top of page

Learning Hub ▶ SCOPE 3 PROJECTS

Sustainability Scope 3 Projects

This guide is designed to help co-ops and processors coordinate Scope 3 projects that support producers' progress toward shared environmental goals – most commonly greenhouse gas emission reductions. These resources will summarize the common steps involved in Scope 3 projects from the perspective of a co-op or processor. 

cows1.jpg

Introduction and Key Terms

Sustainability projects encompass a wide range of initiatives focused on environmental protection, social responsibility, and economic viability. This guide focuses specifically on Scope 3 projects—initiatives aimed at reducing a company’s Scope 3 greenhouse gas (GHG) emissions by supporting the adoption of sustainability and conservation practices or technologies on farms. These projects can help offset producer costs and are often developed in partnership with dairy cooperatives (co-ops) and processors, which maintain strong relationships with both producers and their buyers or customers.

​

Many dairy producers already incorporate sustainability practices, and some co-ops and processors have the resources to run their own projects. However, the technical assistance, data collection, and financial support required can make managing them independently challenging. To address this, independent project developers, NGOs, and consulting teams often collaborate with dairy buyers and customers to bring projects to life.

​

This guidance is designed to help co-op and processor staff evaluate opportunities, understand key considerations, and identify projects that best align with their producers’ goals and management practices. The materials draw on best practices and common questions gathered from team experiences, stakeholder interviews, and other reference sources.

​

The Landscape​

The operational benefits of sustainability practices combined with consumer and customer expectations make it likely that agriculture-focused sustainability initiatives will continue to grow in the coming years. More than 75% of the environmental footprint of milk production comes from on-farm activities that are outside the co-op and processors' walls. Participation in Scope 3 projects can offer meaningful incentives for producers that would like to participate. Co-ops and processors can offer producers connections to Scope 3 projects that have been evaluated and prioritized, ensuring there is strategic alignment between these projects and their producers’ priorities. Both the selection and implementation of Scope 3 projects require time and resources from co-ops and processors. ​​

Key Terms​

Below is a set of definitions of terms used in this guide. For additional information see the List of Terms in the Scope 3 GHG Inventory Guidance (page 3) from the Innovation Center for U.S. Dairy. 

    • Greenhouse Gas; any gas that contributes to the greenhouse effect by absorbing infrared radiation. There are seven greenhouse gases accounted for by the GHG Protocol: carbon dioxide (CO₂), methane (CH₄), nitrous oxide (N₂O), sulfur hexafluoride (SF₆), nitrogen trifluoride (NF₃), hydrofluorocarbons (HFCs), and perfluorocarbons (PFCs).​

    • All indirect emissions (not including generation of purchased energy) that occur in the value chain of the reporting company, including both upstream and downstream emissions.​ Learn more here: Carbon Markets and Credits 101

    • Organized efforts to reduce a company's Scope 3 greenhouse gas (GHG) emissions. For dairy producers, they often focus on implementing new practices or technologies that have potential to reduce the GHG emissions related to producing milk on the farm. Scope 3 projects can also contribute to ancillary benefits in several areas such as resource efficiency, resilience, water quality or quantity, and/or soil health. ​

    • The activities that monitor the implementation of a GHG emissions reduction project, measure the results, report the results to involved parties and verify implementation. You can think of this as audit or quality control for a project.​ Learn more here: Carbon Markets and Credits 200.

    • Science Based Target; greenhouse gas reduction target adopted by companies to achieve the level of decarbonization necessary to keep global temperatures from rising above 2 degrees Celsius compared to preindustrial temperatures. In October 2019, the ambition requirements for SBTs increased to “well below 2 degrees.”

    • Non-tradable environmental improvements attributed to a corporation or their supply chain, typically expressed in units of CO₂ equivalent, a description of activities, or in the achievement of a specific target (i.e., a claim of carbon neutrality). ​

    • Individually tracked and tradeable units of environmental impact, a credit represents one ton of carbon dioxide equivalent (CO₂e). For additional information on carbon markets, check out Carbon Markets 101 on the Dairy Conservation Navigator.​

    • Individually tracked and tradeable units of environmental impact, a credits represents one ton of carbon dioxide equivalent (CO₂e). For additional information on carbon markets, check out Carbon Markets 101 on the Dairy Conservation Navigator.​

Downloadable Resources

Scope 3 Project Stakeholders and Goals

While each Scope 3 project is unique, they tend to share some common elements, particularly the roles that Stakeholders play and the type of Goals the project pursues.

