Foda carbon accounting methodology

Carbon Accounting Methodology for Food, Beverage & Retail

Methodology Overview

Foda Strategy utilises the GHG Protocol Reporting Standard, which is specifically tailored for the food, beverage, and retail sectors. These are aligned with the principles of comprehensive corporate emissions disclosure found in the GRI Sustainability Reporting Standards. We also reference and adhere to various international standards, such as the Task Force on Climate-Related Financial Disclosures (TCFD), as well as region-specific standards, including Climate Active and Toitū.

Given the unique characteristics of food, beverage, and retail operations, we utilise specialised emissions factor databases (MRIO, EEIO & LCA) alongside industry-specific databases. These are constantly updated to assess spending and activity-based data supplied by the client to understand the organisation's carbon emissions (CO2e) and carbon intensity by vendor, product category, or activity to develop an emissions reduction strategy that aligns with Science Based Targets initiative (SBTi).

Flowchart illustrating a climate change impact assessment process with four steps: 1) Establish emission boundaries, 2) Set a base year, 3) Collect data and sources, 4) Calculate total carbon account.

Four-Step Process for Food, Beverage & Retail:

  • Step 1: Establish emission boundaries, including supply chain complexities

  • Step 2: Set a base year accounting for variations in F&B operations

  • Step 3: Collect data & identify emissions sources, including upstream agriculture and downstream waste

  • Step 4: Calculate the total carbon account with the organisation, including Scope 3 specific categories

methodology elements

Carbon Accounting Principles:

  1. Relevance: Select the appropriate emissions sources, data and inventory boundaries that reflect the GHG impact of the entity and its food/beverage/retail value chain, including upstream agricultural impacts and downstream consumer behaviour

  2. Completeness: Identify and account for all relevant emissions sources and activities within the inventory boundaries (Scope 1, 2 & 3), with particular attention to food production, processing, transportation, refrigeration, and food waste. Where exclusions are required, they are disclosed and justified.

  3. Consistency: Use consistent methodologies and assumptions over time, accounting for variations typical in food and beverage operations. Any changes to methods are documented.

  4. Transparency: Disclose all relevant methodologies, data sources and assumptions to ensure an auditable trail, including specific food/beverage emission factors and supply chain mapping

  5. Accuracy: Reducing and quantifying uncertainties as far as possible, with particular focus on high-impact categories like purchased goods and services (typically 60-80% of F&B emissions). Achieving sufficient precision to enable informed decision-making for menu development, supplier selection, and operational improvements.

Boundary Setting for Food, Beverage & Retail

Boundary setting is crucial in food, beverage, and retail carbon accounting due to the complex supply chains that span agriculture, processing, distribution, and waste management. Following the GHG Protocol for Corporate Standards, we define the scope of activities included and excluded from your organisation's emissions inventory.

Two Main Approaches:

  1. Financial Control: All operations where the organisation has the full authority to introduce and implement policies and measures are included (recommended for most F&B operators)

  2. Organisational Control: The organisation includes emissions from operations based on financial ownership, where it has the ability to direct financial policies to gain economic benefits (suitable for larger retail chains with franchise models)

Food, Beverage & Retail Specific Considerations:

  • Supply Chain Complexity: Food supply chains often involve multiple intermediaries, requiring careful mapping of Scope 3 emissions

  • Seasonal Variations: Accounting for seasonal menu changes, agricultural cycles, and holiday trading patterns

  • Refrigeration Systems: Significant direct emissions from refrigerants (Scope 1)

  • Food Waste: Both operational waste and consumer food waste considerations

  • Packaging: Upstream packaging production and downstream disposal

Scope Coverage:

Adhering to GHG Protocols, companies must include Scope 1, 2 and relevant Scope 3 emissions.

