ESG Reporting Guidelines

🌍 Navigating the CSDDD with CDP: A Must-Read Guide🌍 The Corporate Sustainability Due Diligence Directive (CSDDD) is setting the stage for stronger corporate accountability and sustainability in the EU. But how can companies ensure they're meeting these expectations? 🤔 The latest CDP Policy Explainer provides a detailed roadmap, highlighting how companies can address the CSDDD requirements as well as how they align with CDP disclosures. In addition, the guide covers climate transition plans in alignment with global standards, including IFRS S2, ERFAG (ESRS), SEC, GRI, and GFANZ. 🔍 What you’ll learn: 1️⃣ Clear Transition Plan Elements: Governance, scenario analysis, risk management, strategy, financial planning, and target setting – all critical pieces for a successful climate transition plan. 2️⃣ Standards & Frameworks: Learn how your disclosures align with leading frameworks like IFRS, ESRS, and GFANZ, making sure you're compliant with CSDDD requirements. 3️⃣ Actionable Insights: From governance to value chain engagement, the guide shows exactly where and how to report on your company’s climate risks, opportunities, and progress. 4️⃣ Full vs. Partial Coverage: Know which elements the standards require and where CDP goes beyond, helping you stay ahead of the regulatory curve. 🌱 Why it matters: With global regulatory pressure increasing, aligning with these frameworks can boost a company’s credibility, manage risks, attract capital, and ensure long-term resilience. #CDP #CSDDD #Sustainability #ClimateTransition #IFRS #ISSB #GRI #ESRS #CSRD #GFANZ #CorporateGovernance #ClimateStrategy #NetZero #TransitionPlans #DueDiligence #ESGRegulation

99% of professionals can explain Scope 1, Scope 2, and Scope 3 emissions in theory. But far fewer can confidently calculate them❗🤷♂️ That’s where many sustainability and ESG initiatives get stuck. Understanding the formulas behind GHG accounting is essential if you want carbon footprint results that are accurate, auditable, and decision-useful. The GHG Protocol groups emissions into three categories: • Scope 1 – Direct emissions from sources owned or controlled by the organization (fuel combustion, company vehicles, onsite processes) • Scope 2 – Indirect emissions from purchased electricity, heating, steam, or cooling • Scope 3 – All other indirect emissions across the value chain, often representing the largest share of an organization’s footprint At the core, the calculation follows a simple principle: Emissions = Activity Data × Emission Factor × Global Warming Potential (where applicable) Key inputs include: ✓ Activity Data (fuel used, electricity consumed, distance travelled, waste generated, etc.) ✓ Emission Factors (GHG emitted per unit of activity) ✓ Global Warming Potential (used to convert gases into CO₂e) A few practical reminders: • Good carbon accounting starts with good activity data. • Always use the most recent and credible emission factors available. • Document assumptions and data sources. • Report emissions in CO₂e for consistency. • For Scope 2, understand the difference between location-based and market-based reporting. • For Scope 3, engage suppliers early because data availability is often the biggest challenge. A strong carbon footprint is not built by software alone. It is built by understanding the logic behind the calculations, selecting the right data, and applying internationally recognized methodologies consistently. Organizations that master these fundamentals are better positioned to identify reduction opportunities, set credible targets, and meet stakeholder expectations. For practical sustainability and ESG, Carbon footprint, and LCA masterclass courses: visit: 365sustainability.com #Sustainability #ESG #CarbonFootprint #GHGProtocol #Scope1 #Scope2 #Scope3 #ClimateAction #NetZero #Decarbonization #LifeCycleAssessment #LCA #CarbonAccounting #SustainabilityReporting

Sustainability Reporting Isn’t a Maze Anymore — It’s Becoming a Map. This chart shows the most important shift in sustainability disclosures: consolidation. For years, organizations were overwhelmed by overlapping frameworks (GRI, SASB, TCFD, CDP...) — but now, we're seeing convergence led by IFRS and its ISSB board. Why does this matter? - Less confusion, more clarity. The consolidation under IFRS and ISSB is pushing toward a global baseline for sustainability reporting. - TCFD’s influence lives on in the climate focus of ISSB, which many jurisdictions are adopting as mandatory. - GRI complements ISSB by covering broader impacts beyond investors — making dual reporting the new gold standard. Understanding this ecosystem helps businesses future-proof their reporting strategy, no more guessing which standard to follow. Now it’s about aligning with the ones that are shaping the global narrative.