Stakeholders

Scope 3 projects can be initiated by different parties that tend to have several common components. Click on the tabs below to learn more about the role of each stakeholder. 

  • Scope 3 projects can begin within the supply chain when a CPG company or a retailer engages with their suppliers. Often, these parties have set environmental goals they are looking to achieve.

    Examples: Danone​ and Nestle​

    Role: Procure dairy commodities, report and track Scope 3 emissions, and contribute resources (financial or other)

    Impact on Scope 3 Project 3 Projects

    • Progress toward their emissions reduction goals and shared success stories

    • Strengthen relationships with their dairy suppliers

  • Scope 3 projects can begin within the supply chain when a CPG company or a retailer engages with their suppliers. 

    Examples: Walmart and McDonald’s

    Role: Report impacts, contribute financial resources

    Impact on Scope 3 Project 3 Projects

    • Strengthen relationships with their suppliers

    • Progress toward their emission reduction goals and consumer-facing success stories.

  • Independent carbon platforms operate Scope 3 projects, lead MMRV efforts to verify, certify, and transact credits. Many recruit co-ops, processors or their producers to join their carbon projects.

    Examples: Indigo, Soil and Water Outcomes Fund (SWOF) and Athian​

    Role: Organize projects, develop protocols, MMRV, facilitate or administer transactions of impacts or credits​

    Impact on Scope 3 Projects: 

    • Credibility and rigor in verification and certification of projects

    • Potential to reach more producers and engage more partners

  • Some projects are organized by environmental organizations who partner on Scope 3 projects with supply chains or their funders.

    Examples: The Nature Conservancy (TNC) and Alliance for the Chesapeake Bay

    Role: Technical assistance, program administration, partner contributions, access cost shares, secure match fund​

    Impact on Scope 3 Projects: 

    • Leverage reputation, philanthropic resources, and relationships to engage more partners.

    • Potential to offer technical assistance to producers.

  • Specialized contractors may work directly with co-ops and processors to assemble projects, secure grant funding, support the development of policies and procedures, and manage external partnerships.

    Examples: Newtrient and Carbon Yield

    Role: Administer grants, facilitate data collection, assist GHG reporting, and organize partners.

    Impact on Scope 3 Projects: 

    • Tackle specialized tasks and technical assistance

    • Access new resources

Project Goals

Each stakeholder brings a unique perspective on what sustainability means to them and what is most important. Below are some examples of the types of different environmental impacts a Scope 3 project might include: greenhouse gas reduction, water savings, water quality, regenerative agriculture, and biodiversity. 

​

Additionally, stakeholders might have supporting goals such as a regional focus, number of farms, number of cows or number of acres involved in a project. It is important to align on the goals early on to ensure the project is designed to meet the right goal for each stakeholder or partner. It is also worth considering the interconnected and potentially negative environmental impacts of any project.​

Scope 3 project impacts: Greenhouse gas reduction, water savings, water quality, regenerative agriculture, biodiversity

Key Questions to Consider | Stakeholders and Goals​

Who are the stakeholders involved and who is funding the project?​

  • How frequently will data be collected?

  • What is the overall time commitment, 1 year or multiple years?

  • How will results be shared out? With what audiences?

What are the ultimate goals of the projects?

  • How frequently will data be collected?

  • What is the overall time commitment, 1 year or multiple years?

  • How will results be shared out? With what audiences?

How will project goals be tracked and for how long?​

  • How frequently will data be collected?

  • What is the overall time commitment, 1 year or multiple years?

  • How will results be shared out? With what audiences?

Project Structure & Team Members

This section highlights key factors to consider when evaluating project structure and staffing, helping you ensure the project meets producers’ needs and supports the adoption of new sustainability practices.

Key Steps

  1. Align on your own coop or processor goals.​

  2. Review available Scope 3 project details.

  3. Ask questions to get clarity on project viability.​

  4. Align on a structure that fits your producer's needs based on producer input and goals.​

  5. Ensure team members are assigned clear responsibilities.

Key Questions to Consider​ | Project Structure

How do producer get paid?

  • Who is the producer contracting with? ​

  • Do you pay based on the outcomes or by practice implemented, or both?​

  • Are there funding caps per producer?​

  • Do you make any payments up front?​

  • Do farms have an opportunity past project end date to participate in carbon markets?

How will technical assistance be administered?

  • What upfront work and data collection needs to happen for each farm enrolled?​

  • Will you be using FARM ES to model impacts?​

  • What is the time commitment from each producer?​

  • Who will be going on farm to collect data?

What practices are allowed under your program?​

  • Can we add new practices if we have producer interest?​

  • Is there financing available for capital intensive practices?​

  • Can a producer select multiple practices?

