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Description : Description : Description : C:\Users\dreschm\AppData\Local\Microsoft\Windows\INetCache\Content.Word\logo_ACT-R.png

 

Agriculture & Agrifood Methodology

(Version 1.1 | August 2020)

Acknowledgments

ADEME and CDP warmly thank the members of the Technical Working Group for their inputs and feedbacks on the methodology (see list of members in annex).

 
Technical coordination:

Anaïs GOBURDHUN (ADEME)

Alice DE PALMA (CDP)

ACT co-founders:

 

 

 

supported by:  
 
Technical assistance on the scenarios provided by:
C:\Users\goburdhuna\ADEME\Projet ACT - General\ACT 3.0\ACT for Agriculture & Agrifood\Partenariats et cahiers des charges\Scenarios\CF_logo_142.png

© CDP Worldwide & ADEME 2020. Reproduction of all or part of work without license of use permission of CDP Worldwide & ADEME is prohibited.

 

 

 

 

1. Introduction

 

1.1 Context for the agriculture & Agrifood sector

The 2015 United Nations Climate Change Conference (COP21) in Paris solidified the global recognition to act on climate change with the political agreement to limit warming to a 2°C pathways, and if possible, a well below 2°C above pre-industrial levels. The ‘Assessing low-Carbon Transition’ (ACT) Initiative measures a company's alignment with a future low-carbon world. The goal is to drive action by companies and encourage businesses to move to a well-below 2°C compatible pathway in terms of their climate strategy, business model, investments, operations and GHG emissions management. The general approach of ACT is based on the Sectoral Decarbonization Approach (SDA) developed by the Science-Based Targets initiative (SBTi) in order to compare a company’s alignment with a 2°C world, the application of which is described in the ACT Framework [1].

[1]  ACT Initiative , “ACT Framework - Version 1.1,” 2019.

The land sector is responsible for 10-12 Gt CO2e yr-1 of net GHG emissions – approximately a quarter of global GHG emissions [2]. Half of these are driven by agriculture, while the rest derive from land use, land-use change and forestry (LULUCF). The largest contributions from agriculture arise from enteric fermentation, manure from ruminant livestock production, crop-related fertilization practices and soil GHG emissions. In addition, some 5% of emissions related to food production come after the farm gate, up to but not including retail [3]. Therefore, it is clear that in order to decarbonise the Agriculture and Agrifood sector, the largest GHG emissions reduction will need to be achieved at the agricultural production phase.

[2]  IPCC, “Summary for Policymakers. In: Climate Change and Land: an IPCC special report on climate change, desertification, land degradation, sustainable land management, food security, and greenhouse gas fluxes in terrestrial ecosystems,” In press, 2019.

[3]  J. &. N. T. Poore, “Reducing food’s environmental impacts through producers and consumers,” Science, 2018.

 

1.2 Objective of the methodology

The objective of the methodology is to assess most companies in the Agriculture and Agrifood sector. Three subsectors of the food value chain are included within this single methodology: agriculture, agrifood, and food and beverage services. This methodology also contains a fourth weighting scheme for integrated companies which have activities in agricultural production and in food processing. Most companies with an activity in the food and beverage value chain will be included in one of these four categories and will be able to assess their low-carbon transition using this methodology. More details on the activities included in each segment are available in the Scope section below.

Secondly, this methodology aims to focus on the main sources of emissions in the Agriculture and Agri-food sector, but also to take into account emission sources where levers for decarbonisation are available. Agricultural production is highlighted along the document as both the main source of emissions in the sector [2] as well as having a large mitigation potential, and this is reflected in the weighting scheme.

 

Integrating adaptation in the methodology

The ACT framework [1] which includes the guiding principles for all ACT methodologies focuses in main part on mitigation and only partially integrates the issue of adaptation to changes in climate and its impacts. This is because while we recognize that the Agriculture and Agrifood sectors are highly vulnerable to climate change and need to consider ways to adapt to the changing climate over the long-term in order to stabilise and enhance food security [2], the ACT initiative focuses on providing “insight regarding a company’s current and future ability to reduce its carbon emissions” [1] and does not consider climate-related challenges such as biodiversity, water security or health. As a result, only elements of climate change adaptation referring to the standard ISO 14090:2019 “Adaptation to Climate Change — principles, requirements and guidelines” [4] and to the TCFD recommendations [5] were integrated in the Agriculture and Agrifood methodology and will be taken into account in the company assessments.

[4]  ISO, “ISO 14090:2019 Adaptation to climate change — Principles, requirements and guidelines,” 2019.

[5]  T. F. o. C.-r. F. Disclosures, “Final Report: Recommendations of the Task Force on Climate-related Financial Disclosures,” 2017.

The objectives of integrating climate change adaptation in this methodology are:

  • To assess the maturity of the climate change adaptation strategy of the company;
  • To check if the transition plan is coherent with the expected changes in climate and the impacts of climate change in the short, medium and long terms.

 

2. Principles

The selection of principles to be used for the methodology development and implementation is explained in the general ACT Framework [1]. Table 1 recaps the ACT principles that were adhered to when developing the methodology.

Table 1: Principles for implementation

Relevance - Select the most relevant information (core business and stakeholders) to assess low-carbon transition. 
Verifiability - The data required for the assessment shall be verified or verifiable. 
Conservativeness - Whenever the use of assumptions is required, the assumption shall err on the side of achieving a 2° maximum global warming. 
Consistency - Whenever time series data is used, it should be comparable over time. 
Long-term orientation - Enables the evaluation of the long-term performance of a company while simultaneously providing insights into short- and medium-term outcomes in alignment with the long-term. 

 

 

3. Scope

 

3.1 Scope of the document

This document presents the ACT assessment methodology for the Agriculture & Agrifood sector. It includes the rationales, definitions, indicators and guidance for the sector-specific aspects of performance, narrative and trend scorings.

It was developed in compliance with the ACT Guidelines for the development of sector methodologies [6], which describe the governance and process of this development, as well as the required content for such documents.

It is intended to be used in conjunction with the ACT Framework [1], which describes the aspects of the methodology that are not sector-specific.

 

3.2 Scope of the agriculture (AG) and agrifood (AF) methodologies

This section on the scope of the ACT Agriculture & Agrifood methodology specifies which type of company the methodology can assess. [1]

The Agriculture & Agrifood methodology aims to include most of the companies having an activity along the food and beverage value chain. As the activities and challenges in the sector are substantially different, four segments of companies that can use the methodology to assess their low-carbon transition were identified: companies producing agricultural products, companies processing food and companies with a food and beverage service activity (e.g. restaurants, catering). A specific combination of indicators is proposed for integrated companies (i.e. companies with activities across both agriculture and agrifood).

Companies shall include all activities they are subcontracting within the Agriculture & Agrifood value chain when defining which segment they fall into. For example, if a company produces an agricultural commodity and subcontracts processing activities, it will be considered as covering both agricultural production and processing activities.

Table 2: Four segments of companies included in the scope of the ACT Agriculture & Agrifood methodology

Segments Agricultural companies (1) Agri-food companies (2) Integrated companies (3) Food & Beverage service activities (4)
Activities covered Agricultural production Processing and manufacture of agricultural products (including packaging) Covers agricultural production to manufacture and processing (including packaging) Covers food processing and selling (e.g. restaurants, catering)

 

Figure 1: Scope of the ACT Agriculture & Agrifood methodology

 

(1) Agricultural Producers

It includes companies producing all agricultural products, excluding activities related to forestry, hunting and trapping. The agricultural products include crop and animal husbandry, and fishing activities. The types of companies eligible for an ACT AG assessment are listed in Table 3.

Some agricultural producers include a small share of processing activities (e.g. post-harvest handling) but the majority of their activities remain on the agricultural production step. In these cases, as long as emissions associated to the processing activities are lower than 10% of total emissions, they should be assessed using the methodology for agricultural producers only. Companies with emissions that are associated with processing activities that are higher than 10% of total emissions should use the methodology for (3) integrated companies.

Non-producing agricultural cooperatives, which only have an activity in food processing, are assessed using the (2) Agrifood segment.

This segment includes crop producers of animal feed. 24% of global crop production is used for animal feed [7], and as a result, companies producing crops to be transformed into prepared feeds are expected to monitor and reduce downstream GHG emissions from the farm animals they are feeding.

Table 3 : agriculture activities included in act ag scope

Categories NACE Group
Growing of non-perennial crops 01.1
Growing of perennial crops 01.2
Plant propagation 01.3
Animal production 01.4
Mixed farming 01.5
Support activities to agriculture and post-harvest crop activities 01.6
Fishing 03.1
Aquaculture 03.2

 

(2) Agrifood Companies

This segment includes any company with an activity in food and/or beverage processing, including when this activity is subcontracted. The types of companies eligible for an ACT Agrifood assessment have activities listed in Table 4. If the company has agricultural production activities, they should use the methodology for (3) integrated companies.

This segment includes manufacturers of animal feed. 24% of global crop production is used for animal feed [7], and as a result, companies transforming crops into prepared feeds are expected to monitor and reduce downstream GHG emissions from the farm animals they are feeding.

[7]  P. C. W. J. S. G. a. J. A. F. Emily S Cassidy, “Redefining agricultural yields: from tonnes to people nourished per hectare,” Environmental Reserach Letters, 2013.

 

Table 4 : Agrifood activities Included in act AF scope

Categories NACE Group
Processing and preserving of meat and production of meat products 10.1
Processing and preserving of fish, crustaceans and mollusks 10.2
Processing and preserving of fruits and vegetables 10.3
Manufacture of vegetable and animal oils and fats 10.4
Manufacture of dairy products 10.5
Manufacture of grain mill products, starches and starch products 10.6
Manufacture of bakery and farinaceous products 10.7
Manufacture of other food products 10.8
Manufacture of prepared animal feeds 10.9
Manufacture of beverages 11.0

 

(3) Integrated companies

Integrated companies refer to companies that have an activity on both sides of the value chain, i.e. on both the agriculture and agrifood subsectors. The ACT assessment will hence be a combination of the methodology for the two subsectors, with similar indicators but different weights. The proposed weighting scheme to be used is detailed in section 6.3.

Some agricultural producers include a small share of processing activities (e.g. post-harvest handling) but the majority of their activities remain on the agricultural production step. In these cases, as long as emissions associated to the processing activities are lower than 10% of total emissions, they should be assessed using the methodology for (1) agricultural producers only.

 

(4) Food and Beverage service companies

Companies with an activity in food and beverage service (e.g. restaurants, catering) eligible for an ACT assessment must include at least one of the activities listed in Table 5. The food and beverage service company can include food processing or manufacture activities.

No examples of food and beverage service companies with agricultural production activities were identified in the Technical Working Group, so this case was not included in the methodology.

 

Table 5 : food and beverage service activities in ACT AF Scope

Categories NACE Group
Restaurants and mobile food service activities 56.1
Event catering and other food service activities 56.2
Beverage serving activities 56.3

 

Companies excluded from scope of the methodology

Non-producing companies operating only in transport and storage, companies producing the inputs (e.g. seeds, fertilizers), pure biofuels producers(1), maintenance, quality control and machinery manufacturers are excluded from the scope of the ACT Agriculture & Agri-food methodology, which means that they cannot be assessed using this ACT methodology.

(1)  Pure biofuel producers should be assessed using the ACT Oil & Gas methodology [15]. We also expect that the ACT Generic methodology (to be published in 2021) will allow assessors to combine benchmarks for the Agriculture and Oil & Gas sectors in order to assess pure biofuel producers as accurately as possible.

[15]  ACT Initiative, “ACT Sector Methodology - Oil & Gas (to be published),” 2020.

Case of food retail companies

Food retail companies are generally excluded from the scope of the Agriculture & Agrifood methodology, since an ACT Retail (RT) methodology [8] is available and dedicated to this sector. Even though the Retail methodology is not specifically dedicated to food products, it is designed to integrate the upstream emissions when significant, which is the case for food products.

However, if a retail company has activities in agricultural production and/or food processing, that portion of activity relevant to agriculture and/or agrifood can be assessed with the ACT A&A methodology. The company’s overall ACT score will be a mix of their ACT AG and ACT RT scores, and the weight of each score will be defined by the share of emissions from each sector. We expect that the ACT Generic methodology [9] (to be published in 2021) will provide a recommendation to combine ACT results from different sectoral methodologies.

[8]  ACT Initiative, “ACT Sector Methodology - Retail,” 2019.

[9]  ACT Initiative, “ACT Sector Methodology - Generic (to be published),” 2020.

 

 

4. Boundaries

The Boundaries section specifies which emission sources are included in this methodology. [1]

➔ NOTA BENE
  • Hereafter, the term “emissions” will refer to all GHG emissions (not only CO2) which shall be measured in CO2 equivalent.
  • The gases considered in the Agriculture & Agrifood methodology are: CO2, CH4 and N2O.
  • Measuring emissions: ACT provides guidelines concerning the scope and boundaries of the sector covered by this methodology to determine which type of GHG emission sources to be included or excluded. However, it does not provide tools and databases to measure and compute these emissions. In particular, the choice of emission factors does not fall under the responsibility of the ACT methodology. ACT recommends using company-specific emission factors, or if unavailable, standard emission factors recognized in the sector. As such, some recommendations but not prescriptions may appear in this document.

 

Emission boundaries for the Agriculture and Agrifood subsectors

The production activities at the farm level, including the associated land-use, is by far the most emissive step along the overall food and beverage value chain and account for 82% of emissions, as illustrated in Figure 2 below. It includes emissions from livestock and fisheries, crop production and land use. Activities along the supply chain including packaging, transport and food processing and retail account for 18% of emissions in the sector and while that is much smaller than emissions from the farm level, it remains a non-negligible source of emissions and is therefore included in the methodology (expect for retail activities). The major share of emissions from agricultural production will still be reflected in the assessment of a pure Agrifood company (i.e. company with processing activities) through the inclusion of upstream Scope 3 emissions and their allocated weighting.

