Highlights
Companies that present greenhouse gas (GHG) emissions in accordance with the GHG Protocol (GHGP) will need to change the way they account for land-based activities from 1 January 2027. Changes to accounting for removals are optional.
The GHGP’s new Land Sector and Removals (LSR) Standard affects agricultural companies, as well as those with land sector activities in the value chain such as food or packaging. Companies involved with removals may have no connection to the land sector.
The standard builds on the GHG Protocol Corporate Accounting and Reporting Standard and the GHG Protocol Value Chain (Scope 3) Accounting and Reporting Standard and now forms part of the GHGP Corporate Suite of Standards.
What’s the issue?
Companies with significant land sector activities – whether in their operations or value chain – will need to adopt this standard to conform with the GHGP Corporate Standard. Companies will need to use judgement to determine what constitutes ‘significant’ activities in the land sector.
Land sector companies include those that:
- own, manage or control significant areas of land;
- are involved in the purchasing or supply of agricultural products; and
- consume or rely upon agricultural products for the products they sell to their customers.
The scope is therefore not restricted to agricultural companies, but also includes those with land sector activities in the value chain such as food or packaging.
Reporting CO2 removals is optional, but the new standard offers a means to report them if companies choose to do so. For example, companies that own or control technological CO2 removal operations may choose to follow the standard. Companies involved with removals may have no connection to the land sector.
Neither IFRS® Sustainability Disclosure Standards nor European Sustainability Reporting Standards (ESRS) currently reference the new LSR Standard. Companies applying them therefore need to assess whether or how the LSR Standard will affect their measurement of GHGs.
What’s the impact?
Applying the LSR Standard will require companies to use more detailed measurement criteria and disclose land sector emissions separately from their existing inventory with greater granularity.
The standard requires a significantly higher quality of data. Companies may need to update their processes to source additional supplier-specific, traceable information.
What’s next?
The standard will take effect on 1 January 2027.
The GHGP plans to publish guidance on the standard later in 2026.
It is not yet clear whether or how the LSR Standard will be impacted by the GHGP’s ongoing revisions to the Corporate Standard and Scope 3 Standard.
Actions for management
- Consider where land sector emissions or removals appear in your operations or value chain and if these are significant.
- Keep abreast of the implications for reporting under IFRS Sustainability Disclosure Standards or ESRS.
- Review or create GHG inventory methodologies which cover land sector emissions and CO2 removals.
- Assess data availability and quality, considering the readiness of internal systems to collect this data.
- Keep aware of upcoming guidance from the GHGP to accompany this standard.
- Monitor developments from the GHGP to understand how this fits into the broader Corporate Suite revision programme. See GHG Protocol - Updating Scope 2 emissions guidance.
FAQs
Land sector emissions – i.e. the release of GHGs from the land or from biogenic products – represent a major share of global GHGs. Management of land sector emissions and removing CO2 from the atmosphere are considered key to achieving global climate-related goals.
The LSR Standard details how to account and report the following land sector emissions:
- land use change emissions;
- land management net biogenic CO2 emissions;
- land management production emissions; and
- biogenic product emissions.
Forest carbon accounting does not feature in this version of the LSR Standard but is expected to be incorporated in a future revision.
A removal is the transfer of a GHG from the atmosphere to storage, via a sink. The standard includes two general types of sinks.
- Biological: This relies on a biological process to remove CO2 from the atmosphere (e.g. through the growth of crops); and
- Technological: This is a mechanical or chemical process that removes CO2 from the atmosphere (e.g. carbon capture).
To be included in the GHG inventory, removals need to meet a series of requirements, which include permanence and traceability.
Companies involved with removals may have no connection to the land sector.
A biogenic product is one that is made by or derived from living organisms (such as plants).
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