To Get Credit for Their Climate Work, or Even Comply With Emerging Regulations, Agri-food Companies Need Enhanced Traceability

Agri-food companies need traceability to the point of production to comply with emerging voluntary and mandatory climate and other sustainability disclosures.

In recent years, the sustainability landscape has witnessed a significant shift towards transparency and accountability. Agri-food companies are facing increasing pressure to disclose their environmental and social impacts, especially in relation to climate change and nature-related issues. To comply with emerging voluntary and mandatory disclosure requirements and gain recognition for their sustainability efforts, agri-food companies must prioritize traceability throughout their supply chains.

The Growing need for traceability in sustainability disclosures

With the recent publication of climate disclosure guidance, the need for traceability in sustainability reporting has become more pronounced. Agri-food companies, particularly larger ones, will be required to collect and disclose data on their biogenic greenhouse gas (GHG) emissions, including upstream scope 3 emissions, by fiscal year 2024. This shift from voluntary to mandatory disclosure is exemplified by the SEC Climate Rule and the EU Corporate Sustainability Reporting Directive. 

By embracing enhanced traceability systems, agri-food companies can ensure accurate and comprehensive reporting, thus meeting these emerging requirements. Further, corporate disclosure expectations are rapidly expanding beyond climate to nature. For both, companies will need traceability.

Beyond climate: Expanding the scope of sustainability disclosures

While climate-related disclosures have taken center stage, the breadth of sustainability reporting is rapidly expanding to encompass nature-related impacts. The corporate market's expectations are shifting towards a comprehensive assessment of companies' ecological footprints. Consequently, traceability becomes crucial not only for tracking climate-related metrics but also for understanding and mitigating the impacts on nature. 

Initiatives like the Science Based Targets Network's Targets for Nature emphasize the need for companies to incorporate nature-related disclosures into their reporting frameworks. By implementing robust traceability measures, agri-food companies can accurately assess their nature-related impacts and make informed decisions for conservation and sustainability.

Leveraging traceability for compliance and sustainability

Traceability plays a crucial role in helping agri-food companies comply with sustainability disclosure requirements and achieve their environmental goals. By tracking and documenting the entire value chain, from the point of production to the end consumer, companies can accurately measure and report their GHG emissions, water usage, waste generation, and other sustainability indicators. 

This data enables companies to identify hotspots, set targets, and implement effective mitigation strategies. Furthermore, traceability empowers companies to identify inefficiencies, reduce waste, optimize resource usage, and drive operational improvements, leading to both environmental and economic benefits.

Overcoming barriers and realizing the ROI

Implementing traceability systems may pose challenges for agri-food companies, including technological limitations, data integration complexities, and resistance to change. However, the long-term benefits outweigh these temporary and manageable obstacles. 

Enhanced traceability enables companies to make data-driven decisions, improve supply chain transparency, enhance risk management, and build trust with consumers and stakeholders. By leveraging traceability to comply with sustainability regulations, companies can also access new markets, attract investors, and gain a competitive advantage. The return on investment in traceability extends beyond financial gains, as it contributes to the preservation of natural resources and the mitigation of climate change.

The Time is ripe to invest

Agri-food companies must prioritize and devote resources to traceability systems to support their sustainability efforts. By embracing enhanced traceability, companies can ensure compliance with emerging disclosure requirements for climate and nature-related impacts. Implementing traceability also allows companies to unlock numerous benefits, including improved operational efficiency, risk mitigation, and enhanced brand reputation. To stay ahead in a rapidly evolving sustainability landscape, agri-food companies must take action now to establish robust traceability systems and position themselves as leaders in the pursuit of a more sustainable future.

Grow Well has supported clients who are ready to invest as an expert resource in reviewing, interpreting, and developing stakeholder training materials related to the Greenhouse Gas Protocol’s Land Sector and Removals Guidance and the Science Based Targets Inititive’s FLAG Target Setting Guidance. Additionally, Grow Well has worked with IFT’s Global Food Traceability Center (GFTC) on an ongoing basis since 2019. GFTC supports organizations that implement and leverage traceability for a wide range of use cases from regulatory compliance and food safety to environmental and social sustainability. Recently, we focused more on the FDA’s recently finalized Traceability Rule, one of the last components of the Food Safety Modernization Act, which will go into effect in January 2026.

In conclusion, traceability is the key to unlocking the sustainability potential of agri-food companies. By embracing traceability systems that enable comprehensive data collection and reporting, companies can comply with emerging disclosure requirements, mitigate environmental impacts, and achieve their sustainability goals. The enhancement of traceability in the agri-food sector is not only a necessity but also an opportunity for companies to differentiate themselves, attract consumers and investors, and contribute to a more sustainable and resilient future for us all.