WHAT IS IT? Learn what Scope 3 is and what it requires of milk production.
- Bruna Silper, Heloise Duarte e Luiz Gustavo Pereira
- Apr 10
- 10 min read
This article was published in the "Integral Sustainability" column of Issue 205 of Leite Integral Magazine - click to access the full issue.
Scope 3 and the strategic repositioning of the dairy supply chain - Climate governance of the supply chain begins on the farm and defines competitiveness, risk, and market access.
In this column, which follows the evolution of sustainability in the dairy supply chain, the choice of a song serves as a starting point to broaden the perspective on technical topics. It is a conceptual provocation that helps to illuminate structural issues. The title of this edition is inspired by "O que é, o que é?" by Gonzaguinha, one of the most emblematic compositions in Brazilian music, marked by reflection, awareness, and empowerment.
Released in 1982, the song invites maturity in understanding life and the choices that shape it. It speaks of continuous learning, responsibility, and the ability to take on one's own role in building the future. It is in this spirit that the question shifts to the dairy supply chain: what, after all, is Scope 3?
The structural shift in the corporate climate agenda
The answer redefines how sustainability is understood in agro-industrial production. For years, the debate focused on emissions under the direct control of industries, related to fuel use in operations and electricity consumption, classified as Scope 1 and Scope 2, respectively. This initial stage was important for structuring the first corporate inventories and consolidating measurement methodologies.
However, regulatory maturity, investor pressure, and the advancement of international climate commitments have made it essential to also focus on Scope 3. At this level, all indirect emissions associated with the value chain, from the production of inputs to the use of the final product, are covered. According to the GHG Protocol (Greenhouse Gas Protocol, the main international methodology for accounting for greenhouse gas emissions), Scope 3 often accounts for more than 80% of organizations' total emissions. For those reporting to CDP, an international organization that operates the leading global platform for disclosing corporate environmental data and through which thousands of companies report climate information to institutional investors, value chain emissions are, on average, 11.4 times higher than operational emissions. In other words, most of the corporate climate footprint is outside the company's physical boundaries.
In the dairy sector, this shift is particularly noticeable, as primary production accounts for the majority of emissions recorded up to the final product. The question echoed in the song then ceases to be philosophical and becomes strategic: understanding what Scope 3 is means understanding that the farm has become central to industrial climate governance.
Figure 1 illustrates in a simplified way how Scopes 1, 2, and 3 are distributed along the milk production chain.
Understanding what Scope 3 is means understanding that the farm has become part of the center of industrial climate governance.
What does Scope 3 mean for a dairy?
For the dairy industry, emissions from milk production fall under the category of "goods and services purchased," one of the most relevant categories in Scope 3. In practical terms, when conducting a Scope 3 assessment, the carbon footprint of milk produced on the farm is also included in the industry's climate inventory.
The Science Based Targets initiative, known as SBTi, establishes that companies that adopt targets aligned with the Paris Agreement, an international climate treaty that guides global efforts to reduce emissions, must include Scope 3 for products that have a significant portion of their total emissions within this scope. This is precisely the case for dairy products: approximately 75% of emissions associated with UHT milk, for example, occur during the milk production stage on the farm, a result consistent with life cycle assessment (LCA) studies of the dairy chain, which evaluate emissions throughout the entire production chain and indicate that most emissions occur in the agricultural phase of production. In addition to the regulatory requirement for scope expansion, investors also use data reported to the CDP to assess exposure to climate risks, governance, and long-term resilience.
In this way, Scope 3 connects primary production to financing, reputation, and access to international markets. The farm ceases to be merely a supplier of raw materials and becomes an integral part of corporate climate risk.
In practical terms, when conducting a Scope 3 assessment, the carbon footprint of milk produced on the farm is also included in the industry's climate inventory.
Climate risk as a financial risk.
The incorporation of Scope 3 into corporate reporting also links emissions to financial variables. Companies with high exposure and no structured mitigation plan face regulatory and reputational risks, and potentially increased cost of capital.
Financial institutions already consider environmental criteria in credit granting and risk assessment processes. Institutional investors analyze CDP reports and SBTi commitments as governance indicators. In export chains, traceability requirements and proof of environmentally responsible origin become non-tariff barriers.
