Executive summary
Consumer demand, investor pressure, and evolving climate regulations are compelling food and beverage CPGs to commit to ambitious net-zero and Scope 3 reduction targets. Yet for most companies, the vast majority of emissions reside upstream in complex, fragmented agricultural supply chains well beyond their direct control. As a result, CPGs are investing in on-farm carbon reduction programs (“insets”) to accelerate adoption of climate-smart practices and technologies. These programs have significant potential, but face structural, operational, and regulatory challenges that limit their ability to scale.
This white paper examines the current landscape of agricultural inset programs, the drivers behind increasing scrutiny of greenhouse gas (GHG) claims, and the path forward to unlock mass-market adoption of Scope 3 interventions.
Inset programs: high potential, early-stage maturity
Inset initiatives are expanding rapidly as CPGs seek to reduce emissions within their own value chains. Compared to voluntary carbon offsets, inset programs offer stronger alignment with corporate climate strategies and avoid many of the pitfalls associated with controversial credit types. However, inset programs remain far less standardized with companies defining their own protocols, data requirements, and assurance thresholds. These inconsistencies introduce risk for both CPGs and producers and significantly raise transaction costs.
Why scrutiny is rising
As corporate climate claims become more visible, regulators, NGOs, media, and consumers are intensifying oversight. High-profile investigations into carbon offset markets have raised concerns about additionality, credibility, and misestimation. In response, the EU and U.S. regulators are tightening rules for environmental marketing claims and mandating more rigorous, auditable emissions disclosures. These regulatory shifts will require CPGs to adopt higher assurance standards, stronger traceability, and more defensible methodologies for Scope 3 accounting.
Challenges for CPGs: traceability, double counting, and free riding
Agricultural supply chains introduce unique allocation and attribution challenges. Co-products, commingled sourcing, and opaque supply flows make it difficult to link farm-level interventions to specific end products. As a result, CPGs face risks of double counting, unintentional free riding, and loss of “carbon rights,” all of which suppress investment. Without clearer ownership frameworks and better data infrastructure, even companies with strong climate commitments hesitate to expand funding for Scope 3 programs.
Challenges for producers: costs, risk, and contract burdens
For farmers, participation is often costly, operationally complex, and administratively burdensome. Program payments rarely cover the true cost of practice changes—particularly capital-intensive technologies or practices with yield risks. Producers also face concerns around data privacy, loss of market flexibility, and long-term contractual commitments. These factors hinder enrollment and limit scalability, especially for smaller or resource-constrained farms.
What is needed to scale
To achieve industry-wide Scope 3 reductions and meet SBTi-aligned targets, CPGs and producers need a more mature ecosystem that reduces friction and increases trust. Key enablers include:
- Standardization of protocols and verification methods to reduce complexity, increase comparability, and lower transaction costs.
Advanced data management and accounting systems to strengthen traceability, mitigate double counting, and support co-investment models.
Innovative measurement technologies—including sensors, remote sensing, and digital data capture—to reduce the cost and burden of monitoring and reporting. - Market-level attribution frameworks, such as supply sheds, that allow CPGs to claim reductions from geographically defined sourcing areas without rigid supplier lock-in.
- Collaborative investment models that align incentives, distribute risk, and expand funding for high-impact interventions.
Conclusion
Scaling agricultural inset programs is essential for the food and beverage industry to meet climate commitments, mitigate regulatory risk, and support producer livelihoods. Achieving this will require deeper collaboration across the value chain, along with robust infrastructure and technology that bring clarity, confidence, and scalability to GHG reduction efforts. By embracing standardization and coordinated investment, CPGs and producers can unlock the full potential of climate-smart agriculture and deliver meaningful, verifiable Scope 3 emissions reductions.