Activity based carbon accounting quantifies caused emissions by multiplying the physical unit of an activity with the corresponding emission factor (e.g. liters of fuel burned). It is the most accurate carbon accounting method, as real physical values are used.

A CO₂ equivalent (CO₂e) is a unit of measurement that indicates the global warming potential (“GWP”) of various greenhouse gases, expressed as the GWP of one unit of carbon dioxide. It is used as a common basis for calculating emissions of various greenhouse gases.

The Carbon Border Adjustment Mechanism (CBAM), also known as the CO₂ border adjustment mechanism, is an innovative measure taken by the EU as part of the European Green Deal. The CBAM aims to take CO₂ emissions from imported products into account by demanding that importers pay compensation for emissions generated in the manufacturing process. This is intended to protect the competitiveness of EU companies and strengthen global climate protection efforts by providing incentives to reduce greenhouse gas emissions worldwide.

The Carbon Disclosure Project (CDP) serves as a central point of contact for organizations, cities and investors to make their environmental impact transparent. More than 9,600 companies worldwide report their emissions and environmental strategies to CDP through a precise evaluation system that ranges from A to D-. These assessments, which cover key areas such as climate change, water management and forest protection, are a key indicator of corporate environmental responsibility. They help investors and consumers make more sustainable decisions and thus contribute to more sustainable global development.

Carbon leakage describes a scenario in which companies may relocate production to countries that have less stringent emissions regulations due to climate policy costs, which can potentially result in an increase in overall emissions. This issue is particularly relevant in energy-intensive sectors, where the risk of carbon leakage is more pronounced.

Carbon accounting refers to the systematic measurement and monitoring of emissions of CO₂ and other greenhouse gases. It is used to prepare a CO₂ balance sheet that enables companies and other organizations to understand their impact on the climate. In contrast to sustainability accounting, carbon accounting only takes into account environmental effects, while sustainability accounting also takes social and government aspects into account.

Carbon compensation means offsetting emissions by reducing them elsewhere. Climate change mitigation projects, such as reforestation projects, generate a specific amount of CO₂ certificates based on the estimated amount of emissions reduced or saved as a result of this project. Other parties, such as governments or companies, can buy these CO₂ certificates to offset their emissions on the balance sheet. On an individual level, compensation can be made by agreeing to pay a certain amount in addition to a purchase, which is then used to finance such mitigation projects.

A transferable or tradable instrument that represents one metric tonne of CO2eq emission reduction or removal and is issued and verified according to recognised quality standards.

A carbon footprint calculator is a tool for converting activity data into its carbon equivalent by multiplying the value by the corresponding emission factor. The result is an estimate of the carbon emissions caused by a specific activity.

An economic system in which the value of products, materials and other resources in the economy is maintained for as long as possible, enhancing their efficient use in production and consumption, thereby reducing the environmental impact of their use, minimising waste and the release of hazardous substances at all stages of their life cycle, including through the application of the waste hierarchy.

The process of reducing GHG emissions and holding the increase in the global average temperature to 1,5 °C above pre-industrial levels, in line with the Paris Agreement.

The capacity of an undertaking to adjust to climate changes, and to developments or uncertainties related to climate change. Climate resilience involves the capacity to manage climate-related Scope 1 and benefit from climate-related opportunities, including the ability to respond and adapt to transition risks and physical risks. An undertaking’s climate resilience includes both its strategic resilience and its operational resilience to climate-related changes, developments or uncertainties associated with climate change.

Climate risks arise from significant changes in the Earth's spheres and are a result of changes in the climate and environment caused by humans.

Potential positive effects related to climate change for the undertaking. Efforts to mitigate and adapt to climate change can produce opportunities for undertakings. Climate-related opportunities will vary depending on the region, market, and industry where an undertaking operates.

Risks resulting from climate change that can be event-driven (acute) or from longer-term shifts (chronic) in climate patterns. Acute physical risks arise from particular hazards, especially weather- related events such as storms, floods, fires or heatwaves. Chronic physical risks arise from longer-term changes in the climate, such as temperature changes, and their effects on rising sea levels, reduced water availability, biodiversity loss and changes in land and soil productivity.

