SBTi FLAG Compliance Guide for Fashion & Textile Brands

The fashion industry is under growing pressure to reduce its environmental impact, and one critical but often overlooked area is land-based emissions. That’s why the Science-Based Targets initiative (SBTi) established the FLAG (Forest, Land, and Agriculture) Tool, a framework that requires companies to measure and reduce emissions linked to land use, deforestation, and agricultural activities.

We at GreenStitch understand the struggle and are here to break down everything you need to know about the SBTi FLAG Tool, including:

Why land-use emissions matter in fashion and why they’ve been underreported.
How to set FLAG targets and align with SBTi requirements.
The biggest challenges in FLAG reporting and how to overcome them.
How automated tools can simplify the process.

If your company sources materials like cotton, wool, viscose, or leather, FLAG compliance will soon be unavoidable. Keep reading to find out how to stay ahead of regulations and meet your sustainability goals.

Understanding FLAG Emissions in the Fashion and Textile Industry

As of 2025, the world emits approximately 50 billion tonnes of greenhouse gases (GHG) annually, with 22% originating from forestry, land, and agriculture (FLAG) activities. These emissions come from deforestation, livestock digestion (enteric fermentation), fertiliser use, and crop residue burning, all of which reduce the land’s ability to store carbon.

The textile industry contributes 5 billion tonnes of GHGs annually with 7% linked to FLAG emissions. This is largely due to its reliance on land-based raw materials. Cotton alone occupies 2.5% of the world’s arable land, with India leading global cultivation at 130.61 lakh hectares, accounting for 40% of global cotton acreage. Other materials, such as linen, hemp, and wool, also require significant land use, though less than cotton.

While FLAG emissions in textiles are mostly confined to the fibre production stage, the industry’s overall land impact extends far beyond. Europeans consume an average of 26 kg of textiles per year, discarding 11 kg annually. While some waste is exported, 87% ends up incinerated or in landfills.

Fashion’s land footprint is staggering. Producing textiles for just one person in the EU required 400 m² of land in 2020. Yet, only 1% of used textiles are recycled into new garments due to underdeveloped recycling technologies, according to the European Environment Agency.

Why FLAG Emissions Are Underreported in Fashion and Textile

Despite its significant land impact, the textile industry lacks comprehensive data on FLAG emissions. A study by the World Resources Institute (WRI) found that:

Only 23% of companies account for land-use emissions.
Just 16% track land-use change emissions.
Only 10% report carbon removals.

The primary challenge? Lack of clear guidance. More than 50% of companies cite the absence of standardised frameworks as a major barrier to FLAG reporting. Recognising this gap, SBTi introduced FLAG-specific science-based targets (SBTs), which are different from SBTs industry-based targets.

Why FLAG Targets Are Essential for Fashion and Textile Businesses

Science-based targets (SBTs) help companies align GHG reduction efforts with the Paris Agreement, working to limit global warming below 2°C and aiming for 1.5°C. The Science-Based Targets Initiative (SBTi) now requires textile and fashion brands to measure and report FLAG emissions alongside industrial (non-FLAG) targets.

Here’s what fashion brands need to know:

FLAG targets cannot be submitted alone – Companies with validated SBTs must submit a Near-Term Update + FLAG target to ensure comprehensive emissions coverage.
Mandatory for companies with significant FLAG emissions – Any company where FLAG emissions account for 20% or more of total Scope 1, 2, and 3 emissions must set FLAG targets.
Applicable across all SBTi-designated sectors – Any company meeting the 20% FLAG emissions threshold must comply.
Separate reporting for FLAG and industrial targets – FLAG targets must be developed alongside fossil/industrial (non-FLAG) SBTs and aligned with SBTi guidance.

A detailed breakdown of FLAG target requirements follows in the next section.

FLAG Tool Explained: How Fashion and Textile Businesses Can Measure Emissions

FLAG-based SBTs focus on a company’s GHG emissions from Agriculture, Forestry, and Other Land Uses (AFOLU). These targets cover emissions from land use change (LUC), land management, and carbon removals and storage—three key areas that directly impact the textile and fashion industry.

Here’s how each category is defined:

Land-use change (LUC) – Emissions from converting natural forests to plantations and livestock feed production.

Example: CO₂ is released when clearing forests for cotton cultivation.

Land management emissions (non-LUC) – Emissions from agricultural land management, including biogenic CO₂, nitrous oxide (N₂O), and methane (CH₄). This category also includes CO₂ from on-farm vehicles and fertiliser production, as these are commonly embedded in emissions accounting.

Example: CH₄ emissions from sheep farming, or N₂O from fertiliser use.

Carbon removals and storage – The process of sequestering carbon through forest restoration, improved land management, agroforestry, silvopasture, soil organic carbon improvements, and biochar.

Example: Increasing soil carbon storage through sustainable farming practices.

By understanding these FLAG categories, textile companies can accurately measure and reduce land-based emissions, aligning their sustainability strategies with SBTi requirements.

