The role of value chain collaboration for decarbonization

The food and agriculture sector is responsible for one-third of global greenhouse gas (GHG) emissions, making it one of the biggest contributors to climate change. Despite growing commitments to cut emissions, progress remains slow —largely because most emissions stem from Scope 3 sources. Scope 3 emissions are indirect emissions that occur throughout a company’s value chain, both upstream (from purchased goods and services) and downstream (from sold products and services after they leave the company’s control). According to the GHG Protocol, these emissions often represent 75-90% of a company's total footprint, making their reduction essential for achieving climate targets.

Due to the nature of Scope 3 emissions, companies cannot decarbonize in isolation. Meaningful progress requires value chain collaboration – aligning suppliers, producers, and stakeholders around shared climate goals. Those who take the lead will not only reduce emissions but also strengthen resilience, unlock new market opportunities, and future-proof their businesses in an increasingly carbon-conscious world.

In this blog series, we explore the urgency for action and what food and agriculture companies can do to accelerate action to curb emissions in their value chains. This article focuses on why collaboration is essential, what models are proving effective, and how food and agriculture companies can take action to accelerate value chain decarbonization.

Effective emissions reduction starts with understanding the complexity of food value chains — and why collaboration within them is so challenging.

From farmers and suppliers to processors, traders, manufacturers, retailers, and consumers, every link in the chain plays a role. But with value chains spanning across multiple countries, tracking emissions is anything but straightforward. Many companies lack visibility into their own networks, making it hard to identify emissions hotspots. Meanwhile, short-term contracts and shifting suppliers create instability, complicating long-term sustainability investments.

On top of these structural barriers, measuring emissions — particularly in Scope 3— is a highly technical and resource-intensive process. It requires accurate data collection, advanced monitoring, and rigorous verification, which are all often difficult to implement at scale.

The need for joint action across value chains has never been greater. Consumer demand for sustainable products continues to grow, with more shoppers actively seeking climate-friendly options and demonstrating a willingness to pay a premium for them. At the same time, regulatory frameworks governing corporate climate disclosure are evolving rapidly. The Omnibus package impacting implementation timelines for the EU’s CSRD and CSDDD directives is just one recent example. Companies must take a forward-looking approach to stay agile and compliant in a shifting policy environment.

This isn’t just a hypothetical challenge — it’s a real one. As Jim Andrew, Chief Sustainability Officer at PepsiCo, said in an interview with WSJ Pro Sustainable Business:

“When you look at our footprint, 93% of our emissions come from Scope 3. That means we have to work across our value chain, with farmers, logistics providers, and retailers, to make a real impact. This isn't something we can solve alone”.

And the benefits of doing so are already evident. A recent CDP and HSBC report based on data collected from over 23,000 companies, found that businesses that actively manage their value chain emissions have already saved $13.6bn. The takeaway is clear: companies that prioritize collaboration won't just meet rising sustainability expectations —they’ll also gain a competitive edge in the transition to a net-zero economy.

Collaboration works best when supported by structured models that enable sustained, measurable action.

1. Supply Shed Model

The supply shed model allows companies to track and reduce Scope 3 emissions even when they cannot directly trace sourcing to specific suppliers at the farm-level. By defining a group of suppliers within a specific region who produce similar goods and services, it ensures a meaningful link to the value chain.

2. Vertical value chain partnerships

These involve close collaboration across multiple — from raw material suppliers to distributors and retailers. Such partnerships ensure that sustainability goals are aligned across the entire value chain, allowing for deeper engagement and accountability. For example, businesses can integrate standardized emissions reporting frameworks, improving data transparency and consistency.

These partnerships often lead to longer-term relationships, which in turn reduce costs and improve operational efficiency.

3. Co-investing and co-claiming

This approach enables companies and their suppliers to share both the costs and benefits of sustainability initiatives.

• Co-investing means companies work together to fund sustainability projects in their value chain, ensuring that the financial burden is shared rather than placed solely on the suppliers.
• Co-claiming allows multiple companies engaged in the same value chain to recognize and benefit from the emissions reductions achieved through these shared investments. Instead of one company taking full credit, co-claiming ensures that contributions are fairly distributed among those involved.

This approach enables companies across the value chain to contribute to climate solutions while removing financial barriers for small and medium-sized suppliers that may otherwise struggle to implement emissions reduction measures. It also creates an incentive for downstream companies to be able to claim the impact of initiatives happening upstream in the value chain.

A key example is direct investment in value chain interventions, such as agroforestry projects or methane reduction initiatives in dairy farming. These efforts support suppliers in transitioning to low-carbon operations while generating measurable emissions reductions that benefit the entire value chain.

By adopting co-investing and co-claiming, companies can accelerate progress toward Scope 3 targets, strengthen supplier relationships, and enhance the credibility of their climate commitments.

No single company can decarbonize the food and agriculture sector alone. Scaling impact requires deep collaboration — sharing financial risks, aligning incentives, and working with suppliers to implement science-based, regionally tailored solutions that build resilient, low-carbon agricultural systems.

The tools and strategies are available. What’s needed now is the commitment to act — and to act together.

Check out the other instalment of this series to learn more about the finance gap and the finance mechanisms available to scale action.

Download our full report to dive deeper into the strategies, success stories, and how value chain collaboration can drive decarbonization.