 

Figure 2: global greenhouse gas emissions from food production (source: our world in data, Poore & Nemecek - 2019)

 

The ACT Agriculture & Agrifood methodology includes a large majority of the emissions attributable to the production of food at the farm and food industry levels: land use, deforestation or reforestation, farm emissions, animal feed and supply chain. More specifically, the farm emissions include emission sources linked to land management, soil fertilization, methane from rice production, manure management, ruminant enteric fermentation, ruminant wastes on pasture, and energy. Gases other than CO2 are responsible for a significant share of emissions in the AG sector, this is the case for methane (CH4) and nitrous oxide (N2O) [10] which are included in the ACT assessment. As a result, emission totals must be expressed as CO2 equivalent.

[10]  W. R. I. (WRI), “Creating a Sustainable Food Future,” Washington DC, 2019.

Other emissions from sources such as food transportation, storage and refrigeration may occur within the same company and are taken into account in the assessment. With global annual emissions estimated at 4.4 Gt CO2eq [11], food wastage is another considerable source of emissions along the food value chain. Therefore, the ACT assessment evaluates company action to reduce food waste through both a quantitative indicator in the Material Investments module and a qualitative indicator in the Management module.

[11]  Food and Agriculture Organization of the United Nations (FAO), “Food Wastage Footprint & Climate Change,” 2015.

 

Note regarding the use of scopes

Boundaries in an ACT methodology refer to the identification of the sources of emissions to be considered in an ACT assessment. As companies may cover very different activities along the Agriculture and Agri-food value chain, the approach for defining the boundaries is to list the emissions sources included - and excluded, where relevant - rather than using Scopes 1, 2 and 3 as defined in the GHG Protocol. This will bring homogeneity among the ACT assessments of the same segment and will allow comparability among companies’ assessments and results. It also ensures alignment with the decarbonisation benchmarks defined for the sector as the same sources of emissions will be included.

The following table summarizes the emissions included in each subsector:

Table 6: Summary of Emissions included in the methodology per segment of company

 

Rationale and Guidance on Emission boundaries

The food sector represents alone more than a quarter of total global GHG emissions [2]. Addressing the low-carbon transition for this sector is particularly complex given that it is heterogeneous, there is not a unique solution to tackle this issue and it is one of the only high-impact sectors to include carbon sequestration through land use activities.

Livestock: The main challenge for livestock is to encourage consumers to substantially reduce their consumption of ruminant meat by shifting from animal proteins to vegetal proteins. There is potential for reducing methane emissions with better herd and health management, better feeding management strategies, and genetics [12]. Because livestock also implies considerable emissions from animal feeding and consequently from land use, this is by far the most emissive type of food product.

[12]  Food and Agriculture Organization of the United Nations (FAO), “Global Livestock Environmental Assessment Model (GLEAM),” [Online]. Available: http://www.fao.org/gleam/en/. [Accessed 2020].

Crop production: Emissions from crop production are also a major lever for mitigation action and must be included in the methodology. This is especially important because global crop production is expected to rise over the coming decades due to both increasing population and shifting global food consumption to a diet lower in meat. Recommendations for better practices from the literature include possible solutions such as reducing the use of fertilizers and spurring technological innovation [10].

Land-use: Land use reflects the tricky global issue of deforestation and the increasing volume of GHG emissions linked to agricultural production in addition to direct in-farm GHG emissions.

Energy use: Action levers are also significant on the emissions related to energy use in the overall supply chain. New technologies are expected to develop to reduce emissions through, for example, alternative thermal systems [13]. More generally, energy efficiency improvements are a significant lever to decarbonize food process [14].

[13]  Life project, “INDUFOOD - Reducing GHG emissions in the food industry through alternative thermal systems based on induction technology,” 2011.

[14]  T. Garnett, “Where are the Best Opportunities for Reducing Greenhouse Gas Emissions in the Food System (including the food chain)?,” Food Policy, pp. 23-32, 2011.  

More generally and for all types of agricultural products, there seems to be a consensus in the literature incentivising to reduce the growing demand for food (and other agricultural products), increase productivity, and ramp up carbon sequestration with natural solutions such as reforestation [12].

 

Rationale for excluding specific emission sources

Consumer use emissions: Emissions from the consumer use of products (e.g. energy use for cooking and refrigeration, emissions from food waste) are excluded from the quantitative indicators of the A&A methodology. The influence that companies have over the behaviour of their consumers is included and assessed qualitatively in the ‘Client engagement’ module.

Combustion of biofuels: Downstream emissions from the use of biofuels, including second generation biofuels, are covered under the ACT Oil & Gas methodology [15] and are excluded from the quantitative indicators of the A&A methodology because agricultural producers have little influence and levers for action over the use of their agricultural products. The influence that agricultural producers have over their choice of clients is included and assessed qualitatively in the ‘Client engagement’ module.

[15]  ACT Initiative, “ACT Sector Methodology - Oil & Gas (to be published),” 2020.

Chemical production: Downstream emissions from the production of chemicals using agricultural products are excluded from the quantitative indicators of the A&A methodology because agricultural producers have little influence and levers for action over the use of their agricultural products. The influence that agricultural producers have over their choice of clients is included and assessed qualitatively in the ‘Client engagement’ module.

HFCs: Hydrofluorocarbons (HFCs) are not included. HFCs are primarily emitted in cooling and refrigeration, typically in the retail stage. Although HFCs may be relevant in other specific situations, they are excluded in the agriculture literature from the boundaries of emissions in favour of other relevant greenhouse gases. For instance, HFCs were not considered in Roe et al. [16], who look at the agriculture and AFOLU sector as a whole. Similarly, they were not included as part of the boundaries of analysis in Poore and Nemecek [3], who look at product GHG emissions until farm-gate and over the entire life cycle, respectively.

[16]  S. S. C. O. M. e. a. Roe, “Contribution of the land sector to a 1.5 °C world,” Nature Climate Change, no. 9, p. 817–828, 2019. 

 

The specific case of negative emissions

The ACT Agriculture & Agrifood methodology allows the inclusion of negative emissions from carbon sequestration, on the company’s own land, in the company’s reported emissions. This includes carbon sequestration from reforestation and agricultural projects on the company’s own land. This is aligned with the decarbonisation scenario of the A&A methodology.

Carbon removals from carbon offsetting projects on land external to the company shall be excluded from the emission totals reported by companies. Carbon offsetting projects will be considered in the ACT narrative scoring.

For more information on the specific emission sources and sinks, please refer to recommendations from the GHG Protocol Agricultural Guidance (Chapter 8: Accounting for Carbon Stocks) [17]. Please note that a new Greenhouse Gas Protocol Standards/Guidance on Carbon Removals and Land Use is currently under development, and we encourage companies to use this standard to measure emissions in a standardised way once it is published.

[17]  W. World Resources Institute, “GHG Protocol Agricultural Guidance,” 2014.

 

5. Construction of the data infrastructure

 

5.1 Data sources

In order to carry out a company level assessment, many data points need to be gathered which can be sourced from various locations. Principally, ACT relies on the voluntary provision of data by the participating companies. The data provided by the companies may be of different types. Alongside this, however, external data sources are consulted where this would streamline the process, ensure fairness, and provide additional value for verification and validation.

The ACT assessment uses the following data sources:

Table 7: ACT assessment data sources

Data source Main use
Company data from survey Data source for calculating indicators.
Company data from models and simulations Data source for calculating indicators.
Company data from life cycle assessment Data source for calculating indicators.
Company data from econometric data Data source for calculating indicators.
Contextual and financial information database sources (E.g. Online and press news, RepRisk) Contextual and financial information on company and events related to the company that could impact the ACT assessment

Where indicators use third-party data sources as the default option, reporting companies may provide their own data if they can provide a justification for doing so, and information about its verification status, any assumptions used and the calculation methodology.

 

5.2 Company Data request

In accordance with the approach presented in 1. Introduction, the data request will be presented to companies in a comprehensive data collection format. The indicators have been designed in collaboration with Agriculture and Agrifood companies, in order to ensure that necessary data would be mostly available. When no data was available, indicators were designed to encourage companies to set-up a collection process of the information.

Companies are encouraged to use existing standards and references to build their reporting/collection process, such as the CDP Climate Change Questionnaire, to make data compiling and processing easier.

 

5.3 Performance indicators

 

MATURITY MATRIX

Some modules are scored using a maturity matrix, as the assessment is qualitative. The maturity matrix contains five levels of evaluation that are associated to scores given to the company for each indicator. For some indicators, all 5 levels of the matrix are used to score the company, while for other indicators only some levels are used, in a simpler and less granular approach (ex: level 1, 3 and 5 only). Some of the indicators might be divided into sub-dimension that are evaluated individually before the score is aggregated to obtain the indicator score.

 

Modules and indicators:

Table 7 illustrates the performance indicators used by the ACT Agriculture & Agrifood methodology.

Table 7: Performance indicators overview (to be completed)

           
           
           
           
           
           
           
           
           
           
           
           
           
           
           
           
           
           
           
           
           
           
           
           
           
           
           
           

 

5.3.1 Targets (Weighting: 15%)

 

5.3.1.1 - AG 1.1 Achievement of Previous targets (WEIGHTING: 3%)

Description & Requirements AG 1.3 Achievement of previous targets
Short description of indicator A measure of the company’s historical target achievements and current progress towards active emissions reduction targets. The ambition of the target is not assessed here with this indicator.
Data requirements

The questions comprising the information request that are relevant to this indicator are:

  • to be completed
How the Analysis will be done

 

 

For the performance score, this indicator is assessed on two dimensions, whereby companies achieve the maximum score if:

Dimension 1: The company has achieved all previous emissions reduction targets with a target year in the past 10 years. If all past targets are indeed achieved, the highest score is obtained. If not, the achievement ratio a is computed as follows:

 

where E(tref) is the level of emissions of the company on the year the target was set, T(thorizon) is the target the company set (a given level of emission at a given horizon year, now past), and E(thorizon) is the effective level of emission reached by the company on the year of horizon of the target.

A threshold is set for scoring at 0.5: if the company has achieved less than 50% of its own past target, it shall receive a zero score.

If the company has several past targets over the last 10 years, the ratio a shall be computed for each target, and the average of all a ratio shall be kept for scoring.

 

Dimension 2: The company is currently on track to meet an existing emissions reduction target, whereby the ratio between the remaining time period and the level remaining to target achievement (Progress Ratio p) is not lower than 0.5:

The highest score is attained if p is 1 or higher. A percentage score is assigned for any value between 0.5 and 1.

 

Aggregate score - Dimension 1: 25%, Dimension 2: 75%

For all calculations:

  • Companies which do not have targets with target years in the past but only with target years in the future are not assessed on dimension 1, but only on dimension 2.
  • Targets that do not cover >95% of emissions within the boundaries of each subsector are not preferred in the calculation of dimension 2, but are not penalized, as other indicators already penalize for not having a large coverage in the target.
  • If the company has multiple targets in different scopes that can be assessed according to the above criteria, then the score is an average score based on the progress ratios of all targets assessed.

The performance score does not assess the ambition level of previous targets, and therefore dimension 1 has only a low weight in the final performance score. This information is also qualitatively assessed in the narrative analysis, which will take another look at the following dimensions:

  • Achievement level: To what degree has the company achieved its previously set emissions reduction targets?
  • Progress level: To what degree is the company on track to meet its currently active emissions reduction targets?
  • Ambition level: What level of ambition do the previously achieved emissions reduction targets represent?
Rationale AG 1.1 Achievement of previous targets
Rationale of the indicator

Relevance of the indicator:

The historical target ambition and company performance is included in the ACT AG assessment for the following reasons:

  • The ACT assessment looks to the past only to the extent that it can inform on the future. This indicator is future-relevant by providing information on the organizational capability to set and meet emissions reduction targets. Dimension 1 of this indicator adds credibility to any company claim to commitment to a science-based reduction pathway.
  • Indicators 1.2 and 1.3 look at targets into the future, setting a theoretical view of the company. Dimension 2 of this indicator adds value to the analysis by doing a concrete comparison of the company’s current performance against their targets in the reporting year.

Besides, we acknowledge a difficulty to assess this indicator properly because of potential changes in the company’s scope of activity (through M&A and asset sales) over the years. Such hurdles must not prevent companies to measure their progress over time because it is the very first step towards low-carbon transition.

Different approaches do exist to address this issue:

  • To ensure consistent tracking of performance over time, the SBT Initiative recommends to recompute the targets to reflect significant changes that would otherwise compromise the target’s relevance
  • Other solutions can be applied to simplify the recomputation of targets, considering for instance the same reduction % for the acquired assets, from the date of acquisition only (the company not being responsible for the past emissions of these assets)

Scoring rationale:

Quantitative interpretation of previous target achievement is not straightforward. The performance score thus makes no judgement of previous target ambition and leaves it to the narrative analysis to make a meaningful judgement on the ambition level of past targets.

  • Dimension 1 of the performance score will penalize companies who have not met previous targets in the past 10 years, as this means the company has lower credibility when setting ambitious science-based targets.
  • Dimension 2 uses a simple ratio sourced from existing CDP data points (CC 3.1e) in order to compare targets. The threshold 0.5 was chosen as it allows companies some flexibility with respect to the implementation of the target, but it does have the ability to flag companies that are definitely not on track towards achievement. When p is lower than 0.5, the company needs to achieve more than twice the reduction per unit of time than the target originally envisioned.

