A commodity trader sits between millions of farms and a few thousand food and beverage customers. Every tonne of coffee, soy, or palm oil that moves through your books lands on your buyer's balance sheet as a Scope 3 emission. Nestlé, Unilever, JDE have all published targets they can't hit without you, and they're asking for reductions they can trace, not estimates.
So when a farm in Minas Gerais cuts its fertilizer emissions by 40%, can you sell that reduction to a roaster in Hamburg as a credible Scope 3 reduction? The same question applies whether you're moving coffee out of Brazil, soy out of Mato Grosso, palm oil out of Malaysia, or cocoa out of Peru. The answer depends almost entirely on one decision: your chain of custody model.
Get it wrong and the reduction is real but worthless to your buyer.
If you’re trying to figure out where your supply chain sits on this, that’s exactly where we start.
Once coffee leaves the farm it gets mixed. At the warehouse, at the port, at the roaster. Certified lots and regular lots go into the same container. This is commingling, the mixing of certified and uncertified product as it moves through the supply chain.
The problem is that a significant share of coffee's footprint sits at the farm gate, primarily fertilizer. Nitrous oxide from application, CO2 from production. The interventions exist: optimised application, controlled-release fertilizers, nitrification inhibitors. Reductions of 30-50% per bag of green beans are realistic. The agronomy works. It's the same dynamic in soy, palm, and cocoa, this is not only a coffee problem.
But once the crop enters the supply chain and gets mixed, those reductions don't automatically travel with it. It doesn't mean they disappear. You just need the right accounting model to make them transferable to your buyer.
The market has converged on two accounting models. Both are SBTi- and GHG Protocol-compliant. They're not interchangeable.
The reduction travels with the volume. The buyer receives a reduction tied to a specific origin, a specific intervention, a specific verified tonne. Something they can actually point to in their Scope 3 reporting.
Operationally this means mass balance documentation at every handoff, farm or co-op to mill, mill to trader's warehouse, warehouse to customer. It's the most defensible claim available today, and it's what GHG Protocol's Land Sector and Removals Guidance (LSRS) is pushing for.
The cost is traceability depth. Path A requires sourcing infrastructure most trade books don't have from day one, and forcing it on a supply chain that isn't ready produces fragile claims.
The trader finances a verified intervention inside its own supply chain, for instance low-emission fertilizers, improved application practice, or residue management. Proba certifies the reduction. Your buyer receives a certificate showing that X tonnes of CO₂e were reduced inside the supply chain that produces their product, which is suitable for GHG Protocol reporting and SBTi submissions.
No lot-level tracking needed. The claim isn't "this specific bag came from a low-carbon farm." It's "we reduced emissions across the supply chain your coffee comes from." SBTi accepts this. GHG Protocol accepts this. And for most commodity traders today, it's the realistic starting point.
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A note on terminology: "insetting" gets used for both. Path A is essentially physical insetting, the reduction moves with the volume on a mass-balance basis. Path B is market-based insetting, where the carbon attribute is decoupled and transferred as a contribution claim. We use "Impact Claim" for Path B to keep the distinction sharp. |
This is an infrastructure question. You want to know what traceability depth you can credibly demonstrate, and where.
Path A makes sense if you already have direct farmer relationships, existing certification rails like 4C, Rainforest Alliance, or RSPO, and the operational capacity to maintain mass balance documentation at every step. It's increasingly what the largest CPG buyers will require.
Path B is the right starting point for everyone else. Which, in commodity origination, is most traders. It gets you verified, SBTi-credible reductions now, without waiting for a supply chain transformation that could take years. The farmer relationships and data you build with path B will facilitate the transition into setting up path A.
In both cases the foundation is the same: real on-farm interventions, primary data, independent verification, registered on a credible platform.
Whether you go with path A or B, it always starts with one origin, for instance, Arabica coffee from a cluster of farms in Minas Gerais and works through four steps.
1. Hotspot screening: Map the farm-gate footprint for the region. In coffee, fertilizer is almost always the biggest source, N₂O from application and CO₂ from production. This tells you where reductions are biggest.
2. Intervention design: Pick the intervention that fits the farming practice and the budget best. The usual options are nitrification inhibitors, urease inhibitors, controlled-release fertilizers, and optimized fertilizer application. Reductions of 30–50% on fertilizer-related emissions are realistic. The abatement cost of the intervention will determine who pays for this, whether it be trader, buyer, or the farmer, all depending on the economics of your specific programme. Where upfront capital is the barrier, project finance can help get adoption moving.
3. MRV setup: Cool Farm Tool is the most common starting point for calculating farm-level emissions. One important caveat: it's a calculation tool, not a verification tool. The numbers are only as good as the data you put in; fertilizer rates, application, soil type. That data needs to come directly from the farms and cooperatives, using regional averages the claims won't hold up. Quantification needs to align with GHG Protocol's Land Sector and Removals Guidance and use defensible tooling. This step is the hardest operationally and the one most often underestimated.
4. Chain of custody decision: With data flowing, you can make an informed choice between path A and B. For most coffee origins today, the honest answer is to start with path B and build a roadmap toward path A as traceability improves. The data and farmer relationships you build along the way are exactly what path A will need later.
The output is a commercial product: verified, registered emission reductions that can be packaged into customer contracts with sustainability specifications.
We've run this process across coffee, soy, palm and cocoa origins. If you want to know what it would look like for you:
With SBTi 2030 milestones approaching and the FLAG standard tightening in 2027. When your largest CPG buyer asks for Scope 3 reductions in their next sourcing contract, which they will, the answer will depend on decisions you're making now about data, farmer relationships, and chain of custody. That's worth figuring out before it becomes urgent.
If you want to know where your supply chain stands today, we can start there.
Fertilizer is the biggest unclaimed Scope 3 lever in agri-food. Proba helps commodity traders and their buyers turn it into verified reductions they can report, trade, and claim. Reach out at proba.earth to learn more.