‍

Risks that arise from the transition to a low-carbon and climate-resilient economy. They typically include policy risks, legal risks, technology risks, market risks and reputational risks.

A corporate carbon footprint represents the emissions generated by all of the company's activities within the selected reporting period and operating limits. The resulting CO2 balance includes at least Scope 1 and Scope 2 emissions, preferably also Scope 3 emissions, as far as possible.

Corporate Social Responsibility (CSR) describes the advanced efforts of companies to act sustainably beyond pure economic goals. This includes conscious consideration of their social, social and ecological role and the influence of their actions. The aim of CSR is to make a positive contribution to social development and actively reduce negative effects on the environment and society.

The Corporate Sustainability Due Diligence Directive (CSDDD) is a groundbreaking European Union directive that aims to strengthen environmental and human rights protection both within the EU and globally. It requires companies to consider both existing and potential negative impacts on human rights and the environment. This includes responsibility for the company's own business activities, the activities of subsidiaries and in particular those of the supply chain. The CSDDD is a central part of the EU strategy for promoting sustainable business practices and ensuring responsible corporate governance in a global context.

The Corporate Sustainability Reporting Directive (CSRD) is an initiative of the European Commission that was introduced in April 2021 to standardize and expand sustainability reporting within the EU. It extends the requirements of the previous Non-Financial Reporting Directive (NFRD) to all large companies in the EU that exceed certain financial thresholds or employee numbers. The changes to the CSRD include more detailed reporting requirements, the introduction of binding EU standards for sustainability reports, digital accessibility of data and a mandatory review of reports. These measures aim to increase the transparency and credibility of sustainability information and thus promote a more sustainable economy in the EU.

Aggregated   types   of   mitigation   actions   such   as   energy   efficiency, electrification,  fuel  switching,  use  of  renewable energy,  products  change, and   supply-chain   decarbonisation   that   fit   with   undertakings'   specific actions.

Decarbonization is the process of minimizing greenhouse gas emissions, in particular CO₂, and aims to make global economic and social systems climate-neutral by the middle of the century. Supported by the Paris Climate Agreement, states and companies worldwide are committed to urgent and long-term measures against climate change in order to achieve sustainable climate neutrality.

Direct greenhouse gas emissions, also known as “Scope 1 emissions,” refer to all emissions that come from sources that can be attributed directly to a company. Examples include emissions from the combustion of heating oil at a company's sites or the combustion of fuel for a company's vehicle fleet.

Double materiality has two dimensions: impact materiality and financial materiality. A sustainability matter meets the criterion of double materiality if it is material from the impact perspective or the financial perspective or both.

Downstream emissions are indirect greenhouse gas emissions that are recorded as part of Scope 3 of the Greenhouse Gas Protocol. They result from the use, disposal, or processing of a company's products and services after they leave the company's direct control.

The disclosure of environmental, social and governance data, known as ESG reporting, aims to make a company's activities in these areas transparent. This not only increases clarity for investors, but also motivates other organizations to take similar measures.

The Emissions Trading System (ETS) is a market-based tool for reducing greenhouse gases that allows emissions rights to be traded. In the EU Emissions Trading System (EU ETS), companies from industry and aviation receive emission certificates that determine their permitted emissions. These certificates can be traded to create incentives for emissions reductions. If companies exceed their emission limits, they must pay fines or purchase additional certificates. The EU ETS plays a key role in the EU climate strategy and promotes investments in green technologies.

The EU taxonomy, a core part of the European Green Deal, classifies sustainable activities to steer investments into green innovations. It supports the EU goals for climate neutrality by 2050 and the significant reduction of emissions by 2030 by providing guidelines for sustainable investments. Activities must contribute to one of six environmental goals without causing significant damage, in accordance with the “Do No Significant Harm” principle, and comply with social standards. The goals focus on climate protection, adaptation, water use, circular economy, prevention of pollution and biodiversity.

