Important terms about carbon management and sustainability, made simple.

Resources

Glossary

The Carbon Disclosure Project (CDP) supports organizations, cities and investors in disclosing their environmental impacts by running a disclosure scoring system through questionnaires. Over 9,600 companies respond to the CDP and based on the submitted responses, CDP then calculates a score to assess the companies' environmental stewardship. The Scores range from A to D-, whereby different scores are provided for each assessment area (climate change, water, and forests).

Source: [CDP](https://www.cdp.net/en)

Carbon Disclosure Project (CDP)

The Corporate Sustainability Reporting Directive (CSRD) is the revised and expanded successor of the NFRD. It was proposed by the European Commission in April 2021 and aims to harmonise sustainability disclosure practices across the EU. It widens the reporting requirements of the NFRD to cover all large companies meeting the following criteria:

- €40 million in net turnover and/or
- €20 million assets on the
balance sheet and/or
- 250 or more employees.

Furthermore, it sets more detailed reporting requirements, a requirement to report according to mandatory EU sustainability reporting standards, a digital ‘tag’ for the reported information as well as the assurance of the disclosures. 
The CSRD will apply from: 

- January 1, 2024 for companies already subjected to the NFRD;
- January 1, 2025 for large companies not currently subjected to the NFRD;
- January 1, 2026 for listed SMEs and for small and non-complex credit institutions and proprietary insurance companies.

Source: [European Commission](https://ec.europa.eu/info/business-economy-euro/company-reporting-and-auditing/company-reporting/corporate-sustainability-reporting_en)

Corporate Sustainability Reporting Directive (CSRD)

Emission trading is a market instrument that aims to reduce emissions by selling a specific amount of pollution permits to certain polluting parties (e.g. power sector, manufacturing industry and aircraft operators). Policymakers establish how much a certain party is allowed to pollute and these parties need to buy the corresponding amount of pollution permits. If a party pollutes in excess of its allowances it has to pay a penalty. 
The EU ETS is the European Union’s Emission Trading System and almost 2,000 parties fall under its scope. 
Source: [BMUV](https://www.bmuv.de/en/topics/climate-adaptation/climate-protection/what-is-emissions-trading)

Emission Trading System (ETS)

The EU Taxonomy is part of a bundle of measures proposed within the EU’s Sustainable Finance Action Plan. The EU taxonomy aims at supporting the European member states in scaling up sustainable investment and implementing the European Green Deal by providing them with a classification system for environmentally sustainable economic activities. It establishes six environmental objectives: 

- climate change mitigation,
- climate change adaptation,
- sustainable use and protection of water and marine resources,
- transition to a circular economy,
- pollution prevention and control, and
- protection and restoration of biodiversity and ecosystems.

In order to align with the Taxonomy, economic activities have to meet four conditions:

- making a substantial contribution to at least one environmental objective;
- doing no significant harm to any other environmental objective;
- complying with minimum social safeguards;
- complying with the technical screening criteria.

The first two objectives (climate change mitigation and climate change adaptation) have to be applied from January 2022 onwards, whereas the remaining four objectives are still under development and should apply from January 2023 onwards. The Taxonomy applies to financial market participants, all companies who are subjected to the NFRD and to the EU’ member states. 

Source: [European Commission](https://ec.europa.eu/info/business-economy-euro/banking-and-finance/sustainable-finance/eu-taxonomy-sustainable-activities_en)

EU Taxonomy

The European Green Deal is a bundle of political initiatives that were proposed by the European Commission in 2019. It supports a change of the EU towards a green, fair, and prosperous society in a modern and competitive economy. The overall aim of the European Green Deal is to achieve climate neutrality within the EU by 2050.

Source: [European Commission](https://ec.europa.eu/info/strategy/priorities-2019-2024/european-green-deal_en)

European Green Deal

The Global Reporting Initiative (GRI) is an international organisation that provides the world’s most used sustainability reporting standard. The GRI was founded in 1997 with the aim to create an accountability mechanism for responsible environmental conduct principles for companies. In 2016, the GRI published their first global standards for sustainability reporting, which enable companies and other organisations to report on their impacts on environment, social and governmental matters.

