FLAG Standard 2026: Definition, Reporting, and SBTi Targets

FLAG emissions result from agriculture, land use, and land-use changes. For companies with agricultural raw materials in their value chain, these emissions often account for a significant portion of their corporate carbon footprint. At the same time, they are among the emissions that are most difficult to attribute reliably, because data on volume, origin, and management practices are often spread across multiple stages of the supply chain.

Updated guidelines have been in effect since 2026: The GHG Protocol has published Version 1.1 of the Land Sector and Removals Standard, along with the accompanying guidance. The SBTi has updated its FLAG Guidance to Version 1.2 and released the Corporate Net-Zero Standard Version 2.0. This article explains how FLAG emissions are defined, accounted for, and incorporated into climate targets and reporting processes.

Important Note: Version 1.1 of the GHG Protocol Land Sector and Removals Standard applies to agriculture and CO2 removal technologies. Forestry is explicitly not yet covered in this first version. The standard was published on June 30, 2026, and is to be applied starting January 1, 2027.

What are FLAG emissions?

FLAG stands for Forest, Land, and Agriculture. In the context of the SBTi, the term encompasses emissions and removals from land-based activities. These primarily include land-use changes, ongoing agricultural practices, and the storage of carbon in soils and biomass.

FLAG is not an additional category alongside Scope 1, Scope 2, and Scope 3. Rather, it is a country-specific subset within the existing reporting boundaries:

Own agricultural land and livestock are generally classified as Scope 1.
Purchased agricultural commodities typically fall under Scope 3, Category 1, “Purchased goods and services.”
Transportation, processing, refrigeration, and packaging remain within their respective Scope categories but are not automatically classified as FLAG emissions.

The key factor is the source. Nitrous oxide from the application of nitrogen fertilizer in the field is a FLAG emission. Emissions from the industrial production of that same fertilizer, on the other hand, fall under the energy and industry sector. Similarly, diesel for agricultural machinery, electricity for cold storage facilities, and emissions from further processing must be accounted for outside the scope of the FLAG targets.

What emission sources are included in FLAG?

A robust FLAG financial statement distinguishes between three areas because they follow different accounting methods and reporting requirements.

1. Land-Use Change

Land Use Change, or LUC for short, refers to the conversion of an area—for example, from natural grassland to cropland. This process can release large amounts of carbon from biomass and soils. The accounting depends on whether a specific area and its land-use history are known, or whether statistical regional land-use change rates must be used.

Direct data provides greater control. If a company can demonstrate that a raw material comes from land already used for agriculture, this fact can be reflected in the data. With average data, on the other hand, the regional conversion risk is distributed across the total quantity of raw materials procured. The result is acceptable, but less precise and hardly responds to improvements made by individual suppliers.

2. Land Management

Land management encompasses the annually recurring emissions and carbon changes resulting from land use. Typical sources include methane from ruminant digestion and rice cultivation, nitrous oxide from mineral and organic fertilizers, emissions from livestock manure management, and changes in soil organic carbon.

These emissions can be influenced by specific measures, such as adjusted fertilization, feeding strategies, improved manure management, cover crops, or reduced tillage. Whether the impact is reflected in the company’s financial statements, however, depends on whether supplier-specific activity data is available.

3. CO2 Removal

Land areas can sequester CO2, for example through agroforestry systems, humus formation, or the restoration of degraded land. Such removals may only be accounted for if they are verifiably quantified, continuously monitored, and reported separately from gross emissions. They are not a blanket offset.

The key challenge is permanence. If stored carbon is later released again, this must be taken into account in the carbon balance. Companies therefore need a monitoring system that goes beyond a one-time model assumption and accounts for potential reversals.

Who needs an SBTi-FLAG target?

The SBTi requires a separate FLAG target if a company is classified in a FLAG-relevant sector or if FLAG emissions account for at least 20 percent of its total Scope 1, Scope 2, and Scope 3 emissions. This applies in particular to companies in agriculture, food production and processing, food retail, and the forestry and paper value chain, in accordance with the applicable SBTi criteria.

