Clear definitions for carbon accounting, ESG reporting, and sustainability compliance terms.
The process of measuring, quantifying, and tracking greenhouse gas emissions produced by an organisation, product, or activity. It is the foundation of corporate climate strategy and regulatory compliance.
Business relevance: Required for CSRD, CDP, SBTi, and investor reporting. Enables identification of reduction opportunities.
Related: Carbon Accounting Hub, FAQ, Getting Started Guide
Direct greenhouse gas emissions from sources owned or controlled by the organisation. Includes stationary combustion (boilers, furnaces), mobile combustion (company vehicles), and fugitive emissions (refrigerant leaks).
Business relevance: Mandatory under all major reporting frameworks. Often the easiest scope to measure and control.
Related: Scope 1 Guide, Calculator, Scope 1 & 2 Reduction Playbook
Indirect emissions from the generation of purchased electricity, heat, steam, or cooling consumed by the organisation. Reported using either location-based (grid average) or market-based (contract-specific) methods.
Business relevance: Directly influenced by energy procurement decisions. Renewable energy contracts can significantly reduce Scope 2.
Related: Scope 2 Guide, Scope 1 & 2 Reduction Playbook
All other indirect emissions occurring across an organisation's value chain. Covers 15 categories including purchased goods, capital goods, fuel and energy-related activities, upstream transport, waste, business travel, employee commuting, downstream transport, product use, and end-of-life treatment.
Business relevance: Typically 70-90% of total emissions. Increasingly required by regulators and customers. Complex but high-impact reduction potential.
Related: Scope 3 Guide, Scope 3 Measurement Guide, Supplier Engagement Guide
The world's most widely used greenhouse gas accounting standard, developed by WRI and WBCSD. Comprises the Corporate Standard, Scope 3 Standard, Product Standard, and sector-specific guidance.
Business relevance: Foundation for CDP, SBTi, CSRD, and virtually all corporate carbon reporting. Compliance with GHG Protocol ensures credibility and comparability.
Related: GHG Protocol Guide, Getting Started Guide
A coefficient that converts activity data into greenhouse gas emissions. For example, kg CO₂e per kWh of electricity, or kg CO₂e per litre of diesel. Factors vary by geography, technology, and data source.
Business relevance: Critical input for all carbon calculations. Factor selection affects reported emissions and must be documented for audit.
A measure of how much heat a greenhouse gas traps in the atmosphere over a specific time horizon, relative to carbon dioxide. The IPCC publishes GWP values for different time horizons (typically 100 years). Methane has a GWP of ~28-36; nitrous oxide ~265-298.
Business relevance: Used to convert emissions of different gases into CO₂ equivalent (CO₂e) for reporting and comparison.
The standard unit for measuring carbon footprints. It expresses the climate impact of all greenhouse gases in terms of the equivalent amount of carbon dioxide, using GWP values.
Business relevance: Enables comparison across different gases, sources, and organisations. All major frameworks require reporting in tonnes CO₂e.
The total GHG emissions generated across a product's lifecycle — from raw material extraction (cradle) through manufacturing, distribution, use phase, and end-of-life (grave). Calculated using ISO 14067 or GHG Protocol Product Standard.
Business relevance: Required by B2B customers, EU Green Claims Directive, and voluntary programmes. Enables product-level decarbonisation.
A reduction or removal of greenhouse gas emissions used to compensate for emissions elsewhere. Types include avoidance offsets (preventing emissions, e.g., forest conservation) and removal offsets (extracting CO₂ from the atmosphere, e.g., direct air capture).
Business relevance: Can supplement but not replace decarbonisation. Quality varies significantly. SBTi net-zero requires permanent removals only for residual emissions.
An EU directive requiring large companies and listed SMEs to report detailed sustainability information under European Sustainability Reporting Standards (ESRS). Replaces NFRD and expands coverage from ~11,000 to ~50,000 companies.
Business relevance: Mandatory for EU large undertakings and non-EU companies with significant EU turnover. Requires double materiality, climate transition plans, and third-party assurance.
Related: CSRD Omnibus Guide, CSRD Compliance Roadmap
The detailed reporting standards underpinning CSRD. Comprise 12 standards across four categories: cross-cutting (general requirements, general disclosures), environment (climate, pollution, water, biodiversity, resource use), social (workforce, workers in value chain, affected communities, consumers), and governance (business conduct).
Business relevance: Defines exactly what must be reported under CSRD. ESRS E1 (Climate Change) requires Scope 1/2/3 disclosure and transition planning.
An EU policy placing a carbon price on imports of cement, iron, steel, aluminium, fertilisers, electricity, and hydrogen from non-EU countries. Importers must report embedded emissions and purchase CBAM certificates equivalent to the EU ETS carbon price.
Business relevance: Affects EU importers and non-EU exporters to the EU. Requires product-level emissions data and may reshape global trade patterns.
A classification system defining which economic activities are environmentally sustainable. Sets technical screening criteria for six environmental objectives, including climate change mitigation and adaptation.