A detailed description of activities is shown below in the picture:

SBTi FLAG guidance has also established sector pathways (demand-side) for setting targets, along with 11 commodity pathways (supply-side) that companies can use to develop FLAG targets. These commodity pathways include beef, chicken, dairy, leather, maise, palm oil, pork, rice, soy, wheat, timber and wood fibre.

For textile companies, only timber, wood fibre, and leather are considered within the commodity pathways, while emissions from cotton and other plant-based fibres are accounted for more broadly within sector-based FLAG targets.

The following chart outlines the steps textile companies must follow to set a FLAG target.

Key FLAG Compliance Requirements

Set a near-term FLAG target (5-10 years): Textile companies must establish short-term targets that align with pathways to limit warming to 1.5°C. Companies must reduce Scope 1 and 3 FLAG emissions by 30.3% by 2030, using 2020 as the base year.

Account for removals: FLAG targets must include biogenic CO₂ removals, covering activities such as natural ecosystem restoration, improving forest management, deploying silvopasture, and enhancing soil carbon sequestration on pasture and farmland.
Set long-term FLAG targets: Companies engaged in land and agriculture-intensive industries must reduce at least 72% of FLAG emissions by 2050.
Commit to no deforestation by 2025: Textile companies must eliminate deforestation across key commodities like beef, palm oil, soy, cocoa, timber, and wood fibre, with the potential to extend commitments across the supply chain.
Set science-based targets for energy and industry emissions: Businesses with land-based emissions must set FLAG targets alongside their industrial emissions reduction targets.

How to Set a FLAG Target for Your Business

Determine if the company falls within the FLAG scope: There are three key criteria for assessing whether a company must set a FLAG target:
1. It’s mandatory for Leather companies to set FLAG targets. According to SBTi guidance, all leather companies in the textile sector must comply.
2. Companies with FLAG-related emissions accounting for 20% or more of their total Scope 1, 2, and 3 emissions are required to set a FLAG target.
3. Companies with FLAG emissions below 20% must still include them in their non-FLAG SBTi targets to ensure full GHG inventory coverage. However, carbon removals and storage will not be included in non-FLAG targets
4. Small and medium enterprises (SMEs) are exempt if they meet at least two of the following conditions: More than 250 employees, Annual revenue below €50 million, Total assets below €25 million.
Knowing if the company falls in the 20% scope: Textile companies that use materials such as wool, viscose, rayon, cotton, or leather are likely to fall within the 20% FLAG emissions category. If a company’s product mix includes these materials, a closer assessment of emissions data is necessary.
For example, let’s say wool makes up just 10% of a product by weight. Despite its relatively small material share, the high carbon intensity of wool can lead to a 51% emission
Here’s how it adds up:
- Total product weight: 100 kg
- Wool content: 10 kg
- Emission factor for wool: 33 kg CO₂e/kg
- Emission factor for remaining materials (90 kg): 3.5 kg CO₂e/kg
Wool emissions = 10 × 33 = 330 kg CO₂e
Other materials emissions = 90 × 3.5 = 315 kg CO₂e
Total emissions = 330 + 315 = 645 kg CO₂e
In this case, wool alone contributes over 51% of total emissions, despite being only 10% of product weight.
Accounting for land-based emissions and selecting target and base year: Before setting FLAG targets, textile companies must first calculate their FLAG inventory in accordance with GHG Protocol guidelines. FLAG emissions must be separately assessed from industry-based (non-FLAG) emissions to ensure accurate reporting.
If a company chooses to integrate its FLAG target into existing industrial targets, it must first rebaseline and recalculate its current emissions data. Additionally, companies need to set both a base year and a target year, ensuring that all targets align with SBTi guidance for FLAG compliance.
Carbon removals to be reported separately: Under FLAG targets, carbon removals must be reported separately from emissions and cannot be used to offset energy or industry-related targets.
Fashion companies are prohibited from using purchased carbon credits to meet their near-term FLAG or energy/industry targets. Any reported carbon removals must come from land owned or operated by a supplier or be within the fashion brand’s supply chain, ensuring direct responsibility for emissions reductions rather than relying on external carbon credit purchases.
Adhere to the timeline: The FLAG commitment timeline is dependent on the release of the Land Sector and Removals Guidance (LSRG) by GHG Protocols. Companies must align their FLAG targets with the following deadlines:
1. Fashion companies with existing SBTi industrial targets must set their FLAG targets within six months of the finalisation of the GHG Protocol LSRG. Based on current estimates, the FLAG deadline is expected in Q1 or Q2 of 2025—a rapidly approaching milestone.
2. Companies that meet FLAG criteria and aim to set net-zero targets must also include near-term FLAG targets (5-10 years from submission) in their commitments.
3. Companies must commit to no deforestation by December 31, 2025, prioritising efforts to halt deforestation and land conversion in their supply chains. This is critical, as natural forest conversion accounts for 80% of land use change emissions.