The 20-percent test applies across all sectors. Textile companies with a high percentage of cotton, furniture manufacturers using wood-based materials, and consumer goods companies using cocoa, coffee, palm oil, natural rubber, or animal-based raw materials may also exceed the threshold.

Best Practice: Assess FLAG relevance early on using a screening assessment. Quantities by agricultural commodity, sourcing region, and reliable secondary factors are initially sufficient to evaluate key raw materials and the 20 percent threshold. Primary data should then be collected on a risk-based basis for the largest sources of emissions.

An SBTi-FLAG target is a voluntary climate target requirement and not a statutory reporting obligation. This should be distinguished from greenhouse gas emissions disclosures under the CSRD and ESRS, as well as the due diligence and verification requirements of the EU Deforestation Regulation. While the data sets overlap, their legal bases, scopes of application, and deadlines differ. The overview of ESG frameworks illustrates how voluntary frameworks and legal obligations relate to one another.

What has changed in 2026?

Basis	Status	Meaning
GHG Protocol LSR Standard	Version 1.1, June 2026	Mandatory accounting requirements for agriculture and CO2 removal technologies; effective as of January 1, 2027.
GHG Protocol LSR Guidance	Version 1.0, June 2026	Calculation details, equations, examples, and case studies on the implementation of the standard.
SBTi FLAG Guidance	Version 1.2, March 2026	Updated requirements and methods for short- and long-term FLAG objectives.
SBTi Corporate Net-Zero Standard	Version 2.0, June 2026	New cross-cutting standard; the further development of the FLAG Standard Version 2 is not yet complete.

For companies, this entails a two-step approach: The accounting framework should already be aligned with the GHG Protocol LSR standard. At the same time, target parameters and transition rules must be reviewed against the most current SBTi documentation. Since Version 2 of the FLAG Standard is still under development, activity data, emission factors, assumptions, and methods should be stored with version information. The partnership between ISO and the GHG Protocol provides the background for the harmonization of these frameworks; our webinar “Successfully Implementing SBTi 2.0” delves deeper into the objectives.

How Companies Calculate FLAG Emissions

The specific calculation varies depending on the raw material and emission source. However, the basic process remains the same:

Define the scope of the assessment: The consolidation approach, scopes, companies, locations, and stages of value creation must align with the rest of the corporate carbon footprint.
Prioritizing raw materials: Purchase volume, country of origin, emissions intensity, and deforestation risk indicate where more detailed data is needed.
Collecting activity data: The information required includes, among other things, mass, yield, area, livestock population, amount of fertilizer, farming practices, soil type, and geographic origin.
Calculate land-use changes separately: Site-specific data takes precedence. If such data is missing, appropriate regional secondary data must be used in a transparent manner.
Accounting for land management: Activity data is linked to appropriate emission factors or models. Units, greenhouse gases, and global warming potentials must be consistent.
Report removals separately: Only verified and monitored removals are reported. Gross emissions, removals, and potential reversals remain clearly distinguishable.
Documenting data quality: For each value, the source, reporting year, geographic representativeness, method, responsibility, and uncertainty are recorded.

A simplified calculation example: If a company procures 10,000 metric tons of an agricultural raw material and initially applies a regional factor of 1.8 metric tons of CO2e per metric ton, this results in a screening value of 18,000 metric tons of CO2e. This value is suitable for a materiality analysis. For management purposes, it must then be broken down into land-use change, land management, and other process components not covered by FLAG. Only then does it become clear which measures actually have an impact on sourcing and management.

What level of data quality is required?

