Carbon dioxide equivalent defined – 1 Best read

Carbon dioxide equivalent defined

In study material each GHG described has a different global warming potential (GWP). The GWP of a given GHG indicates how much energy one unit of the GHG absorbs (i.e., the ability of that gas to trap heat in the atmosphere) compared to one unit of carbon dioxide, generally over a 100-year period.

The larger the GWP, the more that the GHG warms the earth compared to carbon dioxide over the stated time period. For example, PFCs and HFCs often absorb thousands of times more energy than carbon dioxide. The GWP of each GHG is published as a factor and used to translate GHGs, other than carbon dioxide, into carbon dioxide equivalent (C02e) units.

The GHG Protocol considers C02e to be the universal unit of measurement for GHGs since it expresses the GWP of each GHG in terms of the GWP of one unit of carbon dioxide. C02e and individual GHGs are often expressed in metric tons, which is the equivalent of 1,000 kilograms (or approximately 2,204 pounds).

The purpose of this measure is to enable a reporting entity, users and other stakeholders to compare the potency of the overall emissions from a reporting entity, both across entities and over time, even when the composition of the GHG emissions changes.

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Emissions over Time – The 1 Best read

Emissions over Time

The GHG Protocol is designed to enable reporting entities to track and report consistent and comparable emissions data over time. The first step to tracking emissions over time is the establishment of a base year. A base year is a benchmark against which subsequent emissions can be compared to create meaningful comparisons over time and may be used for setting GHG reduction targets.

To comply with the GHG Protocol principles of relevance and consistency, a reporting entity is required to establish and report a base year for its Scope 1 and Scope 2 GHG emissions. A base year is only required for Scope 3 emissions when Scope 3 performance is tracked or a Scope 3 reduction target has been set. That is the case whether the entity is reporting under the Corporate Standard or the Scope 3 Standard (see below How to apply the Corporate Standard, Scope 2 Guidance and Scope 3 Standard?).

How to apply the Corporate Standard, Scope 2 Guidance and Scope 3 Standard?

An entity reporting under the Corporate Standard is not required to disclose Scope 3 emissions. As a result, there are three options under the GHG Protocol for reporting Scope 3 emissions, as described in the following table, which is based on Table 1.1 in the Scope 3 Standard:



Applicable GHG criteria


A reporting entity reports its Scope 1 and Scope 2 GHG emissions and either (1) no Scope 3 emissions or (2) Scope 3 emissions from activities that are not aligned with any of the prescribed Scope 3 categories (the latter is very rare).

  • Corporate Standard

  • Scope 2 Guidance


A reporting entity reports its Scope 1 and Scope 2 GHG emissions and some, but not all, relevant and material Scope 3 GHG emissions in accordance with the Scope 3 calculation guidance but not with the Scope 3 Standard.

  • Corporate Standard

  • Scope 2 Guidance

  • Scope 3 Guidance


A reporting entity reports its Scope 1 and Scope 2 GHG emissions and all relevant and material categories of Scope 3 GHG emissions

Consider this!

The GHG Protocol encourages reporting entities to begin reporting GHG emissions information and improve the completeness and precision of that information over time.

While the GHG Protocol requires a company to establish and report a base year for its Scope 1 and Scope 2 emissions, a reporting entity that recently started to report GHG emissions information and has not established an emissions reduction target may choose not to set a base year until the precision and completeness of their emissions inventory have improved.

In this situation, the reporting entity should disclose that a base year has not yet been established and the reason for not establishing a base year.

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Scope 1 emissions – Best read

Scope 1 emissions

Scope 1 emissions are emissions from sources owned or controlled by a reporting entity. For example, emissions from equipment, a vehicle or production processes that are owned or controlled by the reporting entity are considered Scope 1 emissions. These emissions include all direct emissions within the entity’s inventory boundary.

The combination of organizational and operational boundaries make up a reporting entity’s inventory boundary, which is also called the reporting boundary. Refer to Organizational boundaries for information on organizational boundaries and Operational boundaries for information on operational boundaries.

The GHG Protocol is designed to avoid double counting GHG emissions. That is, two or more reporting entities should never account for the same emissions as Scope 1 emissions. For example, emissions from the generation of heat, electricity or stream that is sold to another entity are not subtracted from Scope 1 emissions but are reported as Scope 2 emissions by the entity that purchases the related energy.

