In July 2021, the European Commission delivered the European Green Deal, with the goal of Europe becoming the first climate neutral continent by 2050. It aims to ensure:
To reach the target of reducing emissions by at least 55% by 2030, – which all 27 EU Member States are committed to - the implementation of the EU Taxonomy, the Sustainable Finance Disclosure Regulation (SFDR), and the Corporate Sustainability Reporting Directive (CSRD) (currently called NFRD = Non-financial Reporting Directive) will support the European Green Deal. These being central elements of the EU Green Deal, will help reaching the transformational change.
Understanding the complexity of these disclosure requirements can be a challenging process. Due to this complexity, we have created this paper to provide more clarity for large companies, financial market participants, and SMEs regarding the interconnection of these requirements, implementation timelines, and benefits businesses can gain.
The European Commission has published the EU Taxonomy Regulation and Delegated Acts in June 2020, which has entered into force in July 2020. The Taxonomy is a classification system and transparency tool to support reaching the objectives of the European Green Deal, by providing a common language for investment purposes regarding what counts as an environmentally sustainable economic activity. Therefore, companies can monitor and communicate their sustainable activities more concretely, which will help investors to direct investments towards sustainable activities and projects. The Taxonomy regulation will also enable comparability among companies and investment portfolios. Furthermore, the taxonomy can advance the SFDR and NFRD’s regulations, by requiring companies under NFRD and SFDR to comply with the disclosure requirements.
Three main criteria were developed to determine environmentally sustainable economic activities:
An activity can be disclosed as taxonomy aligned when it meets all three criteria.
Information regarding the activities and the specific criteria applicable for them can be found on the European Commission’s website: European Commission – EU Taxonomy Compass
The first criterion for taxonomy-alignment is that an activity needs to contribute to at least one objective, to reach the condition of substantial contribution. Each activity has specific criteria for substantial contribution. The taxonomy defines 6 environmental objectives. These are:
The first two objectives (climate change mitigation and climate change adaptation) are included in a first delegated act approved in 2021, while the remaining 4 objectives are to be published in 2022.
Each objective has a specific set of criteria defined for an activity regarding how to substantially contribute to an objective.
If we take the activity “Renovation of existing buildings” as an example, within the “Construction and real estate activities” sector, the following substantial contribution criteria is applicable to this activity within the “Climate change mitigation” environmental objective:
“The building renovation complies with the applicable requirements for major renovations.
Alternatively, it leads to a reduction of primary energy demand (PED) of at least 30 %).”
The second criterion for taxonomy-alignment is that an activity does not significantly harm any of the 6 environmental objectives. Each activity has specific criteria for DNSH.
DNSH includes three types of criteria:
By considering the same activity “Renovation of existing buildings”, one example for DNSH towards the objective “The sustainable use and protection of water and marine resources”, is the following:
“Where installed as part of the renovation works, except for renovation works in residential building units, the specified water use for the following water appliances is attested by product datasheets, a building certification or an existing product label in the Union, in accordance with the technical specifications laid down in Appendix E to this Annex:
The third criterion for taxonomy-alignment is that an economic activity needs to be in alignment with the following minimum safeguards:
Those environmentally sustainable economic activities, that contribute substantially to an environmental objective can be either enabling or transitional activities.
Enabling activities allow other activities to substantially contribute to an environmental objective by directly enabling them – as its name suggests. Enabling activities can be for example to install energy efficient equipment in buildings.
Transitional activities must contribute to the objective: climate change mitigation. Activities can be categorized as transitional, if there are no other low-carbon alternatives developed, and if their level of greenhouse has emission matches to the sector or industry’s best performance. Transitional activities can be for example best-in-class cement manufacturing.
The EU Taxonomy Compass also defines these activities.
Activities can be either taxonomy-aligned or taxonomy-eligible activities. While taxonomy-aligned activities meet all three main criteria, taxonomy-eligible activities only meet the criteria of “substantial contribution”, and not the DNSH and/or minimum safeguards.
The following companies are subject to mandatory disclosure requirements:
The following companies can choose to disclose voluntarily:
Companies under voluntary disclosure can’t be forced by other companies to do so.
SFDR aims to increase transparency and reduce greenwashing among financial market participants, including financial products and advisors, by providing the possibility to compare disclosed information towards end investors. SFDR sets out different disclosure requirements for Article 6, Article 8, and Article 9 Funds. The level of sustainability disclosure requirements increases from Article 6 to Article 9 Funds.
Article 6 Funds are required to provide transparency regarding how they integrate sustainability risks. They need to report in pre-contractual disclosures about sustainability risks in their investment decisions.