The point at which a relatively small change in external conditions causes a rapid  change  in  an  ecosystem.  When  an  ecological  threshold  has  been passed, the ecosystem may no longer be able to return to its state by means of its inherent resilience.

A dynamic complex of plant, animal and micro-organism communities and their non-living environment interacting as a functional unit. A typology of ecosystems is provided by the IUCN Global Ecosystem Typology 2.0.

Emission factors are used to estimate the amount of CO₂ emitted by an activity. These values can be found in various databases provided by governments such as DBEIS, ProBAS and EPA or by private providers such as ecoinvent.

The European Green Deal is a set of policy initiatives proposed by the European Commission in 2019. It supports the EU's transformation towards a green, fair and prosperous economy in a modern and competitive society. The overall goal of the European Green Deal is to achieve the EU's climate neutrality by 2050.

The European Sustainability Reporting Standards (ESRS) provide a standardized framework for companies to disclose environmental, social and governance (ESG) aspects. Developed by the European Financial Reporting Advisory Group (EFRAG), these 12 standards are mandatory for companies subject to the Corporate Sustainability Reporting Directive (CSRD). They define the core information to be published about the sustainability-related effects, risks and opportunities of a company.

Effects from risks and opportunities that affect the undertaking’s financial position, financial performance and cash flows over the short, medium or long term.

A sustainability matter is material from a financial perspective if it generates risks or opportunities that affect (or could reasonably be expected to affect) the undertaking’s financial position, financial performance, cash flows, access to finance or cost of capital over the short, medium or long term.

The Global Reporting Initiative (GRI) is an international organization that provides the world's most commonly used standard for sustainability reporting. The GRI was founded in 1997 with the aim of creating a mechanism for accountability for responsible environmental behavior by companies. In 2016, the GRI published its first global standards for sustainability reporting, which enable companies and other organizations to report on their impact on environmental, social, and government matters.

Global Warming Potential (GWP) is the factor by which a greenhouse gas contributes to the greenhouse effect, measured as a unit of a specific greenhouse gas in relation to one unit of carbon dioxide (CO₂). Depending on their physical and chemical properties, the behavior of the various greenhouse gases in the atmosphere differs. The extent to which they contribute to global warming depends on their radiation efficiency (the ability to absorb energy) and how long they stay in the atmosphere. The GWP of CO2 is used as a reference value with unit 1 over a period of 100 years, with which the GWPs of other greenhouse gases can be compared. Methane (CH4), for example, has a GWP of 27-30 over 100 years. This is because CH4 stays in the atmosphere longer and also absorbs more energy than CO2.

The Greenhouse Gas Protocol (GHG Protocol) is an internationally recognized framework for measuring and managing greenhouse gas emissions. It was developed at the end of the 1990s by the World Resource Institute (WRI) and the World Business Council for Sustainable Development (BWCSD) out of the need for an international standard for accounting and reporting greenhouse gas emissions in companies. The following two standards are relevant for corporate carbon accounting:

The Corporate Accounting and Reporting Standard contains requirements and guidelines for preparing a greenhouse gas inventory for companies and other organizations.

The Corporate value chain standard concentrated Focus on Scope 3 emissions and helps companies record emissions from their entire value chain. It is the most commonly used global standard for corporate greenhouse gas accounting.

Greenhouse gases (“GHG”) are gases that store and emit radiant energy in the thermal infrared range, which leads to the “greenhouse effect” by heating up the atmosphere and thus contributing to global warming. The main greenhouse gases associated with man-made global warming are: carbon dioxide (CO₂), methane (CH4), nitrous oxide (N₂O), hydrofluorocarbons (HFC), perfluorocarbons (PFC) and sulfur hexafluoride (SF6).

The gases listed in Part 2 of Annex V of Regulation (EU) 2018/1999 of the European Parliament and of the Council (13). These include Carbon dioxide (CO2), Methane (CH4), Nitrous Oxide (N2O), Sulphur hexafluoride (SF6), Nitrogen trifluoride  (NF3),  Hydrofluorocarbons  (HFCs),  Perfluorocarbons (PFCs).

