What are the key requirements in this standard that will impact my business?

1. Traceability - how much do you know about your suppliers?

Business Impact:

Traceability is arguably the biggest theme of the standard. Failing to ensure traceability in your supply chain (where most of your impact likely sits) will prevent you from implementing, accounting for and reporting reductions in the impact of your supply chain which is where, as a food business, most of your impact will likely sit. So this is really crucial for hitting sustainability targets and will become a much more important element of sustainability in food supply chains.

Requirements:  

Businesses must ensure that they understand and can define the level of geographic traceability they have in their supply chain, and the traceability systems (such as chain of custody models) that they can use to evidence that. If you have a really complex supply chain, you can for example use a mass balance approach to support implementation. This may vary by product in your supply chain, and so establishing this as specifically as possible will set you up for success. This should be a component of any engagement with your supply chain, as traceability will support you in working in partnership towards a number of goals. In this standard, the traceability requirements have been raised for reporting emissions removals or land use change emissions that are lower than regional averages. Establishing only global traceability (i.e. none at all) will not be good enough to: 1. Claim better than average emissions. 2. Report carbon removals

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2. Supply Chain Engagement

Business impact:  

The standard puts more emphasis on deep and consistent relationships with your suppliers to support both of you meeting sustainability goals. Early adopters of these requirements will benefit from deeper relationships with suppliers that facilitate deeper and faster impact reductions in the supply chain. The standard also raises the importance of ensuring that any supplier data you gather is harmonised as far as possible to enable confident action.

Requirements:

Consistency in approach, and transparency on inconsistencies, is now a clear requirement. If you are engaging with your supply chain to report a more accurate environmental impact, you must ensure that the assessments you gather are harmonised in both their methodologies and secondary data sources for at least each product x source location combination. To enable decisions and action across sourcing regions and products, harmonisation must extend across your inventory. This is the fundamental core of supplier engagement. Collecting data is easy, but making it actually useful is more difficult.

The increased focus on traceability and ongoing monitoring in the LSRS also puts more of an emphasis on setting up ongoing long-term collaborations with supply chain stakeholders, rather than individual data requests. Progressing your supply chain engagement towards this model will ensure that you can also deliver impact reductions to your scope 3 inventory, in partnership with suppliers.

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3. Land Use Change

Business impact

The updated standard may trigger many businesses to rebaseline as they update methods to meet it as for example the SBTi specifically requires alignment to the LSRS. Ensure that your assessment provider is well set up to establish the materiality of any method change on your base year emissions, and start raising internal awareness of the restatement risk that this new standard poses.

Requirement:

Land use change reporting rules and requirements have been updated, with more specific recommendations on how to ensure a good assessment of the most material land use changes in your supply base. This is important to consider in the context of your baseline, as the standard is clear that companies should rebaseline if LUC calculation methods and data change - although we do expect this to only apply if the existing standard 5% materiality threshold is breached.

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4. Land Carbon Leakage

Business impact:  

Businesses are now being asked more explicitly to think about the impact of your decisions on the world outside of your value chain, to ensure that they don’t have unintended consequences. This broadens the scope of sustainability action for food businesses.

While the concept of leakage may be new to you, Foodsteps can help you identify where there is a risk of leakage in your supply chain, and calculate for you the land carbon leakage for you to report.

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Requirement

Land carbon leakage reporting is a new requirement in this standard, and a hugely important one. Carbon leakage occurs when activities that may reduce emissions (such as a significant reduction in food production due to a change in land management) lead to additional agricultural production and therefore land use change and resulting emissions due to carbon stock changes elsewhere, as food still needs to be sourced from somewhere else to meet societal demand. There is currently a high risk of agricultural leakage in the food system due to practice changes and increasing use of agricultural land for non-food uses such as biofuels. This is an important systems-level metric that supports businesses in considering the wider implications of their actions, beyond their own value chain. This needs to be reported alongside your inventory for specified high leakage risk activities.

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5. Carbon Removals

Business impact

The rules have been clarified and operationalising them is easier, however the compliance bar is still high. The focus is on reducing emissions first, however many food businesses are still relying on significant carbon removals in their value chain to deliver on their net zero targets, and as a result of this standard they know exactly what data systems and safeguards need to be in place to deliver this.

Requirement

The standard has clarified the bar for reporting carbon removals of all types in order to ensure that real removals are occurring. In particular, you must be supporting your emissions removal assessment with empirical data (direct measurements) on stored carbon at least every five years, and ensuring that you maintain the ability to monitor storage of those removals. At present, adjacent and proximate lands are excluded which reduces the potential for removals being claimed on non-productive lands, but this may change in future.

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6. GHG report

Business impact

While there are many stringent requirements in the standard, flexibility in aligning is acknowledged and supported in the shape of a GHG report.

Requirement:

Businesses are required to put together a comprehensive consolidated GHG report for all disclosure requirements outside the physical inventory such as justifications of the methods used and level of traceability available. The ability to justify choices in this way does facilitate more flexibility in aligning to the standard as business can explain why they were unable to fully meet a particular requirement.

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What should businesses do now?

1. Assess your understanding of your supply chain, and the relationships you have with stakeholders in it. These will be crucial in delivering environmental impact reductions for food businesses that allow them to meet sustainability targets.

2. Prioritise strategic business needs to focus your data collection and reporting, rather than simply LSRS alignment. Focus on what your environmental strategy delivers for your business. The LSRS ensures that your accounting and reporting of the outcomes of this strategy is robust and transparent, but it does not set this strategy for you.

3. The standard itself will come into force on 1st January 2027, so businesses do have some time to digest the requirements and implement necessary changes to their accounting and reporting systems. Don’t wait until 1st Jan 2027 to think about it though, as you may struggle to adapt your systems quickly to do so - get in touch with us now to audit your LSRS readiness with confidence.

4. The released standard contains the mandatory ‘shall’ requirements, however a technical guidance document with more clarity on ‘how to’ implementation of the requirements and related calculation methods will follow in Q2 2026. Foodsteps is already updating our models, methodologies and data to support, at a minimum, all of the mandatory requirements.

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