FLAG targets under SBTi: mandatory in 2025 for companies with forest, land or agriculture in the supply chain

FLAG targets under SBTi: mandatory in 2025 for companies with forest, land or agriculture in the supply chain

Since 2023, the Science Based Targets initiative (SBTi) has required companies to separately quantify and reduce land-related emissions (Forest, Land & Agriculture; FLAG). From 2025, this is no longer an ambition but a hard requirement: without a no-deforestation commitment, no approved SBTi target.

In this blog, Kroll SR explains when a FLAG target is mandatory, how to prepare for the new GHG Protocol Land Sector & Removals Standard (LSR), and which five steps lead to a valid and verifiable target.

What is FLAG and why is it essential now?

FLAG covers emissions from deforestation, land use and agriculture, together accounting for approximately 20% of global greenhouse gas emissions. The sector plays a key role in both food security and climate stability, but has long been underexposed.

With the introduction of the SBTi FLAG standard (2023), this has changed. Companies that use forest or agricultural products, or are active in food supply chains, must now set a separate reduction target for FLAG. From 2025, SBTi will no longer accept climate targets without a separate FLAG component when the organisation meets the criteria.

When are you FLAG-obligated?

SBTi distinguishes two routes to obligation:

1. Sector-specific: companies in food production, food & beverage processing, food retail and tobacco must always include a FLAG target.
2. Materiality threshold: companies outside these sectors must also do so if more than 20% of their total Scope 1-3 emissions are FLAG-related.

Organisations in, for example, the paper, clothing or packaging sector may also fall under this, depending on their use of agricultural or forestry raw materials.

”If a company falls under a FLAG-designated sector (e.g., food and beverage processing) but has no or only limited (less than 5%) GHG emissions associated with land and agriculture, the company does not need to set a FLAG target, but shall include those FLAG-related emissions in the overall target boundary and account for them with energy/industry (non-FLAG) targets. No FLAG removals can be included in a target if it is not a FLAG target.”
— SBTi FLAG Guidance (2023)

In other words: even within a designated sector, you do not need to set a separate FLAG target if your land and agriculture-related emissions amount to less than 5% of the total. In that case, these emissions are included in the general (non-FLAG) target, but no land or forest-related removals may be included.

’No deforestation’ before 31 December 2025

The no-deforestation requirement is the strictest condition within the FLAG guidance. Every company submitting a FLAG target must be able to demonstrate by the end of 2025 at the latest that all raw materials used are deforestation-free.

Key action points:

• Establish a cut-off date (often 2020) above which no new deforestation is accepted.
• Develop a policy framework covering all risk commodities (soy, palm oil, cocoa, timber, beef).
• Publish an action plan explaining how suppliers meet this requirement.

Without this policy, SBTi cannot issue validation. A deforestation-free declaration is therefore an absolute prerequisite for approval.

The upcoming GHG Protocol Land Sector & Removals Standard (LSR)

Parallel to SBTi, the GHG Protocol is developing the Land Sector & Removals Standard (LSR), planned for publication in Q4 2025. This standard establishes how organisations must calculate and report emissions from land use and CO2 removals.

Key changes:

• New categories: emissions are split into land use change (e.g. conversion of forest to agriculture) and land management (e.g. fertiliser use, livestock farming, soil management).
• Transparency on removals: CO2 storage in forests or soils may only be counted with demonstrable provenance and exclusive ownership.
• Traceability: supplier data and evidence of sustainable cultivation become mandatory.

The LSR formalises the current SBTi requirements. Companies that are already collecting data according to this methodology -- emission sources, land use, removals -- will find it easier to comply with new reporting and assurance requirements.

Five steps to a robust FLAG target

1. Define the boundary
   Map which activities and supply chains fall under the land sector. Create a clear separation between FLAG and non-FLAG emissions to prevent overlap.
2. Conduct a baseline measurement
   Calculate your current FLAG emissions, including land use change. Without a baseline, you do not know if you are above the 20% threshold. Document methodology and assumptions.
3. Formulate policy and commitment
   Establish in policy that no product stream may contribute to deforestation after 2025. Integrate this into procurement conditions and contracts with suppliers.
4. Set targets and KPIs
   Design a near-term FLAG target (5-10 years), for example:

”-30% absolute FLAG emissions in 2030 (compared to 2020).”
Set additional KPIs, such as:

• • share of deforestation-free volumes per commodity;
  • number of hectares of restored forest or regenerative agriculture.

1. Secure evidence and assurance
   Set up a verifiable evidence trail from source to reporting, including calculations, supplier data and internal controls.

Case: FrieslandCampina sets the standard

In 2025, FrieslandCampina had renewed SBTi targets approved, split into FLAG and non-FLAG. The company committed to a 30.3% reduction in absolute FLAG emissions (Scope 1 & 3) by 2030 compared to 2020.

In addition, FrieslandCampina publicly committed to being deforestation-free by 31 December 2025 at the latest. Suppliers must be able to demonstrate that feed crops and dairy production meet the deforestation criteria.

The result is a concrete, verifiable target that meets SBTi criteria and aligns with CSRD reporting -- a practical example of how FLAG requirements are feasible, provided they are integrated into policy and data management in a timely manner.

Common pitfalls

1. Policy not ready on time; without a formal no-deforestation policy, no target will be validated.
2. Incomplete scoping; timber, paper and packaging are often forgotten but do fall under FLAG.
3. Missing documentation; assumptions and allocations must be traceable; otherwise recalculation follows.
4. Wrong timing; the validation process takes months; those who only start at the end of 2025 risk delays.

What is the LSR Standard?

The GHG Protocol Land Sector and Removals Standard (LSR) is an extension of the existing GHG Protocol. It determines how companies must reliably measure, report and verify emissions and removals from land use.

The standard covers:

• Land use change (e.g. deforestation, grassland conversion);
• Land management (e.g. fertilisation, livestock farming, soil management);
• Biogenic CO2 removals (forest, soil, biomass);
• Products based on biogenic carbon (such as timber or bioplastics).

From its publication in 2025, the LSR will become the international reference for land use emissions. SBTi will align its FLAG guidelines accordingly.

Why act now?

FLAG touches on multiple compliance frameworks:

• SBTi validation; without FLAG, no fully approved targets.
• GHG Protocol; new protocol from 2025.
• CSRD / ESRS E1; mandatory Scope 3 and land use reporting.
• EU Deforestation Regulation (EUDR); enforcement at product level from 2025.

By acting now, you prevent overlap, duplicate reporting and last-minute adjustments.

Recommended approach

Kroll SR recommends a phased approach:

1. Analyse your emission profile: determine whether FLAG is 20% or more, or less than 5%.
2. Conduct a supply chain analysis: identify risk commodities and suppliers.
3. Build a data model in line with the LSR concept rules.
4. Develop policy and targets in accordance with SBTi.
5. Prepare for assurance in 2026; test your evidence trail now.

The role of Kroll SR

Kroll SR supports organisations in:

• determining FLAG materiality;
• designing targets and KPIs;
• documenting methodologies according to the GHG Protocol;
• preparing for assurance under SBTi and CSRD.

Our advisors combine technical expertise in carbon accounting and land data with strategic insight into supply chain transition and compliance.

Conclusion

FLAG is no longer a niche topic, but a core requirement for credible climate accountability. Those who take action now prevent corrections and reputational risks in 2026.

Want to know if your organisation is FLAG-obligated and how you can design a valid target?
Schedule a short check-in with Kroll SR. In one session, we map your materiality, risks and next steps, so you are ready for a deforestation-free future.

#KrollSR #FLAG #SBTi #GHGProtocol #AgriFood