Carbon Disclosure Project (CDP), is a non-profit that gathers voluntary data from companies and cities on their environmental impacts and strategies. The objective is to provide transparency and accountability for investors and other stakeholders. Today, over 590 institutional investors use the data for ESG analysis.
ESG and sustainability glossary
Every year, CDP and its partners request companies and governments to respond to questionnaires on their environmental impacts, risk management, and action plans. Responses are scored A to F for progress towards environmental stewardship. Organizations showing great progress are recognized on CDP’s annual A List.
Given the urgency of the climate crisis and certain net zero targets set by governments and corporations, climate tech companies are on the rise both in terms of numbers and in scale. This article summarizes what you need to know about this new industry that is taking a large share of the market and that is a huge opportunity for growth.
Corporate value chain (Scope 3) helps companies understand the indirect sources of their carbon footprint so that they are able to identify key areas where emissions reductions should be prioritized, including the possible inclusion of sustainability in the products they buy, sell or produce. General information on this area is provided below.
EU rules on the Corporate Sustainability Reporting Directive, also known as CSRD will be coming into force within the next few years. The goal of the new requirements is to ensure that companies report reliable and comparable sustainability information in order to redirect investment toward more sustainable technologies and businesses.
Environmental risk assessment is a proactive measure that helps companies identify the impact of their operations on the environment and prioritize areas for response. Know more below about how it is implemented and the benefits it has for your company.
The acronym ESG stands for Environmental, Social and Governance. Investors are progressively interested in these non-financial factors as part of their analysis of company and fund performance. ESG disclosures are increasingly standardized.
ESG reporting refers to the disclosure of a company’s environmental, social and governance data. An analysis of the performance of these ESG criteria summarizes the quantitative and qualitative information and is useful for investment reviews. ESG reports help investors to avoid companies that may pose a greater financial risk due to their environmental and social impacts.
Depending on the jurisdiction in which they operate, companies may be required to report ESG information on the way they operate and manage environmental and social impacts and governance issues.
ESG reporting frameworks provide guidance for companies to organize and present this information to their stakeholders. At present, there are two main reporting frameworks, the GRI and SASB, as well as various other sector or topic-specific guidelines.
Enacted in 2020, the EU Taxonomy is a science-based classification system of environmentally sustainable activities. Its purpose is to direct financial flows in support of the EU Green Deal and avoid greenwashing. It affects how listed companies and financial institutions can report “green” or sustainable investments.
The GRI is the Global Reporting Initiative, an independent organization leading in the development of sustainability reporting standards. It provides a robust methodology to measure and report on material topics specific to organizations’ activities. While the use of GRI standards is not mandatory, stakeholders value the accuracy and reliability it provides.
The GHG Protocol is the global standard for companies and organizations to measure and manage their Greenhouse Gas emissions. Created in 1998, it is the most widely known and used standard for organizations in their reporting. While it is not mandatory in many geographies, governments and industry associations are increasingly developing policies which require specific standards for GHG reporting, including the GHG Protocol.
A new type of global ESG reporting initiative has been launched to consolidate financial and environmental sustainability metrics at a whole new level. This will eliminate the fragmentation of existing global reporting metrics, reducing costs and complexity for investors, companies and regulators. Find out more about it here.
Materiality assessments are a first step in sustainability strategy and are required by many standards. They help organizations define the ESG topics that are most important to them and their stakeholders. Assessments are conducted by identifying topics, evaluating those topics in terms of business importance, and validating those priorities with external stakeholders through surveys or interviews.
PCAF is a global partnership of financial institutions that establishes a standard for greenhouse gas (GHG) accounting and reporting in the financial industry. It currently has more than 250 members. Learn more about its goals and how you can join this noble initiative.
Product carbon footprint is generally defined as a measure of a product’s greenhouse gas (GHG) emissions in terms of carbon dioxide equivalents (CO2e). But how do you calculate a carbon footprint and how can it help anyone make informed purchasing decisions?
The Product Environmental Footprint (PEF) is increasingly becoming a measure of environmental performance of products or services. Companies and suppliers that want to label their products as green or sustainable must be PEF compliant. Read more about it here.
SASB reporting communicates financially material sustainability information to investors. Companies should follow the specific standards for their industries and communicate results annually in a way convenient for investors. Reporting is not mandatory, but it can satisfy other regulatory requirements or investor expectations.
The Science Based Target initiative, otherwise known as SBTi, grants a set of tools for companies of the private sector by setting targets based on scientific research to align with the ambition of staying below 2 degrees of global temperature rise. These targets vary across industries. Companies go through a step-by-step process to have their targets approved by SBTi.
The Science Based Targets Network (SBTN) is a global coalition of leading NGOs and mission-driven organizations that builds off of SBTi initiatives which work together to provide assistance to businesses and cities by providing them with resources on how to create science-based targets based on the objectives of the Paris Agreement
Greenhouse gas (GHG) emissions are gases that are regulated under the various agreements of the United Nations Framework Convention on Climate Change (UNFCCC). Each has a serious impact on global warming.
In March 2022, the SEC Climate Disclosure Rule proposed new rules for disclosing climate-related financial risks in SEC filings. Public companies will be required to discuss their climate risk management and disclose greenhouse gas emissions in their registration statements and annual reports. While not yet effective, these rules mark a significant step towards mandatory reporting in the US.
Supply chain sustainability gives companies the opportunity to identify areas of their supply chain that are not aligned with sustainability goals. This can help implement sustainable practices throughout their supply chain. Learn more here.
Sustainability Accounting Standards Board (SASB) define industry-specific, financially material sustainability issues that companies voluntarily disclose to their investors. Climate change poses financial threats, and this information helps investors assess the long-term viability of investment decisions. SASB standardizes this information so that it is comparable across companies and geographies.
Consumers are more environmentally conscious than ever about the products they buy. As a result, sustainable procurement has become more important to a wide range of companies after proving that it offers significantly more value than the traditional procurement process. Here are some fascinating facts about this initiative.