Category: Sustainability reporting

October 4, 2023

GHG Protocol – An International Standard for Measuring and Reporting Corporate Greenhouse Gas Emissions

The Greenhouse Gas Protocol, or GHG Protocol, is the most widely used international method for measuring and reporting greenhouse gas emissions. According to this method, emissions are divided into three different categories: Scope 1, Scope 2, and Scope 3.

The classification according to the GHG Protocol reduces the risk of double counting between emission calculations and helps to understand the emission sources throughout the entire value chain of business.

GHG Protocol and Scope 1, 2, 3

According to the GHG Protocol, emissions are classified as follows:

Scope 1 includes all direct greenhouse gas emissions resulting from the company’s operations.
Scope 2 includes greenhouse gas emissions resulting from the production of purchased and consumed energy.
Scope 3 includes all other indirect greenhouse gas emissions resulting from the company’s operations, but the emission sources themselves are not owned or controlled by the company. Such emission sources include, for example, emissions from the production of purchased goods and services, as well as emissions from business travel and commuting. Scope 3 emissions are further categorized into fifteen different emission categories.

Why it’s Important to Reduce a Company’s Greenhouse Gas Emissions

The EU Corporate Sustainability Reporting Directive (CSRD) reporting obligation will come into effect for the first companies in 2024. The CSRD aims to expand the scope of reporting and establish more uniform reporting standards.

The CSRD requires companies to ensure that their business aligns with the goals of the Paris Climate Agreement. Meeting this requirement necessitates companies to monitor greenhouse gas emissions with greater precision and to ambitiously and purposefully reduce emissions.

While not all small and medium-sized enterprises may face the same pressure for emission reductions, the emission reduction efforts and goals of larger companies flow down the value chain to smaller businesses. Thus, promoting climate responsibility may become a significantly more important competitive advantage for small and medium-sized enterprises in the future.

How to Get Started in Reducing Greenhouse Gas Emissions

Identifying the emission sources that are crucial to a company’s operations and calculating emissions is the first step in managing a company’s climate impact. With the identification of the most significant emission sources, a company can set appropriate and effective measures and targets for its operations.

Timely and targeted measures enable the reduction of emissions in a company’s business in both the short and long term. In the future, it will no longer suffice to manage emissions from one’s own operations (scope 1 & 2), but it will also be important to target emission reduction measures towards the emissions in the value chain (scope 3).

Our team of experts are happy to assist you with any questions related to greenhouse gases, their calculation, monitoring, and reporting.

Do you have any questions? Send your questions via the form below, and we will get back to you soon.

October 3, 2023

What are scope 2 emissions and why are they important?

Scope 2 emissions form a significant part of the climate impacts of the company’s own operations. They cover the indirect emissions of energy production, which arise because of purchased and consumed energy production. The emissions are part of the greenhouse emissions inventory according to the GHG Protocol (Greenhouse Gas Protocol) measurement and reporting standard. The GHG protocol is the most used standard for measuring and reporting greenhouse emissions, where emissions are divided into three different categories: scope 1, scope 2 and scope 3.

What do Scope 2 emissions include?

Emissions include all greenhouse gas emissions that arise from the production of energy purchased from another party. This includes emissions from the production of purchased electricity, heat, steam or cooling.

Electricity and heat purchased for most companies are the main sources of scope 2 emissions. However, it should be noted that for some companies, the separate procurement of steam and cooling can also cause scope 2 emissions. On the other hand, if the company produces some or all its own energy, the emissions from production are taken into account as part of the calculation of scope 1 emissions.

Why is monitoring and reporting of scope 2 emissions important?

Monitoring and reporting of greenhouse gas emissions is an important part of companies’ environmental responsibility. Emissions calculation helps companies understand the climate impacts of their own operations and set goals for reducing emissions. The GHG protocol unifies emissions calculation and reporting, which ensures uniform implementation of companies’ emission calculations and, to some extent, enables comparison of results. In addition, monitoring greenhouse gas emissions provides transparency to stakeholders such as customers, investors, and authorities.

