A Practical Guide to SBTi FLAG: The Who, What, When, How

In Part Two of our FLAG education series, we caught up with Allison Koehle, Senior Research Scientist at Planet FWD, to offer a deeper dive on companies that are required and recommended to set FLAG targets, timelines, best practices, and actions companies can take to get ahead of upcoming deadlines.

If you’re an audio-visual learner, we also recorded a Masterclass with Allison.

WHO does the FLAG Guidance and Tool apply to?

Some companies are required to set FLAG targets, while others are only recommended to. The SBTi requires companies that meet either of the following two conditions (left side column of below table) to set a FLAG-specific target separate from their target(s) for other emissions.?

Here are the relevant criteria for FLAG Targets:

WHAT are FLAG emissions in the context of FLAG targets?

The FLAG Guidance describes in detail the SBTi-designated sectors that are required to set a FLAG target, FLAG tool options and interim period for using them, and specifications on emissions coverage.

FLAG SBTs apply to a company’s Greenhouse Gas emission from Agriculture, Forestry and Other Land Use (AFOLU), including emission associated with:

• Land Use Change (LUC) CO2 emissions: Land use change refers to two major processes: 1. A change in land cover associated with the expansion or contraction of the area of land used for different purposes (e.g., pasture, cropland, urban). 2. A change in the type of management on existing land cover (e.g., changes in irrigation, fertilizer use, crop type, harvesting practices, or impermeable surfaces). Land use change related to management can occur without changing the extent of different land covers. All emissions from LUC, including those associated with livestock feed and conversion of natural forests to plantation.?
• Land management (non-LUC) emissions: All emissions from land management (biogenic CO2, N2O and CH4). CO2 emissions related to on-farm vehicles and fertilizer production are also included, as they are commonly embedded in accounting tools and emission factors associated with land management.?
• Carbon removals and storage: Carbon sequestration from improved forest management, agroforestry, forest restoration, silvopasture, soil organic carbon and biochar. Emissions and removals from the production and end use of bioenergy shall not be included in FLAG target setting and shall be addressed in accordance with SBTi general criteria on bioenergy (see criterion C10 and recommendations R3 and R4).?

In terms of target boundaries and emissions coverage, the FLAG target must cover at least 95% of FLAG-related Scope 1 and 2 emissions, and at least 67% of FLAG-related scope 3 emissions. When included in the FLAG target, FLAG-related scope 3 emissions are separate from a company’s energy/industry (non-FLAG) 67% scope 3 target coverage. Each 67% threshold should be met independently.?Emissions reduction must be met according to the Scope 3 emissions data reported in your base year.

WHEN should a company start setting FLAG targets?

To set a FLAG target, companies must first calculate their land-related emissions (i.e., FLAG base-year emissions as specified in the FLAG tool and following GHG Protocol). The two FLAG approaches available with this guidance (FLAG sector approach and FLAG commodity approach) seek to align with the upcoming GHG Protocol Land Sector and Removals Guidance (final version expected mid 2024).

Targets must be set 6 months after the publication of the GHG protocol final version. With the expected mid 2024 release, targets must be set by the end of 2024.

Latest implementation timelines

Choosing the appropriate FLAG Pathway:

The SBTi FLAG combines two mitigation pathways for determining the FLAG target:

1. FLAG Sector Pathway: an approach for companies with diversified emissions or which are further from direct production. The method for companies with a variety of land-intensive activities, and companies in midstream and downstream sectors. Uses model net CO2, CH4, and N2O emissions trajectories for AFOLU and BECCS and bottom-up studies to review mitigation strategies from seven priority measures:

• Land Use Change,
• Improve Agriculture,
• Shift Diets,
• Reduce Food Loss and Waste,
• Restore Forests,
• Improve SFM & Agroforestry, and
• Enhance Agriculture Soil Carbon

2. FLAG Commodity Pathway: an approach for companies with focused, upstream emissions, associated with one or more agricultural commodities including, beef, chicken, dairy, leather, maize, palm oil, pork, rice, soy, wheat, timber & wood fiber

The approaches for a company’s FLAG target depend on the sectors in which the company operates and/or the scope of agricultural commodities in the company’s supply chain. See the table below for more guidance.