Carbon accounting is getting an overhaul. The GHG Protocol just released an update for its new Scope 2 Guidance for corporate emissions reporting. Scope 2 – the emissions from purchased energy – can be measured in two ways: Location-Based:  Measures emissions using the average carbon intensity of the local grid where electricity is consumed. Market-Based: Allows companies to report emissions based on purchasing energy certificates, like Renewable Energy Certificates (RECs). As the graph below shows, there can be huge discrepancies in Scope 2 emissions reporting depending on which of these accounting methods is applied. The market-based method allows reporters to report their emissions for purchased energy, even if the electricity isn't physically delivered to where it's used. Raising questions about accuracy and impact. The new update proposes: - a shift toward hourly and regional matching, meaning your RECs must reflect when and where you actually use electricity - Stricter boundaries for reporting, no more claiming solar from Texas for night-time operations in New York - A new marginal emissions impact metric will let companies still highlight the climate value of clean energy purchases that fall outside new inventory rules However, some warn that these changes could limit investments in renewable energy projects. A draft of the guidance is expected for comment by the end of 2025, with full implementation by the end of 2027. What do you think the GHG Protocol should do about Scope 2? Read the update here: https://lnkd.in/e5xHmpWh

Scope 3 Disclosure Requirements 🌍 Scope 3 emissions are becoming a central focus of climate disclosure regulations in Europe, the UK, and several other markets. From 2025 onward, many companies will be required to report value chain emissions as part of broader sustainability reporting mandates. These rules shift Scope 3 disclosure from a voluntary initiative to a regulated obligation with clearly defined expectations. Voluntary reporting under CDP, TCFD, or SBTi has often lacked consistency. New requirements demand more complete and verifiable data, with a focus on materiality and category-level disclosure. The shift reflects growing investor pressure and regulatory convergence around the role of indirect emissions in climate risk and performance assessments. CSRD compliance deadlines have been adjusted through the EU Omnibus proposal, delaying requirements for some companies until 2028 or 2029. However, the direction remains unchanged. Scope 3 data will increasingly shape access to capital, public contracts, and trade advantages through mechanisms such as CBAM. Value chain emissions often represent the largest share of a company’s footprint. Their scale makes them a significant source of both exposure and opportunity. Procurement criteria, supplier contracts, and product design choices are already beginning to incorporate emissions performance as a competitive factor. Identifying emissions hotspots across the 15 Scope 3 categories is a critical first step. This involves combining financial or activity data with emissions factors to produce consistent, comparable estimates. Finance, procurement, and sustainability teams must collaborate closely, supported by digital tools that manage large volumes of data. Disclosure obligations vary depending on jurisdiction, sector, and market exposure. Reporting gaps, especially in material categories, may lead to reputational and legal risks. Companies with fragmented Scope 3 data are increasingly challenged during audits, transactions, or government procurement processes. Scope 3 data also provides a platform for decision-making. It can inform cost analysis, efficiency improvements, and supplier engagement strategies. When integrated into core business processes, carbon data enables companies to anticipate future constraints and improve long-term resilience. These diagrams developed by ERM help clarify these elements, including a breakdown of regulatory frameworks, emissions by sector, and the 15 categories defined by the GHG Protocol. These visual tools illustrate the scale and structure of Scope 3 challenges, supporting a more targeted and strategic response. Source: ERM #sustainability #sustainable #esg #business