In the case of milk, this means that the carbon footprint of each farm's milk, an indicator of the intensity of greenhouse gas emissions, can influence, albeit indirectly, the industry's financing conditions, positioning in foreign markets, and supply contracts.
What was previously treated solely as an environmental indicator is now also integrated into the economic logic of the supply chain.
The structural bottleneck: primary data and governance.
Despite increasing pressure, many companies still rely on industry estimates to report their Scope 3 emissions. This practice allows for filling out reports, but limits management and differentiation capabilities. When all suppliers are treated as averages, the opportunity to recognize efficiency and drive strategic improvements is lost.
Today, industries that don't know the average carbon footprint of their suppliers are already operating with hidden risk , which can manifest itself in capital costs, regulatory exposure, or loss of competitiveness in more demanding markets.
The central challenge goes beyond measuring emissions. It includes structuring data governance throughout the chain, involving methodological standardization, historical consistency, and the technical capacity for interpretation. A study recently completed by Educampo Sebrae MG reveals the strategic relevance of data governance.
Build the infrastructure before it's needed.
In 2025, the Educampo Sebrae MG Project obtained the carbon footprint of 80 dairy farms, representing a sample of the properties monitored by the program. The initiative was built on a consolidated base of monthly technical assistance, with systematic collection of productive and economic indicators over the years. As most indicators are already routinely monitored and recorded, data collection for carbon footprint assessment became more agile and based on consistent information. The main indicators of the evaluated set are summarized in Figure 2.
The group of farms evaluated had 19,000 animals, with more than 9,000 lactating cows responsible for the production of 95.6 million kg of milk per year, with a daily average per cow of 27.41 kg. The average carbon footprint of the milk was 1.33 kg of CO₂ equivalent per kg of milk corrected for fat and protein (FPCM). When weighted by the total volume produced on each farm, the carbon footprint was equal to 1.15 kg CO₂eq/kg FPCM.
Among the properties, the carbon footprint ranged from 0.88 to 2.51 kg CO₂eq/kg FPCM. This range reflects differences in herd composition, zootechnical performance, animal and agricultural management practices, fuel use, and type of electricity, within the same regional context. On the other hand, the heterogeneity indicates room for technical and/or genetic evolution, corroborating the understanding that the carbon footprint is the result of the interaction between management decisions, individual productivity, herd structure, and efficiency in the use of inputs.
Convergence between productive efficiency and environmental performance
The factors associated with the low carbon footprint on farms assisted by Educampo coincide with classic indicators of livestock efficiency: higher average production per cow, a higher proportion of productive animals in the herd, less time spent by unproductive animals, and more efficient use of concentrated feed.
This convergence is key to a new approach: sustainability ceases to be a secondary agenda and becomes a reflection of management quality . Environmental efficiency emerges as a consequence of productive efficiency.
Ongoing capacity building and governance
One of the pillars of the project on the farms assisted by Educampo was the training of the technicians involved in monitoring the properties, who were trained to apply the tools and interpret the results. Educampo's traditional monthly monitoring model creates an environment of continuous governance, in which financial indicators are analyzed alongside productive indicators, and now also alongside environmental indicators.
For milk collection and processing industries, this integration reduces the risk of Scope 3 being treated as a one-off or generic survey. By being incorporated into routine management, this data collection can become consistent, reliable, and transparent.
Digitization as a strategic infrastructure
The carbon footprint of milk was estimated using the Life Cycle Assessment methodology with the PEC Calc tool, developed by ESGpec. Indicators of animal welfare were also obtained through the BEA Score, and of maturity in environmental, social and governance practices through the ESG Farm Score.
It is important to recognize that different assessment tools may use distinct databases, assumptions, and emission factors, which can naturally result in variations in the absolute values of carbon footprint. These differences do not necessarily indicate methodological inconsistency, but rather reflect adaptations to production conditions, the scientific bases used, and regional particularities. In tropical agricultural systems, for example, methodologies that incorporate specific parameters of climate, management, and feeding tend to represent the local production reality more accurately.
In this context, more relevant than comparing specific values between tools is monitoring the evolution of indicators over time within the same methodological framework, allowing for the identification of trends, guiding management decisions, and directing continuous improvement strategies. The consistency of data collection, the rigor of primary information, and the ability to interpret results are the elements that transform measurement into management.