ISO 14064 defines global standards for greenhouse gas reporting at company level. It consists of parts ISO 14064-1, -2 and -3, with ISO 14064-1 focusing specifically on the quantification and reporting of greenhouse gas emissions.

A  sustainability  matter  is  material  from  an  impact  perspective  when  it pertains  to  the  undertaking’s  material  actual  or  potential,  positive  or negative impacts on people or the environment over the short-, medium- and long-term. A material sustainability matter from an impact perspective 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.

GHG emissions that are a consequence of the activities of an entity but occur at sources owned or controlled by another entity. Indirect emissions are Scope 2 GHG emissions and scope 3 GHG emissions combined.

‍

Indirect greenhouse gas emissions occur as a result of a company's activities but from sources that are not owned or controlled by that company. Both “Scope 2" and “Scope 3" emissions relate to indirect greenhouse gas emissions. Scope 2 emissions include emissions from the generation of purchased energy (electricity, steam, heating, and cooling) that the reporting company consumes. Scope 3 emissions include all other indirect emissions that occur along a company's value chain.

The Intergovernmental Panel on Climate Change (IPCC) is an international body of climate scientists who study the scientific, technical, and socio-economic information relevant to understanding the risks of human-caused climate change.

Price used by an undertaking to assess the financial implications of changes to investment, production, and consumption patterns, and of potential technological progress and future emissions abatement costs.

An organisational arrangement that allows an undertaking to apply carbon prices in strategic and operational decision making. There are two types of internal carbon prices commonly used by undertakings. The first type is a shadow  price,  which  is  a  theoretical  cost  or  notional  amount  that  the undertaking  does  not  charge  but  that  can  be  used  in  assessing  the economic implications or  trade-offs for such things as risk impacts, new investments, net present value of projects, and the cost-benefit of various initiatives. The second type is an internal tax or fee, which is a carbon price charged to a business activity, product line, or other business unit based on its GHG emissions (these internal taxes or fees are similar to intracompany transfer pricing).

The Kyoto Protocol obliges industrialized nations to reduce their greenhouse gas emissions. It was adopted in 1997 and sets a binding framework for global climate protection.

A life cycle analysis assesses the environmental impact of a product over its entire life cycle, including raw material extraction, production, use, and disposal.

Estimates of future GHG emissions that are likely to be caused by an undertaking’s key assets or products sold within their operating lifetime.

Sustainability related opportunities with positive financial effects that materially affect, (or could reasonably be expected to affect) the undertaking’s cash flows, access to finance, or cost of capital over the short, medium or long term.

‍

Sustainability related risks with negative financial effects that materially affect  (or  could  reasonably  be  expected  to  affect)  the  undertaking’s  cash flows, access to finance, or cost of capital over the short, medium or long term.

A  sustainability  matter  is  material  if  it  meets  the  definition  of  impact materiality, financial materiality, or both.

A minimum disclosure requirement sets the required content of the information that the undertaking includes when it reports on policies, actions, metrics or targets, either pursuant to a Disclosure Requirement in an ESRS or on an entity-specific basis.

Natural  assets  (raw  materials)  occurring  in  nature  that  can  be  used  for economic production or consumption.

Net-zero emissions mean that emissions that enter the atmosphere are offset by opposing measures. The goal is an emissions balance of zero.

The NFRD requires organizations to disclose non-financial information, such as environmental, social, and governance aspects. It aims to increase the transparency and quality of sustainability reporting.

Substances listed in the Montreal Protocol on Substances that Deplete the Ozone Layer.

The Paris Agreement of 2015 obliges countries to limit global warming to below 2 °C. It is a key document in global climate protection.

All global economic enterprise depends on the functioning of earth systems, such as a stable climate and on ecosystem services, such as the provision of biomass (raw materials). Nature-related physical risks are a direct result of an organisation’s dependence on nature. Physical risks arise when natural systems  are  compromised,  due  to  the  impact  of  climatic  events  (e.g., extremes  of  weather  such  as  a  drought),  geologic  events  (e.g.,  seismic events  such as  an  earthquake) events  or  changes  in  ecosystem equilibria, such as soil quality or marine ecology, which affect the ecosystem services organisations  depend  on.  These  can  be  acute,  chronic,  or  both.  Nature- related physical risks arise as a result of changes in the biotic (living) and abiotic    (non-living)    conditions    that    support    healthy,    functioning ecosystems.  Physical  risks  are  usually  location-specific.  Nature-related physical risks are often associated with climate-related physical risks.

