LSRS Unpacked for Smallholder Rice Systems: Traceability Guidance in Practice

The release of the GHG Protocol Land Sector and Removals Standard (LSRS) changes how companies account for land based emissions in Scope 3 inventories. For agricultural supply chains, including rice, the Standard clarifies how land sector emissions should be treated with the same rigor applied to energy and industrial sources.

Much of LSRS focuses on removals - an area where guidance has been lacking to date. While removal guidance will matter for a small set of rice programs, it’s not the day-to-day reality for most scope 3 rice projects. For rice systems, the most immediate implications relate to traceability, spatial boundaries, and accounting approaches for practice change programs. 

This article explains what LSRS changes on traceability and what this means for rice supply chains implementing methane reduction programs.

Clearer definition of spatial boundaries for supply sheds

A supply shed is the real-world sourcing footprint you mean when you say, “this is where our rice comes from.” Defining supply sheds is a core concept in inventory-based accounting for commodity supply chains.

In the LSRS Standard, the traceability requirements for supply sheds are formalised as a Scope 3 spatial boundary-the geographic unit used to account for Scope 3 land-sector emissions/removals and related metrics.

For situations where traceability is not achievable, the LSRS specifies that global or jurisdictional boundaries are usable. However, for situations where traceability is achievable, LSRS describes three practical ways to define that Scope 3 spatial boundary:

• Sourcing region: A predefined, spatially explicit land area that supplies a given raw material to the first point of aggregation or first processing facility in the value chain.

• Land management unit (LMU): A predefined, spatially explicit area of a given land use, managed according to clear objectives under a single land management plan to produce a given raw material (or set of raw materials). An LMU may represent areas such as a farm, field, or plot.

• Harvested area: A spatially explicit area of productive agricultural land that was harvested at a given time to produce the relevant raw material.

Practically, this means spatial boundaries can be established without requiring farmer-level traceability. In many commodity supply chains (and especially smallholder rice), farmer-level traceability and geospatial boundaries are not always feasible or appropriate. Constraints include:

• Numerous small farms and plots

• Intermediated procurement (multiple aggregation steps)

• Coordination through producer groups and shared irrigation infrastructure

Rather than treating “maximum granularity” as the goal, LSRS encourages companies to set a boundary that matches the level of traceability that is credible today, while also being fit for driving action-i.e., a boundary that enables “the most effective and efficient way to improve land management practices and foster collaborative investment for climate change mitigation within value chains.” (LSRS, p.29)

What these boundary options look like in rice supply chains

Sourcing region: In rice, a sourcing region can often be operationalised as a catchment area around a mill (or aggregation hub). This spatially explicit area represents the typical sourcing footprint feeding that first processor/aggregator.

LMU (coordinated management unit): LSRS notes that an LMU may represent farms, fields, or plots. In smallholder rice systems, however, the most implementable LMU is often not an individual field. It may be more credibly defined at the level where management is coordinated and change can be delivered-such as a cooperative, producer group, or irrigation block with shared infrastructure, coordinated management plans, and coordinated commercial contracts. This creates a practical “middle ground”: a boundary that is spatially explicit and action-oriented, without requiring farmer-level geospatial traceability upfront.

Harvested area: In rice, defining the spatial boundary at the harvested area level is often what best matches a true practice-change intervention program. If you are actively driving and incentivising practice change, monitoring practice adoption, and quantifying reductions associated with that intervention, then you are effectively operating at a harvested-area level of specificity—linking outcomes to a spatially explicit area and a defined harvest period.

Mixed Granularity Is Recognised

Mixed granularity inventory is explicitly supported in the LSRS Standard — which matters because rice supply chains are almost never uniformly traceable. In practice, you will always have some supply sheds where you have more visibility on the spatial boundary (and can run higher-quality accounting), and other supply sheds where you don’t.

Common examples of “more traceable” rice supply sheds: 

• Higher vertical integration: e.g., a mill with contract growers, or a buyer with direct procurement structures

• Better supplier relationships / more leverage: where you can request data and tailored procurement driven programs

• Existing certification or traceability infrastructure: supply chains that already had to prove origin/chain-of-custody for other reasons.

• Strong producer structures: strong cooperatives/producer groups with shared infrastructure and coordinated management

LSRS states that traceability may vary across activities and volumes within a value chain. This recognition supports phased implementation models that already exist in rice programs:

• Start with supply sheds where influence and data visibility are stronger.

• Define granular spatial boundaries where practice change programs are active.

• Maintain broader accounting for remaining volumes while documentation and traceability improve.

This structure aligns Scope 3 reporting with operational feasibility.

Chain of Custody (CoC) Under LSRS

Historically, chain of custody (CoC) guidelines under GHG protocol have had two major criticisms:

1. Previous guidance has focused strongly on removals, with little guidance on programs focused on emissions reduction (such as rice methane programs).

2. The guidance that did exist required physical traceability, defined as identity preserved or segregated traceability. This is a challenging requirement across most agricultural supply chains where products move through major aggregation and processing points and blending is normal.

LSRS improves on this by not only making all traceability requirements standard across reductions and removals, but defining physical traceability in a more workable way that aligns with the chain-of-custody models already used across supply chain standards and certification systems.

LSRS expands the definition of “physical traceability” to include additional all Chain of Custody approaches commonly used and accepted, aligning with guidance from the ISEAL alliance:

•  Identity preservation.

• Segregation.

• Controlled blending.

• Mass balance, where controls are in place.

For rice supply chains, recognition of mass balance is significant. Full segregation based on sustainability credentials is operationally challenging for many mills, but a much larger proportion would maintain control systems that support mass balance accounting.

Call out: Broken rice as a stress test

Broken rice is an interesting use case to consider because it highlights the operational limits of physical traceability - even with a definition that extends to include mass balance. Broken rice is a co-product stream created during milling. Because it represents a smaller share of output:

• A tonne of broken rice may originate from a wider sourcing footprint

• Blending may be heavier than for paddy

Some supply chains may still implement approved chain of custody models for broken rice. For many, physical traceability at the level required by LSRS may be harder to defend or costly to operationalise. LSRS recognises impact traceability as an alternative approach under strict transparency conditions. The Standard states:

• If alternative traceability approaches are used, associated values must be reported separately from the physical GHG inventory and the approach must be disclosed and justified.

• In the absence of detailed guidance on impact traceability, companies should consult auditors and relevant target setting or regulatory frameworks while ensuring transparency and adherence to GHG accounting principles.

For hard to trace product streams such as broken rice, impact traceability may be appropriate where physical traceability is genuinely difficult, provided it is separately reported and clearly justified.

Implications for Rice Methane Programs

They key take-aways on the traceability guidance for companies looking to run reduction programs in their rice supply chains are the following:

1. Supply shed definitions must be spatially explicit and defensible.

2. Traceability approaches must be documented and transparent.

3.  Mixed granularity across supply sheds is acceptable when clearly described.

4. The emphasis is on alignment between intervention design, spatial definition, and reporting structure, rather than enforcing a “one size fits all” approach.

To learn how CarbonFarm can help your rice programs align with the LSRS guidance, contact info@carbonfarm.tech