Theoretically, if every entity and individual throughout the world reported their GHG emissions using the same organizational boundary (e.g., equity share, financial control or operational control approach), the total of all Scope 1 emissions would equal the total GHGs emitted throughout the world.

Types of Scope 1 emissions

The GHG Protocol describes four types of Scope 1 emissions: stationary combustion, mobile combustion, process emissions and fugitive emissions. The type of emissions that are included in Scope 1 will vary based on the industry and business model of the reporting entity.

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Metrics in use for ESG Reporting- 1 Best and complete read

Metrics in use for ESG Reporting

Here is a list of Metrics in use for ESG Reporting that companies can use to start communicating on the ESG issues. The metrics have been divided into four categories:

Each category contains recommended disclosure metrics (both qualitative and quantitative) that have been marked either as minimum disclosures (relevant to all companies) or additional disclosures (that might not be relevant to all companies).

The selection of recommended disclosure metrics has been informed by relevant regulatory initiatives i.e. the CSRD and the ESRS as well as the Warsaw Stock Exchange corporate governance code. Moreover, to address increasing investors’ data needs, they have been also aligned with the mandatory PAI indicators for corporate investments required by the SFDR (see mapping in the Appendix – Relevance of the Guidelines to investors). References have been added below each section to other frameworks and resources that companies may also consider (Appendix – Alignment with EU regulations and other frameworks).

It should be emphasized that the Guidelines do not provide an exhaustive list of indicators and topics. Rather they aim to offer less advanced companies a minimum set of carefully selected disclosure metrics that will help them to prepare for the upcoming requirements stemming from the CSRD and the ESRS and better respond to investors’ ESG data needs. Companies in scope of the CSRD should use the ESRS to prepare their disclosures on material sustainability topics.

Metrics in use for ESG Reporting – General information

General information metrics provide essential context to understand the company business activities and value creation model, it’s material ESG impacts, risks and opportunities, and how it is managing them.

General information

What should be disclosed:


M 1

Business model

  • Short description of the company business model and value chain.
  • Whether the company is active in the following sectors: fossil fuel (coal, oil and gas), controversial weapons along with related revenues.

Companies may consider including the following characteristics when describing their business model: economic activities; products and services offered; markets of operation, company size (in terms of workforce, business locations, revenue, etc.)


M 2

Sustainability integration

  • Whether and how sustainability matters are integrated in the company strategy and business model.
  • Resilience of the company strategy and business model(s) to material sustainability risks.
  • Policies and actions adopted to manage material sustainability matters.
  • Targets related to management of sustainability matters.


M 3

Sustainability governance

  • Governance bodies roles and responsibilities with regard to sustainability matters (e.g. in relation to risk management, target setting, sustainability disclosure).
  • Whether governance bodies are informed about sustainability matters, and how they are addressed by administrative and/or management bodies.
  • Whether incentive schemes are offered to members of governance bodies that are linked to sustainability matters.


M 4

Material impacts, Risk and Opportunities

  • The processes used to identify material impacts, risks and opportunities.
  • Sustainability due diligence process.
  • Outcome of the materiality assessment (identified material impacts, risks and opportunities).
  • How material impacts, risks and opportunities interact with the company strategy and business model.


M 5

Stakeholder engagement

  • Description of the company main stakeholders, and how the company engages with them.
  • How the interests and views of stakeholders are taken into account by the undertaking’s strategy and business model.

Metrics in use for ESG Reporting- Environmental disclosures

Environmental metrics cover issues that arise from or impact the natural environment.

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2 Navigate the value chain under CSRD and ESRS – Complete comprehensive read

CSRD art 19(a)(3) and 29(a)(3)/ESRS 1.5 Value chain require that reported information relates to a company’s own operations and its upstream and downstream Value Chain (VC), including its products and services, its business relationships and its supply chain.

What is the difference between value chain and supply chain?
In short, the VC includes the supply chain. The supply chain is the actors in the VC upstream from the reporting entity. However, VC also includes downstream entities along with the supply chain.

The supply chain provides products or services that are used in the development of the undertaking’s products or services. Depending on the position in the VC, an undertaking’s supply chain can be part of the downstream VC of another undertaking.

In some industries, upstream or downstream refers to specific points in the chain rather than with reference to the reporting undertaking’s position in the chain.