Source: [Global Reporting Initiative](https://www.globalreporting.org/)

Global Reporting Initiative (GRI)

The Greenhouse Gas Protocol (GHG Protocol) is an internationally recognised framework for measuring and managing greenhouse gas emissions. It was established by the World Resource Institute (WRI) and the World Business Council for Sustainable Development (BWCSD) in the late 1990ies out of a need for an international standard for corporate greenhouse gas accounting and reporting. For corporate carbon accounting, the following two standards are relevant:

The [Corporate Accounting and Reporting Standard](https://ghgprotocol.org//node/485/) contains requirements and guidance to prepare a greenhouse gas inventory for companies and other organisations. 

The [Corporate Value Chain Standard](https://ghgprotocol.org/standards/scope-3-standard) focuses on Scope 3 emissions and helps companies to account for the emissions from their entire value chain. 

It is the most used Corporate Greenhouse Gas Accounting Standard worldwide.

Source: [Greenhouse Gas Protocol](https://ghgprotocol.org/)

Greenhouse Gas Protocol (GHG Protocol)

The Intergovernmental Panel on Climate Change (IPCC) is an international body of climate change scientists, who investigate the scientific, technical and socio-economic information which is relevant to understand the risks of human-induced climate change. 
Source: [IPCC](https://www.ipcc.ch/)

Intergovernmental Panel on Climate Change (IPCC)

The ISO 14064 consists of three parts (ISO 14064-1, -2 and -3), of which the ISO 14064-1 is the International Organization for Standardization's norm for quantification and reporting of greenhouse gas emissions and removals on a organisational level.

The norm was first published in 2006 to create a greenhouse gas reporting standard that is fully compatible with the standards on energy and environmental management (ISO 14001 and ISO 50001).

In 2018 the ISO 14064-1 was revised and is now based on the GHG-Protocol, translating its requirements into an ISO format. Similar to the GHG Protocol the ISO 14064-1 distinguishes between direct and indirect emissions, but does not categorize them into scopes. 

Source: [ISO 14064-1](https://www.iso.org/standard/66453.html)

ISO 14064

The Kyoto Protocol is an international agreement struck by 159 nations attending the Third Conference of Parties (COP) to the United Nations Framework Convention on Climate Change, which was held in December of 1997 in Kyoto, Japan. It requires developed nations to meet reduction targets of 5% of their greenhouse gas emissions relative to their 1990 levels during the period of 2008 to 2012.

Source: [EPA, GHG Protocol](https://www.epa.ie/environment-and-you/climate-change/what-is-europe-and-the-world-doing/kyoto-protocol/#:~:text=The%20Kyoto%20Protocol,-On%2011%20December&text=The%20major%20feature%20of%20this,for%20the%20period%202008%2D2012.)

Kyoto Protocol

The Non-Financial Reporting Directive (NFRD) was the commencement of an EU-wide sustainability reporting regulation. The directive was introduced by the EU in 2014 and adopted into German law in 2017, aiming to improve the disclosure of ESG information of organisations. Its scope includes the reporting of environmental,  social, employee-related and human rights matters, as well as anti-corruption and bribery topics. Organisations which are subjected to the NFRD must compile a non-financial report with information on their policies, results and risks regarding these topics.
Organisations subjected to the NFRD are all large entities who:

- are publicly listed or publicly listed entities who are parent organisations of a large group (includes listed companies and banks and insurance companies)
- have more than 500 employees on average

Source: [Umweltbundesamt](https://www.umweltbundesamt.de/sites/default/files/medien/2546/dokumente/summary_uba_study_evaluation_nonfinancial_reporting_en_0.pdf)

Non-Financial Reporting Directive (NFRD)

The Paris Agreement from 2015 is a legally binding treaty on climate change which was ratified by 193 countries. It sets the goal to limit global warming to well below 2°C, preferably 1.5°C, compared to pre-industrial levels. To achieve this goal, all parties submitted their plans for climate action, called “nationally determined contributions” (NDCs), by 2020. Within the NDCs countries communicate their actions to decrease greenhouse gas emissions and reach climate neutrality by the middle of the century.  
Source: [United Nations Framework Convention on Climate Change](https://unfccc.int/process-and-meetings/the-paris-agreement/the-paris-agreement)

