FLAG Guidance v1.2 & LSR Standard Explained for Corporate Climate Strategies
April 14, 2026
Climate Strategy & Policy
The release of the updated FLAG Guidance v1.2 and the Land Sector and Removals (LSR) Standard marks a significant shift in how companies must account for and reduce land-based emissions. For organizations operating in food, agriculture, and retail value chains, these changes are particularly relevant, as land-based emissions often account for the largest share of their value chain footprint.
While both frameworks aim to bring clarity and a more structured path toward credible net-zero commitments, they also introduce new layers of complexity. If you are unsure where your company stands, we break down both frameworks and what they mean for your climate strategy.
Two Complementary Frameworks
The LSR Standard (released January 2026) and the updated FLAG Guidance (published March 2026) are designed to reinforce each other:
- LSR Standard provides detailed requirements for accounting and reporting land-based emissions and CO₂ removals and will become effective on January 1, 2027.
- FLAG Guidance v1.2 defines how companies should set science-based targets for land-related emissions and removals and has been in effect since March 2026.
Because both frameworks are designed to work together, a GHG Protocol-compliant land sector inventory is a prerequisite before setting FLAG science-based targets. Together, they close a gap in corporate climate strategies: the lack of clear requirements for accounting of land-sector impacts.
Is Your Company in Scope?
If your company operates in food, agriculture, retail, or related supply chains, there’s a high chance these frameworks apply to you.
LSR Standard
This Standard applies to companies with land-based activities (e.g. agriculture) and those seeking to account for or report CO₂ removals. It is important to note that forestry is not yet included, which may create temporary gaps for companies operating in this sector.
FLAG Guidance v1.2
Companies are required to set FLAG targets if
- They operate in a FLAG-designated sector (e.g. as Forest and Paper Products, Food Production, Food and Beverage Processing, Food and Staples Retailing, or Tobacco).
- They operate in any other sector, but their FLAG-related emissions exceed 20% of total Scope 1, 2, and 3 emissions.
Companies below this threshold are still encouraged to participate voluntarily, particularly given increasing expectations from investors and regulators.
What Do These Frameworks Cover?
The LSR Standard introduces accounting requirements across:
- Land use change emissions
- Land management biogenic CO₂ emissions
- Production-related emissions such as methane from livestock and nitrous oxide from fertilizers, land carbon leakage
- Optionally, CO₂ removals from agricultural land management
On the other hand, FLAG targets sit separately from a company's energy and industry science-based targets, covering three categories:
- Land use change emissions such as deforestation and peatland conversion
- Land management emissions including enteric fermentation, fertilizer use, and nutrient management
- Land management CO₂ removals from practices such as agroforestry, silvopasture, and soil organic carbon sequestration.
Companies must keep in mind that removals and emissions reductions must be accounted for and reported separately. Emissions addressed through carbon finance are not acceptable removals.
Deforestation Requirements Under FLAG Guidance v1.2
In addition to aligning with the GHG Protocol, FLAG Guidance v1.2 introduces clear deforestation deadlines and broader commodity coverage. Companies must.
- Commit to deforestation-free supply chains
- Eliminate deforestation within two years of target setting
- Meet a final deadline of December 31, 2030
These requirements apply to:
- All directly produced commodities
- Key global deforestation drivers sourced above 1% of total FLAG volume (e.g. soy, cattle, palm oil, cocoa, coffee, rubber, timber)
- Any commodity above 5% of total volume with deforestation risk
- Commodities already assessed as deforestation-free by the company.
This significantly expands the scope of responsibility for companies with complex sourcing structures.
What This Means for Your Scope 3 Accounting
One of the most important changes is how land-based emissions are treated within Scope 3.
LSR Standard
Companies must separately report direct and statistical land use change emissions for sourced agricultural products within Scope 3 categories. For the first time, animal product supply chains must include land use change from both grazing land and feed production. The standard also requires consistent allocation methods across all accounting categories within a defined boundary.
FLAG Guidance v1.2
It sets distinct coverage thresholds:
- At least 95% of FLAG-related Scope 1 emissions and at least 67% of FLAG-related Scope 3 emissions must be covered by the FLAG target.
- These thresholds are independent of the non-FLAG Scope 3 coverage requirement, meaning companies with significant land-related supply chains may need to meet two separate Scope 3 targets.
The FLAG framework also draws a clear boundary on where land emissions begin and end: “up to the farm gate” for agriculture, and “to the yard” for forestry. This means that they encompass all emissions occurring during agricultural or forestry production, preventing double-counting.
In practice, this represents a structural shift in how companies must manage and report supply chain emissions.
Why This Matters for Your Net-Zero Strategy
Both frameworks strengthen the credibility of net-zero strategies for companies with significant land-related emissions.
- The LSR Standard introduces consistent accounting rules and stricter requirements for CO₂ removal claims, including traceability, monitoring, and third-party assurance.
- The FLAG Guidance v1.2 requires deforestation-free supply chains and prevents the use of land-based abatement to compensate for fossil emissions.
Together, they reinforce that emissions reductions and removals must be addressed separately, raising the bar for credible climate action.
FLAG Guidance v1.2: Steps to Set Science-Based Targets in Land-Intensive Sectors
- Determine whether your company must set a FLAG target
- Build a FLAG GHG inventory aligned with the GHG Protocol Land Sector and Removals Standard (effective January 1, 2027; the 2022 draft guidance may be used until then)
- Make a mandatory no-deforestation commitment. Additional commitments such as no-conversion and no-peat-burning are recommended
- Choose the appropriate FLAG target-setting pathway
- Define the target period and quantify the target
- Validate and communicate the target
- Implement targets with best practices in achieving social and environmental outcomes, including necessary safeguards for all activities
For many organizations, this will require not only new data, but also closer collaboration across teams.
How FORLIANCE Supports Your Transition
As these frameworks take effect, companies need technical and practical guidance. FORLIANCE supports organizations in translating requirements into actionable strategies, from building GHG inventories to setting FLAG targets and implementing the LSR Standard. Contact us for a first consultation with our experts.