 

5.3.1.2 - AG 1.2 Alignment of future targets with low-carbon scenario (WEIGHTING: 9%)

Description & Requirements AG 1.2 Alignment of future targets with low-carbon scenario
Short description of indicator A measure of the alignment of the company’s emissions reduction targets with its decarbonization pathway. The indicator will identify the gap between the company’s target and the decarbonization pathway as a percentage, which is expressed as the company’s commitment gap.
Data requirements

The questions comprising the information request that are relevant to this indicator are:

  •  

External sources of data used for the analysis of this indicator are:

  •  
How the Analysis will be done

The analysis is based on the difference between the company’s target (T) and the company benchmark (CB) 5 years after the reporting year.

For each sub-sector where the company has an activity, the company’s target pathway (T) is the decarbonization over time, defined by the company’s emissions reduction target. To compute T, a straight line is drawn between the reporting year and the company’s target endpoint.

The company benchmark pathway (CB is the “company’s decarbonization pathway”). See section 0 for details on the computation of this pathway.

The analysis compares T to CB, by assessing the difference between these pathways 5 years after the reporting year. The pathways are expressed in kilogram of CO2 per kilogram of product (intensity measure).

To score this indicator, the size of the commitment gap is compared to the maximum commitment gap, which is defined by the business-as-usual pathway (BAU). BAU is defined as an unchanging (horizontal) intensity pathway, whereby the emissions intensity is constant after the reporting year.

For each of these three variables, the emissions boundaries are those listed in section 4 Boundaries for the subsector considered.

 

Figure 3 : ALIGNEMENT OF FUTURE TARGET WITH COMPANY'S BENCHMARK - COMMITMENT GAP

Calculation of score:

The score is a percentage of the maximum commitment gap. It is calculated by dividing the company’s commitment gap by the maximum commitment gap (taking all values 5 years after the reporting year):

The score assigned to the indicator is equal to 1 minus the commitment gap and is expressed as a percentage (1 = 100%). Therefore, if T − CB is equal to zero, and hence the company’s target is aligned with the sectoral benchmark, the maximum score is achieved.

If part of the emissions included in the company’s targets are excluded from the ACT boundaries:

  • If these emissions represent less than 10% of the total emissions accounted for in the targets, the calculation is done without any modification.
  • If these emissions represent 10% or more of the emissions of the targets, they are removed to calculate the indicator.
Rationale AG 1.2 Alignment of future targets with low-carbon scenario
Rationale of the indicator

Relevance of the indicator:

Targets are included in the ACT assessment for the following reasons:

  • Targets are an indicator of corporate commitment to reduce emissions and are a meaningful metric of the company’s internal planning towards low-carbon transition.
  • Most emissions of the food sector lie within the responsibility boundaries of the sector. Target setting is therefore a very powerful tool to increase control over these emissions and drive their reduction.
  • Targets are one of the few metrics that can predict a company’s long-term plan beyond what can be projected in the short-term, satisfying ACT’s need for indicators that can provide information over the long-term.

Scoring rationale:

Targets are quantitatively interpreted and directly compared to the low-carbon benchmarks for the sector, using the company’s benchmark, build from the company’s current level of emissions at reporting year and converging toward the 2050 value of the sectoral benchmark relevant for this company, which is further explained in section 6.1.

Targets are compared to the benchmark directly, and the relative gap is calculated compared to the business as usual pathway. The gap method was chosen for its relative simplicity in interpretation and powerful message, which aligns with the UNEP’s narrative of the global commitment gap of the UNFCCC Climate Agreements [18]. The simple percentage score also needs no further computation to become meaningful on its own, as well as be useable for aggregation in the performance score.

[18]  WRI & WBCSD, “GHG Protocol - Technical Guidance for Calculating Scope 3 Emission,” 2011.

To ensure comparability of the scores and replicability of the measurement, targets are compared to the benchmark at a fixed point in time, similar to all companies. This is necessary, because the method interprets linear decarbonization pathways from the targets, while the decarbonization pathways are nonlinear. Therefore, the measurement gaps would vary over time if the time of measurement was not constant, and an undesired precedent would be set for reporting only targets with short-time horizons.

5 years after the reporting year was chosen as the reference for this measurement, as it is far enough in time to make a meaningful measurement of the company’s future pathway, while close enough to be able to include the typical short to medium time scale of present-day company targets.

 

5.3.1.3 - AG 1.3 Time horizon of endpoint and intermediate targets (Weighting: 3%)

Description & Requirements AG 1.3 TIME HORIZON OF endpoint and intermediate TARGETS
Short description of indicator A measure of the time horizons of company targets. The ideal set of targets is forward looking enough to include a long-term horizon to reflect the company’s strategy to significantly reconsider its production, but also includes short and mid-term targets that incentivise action in the present.
Data requirements

The questions comprising the information request that are relevant to this indicator are:

The benchmark indicators involved are:

How the Analysis will be done

The analysis has two dimensions:

  1. A comparison of: (a) the longest time horizon of the company’s targets, and (b) a default value of lifetime of assets in the Agriculture & Agrifood sector.
  2. The company has interval targets that ensure both short and long-term targets are in place to incentivise short-term action and communicate long-term commitments.

Aggregate score - Dimension 1: 50%, Dimension 2: 50%.

Dimension 1 - Target endpoint (50% of the score):

The company’s target endpoint (Te) is compared to a default value of lifetime Lf for the AG sector.

The company’s target endpoint (Te) is equal to the longest time horizon among the company’s targets, minus the reporting year:

If the company is integrated, it can either:

  • Set targets by activity, and so a separate analysis is done for each activity: the target endpoint Te of the targets the company has set for the given activity is compared to the lifetime Lf of this activity.
  • Set aggregated targets and so Te is compared to the longest lifetime Lf. The horizon gap is used to rate the company on the time horizon relevance of its most long-term target.

The company’s target endpoint is scored according to the following scoring table:

  

Dimension 2 - Intermediate horizons (50% of the score):

All company targets and their endpoints are calculated and plotted. To get full score, the company must not have time gaps larger than 5 years between targets horizons, starting from the reporting year as baseline.

The company’s targets are compared according the following scoring table:

 

An example is illustrated in Figure 4.

 

Figure 4 : Examples of horizons of intermediate targets set by the company and corresponding scores on dimension 2 of the indicator 1.3

 

For all calculations:

  • Targets that do not cover > 95% of the company’s activity-related emissions are not preferred in the calculations. If these types of targets only are available, then the score is adjusted downwards equal to the % coverage that is missing. Figure 8 graphically illustrates emissions covered by the targets:

 

Figure 5 : Illustration of emissions covered by targets that are considered for calculation

 

If part of the emissions included in the company’s targets are excluded from the ACT boundaries:

  • If these emissions represent less than 10% of the total emissions accounted for in the targets, the calculation is done without any modification.
  • If these emissions represent 10% or more of the emissions of the targets, they are removed to calculate the indicator.
Rationale AG 1.3  Time horizon of endpoint and intermediate targets
Rationale of the indicator

Relevance of the indicator:

The time horizon of targets is included in the ACT AG assessment for the following reasons:

  • The target endpoint is an indicator of how forward looking the company’s transition strategy is.
  • Aside from communicating long-term commitments, short-term action needs to be incentivised. This is why short-time intervals between targets are needed.

Scoring rationale:

The score of this indicator is tied to how the target timeline compares to the overall lifetime of assets in the agriculture and agrifood sector.

 

5.3.2 Material Investments (Weighting: 8 - 40%)

 

5.3.2.1 - AG 2.1 Trend in past emissions intensity (WEIGHTING: 2 – 7%)

Description & Requirements AG 2.1 Trend in past emissions intensity
Short description of indicator This metric assesses the alignment of the company’s recent emission intensity trend for emissions within the boundaries with the trend of its decarbonization pathway. The recent emission intensity trend is computed over a 5-year period to the reporting year (reporting year minus 5 years).
Data requirements

The questions comprising the information request that are relevant to this indicator are:

  •  

External sources of data used for the analysis of this indicator are:

  •  

The benchmark indicators involved are:

 

How the Analysis will be done

The analysis is based on the difference between the company’s recent (reporting year minus 5 years) emissions intensity trend gradient (CR′) and the company’s decarbonization pathway trend gradient (CB′) in the short-term (reporting year plus 5 years).

CR′ is the gradient of the linear trendline of the company’s recent emissions intensity (CR).

CB′ is the gradient of the linear trendline of the company benchmark pathway for emissions intensity (CB). The company’s benchmark is defined from the company’s current emissions on reporting year, and from the sectoral benchmark presented in section 6.1

Figure 6 illustrates the various curves and trends used in this indicator.

 

Figure 6: Comparison of trend in past emissions and trend in company's benchmark

The difference between CR′ and CB′ will be measured by their ratio (rT). This is the ‘Transition ratio’ which is calculated by the following equation, with the symbol ‘′ used to denote gradients:

If the transition ratio is a negative number, it means the company’s recent emissions intensity has increased (positive CR′) and a zero score is awarded by default. If the company’s recent emissions intensity has decreased, the transition ratio will be a positive number. The value of the ratio is capped at 1, which represents the maximum score. A score is assigned as a percentage value equal to the value of rT (1 = 100%).

Rationale AG 2.1 Trend in past emissions intensity
Rationale of the indicator

Relevance of the indicator:

Trend in past emissions intensity is included in the ACT AG assessment for the following reasons:

  • The trend shows the speed at which the company has been reducing its emissions intensity over the recent past. Comparing this to the decarbonization pathway gives an indication of the scale of the change that needs to be made within the company to bring it onto a low-carbon pathway.
  • While ACT aims to be future-oriented, ACT does not want to solely rely on projections in a way that would make the analysis too vulnerable to uncertainty. Therefore, this particular indicator, along with projected emissions intensity and absolute emissions, forms part of a holistic view of company emissions performance in the past, present, and future.

Scoring rationale:

While ‘gap’ type scoring is preferred for any indicator where possible, this indicator only looks at past emissions, and would therefore require a different baseline in order to generate a gap analysis. Thus, instead of a gap analysis, a trend analysis is conducted. An advantage of the trend analysis is that it does not require the use of a business-as-usual pathway to anchor the data points and aid interpretation, as trends can be compared directly, and a score can be directly correlated to the resulting ratio.

In this indicator the two trends compared are not measured over the same period: the actual performance of the company is measured over the past 5 years before the reporting year, while the trend of the company benchmark is measured over the future 5 years after the reporting year. The rationale of comparing two different periods of time is the following:

The benchmark trend shows the path the company should direct itself quickly, while the close-past trend shows what the company has been able to achieve lately. Because of inertia to change, the company future performance is likely to be similar to its past/current performance. Comparing the two periods of time highlight the credibility of the company’s ambitions, assessing whether the changes needed can be smooth, or have to be radical.

The choice of minus 5 years / plus 5 years is motivated by the fact that 5 years is long enough to build a trend and smooth possible annual variations, while also remaining short enough to capture the current dynamic of the company and the short-term actions needed. It is a relevant time scale comparing to companies’ business projections.

Given that companies of that sector have very little past data, this indicator can be calculated if the company has data until 3 years before the reporting year.

 

5.3.2.2 - AG 2.2 Food wastage reduction (WEIGHTING: 3 – 8%)

Description & Requirements AG 2.2 Food wastage reduction
Short description of indicator This indicator measures the level of food wastage reduction of the company compared with a benchmark. The expected level of wastage reduction depends on the activity of the company and of its location (developed country / developing country).
Data requirements

The questions comprising the information request that are relevant to this indicator are:

  •  

External sources of data used for the analysis of this indicator are:

  • FAO Food wastage footprint & Climate Change [11]

The benchmark indicators involved are:

[19]  Food and Agriculture Organization of the United Nations (FAO), “Toolkit Reducing the Food Wastage Footprint,” 2013.

How the Analysis will be done

To calculate the amount of food wastage within the company, the definition provided by FAO [19] along with the benchmark shall be used as a reference:

  • Food loss refers to a decrease in mass (dry matter) or nutritional value (quality) of food that was originally intended for human consumption. These losses are mainly caused by inefficiencies in the food supply chains, such as poor infrastructure and logistics, lack of technology, insufficient skills, knowledge and management capacity of supply chain actors, and lack of access to markets. In addition, natural disasters play a role.
  • Food waste refers to food appropriate for human consumption being discarded, whether or not after it is kept beyond its expiry date or left to spoil. Often this is because food has spoiled but it can be for other reasons such as oversupply due to markets, or individual consumer shopping/eating habits.

Both definitions of food loss and waste shall be included in the assessment.

 

 

Rationale AG 2.2 Food wastage reduction
Rationale of the indicator

Relevance of the indicator:

Food wastage is responsible for 4.4 GtCO2eq per year, which represents about 8% of total anthropogenic GHG emissions [11]. While substantial efforts are expected on reducing the supply and demand for animal proteins, reducing the emissions due to the agricultural production and food processing, etc. the fact that a third of the production is lost along the value chain is a critical issue. Among the different action levers, reducing food demand in terms of quantity is also a key recommendation to limit the increase in GHG emissions with population growth. Beyond the idea that one should eat no more than needed to maintain a healthy body weight, companies are required to limit the amount of food waste, through a revised quality process (i.e. accept different notions of quality) and better food valuation [14]. Other actions such as improving harvest techniques and post-harvest storage are particularly relevant in developing countries [19].