Foda Strategy Covers:

Scope 1: Direct emissions

  • Fuel used by facilities and vehicles

  • Refrigerant from cooling systems

  • On-site energy generation (if applicable)

Scope 2: Indirect emissions

  • Electricity usage on-premises

  • Steam/heating/cooling purchased

Scope 3 Categories Particularly Relevant to Food, Beverage & Retail:

  • Category 1: Purchased goods & services (typically the largest category)

  • Category 2: Capital Goods

  • Category 4: Upstream transportation and distribution

  • Category 5: Waste generated in operations (including food waste)

  • Category 6: Business travel

  • Category 7: Employee commuting

  • Category 9: Downstream transportation and distribution

  • Category 12: End-of-life treatment of sold products (packaging)

Categories Currently Not Covered by Foda Strategy (unless specifically relevant):

  • Category 3: Fuel & Energy (not included in scope 1 & 2)

  • Category 10: Processing of sold products

  • Category 11: Use of sold products

  • Category 13: Downstream leased assets

  • Category 14: Franchises

  • Category 15: Investments

Food & Beverage Specific Scope 3 Assessment

For food, beverage, and retail operations, we assess Scope 3 relevance using enhanced criteria:

  1. Relevance: Evaluate if the category contributes significantly to absolute or sector emissions, considering typical F&B emission hotspots (agriculture, transportation, refrigeration)

  2. Magnitude: Assess the size of emissions for each category. In F&B, purchased goods & services typically represent 60-80% of total emissions

  3. Influence: Consider the potential to influence category emission reductions through menu design, supplier selection, local sourcing, and waste reduction. Greater influence increases relevance.

  4. Risks: Categories with financial/strategic/climate risks, including supply chain disruption, regulatory changes affecting agriculture, and consumer preference shifts toward sustainable options

  5. Stakeholders: Relevance noted by customers, suppliers, investors, and regulators indicates importance, particularly regarding sustainable sourcing and food waste

Emissions Calculations - Hybrid Approach

Foda Strategy uses specialised databases (EEIO, MRIO, LCA, plus food-specific databases) to identify the best emissions factors for F&B operations:

  1. Activity-based Approach:

    • Energy usage by type

    • Specific food and material product data where available (kg beef, litres milk, packaging, etc.)

    • Incorporates cooking methods & storage 

    • Accounts for food waste percentages by volume by category

  2. Spend-based Approach:

    • Uses financial expenditure on purchased goods/services

    • Enhanced with F&B-specific economic input-output emission factors

    • Supplemented with supplier-specific emission factors where available

Food & Beverage Specific Emission Factors:

  • Agricultural production emissions by product type

  • Processing and manufacturing emissions

  • Transportation emissions by distance and mode

  • Refrigeration and cold storage requirements

  • Packaging materials and volumes

  • Food waste disposal methods

Emissions Reduction Strategy for Food, Beverage & Retail

Key Focus Areas:

  1. Menu & Product Development:

    • Lower-carbon ingredient substitutions

    • Seasonal and local sourcing strategies

    • Lower emissions sourcing options

    • Portion optimisation to reduce waste

  2. Supply Chain Optimisation:

    • Supplier engagement and requirements

    • Transportation efficiency

    • Local and regional sourcing

    • Packaging reduction initiatives

  3. Operational Efficiency:

    • Energy-efficient cooking and refrigeration

    • Waste reduction programs

    • Staff training on sustainability practices

    • Customer education initiatives

  4. Technology Integration:

    • Smart inventory management systems

    • Energy monitoring and optimisation

    • Waste tracking and reduction technologies

Tracking and Reporting

Key Elements of Foda Strategy's Tracking and Reporting:

  • Regular Data Collection: Activity data collection with seasonal adjustments for F&B operations

  • Annual Recalculation: Comprehensive assessment including YoY variations

  • Development of Specific Performance Indicators:

    • Carbon intensity per meal served

    • Emissions per revenue dollar

    • Food waste reduction metrics

    • Local sourcing percentages

    • Energy efficiency improvements

  • Base Year Establishment: Accounting for seasonal patterns in F&B operations

  • Science-Based Targets: Aligned with SBTi requirements for food, beverage, and retail sectors

  • Public Reporting: Transparent disclosure of methodologies, uncertainties, and progress toward targets

  • Supply Chain Reporting: Engaging suppliers in emission reduction efforts and tracking progress

Industry-Specific Monitoring:

  • Track emission reductions from operational changes

  • Monitor supplier performance on sustainability metrics

  • Measure the impact of waste reduction initiatives

  • Assess customer response to sustainability initiatives

This methodology ensures comprehensive, accurate, and actionable carbon accounting designed explicitly for the unique challenges and opportunities within food, beverage, and retail operations.