Agricultural emissions under CSRD: Key takeaways from the European Commission's FAQ Update.
As the EU’s Corporate Sustainability Reporting Directive (CSRD) reshapes the sustainability reporting landscape, agri-food companies are under increasing pressure to comply with stringent new requirements.
Navigating these changes will be crucial for staying competitive and ensuring compliance and transparency.
To support companies in the implementation of the CSRD requirements, the European Commission recently released a set of Frequently Asked Questions (FAQs).
Since the introduction of the CSRD, the agri-food industry has been eager to understand the Commission’s stance on upstream agricultural emissions – specifically, those generated by suppliers and farmers during agricultural processes.
Who is expected to report these emissions, and when?
Do agri-food companies need to collect and use primary data when reporting their Scope 3 emissions?
This article unpacks what the FAQ update reveals about the emission reporting requirements related to the agricultural value chain.
When are companies expected to report?
European agri-food companies that meet the CSRD’s criteria must begin reporting for the financial year 2024, with submissions due in 2025. This timeline applies, in general, to stock-listed companies and businesses with more than 500 employees.
Organizations with 250-500 employees are expected to report starting from the financial year 2025, with reporting due in 2026. SMEs with fewer than 250 employees are to report from 2026 onwards.
What about upstream Scope 3 reporting?
The FAQ reveals information regarding the reporting of upstream Scope 3 activities and emissions, generated by suppliers and farmers during agricultural processes.
For agri-food companies, upstream emissions are particularly relevant to report as they represent a significant portion of companies’ total environmental footprint.
Overall, the European Sustainability Reporting Standards (ESRS), which the CSRD requires companies to follow, expect companies to report Scope 3 data on:
Greenhouse gas (GHG) emissions: Carbon dioxide (CO2), methane (CH4), and nitrous oxide (N2O) emissions from agricultural practices, including crop cultivation, fertilizer application and livestock management.
Land use and land-use change (LULUC): Data on agricultural land use, including deforestation, reforestation and land type conversions that affect carbon sequestration and emissions.
Energy consumption in agricultural operations: Energy sources used, including the use of machinery and the type of energy consumed (e.g. diesel or electricity).
Energy in water usage: Water use and irrigation and its impact on emissions, particularly from energy used for water extraction and pumping
Are companies expected to use primary data for their Scope 3 reporting?
Agri-food companies are expected to engage with their suppliers to gather data on Scope 3 upstream activities and emissions.
To ensure accuracy, companies are advised to prioritize the collection and use of primary data when reporting their Scope 3 emissions.
Given the complexity of agricultural value chains, collecting and reporting accurate primary data from suppliers and farmers can be challenging. Therefore, in the initial stages of CSRD, companies can consider using estimations and average values. However, companies should approach this path with caution.
If using estimations, companies will be expected to:
Justify the use of estimates or averages.
Demonstrate having made reasonable efforts to collect the necessary supplier data.
Ensure the accuracy of the benchmarks used.
Document and disclose the extent of the use of estimates as well as the methods employed.
While estimations can serve as a temporary measure during a transitional period, agri-food companies should already now prepare for future reporting by gearing up their technological capabilities and processes for gathering field-level primary data from their suppliers.
How Improvin’ can help.
By partnering with Improvin', agri-food companies can seamlessly integrate sustainability into their operations and stay ahead of regulatory demands.
Our farmer-friendly system not only simplifies compliance but also empowers you to make data-driven decisions that drive real change.
See the companies we work with here.
Ready to future-proof your sustainability reporting?
Talk to our team to learn more.