Scoring rationale:

  •  

 

5.3.2.3 - AG 2.3 Action on deforestation (WEIGHTING: 0 – 11%)

Description & Requirements AG 2.3 Action on deforestation
Short description of indicator

Refers to Forest 500 methodology [20] to evaluate the level of company’s commitment to ban deforestation, track progress and incentivise reforestation in the short term.

[20]  Global Canopy, “The Forest 500: 2019 Company Assessment Methodology,” Oxford, UK, 2019.

Data requirements

The questions comprising the information request that are relevant to this indicator are:

  •  

External sources of data used for the analysis of this indicator are:

  •  

The benchmark indicators involved are:

How the Analysis will be done

 

This maturity matrix is derived from indicators from the company’s assessment methodology of Forest 500 by Global Canopy [20].

 

 

Rationale AG 2.3 Locked-in emissions
Rationale of the indicator

Relevance of the indicator:

Four Forest Risk Commodities (FRC) sectors – cattle, soy, palm oil and timber, responsible for 80% of deforestation globally [21].

[21]  CDP, “Zeroing-in Deforestation,” 2020.

Scoring rationale:

  •  

 

5.3.2.4 - AG 2.4 Increase in the share of low-carbon products (WEIGHTING: 0 – 5%)

Description & Requirements AG 2.4 Increase in the share of low-carbon products
Short description of indicator This indicator brings a qualitative measure of how the company is switching its production to more low-emissive food products.
Data requirements

The questions comprising the information request that are relevant to this indicator are:

  •  

External sources of data used for the analysis of this indicator are:

  •  

The benchmark indicators involved are:

 

How the Analysis will be done

The “low-carbon products” would be defined as products not exceeding a certain threshold of kilogram of CO2 equivalent per kilogram of product. Increase in this ratio would be expected over the past 5 years.

Proposed threshold for a product to be considered as “low-carbon”: TBD kgCO2eq/kg product

For the performance of products per category, we look at the average emissions intensity per product calculated by the company. We then compare this value to the emission intensity of the same product category of the top 10% performers in the world (i.e., we take the 10th percentile of the world emission intensity distribution [3]):

 

 

Rationale AG 2.4 increase in the share of low-carbon products
Rationale of the indicator

Relevance of the indicator:

As described, this indicator presents the advantage of assessing two important dimensions in the products mix of any agricultural company. On the one hand, it assesses for the overall sold products if the company has tended in the recent past to shift from highly emissive to low-emissive categories of products. On the other hand, for a given category of product, it assesses whether the company succeeds to sell products with emissions intensity significantly lower than the average.

Scoring rationale:

  • For the first subdimension focusing on the overall share of low-carbon products, the scoring depends on the share of low-carbon food products at the starting point (i.e. 5 years before the reporting year). The higher the share of low-carbon food product, the less effort is required in selling more low-carbon food products.
  • The second subdimension focuses on the performance of a product falling within our defined categories [to be described] and assesses whether the company is among the least emissive.

 

5.3.2.5 - AG 2.5 Implementation of better farming practices (WEIGHTING: 0 – 10%)

Description & Requirements AG 2.5 Implementation of better farming practices
Short description of indicator Assesses how the agricultural company implements practices to reduce its GHG emissions footprint.
Data requirements

The questions comprising the information request that are relevant to this indicator are:

  •  
How the Analysis will be done

The analysis assigns a maturity score based on the company’s demonstration of implementation of better farming practices. These later are defined in the European taxonomy (“Detailed activities: climate change mitigation - 19. Agriculture” starting on page 111) [22] for perennial crops, non-perennial crops and livestock. The measures defined in the taxonomy aim to foster the reduction of GHG emissions and to maintain and increase the carbon sinks and sequestration.

The measures to be considered for this indicator assessment are directly drawn from the European Taxonomy [22]:

[22]  EU Technical Expert Group on Sustainable Finance, “Taxonomy Technical Report,” 2019.

For perennial crops:

  • Crop choice and rotation: sowing of cover/catch crops using at least a 6 species cover crop including 1 legume and reducing bare soil to the point of having a living plant coverage index of at least 75% at farm level per year.
  • Soil tillage and management:
    • Reduced and/or zero tillage with adjusted weed and disease control
    • Prevent soil compaction
    • Management of carbon-rich soils (avoiding row crops, maintaining a shallower water table (arable/peat))
  • Nutrient management plan to optimize fertilization and improve nitrogen use efficiency. In addition, a low-emissions N-application technology shall be used (slurry injection, incorporating manure in the soil within 2 hours of spreading) and fertilizers spreaders which have low coefficient of variation combined with calibration of spreaders.
  • Structural elements with mitigation benefit:
    • Plant hedges and/or buffer strips and/or individual trees.
    • Conversion of low productivity land into woodland to increase C sequestration and protect against soil erosion.
  • Minimize post-harvest loss.

 

For non-perennial crops:

  • Crop choice and rotation:
    • At least a 5 crop rotation, including at least one legume, where a multi-species cover crop between cash crops counts for 1
    • Sowing of cover/catch crops using at least a 6 species cover crop including 1 legume and reducing bare soil to the point of having a living plant coverage index of at least 75% at farm level per year.
  • Soil tillage and management:
    • Avoiding deep ploughing on carbon-rich soils
    • Prevent soil compaction
    • Management of carbon-rich soils (avoiding row crops, maintaining a shallower water table (arable/peat))
    • Check and maintain land drainage to avoid water-logging and compaction
  • Nutrient management plan to optimize fertilization and improve nitrogen use efficiency. In addition, a low-emissions N-application technology shall be used (slurry injection, incorporating manure in the soil within 2 hours of spreading) and fertilizers spreaders which have low coefficient of variation combined with calibration of spreaders.
  • Paddy rice management:
    • Shallow flooding
    • Mid-season drying event
    • Off-season straw
  • Structural elements with mitigation potential:
    • Plant hedges and/or buffer strips and/or individual trees
    • Conversion of low productivity land into woodland to increase C sequestration and protect against soil erosion.
  • Minimize post-harvest loss.

For livestock:

  • Better animal health planning and management (develop a health management plan, improve hygiene & supervision at parturition, etc.)
  • Animal feeding:
    • [Outside of the periods when the livestock is grazing] Feed additives such as dietary fats, nitrate and 3-NOP can be administered with the appropriate dosage.
    • Precision and multi-phase feeding techniques, where nutrient requirements or groups of animals (or individual animals) are targeted in feed formulation.
  • Manure management:
    • Cooling of liquid manure
    • Covering slurry and farm-yard manure
    • Separating solids from slurry
    • Composting and applying solid manure
    • Slurry acidification, possible at different stage: in the livestock house, in the storage tank, or before field application
    • Apply low-emission application technology for slurry and manure
  • Permanent grassland management:
    • Pasture renovation
    • Remove animals from very wet fields to reduce compaction
    • No ploughing of permanent grassland

 

Additional aspects limiting the access to the highest scores:

  • Accounting for current and future weather variability: The company has to mention how the choices of these better farming practices (eg: crop management, crop species, land use) take into account both current weather variability and future climate change, including uncertainty. If not, the overall score for this indicator cannot exceed 66%.
  • Use of pesticides: If the company has no plan to reduce its use of pesticides (when relevant, i.e. for a crop producer), the score cannot exceed 66%.
  • Off-season production: For fruits and vegetables producers, if the company produces off-season products, the score cannot exceed 66%.
  • Organic production: For pulses and vegetables only, the company gets a 33% bonus if more than 50% of its production comes from organic farming. No bonus is awarded if the company has already scored 100%.

The assessment requires calculating the percentage of measures implemented among those listed for each category (when relevant) multiplied by the share of relevant production affected (share of area or share of livestock affected).

  

Rationale AG 2.5 Implementation of better farming practices
Rationale of the indicator

Relevance of the indicator:

Best farming practices are included in the ACT AG assessment for the following reasons:

  • GHG emissions emitted in the Agriculture sector are directly linked to the management of plants and animals to produce food and feed since they are generally the largest emitters of GHG emissions compared to energy use. Assessing the share of farming practices enabling GHG emissions reduction and carbon sequestration by a company allows a judgement to be made about a company’s actions to tackle global warming.
  • The farming practices are divided by categories of production, which allows the assessor to understand whether the relevant farming practices are being implemented per type of product, in order to maximise GHG reduction and carbon sequestration.
  • The list of recommended farming practices are directly drawn from the European Taxonomy [22], which could lead to a geographical bias. However, the recommended farming practices align closely with recommendations from the World Resources Institute’s report on “Creating a Sustainable Food Future” [10] (specifically from “Course 5: Reduce GHG emissions from agricultural production”). The European Taxonomy [22] was also found to have the list of recommendations most easily applicable for the scoring purpose of the ACT assessment.

There is a score limit on the organic production of pulses and vegetables only, because while organic production is recognised for its positive environmental impact compared to conventional agriculture, it does not contribute to GHG emissions reduction for other products [23].

[23]  H. Ritchie, “Is organic really better for the environment than conventional agriculture?,” 2017.

Scoring rationale:

  •  

 

5.3.3 Intangible investments (Weighting: 5 – 6%)

The weighting for the intangible investment module is low, it stands at 5 – 6% (depending on the company segment) where it goes up to 12% in other ACT sectoral methodologies. The reason for this low weight is the fact that research and development for Agriculture is already considered to be at the mature level as shown in Figure 7 below. Sufficient emissions reduction can be achieved through conservation and expansion of carbon sinks, improved agricultural productivity and shift from both the supply and demand sides, so there is no need for further innovation [16].

 

Figure 7: Global CO2 emission reductions by current technology maturity category and sector (IEA, Energy Technology Perspectives 2020 [24])

[24]  I. E. A. (IEA), “Energy Technology Perspectives 2020,” Paris, 2020.

 

5.3.3.1 - AG 3.1 Share of Research & development in mitigation and adaptation technologies (WEIGHTING: 1%)

Description & Requirements AG 3.1 Share of Research & development in mitigation and adaptation technologies
Short description of indicator

A measure of the ratio of R&D investments in mitigation and adaptation technologies. The indicator identifies the ratio between the company’s R&D investment in technologies for mitigation and/or adaptation, and total R&D investments.

Technologies for mitigation and/or adaptation include:

  • Technologies reducing the vulnerability of the company to the impacts of climate changes (for instance : reducing water needs, preserving soil functions in regard to erosion and water stress issues), without harming, or even having a positive impact on climate change mitigation, biodiversity, health and pollution
Data requirements

The questions comprising the information request that are relevant to this indicator are:

  •  
How the Analysis will be done

The analysis is based on the ratio of the company’s ‘annual R&D expenditure on mitigation and adaptation (CAPEX R&D mit /adapt ) to the company’s ‘total annual capital expenditure in R&D’ (CAPEX R&D).

The ratio is defined as the ‘mitigation and adaptation R&D intensity’ ratio (D ) or:

A maturity matrix is then used to assess this indicator, depending on the value of the ratio D.

 

 
Rationale AG 3.1 Share of Research & development in mitigation and adaptation technologies
Rationale of the indicator

Relevance of the indicator:

Scoring rationale:

  •  

 

5.3.3.2 - AG 3.2 Personal training funding for farmers (WEIGHTING: 1 – 2%)

Description & Requirements AG 3.2 Personal training funding for farmers
Short description of indicator This indicator is an assessment of level of funding for training of farmers about climate related issues.
Data requirements

The questions comprising the information request that are relevant to this indicator are:

  •  
How the Analysis will be done

 

Rationale AG 3.2 Personal training funding for farmers
Rationale of the indicator

Relevance of the indicator:

Scoring rationale:

  •  

 

5.3.3.3 - AG 3.3 Innovative low-carbon food-products (WEIGHTING: 2%)

Description & Requirements AG 3.3 Innovative low-carbon food-products
Short description of indicator  
Data requirements

The questions comprising the information request that are relevant to this indicator are:

  •  

External sources of data used for the analysis of this indicator are:

  •  
How the Analysis will be done

The concept of innovative low-carbon food products must be understood as new agricultural or food product reducing significantly the level of GHG emissions for a given nutritional performance (proteins, fibers, etc.).

 

Rationale AG 3.3 Innovative low-carbon food-products
Rationale of the indicator

Relevance of the indicator:

Alternative food products are still to be developed and deployed to help incentivizing the industry and the consumer to reduce its food carbon footprint. To make these alternative products attractive against products with a higher carbon footprint, investments are necessary to

Scoring rationale:

  • The company gets a 50% score if it does R&D for low-carbon food product, but gets a 100% score if it can quantify that this research will reduce the level of GHG emissions.

 

5.3.4 Sold product performance (Weighting: 0 – 32%)

 

5.3.4.1 - AG 4.1 Trend in past upstream emissions intensity (WEIGHTING: 0 - 14%)

Description & Requirements AG 4.1 Trend in past upstream emissions intensity
Short description of indicator This indicator brings a qualitative measure of how the company is switching its production to more low-emissive food products.
Data requirements

The questions comprising the information request that are relevant to this indicator are:

  •  

External sources of data used for the analysis of this indicator are:

  •  

The benchmark indicators involved are:

 

How the Analysis will be done

To calculate this indicator score, the company must report its past upstream emissions over the 5 years before the reporting year. Upstream emissions cover all the emissions listed in section 4 Boundaries that are related to the product used by the agrifood company.

 

Figure 8: COMPARISON OF TREND IN PAST EMISSIONS AND TREND IN COMPANY'S BENCHMARK

Rationale AG 4.1 Trend in past upstream emissions intensity
Rationale of the indicator

Relevance of the indicator:

Most of the emissions attributable to agrifood companies come from the upstream part of the value chain. While companies have levers on direct emissions, they can also significantly reduce their upstream emissions by selecting their suppliers.