Paris Agreement

The Science Based Targets initiative (SBTi) offers a framework and a platform for companies to set emission reduction goals that are in line with the 2015 Paris Agreements. The initiative was founded by CDP (Carbon Disclosure Project), the World Resource Institute (WRI), the United Nations Global Compact and the World Wide Fund for Nature (WWF). It provides best practices in emission reduction and net-zero targets as well as technical assistance for companies who set science-based targets in line with a 1.5°C global warming scenario. 

Source: [Science Based Targets Initiative](https://sciencebasedtargets.org/)

Science-Based Targets Initiative (SBTi)

The Sustainable Finance Disclosure Regulation (SFDR) consists of a bundle of EU regulations addressing measures to make the sustainability profile of funds more transparent and standardised when analysed by end-investors. It imposes mandatory ESG disclosure obligations for asset managers and other financial markets participants and applies from 10 March 2021 onwards.

Source: [Eurosif](https://www.eurosif.org/policies/sfdr/)

Sustainable Finance Disclosure Regulation (SFDR)

The Task Force on climate related Financial Disclosures (TCFD) was initiated by the Financial Stability Board to improve and increase the reporting of climate-related financial information. The disclosure shall help investors, lenders, and insurance underwriters in assessing climate related risks. 

Source: [United Nations Environment Programme - Finance Initiative (UNEP FI)](https://www.unepfi.org/)

Taskforce on Climate-related Financial Disclosures (TCFD)

Standards and Regulations

A CO2 equivalent (CO2e) is a unit of measure that indicates the global warming potential (GWP) of different greenhouse gases, expressed as the GWP of one unit of carbon dioxide. It is used as a common basis when calculating the emissions of different greenhouse gases. 

Source: [GHG Protocol](https://ghgprotocol.org/sites/default/files/Guidance_Handbook_2019_FINAL.pdf)

Carbon Dioxide Equivalent (CO2e)

The Global Warming Potential (GWP) is the factor with which a greenhouse gas contributes to the greenhouse gas effect, measured as one unit of a given greenhouse gas in relation to one unit of Carbon dioxide (CO2). 
Depending on their physical and chemical attributes, the different greenhouse gases differ in their behaviour in the atmosphere. The degree to which they contribute to global warming depends on their radiative efficiency (the ability to absorb energy) and their length of stay in the atmosphere. 
The GWP of CO2 is used as a reference value with the unit of 1 over a time span of 100 years, to which the GWPs of other greenhouse gases can be compared to. Methane (CH4), for example, has a GWP of 27-30 over 100 years. This is because CH4 lasts longer in the atmosphere and also absorbs more energy than CO2. 

Sources: [GHG Protocol](https://ghgprotocol.org/sites/default/files/Guidance_Handbook_2019_FINAL.pdf)

Global Warming Potential (GWP)

Greenhouse Gases (GHG) are gases that store and emit radiant energy within thermal infrared range, leading to the “greenhouse gas effect” by heating the atmosphere and thereby contributing to global warming. The most relevant greenhouse gases linked to anthropogenic global warming are: carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), hydrofluorocarbons (HFCs), perfluorocarbons (PFCs), and sulphur hexafluoride (SF6).

Source: [GHG Protocol](https://ghgprotocol.org/sites/default/files/Guidance_Handbook_2019_FINAL.pdf)

Greenhouse Gases (GHG)

Tipping points are large-scale components of the Earth system, which are characterised by a threshold behaviour. When changes in theEarth system occur - for instance due to climate change - and reach their respective threshold, called “tipping point” in this context, that system can tip into a different and often irreversible state. Crossing these tipping points has severe impacts on the environment. 

Examples are circulation patterns in the ocean such as the golf stream, which plays a role in the climate of northwestern Europe. The circulation of the golf stream is driven by cold, salt-heavy water sinking. Due to climate change melting ice in the northern latitudes, the amount of freshwater increases, what lowers the saline contents of the golf stream and slows it down. This in turns causes drastic changes in marine ecosystems and a cooling of the north Atlantic region. 

