What is SBTi FLAG?

SBTi FLAG is the Science Based Targets initiative’s Forest, Land and Agriculture guidance and target-setting framework. It tells companies how to set science-based greenhouse gas targets for emissions and removals that come from land use and agricultural production, separately from the fossil-fuel and industrial emissions covered by a standard corporate target. For leaders in agriculture and food, that matters because climate impact often sits in livestock, fertilizer, rice cultivation, manure, land-use change, deforestation, peat, and farm-level practices across the value chain.

In practical terms, SBTi FLAG means a company may need two linked climate tracks: a non-FLAG target for energy and industrial emissions, and a separate FLAG target for land-based emissions and removals. The framework gives management a more useful way to plan procurement, supplier programs, traceability, capital allocation, product mix, and claims governance.

What the term means

FLAG stands for Forest, Land and Agriculture. The Science Based Targets initiative created the guidance because land-based sectors do not decarbonize the same way as factories, fleets, or office buildings. Agriculture produces significant methane and nitrous oxide. Land use can release carbon through conversion and degradation, or store carbon through better management. Those dynamics require different accounting rules and target pathways from a typical energy transition program.

Under SBTi, FLAG is designed to sit alongside, not replace, a company’s broader emissions strategy. FLAG target setting generally addresses relevant land-based emissions and removals in scope 1 and scope 3, while scope 2 and other non-land emissions remain in the company’s standard target boundary. The underlying idea is simple: companies should not hide slow progress on fossil emissions behind land-based removals, and they should not overlook land-use emissions because they are harder to measure.

Why it matters in agriculture and food

For many agriculture and food companies, the majority of climate impact sits upstream, especially in purchased commodities and agricultural raw materials. That makes FLAG strategically important for five reasons.

• It changes where management attention goes. A conventional corporate inventory may show a large scope 3 footprint, but FLAG helps isolate the land-based portion so leaders can see whether the real issues are dairy methane, fertilizer application, commodity sourcing, forest conversion, or something else.
• It turns climate strategy into a procurement and supply-chain issue. Progress often depends less on corporate facilities and more on suppliers, growers, cooperatives, traders, and regional sourcing choices.
• It affects commercial credibility. Customers, investors, and lenders increasingly expect food and agriculture businesses to distinguish energy-related decarbonization from land-use and deforestation risk.
• It connects climate, nature, and compliance. Companies exposed to deforestation-linked commodities face overlapping demands around traceability, due diligence, and land-conversion controls.
• It has portfolio and valuation implications. Commodity mix, geography, supplier concentration, and the cost to reduce emissions can all affect growth plans, margin expectations, and transaction diligence.

How SBTi FLAG works

1. Determine whether FLAG applies

SBTi identifies land-intensive sectors that are expected to assess FLAG exposure. Under current SBTi criteria, companies in designated FLAG sectors generally need a separate FLAG target when FLAG-related emissions represent at least 20% of total scope 1, 2, and 3 emissions. Even when a separate target is not mandatory, many companies still use FLAG analysis because it improves hotspot visibility and supports customer, investor, and regulatory conversations.

2. Build a FLAG emissions baseline

This is usually the hardest step. Companies need to quantify land-based emissions and removals across operations and supply chains, often by commodity, country, and production system. Relevant sources may include enteric fermentation, manure management, synthetic and organic fertilizer use, rice methane, land-use change, forest conversion, peat drainage, and other agricultural production impacts. The best programs go beyond a top-down inventory and create a traceability view that shows which suppliers, regions, and commodities actually drive the footprint.

3. Select the target method

SBTi provides target-setting pathways tailored to land-based sectors, including commodity-specific and sector approaches. The right method depends on the company’s portfolio, emissions profile, and data maturity, and it should be checked against the latest SBTi guidance during target development. The important executive point is that FLAG is about reducing real emissions in the value chain and, where the methodology allows, increasing qualifying land-based removals through better management. It is not a license to buy conventional carbon offsets and call the job done.

4. Translate the target into operating choices

A validated target is only the starting point. Delivery usually depends on procurement standards, supplier segmentation, farmer incentives, agronomy support, feed and fertilizer management, productivity improvement, land-conversion controls, contract terms, data governance, and internal decision rights. Finance, sourcing, sustainability, operations, and commercial teams need a shared view of which interventions matter, what they cost, and how progress will be evidenced.

Practical example

Consider a food manufacturer with major exposure to dairy ingredients, cocoa, palm-based inputs, and paper packaging. Its original climate plan emphasized renewable electricity, packaging changes, and logistics efficiency. Those actions help, but FLAG analysis reveals that the larger issues sit elsewhere: methane in dairy supply, land-use change risk in cocoa and palm, and sourcing choices in fiber. With that clearer picture, management can set a separate FLAG target, focus supplier-engagement resources on a smaller number of high-impact regions, strengthen land-conversion controls, and shift spending from scattered pilots to interventions that move the validated target. The value of FLAG is not the acronym; it is the sharper operating agenda.