Scoring rationale:

  • This indicator focuses on the upstream sold product performance, for a fixed product mix. Shift from highly emissive to low-carbon products is not assessed in this indicator, which focuses on the emissions intensities of the products sold by the company compared to the overall emissions intensities of the same products in the same region.

 

5.3.4.2 - AG 4.2 Downstream emissions from the animals fed

Description & Requirements AG 4.2 Downstream emissions from the animal fed
Short description of indicator Assesses how companies producing ruminant animal feeding integrates the downstream emissions into their activity and try to decrease it.
Data requirements

The questions comprising the information request that are relevant to this indicator are:

  •  

External sources of data used for the analysis of this indicator are:

  •  
How the Analysis will be done

Downstream emissions from ruminant animals fed include emissions from land use change associated to this production, enteric fermentation, manure management, pasture management and energy use.

 

Rationale AG 4.2 Downstream emissions from the animal fed
Rationale of the indicator

Relevance of the indicator:

Animal feed producers are an exception compared to other crop producers in the sense that their Scope 3 downstream emissions due to ruminant animals breeding is particularly emissive. The rationale for not including Scope 3 downstream emissions for the other companies is that they remain negligible compared to the rest of the value chain. Furthermore, while downstream emissions are overall excluded from the boundaries for Agricultural companies, in this particular case they do have lever to limit emissions from this emissions source.

Scoring rationale:

  • This indicator only applies to animal feed producers.
  • This indicator is qualitative because of a lack of benchmark for this indirect emissions source.
  • The company producing ruminant animals feeding has levers in decreasing its downstream emissions by estimating these emissions and by diversifying its customers.

 

5.3.4.3 - AG 4.3 Action on deforestation (WEIGHTING: 0 – 8%)

Description & Requirements AG 4.3 Action on deforestation
Short description of indicator Refers to Forest 500 methodology [20] to evaluate the level of company’s commitment to ban deforestation, track progress and incentivise reforestation in the short term.
Data requirements

The questions comprising the information request that are relevant to this indicator are:

  •  

External sources of data used for the analysis of this indicator are:

  •  
How the Analysis will be done

 

 

Rationale AG 4.3 Action on deforestation
Rationale of the indicator

Relevance of the indicator:

Scoring rationale:

  •  

 

5.3.4.4 - AG 4.4 Share of low-carbon products in total sold products (WEIGHTING: 0 – 10%)

Description & Requirements AG 4.4 Share of low-carbon products in total sold products
Short description of indicator This indicator brings a qualitative measure of how the company is switching its production to more low-emissive food products.
Data requirements

The questions comprising the information request that are relevant to this indicator are:

  •  

External sources of data used for the analysis of this indicator are:

  •  

The benchmark indicators involved are:

 

 

How the Analysis will be done

The “low-carbon products” would be defined as products not exceeding a certain threshold of kilogram of CO2 equivalent per kilogram of product. Increase in this ratio would be expected over the past 5 years.

Proposed threshold for a product to be considered as “low-carbon”: TBD kgCO2eq/kg product

For the performance of products per category, we look at the average emissions intensity per product calculated by the company. We then compare this value to the emission intensity of the same product category of the top 10% performers in the world (i.e., we take the 10th percentile of the world emission intensity distribution [3]): 

 

 

 
Rationale AG 4.4 Share of low-carbon products in total sold products
Rationale of the indicator

Relevance of the indicator:

As described, this indicator presents the advantage of assessing two important dimensions in the products mix of any agrifood company. On the one hand, it assesses for the overall sold products if the company has tended in the recent past to shift from highly emissive to low-emissive categories of products. On the other hand, for a given category of product, it assesses whether the company succeeds to sell products with emissions intensity significantly lower than the average.

Scoring rationale:

  • For the first subdimension focusing on the overall share of low-carbon products, the scoring depends on the share of low-carbon food products at the starting point (i.e. 5 years before the reporting year). The higher the share of low-carbon food product, the less effort is required in selling more low-carbon food products.
  • The second subdimension focuses on the performance of a product falling within our defined categories [to be described] and assesses whether the company is among the least emissive.

 

5.3.5 Management (Weighting: 10%)

 

5.3.5.1 - AG 5.1 OVERSIGHT OF CLIMATE CHANGE ISSUES (WEIGHTING: 1%)

Description & Requirements AG 5.1 Oversight of climate change issues
Short description of indicator The company discloses that responsibility for climate change within the company lies at the highest level of decision making within the company structure.
Data requirements

The questions from the information request that are relevant to this indicator are:

External sources of data may also be used for the analysis of this indicator.

How the Analysis will be done

The benchmark case is that climate change mitigation and adaptation is managed within the highest decision-making structure within the company. The company situation will be compared to the benchmark case, if it is similar then points will be awarded.

The position at which climate change is managed within the company structure will be determined from the company data submission and accompanying evidence.

 

 

 

Rationale AG 5.1 Oversight of climate change issues
Rationale of the indicator

Successful change within companies, such as the transition to a low-carbon economy and adaptation to the climate change impacts, requires strategic oversight and buy-in from the highest levels of decision-making within the company. For the RT sector, a change in strategy and potentially business model will be required and this cannot be achieved at lower levels within an organisation. Evidence of how climate change is addressed within the top decision-making structures is a proxy for how seriously the company takes climate change, and how well integrated it is at a strategic level and how its organization is coherent with the ISO 14 090 principles about governance subsidiarity, mainstreaming and embedding. High-level ownership also increases the likelihood of effective action to address the low-carbon transition and the adaptation to the climate change impacts in the short, medium and long terms.

Changes in strategic direction are necessarily future-oriented, which fits with this principle of the ACT project.

Management oversight of climate change is considered good practice.

 

5.3.4.2 - AG 5.2 CLIMATE CHANGE OVERSIGHT CAPABILITY (WEIGHTING: 1%)

Description & Requirements AG 5.2 Climate change oversight capability
Short description of indicator Company board or executive management has expertise on the science and economics of climate change, including an understanding of policy, technology and consumption drivers that can disrupt current business.
Data requirements

The questions from the information request that are relevant to this indicator are:

  •  

External sources of data may also be used for the analysis of this indicator.

How the Analysis will be done

The presence of expertise on topics relevant to climate change, the low-carbon transition and the adaptation to the climate changes impacts at the level of the individual or committee with overall responsibility for it within the company will be assessed. The presence of expertise is the condition that must be fulfilled for points to be awarded in the scoring.

The analyst will determine if the company has expertise as evidenced through a named expert biography outlining capabilities. The analysis is binary: expertise is evident or not. A cross check will be performed against AG 4.1 on the highest responsibility for climate change, the expertise should exist at the level identified or the relationship between the structures/experts identified should also be evident. This indicator can be a proxy to assess how its organization is coherent with the ISO 14 090 principles about robustness.

 

Rationale AG 5.2 Climate change oversight capability
Rationale of the indicator

Effective management of the low-carbon transition and the adaptation to climate change impacts requires specific expertise related to climate change and its impacts in terms of physical and transition risk, and their likely direct and indirect effects on the business. Presence of this capability within or closely related to the decision-making bodies that will implement low-carbon transition and the adaptation to climate change impacts both indicates company commitment to that transition and increases the chances of success.

Even if companies are managing climate change at the Board level or equivalent, a lack of expertise could be a barrier to successful management of a low-carbon transition [16].

 

5.3.5.3 - AG 5.3 LOW-CARBON TRANSITION PLAN (WEIGHTING: 4%)

Description & Requirements AG 5.3 Low-carbon transition plan
Short description of indicator The company has a plan on how to transition the company to a business model compatible with a low-carbon economy.
Data requirements
  •  
How the Analysis will be done

The analyst evaluates the description and evidence of the low-carbon transition plan for the presence of best practice elements and consistency with the other reported management indicators and with the expected changes in climate. The company description and evidence are compared to the maturity matrix developed to guide the scoring and a greater number of points are allocated for elements indicating a higher level of maturity.

Among the best-practice elements identified to date are:

  • The plan includes financial projections
  • The plan should include cost estimates or other assessment of financial viability as part of its preparation
  • The description of the major changes to the business is comprehensive, consistent, aligned with other indicators
  • Quantitative estimates of how the business will change in the future are included
  • Costs associated with the plan (e.g. write-downs, site remediation, contract penalties, regulatory costs) are included
  • Potential “shocks” or stressors (sudden adverse changes) has been taken into consideration
  • Relevant region-specific considerations are included
  • The plan’s measure of success is SMART (specific, measurable, acceptable, realistic, time bound) - contains targets or commitments with timescales to implement them, is time-constrained or the actions anticipated are time-constrained
  • The plan’s measure of success is quantitative
  • The description of relevant testing/analysis that influenced the transition plan is included, including product carbon hotspotting if this has been undertaken
  • The plan is consistent with reporting against other ACT indicators
  • Scope – should cover the entire business, and is specific to that business
  • The plan should cover the short, medium and long terms. From now or the near future <5 years, until at least 2035 and preferably beyond (2050). Discussion about some current company elements that need to be changed to make the transition a reality, including in regard to the expected changes in climate and the impacts of climate change in the short, medium and long term (i.e. water availability, crop yield and quality, consumer demands) have been included.
  • The plan contains details of actions the company realistically expects to implement (and these actions are relevant and realistic). these actions are relevant and realistic including in regard to the expected changes in climate and the impacts of climate change in the short, medium and long terms: i.e. water availability, crop yield and quality, consumer demands, exposition of infrastructures to extreme climate events.
  • The plan has been approved at the strategic level within the organisation
  • Discussions about the potential impacts of a low-carbon transition on the current business have been included
  • The company has a publicly-acknowledged 2°C (or beyond) science-based target (SBT).

The maximum score (100%) is assigned if all of these elements are demonstrated.

En termes de notation, bloquer l’accès aux notes les plus élevées si les éléments en jaune ne figurant pas la description.

Rationale AG 5.3 Low-carbon transition plan
Rationale of the indicator

The AG sector requires changes to its business to align with a low-carbon economy, over the short, medium and long terms, whether voluntarily following a strategy to do so or if forced to change by regulations and structural changes to the market. It is better for the success of its business and of its transition that these changes occur in a planned and controlled manner.

 

Suggestion for the integration of climate change adaptation:

  • adding a supplementary indicator concerning the climate change adaptation strategy and its coherence with the ISO 14090 principles about flexibility, system thinking and sustainability, that will be assessed basing on the following maturity matrix

 

 

5.3.5.4 - AG 5.4 CLIMATE CHANGE MANAGEMENT INCENTIVES (WEIGHTING: 1%)

Description & Requirements AG 5.4 Climate change management incentives
Short description of indicator The Board’s compensation committee has included metrics for the reduction of GHG emissions and adaptation to climate change impacts in the annual and/or long-term compensation plans of senior executives; the company provides monetary incentives for the management of climate change issues as defined by a series of relevant indicators.
Data requirements

The questions comprising the information request that are relevant to this indicator are:

  •  
How the Analysis will be done

The analyst verifies if the company has compensation incentives set for senior executive compensation and/or bonuses, that directly and routinely reward specific, measurable reductions of tons of carbon emitted by the company in the preceding year and/or to the future attainment of emissions reduction targets, or other metrics related to the company’s low-carbon transition plan and adaptation to climate change impacts.

If adaptation aspects are not included in the incentives, the score cannot exceed 80%.

 

Rationale AG 5.4 Climate change management incentives
Rationale of the indicator

Executive compensation should be aligned with overall business strategy and priorities. As well as commitments to action the company should ensure that incentives, especially at the executive level, are in place to reward progress towards a low-carbon transition. This will improve the likelihood of a successful low-carbon transition plan.

Monetary incentives at the executive level are an indication of commitment to successful implementation of a low-carbon transition strategy.

 

5.3.5.5 - AG 5.5 CLIMATE CHANGE SCENARIO TESTING (WEIGHTING: 3%)

Description & Requirements AG 5.5 Climate change scenario testing
Short description of indicator Testing or analysis relevant to determining the impact of the transition to a low-carbon economy on the current and projected business model and/or business strategy has been completed, with the results reported to the Board or C-suite (CEO, CFO, etc.), the business strategy revised where necessary, and the results publicly reported.
Data requirements

The questions comprising the information request that are relevant to this indicator are:

  •  
How the Analysis will be done

The analyst evaluates the description and evidence of the low-carbon economy scenario testing for the presence of best-practice elements and consistency with the other reported management indicators. The company description and evidence are compared to the maturity matrix developed to guide the scoring and a greater number of points is allocated for elements indicating a higher level of maturity.

  • Best-practice elements to be identified in the test/analysis include:
  • entire coverage of the company’s boundaries
  • timescale from present to long-term (2035-2050)
  • these scenario testing have to include changing conditions concerning the expected changes in climate and the impacts of climate change in the short, medium and long terms (cf. TCFD recommendations about climate-related scenarios): i.e. water availability, crop yield and quality, consumer demands.
  • translation of results into value-at-risk or other financial terms
  • multivariate: a range of different changes in conditions are considered together
  • changes in conditions that are specific to a low-carbon climate scenario
  • climate change conditions are combined with other likely future changes in operating conditions over the timescale chosen.

Maximum points are awarded if all of these elements are demonstrated. Partial points might be awarded in case scenario testing has been carried out by the company even if not achieved.

