Food retailers are failing to fully disclose their indirect (or Scope 3) food loss and waste (FLW)-based emissions, finds a report by non-profit financial think tank Planet Tracker. This prevents them from creating accurate Scope 3 emissions-related targets, which could help them tackle the problem, and exposes them to financial risk.
Scope 3 emissions are indirect emissions that occur within a company’s value chain, such as the transportation, use and end-of-life treatment of sold products. Although often overlooked, these emissions account for an estimated 44% of Europe’s total food waste emissions every year.
With between a quarter and one third of all food produced for human consumption going to waste, the total global economic cost of FLW stands at €820 billion (US$940 bn) per year according to the United Nations Food and Agriculture Organisation. In Europe alone, the total associated annual costs of FLW is €143 billion ($165 bn). Yet, only seven out of 12 publicly-listed food retailers in Europe provide any Scope 3 emissions reporting, while only one – Finnish brand Kesko Corporation – discloses the indirect emissions generated by food lost or wasted in its supply chains.
Matthew McLuckie, Director of Research at Planet Tracker, says, “For food retailers, FLW not only represents lost earnings potential and reduced operating profit margins, but also contributes towards their GHG footprint. What’s more, the lack of disclosure over these metrics means total FLW and associated Scope 3 emissions estimates are presumed to be significantly underreported.”
The problem is compounded by the fact that the Greenhouse Gas Protocol and Food Loss & Waste Protocol, two market leading frameworks applied by companies in measuring emissions in the European food retail sector, do not currently include clear guidance for calculating and disclosing FLW-based Scope 3 emissions.
The report calls for action from:
- Food retailers to commit to greater transparency on FLW and FLW-based Scope 3 emissions. This includes reporting on FLW by volume in their annual reports from 2021 onwards and committing to explicit FLW-based Scope 3 emissions accounting and reporting by 2022;
- Greenhouse gas reporting agencies and protocols to update assessment frameworks to include methodologies for accounting for FLW-based Scope 3 emissions in their protocols by 2022 to support uptake by food retailers;
- The European Commission to bring the Directive up to date by specifically including FLW-related Scope 3 emissions reporting in the food retail sector.
Read the full report, “Scope for Improvement: Accounting for food loss and waste in Scope 3 reporting.”