Understand ESG, CSRD, and sustainability reporting

Environmental, Social, and Governance — the three central pillars used to measure the ethical, sustainability, and non-financial performance of an organization or investment.

A private certification issued to for-profit companies of their social and environmental performance. It measures a company’s entire social and environmental performance, from supply chain and input materials to charitable giving and employee benefits.

Corporate Sustainability Reporting Directive — an EU directive requiring large companies and listed SMEs to publish regular reports on their environmental and social impact activities.

A key principle of the CSRD requiring companies to report on both how sustainability issues affect their business performance (financial materiality) and how their business impacts society and the environment (impact materiality).

A classification system establishing a list of environmentally sustainable economic activities to help the EU scale up sustainable investment and implement the European Green Deal.

The threshold at which an ESG topic becomes sufficiently important to a company’s stakeholders and its business performance that it warrants active management and disclosure.

The practice of making unsubstantiated, misleading, or deceptive claims about the environmental benefits of a product, service, technology, or company practice to appear more sustainable than it actually is.

The statistical classification of economic activities in the European Community, used under sustainability frameworks like the CSRD to categorize companies and define sector-specific reporting requirements.

A classification framework for greenhouse gas emissions. Scope 1 covers direct emissions from owned sources; Scope 2 covers indirect emissions from purchased electricity/heating; Scope 3 covers all other indirect value chain emissions.

A state in which the greenhouse gases going into the atmosphere are balanced by removal out of the atmosphere, targetable by reducing absolute emissions by 90-95% and neutralizing residual emissions.