 

Rationale AG 5.5 Climate change scenario testing
Rationale of the indicator

Changes predicted to occur due to climate change could have a number of consequences for the Transport sector, including increased costs, a dramatically changed operating environment and major disruptions to the business. There are a variety of ways of analysing the potential impacts of climate-related changes on the business, whether these are slow and gradual developments or one-off “shocks”. Investors are increasingly calling for techniques such as use of an internal price on carbon, scenario analysis and stress testing to be implemented to enable companies to calculate the value-at-risk that such changes could pose to the business. As this practice is emergent at this time there is currently no comprehensive survey or guidance on specific techniques or tools recommended for the sector. The ACT methodology thus provides a broad definition of types of testing and analysis that can be relevant to this information requirement, to identify both current and best practices and consider them in the analysis.

Scenario stress testing is an important management tool for preparing for the low-carbon transition. For businesses likely to be strongly affected by climate change impacts (both direct and indirect), it has even greater importance.

 

5.3.5.6 - AG 5.6 WASTE REDUCTION STRATEGY (WEIGHTING: 1%)

Description & Requirements AG 5.6 Waste reduction strategy
Short description of indicator The company demonstrates that it has a comprehensive strategy at the corporate level to reduce waste within its own operations, in the upstream phases of its value chain, downstream of its stores for products in use, and from packaging at all phases.
Data requirements

The questions comprising the information request that are relevant to this indicator are:

  •  
How the Analysis will be done

The analyst evaluates the description and evidence of the waste reduction strategy for the presence of best practice elements and consistency with the other reported management indicators. The company description and evidence are compared to the maturity matrix developed to guide the scoring and a greater number of points is allocated for elements indicating a higher level of maturity.

  • Best-practice elements to be identified in the waste reduction strategy include:
  • Basing it on an exercise costing the value of waste
  • Commitment to reduce waste in direct operations (covers all operations and whole organisational boundary)
  • Commitment to reduce waste in value chain – both upstream and downstream
  • Taking account of post-consumer waste and recovery of sold materials through recycling and upcycling
  • Using targets with end dates for waste reduction
  • Having interim targets
  • Following a waste hierarchy approach (prevention first) (for example, from the UNEP national waste management strategies report [17])
  • Management at a high level within the organisation
  • Monitoring, reporting and verification processes included to track progress
  • Continuous improvement/learning feedback mechanisms
  • Commitments to employee, supplier and customer education
  • Linking the waste strategy to the development of circular economy business models
  • Linking the waste strategy to the core business strategy
  • Linking the waste strategy to core business operations (procurement, product design)

The maximum score (100%) is assigned if all of these elements are demonstrated.

 

Rationale AG 5.6 Waste reduction strategy
Rationale of the indicator Waste is a significant source of GHG emissions that can be avoided with co-benefits in economic and environmental terms for retailers. As links between producers and consumers in the economy, retailers are positioned to influence both halves of the value chain. This needs to be within a coherent strategic framework to ensure that (i) GHG impacts are decreased, and (ii) benefits are maximised by prioritising opportunities and scaling up successes. Waste reduction approaches can require cultural shifts and education within organisations, both of which require buy-in from across an organisation that can be enhanced by a specific strategic focus.

 

5.3.6 Supplier Engagement (Weighting: 7 – 10%)

 

5.3.6.1 - AG 6.1 Strategy to influence suppliers to reduce their GHG emissions and to adapt their processes to the expected changes in climate (WEIGHTING: 5%)

Description & Requirements AG 6.1 Strategy to influence suppliers to reduce their GHG emissions and to adapt their processes to the expected changes in climate
Short description of indicator The company has a strategy, ideally governed by policy and integrated into business decision making, to influence, enable, or otherwise shift suppliers’ choices and behaviour in order to reduce GHG emissions.
Data requirements

The questions from the information request that are relevant to this indicator are:

  •  
How the Analysis will be done

The analyst checks if the policy or strategy exists and assesses if it targets suppliers’ behaviour through specific actions undertaken by the company. The strategy has to mention whether:

  • GHG emissions reduction and adaptation to climate change impacts are part of the goal. If the strategy only mentions other elements of an ecological footprint, then it is not sufficient.
  • Suppliers are engaged either directly through education, collaboration or compensation, or indirectly through company regulation.
  • It is widespread. The strategy has to apply to the main company suppliers.

Calculation of the score:

A maximum of 100% is scored if the strategy includes all three aspects mentioned above. 33% is deducted if the analyst finds that one of them is not properly included in the strategy.

Rationale AG 6.1 Strategy to influence suppliers to reduce their GHG emissions and to adapt their processes to the expected changes in climate
Rationale of the indicator

Since a significant part of emissions associated with retailers lies downstream with the use of sold products, and retailers have a lot of influence over what their customers buy and how to influence consumption patterns, an effective and co-ordinated engagement strategy is essential for the low-carbon transition.

The impact of the retailer on the supply chain is chiefly measured using the experimental dynamic maturity approach from RT 4.1. This is a product-specific approach, but there are some general strategic considerations that companies have to do that can apply to all the products they sell. This strategy is more easily measured in a separate indicator, rather than deducing it from its impact on the various product categories in RT 4.1 This also applies to the company’s strategy for customer engagement. Therefore, the indicators RT 6.1 and RT 7.1 are designed to measure this and add additional emphasis to this strategic element.

As noted in the CDP Supply chain report [18], supply chains are critical levers for action, with the GHG emissions often outside the company’s operational Scope 1+2 emissions. Supply chains are also a key element of a company’s climate-related risks. Supply chains must be resilient systems that account for regulatory risk, minimize adverse contributions to climate change, and adapt to climate-related disturbances ranging from resource scarcity to infrastructure damage from extreme weather events. Retail companies should have strategies in place that make attempts to deal with these issues, and to have a sound strategy for emissions reduction mitigate climate change.

Scoring rationale:

The scoring of elements in the way that it is presented is similar to the CDP scoring methodology, whereby a narrative answer that details a certain strategy is checked for whether it includes certain elements that the ACT assessment deems vital for any sound supply chain strategy.

 

5.3.6.2 - AG 6.2 Activities to influence suppliers to reduce their GHG emissions and to adapt their processes to the expected changes in climate (WEIGHTING: 2 – 5%)

Description & Requirements AG 6.2 Activities to influence suppliers to reduce their GHG emissions and to adapt their processes to the expected changes in climate
Short description of indicator The company participates in activities that help, influence or otherwise enable suppliers to reduce their GHG emissions and to adapt their processes to the expected changes in climate. The indicator aims to be a holistic measure of these activities to assess how active the company is in reducing the emissions of their products in the value chain across all products.
Data requirements

The questions from the information request that are relevant to this indicator are:

  •  
How the Analysis will be done

The analyst assigns a maturity score based on the company’s demonstration of engagement with its suppliers, expressed in a maturity matrix. This indicator takes a holistic viewpoint on the same interventions reported (see RT 4.1 [8] for a definition of interventions), and evaluates how together they paint a picture of the company’s level of active engagement with their suppliers.

It will use a similar basic approach as Module 4, using a maturity matrix to cover different types of activities under one score. The level that the company has achieved will be determined by the analyst after reviewing all the information provided on the value chain interventions.

Successive levels into this matrix represent a more advanced level of engagement that works towards a collaborative effort of decarbonizing the retail sector, and assumes that the actions in the previous level are also part of the company’s engagement. Note that this matrix is illustrative.

A company that is placed in the ‘Low-carbon aligned’ category receives the maximum score. Companies that are at lower levels receive a partial score, with 0 points awarded for having no engagement at all.

The reason why the analysis looks at the same data twice on product interventions is that there is a need to provide a more integrated view of the company’s actions, along with the very mechanistic and product-category-specific analysis presented in Module 4.

Rationale AG 6.2 Activities to influence suppliers to reduce their GHG emissions and to adapt their processes to the expected changes in climate
Rationale of the indicator

While measurement of strategy as in RT 6.1 is important, measuring activities and their outcome is more insightful with regard to the company’s actual emissions reduction and adaptation to climate change impacts activities in the supply chain. Because of the difficulty in measuring this, the existing CDP questionnaire, for example, has not yet adopted an approach to do this. The ACT assessment therefore uses this maturity matrix approach that has been piloted by several other institutions (see scoring rationale) to fill this gap in indicators RT 6.2 and RT 7.2.

It may seem like double counting to reconsider the interventions reported in Module 4 for another indicator, but there are several reasons for this approach: (i) it allows for a holistic and specific analysis of the company’s activities outside of the bounds of the product categories. Furthermore, the analysis method in Module 4, using maturity matrices, relies not only on the outcome of the data collection process but also on whether or not this method is actually applicable to the type of information that we are asking for. Therefore, the second reason for assessing this indicator is (ii) to give the analyst another angle to the data if the methodology of Module 4 does not provide the most usable results.

Scoring rationale:

Because of data availability and complexity, a direct measure of the outcome of supply chain engagement activities is not very feasible at this time. Therefore, the approach of a maturity matrix allows the analyst to consider multiple dimensions of supplier engagement and analyse them together towards a single score. This approach has been used before by several institutions that attempt to make measurements of progress in the complex and multidimensional retail and production sectors [15].

 

5.3.7 Client Engagement (Weighting: 7%)

 

5.3.7.1 - AG 7.1 Strategy to influence customer behaviour to reduce their GHG emissions (WEIGHTING: 3%)

Description & Requirements AG 7.1 Strategy to influence customer behaviour to reduce their GHG emissions
Short description of indicator This indicator measures whether the company has a strategy, ideally governed by a clear policy and integrated into business decision making, in order to influence its clients to reduce their GHG emissions.
Data requirements

The questions comprising the information request that are relevant to this indicator are:

  •  
How the Analysis will be done

For crops producers, a special attention will be paid in case part or total share of the products sold are animal feeding for breeders. The strategy with clients producing animal-based proteins must also be assessed with this indicator.

Scoring of the indicator:

Scoring of this indicator is done on a set of narrative data points that do not have a quantitative interpretation. The maturity matrix shown below is used to assess the company strategy. Each sub-dimension has the same weight (50%-50%) in the final score of this indicator.

 

Rationale AG 7.1 Strategy to influence customer behaviour to reduce their GHG emissions
Rationale of the indicator Relevance of the indicator:

 

5.3.7.2 AG 7.2 Activities to influence customer behaviour to reduce their GHG emissions (WEIGHTING: 4%)

Description & Requirements AG 7.2 activities to influence customer behaviour to reduce their GHG emissions
Short description of indicator This indicator measures whether the company has a strategy, ideally governed by a clear policy and integrated into business decision making, and activities to influence, enable, or otherwise shift customer choices and behaviour in order to reduce GHG emissions.
Data requirements

The questions comprising the information request that are relevant to this indicator are:

  •  
How the Analysis will be done

The activities have to mention whether GHG emissions reduction is part of the goal.

For companies producing and processing crops, a special attention will be paid in case part or total share of the sold products are animal feeding for breeders. The activity with clients producing animal-based proteins must also be assessed with this indicator.

Scoring of the indicator:

Scoring of this indicator is done on a set of narrative data points that do not have a quantitative interpretation. The maturity matrix shown below is used to assess the company strategy.

 

Rationale AG 7.2 Activities to influence customer behaviour to reduce their GHG emissions
Rationale of the indicator

Relevance of the indicator:

.

 

5.3.8 Policy engagement (Weighting: 5%)

 

5.3.8.1 - AG 8.1 Company policy on engagement with trade associations (WEIGHTING: 2%)

Description & Requirements AG 8.1 Company policy on engagement with trade associations
Short description of indicator The company is not on the Board or providing funding beyond membership of any trade associations that have climate-negative activities or positions. It should also be considered if the company is supporting trade associations with climate-positive activities and/or positions. The company has a constructive policy on what action to take when industry and trade organisations to which it has membership are found to be opposing “climate-friendly” policies.
Data requirements

The questions comprising the information request that are relevant to this indicator are:

  •  
How the Analysis will be done

The list of trade associations declared in the CDP data and other external source entries relating to the company is assessed against a list of associations that have climate-negative activities or positions. If the company is part of trade associations that have climate-positive activities and/or positions, this should be considered for the analysis. The analyst evaluates the description and evidence of the policy on trade associations and climate change for the presence of best practice elements and consistency with the other reported management indicators. The company description and evidence are compared to the maturity matrix developed to guide the scoring and a greater number of points will be allocated for elements indicating a higher level of maturity.

Best practice elements to be identified in the test/analysis include:

  • Having a publicly available policy in place
  • The scope of the policy covers the entire company and its activities, and all group memberships and associations
  • The policy sets out what action is to be taken in the case of inconsistencies
  • Action includes the option to terminate membership of the association
  • Action includes the option of publicly opposing or actively countering the association’s position
  • Responsibility for oversight of the policy lies at the top level of the organisation
  • There is a process to monitor and review trade association positions

Maximum points are awarded if all these elements are demonstrated.

The following maturity matrix is used to score this indicator:

 

Rationale AG 8.1 Company policy on engagement with trade associations
Rationale of the indicator

See also the module rationale.

Trade associations are a key instrument by which companies can indirectly influence policy on climate. Thus, when trade associations take positions that are negative for the climate, companies need to take action to ensure that this negative influence is countered or minimised.

A policy to govern such interaction is a specific request of the 2015 UNPRI “investor expectations on corporate climate lobbying” document [25].

 

5.3.8.2 - AG 8.2 Position on significant climate policies (WEIGHTING: 1%)

Description & Requirements AG 8.2 Position on significant climate policies
Short description of indicator The company is not opposed to any significant climate relevant policy and/or supports climate friendly policies.
Data requirements

The questions comprising the information request that are relevant to this indicator are:

  •  

External sources of data shall also be used for the analysis of this indicator (e.g. RepRisk database, press news).

How the Analysis will be done

The analyst evaluates the description and evidence on the company’s position on relevant climate policies for the presence of best practice elements, negative indicators and consistency with the other reported management indicators. The company description and evidence are compared to the maturity matrix developed to guide the scoring and a greater number of points are allocated for elements indicating a higher level of maturity.

