Insights to FLAG as part of organisation’s carbon footprint and target-setting

Many companies measure and lead their climate work based on yearly greenhouse gas (GHG) calculations. The GHG calculations usually comprehensively include the industrial and energy related emissions but leave out all – or major parts of – the land-based emissions from primary production and the biogenic carbon cycle (FLAG emissions).

Land-based emissions have been challenging to include as the nature-based environments and biogenic carbon cycles are complex and applicable guidance and data sources to estimate such emissions did not previously exist.

Given that land-based emissions are estimated to represent almost one quarter of the global GHG emissions, recent developments in both data sources and calculations standards are luckily enabling more comprehensive carbon footprint calculations.

New guidance helps companies account for their land-based emissions

In April 2023, the Science-Based Targets initiative (SBTi) launched the world’s first framework for setting targets for land-based emissions. The Forest, Land and Agriculture (FLAG) framework and guidance has been developed jointly with the Greenhouse Gas Protocol that provides the most widely followed GHG calculation guidance for corporate use. The SBTi now requires that companies setting science-based targets and having significant land-based emissions include their land-based emissions in their target setting. This requirement applies to companies in land-intensive sectors, for example forestry and food and beverage production and processing, and companies whose FLAG emissions are at least 20% of their total GHG emissions.

Currently, the GHG Protocol Land Sector and Removals guidance is still a draft version. The release of the final version has been postponed and is currently expected in late 2024. The draft guidance has many open questions and leaves a lot of room for interpretation. Especially the forestry related guidance is rough and seems to focus only on short rotation, single tree species plantation forestry that is significant in many other parts of the world but not in the Nordic countries. This forces companies using Nordic wood-based materials or products either to wait for the final guidance or to carry out calculations based on unfitting guidance.

Many organisations, as part of their overall Science-Based Targets setting process, have had to calculate their FLAG emissions quite early on after the launch of the new requirements. During 2023, Gaia has supported several pioneering companies with their FLAG calculations, not only to assess whether a separate FLAG target is required, but also to understand the magnitude of FLAG emissions compared to other emissions sources. One of these clients is Anora, a major Nordic beverage company.

“Calculating FLAG targets as part of our science-based emission reduction targets was an additional exercise, but a much needed one. We operate in business that uses raw materials deriving from agriculture – grapes for wine and barley for spirit-based drinks. To be able to assess our real impact to the global emissions in our comprehensive value chain, the impacts to land use change is crucial and needs to be validated“, says Anora’s Communications and Sustainability Director Petra Gräsbeck.

Accounting for land-based emission differs from other sources of emissions

Differing from the conventional industry and energy related GHG accounting, FLAG calculation is much more complex. FLAG emissions are caused both by land use change and land management. Land use change refers to the changes in carbon stocks due to clearing new areas for human use, e.g., transforming forest, wetland or grassland to agricultural production or tree plantations. Land management includes emissions due to e.g., use of fertilisers and changes in carbon stocks of cultivated soil and biomass.

Furthermore, as conventional GHG accounting includes mainly emissions, land-based calculations also include removals. Removals refer to capturing carbon from the atmosphere to biogenic or technological carbon sinks and storages. A significant increase in carbon removals is considered necessary in reaching the global climate targets and limiting global warming to 1,5˚C. In the SBT context, removals can be used as means to reaching the company’s FLAG emission reduction targets, but the same does not apply to the industry and energy related emission targets.

The significance of FLAG emissions naturally differs among industries and depending on the role the company plays in the value chain. For many companies, that do not directly produce land-based products, all relevant FLAG emissions are related to the purchased goods and services category in Scope 3. For others, the scope is much broader.

In Anora’s case, for example, the cultivation of barley used for spirits production and viticulture for production of wine grapes, is a significant source of land-based emissions.

Key learnings for companies that need to calculate their FLAG emissions

One interesting finding based on Gaia’s recent projects is that a company’s industry and energy emissions (i.e., total Scope 1, 2 and 3 emissions excluding land-based emissions) or even the volume of production do not necessarily correlate with the scale of FLAG emissions. A far better indication is the volume of produced or purchased agricultural or wood-based commodities and their type and origin. Typically, commodities linked to deforestation and/or animal production result in larger FLAG emissions. FLAG emissions are significantly affected by the diverse agricultural and forestry practices, the local climate conditions in production areas, the existence of carbon rich environments (for example tropical peat lands), areal land use pressures in different countries and historical land use change.

Supply chains from agricultural or forestry production to the processing facilities and further downstream can be long and complex. Thus, getting primary data at plantation level, where actual land use change occurs, and land management practices are used, is very difficult. In practice, many organisations need to rely on secondary data from statistics and life-cycle databases. Use of such secondary data results in an adequate estimate of the emissions, but it gives very little possibilities for the companies to influence the actual emissions. For example, when using statistical data on land use change for a certain location, data may be a few years old, and it may also not distinguish between individual agricultural products and the specific land-based practices and emissions related to its farming. Without primary data from the supply chain, it is difficult to find the most effective actions to reduce FLAG emissions. Furthermore, if a company makes efforts to reduce emissions, the effects may not be seen in the GHG calculations at all or with a few years delay.

Additionally, the draft FLAG calculation guidance requires farm level traceability, monitoring and data for accounting of biogenic carbon removals.Such data requires more transparent global value chains and finding solutions to data ownership and accessibility questions. For example, farming in Finland already produces data in digital format that could be used in FLAG accounting, but companies don’t have access to this data. Companies that now have a hard time collecting FLAG data may comfort themselves in the knowledge that they are not alone, and the field of data management and applications are developing rapidly.

Understanding FLAG emissions enables far greater impact in climate work

Integrating land-based emissions to the corporate GHG accounting enables companies to move from partial optimization to the overall optimization of emission reduction actions. This is in many ways a huge improvement that undoubtedly will bring our climate battle closer to victory. However, more precise emissions and removals accounting is required to gain understanding of the actions that have the largest climate impact. This requires developing global supply chain engagement, data sharing, and determined joint efforts from all parties in the value chain. All the companies that now struggle with the hard, or sometimes even seemingly impossible task of reaching the FLAG emission reduction targets, can consider themselves as part of the crucial transformation for sustainability, that in the long run is the only possible way.

Carbon handprint — what benefits can companies achieve? | Gaia.fi
Assessing nature-related business risks and opportunities – how to get started with the TNFD recommendations? | Gaia.fi