Achieving the 1.5°C climate target will require a broader perspective on sustainability, recognizing interconnections across land, water, and ecosystems within and beyond the value chain. Companies are increasingly expected to account not only for their greenhouse gas (GHG) emissions but also for their impact on other environmental metrics in land and water systems.

Reporting on environmental metrics adjacent to carbon emissions will be required by the upcoming Land Sector and Removals Guidance (LSRG) by the GHG Protocol, which is the global benchmark for GHG accounting for land-intensive sectors. Existing carbon accounting frameworks offer a scalable foundation to incorporate additional environmental metrics, unlocking synergies that can significantly enhance Scope 3 performance.

This blog defines the key concepts related to four environmental metrics with a link to Scope 3 emissions: No Deforestation, Land Use Change, Land Tracking Metrics and Freshwater. These were selected for exploration based on their relevance for Scope 3 and their inclusion in the upcoming LSRG. The insights in this blog are based on the Data Lab – Beyond Carbon, which was a collaborative forum hosted by the Value Change Initiative in 2024. For each of these metrics, the Data Lab explored what they capture, current methodologies, their implications in the different disclosure and reporting frameworks, and existing tools.

Why report on environmental metrics beyond carbon?

No Deforestation

The Accountability Framework initiative (AFi) defines No Deforestation as a commitment to eliminating gross deforestation from value chains. This approach ensures that companies set clear targets and monitor their progress in preserving natural forests.

There are several key definitions to understand No Deforestation and related environmental metrics included in the Accountability Framework initiative:

– Deforestation: Loss of natural forest as a result of: (i) conversion to agriculture or other non-forest land use; (ii) conversion to a tree plantation; or (iii) severe and sustained degradation.

– No Deforestation: Attribute of commodity production, sourcing, or financial investments that do not cause or contribute to deforestation.

– Conversion: Loss of a natural ecosystem as a result of its replacement with agriculture or another land use, or due to a profound and sustained change in a natural ecosystem’s species composition, structure, or function.

From the perspective of Scope 3, No Deforestation is important because deforestation is a major driver of Land Use Change emissions, which fall under Scope 3 for most companies. Deforestation leads to carbon emissions from biomass loss, which not only releases stored carbon but also reduces the future potential for carbon sequestration. In total, the elimination of deforestation represents 80% of the Land Use Change mitigation potential for the Forest, Land and Agriculture (FLAG) Sector.

Land Use Change

Land Use Change (LUC), including deforestation and land management practices, significantly impacts GHG emissions, as well as land, water, and biodiversity. Accurate data on Land Use Change informs strategies to mitigate climate change and protect ecosystems.

The key definitions for LUC metrics include:

– Land Use Change: A transition from one land use category to another, such as from forest to cropland, including deforestation and other types of natural ecosystem conversion.

– Land Use Change emissions: The emissions associated with the transition from one land use category to another, including CO₂ emissions associated with carbon stock losses as well as other GHG emissions.

Land Use Change is relevant from the perspective of Scope 3 emissions because it is a major source of carbon emissions and a key driver of emissions in Scope 3, Category 1: Purchased goods and services. Companies operating in land-intensive value chains need to monitor and mitigate these emissions to meet SBTi FLAG targets and contribute to climate action efforts. Land Use Change can be calculated either as direct LUC or statistical LUC. This is influenced by the scale of accounting, which is determined by the level of traceability.

Land Tracking Metrics

Land Tracking Metrics, including land occupation and carbon opportunity cost, are essential for understanding the environmental impact of agricultural activities on lands owned or controlled by other companies. Tracking these metrics is crucial for preventing land use leakage, restoring ecosystems, and reducing Scope 3 emissions.

Land Tracking Metrics are used to account for land-related pressures and impacts that may not be fully captured by direct LUC or statistical LUC. These metrics help assess how corporate decisions influence the global competition for land and the risk of leakage.

Definitions can be found in the LSRG Draft:

– Land occupation: The amount of agricultural land occupied in the reporting year to produce a product, measured in hectares.

– Carbon opportunity cost: The total amount of carbon lost from plants and soils on land occupied by agriculture, relative to native carbon stocks. Under the LSRG, carbon opportunity cost is an optional yet recommended metric.

From a Scope 3 perspective, Land Tracking Metrics are relevant for a few reasons. First, to effectively prevent land use leakage and combat deforestation, it is crucial to track land occupation. Simply shifting sourcing away from deforested areas may inadvertently lead to land conversion elsewhere. Secondly, stopping deforestation alone is insufficient to meet the 1.5°C climate target. Companies must also contribute to restoring ecosystems and managing overall land use.

Freshwater

Water-intensive sectors are significant contributors to carbon emissions, and integrating water and carbon reporting can enhance data accuracy and efficiency. Frameworks like SBTN/SBTi, CDP, and GRI emphasize the importance of comprehensive reporting on both water and carbon, highlighting opportunities to identify synergies and improve resource management.

Key definitions for freshwater-related environmental metrics include:

– Basin/watershed/catchment: The area of land that provides all surface runoff and subsurface waters to a given waterbody.

– Water quantity: Freshwater withdrawals from surface water bodies and groundwater.

– Water withdrawals: A pressure indicator that describes the amount of water removed from any source from the environment (e.g., surface or groundwater), for anthropogenic purposes.

– Water consumption: Similar to withdrawals, but describes net removals, once water returns are considered (e.g., from non-consumptive water uses).

From the perspective of Scope 3, tracking freshwater metrics provides multiple opportunities. Freshwater is material to many companies in water-intensive sectors, such as agriculture and textile production, which are also significant contributors to carbon emissions. Tracking freshwater and Scope 3 emissions share multiple concepts and frameworks like footprints and shed-based boundaries, but apply them at different levels as carbon is global while water is local. This underscores the need for spatially resolved data and reinforces the value of Supply Shed approaches to enable integrated, location-specific resource management.

Bringing the environmental metrics together

Climate metrics like GHG emissions are now well-integrated into organizational strategies, but including broader environmental metrics into strategies, targets, and Monitoring, Reporting and Verification (MRV) frameworks continues to present both complexities and opportunities. Incorporating broader environmental metrics enhances due diligence, enables data-driven decision-making, and fosters a strong business case for value chain interventions. Regulations are increasingly mandating more comprehensive environmental reporting, as changes in land use and water management significantly impact carbon cycles. This highlights the need for common strategies to address these interconnected systems effectively. The VCI recommends exploring these strategies in relation to Supply Sheds/sourcing regions to have a holistic understanding of environmental impacts.

Complexities in adopting a holistic approach covering different environmental metrics range from methodology and boundary selection, to data accessibility and management, to reporting and verification. The process to consolidate these diverse metrics involves creating an integrated MRV framework capturing interconnections at different levels, including intervention design processes, data collection and processing, and impact reporting. The VCI recommends a pragmatic approach that prioritizes material metrics and accessible data, builds consistent methodologies, and ensures transparency through robust documentation and, where possible, third-party verification.

Learn more about environmental metrics beyond carbon

Download the full Data Lab output for guidance on current tools, disclosure standards, and three strategic pathways for implementation for environmental metrics.