Maturity matrix contents may include (decreasing maturity):

  1. The company publicly supports relevant significant climate policies
  2. No reports of any opposition to climate policy
  3. Reported indirect opposition to climate policy (e.g. via a trade association)
  4. Reported direct opposition to climate policy (third-party claims are found)
  5. The company publicises direct opposition to climate policy (e.g. direct statement issues or given by a company representative in a speech or interview)

The following maturity matrix is used to score this indicator.

 

Rationale AG 8.2 Position on significant climate policies
Rationale of the indicator

See also the module rationale.

Policy and regulation that act to promote transition to a low-carbon economy are key to the success of the transition. Companies should not oppose effective and well-designed regulation in these areas, but should support it.

 

5.3.8.3 - AG 8.3 Interaction with local public authorities and NGOs (WEIGHTING: 2%)

Description & Requirements AG 8.3 Interaction with local public authorities and NGOs
Short description of indicator The company has established an effective dialogue with local and national public authorities and Non-Governmental Organizations to improve the implementation of measures to reduce emissions from the overall food value chain.
Data requirements

The questions comprising the information request that are relevant to this indicator are:

  •  
How the Analysis will be done

The analyst evaluates the description and evidence on the company’s interaction with local public authorities and NGOs for climate activities. The company description and evidence are compared to the maturity matrix developed to guide the scoring and a greater number of points are allocated for elements indicating a higher level of maturity.

The scoring will be dependent on the type of company. The analyst will evaluate the capacity of influence of the company and adapt the level of indulgence used to assess this indicator.

The scope of this module is not limited to emissions reduction and is extended to climate change adaptation, water management and biodiversity management issues.

The following maturity matrix is used to score this indicator.

 

Rationale AG 8.3 Interaction with local public authorities and NGOs
Rationale of the indicator  

 

 

5.3.9 Business model (Weighting: 10%)

 

5.3.9.1 AG 9.1 Business activities shifting supply from highly emissive to low-carbon products (WEIGHTING: 7%)

Description & Requirements AG 9.1 business activities shifting supply from highly emissive to low-carbon products
Short description of indicator An assessment of the company preparedness to be profitable and viable in a low-carbon economy by supplying low-carbon products.
Data requirements

The questions comprising the information request that are relevant to this indicator are:

  •  
How the Analysis will be done

Business model activities should include, but are not limited to:

  • Significant reduction of the amount of animal-based proteins and replacement by plant-based proteins
  • Shift of the supply to other customers, for companies producing and transforming crops for animal feeding for breeders
  • Limitation of the packaging impact
  • Climate adaptation strategy

In order to be assessed, the company must have at least one of new business model in favour of climate mitigation, climate adaptation being another dimension to integrate.

 

Rationale AG 9.1 business activities shifting supply from highly emissive to low-carbon products
Rationale of the indicator  

 

5.3.9.2 - AG 9.2 Business activities shifting to better production practices (WEIGHTING: 3%)

Description & Requirements AG 9.2 Business activities shifting to better production practices
Short description of indicator An assessment of the company preparedness to be profitable and viable in a low-carbon economy by reducing its production emissions.
Data requirements

The questions comprising the information request that are relevant to this indicator are:

  •  
How the Analysis will be done

Business model activities should include, but are not limited to:

  • Shifting a share or the whole land from conventional to organic agriculture
  • Replace production machinery by less emissive and more energy-efficient machines
  • Investment plan for new infrastructure and machinery significantly reducing GHG emissions
  • Climate adaptation strategy
  •  

In order to be assessed, the company must have at least one of new business model in favour of climate mitigation.

 

Rationale AG 9.2 Business activities shifting to better production practices
Rationale of the indicator  

 

6. Assessment

➔ NOTA BENE
  • ACT provides guidelines concerning the scope and boundaries of the sector covered by this methodology to determine which type of GHG emissions are included or excluded. However, it does not provide tools and databases to measure and compute these emissions. In particular, the choice of emission factors does not fall under the responsibility of the ACT methodology. ACT recommends using company-specific emission factors, or if unavailable, standard emission factors recognized in the sector.
  • The evaluator should pay high attention to the way the GHG emissions are assessed by the company and especially if they are aligned with the calculation mode of the benchmarks.

 

6.1 Sector Benchmark

 

 

Approach and Method

 

Data Sources

 

Global Curve Methodology

 

Agriculture & Agribusiness Coverage of Emissions

 

Disaggregated Curves

 

Boundaries & Assumptions

 

 

Regional Curve Methodology

 

Regional Curve Approach

 

Regional Curve Examples

 

Next Steps

 

6.2 Quantitative benchmarks used for the indicators

The following table lists the benchmarks used for the quantitative indicators and their sources:

Table 9: Benchmarks for the quantitative indicators

Benchmark Parameter Source Indicator relevance
       
       
       
       
       

 

Computation of the company benchmark

The Company Benchmark CBScopes(1,2,3) is computed from the relevant Sector Benchmark SBScopes(1,2,3) presented in section 6.1 using the convergence approach illustrated in Figure 6. The convergence of carbon intensity is a common approach and is used by SDA, which is the main source of sector benchmarks in this methodology.

 

6.3 Weightings

The selection of weights for both the modules and the individual indicators was guided by the principles of value of information, impact of variation, future orientation and data quality sensitivity. See the ACT Framework [1] document for more information.

6.3.1 Agriculture & Ruminant Animals Feed Producers

 

6.3.2 Agrifood Midstream Emission

 

6.3.3 Integrated Company

 

6.3.4 Food and Beverage Services

 

 

Rationale for weightings (To Be Completed)

 

Targets 15%
Material Investment %
Intangible Investment %
Sold product performance %
Management 10%
Supplier engagement %
Client engagement %
Policy engagement %
Business model 10%

 

 

7. Rating

 

The ACT rating shall comprise:

  • A performance score
  • A narrative score
  • A trend score

These pieces of information shall be represented within the ACT rating as follows:

  1. Performance score as a number from 1 (lowest) to 20 (highest)
  2. Narrative score as a letter from E (lowest) to A (highest)
  3. Trend score as either “+” for improving, “-” for worsening, or “=” for stable.

In some situations, trend scoring may reveal itself to be unfeasible depending on data availability. In this case, it should be replaced with a “?”.

The highest rating is thus represented as “20A=”, the lowest as “1E=” and the midpoint as “10C=”.

Table 11: Lowest, highest and midpoint for each ACT score type

 

See the ACT Framework [1] for general information and methodology on the ACT rating.

 

7.1 Performance Scoring

 

 

7.2 Narrative scoring

Narrative scoring shall be performed in compliance with the ACT Framework, assessing the company on the 4 following criteria:

  • Business model and strategy
  • Consistency and credibility
  • Reputation
  • Risk

The information reported in Module 2 and 4 shall be considered with particular attention for the narrative analysis and narrative scoring for the Agriculture & Agrifood sector: with this information, the analyst can take a holistic view on the company’s actions to perform a low-carbon transport service, and assess the consistency of actions taken with respect to targets, business model and engagement with other stakeholders.

No other sector-specific issue impacting the narrative scoring for this sector has been identified to date.

 

Suggestion to integrate climate change adaptation: adding the following questions:

  • Business model and strategy: Does the business model of the company include a climate change adaptation strategy?
  • Risk: Is the plan realistic in regard to the expected changes in climate and the impacts of climate change in the short, medium and long terms?
  • Carbon offsetting: consider actions taken by the company

 

7.3 Trend Scoring

Trend scoring shall be performed in compliance with the ACT Framework.

To apply the trend scoring methodology presented in the ACT Framework, the analyst should identify the trends from the existing data infrastructure based on the data points and/or indicators that can indicate the future direction of change within the company.

The table below includes an overview of which indicators/data points could possibly have valuable information about future directions for the AG sector.

Table 12: Relevant performance indicators for trends identification for the Agriculture & Agrifood sector

Module Indicator
Targets  
   
Material investments  
   
Intangible investments  
   
   
Sold product performance  
Management  
   
Clients  
   
Business model  
   
   

 

 

8. Aligned State

The table below presents the response of a low-carbon aligned company of the sector to the 5 questions of ACT:

  • What is the company planning to do? [Commitment]
  • How is the company planning to get there? [Transition Plan]
  • What is the company doing at present? [Present]
  • What has the company done in the recent past? [Legacy]
  • How do all of these plans and actions fit together? [Consistency]

Figure 7: Aligned state for companies in the Agriculture & Agrifood sector

 

 

 

 

 

9. Sources

 

[1] ACT Initiative , “ACT Framework - Version 1.1,” 2019.

[2] IPCC, “Summary for Policymakers. In: Climate Change and Land: an IPCC special report on climate change, desertification, land degradation, sustainable land management, food security, and greenhouse gas fluxes in terrestrial ecosystems,” In press, 2019.

[3] J. &. N. T. Poore, “Reducing food’s environmental impacts through producers and consumers,” Science, 2018.

[4] ISO, “ISO 14090:2019 Adaptation to climate change — Principles, requirements and guidelines,” 2019.

[5] T. F. o. C.-r. F. Disclosures, “Final Report: Recommendations of the Task Force on Climate-related Financial Disclosures,” 2017.

[6] ACT Initiative, “ACT Guidelines for the development of sector methodologies - Version 1.0,” 2018.

[7] P. C. W. J. S. G. a. J. A. F. Emily S Cassidy, “Redefining agricultural yields: from tonnes to people nourished per hectare,” Environmental Reserach Letters, 2013.

[8] ACT Initiative, “ACT Sector Methodology - Retail,” 2019.

[9] ACT Initiative, “ACT Sector Methodology - Generic (to be published),” 2020.

[10] W. R. I. (WRI), “Creating a Sustainable Food Future,” Washington DC, 2019.

[11] Food and Agriculture Organization of the United Nations (FAO), “Food Wastage Footprint & Climate Change,” 2015

[12] Food and Agriculture Organization of the United Nations (FAO), “Global Livestock Environmental Assessment Model (GLEAM),” [Online]. Available: http://www.fao.org/gleam/en/. [Accessed 2020].

[13] Life project, “INDUFOOD - Reducing GHG emissions in the food industry through alternative thermal systems based on induction technology,” 2011.

[14] T. Garnett, “Where are the Best Opportunities for Reducing Greenhouse Gas Emissions in the Food System (including the food chain)?,” Food Policy, pp. 23-32, 2011. 

[15] ACT Initiative, “ACT Sector Methodology - Oil & Gas (to be published),” 2020.

[16] S. S. C. O. M. e. a. Roe, “Contribution of the land sector to a 1.5 °C world,” Nature Climate Change, no. 9, p. 817–828, 2019. 

[17] W. World Resources Institute, “GHG Protocol Agricultural Guidance,” 2014.

[18] WRI & WBCSD, “GHG Protocol - Technical Guidance for Calculating Scope 3 Emission,” 2011.

[19] Food and Agriculture Organization of the United Nations (FAO), “Toolkit Reducing the Food Wastage Footprint,” 2013.

[20] Global Canopy, “The Forest 500: 2019 Company Assessment Methodology,” Oxford, UK, 2019.

[21] CDP, “Zeroing-in Deforestation,” 2020.

[22] EU Technical Expert Group on Sustainable Finance, “Taxonomy Technical Report,” 2019.

[23] H. Ritchie, “Is organic really better for the environment than conventional agriculture?,” 2017.

[24] I. E. A. (IEA), “Energy Technology Perspectives 2020,” Paris, 2020.

[25] UNPRI, “INVESTOR EXPECTATIONS ON CORPORATE CLIMATE LOBBYING,” 2015.

[26] CDP, "CDP Climate Change 2020 Questionnaire," 2020. [Online]. Available: https://guidance.cdp.net/en/tags?cid=13&ctype=theme&gettags=0&idtype=ThemeID&incchild=1&microsite=0&otype=Questionnaire&page=1&tgprompt=TG-124%2CTG-127%2CTG-125.

[27] ACT Initiative, “ACT Sector Methodology - Transport,” 2020.

[28] Food and Agriculture Organization of the United Nations (FAO), “Agriculture, Forestry and Other Land Use Emissions by Sources and Removals by Sinks,” 2014.

[29] FAIRR, “Protein Producer Index 2019,” 2019.

[30] EAT, “Summary Report of the EAT-Lancet Commission: Healthy Diets From Sustainable Food Systems,” 2019.

[31] W. B. C. f. S. D. (WBCSD), “Food, Agriculture and Forest Prodcuts TCFD Preparer Forum: Disclosure in a time of system transformation: Climate-reated financial disclosure for food, agriculture and forest products companies,” 2020.

