Activity data refers to the number of units of a particular product or material purchased by a company, whether textile (kg), fuel (L) or others. For the purposes of carbon accounting, activity data is generally a more accurate way to estimate emissions than simply using spend-based data.
The principle of additionality is used for evaluating carbon removal projects. A carbon removal project is considered as “additional” if it results in greenhouse gas emission reductions that would not otherwise have happened.
Specifying a base year is essential for setting effective and accurate emission reduction targets. Yearly reduction targets are then set by the percentage of the total emissions in the established base year.
Baseline and Credit Systems
A market-based mechanism for emissions reduction where a "baseline" is set, for the level of emissions and issues tradable credits to companies that emit less. Companies can purchase credits from companies that emit less in order to comply with regulations.
Biochar is a charcoal-like substance created by the heating of agricultural waste (corn husks, stems, leaves, etc.) to change its chemical composition. This not only stores CO₂ but the resulting biochar can also be used to create a substance that can be added to the soil and used instead of chemical fertilisers. This is way to permanently remove the CO₂ and ensure it is not released back into the atmosphere during decomposition.
Biodiversity refers to all the different kinds of life on earth - animals, plants, fungi, and also microorganisms such as bacteria. The term can be used more specifically to refer to all species in a region or ecosystem. All types of life interact with each other and are connected in a complex web. Not all species on Earth have been discovered and assessed by any means, but numerous are already threatened with extinction due to human activities. The magnificent biodiversity of the earth is therefore endangered.
Cap and Trade
Cap and trade is an approach that harnesses market forces to reduce emissions. Limited permits are allocated by a central authority, allowing the holder to emit a particular amount of GHG over a set time period. Companies that want to emit more than their allocated share must purchase additional permits from other companies willing to sell them. In the EU, caps decrease every year, ensuring that total emissions fall.
Carbon accounting, also known as a carbon or greenhouse gas inventory, is the process by which organisations quantify their GHG emissions, so that they may understand their climate impact and set goals to limit their emissions.
According to Article 5 of the Paris agreement, actions to conserve and enhance appropriate sinks and reservoirs of greenhouse gases (and explicitly forests) should be taken.
Carbon Dioxide (CO₂)
CO₂ is a colourless and non-flammable gas occurring naturally in the Earth’s atmosphere. However, it is also created in many industrial processes. It is classed as a greenhouse gas and therefore a key contributor to global warming.
Carbon Dioxide (equivalent CO₂e)
As well as CO₂, there are a number of other gases that significantly contribute to global warming, all of which together are quantified in one single metric called CO₂e - Carbon dioxide equivalent. CO₂e means the number of metric tons of CO₂ emissions with the same global warming potential as one metric ton of another greenhouse gas. It provides a common scale for measuring the climate effects of all greenhouse gases.
Carbon Dioxide Removal (CDR)
CDR is the process of taking carbon out of the atmosphere and storing it where it won’t contribute to climate change. The methodology of SILVACONSULT® Forest Carbon Standard for carbon removal can be found here.
Carbon Disclosure Projekt (CDP)
CDP is a framework for companies, cities, and states to report their environmental impact. It was further developed into the CDSB (Carbon Disclosure Standards Board).
A carbon footprint corresponds to the whole amount of greenhouse gases (GHG) produced to, directly and indirectly, support a person’s lifestyle and activities. Carbon footprints are usually measured in equivalent tons of CO₂, during the period of a year, and they can be associated with an individual, an organisation, a product or an event, among others.
Carbon negative (or climate positive) means removing CO₂ from the atmosphere, or sequestering more CO₂ than is emitted. If the net result of a business’s activities result in a decrease in the amount of carbon in the atmosphere, this is considered carbon negative and goes a step further than net zero.
Carbon neutral - or Net Zero Carbon - describes the state of an entity (e.g. a company, service, product or event), where carbon emissions have been balanced out by funding an equivalent amount of carbon savings elsewhere. To become carbon-neutral, companies can either drastically reduce their carbon emissions to net-zero or balance their emissions through offsetting and the purchase of carbon credits.
Carbon reduction is the process where an organisation directly reduces greenhouse gas emissions through efficiencies.
A system in which a certain number of rights or permits are allocated to emit a certain amount of carbon dioxide or other greenhouse gases. These rights can then be bought/ sold, allowing companies to give up more if they purchase additional rights from companies that emit less. Carbon rights systems are a market-based approach to controlling emissions and achieving reduction targets.
Carbon sequestration is the process of capturing and storing atmospheric carbon dioxide. It is one method of reducing the amount of carbon dioxide in the atmosphere with the goal of reducing global climate change.
A carbon sink is anything that absorbs more carbon from the atmosphere than it releases – for example, plants, the ocean and soil. Forests are typically carbon sinks, as they absorb more carbon than they release and continually take carbon out of the atmosphere through photosynthesis. The ocean is another example of a carbon sink, absorbing a large amount of carbon dioxide from the atmosphere.
