FLAG Emissions Inventory

For a food manufacturer, a cotton-based textile brand or a paper company, the largest item in the carbon footprint often comes not from a chimney but from fields, pastures and forests. These are FLAG (Forest, Land and Agriculture) emissions. The SBTi asks companies with significant FLAG emissions to set a FLAG target separate from their energy and industry target, and the GHG Protocol has set out how to account for these emissions in a new standard that takes effect in 2027. Alalëa calculates FLAG inventories, builds SBTi FLAG targets and integrates the work with your corporate carbon inventory in a single data infrastructure. For EU and global buyers sourcing agricultural and forest-based materials from Türkiye, the same work answers the origin and land use questions now reaching suppliers.

What FLAG emissions are and why they are treated separately

According to the SBTi FLAG Guidance, the forest, land and agriculture sector accounts for about 22 percent of net anthropogenic greenhouse gas emissions (about 13 GtCO2e per year), roughly half from agriculture and half from land use, land use change and forestry. These emissions differ from fossil emissions in two fundamental ways:

• The biogenic carbon cycle: Land can be both a source of emissions and a carbon sink. Soils and trees store carbon, and land conversion releases it.
• They are embedded in the value chain: Most of a food company's FLAG emissions occur not at its own sites but on the farms that produce its raw materials, including those farms' past land conversion. In most cases they sit in Scope 3, Category 1.

FLAG emissions fall into three main groups:

The SBTi does not allow these emissions to be blended into the same target as energy and industry emissions. Under criterion FLAG-C5 of the guidance, FLAG and non-FLAG targets and their accounting must be kept separate.

Which companies must set a FLAG target?

Under criterion FLAG-C1 of FLAG Guidance 1.2, companies that meet either of two conditions must set a FLAG target.

1. Sectors designated by the SBTi as FLAG sectors:

• Forest and paper products: forestry, timber, pulp and paper, rubber
• Food production: agricultural production
• Food production: animal source production
• Food and beverage processing
• Food and staples retailing
• Tobacco

2. Other companies whose FLAG emissions reach the 20 percent threshold: Companies whose FLAG-related emissions reach 20 percent of total Scope 1, 2 and 3 emissions must set a FLAG target, whatever their sector. Two details matter. First, the threshold is 20 percent of total emissions, not of Scope 3. Second, it is calculated on gross emissions, so removals are not deducted, and it must include land use change emissions.

The guidance also notes that land-intensive activities can be significant, mostly in Scope 3 Category 1, in the inventories of retail, packaging, hotels and restaurants, textiles (yarn, weaving, apparel), footwear and luxury goods, household and personal care products, tyres, and building products and construction materials.

Exceptions and intermediate cases:

• SMEs: Companies meeting the SBTi SME definition do not need to set a FLAG target.
• Low FLAG share: A company in a FLAG sector whose land and agriculture-related emissions are below 5 percent does not have to set a FLAG target, but must include these emissions in its overall target boundary.
• Below the threshold: Setting a FLAG target is recommended. A company that does not set one calculates its FLAG emissions separately and includes them in its non-FLAG target; in that case removals cannot be used in the target.
• Existing targets: Companies with a target approved without a FLAG target must set one no later than their mandatory five-year review submission. This change came with the 1.2 update in March 2026 (SBTi announcement).

The GHG Protocol Land Sector and Removals Standard

The accounting basis for a FLAG target is the GHG Protocol Land Sector and Removals Standard (LSRS). Version 1.0 was published on 30 January 2026, and version 1.1, with corrections that do not change its substance, followed on 30 June 2026. The standard takes effect on 1 January 2027. This version applies to agriculture and CO2 removal technologies; forestry is out of scope and left to a future version.

Key rules of the standard:

• Who applies it? Companies reporting a GHG Protocol-compliant corporate inventory with significant land sector activities in their operations or value chain. A company with land sector activities that does not apply the standard must explain and justify why those activities are not significant.
• Traceability and spatial boundary: Which land is counted in Scope 3 depends on the company's traceability level. Without traceability, all global land the product could come from is considered; as physical traceability is established down to sourcing region, land management unit or harvest area, the boundary narrows.
• Land use change assessment period: For annual crops and crops with a cultivation cycle of 20 years or less, the assessment period is the 20 years before and including the reporting year. Emissions are allocated over this period by linear amortisation.
• Direct and statistical LUC: The SBTi FLAG Guidance requires LUC emissions to be calculated using either the direct (dLUC) or the statistical (sLUC) method, consistent with the LSRS.
• Removals: Optional; if included, safeguards such as data quality, traceability and monitoring of storage apply. The SBTi also requires emissions and removals to be reported separately, both in the base year and in annual reporting.

According to the SBTi FLAG Guidance, companies may use the draft guidance published in 2022 until the LSRS takes effect on 1 January 2027. Building work that starts today directly on the new standard avoids recalculation in 2027. CDP has also announced plans to align its questionnaire with the LSRS in 2027, so this calculation will be needed for disclosure programmes as well as for SBTi; see our CDP reporting service.