Data Requirements for FLAG Reporting

Companies are required to collect and report land-based emissions, including CO₂, CH₄ (methane), and N₂O (nitrous oxide) emissions under Scope 1 and Scope 3, in accordance with the GHG Protocol Land Sector Guidance.

FLAG in Scope 1 emissions for textile companies refers to primary data on land-based emissions and removals occurring on working lands owned by the reporting company.
- Example: Carbon emissions resulting from the deforestation of land for cotton cultivation.
FLAG in Scope 3 emissions includes emissions that result from the company's activities but occur on land owned or controlled by another entity.
- Example: Emissions from fertiliser use in cotton fiber production.

Fashion and apparel companies must comply with the GHG Protocol Land Sector and Removals Guidance and the GHG Protocol Value Chain (Scope 3) Standard when collecting FLAG emissions data. To ensure accuracy and consistency, companies should follow these key data collection principles:

Collect high-quality data – Obtain primary data from suppliers and other value chain partners to accurately measure Scope 3 emissions.
Use default activity data cautiously – While default activity data can be used, it is less accurate and may limit a company's ability to track performance and progress toward FLAG targets. If default data is used, emission factors should be specific to the relevant commodity (e.g., country-specific emission factors should be used as a minimum), and any uncertainty in the data must be disclosed.
Ensure data granularity – Companies should collect detailed, specific data to ensure that reported FLAG-related emissions accurately reflect real-world impact.
Separate land use and land management emissions – Companies must report FLAG emissions separately for each commodity and region to improve accuracy. Additionally, emissions should be further disaggregated into Land use change emissions vs. land management emissions, CO₂ vs. non-CO₂ emissions from land management activities.

Challenges of FLAG Compliance for Fashion and Textile Businesses

Choosing the appropriate tool for FLAG target setting: According to FLAG SBTi guidance, companies must select the right approach for setting FLAG targets—either a sector-based approach, a commodity-based approach, or a combination of both.
Companies can aggregate sector and commodity-based pathways into a single FLAG target using the FLAG target aggregator. However, if a company’s commodity accounts for 10% or more of its total FLAG emissions (across all scopes), it must follow the commodity-specific pathway.
For the textile industry, which is not a direct emitter of FLAG-related emissions but relies heavily on FLAG-linked raw materials (e.g., cotton, wool, leather), selecting the appropriate FLAG target-setting tool can be complex. Understanding whether to take a sectoral or commodity-based approach remains a key challenge.
Calculating base year emissions: The earliest base year a company can set for FLAG targets is 2015. When setting an SBTi FLAG target, companies must have calculated emissions for their selected base year, which poses a challenge for those without an active emissions database.
GHG accounting for land-related emissions in the FLAG base year must include:
- Land Use Change (LUC) emissions – At a minimum, companies must report direct emissions from land-use change, such as deforestation.
- Other FLAG-related emissions – It is recommended that companies also include indirect emissions from land-use change to ensure a more complete emissions inventory.
Collecting Scope 3 FLAG emissions: Most of the FLAG emissions come under Scope 3, originating from either upstream or downstream operations. However, calculating these emissions presents a significant challenge due to the complexity of supply chains and the need for data from external partners.
Companies must build strong relationships with their supply chain partners to access accurate emissions data. Without supplier cooperation, obtaining reliable data for FLAG reporting and target-setting becomes difficult.
Tedious data collection process: Identifying the right indicators for FLAG emissions, collecting data related to it and determining which stakeholders need to be involved is a major challenge for companies. Beyond this, they must also research the best databases for emissions calculations, choose a reliable data collection platform or tool, and prepare for an annual reporting process.
Collecting data for land use and land management adds another layer of complexity, making it difficult for companies to integrate this work into their normal operations. To simplify data collection, textile companies can use industry-specific software like Greenstitch, which provides built-in databases tailored to the textile and fashion industry. If certain data points are missing, the software can fill gaps using default values, ensuring complete and accurate reporting.

How Greenstitch Helps with FLAG Compliance

FLAG reporting is complex, but Greenstitch makes it easier. As an AI-powered platform designed for textile and apparel brands, Greenstitch helps companies track carbon emissions, life cycle assessment, ESG reporting, supply chain decarbonisation, and traceability—all in one place.

With GreenStitch’s carbon accounting, businesses can calculate land-based emissions based on all required indicators, such as region type and soil classification in deforestation assessments.

Beyond emissions tracking, Greenstitch enables detailed life cycle analysis (LCA). A leather jacket, for example, carries an emissions footprint from cattle ranching (upstream) to chemical treatments in production.

For many businesses, data collection is the biggest hurdle. Greenstitch automates it by integrating industry-specific databases to fill gaps where primary data is missing. Whether a company has an in-house sustainability team or is just starting, Greenstitch provides the tools and expertise to make FLAG compliance seamless.

References

• Knowledge

• ESG Frameworks

• Sustainablility and Climate Regulations

• Disclosures & Reporting