Source: [Potsdam Institute for Climate Impact Research](https://www.pik-potsdam.de/en/output/infodesk/tipping-elements)

Tipping Points

Climate Science Basics

Activity based carbon accounting accounts for caused emissions by multiplying the physical unit of an activity with the corresponding emission factor (e.g. litres of fuel burned). It is the most accurate carbon accounting method as real physical values are used. 

Source: [GHG Protocol](https://ghgprotocol.org/sites/default/files/standards/Scope3_Calculation_Guidance_0.pdf)

Activity-based accounting

Carbon accounting refers to the systematic measurement and monitoring of emissions of CO2 and other greenhouse gases. It is used to produce a CO2 balance which enables companies and other organisations to understand their impact on the climate. In contrast to sustainability accounting, carbon accounting only considers environmental impacts, whereas sustainability accounting also considers social and governmental aspects. 

Source: [Global Reporting Initiative](https://www.globalreporting.org/)

Carbon Accounting

A carbon footprint calculator is a tool used to convert activity data into its carbon equivalent, by multiplying the value with its respective emission factor. The result is an estimation of the carbon emissions emitted by the certain activity. 

Carbon Footprint Calculator

Carbon Offsetting describes the practice of compensating emissions by reducing them elsewhere. 

Therefore, climate change mitigation projects, such as afforestation projects, produce a certain amount of CO2-certificates, based on an estimated amount of emissions reduced or saved by this project. Other parties, such as governments or companies, can buy these CO2-certificates to compensate for their emissions on the balance sheet. On an individual level, carbon offsetting can be made by agreeing to pay a certain amount on top of a purchase, which will then be used to finance such mitigation projects. 

Source: [GHG Protocol](https://ghgprotocol.org/)

Carbon offsetting

Climate risks arise from significant changes in the earth’s spheres and are a consequence of human-made changes to the climate and the environment. They can be divided into extreme weather events such as droughts, extreme rainfall and heavy storms, and slow onset events such as ocean acidification, rises in sea levels and loss of biodiversity. 
Source: [BMZ](https://www.bmz.de/en/development-policy/climate-change-and-development/climate-risk-management) 

Climate risks

A Corporate Carbon Footprint represents the emissions that arise from all company’s activities within the chosen reporting period and operational boundaries. The resulting CO2 balance comprises at least the Scope 1 and Scope 2 emissions, preferably also the Scope 3 emissions as far as possible. 

Source: [GHG Protocol](https://ghgprotocol.org/)

Corporate Carbon Footprint (CCF)

Corporate Sustainability reporting, also called ESG reporting, refers to the disclosure of corporate performance along three non-financial dimensions: Environment, Social and Governance, which can be either voluntary, solicited or mandatory. The aim is to help stakeholders such as investors and consumers to evaluate the non-financial performance of a company and to encourage companies to develop a responsible way of conducting business.

In Europe, EU laws require certain companies to report on ESG aspects, in addition to their financial information. To date, this requirement applies to large public-interest companies with more than 500 employees, which represent approx. 11’700 companies, including listed companies, banks, insurance companies and other public-interest entities. Under these EU reporting regulations, they must disclose information about their management of social and environmental challenges as well as their governmental operations. 

Source: [European Commission](https://ec.europa.eu/info/business-economy-euro/company-reporting-and-auditing/company-reporting/corporate-sustainability-reporting_en)

Corporate Sustainability reporting / ESG reporting

Direct greenhouse gas emissions, also called “Scope 1 Emissions”, refer to all emissions stemming from sources that can be directly attributed to a company. Examples are emissions from the combustion of heating oil at a company’s sites or the combustion of fuel for a  company’s car fleet. 

Source: [GHG Protocol](https://ghgprotocol.org/)

Direct greenhouse gas emissions

Emission factors are used in the estimation of the quantity of CO2 emitted by an activity. These values can be found in various databases, provided by governments, such as DBEIS, ProBas and EPA, or private providers such as ecoinvent. 

