Understanding FLAG emissions: what companies need to know about the new SBTi requirements

Countless supply chains begin with fields, forests and pastures: the milk in a latte macchiato, the soy in animal feed, the palm oil in shampoo, the leather on a car seat. The emissions linked to this land are substantial. According to the Science Based Targets initiative (SBTi), 22% of global greenhouse gas emissions come from the forest, land and agriculture sector. That puts it right behind energy and industry.

Since May 2023, companies setting science-based targets have had to account for these land-based emissions and, where relevant, set separate FLAG targets. 2026 brought several changes at once: version 1.2 of the SBTi FLAG Guidance in March and the Corporate Net-Zero Standard V2.0 in June. On top of that comes the GHG Protocol’s new Land Sector and Removals Standard, which takes effect on January 1, 2027.

This article explains what FLAG emissions are, which companies need a FLAG target, what the SBTi currently requires, what is changing and what all of this means for suppliers further down the supply chain.

What counts as a FLAG emission

FLAG stands for Forest, Land and Agriculture. In the SBTi’s definition, FLAG covers land-related emissions and removals in a company’s own operations (Scope 1) and in its value chain (Scope 3), accounted for under the GHG Protocol’s land sector accounting. The FLAG Guidance distinguishes three groups:

• Land use change (LUC): carbon released when natural ecosystems are converted, for example through deforestation, forest degradation, the drainage or conversion of wetlands and peatlands, or the conversion of savannas and grasslands. LUC must be included in both Scope 1 and Scope 3.
• Land management: emissions from managing land, for example methane from cattle digestion, emissions from manure and nitrous oxide from fertilizer use.
• Removals and storage: carbon taken out of the atmosphere and stored in soils and plants, for example through improved forest management, agroforestry or increased soil carbon.

Some things fall outside FLAG or sit at its edges. Emissions and removals from bioenergy are not included; the SBTi covers them in a separate bioenergy criterion. Energy used to process agricultural commodities belongs in the regular energy and industry inventory. For fertilizer production and fuel for farm machinery, the guidance allows emissions to be covered either in the FLAG target or in the energy and industry target, as long as nothing is double-counted.

For processors, brands and retailers, most FLAG emissions arise in Scope 3: in the agricultural commodities they buy and on the land where these were grown.

Who needs a FLAG target

The SBTi is a voluntary framework. A FLAG target only becomes mandatory for companies that set or update science-based targets with the SBTi. For them, criterion FLAG-C1 of the guidance defines two triggers:

• Sector: companies in FLAG sectors must set FLAG targets. These include food production (plant-based and animal-based), food and beverage processing, food retail and tobacco. The guidance also lists forest and paper products (forestry, timber, pulp and paper, rubber). For this sector, the SBTi has temporarily suspended the timber and wood fiber pathway in its FLAG tool until a revised version is available.
• Share of emissions: companies in all other sectors need a FLAG target if FLAG emissions make up 20% or more of their total Scope 1, 2 and 3 emissions. The share is calculated on gross emissions, i.e. excluding removals, and includes land use change.

The second trigger is easy to overlook. A cosmetics manufacturer buying palm oil derivatives, a fashion brand sourcing cotton and leather, or a caterer whose purchasing is dominated by meat and dairy can cross the threshold without ever having seen itself as part of the land sector.

Three further points complete the picture:

• Below the threshold, FLAG emissions do not disappear. They must still be included in the regular energy and industry target boundary.
• Small and medium-sized enterprises (SMEs) do not have to set FLAG targets. The SBTi’s separate SME route applies to them.
• Existing targets: since May 1, 2023, companies have had to account for their land-based emissions. Companies with validated targets that now fall under FLAG must add FLAG targets before the end of their five-year review period.

What the SBTi requires

A FLAG target does not replace a company’s other climate targets but sits alongside them: FLAG targets and energy and industry targets, including the underlying accounting, are kept separate, and all non-FLAG emissions still need their own science-based targets. The core requirements of FLAG Guidance V1.2 at a glance:

Two routes to a target

The FLAG sector pathway results in an absolute reduction target covering all of a company’s FLAG emissions, regardless of which commodities they come from.

The commodity pathways set intensity targets for individual commodities, for example emissions per tonne of product. The SBTi provides pathways for 11 commodities: beef, chicken, dairy, leather, maize, palm oil, pork, rice, soy, wheat, and timber and wood fiber. Companies sourcing from certain regions must use regional pathways where they exist, unless the global pathway is more ambitious.

The commitment to deforestation-free supply chains

No FLAG target can be validated without this commitment. Version 1.2 revised the rules:

• Target date: no later than two years after the FLAG target is submitted and no later than December 31, 2030. Earlier versions required 2025; companies that had already committed to 2025 may not move their date beyond December 31, 2028.
• Cutoff date: the SBTi expects a cutoff date in 2020 or earlier. A later cutoff date is only possible if it is at least three years before the first submission of a FLAG target, and the reasons must be disclosed.
• Publication and alignment: the commitment must be published within 12 months of validation. The SBTi explicitly recommends aligning it with the guidance of the Accountability Framework initiative (AFi).

Reductions come first

Removals, such as carbon stored through agroforestry or increased soil carbon, can be counted toward a FLAG target, but only toward that target and not toward energy and industry targets. They must also be reported separately from emissions, in the base year and in every subsequent year. In the SBTi sector pathway, 62% of the mitigation potential comes from emission reductions and 38% from removals. Purchased carbon credits do not count toward a FLAG target at all.

What changes in 2026 and 2027

Three developments are reshaping the framework at the same time.