Business relevance: CSRD-reporting companies must disclose Taxonomy alignment (turnover, CapEx, OpEx). Influences green finance and investor decisions.
UK legislation requiring quoted companies, large unquoted companies, and large LLPs to report energy use, GHG emissions, and intensity metrics in their annual reports.
Business relevance: Mandatory for UK large undertakings. Simpler than CSRD but still requires Scope 1 and 2 reporting and energy efficiency action.
The CSRD requirement to assess sustainability topics from two perspectives: financial materiality (how sustainability affects the company) and impact materiality (how the company affects people and environment). A topic is material if significant from either perspective.
Business relevance: Determines which ESRS standards and disclosures apply. Requires stakeholder engagement and robust assessment processes.
A framework for evaluating organisational practices and performance on environmental stewardship, social responsibility, and governance quality. ESG data is used by investors, lenders, regulators, and customers to assess risk and opportunity.
Business relevance: Central to investment decisions, loan pricing, supplier selection, and regulatory compliance. Poor ESG performance increases cost of capital.
Related: ESG Reporting Hub, FAQ: Do small companies need to report?
A global non-profit running the world's largest environmental disclosure system. Companies complete detailed questionnaires on climate, water, and forests, scored from A to D-. Used by 680+ institutional investors with $130 trillion in assets.
Business relevance: Responding to CDP is often mandatory for large companies (investor or customer request). Scores influence capital access and reputation.
The world's most widely used sustainability reporting standard, focusing on impact materiality — how an organisation affects the economy, environment, and people. GRI Standards cover topics from emissions to human rights.
Business relevance: Used by 75% of the world's largest 250 companies. Compatible with CSRD and ESRS for social and governance disclosures.
A framework for disclosing climate-related risks and opportunities across four pillars: governance, strategy, risk management, and metrics/targets. Now integrated into ISSB standards and CSRD.
Business relevance: Required or expected by regulators in UK, EU, US, and many other jurisdictions. Underpins climate risk assessment and scenario analysis.
A standard-setting body under the IFRS Foundation, developing global baseline sustainability disclosure standards. ISSB S1 covers general sustainability disclosures; S2 covers climate-specific disclosures.
Business relevance: Aims to create global consistency in sustainability reporting. Adopted by jurisdictions including UK, Australia, Singapore, and Nigeria.
A state where anthropogenic emissions are reduced as close to zero as possible (typically 90-95%), with residual emissions permanently neutralised through carbon removal. Not achieved through offsets alone.
Business relevance: SBTi Net-Zero Standard provides the most rigorous corporate definition. Net-zero commitments are expected by investors, customers, and regulators.
A partnership between CDP, UN Global Compact, WRI, and WWF that validates corporate emissions reduction targets against climate science. Requires Scope 1 and 2 targets; Scope 3 if >40% of total emissions.
Business relevance: Gold standard for credible climate targets. Over 4,000 companies committed. Increasingly required by investors and customers.
A time-bound action plan showing how an organisation will adapt its strategy, operations, and financing to align with a 1.5°C pathway. Includes governance, targets, decarbonisation actions, risk assessment, and capital allocation.
Business relevance: Required under CSRD, UK TPT, and expected by investors. Demonstrates credible commitment and reduces regulatory and reputational risk.
A state where an organisation's emissions are balanced by carbon offsets or removals, without necessarily reducing underlying emissions. Distinct from net zero, which requires deep decarbonisation before neutralising residuals.
Business relevance: Less credible than net zero due to reliance on offsets. The EU Green Claims Directive will restrict "carbon neutral" product claims.
The risk that stringent climate policies in one jurisdiction cause production and emissions to shift to jurisdictions with weaker policies, resulting in no global emissions reduction.
Business relevance: CBAM is designed to prevent carbon leakage. Companies in carbon-intensive sectors may face competitive pressure from imports.
An economic model that eliminates waste and keeps materials in use through design, reuse, repair, remanufacturing, and recycling. Contrasts with the linear "take-make-dispose" model.
Business relevance: Reduces Scope 3 emissions from purchased goods and waste. Increasingly required by EU regulations (Ecodesign, Right to Repair, PPWR).
Making misleading or unsubstantiated claims about the environmental benefits of a product, service, or organisation. Includes vague terms ("eco-friendly"), irrelevant claims, and hidden trade-offs.
Business relevance: The EU Green Claims Directive and national regulators are cracking down. Penalties include fines and reputational damage. Claims must be substantiated with evidence.
A Scope 3 calculation approach using financial spend data multiplied by environmentally extended input-output (EEIO) emission factors. Useful for screening assessments where activity data is unavailable.
Business relevance: Quick to implement but less accurate than activity-based methods. Best used for initial Scope 3 screening, then replaced with primary data for priority categories.
A Scope 3 calculation approach using physical activity data (tonnes purchased, km travelled, kWh consumed) multiplied by specific emission factors. More accurate than spend-based but requires better data collection.
Business relevance: Preferred by SBTi and CSRD for priority categories. Enables targeted reduction actions and supplier engagement.
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