A handy reference for disclosure standards, recommendations, goals and pathways to an organization’s sustainability.
Emissions Accounting Standards: GHG Protocol
GHG Protocol is probably the world’s most widely used greenhouse gas accounting standard to measure and manage greenhouse gas (GHG) emissions from private and public sector operations, value chains, as well as mitigation actions.
- Scope 1: Scope 1 refers to direct GHG emissions that occur from sources that are owned or controlled by the company, for example, emissions from combustion in owned or controlled boilers, furnaces, vehicles, etc.; emissions from chemical production in owned or controlled process equipment.
- Scope 2: Scope 2 refers to emissions from acquired and consumed electricity, steam, heating, and cooling. These emissions are a consequence of activities of the reporting organization but occur at sources owned or controlled by another organization (for example, they are owned or controlled by an electricity generator or utility).
- Scope 3: Scope 3 emissions are a consequence of the activities that occur from sources not owned or controlled by the company, such as the supply chain. Some examples of scope 3 activities are extraction and production of purchased materials; transportation of purchased fuels; and use of sold products and services. Scope 3 activities also include waste disposal, employee business travel, and outsourced operations.
GHG Emissions ISO Standards– ISO – 14060
The ISO 14060 family provides clarity and consistency for quantifying, monitoring, reporting and validating or verifying GHG emissions and removals to support sustainable development through a low carbon economy and to benefit organizations, project proponents and interested parties worldwide.
- ISO 14064 -1 – Design and develop GHG inventories for organizations.
- ISO 14064-2 Project based GHG emissions.
- ISO 14064-3 – Organizational GHG emissions.
- ISO 14064-7—Product carbon footprints quantifies GHG emissions associated with a product’s life cycle stages, beginning with resource extraction and raw material sourcing and extending through the production, use, and end-of-life phases.
Emissions Reduction Targets and Plans: SBTi
The Science-Based Targets initiative (SBTi) provides companies with clearly-defined pathways to reducing emissions in alignment with the 2015 Paris Agreement. Targets are considered ‘science-based’ if they agree with the latest climate science actions necessary to meet the goals of the Paris Agreement – limiting global warming to well below 2°C above pre-industrial levels and pursuing efforts to limit warming to 1.5°C.
Setting a science-based target is a five-step process:
- Commit: submit a letter establishing your intent to set a science-based target;
- Develop: work on an emissions reduction target in line with the SBTi’s criteria;
- Submit: present your target to the SBTi for official validation;
- Communicate: announce your target and inform your stakeholders; and
- Disclose: report company-wide emissions and track target progress annually.
Corporate Net Zero Standard
Key components of the Corporate Net-Zero Standard:
- Near-term targets: Rapid, deep cuts to direct and indirect value-chain emissions must be the overarching priority for companies. Companies must set near-term science-based targets to roughly halve emission before 2030. This is the most effective, scientifically-sound way of limiting global temperature rise to 1.5°C.
- Long-term targets: Companies must set long-term science-based targets. Companies must cut all possible – usually more than 90% – of emissions before 2050.
- Neutralize residual emissions: After a company has achieved its long-term target and cut emissions by more than 90%, it must use permanent carbon removal and storage to counterbalance the final 10% or more of residual emissions that cannot be eliminated. A company is only considered to have reached net-zero when it has achieved its long-term science-based target and neutralized any residual emissions.
- Beyond Value Chain Mitigation (BVCM): Businesses should invest now in actions to reduce and remove emissions outside of their value chains in addition to near- and long-term science-based targets. Please refer to the BVCM page and resources for details.
Sustainability Reporting Standards: GRI
Global Reporting Initiative (GRI) Standards communicate organizations’ impact on critical sustainability issues, such as climate change, human rights, governance and social well-being. The GRI Standards are structured as a set of interrelated, modular standards. Three Universal Standards apply to every organization preparing a sustainability report:
- Foundation: starting point for using the GRI Standards,
- General Disclosures: to report contextual information about an organization,
- Material Topics: to report how each material topic will be addressed.
An organization further selects from the set of topic-specific standards for reporting on its material topics. These standards are organized into three series – economic, environmental and social.
Investor Grade Sustainability Disclosures: IFRS
IFRS Sustainability—The IFRS Sustainability Standards were developed to enhance investor-company dialogue so that investors receive decision-useful, globally comparable sustainability-related disclosures that meet their information needs. The standards are divided into IFRS S1 – General Requirements for Sustainability-related Financial disclosures and IFRS S2 – Climate related disclosures.
The objective of IFRS S1 is to require an entity to disclose information about its sustainability-related risks and opportunities that is useful to users of general purpose financial reports in making decisions relating to providing resources to the entity.
