SBTi FLAG: Land and Agriculture Emissions Explained

Most corporate carbon work is about fossil fuels: energy bought, fuel burned, and the emissions embedded in manufactured goods. FLAG is about land, and land does not behave the way a boiler does.

SBTi’s FLAG guidance, version 1.1, December 2023, covers emissions and removals from forest, land and agriculture. It comes with a getting-started guide. If a meaningful share of your footprint comes from food, timber, fibre or land use change, this is the part of SBTi that applies to you, and it works differently from everything else.

Why land needs its own targets

Three differences drive the separate treatment.

Land removes carbon as well as emitting it. A well-managed landscape sequesters. Fossil accounting has almost no equivalent, which is why FLAG accounting explicitly handles removals and conventional inventories largely do not.

FLAG emissions are volatile for reasons outside management control. Rainfall, yield and seasonal variation move the numbers year to year in ways that a factory’s energy consumption does not. A target has to be robust to that.

Land use change produces large, one-off releases. Clearing forest for cultivation emits a great deal at once and then changes the baseline permanently. That is a different shape of problem from a gradual efficiency improvement.

Merge these into a single company-wide target and both halves become unreadable. You cannot tell whether a reduction came from decarbonising a fleet or from a good harvest. So SBTi requires FLAG targets set separately, alongside fossil targets, rather than netted into one number.

The deforestation commitment

A no-deforestation commitment forms part of the FLAG requirements. This is a commitment about supply chains rather than a target about tonnes, and it usually turns into a traceability problem: knowing where a commodity was grown, which for many buyers means knowing considerably more about their suppliers’ suppliers than they currently do.

Confirm the current deadline and drafting expectations against FLAG guidance version 1.1, because the specifics matter and this material is revised.

Who is actually in scope

The obvious candidates are companies in forest, land and agriculture sectors themselves.

The less obvious, and in the Gulf the more common, are companies where FLAG emissions are significant within the value chain. SBTi applies a materiality threshold to decide when a separate FLAG target becomes mandatory. Check the current threshold and how it is calculated against version 1.1 before concluding you are outside it, because the value chain test catches businesses that own no land at all.

Why this matters particularly in the Gulf

The GCC imports the overwhelming majority of its food. That means the emissions associated with producing it sit in the value chains of businesses here even though the agriculture happens elsewhere.

In practice the exposure shows up in:

• Retail groups and supermarket chains, where food is a large share of goods sold
• Food and beverage manufacturers and distributors
• Hospitality and catering, including the large contract catering operations serving industrial and institutional clients
• Agri-traders and commodity businesses
• Diversified family conglomerates with food, retail or hospitality divisions sitting alongside unrelated businesses

For all of these, FLAG emissions are a Scope 3 problem. They are real, they are often large relative to operational emissions, and they are invisible until someone measures the value chain properly.

What to do about it

1. Establish whether you cross the threshold. This is a screening exercise against your Scope 3 categories, not a full inventory. It answers whether FLAG targets are required at all.
2. If you do, separate the accounting early. Retrofitting a FLAG split onto an inventory built as a single fossil-oriented total is painful. Build it separated.
3. Treat deforestation as a traceability project. It is a supply chain data problem before it is a reporting one.
4. Check the version. FLAG version 1.1 dates from December 2023, which makes it one of the older documents in the SBTi set. Confirm it has not been superseded before relying on a specific criterion.

How ESGweise helps

We build Scope 3 inventories that separate FLAG from fossil emissions from the outset, run the materiality screening that establishes whether a FLAG target is required, and work through the supply chain traceability that a deforestation commitment implies. See our carbon, ESG strategy and nature and biodiversity services.

If you are a food importer, retailer or diversified group and have never separated FLAG from the rest of Scope 3, talk to us.

Related guides

• Which SBTi sector guidance applies to you?
• SBTi near-term and net-zero targets for corporates
• Decoding Scope 3 emissions
• TNFD explained: nature-related disclosure for GCC companies