Reason #4 Why Canadian Companies Need to Measure Carbon Emissions Starting in 2024

As the global landscape of carbon reporting evolves, Canadian Food and Beverage companies face increasing pressure to measure and report carbon emissions. While domestic pressure is rapidly heating up here in Canada, international reporting requirements are well underway. This shift is particularly evident in jurisdictions like the European Union (EU), the United Kingdom (UK) and Australia. The US has also implemented national landmark climate disclosure requirements, while individual states like California require additional requirements.

Understanding and complying with international requirements is essential for Canadian companies doing business with or aiming to expand into these global markets. This article explores various forms of international carbon reporting requirements including Mandatory Reporting, Carbon Border Adjustment Mechanisms (CBAM), and Digital Product Passports (DPP) along with their impact on Canadian F&B businesses.

1. The Push for Transparency with Mandated Reporting:

Many jurisdictions across the globe have already implemented stringent carbon reporting standards requiring businesses to disclose emissions data across all three scopes. Leading the way are jurisdictions such as California with the Climate Corporate Accountability Act and the EU with their Corporate Sustainability Reporting Directive (CSRD) which aims to increase corporate accountability for greenhouse gas (GHG) emissions. While mandated requirements such as the CSRD may have initially targeted domestic companies, they are now starting to impact international companies with business interests in these regions.

Further, Canada is introducing its own Mandated Reporting requirements for Publicly Listed companies that will ripple across supply chains.

Beyond the impending Canadian reporting requirements, for Canadian Food & Beverage companies looking to expand into international markets, carbon reporting is quickly becoming a barrier to entry both from a regulatory and competitive perspective.

2. Leveling the Playing Field - Carbon Border Adjustment Mechanism (CBAM):

Potentially one of the most impactful regulations for Canadian exporters is what’s known as a Carbon Border Adjustment Mechanism (CBAM). Designed to level the playing field on carbon pricing between trading partners, CBAM’s essential aim is to ensure the carbon price of imports is equivalent to the carbon price of domestic production. Once again, areas like the EU have already started rolling out CBAM targeting select goods such as steel, cement, and certain agricultural products and will expand to include more product categories over time. Canada is also exploring the implementation of a CBAM along with several other jurisdictions across the globe.

For Canadian Food & Beverage companies, CBAM poses a challenge and an opportunity. Without adequate carbon accounting coupled with aggressive emission reductions, Canadian exporters could face unnecessary added costs when accessing international markets such as the EU. However, companies that can efficiently measure and reduce carbon emissions will strengthen their ability to compete and win in jurisdictions like Europe’s sustainability-conscious market.

3. Digital Product Passports (DPP) and Product-Level Reporting:

The introduction of Digital Product Passports in the EU is another significant development. These passports provide detailed information about a product's sustainability impact including its carbon footprint, circularity and more. DPPs require companies to have robust data collection processes in place, capturing information on emissions from sourcing, production, transportation, and disposal. Similar to CBAM’s, DPP’s are currently targeting select product categories that will expand over time.

For Canadian F&B companies, this means that simply reporting emissions at the corporate level may not be sufficient; to compete globally, companies will also need to measure and disclose emissions at the product level.

How Canadian Companies Can Prepare

Canadian Food & Beverage companies looking to expand into global markets must adopt comprehensive carbon measurement and reporting practices. Here’s what they need to focus on:

Adopt Advanced Carbon Accounting Tools: To efficiently meet international standards, companies can leverage digital platforms like CarbonOne that provide precise emissions tracking and reporting across all three scopes and down to the product level. Such platforms streamline data collection, ensure regulatory compliance, and provide insights for emissions reductions.
Focus on Scope 3 Emissions: With a significant portion of carbon footprints often tied to Scope 3 emissions, companies must focus on the material scope 3 categories such as purchased goods and services which includes emissions from ingredients and packaging materials. Data quality becomes critically important when calculating Scope 3 emissions to ensure accuracy and acceleration of reduction efforts.
Prepare for Product-Level Reporting: The ability to measure emissions at the product level will become increasingly critical for compliance with CBAM, DPP and even Mandated Reporting. Companies should ensure internal capabilities or chosen technology tools can efficiently measure product-level emissions according to the required international standards using high-quality, preferably primary data, wherever possible.

A Window of Opportunity

While international carbon reporting requirements present challenges, they also create opportunities for Canadian F&B companies to differentiate themselves. Adopting best practices in carbon reporting now can help businesses gain a competitive edge by meeting the expectations of global customers, investors, and regulators.

For Canadian Food and Beverage companies looking to gain global market share, aligning with international carbon reporting standards is no longer optional—it is a necessity for growth in global markets. Canadian exporters must be proactive in adopting accurate, comprehensive, and verifiable carbon reporting practices. By doing so, they not only ensure compliance but also position themselves as leaders in the global transition towards a global net-zero economy. By aligning with these regulations, Canadian companies can transform compliance challenges into growth opportunities, ensuring long-term success in a rapidly changing global market.

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