Article 8 Funds (also called as ‘Light green’ funds) are required to provide transparency regarding “the promotion of environmental or social characteristics in pre-contractual disclosures”, “or a combination of those characteristics, provided that the companies in which the investments are made follow good governance practices”. Article 8 fund investments only consider ESG characteristics, without having a sustainable investment objective.
Article 9 Funds (also called as ‘Dark green’ funds) are required to provide transparency (regarding “sustainable investments in pre-contractual disclosures”, “where a financial product has sustainable investment as its objective and an index has been designated as a reference benchmark”. Article 9 fund investments consider both ESG strategies and sustainable investment objectives.
Financial advisers which employ fewer than three persons à although they are required to consider and factor in sustainability risks in their advisory processes.
CSRD will replace the Non-Financial Reporting Directive (NFRD) with additional reporting requirements, due to the evaluated shortcomings of NFRD. Currently, NFRD is applicable to listed and large companies with an average balance sheet total EUR 20M or net revenue EUR 40M projected on a financial year, employing more than 500 employees (covering ~ 11,700 companies). These companies under NFRD are required to disclose how they impact and how they are impacted by social and environmental sustainability issues. However, NFRD is rather flexible in a way, that it allows non-disclosure of information, due to its nature.
To support the European Green Deal, the European Commission proposed to tighten these requirements by replacing the Non-Financial Reporting Directive with the Corporate Sustainability Reporting Directive. This means, that the requirements set out in NFRD will also be part of CSRD, including additional reporting requirements, such as machine-readable reports and third-party audits. The tighter requirements will also broaden the scope of the new reporting directive, covering ~ 49,000 companies. This will be achieved by including SMEs besides listed and large companies and lowering the amount of the previously mentioned balance sheet total and net revenue by exceeding the 2/3 of that amount, as well as lowering the required number of employees to 250. (The decrease in numbers is only applicable to listed and large companies, not SMEs).
The EU Taxonomy, together with the SFDR and CSRD are tools to support directing investments towards Taxonomy-aligned activities, by enabling investors to identify these activities. Companies under the NFRD (later CSRD), are required to disclose information under the EU Taxonomy. Financial market participants and advisors are therefore not only required to disclose such information, but also to collect such information from companies within their portfolio for example and disclose further information under SFDR towards end investors. (SFDR incorporates ‘environmentally sustainable economic activities’ that have been specified in the EU Taxonomy). Another link between the SFDR and the EU Taxonomy, is that specifications of the SFDR’s sustainable investments are outlined based on the EU Taxonomy’s DNSH criterion. This ensures that sustainable investments avoid significantly harming sustainable investment objectives. Financial market participants under the SFDR also have to disclose taxonomy-aligned investments.
Market participants can only make thoughtful investment decisions, if they consider both the disclosures under the EU Taxonomy and CSRD. This will ensure that market participants are well informed about how companies’ implementation of environmental activities takes place. Disclosures under the CSRD will provide more comprehensive information, complementing the EU Taxonomy’s classification system.
By implementing the EU Taxonomy, companies can:
Using the criteria defined in the EU taxonomy can help companies to define strategies towards sustainable transition.
At the moment, there are no known legislative sanctions regarding non-compliance with the EU Taxonomy, which can be due to the fact that its development is still ongoing.
Investors require more and more sustainability information and consider more to invest in sustainable companies. Therefore, companies can gain competitive advantage by applying the criteria laid out in the taxonomy, as it is suggested to provide as much information as possible. Furthermore, its application can lead to avoiding potential negative effects on PR activities, that might happen in the future by not complying.
With regard to the development of the EU Taxonomy, there are discussions within the European Commission about developing a social taxonomy as well. It might have the same requirement framework as the environmental taxonomy with adjustments to social aspects. The EU Taxonomy in general is a dynamic regulation being regularly assessed. Therefore, businesses affected by the regulation need to keep an eye on its development.
In an ideal situation, financial market participants and financial advisors could easily gather the information they need from other companies, such as companies’ share of taxonomy-aligned activities. Furthermore, disclosing such information can help authorities with future policy development, by monitoring the situation.
BeCause is a ‘sustainability hub’ to
Social sustainability is about identifying and managing business impacts, both positive and negative, on people. The quality of a company’s relationships and engagement with its stakeholders is critical. Directly or indirectly, companies affect what happens to employees, workers in the value chain, customers and local communities, and it is important to manage impacts proactively
• Has a big impact on business’s operations• a lack of social development can hamper business operations and growth.
• Potential benefits for business when working towards social sustainability
Frameworks’ focus:
• The first six of the UN Global Compact's principles focus on this social dimension of corporate sustainability, of which human rights is the cornerstone.
• Covers the human rights of specific groups
Covering groups of
As a complement, not as a substitute for respecting rights, businesses can also take additional steps:
• Contribute in other ways to improve the lives of the people they affect, such as by creating decent jobs, goods and services that help meet basic needs, and more inclusive value chains.