Benefits

• Better prioritization. FLAG separates land-based hotspots from the rest of the inventory, which improves capital allocation and management focus.
• More credible target setting. A single enterprise-wide number can hide very different decarbonization problems. Separate FLAG and non-FLAG targets create a clearer story for boards, investors, and customers.
• Stronger supplier strategy. The framework pushes companies to understand which commodities, regions, and suppliers matter most, rather than funding broad but shallow sustainability programs.
• Improved resilience. Many FLAG interventions overlap with better soil health, productivity, land stewardship, and supply stability, even though the economics vary by crop and region.
• Better diligence and portfolio management. Companies can assess whether future growth is concentrated in emissions-intensive or land-conversion-sensitive categories.

Risks, limitations, and common misconceptions

FLAG is useful, but it is not easy. Data quality can be uneven, especially when supplier traceability is limited or land-use change is estimated with regional averages. Smallholder supply chains add complexity. Some interventions deliver climate benefits slowly or with wide confidence intervals. And the commercial team may resist changes that raise ingredient cost, narrow sourcing options, or complicate customer claims.

There are also a few common misunderstandings. First, FLAG is not the same as regenerative agriculture. Regenerative practices may be part of the solution, but FLAG is the target framework and accounting discipline, not a farming philosophy. Second, FLAG is not the same as a deforestation-free policy. Deforestation controls are important, but a FLAG target also covers emissions from livestock, fertilizer, rice, and other sources. Third, FLAG is not the same as offsetting. SBTi target progress is based on value-chain action and qualifying removals within the rules, not on purchasing external credits to compensate for ongoing emissions. Finally, validation is not implementation. A target approved by SBTi does not guarantee the company has the supplier programs, data infrastructure, incentives, or governance needed to deliver it.

How executives should think about it

Executives should treat SBTi FLAG as a strategic management issue, not just a reporting exercise. Four questions usually matter most: Where are the true land-based hotspots by commodity and region? Which levers are under direct control versus supplier influence? What is the marginal cost and operational feasibility of the main interventions? And how will the company substantiate progress for boards, auditors, customers, and lenders?

That perspective often changes decisions in sourcing, R&D, portfolio planning, M&A, and organizational design. A business with concentrated exposure may need different supplier financing mechanisms, different contracting terms, more agronomic field support, better traceability systems, or a narrower set of climate claims than leadership originally expected.

For companies turning SBTi FLAG into a workable sourcing, traceability, supplier-engagement, and implementation plan, the Umbrex Agriculture & Food Practice can help connect clients with independent consultants experienced in emissions baselining, procurement design, farm-program economics, deforestation-risk management, data architecture, and target-ready operating models.

How organizations can get started

1. Confirm applicability early. Determine whether the company falls within SBTi’s FLAG scope and whether a separate target is likely to be required under current criteria.
2. Build a fit-for-purpose baseline. Start with the inventory, but get quickly to commodity, region, and supplier views that management can act on.
3. Prioritize interventions economically. Estimate abatement potential, cost, timing, adoption barriers, and evidence requirements before launching broad programs.
4. Align procurement and sustainability. If buyers are paid only on cost and supply assurance, FLAG targets will struggle. Incentives, contracts, and supplier scorecards need to reflect the target.
5. Integrate with traceability and land-conversion controls. Climate target work should not be separate from deforestation-risk management, sourcing standards, and due-diligence processes.
6. Set governance for claims and disclosure. Decide who owns methodologies, data quality, supplier evidence, and external statements so the company does not overclaim progress.

Related concepts and distinctions

FLAG vs. non-FLAG targets

Non-FLAG targets cover the energy and industrial side of the footprint, such as purchased electricity, fuel combustion, manufacturing energy, and transport emissions that are not land based. FLAG focuses on land-related emissions and removals. Many agriculture and food businesses need both views to manage the full problem intelligently.

FLAG vs. regenerative agriculture

Regenerative agriculture refers to a set of practices or outcome ambitions around soil, biodiversity, water, and farm resilience. Those practices may help deliver a FLAG target, but the terms are not interchangeable. A company can talk about regenerative programs without having a validated FLAG target, and vice versa.

FLAG vs. insetting and offsets

Insetting usually refers to value-chain interventions that reduce emissions or enhance removals within the company’s own supply system. Offsets generally refer to external credits purchased outside the value chain. FLAG is the target framework that governs how land-based emissions and qualifying removals are handled; it is broader and more disciplined than either label alone.