.svg)
.jpeg)
SBTi FLAG: The new sector-specific guide from the Science Based Targets initiative
The Science Based Targets initiative (SBTi) was launched in 2015 through a partnership between CDP, the United Nations Global Compact, the World Resources Institute (WRI), and the World Wide Fund for Nature (WWF). The SBTi is based on established scientific approaches and data— Science Based —to evaluate the voluntary targets set by companies to reduce their greenhouse gas (GHG) emissions.
A company's GHG reduction target is considered "science-based" if it is scientifically credible in terms of meeting the goals of the Paris Agreement, which aims to limit global warming to well below 2°C above pre-industrial levels and to pursue efforts to limit warming to 1.5°C.
The Science Based Targets initiative determines whether the voluntary targets set by companies are sufficiently ambitious and realistic to contribute to the climate goals established by the Paris Agreement. As such, it provides companies with a clear path to follow to reduce their emissions while adopting a sustainable business model.
With this in mind, the SBTi is working on developing new sector-specific methodologies to support all companies in their decarbonization journey. Forest, Land and Agriculture (FLAG), the latest sector-specific methodology developed by the SBTi, clarifies, expands, and strengthens the SBTi framework and requirements for stakeholders with food, agriculture, and forestry activities in their value chain.
Which companies are affected by the new SBTi FLAG methodology?
The SBTi FLAG methodology is aimed at two types of stakeholders defined by the SBTi.
First, companies with operations based on forest, land, and agricultural use must set a FLAG target:
- Forest and paper products
- Food production - Agricultural production
- Food production - Animal source
- Food and beverage processing
- Food retail
- Tobacco
The second type of company concerned includes those in other sectors but that have at least 20% of their total scope 1, 2, and 3 emissions linked to forest, land, and agricultural use. For example, a company in the retail sector where at least 20% of total emissions are due to land use must set a FLAG target to reduce the relevant emissions.
When must the affected companies apply the SBTi FLAG methodology?
The deadlines for implementing an SBTi FLAG target differ depending on when companies committed to the Science Based Targets initiative:
- Companies that set their SBTi target before January 2020 must set a FLAG target by December 31, 2023.
- Companies that set their SBTi target after January 2020 and before April 30, 2023, must add a FLAG target before December 31, 2024
- For companies setting their first SBTi target after April 30, 2023, the FLAG target will be mandatory upon submission of their SBTi targets
Which activities are covered by the scope of the SBTi FLAG methodology?
The SBTi FLAG scope covers three areas: Land Use Change (LUC), land management and operations (non-LUC), and sequestration.
1. Land Use Change (LUC)
This first category includes CO2 emissions related to land-use changes. This type of emission is rarely included in carbon footprints due to the limited number of affected stakeholders and the relative difficulty of measuring them; however, these emissions should not be ignored. For example, replacing wetlands with agricultural fields has a dual environmental impact: (1) the destruction of wetlands releases the CO2 that was stored there, and (2) it prevents future CO2 sequestration by that same natural environment.
The FLAG methodology proposes finally accounting for LUC activities and covers the following:
- deforestation
- forest degradation including conversion to plantations
- conversion of wetlands coastal areas, mangroves, seagrass beds, and marshes
- conversion, draining and burning of peatlands
- conversion of natural savannas and grasslands
In addition to reducing direct and indirect FLAG-related emissions, the SBTi requires companies aligned with the SBTi FLAG methodology to comply with a no-deforestation commitment starting in 2025.
2. Agriculture and land management (Non-FLAG)
Whether for specific practices, the use of machinery, or fertilizer production, the second category encompasses all emissions related to agricultural production, including livestock.
The following activities fall within the scope of the FLAG sector:
- Emissions from enteric fermentation
- Flooded lands for lowland rice
- Manure management
- Incineration of agricultural waste
- The use offertilizer
- The crop residues
- The production offertilizer
- The machinery used on the farm
- The transport of biomass
3. Carbon removal and sequestration
This final category is the major methodological innovation of the SBTi. The new scope allows for accounting for carbon emissions sequestered through the introduction of responsible farming practices on cultivated land. The main categories of agricultural practices identified by the SBTi are:
- Forest restoration and silvopasture.