 

 

10. Glossary

2 degrees (2°C) A political agreement was reached at COP21 on limiting global warming to 2°C above the pre-industrial level (COP21: Why 2°C?). A 2°C scenario (or 2°C pathway) is a scenario (or pathway) compatible with limiting global warming to 2°C above the pre-industrial level.
ACT The Assessing low-Carbon Transition (ACT) initiative was jointly developed by ADEME and CDP. ACT assesses how ready an organization is to transition to a low-carbon world using a future-oriented, sector-specific methodology (ACT website).
Action gap In relation to emissions performance and reduction, the action gap is the difference between what a given company has done in the past plus what it is doing now, and what has to be done. For example, companies with large action gaps have done relatively little in the past, and their current actions point to continuation of past practices.
Activity data Activity data are defined as data on the magnitude of human activity resulting in emissions or removals taking place during a given period of time (UNFCCC definitions).
ADEME Agence de l'Environnement et de la Maîtrise de l'Energie; The French Environment and Energy Management Agency (ADEME webpage).
Alignment The ACT project seeks to gather information that will be consolidated into a rating that is intended to provide a general metric of the 2-degree alignment of a given company. The wider goal is to provide companies specific feedback on their general alignment with 2-degrees in the short and long term.
Analyst Person in charge of the ACT assessment.
Assess Under the ACT project, to evaluate and determine the low-carbon alignment of a given company. The ACT assessment and rating will be based on consideration of a range of indicators. Indicators may be reported directly from companies. Indicators may also be calculated, modelled or otherwise derived from different data sources supplied by the company. The ACT project will measure 3 gaps (Commitment, Horizon and Action gaps – defined in this glossary) in the GHG emissions performance of companies. This model closely follows the assessment framework presented above. It starts with the future, with the goals companies want to achieve, followed by their plans, current actions and past actions.
Asset An item of property owned by a company, regarded as having value and available to meet debts, commitments, or legacies. Tangible assets include 1) fixed assets, such as machinery and buildings, and 2) current assets, such as inventory. Intangible assets are nonphysical such as patents, trademarks, copyrights, goodwill and brand value.
Barrier A circumstance or obstacle preventing progress (e.g. lacking information on supplier emissions and hotspots can be a barrier to companies managing and reducing their upstream Scope 3 emissions).
Base year According to the GHG Protocol and ISO14064-1, a base year is “a historic datum (a specific year or an average over multiple years) against which a company’s emissions are tracked over time”. Setting a base year is an essential GHG accounting step that a company must take to be able to observe trends in its emissions information (GHG Protocol Corporate Standard).
Benchmark A standard, pathway or point of reference against which things may be compared. In the case of pathways for sector methodologies, a sector benchmark is a low-carbon pathway for the sector average value of the emissions intensity indicator(s) driving the sector performance. A company’s benchmark is a pathway for the company value of the same indicator(s) that starts at the company performance for the reporting year and converges towards the sector benchmark in 2050, based on a principle of convergence or contraction of emissions intensity.
Board Also the “Board of Directors” or “Executive Board”; the group of persons appointed with joint responsibility for directing and overseeing the affairs of a company.
Business-as-usual No proactive action taken for change. In the context of the ACT methodology, the business-as-usual pathway is constant from the initial year onwards. In general, the initial year – which is the first year of the pathway/series – is the reporting year (targets indicators) or the reporting year minus 5 years (performance indicators).
Business model A plan for the successful operation of a business, identifying sources of revenue, the intended customer base, products, and details of financing. Under ACT, evidence of the business model shall be taken from a range of specific financial metrics relevant to the sector and a conclusion made on its alignment with low-carbon transition and consistency with the other performance indicators reported.
Capital expenditure Money spent by a business or organization on acquiring or maintaining fixed assets, such as land, buildings, and equipment.
CDP Formerly the "Carbon Disclosure Project", CDP is an international, not-for-profit organization providing the only global system for companies and cities to measure, disclose, manage and share vital environmental information. CDP works with market forces, including 827 institutional investors with assets of over US$100 trillion, to motivate companies to disclose their impacts on the environment and natural resources and take action to reduce them. More than 5,500 companies worldwide disclosed environmental information through CDP in 2015. CDP now holds the largest collection globally of primary climate change, water and forest risk commodities information and puts these insights at the heart of strategic business, investment and policy decisions (CDP website).
Climate change A change in climate, attributed directly or indirectly to human activity, that alters the composition of the global atmosphere and that is, in addition to natural climate variability, observed over comparable time periods (UNFCCC).
Company A commercial business.
Company pathway A company’s past emissions intensity performance pathway up until the present.
Company target pathway The emissions intensity performance pathway that the company has committed to follow from the initial year on until a future year, for which it has set a performance target.
Commitment gap In relation to emissions performance, the difference between what a company needs to do and what it says it will do.
Confidential information Any non-public information pertaining to a company's business.
Conservativeness A principle of the ACT project; whenever the use of assumptions is required, the assumption shall err on the side of achieving 2-degrees maximum.
Consistency A principle of the ACT project; whenever time series data is used, it should be comparable over time. In addition to internal consistency of the indicators reported by the company, data reported against indicators shall be consistent with other information about the company and its business model and strategy found elsewhere. The analyst shall consider specific, pre-determined pairs of data points and check that these give a consistent measure of performance when measured together.
COP21 The 2015 United Nations Climate Change Conference, held in Paris, France from 30 November to 12 December 2015 (COP21 webpage).
Data Facts and statistics collected together for reference and analysis (e.g. the data points requested from companies for assessment under the ACT project indicators).
Decarbonization A complete or near-complete reduction of greenhouse gas emissions over time (e.g. decarbonization in the electric utilities sector by an increased share of low-carbon power generation sources, as well as emissions mitigating technologies like Carbon Capture and Storage (CCS)).
Decarbonization pathway Benchmark pathway (See ‘Benchmark’)
Emissions The GHG Protocol defines direct GHG emissions as emissions from sources that are owned or controlled by the reporting entity, and indirect GHG emissions as emissions that are a consequence of the activities of the reporting entity, but occur at sources owned or controlled by another entity (GHG Protocol).
Energy Power derived from the utilization of physical or chemical resources, especially to provide light and heat or to work machines.
Fossil fuel A natural fuel such as coal, oil or gas, formed in the geological past from the remains of living organisms.
Future A period of time following the current moment; time regarded as still to come.
Primary energy Primary energy is an energy form found in nature that has not been subjected to any conversion or transformation process. It is energy contained in raw fuels, and other forms of energy received as input to a system. Primary energy can be non-renewable or renewable.
Greenhouse gas (GHG) Greenhouse gas (e.g. carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O) and three groups of fluorinated gases (sulfur hexafluoride (SF6), hydrofluorocarbons (HFCs), and perfluorocarbons (PFCs)) which are the major anthropogenic GHGs and are regulated under the Kyoto Protocol. Nitrogen trifluoride (NF3) is now considered a potent contributor to climate change and is therefore mandated to be included in national inventories under the United Nations Framework Convention on Climate Change (UNFCCC).
Guidance Documentation defining standards or expectations that are part of a rule or requirement (e.g. CDP reporting guidance for companies).
Horizon Gap In relation to emissions performance, the difference between the average lifetime of a company’s production assets (particularly carbon intensive) and the time-horizon of its commitments. Companies with large asset-lives and small time horizons do not look far enough into the future to properly consider a transition plan.
Incentive A thing, for example money, that motivates or encourages someone to do something (e.g. a monetary incentive for company board members to set emissions reduction targets).
Indicator

An indicator is a quantitative or qualitative piece of information that, in the context of the ACT project, can provide insight on a company’s current and future ability to reduce its carbon intensity. In the ACT project, 3 fundamental types of indicators can be considered:

Key performance indicators (KPIs);

Key narrative indicators (KNIs); and

Key asset indicators (KAIs).

Intensity (emissions) The average emissions rate of a given pollutant from a given source relative to the intensity of a specific activity; for example grams of carbon dioxide released per MWh of energy produced by a power plant.
Intervention Methods available to companies to influence and manage emissions in their value chain, both upstream and downstream, which are out of their direct control (e.g. a retail company may use consumer education as an intervention to influence consumer product choices in a way that reduces emissions from the use of sold products).
Lifetime The duration of a thing's existence or usefulness (e.g. a physical asset such as a power plant).
Long-term Occurring over or relating to a long period of time; under ACT this is taken to mean until the year 2050. The ACT project seeks to enable the evaluation of the long-term performance of a given company while simultaneously providing insights into short- and medium-term outcomes in alignment with the long-term.
Low-carbon scenario (or pathway) A low-carbon scenario (or pathway) is a 2°C scenario, a well-below 2°C scenario or a scenario with higher decarbonization ambition.
Low-carbon transition The low-carbon transition is the transition of the economy according to a low-carbon scenario.
Low-carbon solution A low-carbon solution (e.g. energy, technology, process, product, service, etc.) is a solution whose development will contribute to the low-carbon transition.
low-carbon vehicles and energies  
Manufacture Making objects on a large scale using machinery.
Maturity matrix A maturity matrix is essentially a “checklist”, the purpose of which is to evaluate how well advanced a particular process, program or technology is according to specific definitions.
Maturity progression An analysis tool used in the ACT project that allows both the maturity and development over time to be considered with regards to how effective or advanced a particular intervention is.
Mitigation (emissions) The action of reducing the severity of something (e.g. climate change mitigation through absolute GHG emissions reductions)
Model A program designed to simulate what might or what did happen in a situation (e.g. climate models are systems of differential equations based on the basic laws of physics, fluid motion, and chemistry that are applied through a 3-dimensional grid simulation of the planet Earth).
Pathway (emissions) A way of achieving a specified result; a course of action (e.g. an emissions reduction pathway).
Performance Measurement of outcomes and results.
Plan A detailed proposal for doing or achieving something.
Point A mark or unit of scoring awarded for success or performance.
Power Energy that is produced by mechanical, electrical, or other means and used to operate a device (e.g. electrical energy supplied to an area, building, etc.).
Progress ratio An indicator of target progress, calculated by normalizing the target time percentage completeness by the target emissions or renewable energy percentage completeness.
TR Abbreviation of the ‘Transport’ sector
Relevant / Relevance In relation to information, the most relevant information (core business and stakeholders) to assess low-carbon transition.
Renewable energy Energy from a source that is not depleted when used, such as wind or solar power.
Reporting year Year under consideration.
Research and Development (R&D) A general term for activities in connection with innovation; in industry; for example, this could be considered work directed towards the innovation, introduction, and improvement of products and processes.
Science-Based Target To meet the challenges that climate change presents, the world’s leading climate scientists and governments agree that it is essential to limit the increase in the global average temperature at below 2°C. Companies making this commitment will be working toward this goal by agreeing to set an emissions reduction target that is aligned with climate science and meets the requirements of the Science-Based Targets Initiative.
Scenario The Fifth Assessment Report (AR5) of the Intergovernmental Panel on Climate Change (IPCC) presents the results of an extensive climate modelling effort to make predictions of changes in the global climate based on a range of development/emissions scenarios. Regulation on climate change-related issues may present opportunities for your organization if it is better suited than its competitors to meet those regulations, or more able to help others to do so. Possible scenarios would include a company whose products already meet anticipated standards designed to curb emissions, those whose products will enable its customers to meet mandatory requirements or those companies that provide services assisting others in meeting regulatory requirements.
Scenario analysis A process of analysing possible future events by considering alternative possible outcomes.
Sectoral Decarbonization Approach (SDA) To help businesses set targets compatible with 2-degree climate change scenarios, the Sectoral Decarbonization Approach (SDA) was developed. The SDA takes a sector-level approach and employs scientific insight to determine the least-cost pathways of mitigation, and converges all companies in a sector towards a shared emissions target in 2050.
Short-term Occurring in or relating to a relatively short period of time in the future.
Stress test A test designed to assess how well a system functions when subjected to greater than normal amounts of stress or pressure (e.g. a financial stress test to see if an oil & gas company can withstand a low oil price).
Scope 1 emissions All direct GHG emissions (GHG Protocol Corporate Standard).
Scope 2 emissions Indirect GHG emissions from consumption of purchased electricity, heat or steam (GHG Protocol Corporate Standard).
Scope 3 emissions Other indirect emissions, such as the extraction and production of purchased materials and fuels, transport-related activities in vehicles not owned or controlled by the reporting entity, electricity-related activities (e.g. T&D losses) not covered in Scope 2, outsourced activities, waste disposal, etc. (GHG Protocol Corporate Standard).
Sector A classification of companies with similar business activities, e.g. automotive manufacturers, power producers, retailers, etc.
Strategy A plan of action designed to achieve a long-term or overall aim. In business, this is the means by which a company sets out to achieve its desired objectives; long-term business planning.
Supplier A person or entity that is the source for goods or services (e.g. a company that provides engine components to an automotive manufacturing company).
Target

A quantifiable goal (e.g. to reduce GHG emissions).

The following are examples of absolute targets:

metric tonnes CO2e or % reduction from base year

metric tonnes CO2e or % reduction in product use phase relative to base year

metric tonnes CO2e or % reduction in supply chain relative to base year

The following are examples of intensity targets:

metric tonnes CO2e or % reduction per passenger. Kilometre (also per km; per nautical mile) relative to base year

metric tonnes CO2e or % reduction per square foot relative to base

metric tonnes CO2e or % reduction per MWh

Trade association Trade associations (sometimes also referred to as industry associations) are an association of people or companies in a particular business or trade, organized to promote their common interests. Their relevance in this context is that they present an “industry voice” to governments to influence their policy development. The majority of organizations are members of multiple trade associations, many of which take a position on climate change and actively engage with policymakers on the development of policy and legislation on behalf of their members. It is acknowledged that in many cases companies are passive members of trade associations and therefore do not actively take part in their work on climate change (CDP climate change guidance).
Transport To take or carry (people or goods) from one place to another by means of a vehicle, aircraft, or ship.
Trend A general direction in which something (e.g. GHG emissions) is developing or changing.
Technology The application of scientific knowledge for practical purposes, especially in industry (e.g. low-carbon power generation technologies such as wind and solar power, in the electric power generation sector).
Transition The process or a period of changing from one state or condition to another (e.g. from an economic system and society largely dependent on fossil fuel-based energy, to one that depends only on low-carbon energy).
Verifiable / Verifiability To prove the truth of, as by evidence or testimony; confirm; substantiate. Under the ACT project, the data required for the assessment shall be verified or verifiable.
Weighting The allowance or adjustment made in order to take account of special circumstances or compensate for a distorting factor.