Carbon Life Cycle - what is it?
Carbon life cycle refers to the CO2 equivalent of greenhouse gas emissions (GHG) that result from the full life cycle of a given product or ingredient. HowGood’s Carbon Life Cycle Module has been designed according to the GHG Protocol Product Life Cycle Accounting and Reporting Standard (referred to as the Product Standard) standards and guidance for GHG emissions measurement and reduction. It highlights the carbon footprint of an individual product for 12 stages of a product’s lifecycle, from farm through processing, transport, manufacturing, product use and disposal. In doing so, it provides insight into the Purchased Good and Services category of Scope 3 emissions, which are the most difficult to measure and control. By breaking out each step, users can channel their efforts to focus on the specific stages at which there is either the most need for improvement, or, the phases at which they have the most control.
Why is it important?
Measuring greenhouse gas emissions is important, as human-induced GHGs are the primary driver of global warming, climate change and its impacts around the world - including habitat and biodiversity loss, food insecurity, drought, desertification, severe storms and wildfires. According to the United Nations Intergovernmental Panel on Climate Change (IPCC), global GHG emissions must be reduced by at least 85 percent below 2000 levels by 2050 to limit global warming to 1.5°C above pre-industrial levels. Current global warming reached an estimated 1.18°C in December 2020, and if the 30-year warming trend leading up to that point continues, global warming will reach 1.5°C by January 2034.1
How does the carbon life cycle relate to agriculture, product development, and the food system?
Agriculture and food production are responsible for a significant percentage of global emissions, so choosing ingredients with a lower carbon footprint can have a direct impact on slowing climate change. Global food systems are responsible for a tremendous portion of global Greenhouse Gas emissions (GHGs) — a staggering 34% according to the Food and Agriculture Organization. Of those emissions, more than 80% are due to agricultural production and land-use change.
In the quest for carbon neutrality and net-positive initiatives to combat climate change, companies are increasingly focusing on inventorying, reporting and reducing their emissions. The GHG Protocol defines Scopes 1-3 as the standard framework for understanding how a company can set the boundaries of its carbon reduction efforts:
Scope 1 refers to direct emissions from sources a company owns or controls, including electricity generation, physical or chemical processing, transportation of materials, products, waste and employees, and fugitive emissions.
Scope 2 refers to indirect emissions associated with purchased energy that is consumed in a company’s owned or controlled equipment or operations.
Scope 3 refers to indirect emissions associated with sources that are not owned or controlled by a company, including extraction and production of purchased materials and fuels; transportation of purchased materials, goods, fuels, employees, sold products and waste; leased assets, franchises and outsourced activities; use of sold products and services, and waste disposal.
While Scopes 1-2 are expected in the United States for ESG disclosures, a full reporting of Scope 3 emissions are increasingly expected by investors and NGOs because they are estimated to make up 50-70% percent of CPG companies’ total emissions. They are also the most challenging to report as the data lies largely outside of a company’s control.
There has been increasing pressure to report Scope 3 emissions, with the U.S. Securities and Exchange Commission (SEC) having recently released a proposed rule, The Enhancement and Standardization of Climate-Related Disclosures for Investors. The rule would require companies to disclose a wide variety of climate-related information, including information about climate-related risks that are reasonably likely to have material impacts on its business and/or its consolidated financial statements, and greenhouse gas (GHG) emissions metrics that could help investors assess those risks. The rule would require disclosure of Scope 3 emissions if the emissions are material, or if the company has set a GHG emissions reduction target or goal that includes its Scope 3 emissions.
Through the development of the Product Standard, the GHG Protocol has responded to the demand for an internationally accepted method to enable GHG management of companies’ goods and services. The GHG Protocol’s Technical Guidance for Calculating Scope 3 Emissions outlines four methods of Scope 3 emissions reporting, requiring varying levels of commitment and resources for a CPG company to undertake.2 While many CPGs cannot resource supplier-specific reporting methods, the average data method which calculates cradle-to-gate emissions per unit of product is a viable method of reporting for CPG companies who can pair basic product data with HowGood’s vast database of 33,000 ingredients, chemicals and materials.
What are the biggest contributors to a high carbon footprint?
Whilst the largest emissions impact takes place during Stage 1 (Farm to farm gate), any products that use energy intensive manufacturing have a high carbon footprint.
Companies have the most direct control over the processing, manufacturing and transport stages of the product life cycle, making HowGood’s Carbon Life Cycle Metric an important and timely addition for CPG brands looking to mitigate the Purchased Goods and Services category of their Scope 3 GHG emissions.
How do we measure the carbon lifecycle?
HowGood’s Carbon Life Cycle module measures the carbon footprint of a finished product in kilograms of CO2e per kilogram of material.
