FLAG and land use: Rapid adjustment to a new carbon accounting opportunity

June 22, 2023

Land use is emerging as a key lever for companies fighting climate change.

Some of the most important mitigation measures in the fight against climate change involve companies in the forest, land, and agriculture (FLAG) sectors. According to the Climate Change 2022 Report released by the IPPC, these sectors could provide 20% to 30% of the mitigation required to limit the most catastrophic impacts of climate change.

Companies in agriculture, forestry, and other land-heavy sectors wanting to reduce their GHG emissions – particularly those with emission reduction targets – have a tremendous opportunity to leverage land use in their fight against climate change. However, these opportunities are not without their challenges.

Understanding the complexities of FLAG and land use is essential to capitalize on new opportunities created.

Understanding the complexities of FLAG and land use is essential to capitalize on new opportunities.

One of the challenges faced by companies with significant land use in their operations and supply chains is accounting. At present, few companies have a comprehensive accounting of GHG emissions and/or removals related to land use. According to the Science Based Targets initiative (SBTi), this is primarily due to a lack of clarity surrounding guidance and methods.

Recognizing the need for more consistent and transparent guidance in land use-related GHG accounting, the GHG Protocol has led a multi-stakeholder approach to developing comprehensive land sector accounting guidelines, with final publication expected in 2024. While this guidance will provide much needed clarity on quantifying emissions and removals related to land use, it is poised to create complications for companies in land-intensive sectors as they move to adopt the new guidelines.

These complications will be further compounded by new requirements from the SBTi, which will significantly affect how FLAG sector companies set targets and report on their progress. Whether a company is looking to set a target or already has one in place, the new guidance from GHG Protocol and SBTi will become mandatory by the end of 2024, making these changes pertinent for almost all companies in the FLAG sector.

Download our whitepaper below to learn who will need to set FLAG science-based targets, and how to prepare for SBTi’s new FLAG guidance.

How can AITrack help you simplify FLAG and land use accounting, target setting, and mitigation?

Aligned Incentives strives to be on the cutting edge when it comes to technology-enabled solutions for the constantly changing landscape of corporate sustainability. To meet the needs of our clients, we have developed a comprehensive suite of tools in an easy-to-use web-based platform—AITrack. AITrack combines our involvement in guidance development and forthcoming initiatives with years of experience in LCA modeling, software development, and corporate sustainability to provide an all-in-one solution for challenges facing the modern corporate sustainability landscape.

AITrack reduces the time required to adopt new FLAG and land use change (LUC) accounting guidelines, facilitates the setting and tracking of targets, and helps our clients answer a simple question: where should we invest our next dollar to achieve our goals?

1. Reduce the time required to adopt new land use accounting—from months to weeks

In meeting the accounting requirements set forth by the GHG Protocol, companies will be required to account for all land use change (LUC) emissions that occur within their operations and throughout their supply chains over the preceding twenty-year period. The required approach is complicated, with a tiered accounting system dependent upon data availability, among other factors. This means that the level of transparency a company has over its supply chain can alter the requisite accounting methodology on a case-by-case basis.

Aligned Incentives has been involved in the GHG Protocol’s multi-stakeholder guidance development process and, as a result, our analysts are ahead of the curve in helping companies adopt these new accounting principles. We help our clients incorporate the available information into AITrack, enabling a comprehensive accounting of land use change emissions in compliance with the appropriate tier of GHG Protocol guidance. This saves our customers valuable time and resources as they adapt to the changing reporting landscape.

Furthermore, AITrack incorporates our expansive life cycle assessment database with tens of thousands of activities that already adhere to the impending land sector guidance, empowering our customers to fill any data gaps quickly and easily.

2. Make the setting and tracking of targets in the FLAG sector easy

The new GHG Protocol and SBTi guidelines will impact more than just GHG accounting. Setting and reporting on progress against targets will also present substantial challenges because of these changes.

The FLAG guidance from SBTi will require companies with existing targets to account for and report on FLAG-related emissions separately. This involves calculating emissions related to land use and land use changes separately from fossil-related emissions at every point in a company’s supply chain. Doing so in compliance with GHG Protocol land sector guidelines, and reporting on these emissions separately, can be incredibly complex.

FLAG emissions are often buried deep within supply chains, requiring expertise in structured path analysis and life cycle assessment, which many companies do not usually hold in-house. Aligned Incentives has been involved in piloting the new SBTi FLAG target-setting process, and, in doing so, has developed a process into AITrack that leverages cloud computing and powerful software analytics to break down the most vast and complex supply chain models into their most resolute parts, enabling concise and accurate reporting of FLAG emissions – or any other pertinent component of supply chains big and small.

3. Enable companies to answer a simple question: where should we invest our next dollar to achieve our GHG targets

Once a company has adapted to the new GHG Protocol guidelines, adopted a FLAG-compliant target, and done so in adherence to new reporting requirements, the challenging work starts. Developing strategies to reduce, mitigate, and eliminate GHG emissions is complicated work in and of itself. Doing so in a way that optimizes environmental and economic benefits while complying with the constantly evolving reporting and accounting landscape is next to impossible.

To help our clients tackle such complex and complicated challenges, we have developed a Strategy Module in AITrack that combines robust emission forecasting and what-if analysis. The Strategy Module utilizes company-specific data, supported by our GHG Protocol and SBTi-ready database and calculation methodologies, to rapidly compare dozens of future scenarios to find the optimal environmental and economic strategy.

How can AITrack help you simplify FLAG and land use accounting, target setting, and mitigation

Free consultation for FLAG and land use accounting

Is your company affected by these changes in FLAG and land use accounting? Would it be helpful to show you what you can do to leverage these changes and turn them into opportunities for significant emission reductions?

Fill out the contact form, and we will get in touch to schedule a free consultation.

Aligned Incentives

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