Understanding SBTi FLAG Guidance for Land-Use Sector

Emma Valli

Marketing & Product Manager

At end of 2023, SBTi (Science Based Targets initiative) released a FLAG (Forest, Land, and Agriculture) guidance for companies operating in the land-use sector. With these guidelines, companies can set more precise climate targets. They can also plan efficient emission reduction measures specifically concerning land use.

SBTi in a nutshell

Companies set science-based emission reduction targets as part of the Science Based Targets initiative, which aims to limit climate warming to the 1.5-degree Celsius threshold outlined in the Paris Agreement.

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Who should set FLAG targets?

SBTi has defined that the FLAG guidance applies to those companies whose supply chain emissions in the land-use sector are significant. This includes, among others:

Agricultural companies
Food and beverage industry companies
Retailers
Forest and paper industry companies

The FLAG-specific guidance is aimed at companies that meet at least three of the following criteria:

Employ over 250 employees
Have a turnover of over €50 million
Have total assets of over €25 million
Operate in the land-use sector (see sectors above)

Based on this, for example, a food company employing 300 people with a turnover of over €50 million is required to follow the FLAG guidance when setting science-based emissions reduction targets.

If you work in a qualifying company that is setting SBTi targets for the first time, you should also set FLAG targets.

However, your company might have set SBTi targets before the publication of FLAG guidelines on March 30, 2023. In that case the FLAG targets should be added 6 months after GHG protocol’s publish the LSR (Land Sector and Removals) guidance (expected mid 2024).

What do FLAG guidelines cover?

When setting SBTi and FLAG targets, you should have the tools and expertise to conduct emission calculations according to the GHG protocol to set target levels and track progress.

GHG Protocol has released a draft guidance for land sector and removals (LSR) calculations, which is expected to be published in 2024.

Already in the FLAG guidance, it is stated that for setting and monitoring targets, companies need to calculate and differentiate:

Land use emissions
Land use change emissions
Carbon removals.

You can start calculations using general emission factors and averages, especially in complex supply chains where readily available data is essential. However, SBTi wants companies to provide sufficiently accurate data, so it’s worth preparing to collect primary data.

How are FLAG targets set?

When setting emission targets, you can choose one or a combination of the following two paths:

Sector pathway

This option requires an absolute reduction of FLAG emissions by 30.3% by 2030. It’s a challenging path for growing companies as emissions are not tied to revenue. The path is suitable for companies with complex supply chains.

Commodity pathway

Used by companies where over 10% of emissions come from the following commodities: beef, poultry, milk, leather, maize, palm oil, pork, rice, soy, wheat, and timber or pulp.

In this option, emissions are calculated by commodity and compared to the global average and its trend.

The requirements for setting FLAG targets are as follows:

Set short-term (5-10 years) emission reduction targets aligned with the 1.5-degree Celsius goal of the Paris Agreement.
Consider removals in short-term targets: Biogenic CO2 removals include activities such as restoring natural ecosystems, improving forest management practices, introducing forest grazing, and enhancing carbon sequestration in pasture and cropland areas.
Set long-term targets: Companies operating in the land-use sector must reduce at least 72% of emissions by 2050. Targets are set using the SBTi Net-Zero standard.
Zero deforestation goals must be set by 2025 and must be aligned with The Accountability Framework initiative.
Set science-based targets for fossil emissions: Companies producing emissions from land use must set FLAG targets AND science-based targets for energy/industry because all companies produce fossil emissions.

How can Biocode help?

With Biocode’s FLAG calculator, you can calculate emissions and removals from land use, agriculture, and forestry in line with SBTi’s FLAG guidance. FLAG calculations are based on your company’s emissions accounting, more commonly known as Scope 1–3 accounting.

The first calculation is done together with our expert, so you receive the necessary FLAG emission factors and an understanding of how to use them. After that, you will have the know-how and the tools to carry out calculations independently with the calculator.

Methodology of the calculator

Biocode is a versatile carbon footprint calculator that separates biogenic emissions from fossil-based ones and includes the impact of land use on emissions. With its primary production tools, you can calculate agricultural emissions at the producer and field-plot level. Biocode is continuously updated in line with revisions to FLAG calculation guidance.

With Biocode, you can also calculate carbon removals achieved through your operations. The primary production calculation tool allows you to measure the amount of carbon sequestered in soil and use the result also in your company-wide emissions accounting. For animal-based products, we apply the SBTi FLAG Feed Conversion Ratio (FCR) method, which accounts for feed efficiency and its impact on production emission intensity.

Biocode has standardized calculation methods based on the GHG Protocol built in, which companies follow when reporting progress towards SBTi targets. We update the calculator after new LSR calculation guidelines are released, so our customers can make use of the tool when calculating emissions as part of their science-based reduction targets.