Navigating the value chain under CSRD and ESRS
How to identify the reporting boundaries?

Reporting boundaries for sustainability reporting

The reporting boundaries would be based on the financial statements (For example, when reporting for a group where the parent company prepares consolidated financial statements, the consolidated financial and sustainability statements will be prepared for the parent and its subsidiaries.) –but expanded to cover material impacts, risks and opportunities related to the upstream and downstream value chain.

Associates or joint ventures –accounted for under the equity method or proportionally consolidated –may form part of the upstream or downstream value chain, if they are to be considered as business partners of the reporting company.

When determining impact metrics, the data of associates or joint ventures are not limited to the equity share held but should be taken into account on the basis of the impacts that are directly linked to the company’s products and services through its business relationship.

Most of the metrics in the sector-agnostic standards are limited to the own operations (no value chain). If information on the value chain cannot be obtained, in the first three years of applicable the draft ESRSs would allow transitional measures.

Disclosures – General requirements

The general requirements relating to all disclosures on VC can be found in ESRS 1 General requirements:

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The International Sustainability Disclosure Standards – IFRS S1 and IFRS S2 – Best read

The International Sustainability Disclosure Standards – IFRS S1 and IFRS S2

On 26 June 2023 the International Sustainability Standards Board (ISSB) released its first two International Sustainability Disclosure Standards (IFRS SDS or the Standards) that become effective for periods beginning on or after 1 January 2024. Together they mark the start of a new era of requiring companies to make sustainability-related disclosures.

The ISSB was launched by the IFRS Foundation at COP26 with the aim of improving the consistency and quality of sustainability reporting across the globe, by matching the importance of sustainability reporting with the current regulations around financial reporting. To reinforce this message, the ISSB sits alongside the International Accounting Standards Board (IASB) and is overseen by the trustees of the IFRS Foundation and the Monitoring board.

The International Sustainability Disclosure Standards – IFRS S1 and IFRS S2

The ISSB brings together the Climate Disclosure Standards Board (CDSB) and the Value Reporting Foundation (VRF), the name behind the Integrated Reporting Framework and the Sustainability Accounting Standards Board (SASB) Standards.

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EU ESG regulatory framework – 1 Complete read

EU ESG regulatory framework

EU ESG regulatory framework – Introduction

The EU ESG regulatory framework is in every company’s interest to adequately address material ESG impacts, risks and opportunities. ESG risks just like any other corporate risks may become detrimental to the company value. The cost to repair damages can be higher than preventative measures and proactive management. Evidence shows that companies that fully integrate ESG consideration in their operations and that are transparent and accountable to their stakeholders are better positioned for a long-term success.

Furthermore, companies face increasing pressure to report on ESG matters driven by shareholder demands, regulation, reputational concerns and other factors.

ESG refers to a broad range of environmental, social and governance factors that are used to evaluate how companies are managing their sustainability impacts, risks and opportunities. These factors can be either considered from the inside-out perspective (how the company operations impact the environment and the society at large) or an outside-in perspective (how ESG issues can affect the company’s positions). Here are examples of differente ESG Issues:

EU ESG regulatory framework


Environmental factors include issues that stem from or affect the environment. They include but are not limited to company impact on climate change (through GHG emissions); its management of climate related risks and opportunities; the use of energy, water and other resources; pollution and waste management; and impact of its business activities on biodiversity and natural environment.

Social factors refer to how the company affects humans it interacts with – its employees, clients, suppliers, local communities and other stakeholders – and how they in turn can affect the company. They include but are not limited to issues such as treatment of workers in own operations and in the supply chain; employees’ health and safety; diversity and inclusion; respect for human rights; as well as impacts on local communities and users of company’s products and services.

Governance refers to a system of internal practices, controls and procedures that a company adopts in order to govern itself, make effective decisions, comply with the law, and meet the needs of its stakeholders. Governance encompasses a system by which a company is managed, operated and held to account. Its primary objective is to help build the environment of trust, transparency and accountability that is key to ensure stability and encourage long-term investments. In the context of a broader range of ESG issues, governance can be broken down into two main areas: corporate governance and business ethics (or responsible business conduct).