The objective of IFRS S2 is to require an entity to disclose information about its climate-related risks and opportunities that is useful to users of general purpose financial reports in making decisions relating to providing resources to the entity.
ESG Related Financial Disclosure Recommendations: SASB
SASB Standards guide the disclosure of financially material sustainability information by companies to their investors. Available for 77 industries, these standards identify the subset of environmental, social, and governance (ESG) issues that are most relevant to the financial performance in each industry. They are designed to help companies disclose financially material sustainability information to investors. SASB standards are industry specific and are based on the different sustainability risks and opportunities within each industry.
In August 2022, the International Sustainability Standards Board (ISSB) of the IFRS Foundation assumed responsibility for the SASB Standards. The ISSB has committed to build on the industry based SASB Standards and leverage SASB’s industry based approach to standards development. The ISSB encourages preparers and investors to continue to provide full support for and to use the SASB Standards until IFRS Sustainability Disclosure Standards replace SASB Standards.
Climate Related Financial Disclosure Recommendations: TCFD
The Financial Stability Board (FSB) created the Taskforce for Climate-Related Financial Disclosure (TCFD) to develop recommendations on the types of information that companies should disclose to support investors, lenders, and insurance underwriters. These recommendations are meant to appropriately assess and price a specific set of risks that are related to climate change. TCFD disclosure recommendations are structured around four thematic areas: governance, strategy, risk management, and metrics and targets.
The TCFD framework helps companies demonstrate their consideration of the risks and opportunities presented by climate issues. The risks include physical ones (like droughts, flooding, sea-level rise and wildfires) and transition risks (like new technologies, policy and regulation changes, and reputation). TCFD uses scenario analysis as a strategic tool to develop an understanding of short, medium and long-term impacts of climate change.
Concurrent with the release of its 2023 status report on October 12, 2023, the TCFD has fulfilled its remit and disbanded. The FSB has asked the IFRS Foundation to take over the monitoring of the progress of companies’ climate-related disclosures. (see IFRS – S2 above)
Taskforce on Nature-related Financial Disclosures: TNFD
The Taskforce on Nature-related Financial Disclosures (TNFD) has developed a set of disclosure recommendations and guidance that encourage and enable business and finance to assess, report and act on their nature-related dependencies, impacts, risks and opportunities.
Global Disclosure System: CDP
CDP is a not-for-profit charity that runs a global disclosure system for capturing data related to environmental impacts. CDP is fully aligned with the TCFD recommendations.
Companies and other entities like cities, states, or regions supply information to the CDP system by answering a questionnaire. Each year, CDP takes the information supplied in its annual reporting process and scores the reporting entity.
CDP also provides a supply chain membership to engage your suppliers in your net-zero transformation. As a CDP Supply Chain member, you can ask your key suppliers to report environmental data through CDP’s questionnaires and garner information for your Scope 3 reporting.
European Reporting Directive – Corporate Sustainability Reporting Directive (CSRD)
The Corporate Sustainability Reporting Directive (CSRD) is a European Union (EU) directive that requires companies to report on their environmental, social, and governance (ESG) impact.
Companies subject to the CSRD will have to report according to European Sustainability Reporting Standards (ESRS). The ESRS Standards are organized into Cross-Cutting Standards covering general requirements and disclosures and Topical Standards covering Environmental, Social, and Governance topics. The topical standards contain 5 Environmental Standards, 4 Social standards and 1 Governance standard.
Environmental Standards:
- ESRS E1 – Climate Change
- ESRS E2 – Pollution
- ESRS E3 – Water & Marine Resources
- ESRS E4 – Biodiversity and Ecosystems
- ESRS E5 – Resource use & circular economy
Social Standards:
- ESRS S1 – Own workforce
- ESRS S2 – Workforce in the Value Chain
- ESRS S3 – Affected communities
- ESRS S4 – Consumers & End-users
Governance Standards:
- ESRS G1 – Business Conduct
ESRS requires that the materiality assessment (MA) apply the principles of double materiality.
Double materiality covers both impact and financial materiality. Impact materiality pertains to the material information about the undertaking’s impacts on people or the environment related to a sustainability matter; financial materiality pertains to the material information about risks and opportunities related to a sustainability matter.
Development Goals: UNSDGs
UNSDGs are the 17 Sustainable Development Goals (SDGs) that have been adopted by all United Nations member states in 2015. They provide a shared blueprint for peace and prosperity for people and the planet, for both the present and the future.
Your Carbon Steps can help you determine which sustainability frameworks and standards are relevant to your organization and whether you will benefit from applying for ranking.