FLAG assessments are not improved simply by using more accurate emission factors. The key is ensuring a good fit between activity data, geographic context, and methodology. Companies should categorize data into three levels:

Primary data comes from the producer’s operation or from verified supplier systems. It allows for area- and measure-specific conclusions but requires the greatest amount of data collection effort.
Secondary data are based on recognized regional, national, or commodity-specific data sources. They are suitable for screening and filling data gaps, but must be representative in terms of time and geography.
Estimates and proxies fill in the remaining gaps. Assumptions, uncertainties, and plans to replace them with better data must be documented.

A sensible transition path does not begin with a demand for complete primary data. It begins with a materiality analysis. First, the raw materials and sourcing regions with the largest contribution are addressed. Suppliers are then specifically approached based on land origin, land management practices, and supporting documentation. This improves the environmental performance in areas where the additional effort yields the greatest impact on sustainability.

Integrating FLAG and ESRS Effectively

The ESRS does not include a standalone metric labeled “FLAG emissions.” Land-related emissions are incorporated into the respective Scope disclosures. Biogenic emissions and greenhouse gas removals are treated separately in accordance with the applicable ESRS requirements. For reporting purposes, it must therefore be possible to reconcile the data from the FLAG database with the reported Scope figures. The requirements for supporting documentation as part of the external audit are described in the Sustainability Reporting Audit.

The Most Common Mistakes in FLAG Projects

FLAG is treated as an additional scope. This results in double counting and unclear reconciliations with the corporate carbon footprint.
Land-use change and land management are grouped under a single factor. As a result, traceability and the ability to steer measures are lost.
Global averages are used despite the known region of origin. This unnecessarily reduces the data’s representativeness.
Emissions from fertilizer production, processing, or transportation are counted toward the FLAG target, even though they fall under the energy and industry target.
Removals are offset directly against gross emissions. As a result, there is a lack of transparency regarding reductions, removals, and potential reversals.
Supplier data is imported without an audit trail. Missing source, period, unit, or method version will make the values impossible to reproduce later.
The assessment is organized as a one-time reporting project. Without a repeatable data process, progress and the achievement of goals cannot be reliably measured.

Frequently Asked Questions About FLAG Issuances

Are FLAG emissions the same as Scope 3 emissions?

No. FLAG is a country-specific subset within several scopes. Purchased agricultural commodities are typically classified under Scope 3, while emissions from a company’s own agricultural activities are classified under Scope 1.

Does the new GHG Protocol standard also apply to forestry?

Not yet complete. Version 1.1 of the Land Sector and Removals Standard applies to agriculture and CO2 removal technologies. Forestry will be addressed in future versions.

When does the Land Sector and Removals Standard take effect?

The GHG Protocol LSR Standard, Version 1.1, was published on June 30, 2026, and is effective as of January 1, 2027.

Which companies need a FLAG goal?

Companies in FLAG-relevant sectors, as well as companies whose FLAG emissions account for at least 20 percent of their total Scope 1, Scope 2, and Scope 3 emissions, must set a separate FLAG target in accordance with the SBTi criteria.

What is the minimum amount of data required?

For a screening, information on raw material quantities, sourcing regions, and relevant secondary factors is sufficient. For robust management, additional data is required, including land origin, land-use history, yields, inputs, livestock and farming data, as well as monitoring data on withdrawals.

Managing FLAG Emissions Using a Reliable Data Set

The biggest challenge with FLAG emissions is not the final calculation formula, but rather linking raw material quantities, origin, land area, management practices, and method version. Companies therefore need a repeatable process based on decentralized data collection that makes quality levels transparent and allows each metric to be traced back to its source.

FramesCube Corporate Carbon Footprint supports the structured collection and calculation of Scope 1, Scope 2, and Scope 3 emissions, documents sources and calculation steps, and provides the results for carbon management and reporting. Learn more about FramesCube Corporate Carbon Footprint.

Would you like to find out whether your company needs a FLAG target or how you can improve your data foundation? Contact us for a no-obligation consultation.

This article provides a technical overview as of September 2026 and is not a substitute for a legal review of a specific case.