Therefore, a comprehensive assessment that goes beyond carbon footprint broadens the scope of Scope 3 by connecting it to wider dimensions of supply chain governance. In this context, digitalization becomes an essential component of traceability and transparency.
Without structured data, the industry relies on average estimates, which are the same for everyone. With structured data, it can qualify its customer base, differentiate suppliers, target investments, and reduce risk.
From invisibility to strategic positioning.
The question "what is it, what is it?" guides the reading of the ongoing transformation and organizes the interpretation of changes in the milk supply chain. Scope 3 establishes itself as a market criterion, a financial variable, and a governance instrument, with implications that go beyond the methodological field.
In the dairy supply chain, this transformation shifts the focus of climate governance to the production link, making farm performance a structuring element of the industrial strategy. This means that data becomes a strategic infrastructure. Productive efficiency and environmental efficiency cease to be separate entities and begin to converge as elements of competitiveness.
SCOPE 3 IS ESTABLISHED AS A MARKET CRITERION, FINANCIAL VARIABLE, AND GOVERNANCE INSTRUMENT, WITH IMPLICATIONS THAT GO BEYOND THE METHODOLOGICAL FIELD.
The movement observed within the Educampo program indicates that part of the sector has already understood this transition. The structured and collaborative organization of productive and environmental information demonstrates that it is possible to transform regulatory pressure into technical preparedness. Therefore, the question of whether the requirement will reach the farm is no longer in question, as it is already integrated into the global reporting and financing system.
From now on, the competitive difference will be between those who wait for the requirement to be formalized and those who structure their data in advance.
Perhaps it is at this point that Gonzaguinha's song regains its deepest meaning. "We are the ones who make life, however it comes, or however we can, or however we want." In the context of the dairy chain, this means recognizing that climate governance is not an external phenomenon. It is being built now, within the production systems themselves. If the initial question provoked reflection, the answer demands a stance.
Authors
Bruna Silper - Veterinarian, specialist in precision livestock farming and sustainable solutions, PhD in Animal Science and dairy farmer in Minas Gerais, CEO of ESGpec.
Heloise Duarte - Veterinarian, specialist in Agroindustrial Management and beef producer in MG, COO of ESGpec.
Luiz Gustavo Pereira – Veterinarian, professor and researcher, PhD in Animal Science, specialist in nutrition and regenerative systems.
The "Integral Sustainability" column is a column published by ESGpec in Leite Integral magazine , which has established itself as a space for dialogue between science, innovation, and practice in the field. Each article invites reflection on the future of dairy farming and on how we can balance productivity, animal welfare, and environmental responsibility.
Check out all the columns published in the magazine:
① The winds of change — a call to recognize that the time for sustainability has arrived and that agriculture needs to act now.
② Modern times — practical and technological solutions to reduce methane emissions in livestock farming.
③ Beyond the horizon — a vision of how innovation and regeneration open new paths for the milk of the future.
④ A simple way — how each producer's choice can transform livestock farming, making ESG something accessible and real in the field.
⑤ Nothing is by chance — animal behavior and welfare: The science applied to sustainable dairy production.
⑥ COP30: Time doesn't stop — What is the role of livestock farming on a planet under pressure?
⑦ COP30: We'll need everyone — What the world's largest climate conference revealed for Brazilian milk and why the next decade demands data, transparency, and real implementation in the field.
⑧ FROM JANUARY TO JANUARY: Sustainability starts with the basics — This article shows how consistent decisions, from the herd to the soil, reduce emissions and increase efficiency in milk production.
⑨ "Those Who Know How, Make the Time" - The International Year of Women in Agriculture and ESG Beyond Carbon — This article discusses why the future of dairy farming depends not only on environmental metrics, and why ESG needs to go beyond carbon to generate real resilience.
⑩ NEW ERA - Animal welfare on the global milk sustainability agenda — This article discusses why animal welfare has ceased to be peripheral and has become an integral part of milk sustainability.
⑪ WHAT IS IT? Learn what Scope 3 is and what it demands of milk production — Scope 3 and the strategic repositioning of the milk supply chain — Climate governance of the supply chain begins on the farm and defines competitiveness, risk, and market access.
🌿 This column is the result of a partnership between ESGpec and Revista Leite Integral , and reinforces our commitment to making sustainability a practical, measurable, and inspiring topic.
