Agriculture: supply chain logic makes carbon farming more efficient
Can the most effective solution for decarbonizing the agrifood supply chain do without the multiplication of carbon credits? Instead of purchasing “offsets” on the carbon credit market, processing and retail companies could work together with farmers to concretely reduce the latter’s emissions and recognize that result through a price premium on raw materials. In this way, the value of decarbonization would remain within the commercial relationship rather than dissipating into the credit market, also avoiding future regulatory contradictions.
The limits of the agricultural credit market
The market for carbon credits linked to agricultural practices is growing rapidly, supported by the new European regulatory framework - from Regulation (EU) 2024/3012 to the CSRD, which requires reporting across the entire value chain - and by rising demand for offsets.
While forest credits rely on relatively established methodologies, agricultural credits present significant uncertainties: the ability of soils to sequester carbon depends on highly variable soil and climate conditions, crop rotations, and agronomic management, while the precise measurement of absorbed CO₂ remains costly and complex. The deregulation of the voluntary market has also multiplied methodologies, which often diverge: for the same agricultural practice, estimates of sequestered CO₂ can vary by several orders of magnitude.
The prevailing approach - granting credits based on the actions adopted, with sample-based measurements - produces approximate estimates that could prove inaccurate once more precise technologies become more accessible.
These technical limits are compounded by systemic risks: the voluntary market is subject to sudden fluctuations and political redesign. With methodologies still evolving and price expectations running high, the risk of a bubble is real. Any collapse would undermine the credibility of regenerative practices, turning a transition tool into a source of instability.
The Scope 3 issue
Credits should offset only the residual share left after reduction efforts. But large processing companies and mass retailers can do little about the emissions of the products they sell, because the most significant part of their climate footprint comes from agricultural raw materials, which fall within Scope 3 of the GHG Protocol, encompassing all indirect emissions upstream and downstream of the value chain, excluding those from purchased energy.
Purchased goods account for 64.4 percent of Carrefour’s total indirect emissions, 76 percent for Danone, 51 percent for Marks & Spencer, 48.3 percent for Tesco, and 56 percent for Kellanova. These are emissions that no internal efficiency gains can reduce: they depend on what happens in suppliers’ fields.
Faced with these figures, the traditional response is to buy credits to achieve carbon neutrality. But credits are an offsetting tool, not a reduction tool: for a company that makes cookies, purchasing a credit does not reduce the emissions generated by the wheat; it neutralizes them on paper, exposing the company to market risk, methodological revision, and European scrutiny over greenwashing.
A possible alternative: supply chain logic
There is a different path, still little explored but conceptually more solid. Today, downstream companies incentivize regenerative practices through schemes that generate credits then repurchased by those same companies. This stems from the fact that farms are not yet subject to climate targets, the CSRD, or emissions trading systems. But if they were required in the future to decarbonize—a scenario that is not far-fetched, especially for livestock farming—those that had sold credits would no longer be able to use them and would have to buy others instead: a paradox consistent with the system’s anomalies.
So how can agrifood companies decarbonize without depriving farmers of the benefits generated in their own fields? The alternative is a supply chain approach: the downstream company could finance the calculation of suppliers’ carbon footprints according to methodologies aligned with the GHG Protocol, defining a certified baseline per unit of product through an accredited third party.
The reductions achieved—cover crops, reduced tillage, fertilizer optimization, residue management—would be accounted for in the farm’s footprint, attributed pro rata to the downstream company’s Scope 3 based on purchased volumes, and compensated through a premium on the price of the raw material paid to the supplier. The value would thus remain within the commercial relationship, not the credit market.
The crucial point is additionality: in voluntary markets, proving that the reduction would not have occurred without the project is costly and controversial. In the supply chain model, a reduction is not sold to third parties, but a change in the supply chain is reported under the CSRD. Scope 3 methodologies require measurability and traceability, not additionality in the strict sense: what matters is that the emissions associated with the raw material decrease relative to the baseline and that this can be verified.
The credit market will not disappear, but for processing and retail companies the supply chain model is more direct and more consistent with reporting obligations: real reduction instead of offsetting, economic value retained within the commercial relationship, and recognition of benefits such as soil fertility, resilience, and lower dependence on external inputs, which today go uncompensated. Tools and methodologies, including those developed by the Invernizzi AGRI Lab in collaboration with the DiProVeS Department at the Università Cattolica, already exist and are evolving rapidly, but there must be a shift toward seeing agricultural sustainability not as a cost to be externalized, but as a value-creation lever to be integrated into sourcing strategies and long-term relationships.