Key criteria of an SBTi FLAG target

The commodity pathways cover beef, chicken, dairy, leather, maize, palm oil, pork, rice, soy, wheat, and timber and wood fibre. Paper and forest products companies, and companies whose timber and wood fibre emissions exceed 10 percent of their FLAG emissions, must use the timber and wood fibre commodity pathway.

The guidance also asks companies to focus primarily on emission reductions: 62 percent of the mitigation potential in the FLAG sector pathway comes from emission reductions, and removals should not be used to lower the level of reduction.

No-deforestation commitment and the EUDR

A company setting a FLAG target must publish a no-deforestation commitment covering its main deforestation-linked commodities, and publish how the commitment will be implemented within 12 months of target approval. Under Annex A of the guidance, all commodities the company produces directly are covered; among purchased commodities, cattle, cocoa, coffee, palm oil, rubber, soy and timber are included once they exceed 1 percent of purchased FLAG commodity volume.

These seven commodities also appear in the EU Deforestation Regulation (EUDR). The FLAG Guidance states clearly, however, that the SBTi no-deforestation criterion is separate from legal obligations under the EUDR. In practice both rely on the same origin and traceability data, and collecting it correctly once serves both.

Which sectors in Türkiye are affected?

Given Türkiye's export profile, FLAG is closer to home than many companies expect:

• Food and beverage: Food and beverage processing is a FLAG sector. Animal feed and livestock emissions stand out in dairy and meat, wheat in bakery products, and soy, palm oil and cocoa in oils and confectionery. See the food and beverage boundary guide.
• Agriculture and agricultural processing: Agricultural production is a FLAG sector; fertiliser use, irrigation and land management can fall in Scope 1.
• Textiles and apparel: Agricultural fibres and materials such as cotton, wool and leather can make up a large share of Scope 3 Category 1. Textiles is not a FLAG sector, but a FLAG target is required if FLAG emissions reach 20 percent of the total, and the guidance lists textiles among sectors where land-intensive activities can be significant. See the textile and apparel boundary guide.
• Paper and packaging: Pulp and paper is a FLAG sector; for packaging producers, wood fibre emissions can affect the threshold.
• Retail: Food and staples retailing is a FLAG sector, and the agricultural raw materials in products sold are the centre of gravity of the inventory. See the retail and consumer goods boundary guide.

Even if these companies do not set SBTi targets themselves, they should expect more requests for origin, land use change and deforestation information from European and global customers that have targets.

How we run a FLAG project

1. Applicability assessment: We establish whether the company is in a FLAG sector and calculate the share of FLAG emissions in total emissions. Since companies below the threshold must still calculate FLAG emissions separately, this step is valuable in every case.
2. Commodity map: We map purchased agricultural and forest-based commodities by volume, country of origin and supplier, and identify commodities carrying deforestation risk using the 1 percent and 5 percent thresholds in Annex A.
3. Traceability level: For each commodity we document current traceability (none, country, region, land management unit); the LSRS spatial boundary follows from this.
4. Calculation: We calculate LUC emissions with the dLUC or sLUC method and land management emissions including CH4 and N2O, keep FLAG and non-FLAG emissions separate and report removals separately.
5. Target modelling: We compare the sector pathway with commodity pathways and show how the 95 percent and 67 percent coverage levels will be met.
6. No-deforestation commitment: We set the cut-off date, target date and covered commodities and draft the document to be published.
7. Submission and integration with the corporate inventory: The FLAG target is submitted together with the non-FLAG target through our SBTi target setting process, and the FLAG inventory is updated every year as part of your corporate carbon inventory.

Data we will ask for

• Annual volumes of purchased agricultural and forest-based raw materials (tonnes, m³)
• Supplier and known country or region of origin for each raw material
• Certification and traceability records where available, including chain of custody documents
• If you farm or keep livestock on your own land: land area, crops, livestock numbers, fertiliser and feed use
• Your current corporate inventory and, if you have one, your SBTi target and its review date

What determines the scope of the work

Timeline and scope vary widely between companies. The decisive factors are the number and diversity of commodities, the number of countries of origin, how much traceability data suppliers can provide, whether the company produces on its own land, and whether a corporate inventory already exists. Data collection for a retailer using many commodities with weak traceability takes far more effort than for a processor relying on a single main raw material.

Why Alalëa

Alalëa's founder, Göker Avcı, is an SBTi Certified Expert. We handle the FLAG target together with the SBTi's general criteria, the non-FLAG target and the corporate inventory, because if the split between FLAG and non-FLAG emissions is wrong, both targets will be questioned. We share the foundations of our approach openly: see Scope 3 categories 1 to 15, why SBTi targets are withdrawn and current points in the SBTi process.

To assess your FLAG obligation or update your existing inventory to the LSRS, get in touch with us.