Scope Three Emissions Reporting For Agriculture In Australia

Due to its role as a source of greenhouse gases and its efforts to cut emissions, Australia’s agriculture sector is at the forefront of the global issue of climate change. The Australian government recently made it mandatory for big companies with agricultural entities in their supply chains to disclose Scope 3 emissions. The goal of this regulation change is to promote sustainable practices and increase transparency throughout the agrifood chain. Understanding Scope 3 emissions reporting is essential for Australian farmers and agribusinesses hoping to compete and comply in a market that is becoming more environmentally conscientious.

3 Emission Scope: Explained

Scope 3 emissions are different from the more straightforward Scope 1 and Scope 2 categories.

Since Scope 2 covers indirect emissions from purchased electricity and Scope 1 covers direct emissions from controlled sources (like tractors or methane from enteric fermentation), Scope 3 encompasses the full range of indirect emissions that take place upstream and downstream along the entire value chain.

Emissions from the production of fertiliser, transportation, food processing, packaging, retail, and even the disposal of garbage after the product leaves the farm might be included in this.

Examples of Scope 3 Emissions in Agriculture:

• Input Production: Significant emissions, particularly nitrous oxide, a potent greenhouse gas, are produced during the production and shipping of synthetic seeds, fertilisers, and pesticides.
• Energy Use: Emissions related to fuel production and transportation may be covered under Scope 3, although diesel combustion in farm vehicles and equipment used directly on farms is reported under Scope 1.
• Post-Farm Processes: Emissions related to crop storage, food processing, packaging, distribution, and retail.
• Waste: Decomposing agriculture leftovers, food loss, and emissions from processing waste. By addressing this wide range of activities, Scope 3 reporting provides a comprehensive picture of an agriculture operation’s total greenhouse effect.

Why Is Scope 3 Reporting Mandatory in Australia?

Scope 3 emissions are part of a phased deployment of required climate disclosures under the Australian government’s Treasury Laws Amendment (2024) and the Australian Sustainability Reporting Standards (ASRS). Many companies are required to report their Scope 3 emissions starting in 2026. It is anticipated that agricultural enterprises will take part, particularly those with more extensive supply chain linkages for export or retail. Australia’s national carbon reduction pledges under the Paris Agreement are supported by this team effort, which also strengthens Australia’s standing in sustainable international trade.

Scope 3 Emissions in Australian Agriculture: the scope

According to recent studies, indirect (Scope 3) emissions are more frequently reported to be higher than direct on-farm emissions, which present significant reporting and mitigation challenges:

• About 40% of Australia’s agricultural greenhouse gas emissions are methane from enteric fermentation alone, highlighting the need of livestock management in emission control plans.
• Approximately 13% of all agricultural emissions are nitrous oxide, which is produced during the fertilizer and soil application processes.
• According to estimates, emissions from product processing, storage, and shipping account for a sizable additional portion.

These numbers highlight how crucial strong Scope 3 accounting is for efficiently identifying opportunities for emission reduction.

Challenges in Scope 3 Emissions Reporting

Despite the obvious advantages, farmers nevertheless face a number of challenges:

• Complexity: Accurate data collection in a large, multi-actor supply chain is challenging. It is not always possible to get or standardise reliable emissions variables and inputs.
• Resource Intensity: Small and medium-sized farms might not have the financial means and experience necessary for thorough reporting.
• Regulatory Evolution: Reporting procedures and frameworks are always changing, requiring constant learning and adaptability.
• Data exchange: Transparency and exchange of emissions data with downstream partners are frequently necessary, and this sharing may be delicate or competitive.

Support Available to the Agricultural Sector

Federal and provincial initiatives in Australia offer farmers and rural enterprises a great deal of assistance in overcoming these obstacles. For measuring and reducing emissions, the Department of Agriculture’s Carbon Farming Initiative provides financial incentives, useful tools, and technical advice. In an effort to make reporting simpler and benchmarking more reliable, programs are putting more effort into enhancing consistency through the Voluntary Emissions Estimation and Reporting Standards (VEERS).

Steps: To Prepare for Reporting

Proactive measures that agricultural enterprises should implement include:

• Supply Chain Mapping: Determine the main sources of emissions in the value chain, including upstream and downstream.
• Data Collection Systems: Make an investment in digital technologies that allow for the exact collection of emissions data, such as GHG Protocol-aligned platforms, software for tracking fuel, and Internet of Things (IoT) sensors for machinery.
• Collaborative Engagement: To exchange data and coordinate emissions management initiatives, work closely with retailers, processors, and input suppliers.
• Implement Technology Mitigation: In addition to lowering emissions, practices including better fertilizer management, methane-reducing feed additives, the use of renewable energy, and waste recycling can increase farm productivity and profitability.

Conclusion

Scope 3 emissions reporting has grown to be an important component of Australia’s transition to more sustainable and transparent agricultural operations. Despite the process’s seeming complexity, it offers farmers and agribusinesses a great chance to comprehend the wider environmental impact, improve supply chain connections, and conform to international sustainability norms.

The agriculture industry may meet regulatory requirements and open up new opportunities for efficiency, innovation, and competitiveness in the market by adopting accurate reporting and proactive mitigation. By doing this, Australian agriculture establishes itself as a world leader in the production of sustainable food, striking a balance between environmental stewardship and productivity.

Visit KG2 Australia for more information on Scope Three Emission Reporting.