A PCF measures a product's greenhouse gas emissions over its entire life cycle. The focus is on specific greenhouse gas emissions, as opposed to the general environmental balance.

Energy from renewable non-fossil sources, namely wind, solar (solar thermal and solar photovoltaic) and geothermal energy, ambient energy, tide, wave and other ocean energy, hydropower, biomass, landfill gas, sewage treatment plant gas, and biogas.

Materials  that  are  derived  from  resources  that  are  quickly  replenished  by ecological cycles or agricultural processes, so that the services provided by these and other linked resources are not endangered and remain available for the next generation.

The SBTi helps companies set science-based emission reduction targets that are compatible with the Paris Agreement.

Scope 1 emissions are direct emissions from processes that can be attributed to a company.

Scope 2-Emissions are indirect emissions that result from the generation of purchased energy that a company uses.

Scope 3-Emissions are all other indirect emissions along a company's value chain.

Spend-based carbon accounting uses the economic value of a good or service together with a corresponding emission factor (e.g. kg CO₂e per €) to calculate the emissions caused.

The effect the undertaking has or could have on the environment and people, including effects on their human rights, as a result of the undertaking's activities or business relationships. The impacts can be actual or potential, negative or positive, short-term, medium or long-term, intended or unintended, and reversible or irreversible. Impacts indicate the undertaking's contribution, negative or positive, to sustainable development.

Uncertain environmental, social or governance events or conditions that, if they occur, could cause a potential material positive effect on the undertaking's business model, or strategy on its capability to achieve its goals and targets and to create value, and therefore may influence its decisions and those of its business relationship partners with regard to sustainability matters. Like any other opportunity, sustainability-related opportunities are measured as a combination of an impact’s magnitude and the probability of occurrence.

Uncertain environmental, social or governance events or conditions that, if they occur, could cause a potential material negative effect on the undertaking's business model or strategy and on its capability to achieve its goals and targets and to create value, and therefore may influence its decisions and those of its business relationships with regard to sustainability matters. Like any other  risks, sustainability-related risks are  the  combination  of  an  impact’s  magnitude  and  the  probability  of occurrence.

Corporate sustainability reporting refers to the disclosure of environmental, social, and governance performance. It is often required by law and aims to enable stakeholders to assess a company's non-financial performance.

The SFDR aims to standardize and improve the disclosure of ESG aspects in the financial sector.

Risks  arising  from  the  breakdown  of  the  entire  system,  rather  than  the failure of individual parts. They are characterised by modest tipping points combining indirectly to produce large failures with cascading of interactions of physical and transition risks (contagion), as one loss triggers a chain of others, and with systems unable to recover equilibrium after a shock. An example is the loss of a keystone species, such as sea otters, which have a critical  role  in  ecosystem  community  structure.  When  sea  otters  were hunted to near extinction in the 1900s, the coastal ecosystems flipped and biomass production was greatly reduced.

The TCFD is improving the disclosure of climate-related financial information to help investors assess risks.

Tipping points are critical thresholds in the Earth system, the exceeding of which leads to serious and often irreversible environmental changes.

Risks  that  result  from  a  misalignment  between  an  organisation’s  or investor’s strategy and management and the changing regulatory, policy or societal landscape in which it operates. Developments aimed at halting or reversing   damage   to   the   climate   or   to   nature,   such   as   government measures,  technological  breakthroughs,  market  changes,  litigation  and changing consumer preferences can all create or change transition risks.

Upstream emissions are emissions caused by a company's supply chain, from procurement to use.

The  full  range  of  activities,  resources  and  relationships  related  to  the undertaking’s  business  model  and  the  external  environment  in  which  it operates.