LSRG: The New Rulebook for Land Emissions

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An Overview of Land Accounting

If you’re a grower with land activities in your direct operations, the GHG Protocol’s Land Sector and Removals Guidance (LSRG) has likely been on your radar since its 2022 pilot release. 

But if you’re a company with land activities far from your direct operations, such as a grocery retailer or hospitality brand, the new requirements may come as a surprise. In our complimentary LSRG workshops, one of the most frequent requests is for help in scoping exposure to the new guidance.

That’s because LSRG will be mandatory for any company that uses land in its supply chain, no matter how big they are or how much land they use. In LSRG’s own words, here is the mandatory “shall” requirement:

Companies reporting a corporate GHG inventory in conformance with the Greenhouse Gas Protocol shall follow the Land Sector and Removals Guidance if the company has land sector activities in its operations or value chain or if the company is reporting removals.

LSRG 2022, page 4

You’ll notice there’s no materiality threshold, such as “only if land activities are 5% of your total inventory”. There’s no opt-out if land sector activities are in the value chain but not direct operations. Land sector activities are broadly defined and broadly inclusive. 

What are land sector activities and associated emissions? 

Land sector emissions occur before the farm gate, excluding energy emissions such as on-farm fuel use, which are energy/industrial emissions. In the rice value chain, for example, emissions from the farm-gate production stage are 50–65% of a kilogram of rice’s total footprint. Land sector emissions come from two sources:

Land Use Change (LUC) emissions occur when land is converted from one type of land cover to another: clearing tropical forests for soy, draining peatlands for palm oil, or replacing grasslands with croplands all fall into this category. These activities release carbon stored in all carbon pools (biomass, soil organic carbon and dead organic matter).

When deforestation occurs, emissions must be amortised over an assessment period of at least 20 years. This reflects the decades-long impacts of carbon release and storage changes when land is cleared. In practice, companies need to know whether the land they source from was deforested in the past 20 years, and calculate LUC emissions accordingly. Global Forest Watch is a useful open-source tool to assess land use change and deforestation by location.

Land Management (LM) emissions stem from how land is farmed or how livestock are reared. LM emissions are reported in two categories:

• Biogenic CO₂ emissions are linked to the short-term carbon cycle, affected by practices like crop tillage, residue management, soil amendments, conservation buffers, or land set-asides.
  Non-biogenic LM emissions include methane (CH₄) from rice paddies or cattle, nitrous oxide (N₂O) from manure management, and fossil CO₂ from inputs like lime or urea
• Non-biogenic LM emissions include methane (CH₄) from rice paddies or cattle, nitrous oxide (N₂O) from manure management, and fossil CO₂ from inputs like lime or urea.
  

Source: GHG Protocol Land Sector and Removals Guidance, 2022

LSRG-compliant inventories

The end result is that LSRG-compliant inventories will have more reporting categories overlaid on their Scope 1, 2 and 3 inventory totals. Each relevant scope category will need to be reported with the following totals: non-land emissions and land emissions, with the latter reported as: land use change, land management net CO₂ emissions, and land management non-CO₂ emissions.

Companies are also required to report one land tracking metric, may optionally report carbon removals and, if the previously sequestered carbon is no longer part of the inventory boundary or if traceability is lost, companies will need to report reversals.

Traceability Matters

With its value chain approach, traceability becomes one of the biggest frontiers in land sector accounting. That’s because claiming carbon removals or reporting land use change values that are lower than global or regional averages requires primary data from traceable supply chains.

In a nutshell, companies that invest in traceability will be able to report lower emissions than peers that do not invest in it, through two avenues: carbon removals and direct land use change values.

Carbon Removals

LSRG provides a framework for reporting activities that remove carbon from the atmosphere and store it in land, products, or geological reservoirs:

• Land-based removals, where carbon is stored in land carbon pools such as soils, trees, and dead organic matter. Examples include reforestation projects, agroforestry systems, and regenerative farming practices which restore soil carbon.
• Product-based removals, where carbon is locked into long-lived products. This could include timber used in construction, bio-based materials, or cement which absorbs CO₂ during curing.
• For most agriculture, forestry, and land-use companies, land-based and product-based removals will be most relevant. Geologic removals, where carbon is permanently stored underground, are included in the LSRG framework for completeness, but they are not the main focus for land-intensive sectors.
  

These carbon removals can be subtracted from emissions, if the removals meet 5 criteria.

LSRG’s stringent requirements for CO₂ removals (LSRG Part I, page 93)

Removals are optional to report, but if companies choose to report them, they must meet strict requirements for permanence (ensuring stored carbon is not easily reversed) and conservativeness (ensuring estimates don’t overstate benefits).

Land Use Change

LUC can be a major source of emissions. Consider the case of soy: around 80% of the global ecoinvent emissions factor for soybean production is due to land use change. This high share reflects soy expansion in Brazil and Argentina linked to deforestation. 

If a company wants to report lower LUC emissions, it must move from statistical land use change (sLUC) values based on global or regional secondary data towards direct land use change (dLUC) values that use location-specific data but require traceability.

Carbon Contracts

When farms, forests or other removals projects are jointly owned, leased, or operated under partnerships, the question of who claims carbon removals becomes critical. According to the LSRG, all parties must use a consistent consolidation approach to avoid double counting, and must either grant one entity exclusive rights to report Scope 1 removals, or formally apportion removals between owners. This means ensuring contracts clearly define ownership of emissions and removals, just as is done in joint ventures or industrial projects, now extended to greenhouse gas emissions. 

For example, if 100 tonnes of CO₂ removals occur on a farm that is a joint venture (JV) between two agribusinesses, both brands cannot claim the same 100 tonnes of removals. Their consolidation approach, if operational, would specify which entity has operational control and would therefore report Scope 1 removals. Expect to see clauses on:

• Allocating removals between parties
• Data sharing specifications to substantiate GHG claims
• Certification or chain-of-custody models
  

Contracts will increasingly specify who can claim what, backed up by data-sharing provisions. 

Why & How LSRG is Relevant to Your Organization

Nearly a quarter of global emissions come from agriculture and land cover changes, yet emissions were historically under-reported and carbon removals often over-reported. According to GHG Protocol research, organisations cited a lack of clear guidance as the number 1 barrier - a gap that LSRG addresses.

The GHG Protocol already underpins most climate reporting worldwide. With IFRS S2 climate disclosure standards now adopted in more than 17 jurisdictions, and under consultation in 16 more, companies must measure emissions using the GHG Protocol. That includes LSRG compliance for land-exposed businesses.

LSRG is 429 pages – longer than the Corporate and Scope 3 Standards combined.

LSRG will clarify which service providers and platforms have deep expertise with land sector activities, versus more general providers. Set your company up for success by ensuring you’re working with LSRG-compliant providers.

Turn LSRG compliance into new value creation across risk, finance, and procurement

Better data and clearer accounting open the door to improved supply chain stewardship, resilience, and integration of regenerative practices. Businesses that move early can transform compliance into competitive advantage, demonstrating credibility to investors, regulators, and customers.

Bottom line: LSRG will define how land sector emissions are measured, compared, and rewarded. Preparing now means that you stay ahead of the curve.

If you’re curious how to turn LSRG compliance into a strategic advantage, speak to us today. Learn how you can build trust with investors, unlock capital, and accelerate your transition to net zero.