The first Land Sector and Removals (LSR) Standard finally published by the GHG Protocol 

As part of the former advisory council, Quantis began discussions with the GHG Protocol about what would become the Land Sector and Removals Standard more than 7 years ago. A draft (part 1 and part 2) of over 400 pages was published in 2022 for public consultation and since then debate and governance changes have led to long delays in publishing a final version, which came out last Friday, Jan 30^th. 

The main topics covered that are key for any business relying on agriculture are:  

• Traceability 
• Removals 
• Land Use Change 
• Biogenic carbon & carbon product pools 

The GHG Protocol is a voluntary guidance document that can be required or suggested by reporting frameworks such as SBTi and CSRD.  

Below, we examine how the final standard addresses each topic — what changed from the 2022 draft and where the debates ultimately landed. 

*This article focuses on Removals, Traceability and Land Use Change. Biogenic carbon accounting and land-occupation metrics are addressed more comprehensively in the standard.

Traceability 

The 2022 draft said:  

• Traceability was required for removals accounting.  
• Mass balance chains of custody models were considered to not provide this traceability.   
• Traceability was encouraged but optional for land use change accounting. 
• Traceability requirements for emissions (and emission reduction) reporting were unclear.  

The major debates:  

• Shouldn’t we be directing resources on climate action, and not on segregating and separating supply chains (which can be important for supply resilience)?   
• How should we navigate chain of custody in dynamic commodity markets?  
• Why is mass balance (with safeguards) not good enough?  
• Why do the traceability requirements only cover removals and not other (controversial) emission sources and year-on-year reductions?  

The current draft says:  

“… to account for emissions, removals and other metrics, companies shall have physical traceability to the sourcing region, LMU, or harvested area within their value chain…” Identity preservation, segregation, controlled blending, and some forms of mass balance are acceptable for physical traceability.  (Requirement 8, page 27) 

Major changes: Added mass balance with safeguards as a possibility to achieve physical traceability. Clarified physical traceability is required for removals and emissions when reporting with respect to specific spatial boundaries such as sourcing regions, of farms (land management units).  

Removals 

The 2022 draft said:  

• Removals had the strictest rules for traceability, and also for primary data.  
• Empirical or primary data, or calibrated models using primary data were required.   
• Reversals had to follow the “permanancy principle” which required continuous monitoring, and any reversal had to be reported if monitoring stopped or a reversal was measured.  

The major debates: 

• Accurate soil organic carbon data can take many years to establish, so what is good enough for year-on-year corporate reporting? 
• Do removals need to be permanent to (scientifically) have a climate benefit or can temporary benefits be included if “discounted,” e.g. using the tonne-year approach? 

• Does it make sense to do year-on-year reporting of carbon stock change for perennial or agroforestry systems that ebb and flow?  
• Can the carbon stock in the perennial crop trees be accounted for as removal? 
• How can the need for long-term removals on specific sites be reconciled with dynamic agricultural supply chains where many companies change sourcing farms often (i.e. buy from the market)? 
• What qualifies as “primary data” and as “calibrated models,” e.g. is primary data on practices enough, or does it need to be primary data on soil organic carbon? 

The current draft says: 

On page 65-66: “Reporting CO2 removals is optional.” If companies account for and report removals in their GHG inventory, they must meet the following requirements: 

• Report on all emissions and account for removals based on annual or annualized carbon stock increases (Requirement 19) 
• Have traceability throughout the full CO2 removals pathway (Requirement 20) 

• Have sufficient data quality (Requirement 21) 
• Ensure the same scope 3 allocation methods are applied for removals to prevent double counting (Requirement 22) 
• Meet the permanence principle by ensuring CO2 removals reported in an inventory are monitored and any losses of stored carbon are accounted for and reported (Requirement 23)  

Land Use Change

The 2022 draft said:  

• Different levels of land use change (LUC) reporting were described, e.g. in reference to different traceability levels.  
• Direct land use change was the most rigorous traceability level with visibility on the farm area.  
• Traceability and primary data were encouraged but optional for land use change accounting. 
• Sections of the guidance mandated “physical traceability” (i.e. segregated supply) for reporting “direct land use change” (dLUC).  
• There were no clear strict requirements for primary data sources.   

The major debates: 

• Should we be netting emissions (i.e. C stock difference between forest and orchard) or should we be reporting gross (i.e. C emitted through forest loss)?
• Does satellite imagery count as primary data (when it is often linked to a model)?  
• Which data sources should be used for land use change and how to harmonize the metrics? 
• Is direct land use change (dLUC) really better if it excludes all indirect and leakage issues? 

The current draft says: 

• LUC is reported as a carbon stock decrease between two land use carbon stocks (i.e. before and after agricultural conversion).  
• If LUC results in net removals (e.g. from degraded land to perennial crop) then removals can be reported removals following removals requirements.  
• Quantis interpretation is thereby that LUC is a “netted” calculation and removals are included without particular rules, except when they exceed the emissions and thereby bring the net below 0 (i.e. there is a net removal) and thus need to follow removals requirements.  
• No specific clarification on primary data (e.g. and satellite imagery, and yield) has been provided. The definition of primary data includes the possibility to use models and “other methods.”  
• The draft specifies some requirements for metric harmonization e.g. requiring linear discounting except in special cases. See separate work done by WRI and Quantis on this.  

Should you be following the GHG Protocol Land Sector & Removals Standard?  

With all of these new rules, many companies are asking “should we be following the GHG P LSRS?” The answer is a strategic one, that can be worth millions of dollars in consequences. On one hand, reporting standards used by a company and their sustainability strategy (e.g. SBTi FLAG) may require or strongly suggest the use of the GHG Protocol. On the other hand, the reporting standard may not match what is practical for a company to implement immediate climate action in their agricultural supply chains.  

Companies should not make strategic decisions on their investment in traceability and primary data only to be GHG Protocol aligned.  

The supplier engagement and monitoring needed to be put in place to gather primary data and secure traceability are strategic issues that touch on many aspects of making a strong business case and creating return on investment (ROI). Many agricultural businesses are fundamentally based on their supplier relationships. For example, having vertical integration (e.g. own farms, and/or even have the farmers own the business) or to buy from the market (e.g. trade and/or seek the most competitive price).  

Furthermore, the same primary data that can be used for climate and nature reporting can be used for other financial and business relevant issues such as alignment with regulation and optimization of production (e.g. yield). Farmers and suppliers may not be able to or want to share these types of data for various reasons including protecting their privacy rights. Fair and ethical balance of the power relationship between purchasing and producing companies needs to be established in order for the data collection (and incentive) systems in place to function and provide the outcomes needed. 

What are the implications of this? The decision to be GHG Protocol aligned or not, and thereby to implement primary data and chain of custody systems, should not sit with a sustainability team alone but should be considerations at the highest level of the business management.  

In summary, both the process of gathering primary data through supplier engagement, and establishing traceability through chain of custody are key to manage: 

• Quality control for physical supply (e.g. water content, taste, etc.) 
• Supply security and stability (e.g. in countries where access to farm equipment and products may be limited, impacting yield)
• Reputational and ethical risks (e.g. child labor, contamination, GHG emissions, nature impacts, regulatory alignment) 
• Climate adaptation and resilience (e.g. regenerative agriculture) 
• B2B relations and green premiums 

Quantis teams are prepared to help support your business in making these difficult and important decisions. Now that the standard is published, the time for action is now.