Agri-Tech Briefing

Task Force on Climate-related Financial Disclosures (TCFD)

Unpredictable disruptions have challenged the agri-food chain over recent months, but it has shown amazing resilience.

At REAP 2023 there is a Supply Chain panel where food producers, brands and retailers discuss how they are applying innovation to help mitigate risk and improve sustainability.

It will include a discussion of the opportunities that this is creating for producers and agri-tech to support them.

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Task Force on Climate-related Financial Disclosures is driving the transition to Net Zero

Ahead of the discussion at REAP 2023 we asked Chris Brown, Senior Director for Sustainability at Asda, and a member of the Agri-TechE Stakeholder Group, about the Task Force on Climate-related Financial Disclosures (TCFD) legislation that has come into effect this year, and is driving the journey to Net Zero from the top of the supply chain.

Chris says: "2023 is the first mandatory reporting year for TCFD. This is still quite top level, and only obligatory for the largest companies, but the consensus is that it will tighten in the future and trickle down."

Asda, in line with other progressive companies, is signed up to Science-Based Targets Initiative (SBTi) a pathway to achieving its commitment to a key goal of the Paris Agreement – to limit global warming to 1.5°C above pre-industrial levels.

The targets aim to 'reduce greenhouse gas (GHG) emissions, helping prevent the worst impacts of climate change and future-proof business growth'.

Chris Brown, ASDA — *Chris Brown, Senior Director for Sustainability, A*sda

Scope 3 emissions from food production require joined up approach

As part of this companies need to disclose their Scope 1, Scope 2 and, if appropriate, Scope 3 greenhouse gas (GHG) emissions and the related risks. These 'scopes' are set out in the Greenhouse Gas Protocol. Essentially, Scope 1 are those direct emissions that are owned or controlled by a company, whereas Scope 2 and 3 indirect emissions are a consequence of the activities of the company but occur from sources not owned or controlled by it.

As most Scope 3 emissions in the supply chain originate from the production of raw materials, a united approach is required to techniques for measuring, monitoring and mitigating emissions at all stages.

We asked Chris how producers can prepare for this; he comments: "We are at the start of this journey and just working out what we need, but my expectation is that once government, or the EU, or one of the big brands, takes the initiative then things will happen very quickly."

This global move towards sustainability is evident from projects initiated by the speakers on the Supply Chain Panel at REAP, with reporting on their websites aligned to the requirements of TCFD.

Find out more about the TCFD at https://www.fsb-tcfd.org/

Apples for sale, Task Force on Climate-related Financial Disclosures

The road to Net Zero

1998 – The Greenhouse Gas Protocol is established. This provides an international corporate standard that firms can use to account and report GHG emissions. A GHG emissions inventory is a foundational tool that allows a company to understand its emissions and build effective climate change strategies. These tools help companies understand their exposure to GHG-related risks, identify emissions reduction opportunities, create baseline data and reduction targets for tracking performance. This includes the Scope 1, 2, and 3 emissions categories.

2008 – The Climate Change Act commits the UK government by law to reducing greenhouse gas emissions by at least 100% of 1990 levels (net zero) by 2050.

2015 – The Paris Agreement is agreed. This international treaty on climate change covers climate change mitigation, adaptation, and finance.

2019 – Streamlined Energy and Carbon Reporting (SECR) policy comes into effect and includes rules for Scope 3 reporting.

2021 – The Science Based Targets Initiative launches the SBTi Net-Zero Standard ahead of COP26, held in Glasgow. It is the world’s first framework for corporate net-zero target setting to reduce emissions inline with the Paris Agreement goals. It is anchored in climate science and 1.5°C pathways, and requires companies to make emission cuts, through both near- and long-term science-based targets. More than 4,000 businesses are already signed up.

2023 – Forest, Land and Agriculture (FLAG) science-based target is released. This covers the specific portion of emissions that are related to the land sector, such as emissions and removals from agricultural and forestry production ‘up to the farm gate’ (excluding energy-related emissions from processing of biomass).

Companies required to set a FLAG target include those in agricultural production, food and beverage processing, food retailing.

From April 2023, companies that meet the relevant criteria (over 500 employees) are required to account for their land-related emissions and removals and include them in a FLAG target this includes:

land use change that releases carbon – for example deforestation
land management emissions – for example carbon dioxide, methane, nitrous oxide released from biogenic (living organisms)
carbon dioxide emissions from on-farm vehicles and fertilizer production

2023 – Task Force on Climate-related Financial Disclosures (TCFD) enters first year of mandatory reporting. UK-TCFD are adapted to fit within UK legislation ie the Companies Act and the FCA’s ESG Sourcebook. Enough detail is required to enable the reader of the annual report to understand the effect of climate-related financial risks and opportunities on the business without referring to other sources. A good example of TCFD reporting is contained in the J Sainsbury plc Interim Results 2023 Statement. p18.