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SBTi FLAG, the new sector guide from the Science Based Targets Initiative
The Science Based Targets (SBTi) initiative was born in 2015 from a collaboration between CDP, the UN Global Compact, the World Resources Institute (WRI) and the World Wildlife Fund (WWF). SBTi uses an established scientific approach and data - Science Based - to assess the targets that companies voluntarily set themselves to reduce their greenhouse gas (GHG) emissions.
A company's GHG emissions reduction target is considered "science-based" if it is scientifically credible in terms of meeting the Paris Agreement's objectives of limiting global warming to well below 2°C above pre-industrial levels, and continuing efforts to limit warming to 1.5°C over time.
The Science Based Target Initiative determines whether the targets voluntarily set by companies are ambitious and realistic enough to help achieve the climate objectives set by the Paris Agreement. As such, it offers companies a clear pathway to limit their emissions while adopting a sustainable business model.
With this in mind, SBTi is working in particular on the construction of new sector-specific methodologies to support all companies in their decarbonization trajectory. Forest Land and Agriculture (FLAG), the latest sectoral methodology designed by SBTi, clarifies, enriches and reinforces the SBTi method and requirements for players with agri-food and forestry activities in their value chain.
Which companies are affected by the new SBTi FLAG methodology?
Methodology SBTi FLAG methodology is aimed at two types of stakeholder defined by SBTi.
Firstly, companies with activities based on the use of forests, soil and agricultural land must define a FLAG objective:
- Forest products and paper
- Food production - Agricultural production
- Food production - Animal sources
- Food and beverage processing
- Food retailing
- Tobacco
The second type of company concerned is those belonging to other business sectors, but having at least 20% of their overall emissions on scopes 1, 2 and 3 linked to the use of forests, soils and agricultural land. For example, a company in the mass retail sector with at least 20% of its overall emissions due to land use will have to define a FLAG target to reduce the emissions concerned.
When do companies have to apply the SBTi FLAG methodology?
The timescales for implementing an SBTi FLAG target differ according to the date on which companies commit 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 as soon as they submit their SBTi targets.
What activities are covered by the SBTi FLAG methodology?
SBTi FLAG's scope covers three areas: Land Use Change (LUC), land management and use (non LUC) and sequestration.
1. Change of land use (CAT)
This first category includes CO2 emissions linked to changes in land use. This type of emission is rarely taken into account in carbon balances, due to the small number of players involved and the relative difficulty of measuring them; yet these emissions should not be ignored. Replacing wetlands with agricultural fields, for example, has a double environmental impact: (1) the destruction of the wetlands releases the CO2 that was stored there, and (2) this prevents future CO2 capture by the same natural environment.
The FLAG methodology proposes to finally take into account CAT activities and covers the following:
- deforestation
- forest degradation, including conversion to plantations
- conversion of coastal wetlands, mangroves, seagrass beds and marshes
- conversion, draining and burning of peat bogs
- conversion of savannahs and natural grasslands
In addition to reducing indirect and direct emissions linked to CAT, SBTi requires companies compatible with the SBTi FLAG methodology to comply with a commitment to zero deforestation by 2025.
2. Agriculture and land management (Non-CAT)
Whether for specific practices, the use of machinery or the production of fertilizers, the second category covers all emissions relating to agricultural production, including livestock.
The following activities fall within the scope of the FLAG sector:
- Enteric emissions
- Flooded land for lowland rice
- Manure management
- Incineration of agricultural waste
- The use offertilizers
- Crop residues
- Fertilizer production
- Machines used on the farm
- Biomass transport
3. Carbon removal and sequestration
This last category is the major methodological innovation of SBTi. The new perimeter makes it possible to account for carbon emissions sequestered through the introduction of responsible agricultural practices on farmed land. The main groups of agricultural practices identified by SBTi are :
- Forest restoration and sylvopastoralism.
- Improved forest management, including optimization of rotation times and biomass stocks, reduced-impact logging, improved plantations and forest fire management.
- Agroforestry, which sequesters carbon by integrating trees into farmland and pastures.
- Soil organic carbon enrichment, which includes erosion control, wider-rooted plants, reduced tillage, cover crops, restoration of degraded soils and biochar amendments.
SBTi nevertheless points out that the carbon sequestered by these different agricultural practices is only accounted for if these actions are carried out on the farmed land in the value chain. Carbon offsetting mechanisms, which by definition take place outside the value chain, remain unaccounted for in this new methodology.
Key principles of SBTi FLAG methodology
From now on, companies concerned by the SBTi FLAG methodology will need to have two separate SBT targets.
- A first "classic" SBT target, called "Energy/Industry", should cover all non-land-related greenhouse gas emissions. For this target, the general SBTi methodology will apply, and this target will have to cover (among other things) all direct and indirect GHG emissions linked to electricity consumption, fossil fuels and transport.
- The second "specific" target, known as "SBTi FLAG", will 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" approach in intensity, and a "sector" approach in absolute contraction.
For players in the supply chain, SBTi proposes setting absolute reduction targets for all FLAG sub-sectors. In particular, this methodology simplifies trajectory-setting for large groups, by avoiding the need to differentiate trajectories by type of activity - forestry, agriculture, livestock farming, catering, etc. - in order to achieve the same targets.
For supply-side players with agricultural and/or forestry activities within their direct scope (scope 1), upstream of the value chain, SBTi has identified 11 commodities with specific trajectories that can be adapted to 26 regions around the world. This methodology makes it possible to set decarbonization targets tailored to the emissions profile of each commodity within each region. A kilogram of beef, for example, is not produced under the same conditions in France as in Brazil. Mechanically, this differentiated methodology encourages suppliers to avoid relocating their activity and to improve their practices locally in line with their own decarbonization trajectory.
How can you use SBTi FLAG methodology effectively in your company?
Admittedly, the SBTi FLAG methodology is more rigorous and demanding than the general methodology for players with agricultural and/or forestry activities in their direct perimeter (scope 1) or in their value chain (upstream/downstream scope 3). However, embarking on an SBTi FLAG trajectory will enable these players to make better use of their virtuous practices and accelerate their organization's transition to a sustainable, high-performance model for tomorrow's world.
SBTi FLAG is, of course, just one step in a company's journey towards achieving its climate objectives. This new sector-specific methodology is intended to complement a set of tools and best practices on various environmental factors. The carbon accounting of a company wishing to define objectives according to SBTi FLAG will necessarily have to be reviewed in the light of the new details expected by the methodology.
In order to achieve its ambitious new objectives in line with SBTi FLAG, the company's transition plan for reaching its new targets will also need to be updated, its robustness reassessed (e.g. using the ACT methodology), its financing rediscussed and its operational deployment replanned.
What the new SBTi FLAG methodology portends is a strengthening of communication and collaboration between all the players 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 transition will not have to fall solely on producers, who generally supply several sectors with complex value chains. As a company with agricultural and/or forestry activities within its indirect perimeter, it is essential to engage in dialogue with its suppliers, with its peers, and with players in other value chains whose activity relies on sourcing resources from the same farms.
At Traace, we've been preparing for months to help our customers serenely integrate the SBTi FLAG methodology. We're working on the subject with Sodexo, which is one of the 18 multinationals that took part in the SBTi FLAG pilot phase, and will probably be one of the first companies to have an SBTi FLAG-certified target.
Want to take the lead and build your SBTi FLAG target? Let's talk!
If you'd like to find out more about the subject and find concrete solutions for decarbonizing your agri-food business, download our white paper "The carbon challenges facing the agri-food sector: Reducing your own emissions and capturing those of others".
Source : https://sciencebasedtargets.org/sectors/forest-land-and-agriculture