Who are the individual members of the project team? Do they have dairy experience?

How do you communicate with producers?

  • Do you expect co-op staff to select producers and communicate throughout the project? If so, can the co-op be compensated for our time?​

  • Is there any seasonality to your communications with producers? (e.g. planting & harvest)​

  • How are producers selected to participate in a fair and unbiased way?

Producer Engagement

As more sustainability programs emerge, some dairy producers are feeling overwhelmed by the number of options and uncertainties, leading some to avoid Scope 3 projects entirely. Many also worry that joining a program now might mean missing out on a better opportunity later. Coordinating the review of Scope 3 projects at the co-op or processor level can help address these concerns. Because producers often have long-standing relationships with their co-op or processor, they are more likely to trust and act on their guidance​

See guide to evaluating carbon programs  

Guide to Evaluating Carbon Programs

Not every Scope 3 project will be the right fit for every producer. However, producers are more likely to participate when they feel their voices are heard and they have input on how projects are implemented. Open, honest, and proactive engagement can help set clear expectations, improve the producer experience, and build stronger supplier relationships.

 

Creating opportunities for peer-to-peer exchange around sustainability and conservation can further motivate producers and ensure they feel valued. Co-op or processor-led sustainability committees can also play a key role in evaluating.

​

Key Steps: 

  1. Determine the best way for producers to engage with the project team (i.e., via co-op or directly).

  2. Effectively communicate project opportunities with producers.

helpful tips | Communication with Producer

Communication Cadence

  • Regular producer questionnaires can provide useful insight when evaluating potential projects and practices, and allow producers to self-select as interested in new projects.

  • Being transparent and upfront about project specifics is critical to ensuring producers feel heard and welcome.

Communication Style

  • Do not just rely on digital communications. Hard copy mailers, physical newsletters, informal meet-ups, and farm field days tend to get stronger responses than blast emails alone.

  • Ensure project timing and communications align with the growing season. Producers need adequate time and resources to consider projects that must align with planting seasons, including enough advance notice prior to crop planning.

  • Gatherings or field days can give producers the chance to share experiences, discuss what works for their region, and build confidence in new practices. Peer mentorship programs can be as simple as hosting coffee once a month or asking a few influential producers to host a session related to Scope 3 projects.

Fairness and Transparency

  • Clarify Eligibility and Selection Criteria
    Clear eligibility requirements and transparent selection criteria will increase overall support for projects and help ensure the right producers engage. Collaborate with program leads to develop accessible explanations that can be used in producer communications and recruitment efforts.

  • Understand Common Eligibility Constraints
    Eligibility rules often require producers to adopt new practices, limit participation in overlapping incentive programs, and may include criteria such as farm size or income limits. Programs may also require several years of practice data, FSA records, and proof of operational control through formal leases or ownership.

  • Consider Early Adopter Recognition
    For early adopters, Scope 3 projects focused on lowering emissions intensity may better reflect their sustainability achievements than carbon offset-style models that credit absolute change from a baseline.

Implementation

While technical assistance (TA) is usually provided by independent agronomists or other service providers, co-ops and processors play an important role in explaining what and when resources will be available and answering questions from producers. 

Data Collection and Quantification

The MMRV requirements can vary between different Scope 3 projects. Typically, Scope 3 projects generating carbon credits require more rigorous verification than a carbon insetting project. The level of rigor may also depend on the external protocols the project partners are following. Gathering the data for MMRV is often a burden for producers. Well-designed data collection efforts can lower barriers for producers and achieve the right level of rigor required by the project partners.

Key Steps​

  1. Confirm what data is required and who will collect it.

  2. ​ Review terms and contracts around data privacy and ownership.

  3. Coordinate or support the data collection process.

helpful tips | Supporting Producers

 Some of the concern producers have about sharing data comes down to whether they are getting sufficient value for their efforts. Data privacy conversations tend to go better when there is fair compensation alongside appropriate protections for data. When producer data unlocks access to sustainability outcomes payments, preferred contracts or premium pricing we can demonstrate the value of these, at times, tedious data collection initiatives.  Below are some tips. 

Advocate for producers to be compensated for their time

Projects can require a lot of a producer’s time. Separating payment for data collection from payment for outcomes goes a long way - for dairy producers, we have seen programs include a $500-$2,500 stipend for data collection depending on the level of detail required.