Reporting of greenhouse emissions

Since 2014, the European Union’s NFR Directive (Non-Financial Reporting Directive) has required all companies employing more than 500 people to report on their social and environmental impacts. This obligation also applies to the reporting of greenhouse gas emissions.

From 2024, the reporting obligation according to the new CSRD (Corporate Sustainability Reporting Directive) will enter into force, and with it, the reporting will move to an approach in accordance with the new guidelines. The new directive aims to expand the scope of reporting and establish more uniform reporting standards. In addition, the reporting obligation will gradually extend to all listed companies.

Reducing emissions and optimizing energy

It is important that companies understand the importance of scope 2 emissions and take them into account in their environmental strategy. Emission reduction measures and optimization of energy procurement can help companies reduce their carbon footprint and promote sustainable development.

Ecobio’s team of experts are ready to help companies with issues related to greenhouse gas emissions, monitoring, and reporting, so that they can fulfill their reporting obligations and act responsibly towards the environment.

October 3, 2023

What are Scope 1 emissions and why are they important?

Scope 1 emissions are part of the greenhouse emissions inventory according to the measurement and reporting standard of the GHG protocol (Greenhouse Gas Protocol).

A large part of the company’s climate impact consists of greenhouse gas emissions, of which the most significant are carbon dioxide (CO2), methane (CH4) and nitrous oxide (N2O) emissions. The most used standard for measuring and reporting greenhouse emissions is the GHG protocol, where emissions are divided into three different categories: scope 1, scope 2 and scope 3.

GHG protocol

The GHG protocol is a global standard for measuring and managing greenhouse emissions. The GHG protocol unifies the calculation and reporting of emissions, which ensures uniform implementation of companies’ emission calculations and to some extent enables the comparison of results.

According to the Greenhouse Gas Protocol, emissions are divided into three different categories:

Scope 1 includes all direct greenhouse emissions from the company’s own operations
Scope 2 includes greenhouse emissions caused by the production of energy (electricity, heat, steam and district cooling) purchased and consumed in the company’s operations
Scope 3 includes other indirect greenhouse emissions related to the company’s operations, such as business travel, waste handling and primary production of purchases. Scope 3 contains 15 different emission categories.

deneme bonusu veren siteler

What about Scope 1 emissions?

Scope 1 emissions consist of the company’s direct emissions caused by resources owned or controlled by the company. Scope 1 class emissions are generated directly because of the company’s operations, and these are the easiest ones for a company to control.

Scope 1 emission sources

The emission sources are direct emissions from the company’s own operations:

Process emissions. Process emissions refer to direct greenhouse gas emissions, such as methane emissions from anaerobic fermentation or natural gas flaring, generated in the company’s operations.

Own energy production. If the company produces operational energy either for its own use or that of other operators, the emissions resulting from energy production are included in the scope 1 emissions of the reporting company.
Fuel consumption. Emissions caused by fuel consumption in machines, equipment and vehicles owned or managed by the company.
Fugitive emissions. Fugitive emissions are so-called leak emissions, which are caused, for example, because of pipe and equipment leaks. Fugitive emissions occur not only in industry but also in ordinary home and office conditions, such as, for example, malfunctioning refrigerators and air conditioners. Fugitive emissions can be reduced or completely avoided by taking care of the equipment’s condition and maintenance appropriately and by repairing or replacing malfunctioning equipment.
Scope 1 emissions therefore include greenhouse gas emissions directly caused by the company’s own operations. Since emissions are generated because of the company’s own operations, it is also the easiest to influence them.

Calculation of Scope 1 emissions

When calculating Scope 1 emissions, it is essential to identify the direct emissions of one’s own operations. In terms of identifying emissions, it is important to define the organizational boundaries of the reporting company.

The organizational boundary determines which emissions are the company’s own and indirect (scope 1&2) emissions related to energy consumption, and which are value chain (scope 3) emissions. Organizational demarcation is done in accordance with the GHG protocol either based on the company’s capital share or management.

After identifying the Scope 1 emission sources, the consumption figures for the reporting year necessary for the calculation are collected. If direct consumption figures, such as liters of fuel consumed during the year, are not available, the calculation can be made based on secondary data sources, such as kilometers driven during the year.

