ESG and Sustainability Topics

Sustainable finance integrates environmental, social, and governance (ESG) factors into financial decision-making to support long-term economic growth while protecting the planet and society. It includes regulations like SFDR, the EU Taxonomy, and green bonds, guiding investors, companies, and financial institutions toward responsible investments. Whether you're navigating compliance, securing sustainable funding, or aligning with ESG goals, understanding sustainable finance is key to future-proofing your business.

The EU Taxonomy is a classification system that defines which economic activities are considered environmentally sustainable. It helps investors, companies, and policymakers identify activities that contribute to the EU’s climate and environmental goals, ensuring transparency and preventing greenwashing. If your business needs to align with sustainability regulations or attract green financing, understanding the EU Taxonomy is essential.

ESG Reporting refers to the disclosure of a company’s environmental, social, and governance (ESG) performance, helping stakeholders assess sustainability risks and impacts. Depending on company size, regulatory obligations, and audience, ESG reports can take different forms: Mandatory Reports: -> CSRD (Corporate Sustainability Reporting Directive) – Mandatory for large and listed EU companies, requiring detailed ESG data in line with European Sustainability Reporting Standards (ESRS). Voluntary Reports: -> LSME (Large & Listed SMEs) – Mid-sized companies preparing for future reporting obligations. -> VSME (Voluntary SME Reporting) – Small businesses opting for streamlined, non-mandatory ESG disclosures to improve transparency and market positioning. More detailed overview of Frameworks & Standards can be found in guide - Sustainability Reporting and Disclosure. Types of Reports: -> Data-Driven ESG Reports – Factual, compliance-focused reports designed for regulators and investors (e.g., CSRD-compliant disclosures). -> Marketing-Oriented ESG Reports – Designed for branding and reputation management, often focusing on storytelling rather than deep compliance data. Effective ESG reporting ensures compliance, builds trust with stakeholders, and enhances access to sustainable finance. The right approach depends on regulatory requirements, investor expectations, and business strategy.

Biodiversity refers to the variety of life on Earth — plants, animals, and ecosystems that support natural balance and resilience. It plays a crucial role in climate regulation, food security, and economic stability. However, human activities are driving an unprecedented loss of biodiversity, threatening ecosystems and industries that depend on them. Businesses and policymakers are now integrating biodiversity strategies, such as nature-based solutions, regenerative practices, and biodiversity reporting, to align with global conservation goals and ensure long-term sustainability.

Scope 3 Assessment refers to the evaluation of greenhouse gas (GHG) emissions that occur across a company's value chain, outside of its direct operations (Scope 1) and purchased energy (Scope 2). This includes emissions from suppliers, transportation, product use, and disposal. By identifying and quantifying these indirect emissions, businesses can gain a clearer understanding of their overall environmental impact. Conducting a Scope 3 Assessment is crucial for organizations committed to comprehensive climate action, helping them set reduction targets, engage suppliers, and improve their sustainability practices across the entire value chain.

Sustainable Hospitality focuses on minimizing the environmental footprint and promoting social responsibility within the hospitality industry. This includes adopting energy-efficient practices, reducing waste, conserving water, and sourcing locally to support sustainable food systems. It also involves fostering inclusive, fair working conditions for staff and engaging with local communities. By embracing sustainable practices, hospitality businesses can enhance guest experiences, reduce operational costs, and contribute to a greener, more ethical tourism sector, all while meeting the growing demand for eco-friendly and socially responsible travel options.

Science-Based Targets are climate goals aligned with what science says is needed to limit global warming to 1.5°C or well below 2°C, as per the Paris Agreement. Companies commit to reduce their emissions in line with a defined carbon budget. Targets are validated by the Science Based Targets initiative (SBTi), which ensures the ambition is credible. SBTs help businesses show climate leadership, meet investor expectations, and future-proof their operations.

ESG ratings are evaluations of a company's adherence to ESG criteria, reflecting its commitment to sustainable and ethical practices. Various organizations, such as MSCI, Sustainalytics, and others, have developed ESG rating systems. These systems analyze publicly reported data and other relevant information to assign scores or ratings to companies. The methodologies and scales used can vary between providers; for instance, some may use letter grades (e.g., AAA to CCC), while others use numerical scores. External third-party rating providers 1/ Unsolicited ESG Ratings - Uses public data, no direct company input, aimed at investors. Providers: MSCI, Sustainalytics, Bloomberg, CDP Scores, Refinitiv, Moody's ESG, S&P Global, and more. 2/ Solicited ESG Ratings - Company provides data to obtain a customized rating or ESG score, often for supply chain purposes. Providers: EcoVadis

LCA is a method used to assess the environmental impacts of a product, service, or process from start to finish — “cradle to grave.” It looks at everything from raw material extraction to production, use, and disposal. It’s a powerful tool for spotting environmental hotspots, improving product design, and supporting claims like "low carbon" or "eco-friendly." International standards like ISO 14040/44 guide how LCA should be done. The main stages analysed as part of a life-cycle assessment are: -> making materials for the product from the raw materials -> manufacturing the product -> transport of the product (and raw materials) -> using the product -> disposing of the product at the end of its useful life

Sustainable Procurement is the practice of sourcing goods and services in a way that considers environmental, social, and ethical impacts throughout the supply chain. It involves selecting suppliers and products that contribute to long-term sustainability by minimizing environmental harm, promoting fair labor practices, and fostering responsible resource use. By integrating sustainability into procurement decisions, organizations not only reduce their carbon footprint but also support a more equitable global economy, drive innovation, and align their operations with broader ESG goals for a positive societal impact.