FLAG Guidance: V1.2 applies, V2 is in progress

Version 1.2 has applied since March 19, 2026. The most visible change is the revised commitment to deforestation-free supply chains. In parallel, the SBTi is revising the FLAG Guidance to align it with the new Corporate Net-Zero Standard V2. A call for evidence ran from June to October 2026, and the SBTi expects the revision to take more than twelve months. Until then, V1.2 remains the current version.

Corporate Net-Zero Standard V2.0

The SBTi published V2.0 of its Corporate Net-Zero Standard on June 11, 2026. It takes effect on February 1, 2027; version 1 remains open for new targets until the end of 2027. For land-based emissions, V2.0 sets two clear rules: FLAG emissions must be accounted for and reported under the GHG Protocol’s Land Sector and Removals Standard, and where companies set FLAG targets, these are set and reported separately from non-FLAG targets.

V2.0 also introduces two company categories. Category A covers large companies worldwide and medium-sized companies in high-income countries. Category B covers all other companies; they must set Scope 1 and Scope 2 targets, while Scope 3 targets are optional for them. How exactly FLAG targets will be integrated into V2.0 is being worked out in the ongoing FLAG revision.

The GHG Protocol’s Land Sector and Removals Standard

The accounting basis is changing too. The GHG Protocol published its Land Sector and Removals (LSR) Standard on January 30, 2026 and, in June 2026, released version 1.1 with minor editorial changes together with the new LSR Guidance. The standard takes effect on January 1, 2027. In practice, reports published in 2028 that cover data for 2027 must follow it. Until it takes effect, the SBTi allows companies to use either the draft or the final standard.

The LSR Standard applies to companies with significant land sector activities in Scope 1 or Scope 3: agricultural producers, buyers and sellers of agricultural products, companies that own or manage larger areas of land, and companies that report removals. Three details matter in practice:

• Reporting removals is optional. Those who do report them, however, need physical traceability, meaning complete documentation of the supply chain (chain of custody) back to the land.
• Farm-specific emission factors also require physical traceability. Without it, companies work with less specific data, for example average values for the country or region a commodity comes from.
• Forests are not yet included. This version does not cover forest land and forest product value chains; they are planned for a later update. Until then, the GHG Protocol asks companies that disclose impacts on forest carbon to be transparent about their methodology.

At a glance: the key dates

Key dates for FLAG targets and land sector accounting, 2022 to 2030

Most milestones fall within just over a year, from the publication of the LSR Standard in January 2026 to the Net-Zero Standard V2.0 taking effect in February 2027. The long-term horizon is further away: under the Corporate Net-Zero Standard, FLAG emissions must fall by at least 72% by 2050 at the latest.

What this means for suppliers

Many companies asked about FLAG do not set FLAG targets themselves. They supply a customer who does. The requirements travel down the supply chain for three reasons:

• Coverage: a FLAG target must cover at least 67% of FLAG emissions in Scope 3. Customers can only achieve this with information about what they buy. The FLAG Guidance states that companies with FLAG emissions in Scope 3 should collect high-quality data from suppliers and other value chain partners.
• Deforestation: every customer with a FLAG target has published, or will publish, a commitment to deforestation-free supply chains with a cutoff date. To meet it, they need to know where the commodities come from. Questions about origin and land conversion are therefore likely to end up with suppliers.
• Traceability: from 2027, the LSR Standard ties farm-specific emission factors and reported removals to physical traceability. Customers who want to use more specific data need a documented chain of custody, and only their suppliers can provide it.

In practice, these data points link directly to the requirements:

A related legal obligation in the EU

In the EU, a binding law with similar logic applies in parallel. The EU Deforestation Regulation (EUDR) applies to large and medium-sized operators and traders from December 30, 2026 and to micro and small enterprises from June 30, 2027. It covers cattle, cocoa, coffee, oil palm, rubber, soy and wood, as well as certain products made from them. The products must not come from land deforested after December 31, 2020. The SBTi framework and the EUDR are separate sets of rules with different scopes and different obligations. Both, however, require the origin of commodities to be known. The European Commission published a simplification review of the EUDR in May 2026, so it is worth checking the Commission’s EUDR page for the latest status.

Practical next steps

Whether a company sets a FLAG target itself or supplies a customer with a FLAG target, the groundwork is similar:

1. Check the threshold. Estimate the share of FLAG emissions in total Scope 1, 2 and 3 emissions, gross and including land use change. Companies in a FLAG sector can skip this step: for them, the target is mandatory anyway.
2. Map your commodities. List your agricultural and wood-based commodities with volumes and origin, and flag which of them are among the 11 commodities with their own SBTi pathway.
3. Clarify traceability. Record which chain of custody model applies to each commodity. This determines how specific your data can be under the LSR Standard.
4. Prepare for reporting year 2027. The LSR Standard applies to data from 2027, and the GHG Protocol advises adapting processes in 2026. The remaining weeks of this year are a good time to align your data collection with it.
5. Separate reductions and removals. Both must be reported separately, in the base year and in every subsequent year. Carbon credits stay outside the FLAG target.
6. Answer customers from one dataset. Requests from different customers often overlap. A single, documented data foundation saves effort and keeps answers consistent.
7. Keep an eye on the revision. The FLAG Guidance is being aligned with the Corporate Net-Zero Standard V2.0, and the timber and wood fiber pathway is still being revised.

If you’d like support along the way: at today.green, we build your carbon footprint with you in line with the GHG Protocol, with software and personal guidance from our experts. That way, you have the numbers ready before the next request arrives.