• Make strategic social investments and promote public policies that support social sustainability.
• Partner with other businesses, pooling strengths to make a greater positive impact.
▪ making social investments in communities to improve quality of life
▪ create jobs
▪ partner with other businesses to solve social problems.
Diversity and inclusion efforts:
Working with local government or the nonprofit community to help build resilient and equitable local social systems. A company’s impact on community development structure through housing, investment, and equity.
As a new generation of employees enter the workforce, many expect their employers to have values that align with their own and are taking measures to positively engage with their communities. Attracting investors: there has been a huge shift in recent years as investors are not only attracted to businesses that are sustainable and socially responsible but actively turning away from those which are not. Customers are increasingly utilizing community impact, sustainability, and commitment to a higher purpose to help them differentiate between brands.
This interrelation between social, economic and environmental factors includes:
SDG8 - decent work and economic growth"
SDG10 - "reduction of inequality"
SDG3 - health and well-being"
SDG 5 - “gender equality”
SDG9 - "reduction of inequality"
SDG10 “build resilient infrastructure, promote sustainable industrialization and foster innovation”
SDG11 “ensure sustainable consumption and production patterns”
According to Nobel Laureate Amartya Sen, social sustainability has five dimensions that should be considered when determining if a business or project is socially sustainable:
• Equity
• Diversity
• Social Cohesion
• Quality of life
• Democracy
• Governance.
Social Sustainability plays a particularly special role for companies grappling with the challenges of an ever-changing workforce, societal shifts, fluctuations in migration and globalization, investing, even quality of work and employee retention.
The Danish news outlet Berlingske recently published an article about BeCause's new partnership with Elretur, which aims to promote sustainability efforts among its approximately 900 participating companies. The article discusses the Elretur scheme, which collects and recycles used and worn-out electronics, and how these companies now have a certification in the form of an E-mark that showcases their efforts towards sustainability.
Elretur's members can currently show with an emblem that they participate in the recycling program. The emblem will now be part of what is shown through BeCause when a company is looked up, and within a few months, the participating Elretur members are also expected to be able to show the world how much CO2 they are each helping to save by ensuring that used or worn-out electronics are collected and sorted or recycled.
Morten Harboe-Jepsen, director of Elretur, emphasized the importance of sustainability in the future market and how it can be a competitive parameter. He stated, "sustainability is important for the environment and the climate, but can also be important if you want to survive in the future market, where sustainability will become an even more important competitive parameter." BeCause's platform allows participating companies to collect and display all their communication about their sustainability efforts in one place.
According to Frederik Rubens Steensgaard, CEO and co-founder of BeCause, "Collaboration, transparency, and valid communication are key to combating the challenges presented to maintain sustainability for the planet, people, and businesses." BeCause's platform provides a way for companies to showcase their sustainability efforts and progress, including their alignment with the UN's Sustainable Development Goals and other certifications.
Several of Elretur's members, including Danish-owned company Dandiag, are already using BeCause's platform to showcase their recycling efforts. By installing their Elretur widget on their website, these companies can provide greater visibility to their recycling programs and make their sustainability efforts more accessible to customers.
The importance of visibility in promoting sustainable behavior is clear, and a recent Megafon survey for Elretur highlighted the need for greater visibility of recycling programs. BeCause is proud to partner with Elretur to provide an easy way for their members to showcase their sustainability efforts and align with the growing importance of sustainability in the market.
Read original article here.
Calculating greenhouse gas (GHG) emissions and understanding a scope’s dimension in relation to certain activities can be quite challenging. Therefore, it is no surprise that there are standardized frameworks and specialized experts in this field. We would like to help you to gain a better understanding of the GHG protocol, and how to start your organization’s GHG emissions calculating journey.
The Greenhouse Gas Protocol (GHG Protocol) includes standardized frameworks for measuring and managing greenhouse gas emissions, as well as emission reduction measures, that provide global calculation and progress tracking guidance for companies, organizations, countries, and cities. Since its establishment in 1990, GHG Protocol has been used world-wide.
The GHG Protocol differentiates between three scopes: Scope 1, Scope 2, and Scope 3. By including these scopes in the emissions measurement, public and private organizations can measure both their internal emissions and those occurring in their supply chain.
For those who use the GHG Protocol, it is required to report the organization’s Scope 1 and Scope 2 emissions. Reporting on Scope 3 emissions is recommended, but still a voluntary choice.
Depending on the nature of your organization, you should consider looking through the following documents.
For Companies and Organizations
For Countries and Cities
The Corporate Standard provides guidance on measuring and reporting the company’s own (Scope 1 and Scope 2) GHG emissions through standardized approaches. It is helpful for companies in terms of creating a GHG inventory and reducing the accompanying costs. Creating a strategy by using the standards can help to increase effectiveness in reducing emissions, and to provide consistency and comparability both internally (meaning the company’s year-by-year progress) and externally with other companies through transparency.