Important read. European Central Bank has released an opinion paper on the role of CSRD and CSDDD expressing concern on reduction of scope citing business competitiveness today is dependent also on utilising sustainability as an asset. Reporting on it supports better understanding on the return on investment on any such efforts. Here is a summary of the key messages: ⚉ Sustainability Reporting as a Strategic Asset →High ROI on Reporting: Sustainability data enables better risk management, supports investment flows into green sectors, and improves financial stability across the EU. →Informed Decision-Making: Reliable, comparable ESG data supports effective monetary policy, supervision, and financial regulation. →Supports Innovation & Competitiveness: Harmonized ESG reporting aligns with the EU’s long-term industrial and climate goals, e.g., Clean Industrial Deal and Competitiveness Compass. ⚉ ECB’s Strategic Role →Data-Driven Monetary Policy: The ECB needs quality firm-level ESG data to account for climate and nature-related risks in its monetary operations. →Financial Supervision: Incomplete ESG data from banks (due to scope reduction) could impair the ECB’s oversight and undermine market stability. →Systemic Risk Management: ESG data gaps can create blind spots in macro-prudential frameworks. ⚉ Concerns Raised by the ECB →Reduction in Reporting Scope: An 80% cut in reporting entities risks systemic blind spots—especially excluding high emitters and smaller but significant financial institutions. →Voluntary Standards Risk: Without mandatory reporting, there’s potential for greenwashing, self-selection bias, and data fragmentation. →Loss of Sector-Specific Standards: Eliminating these could undermine comparability and weaken risk differentiation for banks and investors. ⚉ ECB Recommendations →Maintain robust ESG reporting for all significant financial institutions, regardless of size. →Introduce simplified standards for “medium-large” undertakings (500–999 employees) to bridge the gap. →Ensure the timely adoption of assurance standards and maintain Commission authority for sector-specific guidelines. →Leverage ESAP and digital access for bulk ESG data use by market participants. #sustainabilityreporting #esg #ecb #greenfinance #csrd #euregulation #sustainablefinance #monetarypolicy #financialstability #climaterisk #corporatereporting #esgdata #duediligence #eucommission #sustainablegrowth European Commission

#Climate reporting is dead. Long live 氣候揭露! [with a #DoubleMateriality cherry on top] ICYMI, late last year, the Chinese Ministry of Finance released 企業永續揭露準則第1號－氣候 (试行) | Corporate Sustainable Disclosure Standard No. 1 – Climate (Trial). The Chinese standard aligns with IFRS’s S2 climate reporting standard, but importantly includes the requirement to report on both how climate change affects a company’s finances as well as the impact of their business activities and value chains on the environment. Also notable that whilst the Ministry has said the new standard will at first be voluntary, in time it will expand implementation “from listed companies to non-listed companies, from large enterprises to SMEs, from qualitative requirements to quantitative requirements, and from voluntary disclosure to mandatory disclosure.” This new reporting standard is particularly relevant for Aotearoa #NewZealand given China’s position as one of the country’s most important trading partners, and the rapidly shifting geopolitical sands. The standard’s release also reinforces calls for NZ companies impacted by the recent rollback of domestic #ClimateReporting requirements to continue building on the foundations of recent years, understand and focus on where the process can best derive strategic value, and prepare for the inevitable requests from international value chains and customers captured by their reporting regimes.

👉 CSRD EXPLAINER 👈 The purpose of the Corporate Sustainability Reporting Directive (CSRD) is to standardize corporate sustainability reporting. Its primary objective is to ensure that stakeholders and investors have access to consistent, comparable, and reliable information regarding sustainability (ESG). The CSRD has 12 underlying European Sustainability Reporting Standards (ESRS). There are three critical ESRS (besides mandatory disclosures in ESRS 2), namely ESRS E1, ESRS S1, and ESRS G1, which focus on climate change, social aspects of the workforce, and governance practices, respectively. As shown in the figure, these standards pertain to processes that the reporting entity controls, manages, or is directly involved in through their operations. As part of ESRS E1, companies are required to report comprehensive information regarding their impact on and effects from climate change. It is important to note that all companies are CO2 emitters, which means that they have a negative effect on the environment. A company that determines that this topical matter is irrelevant must also provide a defense explaining why this is so. Companies that deem this matter material must disclose their exposure to physical and transition risks related to climate change and the opportunities they may pursue including, - GHG emissions (GHG Protocol): Detailed reporting on greenhouse gas (GHG) emissions, including Scope 1 (direct), Scope 2 (indirect from energy), and Scope 3 (all other indirect emissions) emissions. - Climate Targets and Transition Plans (TPT): Disclosure of targets related to climate change mitigation and adaptation, as well as the strategies and plans to achieve these targets. - Resilience of their business models in the face of climate change. ESRS S1 focusing on the company's own workforce. This is also an actual impact, however companies are not required to file a defense if they deem this matter immaterial. S1 requires companies to report information on working hours, wages, and employment conditions. Furthermore, entities need to report data on the diversity of the workforce, health and safety, training, as well as labor practices. ESRS G1 focuses on governance aspects, ensuring that companies provide clear and transparent information about their governance structures and practices. ESRS G1 requires companies to disclose the company’s governance framework, including the roles and responsibilities of the board and management. This includes information on the company’s policies and practices related to ethics, anti-corruption, and anti-bribery as well as how the company engages with stakeholders, including shareholders, employees, customers, and other relevant parties. Required information in G1 is risk management framework (processes for identifying, assessing, and managing risks), executive remuneration, and transparency regarding executive compensation, incl. link between remuneration and the company’s sustainability performance.

