ESG Strategy - How to start

Written by Andrea Orsag, Sustainability Strategy Expert

ESG STRATEGY – CREATION

  1. WHERE WE ARE - Start by defining baseline
  2. WHERE WE NEED TO GO – Identify requirements (regulatory and Industrial)
  3. WHERE ARE WE GOING – Define ambition

How to approach ESG Reporting

Written by Robin Boustead, ESG & Carbon Management Strategist

The European Union (EU) and world financial markets are currently experiencing an explosion of sustainability reporting standards, most notably the International Sustainability Standards Board (ISSB, established by the global accounting standard-setter International Financial Reporting Standards, IFRS) and the European Sustainability Reporting Standards (ESRS, an outcome of the Corporate Sustainability Reporting Directive, CSRD). Both link financial reporting statements with sustainability disclosures to strengthen investor protection, reduce greenwashing and ensure reliable and comparable disclosures that meet the information needs of investors and other stakeholders.

Following is a summary of how to approach and implement reporting systems to meet your obligations under these new standards.

The EU Taxonomy regulation

Written by VIRIDAD

Your direct path to expert knowledge and essential EU Taxonomy insights for well-informed, sustainable business decisions.

The EU Taxonomy

The EU Taxonomy Regulation (EU) 2020/852 plays a central role in the EU's sustainability strategy as it defines when an economic activity – and subsequently an investment – is considered sustainable. This common language enables investors to compare companies in terms of their sustainability performance (i.e., it helps them identify "green" activities) and redirect their funds towards environmentally sustainable companies. The EU Taxonomy is designed to be dynamic and is expected to evolve over time to reflect advances in scientific understanding and changes in environmental performance standards.

Conducting a Scope 1-3 Emissions Assessment

Written by Raphael Schranz, Circular Economy Specialist

Introduction

Assessing and managing greenhouse gas (GHG) emissions across Scope 1, 2, and 3 is vital for companies committed to sustainability and reducing their environmental footprint.

Why Conduct a Scope 1-3 Emissions Assessment?

  • Regulatory Compliance: Ensure compliance with local and international environmental regulations.
  • Operational Efficiency: Identify opportunities to improve efficiency and reduce costs by minimizing energy use and waste.
  • Stakeholder Trust: Enhance transparency and build trust with stakeholders, including customers, investors, and regulators.
  • Risk Management: Mitigate risks associated with climate change and regulatory pressures.
  • Competitive Advantage: Position your company as a leader in sustainability, attracting socially responsible investors and customers.

Understanding Scope 1, 2, and 3 Emissions

Scope 1: Direct Emissions

These are emissions from sources owned or controlled by your company, such as fuel combustion in company-owned vehicles and on-site manufacturing processes.

Scope 2: Indirect Emissions from Energy

These are emissions from the generation of purchased electricity, steam, heating, and cooling consumed by your company.

Scope 3: Other Indirect Emissions

These include all other indirect emissions that occur in your value chain, both upstream and downstream. Scope 3 emissions cover 15 categories, including purchased goods and services, business travel, and waste disposal.

Steps to Conduct a Scope 1-3 Emissions Assessment

How to Prepare for DPPs (Digital Product Passport)

Written by Protokol

For any business, major operational changes can be challenging – especially when these changes are specifically mandated for compliance with new regulations. This is exactly the case for organisations that intend to manufacture or sell physical products within the EU over the next decade as they grapple with how to prepare for DPPs.

In December 2023, the EU Commission reached a provisional agreement on a new Ecodesign for Sustainable Products Regulation (ESPR), which will set design and performance standards for specific product groups, intended to improve their sustainability, energy performance, and overall circularity.

Recognising the need for up-to-date and accessible product information to enforce the legislation, the ESPR will require affected product groups to contain Digital Product Passports. For some industries such as Textiles, DPPs must be in place by 2030, with many other industries like Consumer Electronics and ICT to follow suit.

While penalties for non-compliance haven’t yet been specified, they may include fines, confiscation of assets, and business sanctions, leaving organisations to ponder over how to prepare for DPPs and implement them effectively before their respective industry deadlines.

Building LCA and Carbon Footprint (GWP)

Written by Jamie Casciotta, Sustainable Building Consultant

INTRODUCTION

The following guide aims to address some practical aspects related to the life cycle of buildings. An overview is given at a European level and then insights are developed on the Italian case and the voluntary BREEAM and LEED protocols.

The subject of LCA has existed for many years, but is now the focus of attention due to the increasingly stringent environmental demands linked to the subject of climate change.

Unfortunately, it is still a little known topic, especially in the translation and practical application of the literature. It is also often applied in an ‘unsustainable’ way.

STATE OF THE ART IN EUROPE

The current European situation is quite diverse. Some member states have guidelines on the use of LCA for buildings.

Some actually have numerical limits for carbon footprint and are included in local regulations, either as guidelines or as an obligation.

