Climate Accounting and Agricultural Supply Chains: ESG BROADCAST shares key takeaways.
The Greenhouse Gas Protocol released the Land Sector and Removals (LSR) Standard on January 30, 2026, following a five-year development process. This new framework represents the first-ever global standard designed specifically to help corporations quantify, report, and track greenhouse gas emissions and CO2 removals from land-based activities. By establishing a common benchmark, the standard aims to eliminate major “blind spots” in corporate carbon accounting that have historically obscured the true environmental footprint of the global food and fiber industries.
The LSR Standard will formally take effect on January 1, 2027, providing businesses with a transition period to align their internal data systems with the new requirements. The scope of the standard covers agricultural emissions, land use change, and land management, alongside both natural and technological CO2 removals. This inclusion of removals, such as direct air capture and geologic storage, provides a comprehensive pathway for companies to account for their full climate impact across their operations and extended value chains.
One of the most significant features of the new standard is the introduction of strict traceability requirements for Scope 3 emissions. Companies sourcing agricultural products will now be required to trace their supply chains back to the farm or regional level to ensure data accuracy. This move is designed to combat greenwashing and provide institutional investors with higher-quality information regarding the transition risks associated with land-intensive sectors. The standard also requires companies to account for “agricultural leakage,” ensuring that emissions displaced to lands outside a company’s direct value chain are not ignored.
To maintain scientific integrity, the GHG Protocol has implemented robust safeguards for reporting CO2 removals. Companies must demonstrate the permanence of their carbon storage and utilize lifecycle accounting to capture all upstream and downstream emissions associated with removal activities. While reporting removals remains optional within the general GHG inventory, those who choose to do so must adhere to these transparency rules. This structured approach ensures that carbon sinks are managed with the same level of rigor as fossil fuel reduction targets.
Notably, the initial version of the LSR Standard does not include specific requirements for forest carbon accounting due to ongoing methodological debates within the scientific community. The Independent Standards Board decided to defer this complex topic to avoid delaying the broader agricultural and removals framework. A formal Request for Information will be issued later in 2026 to gather stakeholder input for a future update. Until then, the GHG Protocol advises firms to be transparent about their chosen methodologies for any voluntary forest-related disclosures.
Strategic significance lies in the land-use sector, which accounts for roughly one-quarter of global greenhouse gas emissions. By providing a road-tested, science-based framework, the GHG Protocol is equipping diverse industries—from food producers to apparel retailers—with the tools needed to prove their impact. This transition allows the global financial system to better identify sustainable land management practices and direct capital toward the most effective nature-positive solutions. Ultimately, the standard supports the international effort to limit global warming to 1.5°C by ensuring all sectors are held to the same accounting rigor.
Image Credit: Greenhouse Gas Protocol
