What Is the SBTi FLAG Guidance?
In September of 2022, the Science Based Targets initiative, more commonly known by its acronym SBTi, released their latest guidance for companies with intensive land-use activities in their operations. This guidance, called FLAG for “forestry, land and agriculture,” was over two years in development and “provides the world’s first standard method for companies in land-intensive sectors to set science-based targets that include land-based emission reductions and removals.” On March 14th of this year, SBTi followed up this release with a webinar that offered more specific guidance to organizations as to whether, and how, to submit a FLAG target. In this post, we’ll explore SBTi FLAG and how this is important for companies, NGOs and other actors who are looking to quantify, set and monitor land-based climate mitigation goals.
SBTi in a Nutshell
SBTi was spun up in 2015 as a partnership between the United Nations Global Compact, World Resources Institute (WRI) and the World Wide Fund for Nature (WWF) with a goal to provide guidance to companies seeking to set emissions reductions targets that are aligned with the latest climate science. Unlike the GHG Protocol, which provides an emissions accounting and measurement framework to companies, SBTi provides specific guidance focused on how to target and declare corporate emission reductions, and provides a pathway to a 1.5C future. In simple terms, think of the GHG Protocol as the corporate tool for answering the question “how do we measure emissions?” and SBTi as the tool for answering the question “what reduction goals do we want to hit in measuring emissions?” Since launching, over 4,000 companies have made SBTi emissions reductions commitments and over 1,700 of these initiatives have been validated by the program. According to SBTi, companies with validated commitments decarbonize their operations at twice the rate of the global average.
What is FLAG?
Recognizing that land use strategies can contribute up to 37% of the total GHG reductions and removals globally, SBTi decided to author separate and specific guidance to companies whose operations rely heavily on land-based resources. In a big move for the land-use sector, the FLAG guidance covers practices in land use change and management that can reduce GHGs, but also includes natural land-based solutions that can remove GHGs through sequestration and practice change. Additionally, any company submitting a FLAG target must also commit to zero deforestation in their operations and supply chains by 2025. As of this writing, SBTi is piloting and pre-validating this guidance with their second cohort of companies, and in the next few weeks FLAG targets will be required for companies that meet specific criteria, which we’ll talk about here.
Who is impacted by FLAG requirements?
If your organization generates 20% or more of emissions through land-based activities, then you will be required to submit a separate FLAG target statement when you submit your SBTi targets. Companies that operate in the following sectors will be required to submit FLAG targets:
- Forest and paper products
- Agricultural food production
- Livestock food production
- Food and beverage processing
- Food and staples retailing
- Tobacco
To submit your targets, the SBTi structure offers two pathways for target setting. The first is for organizations that have commodity intensive operations that are close to the land. These will largely be companies that operate as producers of beef, dairy, pork, soy, palm oil, leather, wheat, maize, rice, poultry and timber. These operators are also expected to provide regional details of FLAG-based activities based on 26 predefined global regions. The second pathway is targeted to companies that operate on the demand-side, such as forestry, agriculture and livestock, as well as retailers and CPGs.
The timing of when an organization needs to submit FLAG targets depends on where you are with your current SBTi initiatives. If you currently have SBTi targets, and these were submitted before January of 2020, then you have until December 2023 to submit a FLAG target. If your targets were set after January 2020 but before April of this year, then you have until December of 2024 to submit. For those companies yet to submit any SBTi targets by April of this year, then you must submit separate FLAG targets with your first submission.
Why this is interesting
The new FLAG guidance is an important development for two reasons. First, this sends a signal to industry that land-use as a climate solution is important to tackle in conjunction with, but as a separate effort than, other industry Scope 1, 2 and 3 goal-setting work. Companies are now compelled to dig deep into supply chains to identify and understand how they are using land-based services and to quantify the related emissions. This is a critical first step to quantifying and accounting for externalities in their operations. This is welcome news, as externalities have been a thorn in the side of environmental accounting and climate mitigation strategies for years. The zero deforestation commitment amplifies this.
Second, and perhaps most compellingly, unlike the other SBTi guidance, it specifically includes emissions removals as a component to goal setting. Anyone who has been paying attention to carbon and ecosystem markets will understand the complexity and nuance that exists in quantifying land-based emissions removals through soil and forest carbon sequestration, deployment of biochar, increasing silvopasture and other activities. Companies will now be trying to navigate the attendant array of methodologies, frameworks and protocols to measure and meet FLAG targets. Additionally, the evolving MMRV market will have to respond to the increased demands for the data that will support and validate the efficacy of these activities. Reliability, replicability, transparency and availability will be king, and big changes are almost certainly afoot in this space.
While this new guidance might sound overwhelming or even tedious, this motion towards deep accountability in land use and land management is necessary for natural climate solutions to rise to their full potential. The new requirements will force necessary investigation into supply chains and may ultimately yield some of the most consequential initiatives in climate mitigation that we have seen to date. We’re hopeful that this effort will deliver some momentum and bring focus to the powerful impact that nature based solutions bring to the climate table. We’ll be keeping a keen eye on how the market reacts.
To learn more about how companies and other organizations are responding to the new SBTi FLAG guidance, join Carbon A List on April 26, 2023 at 1pm Eastern for an intimate and informational discussion with our team and SMEs from across the climate space. To learn more and to register for the event, visit our event page!