Carbon Life Cycle
Farm to Farm Gate
Farm to Farm Gate measures GHG impact of the primary commodity ingredient before any factory or processing emissions. It covers all on-farm processes including primary inputs like fertilizer, pesticides, herbicides, and farm machinery fuel needs. On-farm processing, cooling or fermentation, and off-farm cleaning and sorting are also included.
Farm to Processing Transportation
Farm to Processing Transportation measures GHGs emitted during transportation from the farm to the processing location. We assume a likely mode of transportation based on the two locations and calculate emissions per kilometer traveled. Transportation within North America is assumed to take place via truck, whereas transportation between countries outside of the United States is assumed to take place via ship. To account for fuel type, we use an industry average emissions factor for truck transport that accounts for different modes and their prevalence in industry. By providing us with a precise location for the sourcing of raw materials used in your ingredients, we can provide a much more granular measurement of emissions for your product.
Upstream Processing measures the GHGs emitted during the processing of your ingredients. This includes all processing steps from pre-processing through packaging, and varies by ingredient. We measure the emissions generated per megajoule of energy based on the processing type for your ingredients. We take into account the geographic location of processing, which determines the grid mix, (energy sources most likely to be used i.e. coal, solar, hydro), in that area and therefore the breakdown of renewable and non-renewable energy sources.
Processing to Manufacturing Transportation
Processing to Manufacturing Transportation is measured using the same criteria as Farm to Processing Transportation. We request processing and manufacturing location information from you and use the same transportation calculations used in Farm to Processing Transportation.
Manufacturing refers to the manufacturing of your product or ingredient. We calculate the energy associated with different manufacturing processes based on the best available industry standard data, taking into account any refrigeration or freezing requirements. We don’t factor non-attributable inputs and processes, such as capital goods (ie. machinery and infrastructure), overhead operations (ie. facility lighting, heating and cooling), corporate activities and services (ie. research and development, administration), user transport to the retail location or employee transport. We take into account the geographic location of manufacturing, which determines the grid mix in that area and therefore the breakdown of renewable and non-renewable energy sources.
HowGood requests the specifics of each layer of packaging as well as the recycled content of the materials. The weight of the material, the number of times the packaging can be re-used, and the number of consumer units within the packaging layer all contribute to the final packaging emissions.
Transportation to Storage
For those products that will travel to a warehouse or distribution center between being manufactured and going to retail shelves, we account for emissions due to transportation between the manufacturing facility and the storage facility. Transportation is calculated using the same method as Farm to Processing Transportation.
Keeping products in a storage or distribution location prior to retail impacts a product’s total emissions. We are including cold storage emissions and excluding emissions related to other overhead costs at the distribution center or storage facility. HowGood recognizes that a product may have many storage or distribution centers. However, since our final unit is kg CO2e/kg final product, we ask customers to choose a single location that best represents their data, and we ask if their product requires refrigeration.
Transportation to Retailer
This refers to transportation to the retailer, and is calculated using the same method as Farm to Processing Transportation. Transportation emissions are calculated from the storage location, or the manufacturing location if no storage location was provided.
Retailer captures the energy required to store and merchandise the product at the retail location, if it requires refrigeration or freezing. It is calculated using the same method as Storage/Distribution Center.
Product Use refers to the energy required for the consumer to refrigerate and cook the product, if applicable. Products that are pre-cooked will have these emissions accounted for during Processing or Manufacturing. We request information from you as to whether the product requires cooking on the Sourcing Details page in Latis.
Disposal refers to the energy used to dispose of the product packaging. We take into account the percentage of packaging that is disposed of via landfill, recycling or incineration, and assign an emissions factor for each packaging type. Packaging that is recycled or incinerated may have higher emissions for this stage due to the energy associated with those processes.
Key Data Sources
How to use the Carbon Life Cycle Module to achieve ESG goals?
Measuring, reporting and reducing GHG emissions throughout the product life cycle offers numerous advantages to CPG product developers, including:
Climate change management - Identify new market opportunities, regulatory incentives and risks as governments implement carbon reduction initiatives globally.
Performance tracking - Identify efficiency improvements and cost-saving opportunities by setting product-related GHG reduction targets and measuring achievements over time.
Supplier and customer stewardship - Achieve a GHG emissions network effect by partnering with suppliers to assess supplier performance, reduce GHG emissions and energy use, and mitigate risks in the supply chain.
Product differentiation - Achieve competitive advantage by pursuing GHG reduction opportunities and cost savings to create a low-emitting or “Climate Friendly” product. Capitalize on consumer demand for products with a lower carbon footprint, and strengthen brand image regarding GHG performance.
The Carbon Life Cycle Module is available to Latis customers by contract - contact your Customer Success Manager to find out more.