For example, the emission factor assigned to the activity of burning fuel oil is 2.54 kgCO2e/liter. Therefore, burning one liter of fuel oil represents the emissions of 2.54 kgCO2e (calculation: 1*2.54) 

Source: [DBEIS](https://naei.beis.gov.uk/data/ef-all)

Emission factors

Indirect greenhouse gas emissions arise as a *consequence* of a company’s activities, but occur at sources that are not owned or controlled by this company. Both “Scope 2” and“Scope 3” emissions refer to indirect GHG emissions. Examples are emissions arising from the production of purchased electricity, emissions from business travel or emissions that can be attributed to the production of purchased goods. 

 Source: [GHG Protocol](https://ghgprotocol.org/)

Indirect greenhouse gas emissions

Used interchangeably, a Life Cycle Analysis or -Assessment (LCA) evaluates a product’s total impact on the environment over the span of its complete lifecycle (i.e.: includes the extraction of raw materials, transportation, the production, the use phase and the end-of-life treatment). 

Environmental impacts assesses are, among others: climate change, ozone depletion, acidification, eutrophication,…

Source: [WRI](https://www.wri.org/research/greenhouse-gas-protocol-product-life-cycle-accounting-and-reporting-standard#:~:text=The%20GHG%20Protocol%20Product%20Life,associated%20with%20a%20specific%20product.)

Life Cycle Analysis / Life Cycle Assessment (LCA)

A state of Net-Zero emissions means that all emission introduced into the atmosphere are equal to all emissions removed from the atmosphere.  Achieving net-zero emissions means achieving a state where all emissions resulting from one’s activities are reduced and/or compensated for, until they are equal to zero on a balance sheet. 

Typical ways used to achieve this balance of emissions are emission reduction (e.g.: switching from conventional to renewable energy sources), offsetting (e.f. afforestations projects) or removal initiatives (investing in direct air capture technologies). 

Source: [United Nations](https://www.un.org/en/climatechange/net-zero-coalition)

Net-Zero Emissions

A Product Carbon Footprint measures the total greenhouse gas emissions generated by a product, from extraction of raw-materials, to end-of-life. 

In comparison to an LCA, the focus is specifically placed on the greenhouse gas emissions generated and does not consider other environmental impacts. 

It also differs from a CCF, in that the PCF focuses on the greenhouse gas emissions involved with the production of a certain product unit, while the CCF comprises the activities of the company as a whole. 

Source: [GHG Protocol](https://ghgprotocol.org/)

Product Carbon Footprint (PCF)

Scope 1 emissions are all emissions that can be directly associated with a company’s processes. These processes are usually based on the burning of fuels, such as heating oil for offices, fuel for a company’s car fleet or emissions arising from physical or chemical production processes.  

Source: [GHG Protocol](https://ghgprotocol.org/)

![scope1.png](https://tanso-cms.onrender.com/uploads/scope1_06a2b38757.png)

Scope 1 emissions

Scope 2 emissions entail all indirect emission associated with the generation of electricity, heating and cooling systems, and steam purchased for a company’s own consumption. They are the result of a company’s choices in terms of energy suppliers. 

Source: [GHG Protocol](https://ghgprotocol.org/)

![scope2.png](https://tanso-cms.onrender.com/uploads/scope2_c93649eb1a.png)

Scope 2 emissions

Scope 3 emissions are all indirect emissions generated along a company’s value chain. This includes all emissions arising from upstream and downstream activities, that aren’t already included in Scope 1 and Scope 2. 

Source: [GHG Protocol](https://ghgprotocol.org/)

![scope3.png](https://tanso-cms.onrender.com/uploads/scope3_403f499cf7.png)

Scope 3 emissions

Spend-based carbon accounting makes use of the economic value of a good or service, paired with a corresponding emission factor (e.g. kg CO2e per €), to calculate the caused emissions. 

Source: [DFGE](https://dfge.de/spend-based-carbon-accounting/#:~:text=In%20spend%2Dbased%20carbon%20accounting,%2Doutput%20(EEIO)%20models.)

Resources

Standards and Regulations

Climate Science Basics

GHG Accounting and Reporting