Others have no indication or refer to general guidance (such as the Level(s) framework).

What is being done is to inform as much as possible and to unify requirements, so as to facilitate comparisons and the achievement of targets on a large scale.

How to Integrate Biodiversity into Corporate Sustainability

Written by Kamila Reczyńska, Biodiversity Expert, Researcher

Businesses, in general, rely heavily on numerous ecosystem services while simultaneously exerting significant pressure on natural capital, contributing to biodiversity loss. To ensure long-term resilience and responsible growth, a shift towards a sustainable strategy is crucial – with biodiversity serving as a key component of such a strategy.

What is Biodiversity?

To begin, it’s important to remind the concept of biodiversity. According to the definition presented in the United Nations Convention on Biological Diversity, it is "the variability among living organisms from all sources, including, inter alia, terrestrial, marine and other aquatic ecosystems and the ecological complexes of which they are part: this includes diversity within species, between species and of ecosystems". But what does it actually mean?

  • Within species diversity – this level of diversity covers genetic variety found within species; this ability allows the population or species to adapt and evolve in response to changing environments and natural selection pressures
  • Between species diversity – species diversity refers to the number, types, and distribution of different organisms present in a specific area, encompassing all groups of fauna, flora, fungi, and bacteria. Beyond the large organisms we typically associate with biodiversity – such as birds, mammals, fish, or trees – this aspect of diversity also includes an innumerable array of microscopic organisms. These often play key roles in the ecosystem, performing essential functions that enable ecosystems to fulfill their vital processes.
  • Ecosystem diversity – encompasses the full range of habitats and the plant, animal, and fungal communities found within a specific geographic area. The value of this diversity is not determined solely by the number and area of habitats, but rather by their degree of naturalness and alignment with distinct physical and geographical conditions.

These definitions highlight the complexity of biodiversity, which should always be considered when evaluating potential and actual impacts of businesses. Biodiversity means far more than the number of species and habitats’ area. It is an essential and integral characteristic of nature that enables ecosystems to be productive, resilient and able to adapt.

What is Not Considered Biodiversity?

Equally important issue is to distinguish what is not biodiversity. Ecosystems dominated by alien and invasive species that have appeared due to human activity do not contribute to biodiversity as it is commonly understood. These species often disrupt native ecosystems by outcompeting native species, lacking natural predators, or causing the decline of indigenous species. This results in the formation of new ecosystems with altered networks of dependencies, which often lack the complexity and balance of natural biodiversity. Nevertheless, it is always worth considering whether a native ecosystem dominated by alien species has a potential to be restored to better condition.

We also should not include common habitats created through human intervention, consisting predominantly of synanthropic species – those thriving in human-dominated environments in vast numbers – among the valuable elements of biodiversity. Likewise, gardens, squares, parks, and other green spaces established and maintained by humans are not typically regarded as integral elements of natural biodiversity. While they may offer ecosystem services, they do not represent the complexity and ecological integrity of natural habitats.

When a Company May Need to Assess Its Impact on Biodiversity?

Businesses may need to evaluate their impact on biodiversity for a variety of reasons, including:

  • Fulfillment of EU Taxonomy objectives
  • Meeting standards for B Corp Certification
  • ESG (Environmental, Social, Governance) reporting
  • Conducting double materiality assessments (DMA)
  • Carrying out environmental impact assessments (EIA)
  • Executing environmental due diligence (EDD) procedures
  • Applying for funding and meeting requirements specified in international performance standards (e.g., Performance standard 1 or 6)

Each of these drivers will require consideration of environmental factors, including biodiversity, at different scales and within different contexts, both spatially and temporally.

However, the process should always begin with identifying business dependencies on biodiversity and the impacts on biodiversity – the latter generated by the company at different stages of its operations. Without the recognition of impacts, even the most innovative ideas to enhance sustainability can be perceived as greenwashing. It is essential to understand where the company’s strengths lie and where critical improvements are needed. The second stage involves enhancing the business strategy through measures focused on avoidance, mitigation, and compensation with respect to biodiversity. Both stages should incorporate a science-based approach to ensure credibility and effectiveness.

Prioritizing Impact Detection and Mitigation for Effective Biodiversity Strategy

When integrating biodiversity into a corporate strategy, the first and most crucial step for businesses is to identify dependencies on biodiversity as well as potential and actual impacts on biodiversity resulting from their operations, supply chains, or projects. This detection process ensures that companies understand the extent and nature of their influence on local or global ecosystems and species. The recognition of dependencies and impacts also enables to provide a basis for determining the scope of the biodiversity strategy the company will ultimately adopt. Since every company is unique, biodiversity strategies must be customized to fit the specific needs and context of each organization. The scope of a strategy should be viewed as dynamic, evolving over time and revisited iteratively as the company develops. Therefore, a deep understanding of business-biodiversity interactions is essential for effective strategy formulation.