- Improving forest management, which includes optimizing rotation periods and biomass stocks, reduced-impact logging, improved plantations, and forest fire management.
- Agroforestry, which enables carbon sequestration by integrating trees into agricultural land and pastures.
- Soil organic carbon enrichment, which includes erosion control, plants with deeper roots, reduced tillage, cover cropping, restoration of degraded soils, and biochar amendments.
The SBTi notes, however, that carbon sequestered through these various agricultural practices is only accounted for if these actions are carried out on land within the value chain. Carbon offsetting mechanisms, which by definition take place outside the value chain, remain excluded from this new methodology.
Key principles of the SBTi FLAG methodology
From now on, companies subject to the SBTi FLAG methodology will need to have two separate SBT targets.
- A first "standard" SBT target, known as "Energy/Industry," must cover all non-land-related greenhouse gas emissions. For this target, the general SBTi methodology will apply, and it must encompass (among other things) all direct and indirect GHG emissions related to electricity consumption, fossil fuels, and transport.
- The second "specific" target, known as "SBTi FLAG," must cover all land-related emissions based on the new SBTi FLAG methodology. For this second target, and depending on the company's activities, two calculation methods will be possible: a "commodity-based" approach for intensity, and a "sector-based" approach for absolute contraction.
For stakeholders across the supply chain, the SBTi proposes setting absolute reduction targets for all FLAG sub-sectors. This methodology simplifies trajectory setting for large groups by sparing them from having to create differentiated trajectories for each type of activity — forestry, agriculture, livestock, food service, etc.
For supply-side actors with agricultural and/or forestry activities within their direct scope (Scope 1), upstream in the value chain, the SBTi has identified 11 commodities with specific trajectories that can be applied across 26 global regions. This methodology allows for the setting of decarbonization targets tailored to the emission profiles of each commodity within each region. For instance, a kilogram of beef is not produced under the same conditions in France as it is in Brazil. Mechanically, this differentiated methodology encourages suppliers to avoid relocating their operations and instead improve their local practices in alignment with their specific decarbonization trajectory.
How can you effectively use the SBTi FLAG methodology within your company?
Admittedly, the SBTi FLAG methodology is more rigorous and demanding than the general methodology for actors with agricultural and/or forestry activities in their direct scope (Scope 1) or value chain (upstream/downstream Scope 3). However, committing to an SBTi FLAG trajectory will allow these actors to better showcase their virtuous practices and accelerate their organization's transition toward a sustainable and high-performing model for the future.
SBTi FLAG is, of course, only one step in a company's journey toward achieving its climate goals. This new sector-specific methodology should complement a suite of tools and best practices addressing various environmental factors. The carbon accounting of any company wishing to define targets according to SBTi FLAG will necessarily need to be reviewed in light of the new requirements introduced by the methodology.
To reach these new, ambitious targets in compliance with SBTi FLAG, the company's transition plan must also be updated, its robustness reassessed (for example, using the ACT methodology), its financing renegotiated, and its operational deployment rescheduled.
The new SBTi FLAG methodology suggests a strengthening of communication and collaboration among all stakeholders in the value chain. Synergies will be key to enabling ecosystem regeneration, land reforestation, and the deployment of modern, sustainable agricultural practices. The burden of the transition must not fall solely on producers, who typically supply multiple sectors with complex value chains. As a company with agricultural and/or forestry activities within its indirect scope, it is essential to engage in dialogue with your suppliers, your peers, and stakeholders in other sectors whose activities rely on sourcing resources from the same farms.
At Tennaxia, we have been preparing for months to help our clients integrate the SBTi FLAG methodology with confidence. We are working on this topic with Sodexo, one of the 18 multinationals that participated in the SBTi FLAG pilot phase, and which will likely be one of the first companies to have an SBT-certified FLAG target.
Would you like to get ahead and build your SBTi FLAG target? Let's talk!
If you would like to deepen your knowledge of the subject and find concrete solutions to decarbonize your agri-food business, download our white paper "Carbon challenges in the agri-food sector: Reducing your emissions and capturing those of others".
Source: https://sciencebasedtargets.org/sectors/forest-land-and-agriculture