In terms of calculation, it is also essential to identify and determine the appropriate emission factor for each emission source. The most accurate calculation result is achieved by using supplier-specific emission coefficients, but if emission data is not available from the supplier, emission coefficients available from public or commercial data sources can also be used in the calculation.

Ecobio’s experts are happy to help you with all questions related to greenhouse gases and their monitoring and reporting.

October 3, 2023

What does scope 1, 2 and 3 emissions mean?

The most internationally used standard for measuring and reporting greenhouse emissions is the GHG protocol (Greenhouse Gas Protocol), where emissions are divided into three different categories: scope 1, scope 2 and scope 3.

When reporting on the climate impacts of business operations, it is customary to classify emissions into scope 1, 2 and 3 categories in accordance with the GHG protocol. Classification of emissions reduces the risk of double counting between emission calculations of different companies and helps the company and the company’s stakeholders to understand the most significant emission sources of the company’s business in its own and value chain operations.

Many companies also report value chain emissions in more detail, broken down into fifteen different emission categories. By utilizing emission data, the company is able to identify the most relevant emission sources for its operations and optimize its business to reduce the burden on the environment.

Greenhouse gas emissions caused by the company’s operations, such as carbon dioxide (CO2), methane (CH4) and nitrogen oxide (N2O) emissions, are a significant environmental aspect related to the business.

Growing reporting obligations, such as the CSRD sustainability reporting directive, now and in the future require companies to report in detail the environmental impacts of their business operations

Scope 1, scope 2 and scope 3 classification

In accordance with the Greenhouse Gas protocol, emissions are classified as follows:

Scope 1 includes all direct greenhouse emissions that are formed as a result of the company’s operations
Scope 2 includes greenhouse emissions caused by the production of purchased and consumed energy
Scope 3 includes all other indirect greenhouse emissions that are formed as a result of the company’s operations, but the emission sources themselves are not owned or controlled by the company. Such emission sources include, for example, emissions from the primary production of purchases and emissions caused by travel and transport. Scope 3 emissions are broken down into fifteen different emission categories.

Scope 1: direct greenhouse emissions

Scope 1 emissions consist of direct emissions from resources owned or controlled by the company. Emissions are created as a direct result of the company’s operations, and these emission sources are typically the easiest to control.

Scope 1 emissions can be divided into four groups:

Process emissions

Process emissions refer to direct greenhouse gas emissions, such as methane emissions from anaerobic fermentation or natural gas flaring, generated in the company’s operations.

Own energy production

If the company produces operational energy either for its own use or that of other operators, the emissions resulting from energy production are included in the scope 1 emissions of the reporting company.

Fuel consumption

Emissions caused by fuel consumption in machines, equipment and vehicles owned or managed by the company.

Fugitive emissions

Fugitive emissions are so-called leak emissions, which are caused, for example, as a result of pipe and equipment leaks. They occur not only in industry but also in ordinary home and office conditions, such as, for example, malfunctioning refrigerators and air conditioners. These emissions can be reduced or completely avoided by taking care of the equipment’s condition and maintenance appropriately and by repairing or replacing malfunctioning equipment.

Scope 1 emissions therefore include greenhouse gas emissions directly caused by the company’s own operations. Since Scope 1 emissions are generated as a result of the company’s own operations, it is also the easiest to influence them.

Scope 2: indirect greenhouse emissions of energy consumption

Scope 2 emissions include all greenhouse gas emissions that arise from the production of energy purchased from another party. This includes emissions from the production of purchased electricity, heat, steam or cooling.

Electricity and heat purchased for most companies are the main sources of scope 2 emissions. However, it should be noted that for some companies, the separate procurement of steam and cooling can also cause scope 2 emissions. On the other hand, if the company produces some or all of its own energy, the emissions from production are taken into account as part of the calculation of scope 1 emissions.

By identifying the most essential scope 2 emission sources, the company can develop its energy consumption and procurement in a more sustainable direction and reduce the emissions of its business.

Scope 3: indirect greenhouse emissions of the value chain

Scope 3 emissions cover all indirect greenhouse gas emissions that occur as a result of the company’s operations, but the emission sources are not directly owned or controlled by the company. These emissions include, for example, emissions caused by the supply chain, emissions from transport, emissions from the use of sold products and emissions from waste treatment.

In most companies, the majority of greenhouse gas emissions are generated in the company’s value chain, either upstream or downstream in relation to the company’s own operations.

Upstream emission sources include all indirect emissions that occur in the company’s value chain up to the moment of handing over one’s own product or service.

The GHG protocol divides these emission sources into eight different categories:

Purchased products and services
Fixed assets
Activities related to fuels and energy that have not been taken into account as part of the scope 1 & 2 calculation
Upstream transportation and distribution
Handling of waste generated in operations
Business trips
Business trips
Property leased by the company
Downstream emission sources include all indirect emissions that occur after the product or service is delivered to the customer.

The GHG protocol divides these emission sources into seven different categories:

Downstream transportation and distribution
Processing of sold products
Emissions from the use of sold products
Emissions from the final processing of sold products
Downstream leased property
Franchise Business Emissions
Emissions from investment activities

Why is monitoring the company’s emissions important?

Carbon footprint monitoring and reporting is an important way for companies to take responsibility for their environmental impact. Since 2014, all companies employing at least 500 people have been obliged to report on their social and environmental impacts in accordance with the European Union’s NFR (Non-Financial Reporting Directive).

With the Corporate Sustainability Reporting Directive (CSRD), responsibility reporting will become even more precise and demanding for companies.

With the new CSRD directive, it was intended to expand the scope of the corporate reporting guidelines and more uniform reporting standards. In addition, the reporting obligation will gradually extend to all listed companies.

Scope 1, 2 and 3 emissions included in responsibility reporting

In the EU, various directives oblige companies to report on the environmental harm and social impact of their business operations.

Since 2014, the European Union’s NFR Directive (Non-Financial Reporting Directive) has obliged all companies employing more than 500 people to report on their social and environmental impacts. This obligation also applies to the reporting of greenhouse gas emissions.

From 2024, the reporting obligation according to the new CSRD (Corporate Sustainability Reporting Directive) will enter into force, and with it, reporting will move to an approach in accordance with the new guidelines.

The CSRD directive aims to expand the scope of reporting and establish more uniform reporting standards. CSRD requires companies to ensure that the company’s operations are in line with the goals of the Paris Climate Agreement. Meeting this requirement requires companies to monitor greenhouse gas emissions even more closely and to achieve ambitious and goal-oriented emission reductions.

Management of climate effects particularly responsible business activities

Finding out the sources of greenhouse gas emissions that are relevant to the company’s operations and calculating the emissions is the first step in managing the company’s climate impacts. By identifying the most significant emission sources, the company can set appropriate and effective emission reduction targets for its own operations.

Timely and targeted measures make it possible to reduce emissions in the company’s business in the short and long term. In the future, it will no longer be enough to manage the emissions of one’s own operations (scope 1&2), but it is also necessary to apply emission reduction measures to the emissions of the value chain (scope 3).

It is important to include the management and planned reduction of climate impacts as part of the company’s responsibility strategy, because the company’s climate responsibility is an inseparable part of sustainable business operations. The stricter requirements and expectations of stakeholders and legislation regarding responsibility require ambitious and effective climate measures.

Although not all small and medium-sized companies are necessarily under the same pressure in terms of emission reductions, the emission reduction measures and targets of large companies trickle down the value chain to smaller companies as well. For this reason, it is also time for SMEs to include climate issues as part of their responsibility strategy and to prepare well in advance for possible future claims.

Ecobio’s team of experts are happy to help you with all questions related to greenhouse gases and their monitoring and reporting.

Submit your question via the form below and we’ll get back to you shortly.

July 12, 2023

Materiality assessment creates the foundation for Responsibility Goals and Sustainability Reporting

The Materiality Assessment tells about the sustainability risks to which the company is exposed, as well as the effects of the company’s own operations on people and the environment.

The materiality assessment helps to understand the most significant activities related to responsibility for the company and to identify the issues that have a key impact on the company’s ability to create value. With the help of a materiality assessment, companies have a clearer picture of the sustainability risks to which the company is exposed, as well as the effects of the company’s own operations on people and the environment.

The double materiality principle guides the materiality assessment of companies

With the help of a comprehensive materiality assessment, the most significant sustainability aspects for the company are defined and the issues that have a central effect on the company’s ability to create value are identified. Companies should act on time and map the situation of the operating environment that is essential for the company. Forerunner companies have the best opportunities to ensure new business opportunities through responsible operations.

The materiality assessment of corporate responsibility serves as the basis for the company to have up-to-date information on what kind of effects sustainability risks, such as climate change, can have on the company’s results and operations (outside-in). Companies must also be aware of the effects of their own operations on people and the environment (inside-out). This principle of reporting from both perspectives is called double materiality, which is clarified in the EU Sustainability Reporting Directive (CSRD).

The principle of double materiality means that the company has to make two separate materiality assessments. In the future, double materiality will serve as a central guiding principle in assessing sustainability effects, but Corporate Responsibility cannot rely on it alone. The company must assess the materiality of sustainability issues and risks from two different perspectives (outside-in and inside-out).

The aspects of materiality must be taken into account separately, and in addition, the key aspects that are essential for the company from both perspectives must be taken into account. Sustainable Development goals cannot be deprioritized just on the basis that some sustainability risk does not seem to have financial effects on the company. Companies should keep their materiality assessment up to date and update it regularly.

Sustainability reporting is developing

The goals of Sustainable Development are now especially relevant for companies’ value creation. Guided by them, the company achieves results in a planned and sustainable way, respecting nature and people. Customers are more aware than before of the possibilities for companies to act in an environmentally friendly manner, and thus the market-based demand for a green transition has grown.

A company that operates in a sustainable and responsible manner makes climate goals and other sustainable development goals part of its strategy and ensures the achievement of business benefits despite changing world situations. Companies are required to have a clear situational picture of its effects on the environment, society and people, also taking human rights into consideration.

Sustainability reporting will be a regulatory obligation in the future, when the new corporate sustainability reporting directive (CSRD) becomes applicable in all EU member states. An even larger number of companies will be covered by the reporting obligation, which must report more detailed information about their business operations. At the latest, as required by regulation, company management must take a more significant role than before in setting the company’s sustainability goals and ensuring the achievement of responsibility goals.

Materiality assessment in cooperation with Ecobio
We help your company prepare a versatile corporate responsibility materiality assessment and a road map, with which the responsibility goals are more easily utilized in strategic decision-making.

June 21, 2023

Corporate Sustainability Reporting Directive (CSRD) explained

Corporate Sustainability Reporting Directive (CSRD) is in action since January 2023. CSRD will strengthen and standardize the rules for how companies are required to report on their social and environmental activities and their impact on people and the planet. Currently Corporate Sustainability Reporting Directive impacts approximately 50 000 companies in Europe.

CSRD timeline and what to expect in the future

The Corporate Sustainability Reporting Directive applies to companies in the following order:

From January 2024, listed companies with more than 500 people (i.e. those already covered by the NFRD are obliged to prepare a statement of non-financial information and publish information according to the EU taxonomy).
From January 2025, listed and unlisted companies that meet at least two of the following criteria: more than 250 employees, revenue of 20 million euros or more than 40 million euros in turnover.
Listed SMEs from 1 January 2026.
From January 2028 CSRD expands to third-country companies with turnover over 150 million euros.

Companies subject to the CSRD will have to report according to European Sustainability Reporting Standards (ESRS).

ESRS entered a four-week feedback period for the first set of Sustainability Reporting Standards, the feedback period lasts from 9th of June to 7th of July 2023.

These mandatory reporting standards aim to ensure that companies are fully transparent about their impact on people and the environment. The standards will also be a key tool in trying to extinguish green washing. The new standards will assist companies in communicating and managing their sustainability performance more efficiently.

After the four week feedback period, the commission will consider the feedback given and then finalise the standards. When adopted, the standards will be used by companies that are subjected to CSRD (Corporate Sustainability Reporting Directive) reporting requirements. This will be another step forward to the goal to achieve a sustainable EU economy.The requirements for different companies will be phased in gradually, depending on factors such as company size and revenue.

Additionally, all sustainability reports must be verified by an independent assurance provider, to ensurereliable information. CSRD also supports and requires reporting in digital format.

Prepare now for CSRD reporting

In 2023 prepare reporting systems. Ensure you have clear Key Performance Indicators (KPI’s), goals and a plan in place for 2024 reporting requirements.

In 2024 gather data trough out the year for 2025 reporting and review it with your accountant. Note, if your company is subjected to NFRD you are required to report on 2024 data in 2025.

In 2025 review your reporting activities and systems to establish or improve for 2026 reporting. It is also good to note that many companies that are not yet in the scope of CSRD will have to report for the companies that are in the scope because they need information about their supply chain’s impacts.

Corporate Sustainability Reporting Directive reporting requirements

CSRD is adding requirements on top of the Non-Financial Reporting Directive (NFRD). According to the NFRD, large companies must report on:

environmental matters
social matters and treatment of employees
respect for human rights
anti-corruption and bribery
diversity on company boards (in terms of age, gender, educational and professional background)

With the Corporate Sustainability Reporting Directive companies need to also report on:

governance relating to sustainability impacts, risks and opportunities
impacts of sustainability-related risks and opportunities on the company’s strategy, business and financial planning
processes for identifying and assessing sustainability impacts, risks and opportunities
metrics and targets that are used to assess and manage sustainability risks and opportunities

Corporate Sustainability Reporting Directive impact on business strategy

Sustainability will in the future have a bigger role in the evaluation of companies. In addition to the reporting obligations, CSRD sets other requirements for companies. For example, in the future companies must plan how to take climate and other sustainability risks into account in the business model and strategy, as well as the transition to a climate-neutral economy.

The role of the company’s management and board of directors must now be strengthened in accordance with sustainability goals. The interest of customers and investors in responsible and environmentally sustainable businesses has grown. This contributes to the financing companies receive for sustainable and responsible projects.

The direction is clear even for those who have not yet been able to participate in creating responsible businesses. Common sustainable development rules accelerate the market, creating new growth opportunities for companies.

Large companies are already obliged to annually publish information on how much of their operations are in line with the EU taxonomy’s climate and environmental goals. The first EU taxonomy reporting was due in the first months of 2023.

Benefits of CSRD directive

According to the European Parliament, The CSRD will improve the existing legislation (NFRD) by requiring more detailed information from companies’ impact on the environment, human rights and social standards, that are in line with the EU’s climate goals.

What we can expect from adapting to CSRD is

Standardized reporting on companies’ activities on people and the planet, therefore providing the opportunity to compare sustainability reports to one another.
Direct finances and investments to activities and businesses that create a positive or ‘net-zero’ impact on the planet and people.
CSRD pushes management to adapt to or improve their strategies to be aligned with sustainability and EU climate goals.
CSRD enforces companies’ capability to mitigate risks, such as climate risks that will help companies to ensure longevity.

Adapting to CSRD requirements as soon as possible is recommended, due to the vast scope of the directive. Where to start from depends on the company’s status with sustainability matters and how well they are documented and reported in the past.

Building a reporting system with Double Materiality assessment is a highly recommended starting point as it is required in the directive to be analysed.

If you wish to talk more about CSRD, don’t hesitate to contact us below or send an email to info@ecobio.fi.

February 10, 2023

The science-based target for Nature – at the core of business strategy

The science-based target for Nature (SBTs for Nature) is leadership’s next must-have. Biodiversity loss and degradation of nature are increasing; therefore, businesses need to take biodiversity into account when creating their strategies and sustainability reports.

Biodiversity loss influences ecosystems, species extinction and the natural resources humans need. Companies working in forestry, farming, convenience, and infrastructure industry will be impacted first.

Science-based Targets (SBTs)

Science-based Target (SBT) mean emission reduction targets that are lined with the Paris Climate Agreement: targets support limiting global warming to well below 2°C compared to pre-industrial times and support efforts to limit warming to 1.5°C. With SBTs you know exactly how much and how fast you need to cut your greenhouse gas emissions.

Science-based means acting within limits of the earth’s carrying capacity that are favorable and safe for nature and humans, and determined by scientifically studied information. Additionally, target needs to be measurable, time-bound and impact the company’s activities.

The most known SBTs are Science-based Targets for Climate. SBT for Climate is widely known and globally used by various companies. The initiative is based on science-backed knowledge of how to cut greenhouse gas emissions globally to preserve living conditions. Companies committed to SBTs achieve on average better results than those not committed to SBTs.

What are science-based targets for Nature?

Science-based Target Network, SBTN, is preparing a Science-based target for Nature (SBT for Nature) model for companies, just like the Science-based target for Climate (SBT for Climate). In the SBT for Nature, companies will find guidelines for leading and reporting on companies’ actions to prevent future biodiversity loss.

The model will include the following steps:

Evaluate. Carry out a materiality assessment. Look at the business value chain.
Interpret and prioritize. Identify the affected areas. Prioritize.
Measure, set goals & report. Set the base level. Plan your observation. Set goals. Report baseline and goals.
Act. First of all, avoid adverse effects. Reduce them. Protect and restore. Convert.
Track the impact of your results. Report. Verify.

SBT for Nature will cover biodiversity, freshwater, ocean, and land. The model is still under development, currently, the principles, elements and guidelines are being tested. The first part of SBT for Nature V1, is published in March 2023

How does Science-based Target for Nature differ from SBT for Climate?

Science-based Targets for Climate aims to stop global warming to 1.5 degrees Celsius in accordance with the Paris climate agreement. Companies committed to climate goals have one clear goal, reducing greenhouse emissions. How the goals are achieved is freely up to the companies, and progress is easy to measure.

Currently, there is no global goal to protect nature, as there is for the climate. Prevention of biodiversity loss is location-bound, both in terms of influencers and consequences. Reducing greenhouse emissions is not location-bound.

The decrease in biodiversity is accelerated by changing, diverse and interacting factors. Biodiversity loss does not manifest itself in the same way globally, in which case protecting biodiversity and monitoring progress requires location-related goals.

SBT for Nature considers several different dimensions: water bodies, and the well-being of the soil and the seas, and requires site-specific plans and goals. Companies must therefore have separate goals for the use of fresh water, pollution of fresh water and so on.

Ecobio’s biodiversity services for companies

We offer biodiversity services ranging from research to leadership consulting. The expertise of Ecobio’s biodiversity team is created at the intersection of many disciplines – from the cooperation of specialists in biology, geography and management.

We will be happy to discuss more how you can move forward in taking nature into account in your business.

Ecobio is the expert partner of leading companies in biodiversity.

We help you balance business and nature.

January 10, 2023

Sustainability reporting in Europe – All you need to know

Every year sustainability reporting in Europe for companies operating in the European Union accelerates. Below you can read the key points of corporate sustainability reporting that are valid today and in the future.

EU Green Deal

Climate change and biodiversity degradation pose a threat to Europe and the world. To prevent aggravating climate change further and to overcome the challenges caused by climate change and biodiversity loss, the European Union established a European Green Deal.

The EU Green Deal’s short-term goals are:

Europe to be the first climate-neutral continent by 2050
Cut greenhouse gas emissions by 55% compared to 1990-levels
3 billion trees planted in the EU by 2030

In the long term the Green Deal aims to transform the EU into a modern, resource-efficient and competitive economy, ensuring:

no net emissions of greenhouse gases by 2050
economic growth decoupled from resource use
no person and no place is left behind

Corporate Sustainability Reporting in Europe

Under EU law large companies are obligated to report annually on company operations and how a company manages social and environmental challenges. The sustainability reporting regulations help to direct financing towards sustainable companies and activities, supporting the EU Green Deal goals for 2030 and 2050.

A key contribution to achieving the European Green Deal goals is to improve the data on the sustainability risks companies are exposed to and their impact on people and the environment. Improved data requires improved and mandatory corporate reporting on these issues.

Today, approximately 12000 public-listed companies are required to report, however, by 2027 over 50 000 companies will be impacted by European sustainability standards under the Corporate Sustainability Reporting Directive (CSRD).

All large companies (stock market lister or not) will have to adhere to the European sustainability standards, already reporting companies from 2025 and large companies currently not reporting from 2026.
Listed SMEs will have time until 2027 to adapt to coming reporting standards and requirements.
The reporting requirements will also cover companies with headquarters outside the EU with over 150€ million in turnover in the EU from 2029.

European sustainability reporting standards

The European Sustainability Reporting Standards (ESRS) specify the obligations of the Corporate Sustainability Reporting Directive (CSRD).

The ESRS define the minimum level of mandatory corporate responsibility information for companies. All companies report in addition to the general principles related to sustainable business operations:

strategy and business model
sustainability effects
sustainability risks and opportunities.

The standards were prepared with the choices of various stakeholders, the European financial reporting advisory group EFRAG in November the second set of EU sustainability reporting standards. Based on these 12 standard drafts, the commission will publish this standard in the summer of 2023. Read more here.

Mandatory reporting requirements

In 2023, the first round of full EU taxonomy reporting was required from companies reporting under the NFRD. From 2024 onwards, the scope of the EU taxonomy will expand as the Corporate Sustainability Reporting Directive (CSRD) is implemented, requiring more and more companies to include EU Taxonomy information in their sustainability reporting.

Corporate Sustainability Reporting Directive (CSRD)

With CSRD reporting, a larger part of companies operating in the EU will be covered by taxonomy reporting, and in addition, companies must publish more detailed information in connection with their activity report, e.g., about the environmental and social impacts of their business.

The CSRD scope:

Starting from 1 January 2024, all listed companies that employ more than 500 people (i.e. those that are already covered by the NFRD and are obliged to prepare a statement of non-financial information and to publish information according to the EU taxonomy).
From January 1, 2025, listed and unlisted companies with more than 250 employees and more than €40 M in turnover.
SMEs listed from 1 January 2026.
Third-country companies with net turnover above 150 million in the EU from 1 January 2029.

5 steps to prepare for CSRD – read more here

EU Taxonomy

EU taxonomy is part of the EU Green Deal, which aims to promote the EU carbon neutrality targets by 2050. EU taxonomy requires companies to classify their environmentally sustainable activities and investments. The aim of the Taxonomy is to get the financial market to direct investments towards more environmentally sustainable solutions.

As of January 2023, companies must assess the sustainability of their economic activities. This must happen in accordance with the technical screening criteria for the EU taxonomy climate goals.

EU Taxonomy in a nutshell – Read more here.

EU’s Directive on Corporate Sustainability Due Diligence (CSDD)

In February 2022, the European Commission proposed a Directive on corporate sustainability due diligence (CSDD). CSDD places companies with a key role in building a sustainable economy and society in the EU and complements several current sustainability reporting legislation, such as the CSRD, the Sustainable Finance Disclosure Regulation and the EU Taxonomy regulation.

Under the CSDD companies are required to:

integrate due diligence into policies;
identify actual or potential adverse human rights and environmental impacts;
prevent or mitigate potential impacts;
bring to an end or minimise actual impacts;
establish and maintain a complaints procedure;
monitor the effectiveness of the due diligence policy and measures;
and publicly communicate on due diligence.

The future of sustainability reporting

As sustainability reporting within Europe continues to develop, the legal and mandatory reporting requirements and due diligence work within the EU will increase. The EU aims to set a global standard for sustainability work and key features of sustainability reporting will have an impact outside the EU, encouraging the rest of the world to follow suit.

European countries outside the EU will most probably incorporate, or at least benefit from voluntary reporting from an early stage due to higher market pressure. All third-country companies with EU subsidiaries will have to report sustainability information based on CSRD from 2029, thereby affecting companies also on other continents.

The immediate next steps of future sustainability reporting in Europe include the adaption of the Corporate Due Diligence Directive and the addition of activities under the EU Taxonomy regulation. The EU has high ambitions for setting a legal framework to achieve the goals of the European Green Deal and combat the most threatening sustainability risks that impact our societies today.

Sources

https://www.consilium.europa.eu/en/press/press-releases/2022/11/28/council-gives-final-green-light-to-corporate-sustainability-reporting-directive/

https://ec.europa.eu/commission/presscorner/detail/en/ip_22_1145