HOW should companies set FLAG targets

Overall, companies should account for emissions and removals from land management, LUC, biogenic products, technological CO2 removals and related activities in GHG inventories. A value chain approach is needed to provide corporate level accounting and reporting guidance, and will be especially valuable given the limited guidance on corporate-level AFOLU inventories to date.?

The FLAG guidance applies to both upstream and downstream emissions and to both producers and consumers, primarily focusing on accounting and reporting emissions for different carbon pools: Land, geologic and product. FLAG guidance and tools will be updated as needed to align with the GHG Protocol Land Sector and Removals Guidance, once finalized, and as new and improved data become available.?

In general, companies must keep FLAG and energy/industry (i.e. non-FLAG) targets and accounting separate. FLAG-relevant emissions and removals include those related to agriculture (to the farm gate, excluding processing), LUC and land management, including forestry (to the yard, excluding processing). For companies with FLAG emissions below the 20% threshold that choose not to set a separate FLAG target, FLAG emissions must be accounted for separately and included in the traditional target. Removals may not be used in this case.

Key Considerations

1. Level of ambition: A FLAG company’s target classification will be determined based on the ambition of its energy/industry (non-FLAG) target.
2. Tool usage: Supply-side companies with emissions from one of the ten available agricultural commodity pathways that account for 10% or more of a company’s total (gross, excluding removals) FLAG emissions (across all scopes) may use the commodity pathway for that commodity.?
3. Base and target years: In alignment with SBTi criteria, targets must cover a minimum of five years and a maximum of ten years from the date the target is submitted to the SBTi for official validation.The earliest base year that can be selected by the company in the current version of the FLAG tool is 2015. In addition to a near-term FLAG target, companies are encouraged to develop a long-term agriculture FLAG target with a target year before 2050 aligned with the Net-Zero Standard.
4. Target validation and reporting: Companies must report removals and emissions separately for both baseline and annual emissions accounting. When aggregating FLAG targets across commodities and/or approaches, companies must report on sub-targets, in addition to the overarching, aggregated target, in their validation form. Companies shall meet the aggregated target, and they should also strive to meet their sub-targets (e.g., individual commodities) as well.?
5. No Deforestation commitments: Companies setting FLAG targets are required to publicly commit to no deforestation covering all scopes of emissions. Example - “[Company X] commits to no deforestation across its primary deforestation-linked commodities, with a target date of [no later than December 31, 2025].”
6. Target and Zero Deforestation communication: Companies are encouraged to aggregate FLAG commodity targets and the FLAG sector target into one combined FLAG target, when this is relevant, using the aggregator tool, though reporting to the SBTi on sub-targets for target validation is still required. Companies must communicate their FLAG target by indicating the base year and target year selected, and the percentage reduction (either absolute or intensity) in the target period.

• Target Example - Deforestation-Linked Commodities:?“[Company name] commits to no deforestation across its primary deforestation-linked commodities, with a target date of [no later than December 31, 2025]
• Target Example - FLAG-Sector Approach:?Absolute target (FLAG-Sector approach):?[Company name] commits to reduce absolute [enter scopes] FLAG GHG emissions [percent reduction] % by [target year] from a [base year] base year.
• Target Example - FLAG-Commodity Approach:?[Company name] commits to reduce [enter scopes] FLAG GHG emissions [percent reduction] % by [target year] from a [base year] base year. [This may include multiple % targets per commodity, or a single averaged target across commodities.]

Key Takeaways and Next Steps

Looking for more guidance on FLAG Emissions? View our recorded SBTi FLAG Masterclass.?

At Planet FWD, we help leading food and consumer companies understand how to navigate the changing SBTi landscape. This includes FLAG’s technical standards, reporting structure, data requirements and timelines. We’d love to show you how.?

Book a FLAG Assessment