🌎🌍🌏Updated information on global regulation of embodied carbon! (mostly good news, I promise...) 🌟EU ⚪️ No change From 2028, all member states will be required to report embodied carbon for major projects. From 2030, this will be extended to all projects, and limits will also be introduced. This EPBD website explains the latest progress on these requirements: https://lnkd.in/dPbhEf4V 🧀The Netherlands 🟢Positive update! Thank you to all those who pointed out that the Netherlands have mandated embodied carbon reporting since 2013, with limits introduced in 2018 and tightened in 2021! 🏆https://rb.gy/dniq67 🧀France 🟢Positive update! I should similarly share that France has had limits in place since 2022 under their RE2020 legislation: https://rb.gy/lazqnp ⛄Nordics 🟢Positive update! I missed Finland off the list! They join Denmark, Noway and Sweden as already having reporting legislation in place - and Denmark also has limits. There's a great chart showing the progress here: https://lnkd.in/d9DgjU5w 🗽USA⚪️ No change States including California, Colorado, New York, Oregon require embodied carbon reporting for some materials. These states have a combined GDP so great that they combine to make the third largest economy in the world. CLF overview document: https://lnkd.in/db_YRvxC 🍁Canada 🟢Positive update! The cities of Vancouver and Toronto, and several other municipalities, have introduced planning requirements, and the federal govt’s policies for their own facilities include embodied carbon requirements: https://rb.gy/j9i7sm 🌇Singapore 🟠Clarification! Singapore's laws make embodied carbon optional, as it's a BREEAM-esque 'points mean prizes' where embodied carbon assessments count towards your points. Read their code for environmental sustainability of buildings here: https://lnkd.in/dXx3Wxun 🦘Australia 🟢Positive update! Better news than I thought last week - turns out that the National Construction Code 2025 will have voluntary embodied carbon standards, likely to then be mandated from 2027! Also, New South Wales alread regulates measurement in commercial and domestic buildings for planning. Positive moves here! https://lnkd.in/d6hY28rY 🥝New Zealand 🔴 Bad news! Sadly, I've had confirmation that there will no longer be embodied carbon regulation introduced this year. The UK feels your pain, NZ... ☹️ 💂UK🟢Positive update! For fairness, we should probably celebrate that more and more local authorities in the UK are working to introduce embodied carbon as a planning requirement. It's a bit of a mess (see here: https://rb.gy/254bie), but still better than nothing. But still, at a national level, www.part-z.uk keeps fighting...🥊 Massive thanks to all those who wrote to me last week to share updated insights from your country, and to Jannik Giesekam for sharing his knowledge and links with me to get me started in the first place. #embodiedcarbon #wholelifecarbon #regulation #policy #decarbonisation #netzero #leadership

Contrary to prevailing sentiment, greenhouse gas inventories are dramatically inadequate tools for climate target accounting. Traditional GHG reporting was designed to capture static snapshots of emissions estimates across company activities and value chains. They are definitively not designed (and are mostly unable) to reliably track the impact of mitigation actions that companies apply in their supply chains. Inventory accounting wasn't designed to distinguish between an emissions drop caused by a divestiture, a procurement decision, and a deliberate mitigation action. When all of that gets folded into one inventory number, the signal gets lost. That's one of the core problems TCAT's Mitigation Action Accounting and Reporting Guidance (MAARG) was built to solve. Task Force for Corporate Action Transparency just published a piece walking through exactly how this framework works and why the separation of inventory accounting from impact accounting is long overdue. The MAARG introduces five distinct reporting statements -- Physical, Contractual, and three Impact statements. These statements let different types of information live where they actually belong, rather than being collapsed into a single figure. One statement for your baseline footprint. One for how contractual instruments (RECs, SAF certificates, etc.) adjust that picture. Three more for the actual climate impact of the actions you've taken: in your inventory (captured as emissions impact that would otherwise not be visible in your footprint) in your sector, and beyond your value chain. On paper, five statements sounds like more complexity. In practice, it's the opposite. We drew from our experiences building the MRV architecture under the Paris Agreement to inform how this works in the guidance, and it's an essential set of distinctions to make if we really care about separating the impact of intentional climate action and the MANY changes in inventories that occur as a result of wide range of things that sustainability teams have functionally zero influence over. Read it here: https://lnkd.in/dNpxX2wD