyers encourage processors to actively engage with the SDP?

Khaoula Essoussi: With the dairy sector currently under scrutiny, we need to move as an industry in a pre-competitive fashion to protect the sector. Adoption of the SDP and the Carbon Module is key to position the IDF Carbon Footprint Methodology as the minimum compliance standard for the dairy sector. Dairy buyers need to set common goals on usage to ensure that it becomes the new way of reporting every year.

At Danone, one of our strategic engagement goals with suppliers is to encourage SDP membership and it is our ambition to make the SDP Reporting Hub the common solution to engage with suppliers on sustainability with dashboards in place so that procurement teams can track progress.