This text is sponsored by 3Degrees.

The world’s Forest, Land and Agriculture (FLAG) sector is accountable for roughly 25 p.c of internet anthropogenic emissions globally, however it additionally has the potential to soak up a major quantity of present emissions from the ambiance. To handle this hole in emissions accounting and discount, the Science Primarily based Goal initiative (SBTi) launched new FLAG steerage that requires SBTi dedicated corporations to account for his or her FLAG emissions and supply pathways for decarbonization according to the 1.5 levels Celsius state of affairs. As a local weather consultancy, right here is how we’re advising our corporations ought to navigate the quite a few essential items of knowledge contained in SBTi’s new FLAG steerage.

The necessity for FLAG steerage

Firms have a comparatively mature understanding of the necessities for power and process-related emissions reporting. Steering from organizations similar to Greenhouse Fuel Protocol and CDP is well-established, and at the very least primary knowledge sources exist to quantify direct emissions from major sources of emissions. Nevertheless, emissions from the forest, land and agriculture sector have been traditionally calculated at nation, area or world stage (often addressed as LULUCF or AFOLU sector emissions) and never included in company emissions stock. GHG accounting standards and proposals on FLAG emissions have been traditionally poorly addressed and there was no framework on course setting for these emissions. Just a few corporations have been accounting for and reporting these emissions at some stage. 

The rationale for that is lack of information and methodology, leading to round 22 p.c of worldwide emissions from the land sector not being accounted for appropriately in company carbon footprint calculations. Primarily based on SBTi evaluation, mitigation measures within the FLAG sector provide a possible 30 p.c discount of worldwide emissions by 2050 by its carbon sink capability. On this context, each SBTi and GHG Protocol began engaged on accounting and goal setting frameworks for these land sector emissions as a way to enhance the protection of actions and convey the world nearer to reaching the worldwide emissions stage to 1.5C levels.  

The SBTi FLAG undertaking developed steerage and a instrument for easy methods to set a science-based goal for land-related emissions. The GHG Protocol’s Land Sector and Removals Initiative is a complementary undertaking growing steerage on easy methods to account for land-related emissions and removals (each technological and pure) inside a carbon stock.

By offering instruments and readability to the FLAG sector, corporations lastly have the construction they should handle the 22 p.c of worldwide emissions that outcome from this sector, which is crucial to world emissions discount.

Standards to set a FLAG science-based goal

The SBTi FLAG steerage will finally have an effect on all corporations setting a science-based goal. SBTi requires all corporations which have, or plan to have, an SBT to calculate/estimate their FLAG emissions of their direct operations and provide chain according to GHG Protocol’s Land Sector and Removals Steering. Relying on the ultimate share of FLAG emissions of their complete scope 1, 2 and three emissions, corporations can have numerous target-setting necessities and/or expectations for FLAG-related emissions.

SBTi requires corporations that meet one of many following two standards to set a FLAG science-based goal:

For corporations with FLAG-related emissions that fall beneath the 20 p.c threshold, it’s nonetheless really useful to set a FLAG goal, though not a requirement. If the corporate chooses to not set a FLAG goal, FLAG-related emissions nonetheless should be included within the general goal boundary and accounted for, along with power/trade (non-FLAG) targets for an entire GHG stock. On this case, nature-based emissions removals can’t be accounted for in calculating progress in direction of an emissions discount goal. 

Finally, all corporations might want to account for FLAG-related emissions when setting a science-based goal. Relying on the sector and materiality of their FLAG-related emissions, corporations are required to both set a separate FLAG goal or embrace these emissions of their non-FLAG goal. 

Impression on calculating FLAG emissions

Organizations setting FLAG targets shall be launched to the next new classes of emissions accounting: emissions from land use change (LUC); emissions from land administration; and emission sinks (additionally known as carbon removals). Base yr FLAG emissions should be calculated according to GHG Protocol’s Land Sector and Removals Steering, set to be finalized in early 2023. 

A number of challenges related to the FLAG emissions calculation should be addressed by SBTi-committers:

FLAG and non-FLAG targets must be tracked and reported individually. Which means that FLAG-related removals (biogenic removals) can’t be used to compensate for non-FLAG emissions. SBTi developed two pathways for FLAG goal setting.