The Corporate Value Chain (Scope 3) Standard is the only standard that is accepted on an international level in relation to Scope 3 emissions accounting. It provides guidance on evaluating impacts of unowned GHG emissions, which result from a company’s value chain. Furthermore, this standard helps companies to pinpoint areas where reduction activities are needed.
3. Product Standard
The Product Standard provides guidance on measuring a product’s GHG emissions throughout its whole life cycle, from raw materials to disposal. From the standard, companies can also gain understanding of where to reduce greenhouse gases. The benefit of complying with the standard can show up as better environmental communication, enhanced product design, and decreased risks and expenses, which can increase the company’s competitive advantage.
The Project Protocol has been created for organizations that want to measure GHG benefits resulting from climate change mitigation projects. Such organizations can for example be those who develop or verify greenhouse gas projects, initiatives, and related programs or systems.
The Mitigation Goal Standard can help cities and countries to create standards, and nation-wide mitigation goals. It can also help in making sure that emission reduction activities are generating outcomes that are in line with the goals.
The Policy and Action Standard has primarily been created for policymakers and analysts. When creating policies, the standard can help these actors to assess the impact of greenhouse gases in relation to the designed policies. The assessment can help with policy improvements towards achieving enhanced emission reductions.
The GHG Protocol for Cities standard includes a framework for measuring and reporting GHG emissions of cities. Using the standard can enable cities to have increased effectiveness of emission reduction strategies, and to have more precise progress tracking.
At BeCause, we can help you with matchmaking to companies who are experts in the field of GHG emissions calculation and offsetting, so you get the right guidance you need. If you would like us to set you up with a solution provider, contact us here.
Companies often rebrand as a means of refreshing their image, reconnect with an ever-changing customer base, or in the most extreme of cases, mitigate a crisis.
In the case of ‘hoodHeroes, now BeCause.eco, we simply wanted to create a brand that represents the expanse that we fill between companies, stakeholders, and the often-confusing cloud of sustainability ideologies that never seem to accurately, nor effectively connect these players.
This expanse in the world of business sustainability, while confusing to many due to the complex, overlapping ambitions, goals and outcomes, found a home in a rogue collective of professionals representing fifteen nationalities with diverse sets of expertise. We named it ‘hoodHeroes. Or, to be best understood, a collective of heroes of our own ‘hoods.
The underlying problem BeCause and our team works to solve is the lack of communication companies have on their sustainability goals and actions. Wherever you look there’s a disconnect between companies and stakeholder groups; ESG (Environmental, Social, Governance) reports are useful for mitigating financial risk, but not widely understood. CSR (Corporate Social Responsibility) is often seen as purely philanthropic activities that are easily scrutinized for “Green Washing.” A company sustainability report is too long, complex, and only offered once a year for them to make any effective, on-going connection between stakeholders.
The lack of sustainability communications has been a great topic of interest recently. While it is only one facet of sustainability, Bloomberg recently published an article titled Capitalism Is Struggling with the Language of Climate Change. Imagine trying to communicate not only climate change mitigation, but also the social and financial aspects of sustainability: diversity, access to education, wealth inequality, gender equality, etc. etc.! Yeah, that’s why we answer the “why a rebrand?” question with “BeCause.”
BeCause allows companies to assemble and organize all of their company sustainability elements into one place; a single, complete source of truth to manage a company’s growing sustainability CV.
Consider BeCause the new home for company Sustainability Information Management. Regardless of whether companies have already matured or just getting started on their sustainability journey, a big or small company, have a B2C or B2B focus, and regardless of market vertical — every company experiences the same overall needs and challenges today.
BeCause empowers companies to manage and advance their brand sustainability 360° — all conveniently done from one single platform.
Get industry and market insight to overview and advance the resonance of a sustainable brand through powerful and personalized analytics dashboards digesting real-time data on a company, audience, industry and broader ecosystem.
Let’s face it — no one is perfect when it comes to optimizing the sustainability of their company. We connect companies with vetted solution providers to improve in the areas they want to improve upon most.
Why all of these elements? Well…BeCause. Don’t you also want to see companies of the world continue to operate more sustainably? Don’t you want to purchase products and services that meet sustainability criteria? We also want to see these changes, and while we will always be a ‘hood of Heroes’ we couldn’t ignore the ‘BeCause.’
The challenge of being a truly sustainable company has never been greater; but then again, the solutions have also never been greater.
We invite you to follow along on this journey as we continue helping everyone ‘Be their Cause’ whether you are an everyday citizen or a multinational company. Only together can we all live, work, and do business for the better.