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Sustainability efforts across agri-food supply chains have advanced significantly over the past decade. Better farming practices, improved processing, and growing awareness of Scope 3 emissions mean that real progress is being made on the ground. Yet much of that progress remains invisible to the buyers who are under increasing pressure to decarbonise.
The issue is not a lack of activity. It is a lack of connection. Low-carbon production is still blended into undifferentiated supply, sustainability attributes are diluted before they reach the market, and the link between what is produced and what is purchased is often unclear.
In this article, we explain what mass balance is, why it is frequently misunderstood, and why it is becoming a central mechanism for connecting sustainability performance to commercial outcomes. We also set out how it fits within broader traceability systems and what it enables for suppliers and buyers working toward Scope 3 targets.
Why sustainability progress is not always translating into value
Across many supply chains, sustainability improvements are already happening. Producers are adopting regenerative practices, reducing inputs, and improving land management. At the same time, brands are investing in projects designed to reduce deforestation, improve livelihoods, and lower emissions.
What we see repeatedly, however, is that these efforts are not connected to procurement. Projects are funded, often with good intent, butthe outputs of those projects are not clearly linked to the materials beingpurchased. In parallel, carbon accounting exercises take place separately, with their own datasets, methodologies and teams.
The result is fragmentation. Progress exists, but it is not captured in a way that allows it to be used, valued or scaled through normal commercial channels.
What is mass balance and why does it matter?
Mass balance is often described as a way of tracking sustainability attributes through a supply chain where physical mixing occurs. That description is broadly correct, but it is incomplete and, in many cases, misleading.
The key element is not mass balance in isolation, but mass balance as a chain of custody system.
In a mass balance chain of custody, sustainability attributes are transferred alongside physical materials through continuous reconciliation at each step of the supply chain. Each actor records what enters their system, what leaves it, and how sustainability attributes are allocated. The total volume of attributes cannot exceed the volume originally introduced, and responsibility for maintaining that balance sits with every participant.
This is fundamentally different from approaches where attributes are traded independently of physical flows. The distinction is subtle but important, and it underpins the credibility of the system at a market level.
How does mass balance chain of custody work?
At each stage of the supply chain, operators receive materials from multiple sources, some with improved sustainability characteristics and others without. Those materials are often blended during processing, storage or transport.
Rather than attempting to keep every batch physically separate, which is often not practical, mass balance maintains a record of the attributes associated with incoming volumes and ensures that equivalent volumes of those attributes are passed on.
A processor, for example, may receive a defined quantity of low-carbon raw material. When that material is transformed and sold, an equivalent quantity of output can carry the associated low-carbon attribute, even if the physical molecules are not the same.
What is preserved is not the physical identity of the product, but the integrity of the attribute and its link to real activity within the supply chain.
Why not rely on full segregation?
Physical segregation remains the most straightforward form of traceability. When materials are kept separate from origin to end use, the claim is simple and intuitive.
The challenge is that segregation does not scale easily in complex agricultural supply chains. It introduces additional storage requirements, separate logistics flows, and operational constraints that increase cost at every step. In many cases, those costs outweigh the value of the attribute being preserved.
Mass balance provides that flexibility. It allows supply chains to maintain a credible link between production and procurement without imposing the full costof physical separation.
The difference between mass balance and book and claim
A common source of confusion is the relationship between mass balance and market-based mechanisms such as book and claim.
Both involve some form of reconciliation, but the level at which that reconciliation takes place is different.
In a chain of custody mass balance system, reconciliation happens at every node within a defined supply chain. The transfer of attributes is linked to physical flows, and participants are part of the same operational system.
In a book and claim system, reconciliation takes place at the market level. Attributes can be decoupled entirely from the underlying commodity and traded independently, often across unrelated supply chains.
These approaches serve different purposes. Book and claim can support early-stage transitions or technologies that are not yet integrated into existing supply chains. Mass balance becomes more relevant where aphysical connection exists and where credibility depends on maintaining that link.
Why mass balance is becoming central to Scope 3
The direction of travel in carbon accounting is increasingly clear. Companies are being asked to demonstrate not only that emissions are being reduced, but that those reductions are linked to their actual supply chains.
This shift is reflected in emerging guidance, where physical traceability using mass balance chain of custody is becoming the reference point for credible claims, under GHGP Land Sector and Removals (LSRS) guidance. The implication is that companies need mechanisms that connect improvements on the ground with the products they purchase and report on.
Mass balance chain of custody provides a way to establish that connection. It allows companies to move beyond average emission factors and begin working with differentiated supply, while maintaining consistency with existing supply chain operations.
From traceability to commercial value
The most significant impact of mass balance is not technical but commercial.
When sustainability attributes can be linked to specific volumes, they can be priced, negotiated and sold. Suppliers who invest in improved practices gain a way to differentiate their output, rather than seeing those improvements averaged out across commodity flows.
For buyers, access to differentiated volumes strengthens the commercial incentive to reward suppliers investing in measurable improvements. Instead of a homogeneous view of the supply base, this approach makes verified performance visible across the value chain and is therefore directly relevant in procurement decisions.
This changes the dynamic on both sides. Sustainability becomes part of the commercial conversation, rather than sitting alongside it.
What this means for supply chains
As mass balance systems become more widely understood and implemented, several shifts are likely to follow.
Supply chains will move from relying on averages to working with actual performance. Procurement decisions will increasingly reflect differences in carbon intensity and other sustainability attributes. Suppliers will have clearer incentives to invest, as those investments become visible and recoverable through market mechanisms.
At the same time, the distinction between different transfer models will become more important. Not all claims will carry the same weight, and the ability to demonstrate how an attribute is transferred will influence how it is valued.
In certification systems such as those used in palm oil or other agricultural commodities, this distinction is already visible in how different models are priced. Identity preserved and segregated supply chains, where traceability is strongest, tend to carry higher premiums because the link between production and procurement is clearer and more direct.
Mass balance systems, while more flexible, still retain a connection to physical flows and are typically valued differently from book and claim mechanisms, where attributes are traded independently of the underlying material.
What sits behind this is not only a question of methodology, but of confidence. The closer the link between a sustainability attribute and a specific supply chain, the easier it becomes for buyers to rely on it in procurement decisions and for suppliers to justify investment.
As traceability becomes more central to carbon and Scope 3 claims, these differences are likely to become more explicit, with transfer models influencing not just how sustainability is reported, but how it is priced and traded.
Using mass balance to commercialise sustainability
At Segmos, we focus on enabling this transition from activity to value.
We work with supply chains to structure mass balance chain of custody systems that are aligned with emerging standards, and to connect those systems to the commercial processes that determine how products are bought and sold.
By linking sustainability data to physical flows and transaction records, it becomes possible to turn carbon performance into something that can be used in procurement, pricing and long-term supply agreements.
If you are exploring how to move from sustainability commitments to commercially viable low-carbon offerings, we can help you design the systems that make that transition possible.