The PCF measures the total greenhouse gas (GHG) emissions linked to a specific product throughout its life cycle. It includes emissions from sourcing, manufacturing, transport, use, and end-of-life. This metric is used for product comparisons, sustainability labeling, and identifying opportunities to reduce emissions. Tools such as the Product Life Cycle Accounting and Reporting Standard (GHG Protocol) provide structured methodologies for calculating PCF.

An Environmental Product Declaration (EPD) is a standardized, independently verified document that quantifies and communicates the environmental impacts of a product, material, or service over its entire life cycle. -> Based on Life Cycle Assessments (LCA): The environmental performance reported in an EPD is derived from an LCA study, which identifies inputs (like energy, water, and raw materials) and outputs (including emissions, waste, and resource depletion) throughout the product’s entire life cycle. -> Third-Party Verification: To ensure credibility, the LCA data and the resulting EPD are verified by an independent party. This third-party verification is crucial to uphold the integrity and impartiality of the declaration. -> Quantitative Data: Unlike eco-labels that may offer qualitative assessments or ‘green’ ratings, an EPD provides quantifiable data (e.g., global warming potential measured in kg CO₂e) that businesses and consumers can use for informed decision-making. -> Voluntary but Influential: While obtaining an EPD is generally voluntary, many industries (especially in construction) use them to comply with green procurement policies, achieve certifications such as LEED and BREEAM, and demonstrate a commitment to sustainability.

The Corporate Carbon Footprint quantifies all GHG emissions a company generates in its operations (Scopes 1 & 2) and across its value chain (Scope 3). This footprint serves as the baseline for setting reduction targets, reporting, and regulatory compliance. Calculations typically follow standards like the GHG Protocol Corporate Standard or ISO 14064. The CCF is increasingly expected in ESG reporting and climate disclosures. Scopes categorization: -> Scope 1 — direct emissions that are owned or controlled by a company -> Scope 2 — indirect emissions from purchased energy -> Scope 3 — indirect emissions in the whole value chain

Carbon offsetting is a carbon trading mechanism that allows companies to compensate for their emissions by investing in external projects that remove or avoid carbon — like reforestation, renewable energy, or methane capture. It’s not a replacement for reducing emissions but can be used for unavoidable ones. The credibility of offsets depends on whether they are verified, additional, and permanent. Standards include e.g. Gold Standard and Verra’s VCS. Examples of schemes: -> Renewable Energy Projects -> Forestry and Land Use Projects -> Energy Efficiency Projects -> Methane Capture and Utilization -> Waste Management and Recycling Initiatives -> Carbon Capture and Storage (CCS) -> Household and Community-Based Projects

The circular economy is a system where materials never become waste and nature is regenerated. In a circular economy focuses on designing products and processes that minimize waste and make the most of resources. It involves reusing, repairing, refurbishing, and recycling existing materials and products, which can reduce costs and environmental impact while opening new business opportunities. -> Reuse, Repair, Refurbish - Extending Product Life Cycles -> Recycling - Closing the Loop -> Waste Reduction - Designing for Efficiency –> Product Redesign - Rethinking the System

TGreen building certifications are used to review and assess a project or development's environmental and sustainability performance. Common standards include LEED (US), BREEAM (UK), and DGNB (Germany). They evaluate factors like energy efficiency, water use, indoor air quality, and materials. Green buildings often cost less to operate, reduce carbon footprints, and improve occupant well-being. Certifications also add value in property investment and tenant attraction.

Diversity relates to having a unique workforce built of different individuals, equity relates to fair treatment, and inclusivity relates to the feeling of belonging. Implementing policies that promote a diverse workforce and inclusive culture can lead to increased innovation and employee satisfaction. This includes equitable hiring practices, providing diversity training, and creating an environment where all employees feel valued and respected.​

GHG Emissions Management involves identifying, measuring, and reducing the gases your company emits that contribute to global warming, such as carbon dioxide and methane. The Greenhouse Gas Protocol offers standardized methods to help organizations accurately track these emissions, which is crucial for setting effective reduction targets and complying with environmental regulations.

DNSH is a principle from the EU Taxonomy Regulation stating that an activity must not significantly harm any of six environmental objectives (e.g., climate, biodiversity, circularity) to qualify as "sustainable." Companies must assess and disclose DNSH compliance when claiming green finance or reporting under CSRD. It requires due diligence, credible evidence, and alignment with legal thresholds (like pollution limits or LCA metrics).