The first one covers issues such as: ownership structure; board composition, independence and compensation; approach to risk management and internal controls; shareholder rights; and communication with shareholders. Business ethics on the other hand, refers to values, standards and principles a company adopts to govern itself in a responsible way, in line with applicable laws and regulations, and commonly accepted norms. It includes issues such as anticorruption, whistle blowing, and political lobbying, among others.

ESG factors are sometimes referred to as “non-financial” or “extrafinancial”. However, there has been some scepticism around the adequacy of those terms, because they imply that the information in question has no financial relevance. Whereas ESG issues in fact may have direct implications for the company financial performance.

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Getting started with your Best Sustainability reporting Project

Getting started with your Sustainability reporting

0. Overview Sustainability reporting

Organisations embarking on the sustainability reporting journey would do well to establish a sustainability reporting cycle, setting out what needs to be done, how, when and by whom.

There are four stages to the sustainability reporting cycle and these form the basis for the structure of this project guide:

  • who is accountable and responsible,
  • the processes for identifying material sustainability-related information for reporting purposes,
  • determining, collecting and reporting the data, and
  • considerations for verification that can lead to continual improvement of reporting

When undertaking sustainability reporting, there may well be instances when working on one stage may necessitate considering another stage or parts within a stage. For instance, new information discovered when collecting data for reporting may prompt the organisation to revisit the identification of sustainability-related risks and opportunities (SRROs) that could reasonably be expected to affect the organisation’s prospects or material information about those SRROs. Beyond reporting, the organisation may also revisit its strategy for managing its SRROs.

In support of a simpler engagement, this project guide such that each stage can be engaged with independently of another. Where relevant, links or outlines to key interconnected content from other stages are included. There’s no one-size-fits-all solution. It is therefore important to take time to work through the suggested processes, then design processes appropriate to your organisation and implement them.

It’s also essential to reflect and return to the cycle to build in continual improvement. Those designing and implementing processes for the first time may wish to engage with this guide’s content piecemeal, and all are encouraged to return regularly to its key messages.

1. Allocating Responsibility and Establishing the Landscape for Sustainability reporting

Sustainability reporting is a subset of corporate reporting which, in turn, is essentially about accountability and communication. Whereas the corporate reporting focus has previously been on financial reporting, today’s approach incorporates sustainability reporting, which provides a more holistic view of the organisation.

In addition, before charting a path and making key decisions, it is important, to understand and evaluate where the organisation currently stands in relation to sustainability reporting and the environment in which it is operating.

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Double Materiality Assessment under CSRD – 1 Best Guidance on Implementation

Double Materiality Assessment under CSRD – 1 Best Guidance on Implementation

Overview Double Materility Assessment

  • The double materiality assessment involves three steps: (1) understanding context, (2) identifying material topics and their impacts, and (3) assessing materiality, leading to the preparation of a final list for sustainability reporting
  • Reporting needs to cover the assessment process and the outcomes in accordance with ESRS 2 IRO-1, ESRS 2 SBM-3, and ESRS 2 IRO-2
  • CSRD’s materiality assessment aligns GRI’s impact focus, integrates IFRS from ISSB for financial materiality, and considers international due diligence outcomes
  • EFRAG has drafted a set of guidelines for carrying out a double materiality assessment in accordance with the CSRD regulations


GOV = Governance: the governance processes, controls and procedures used to monitor and manage impacts, risks and opportunities;

SBM = Strategy: how the undertaking’s strategy and business model(s) interact with its material impacts, risks and opportunities, including the strategy for addressing them;

IRO = Impact, risk and opportunity management: the process(es) by which impacts, risks and opportunities are identified, assessed and managed through policies and actions; and

MT = Metrics and targets: how the undertaking measures its performance, including progress towards the targets it has set.

Double Materiality: determining both the importance of sustainability issues on the company’s performance (i.e. financial materiality) and the external impacts of the company’s activities on the economy, the environment, and people (i.e. impact materiality).

EFRAG (European Financial Reporting Advisory Group) has provided an Implementation guidance for the materiality assessment.

  • Impact materiality
    Includes impacts connected with the undertaking’s own operations and upstream and downstream value chain, including through its products and services, as well as through its business relationships.
  • Financial Impact Materiality
    Requires disclosing all sustainability/ESG issues that are likely to significantly affect your company’s financial health and operational performance. For this, you can rely on non-monetary and monetary quantitative as well as qualitative datasets.

Double Materility Assessment – How to do it?

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