Carbon removals throughout the FLAG pathways

FLAG pathways are the one means by which corporations can embrace biogenic (nature-based) carbon removals of their goal setting and reporting below SBTi. To be reported, nature-based removals should be within the firm’s provide chain (on-farm/in-forest actions). Removals should be accounted for according to GHG Protocol’s steerage, together with the requirement that an organization might solely embrace biogenic removals in its stock which have ongoing storage and monitoring. Whereas technological removals are included within the GHGP steerage, reporting on this class of removals shall be addressed in separate SBTi steerage. 

Whereas SBTi and GHG Protocol’s land sector steerage don’t enable a company to rely a removing exterior of its worth chain in direction of its near-term targets (no carbon credit), the steerage paperwork do deal with accounting for the sale of carbon credit. 

Within the case the place a carbon removing or discount inside a company’s worth chain is quantified and offered as a carbon credit score, that group — and every other group accounting for the exercise in its worth chain — can not declare such carbon removing or discount. Removing tasks could be accounted for both inside an organization’s provide chain and its FLAG goal or as a carbon credit score by the exterior purchaser, however not each to keep away from double counting. 

Though corporations are required to report gross emission and removals individually, the ultimate FLAG goal is a internet discount goal that features removals. This strategy was adopted as a way to preserve a give attention to decreasing cumulative emissions to the ambiance, whereas individually rising CO2 removals.

Complying with SBTI’S FLAG steerage

Though the SBTi steerage was launched just lately in September, corporations are already feeling its affect because the SBTi-committers have set a timeline of FLAG goal compliance.

In keeping with the compliance of SBTi’s FLAG steerage, there are eight steps that corporations may take to organize for the brand new SBTi necessities on FLAG emissions:

1. Discovery: Get accustomed to the brand new FLAG steerage and its implication in your emissions accounting and reporting. Decide if the brand new steerage is related to your organization and if you have to to replace your targets, if already set.
2. Screening: Carry out a screening train by reviewing your key operational actions related to the land sector as a way to determine and map your FLAG emissions, in addition to their share in your complete scope 1, 2 and three. It will assist determine whether or not you fall in a class of corporations that should set FLAG targets.  
3. Goal modeling: If the corporate is required to replace or set new targets, the following step is to mannequin targets utilizing both the FLAG sector pathway or the commodity depth pathway, or a mixture of each, then determine the required emissions reductions and removals. Observe that the SBTi standards on forward-looking ambition additionally apply to FLAG targets.
4. Goal submission: Put together the goal submission bundle for target-setting, then replace and submit it for validation. Each emissions discount goal and removing goal should be submitted. 
5. Knowledge: Develop a FLAG knowledge assortment course of by figuring out key knowledge to be collected and key stakeholders to be concerned; researching finest databases for use for emissions calculation in your particular case; having a platform or instrument that works finest for knowledge assortment and emissions calculation; and preparing for an annual means of FLAG knowledge assortment and reporting. At the moment GHG Protocol printed solely a draft model for its Land Sector and Removals Steering and is really useful by SBTi, though numerous different steerage paperwork might be used for reference earlier than the brand new steerage is finalized. 
6. Technique: Develop a company-wide technique as a way to advance in direction of your targets by figuring out key levers in emissions reductions and removals.
7. Motion: Act in direction of attaining your targets. Much like non-FLAG targets, FLAG targets have a timeframe between 5 and 10 years, as a way to prioritize quick motion over long-term ambition.   
8. Observe up: Observe the newest variations of the SBTi FLAG steerage. An up to date model of the FLAG steerage will observe after the GHG Protocol Land Sector and Removals Steering is completed, to make sure alignment with company accounting steerage.

Emissions accounting and target-setting frameworks are continuously evolving, and SBTi acknowledges that the present model is just the primary and updates will observe. As such, corporations can have targets in place whereas persevering with to enhance their reporting by collaboration with suppliers. Any changes to accounting strategies ought to be disclosed and applied per the GHG Protocol Company and Worth Chain Requirements. Any affect of these changes on the corporate’s targets ought to be assessed according to SBTi standards and proposals, which name for goal recalculation when main adjustments happen in inventories.

The SBTi FLAG steerage helps present a critically essential framework for organizations to make essential progress in addressing their scope 1, 2, and three emissions. In the event you need assistance assessing the affect of the SBTi FLAG steerage in your firm, or help setting local weather targets usually, please attain out to 3Degrees.