A carbon target is a commitment to reduce a company’s greenhouse gas emissions by a specified amount before a given year. A carbon emissions target is defined as science-based if it is in line with the scale of reductions required to keep global temperature increase below 2°C above pre-industrial temperatures.
A carbon tax is paid by businesses and industries that produce carbon dioxide through their operations. The tax is imposed with the goal of environmental protection and designed to reduce the output of greenhouse gases and CO₂ into the atmosphere.
Certified Emission Reductions (CERs)
Are carbon credits from greenhouse gas emission reduction projects certified by the UNFCCC under the Clean Development Mechanism that can be traded on carbon markets. Each CER represents a reduction in emissions of one metric ton of carbon dioxide equivalent. They are intended to provide financial incentives for countries to reduce emissions and promote sustainable development.
Clean Development Mechanism (CDM)
Is a mechanism of the United Nations Framework Convention on Climate Change (UNFCCC). The CDM, allows developed countries to invest in emission reduction projects in developing countries to meet their greenhouse gas reduction commitments under the Kyoto Protocol, as an alternative to reducing emissions in their own countries. These projects generate certified emission reductions (CERs) that can be used by developed countries to meet part of their emission reduction targets.
Climate Action Reserve (CAR)
A non-profit organization that operates a voluntary carbon offset program in the United States. The CAR program provides a standardized approach to developing and verifying carbon offset projects and ensures that the carbon credits generated by these projects are real, permanent, and verifiable. The organization promotes the development of greenhouse gas reduction projects, including those that reduce or avoid emissions of carbon dioxide and other greenhouse gases, and provides an online platform for trading carbon credits.
Climate Commitment for small and medium-sized enterprises (SME)
A commitment for small and medium-sized enterprises to halve emissions by 2030 and reach net zero by 2050, made via the SME Climate Hub.
Climate investment – also known as offsetting, carbon compensation, and carbon removal – takes carbon from the atmosphere and stores it where it will no longer contribute to climate change.
Carbon positive (or climate negative) means removing CO₂ from the atmosphere, or sequestering more CO₂ than is emitted. If the net result of a business’s activities result in a decrease in the amount of carbon in the atmosphere, this is considered carbon positive and goes a step further than net zero.
Climate, Community, and Biodiversity Standard (CCBS)
Is a certification scheme for carbon offset projects that aims to offset a project's impact on the climate, community, and biodiversity by assessing the carbon sequestration, community, and biodiversity benefits of the project and awarding carbon credits. It promotes sustainable land use, poverty alleviation, and biodiversity conservation.
CO₂ compensation refers to the offsetting measures that help to reduce or neutralize greenhouse gas emissions caused by human activities.
CO₂ mineralization is the process by which carbon dioxide becomes a solid mineral, such as a carbonate. It is a chemical reaction that happens when certain rocks are exposed to carbon dioxide. The biggest advantage of carbon mineralization is that the carbon cannot escape back to the atmosphere.
Conference of the Parties (COP)
COP is an annually held UN climate change conference, gathering leaders from almost every country to review progress made in cutting emissions and ensure that agreed climate targets are met.
Corporate Social Responsibility (CSR)
CSR is a management concept whereby companies integrate social and environmental concerns into their business operations and interactions with their stakeholders. CSR is a self-regulating mechanism through which a company achieves a balance of economic, environmental and social imperatives.
Corporate sustainability is defined as the incorporation of long-term and sustainable values into a company's business strategy and value creation.
Decarbonisation refers to the process of reducing carbon dioxide (CO₂) emissions resulting from human activity in the atmosphere. The current (and optimistic) objective of decarbonisation is to, eventually, eliminate our carbon dioxide emissions. In practice, getting to zero net emissions requires shifting from fossil fuels to alternative low-carbon energy sources.
The main motivation for deforestation is the diversion of forest land to other land uses. Deforestation thus reduces forest area and impacts the carbon cycle, biodiversity, climate, and livelihoods of local people.
Direct emissions come from sources that are owned or controlled by the reporting entity. This includes generation of electricity, the manufacturing and processing of materials, waste processing, and transportation using a company’s own vehicle fleet. Direct emissions are also called Scope 1 emissions.
Double counting refers to a situation where two parties claim the same carbon removal or emission reduction. A carbon removal project double-counts if the same climate investment is sold more than once. Avoiding double-counting is an important principle of high-quality climate investment.
Downstream emissions are emissions that occur after a company has sold its goods and services. The greenhouse gases from burning fossil fuels are called "downstream" emissions in terms of the production, processing, and transportation of those fuels. Along with upstream emissions (or supply chain emissions), these are classed as a company’s Scope 3 emissions.
Ecosystem functions are defined as the ecological processes that control the fluxes of energy, nutrients and organic matter through an environment, contributing to the self-regulation of an ecosystem. Some examples of ecosystem functions are provision of ecological niches, carbon cycling, or the trapping of nutrients. