EU Taxonomy CSRD

Demystifying Sustainability Reporting Terms: A Guide to Key Concepts

Sustainability reporting has become a vital component of modern business practices, driven by the increasing importance of environmental, social, and governance (ESG) considerations. In Europe, not only is the market demand impacting the increase in sustainability practices and activities the EU legislation is requiring companies to report on their sustainability activities in a standardized way that supports a change to a more sustainable economy.

Sustainability Reporting Terms You Should Know

As companies seek to address their impact on the world, for sustainability and ESG managers it can be difficult to navigate the complex landscape of terms and acronyms that govern their reporting efforts.

In this article post, you will find some of the essential sustainability reporting terms, with a focus on European legislation and global standards, including the EU Taxonomy, European Sustainability Reporting Standards (ESRS), Corporate Sustainability Reporting Directive  (CSRD) and others.

Sustainability reporting is a dynamic field that requires businesses to navigate a complex web of terms and standards. Understanding these key concepts, from ESG and CSRD to Scope 1, 2, and 3 emissions, the EU Taxonomy, European Sustainability Reporting Standards (ESRS) and others is essential for companies aiming to communicate their sustainability efforts effectively.

Compliance with European legislation and adherence to global reporting standards, including ESRS, are crucial steps toward transparent and impactful sustainability reporting.

Sustainability Reporting terms from A to Z

Biodiversity Reporting:

Biodiversity reporting focuses on a company’s impact on ecosystems and biodiversity. It includes measuring and disclosing actions taken to mitigate harm to natural environments.

Carbon Disclosure Project (CDP):

The CDP is a global platform for companies to disclose environmental data, particularly related to climate change. It helps investors and stakeholders assess a company’s environmental performance.

Corporate Sustainability Reporting Directive (CSRD)

The Corporate Sustainability Reporting Directive (CSRD) is a vital European legislative initiative that expands sustainability reporting requirements for companies operating within the European Union. It replaces the Non-Financial Reporting Directive (NFRD) and mandates companies to report on their environmental, social, and governance (ESG) performance, fostering transparency and enabling stakeholders to assess companies’ sustainability efforts effectively.

Corporate Sustainability Due Diligence Directive, CS3D (CSDDD):

The CS3D, also known as Corporate Sustainability Due Diligence Directive, is a significant European legislative proposal designed to enhance sustainability reporting requirements for companies operating in the European Union.

ESG (Environmental, Social, and Governance):

ESG refers to the three central factors used to evaluate a company’s ethical and sustainable practices. It encompasses environmental impact, social responsibility, and corporate governance. ESG reporting is integral to assessing a company’s overall sustainability performance.

EU Green Deal:

The EU Green Deal is a comprehensive plan by the European Union to make the EU’s economy sustainable. It addresses various aspects of sustainability, including climate change, energy efficiency, and biodiversity.

EU Taxonomy:

The EU Taxonomy is a classification system that defines environmentally sustainable economic activities. It plays a crucial role in aligning investments with EU climate and energy targets for 2030 and the European Green Deal’s objectives.

European Sustainability Reporting Standards (ESRS):

ESRS refers to a set of standardized reporting requirements and guidelines for sustainability reporting in the European Union. They provide a harmonized framework for companies to disclose their ESG performance.

GRI Standards (Global Reporting Initiative):

GRI Standards are a set of globally recognized guidelines for sustainability reporting. They provide a comprehensive framework for organizations to report on their ESG performance in a standardized manner.

German Act on Corporate Due Diligence Obligations in Supply Chains (Lieferkettensorgfaltspflichtengesetz – LKsG ):

LKsG is a German legislation addressing corporate due diligence obligations in supply chains. It focuses on ensuring responsible business practices, particularly regarding environmental and social concerns.

Materiality Assessment:

A materiality assessment is a process through which companies identify ESG issues that are most relevant and significant to their business and stakeholders. Reporting should prioritize material issues.

NFRD (Non-Financial Reporting Directive):

The NFRD is a European Union directive that outlines the reporting requirements for certain large companies regarding their environmental and social impact. It aims to increase transparency and accountability in non-financial reporting.

SASB Standards (Sustainability Accounting Standards Board):

SASB Standards are industry-specific reporting standards that focus on financially material ESG factors. They help companies disclose industry-relevant sustainability information to investors.

Scope 1, Scope 2, and Scope 3 Emissions:

These terms are part of the Greenhouse Gas (GHG) Protocol, a globally recognized framework for measuring and managing GHG emissions. Read more on Scope 1, 2 and 3 emissions here.

  • Scope 1 emissions: Direct emissions from sources that a company owns or controls, such as emissions from on-site combustion.
  • Scope 2 emissions: Indirect emissions from the generation of purchased electricity, heat, or steam consumed by the reporting company.
  • Scope 3 emissions: All other indirect emissions that occur in a company’s value chain, including emissions from suppliers, transportation, and product use.

TCFD (Task Force on Climate-related Financial Disclosures):

TCFD provides recommendations for disclosing climate-related financial risks and opportunities in mainstream financial filings. It encourages companies to assess and report on climate risks.

Corporate Sustainability Reporting has never been easier

Keeping track of all aspects of your sustainability reporting activities and KPIs can be a hurdle when data is scattered across different systems and spreadsheets. With Ecobio Manager you can control every aspect of climate risk assessment, CSRD and EU Taxonomy in one place. Ecobio Manager ensures that can you manage the requirements with ease. Helping you to process all the steps required for successful compliance with EU Taxonomy and CSRD. Read more here.

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