Data ownership and sharing rights

Producer contracts for Scope 3 projects should clearly specify who owns the data (often the producer maintains ownership) and appropriate uses of data in service of the project. Field or farm level data may be required to quantify claims properly, but many projects only report out aggregated data and anonymize personally identifiable information. Co-op or processor sustainability committees are a good audience for discussing data privacy agreements and acceptable uses of data.

Streamline data dollection

Streamlining data collection across sustainability initiatives FARM-ES and Cool Farm Tool are common tools for reporting outcomes within the dairy value chain, but other tools might be used for field or crop focused projects. If possible, build on existing data collection efforts to integrate data needs for Scope 3 projects with internal co-op or processor data needs.

Program MMRV differences

Ask Scope 3 program administrators about their MMRV capabilities. The level and rigor of MMRV can vary by project, pending the stakeholder and partner expectations and requirements. Projects can use remote sensing tools, satellite imagery, in-person visits, or live tech support to help make data collection more efficient and protect producer time.

Enrollment and MMRV Timelines

When planning a Scope 3 project, it’s essential to gain clarity on enrollment and MMRV (Measurement, Monitoring, Reporting, and Verification) timelines early on. Negotiating a Scope 3 agreement can take anywhere from 6 to 12 months, so it’s helpful to establish clear expectations around project start dates and when eligible practices can reasonably be implemented.

 

Many cropland-focused programs have strict requirements regarding the timing of enrollment, often tied to harvest and planting cycles. These programs typically evaluate impacts from harvest to harvest and may require a farm to commit within a year of the previous harvest. In contrast, livestock-related practices tend to offer slightly more flexibility but still usually require enrollment within a year of implementation. Understanding these timelines upfront can help avoid missed opportunities and ensure eligibility for credits.

​

The table below outlines some of the common farm data collection and footprinting tools.

Comparison table: CFT, Farm, Comet-Farm and Field To Market.

Enrollment and MMRV Timelines

When planning a Scope 3 project, it’s essential to gain clarity on enrollment and MMRV (Measurement, Monitoring, Reporting, and Verification) timelines early on. Negotiating a Scope 3 agreement can take anywhere from 6 to 12 months, so it’s helpful to establish clear expectations around project start dates and when eligible practices can reasonably be implemented.

 

Many cropland-focused programs have strict requirements regarding the timing of enrollment, often tied to harvest and planting cycles. These programs typically evaluate impacts from one harvest to the next and may require a farm to commit within a year of the previous harvest. In contrast, livestock-related practices tend to offer slightly more flexibility but still usually require enrollment within a year of implementation. Understanding these timelines upfront can help avoid missed opportunities and ensure eligibility for credits.

​

The table below outlines some of the common farm data collection and footprinting tools.

See Learning Hub Content for More Information

Carbon Markets and Credits 101

Carbon Markets and Credits 200

Resourcing Scope 3 Projects

Coordinating Scope 3 projects can take a lot of work from co-ops and processors, even when independent partners take on technical tasks. Setting staffing & resource expectations and integrating Scope 3 projects into existing operations can improve performance, provide a positive experience for all partners and expand your options in attracting partnerships.

Key Steps​

  1. Determine what roles your organization is expected to play.

  2. ​Allocate responsibilities to appropriate staff.

  3. Determine where project requires coordination with other organizational efforts.

Staff Commitment

Don’t underestimate the staff time required for Scope 3 projects. These initiatives typically demand the equivalent of one to two full-time employees, and the workload can quickly grow if you are managing multiple projects. It is important to account for the significant time needed for administrative tasks such as meetings, reporting, and coordination. To ensure smooth execution, leverage support from cross-functional teams, including finance, procurement, and legal.​

Roles and Responsibilities

Scope 3 projects involve diverse tasks requiring specialized skills, including project management, producer relations, communications, and data collection and management. While sustainability staff often lead these efforts, sharing responsibility across departments can strengthen institutional support and reduce risk. Projects led by a single champion are vulnerable to disruption if that person changes roles or leaves the organization.

Socialize and Streamline

​Communicating and sharing updates about Scope 3 projects with cross-functional teams and leadership is essential. Socializing these initiatives can strengthen relationships with customers and help reduce their supply chain risks, even if they are not directly involved. It also creates opportunities to identify co-investments across customers or develop sustainability claims for your organization. Many customers may have additional resources to support these projects, such as producer contracting, incentive funding, project administration, and equipment financing—so don’t hesitate to ask about potential support.

Strategy and Positioning

One of the most challenging components of a Scope 3 project is building a case internally for starting a project. Co-op and processor staff have many priorities that make devoting staff and other resources to a new project a tough sell. Creating broad support and shared ownership helps projects succeed and is critical to institutionalizing Scope 3 projects. Scope 3 projects can also help achieve a variety of goals for senior leadership, field staff, sustainability team members, and dairy producers. Building a case that appeals to each stakeholder, will help build momentum around new projects and secure resources. 

Key Message for Different Audiences

For each stakeholder group, this section provides a list of factors and benefits that commonly motivate participation in Scope 3 projects. These insights can help organizations develop more effective internal communications.

    • Strengthen customer relationships: Buyers increasingly expect greenhouse gas (GHG) reporting and emissions reduction efforts to be part of their procurement relationships. Demonstrating sustainability action can help deepen trust and long-term engagement.

    • Leverage Scope 3 opportunities in milk contracts:  Sustainability performance can open doors during milk contract negotiations. Buyers may be willing to co-invest in farm practices, offer premium pricing, or account for sustainability investments within the Cost of Goods Sold. If a buyer isn’t interested, consider third-party carbon programs or external projects as alternative pathways to monetize conservation practices.

    • Enhance supply chain resilience: Dairy farms that improve soil health, reduce reliance on external inputs, and modernize manure management are better equipped to handle challenges like extreme weather, inflation, and regulatory pressure. A more resilient farm base helps processors and co-ops meet supply commitments—even when competitors fall short.

    • Build a stronger reputation: Co-ops and processors with demonstrated sustainability leadership can differentiate their products, make credible sustainability claims, and become more attractive to mission-driven investors and buyers.

    • Improve animal welfare and productivity: Many sustainability practices—such as improved forage management or optimized feeding—can boost feed efficiency, animal welfare, and milk quality. Highlighting areas of alignment with field team goals helps build trust and collaboration.

    •  Gain access to additional technical support: Scope 3 projects often bring added support from agronomists, veterinarians, or certified technicians, expanding the range of services available to producers.

    • Align data collection with field priorities: Data gathered through Scope 3 initiatives can be adapted to capture metrics that matter to the field team, helping streamline efforts and reduce duplication.

    •  Expand capacity: Partnering with external Scope 3 programs can bring in additional funding and staffing support—resources that may not be available internally—to help advance your sustainability goals.

    • Access credible data: Many Scope 3 projects include robust Measurement, Monitoring, Reporting, and Verification (MMRV) tools that can help you quantify improvements and track progress toward your organization’s sustainability targets.

    • Unlock financial support: Scope 3 programs can offer cost-share or incentive payments to help cover the cost of adopting new practices and technologies—support that may not be available through other programs.

    • Improve farm resilience: Participating in Scope 3 efforts can boost soil health, reduce input costs, and improve efficiency—making your farm more resilient to extreme weather, rising prices, and market fluctuations. These improvements also help strengthen relationships with buyers and open doors to long-term market opportunities.

    • Leave a legacy: Producers often value the opportunity to leave the land better than they found it. Investing in soil health and farm modernization builds long-term value and pride in stewardship for future generations.

Financials and Payment

Scope 3 projects provide new financial resources to incentivize sustainability practices, but building a business case for a project requires a long-term economic view. Projects rarely come with a meaningful profit margin, but that does not mean that the value of a project is intangible.

Key Steps​

  1.  Explore the financial terms for the co-op, processor, and producers.

  2. ​Evaluate to establish if the terms are sufficiently motivating for all parties.

Producer Expectations

  • Set clear, realistic expectations: Communicate achievable outcomes—such as recovering implementation costs and gaining operational co-benefits like improved feed efficiency, soil health, or yield stability. These outcomes can be more compelling than profit alone.

  • Respect time and shared investment: Producers recognize the value of conservation to their operations and communities—but they want to see that their time and effort are respected, and that projects result in meaningful returns.

  • Avoid overpromising: Some carbon programs have overpromised financial returns that never materialized. This has led some producers to delay practice adoption while waiting for “better” deals. Be honest about potential payoffs, timelines, and risks.

Co-op and Processor Expectations

  • Focus on long-term value: The business case for Scope 3 work is often about protecting long-term product value, ensuring producer viability, and maintaining access to climate-conscious markets—not short-term price premiums.

  • Partner to reduce risk: Working with buyers and customers to demonstrate sustainable production helps mitigate regulatory and market risks, and strengthens dairy’s role in a sustainable food system.

  • Budget for support: Successful programs require upfront investments in technical assistance, administration, and monitoring. Set aside clear budget lines to ensure smooth implementation and long-term impact.

Acknowledgements​

This resource was developed by Dairy Management Inc. (DMI) in partnership with Carbon Yield.

bottom of page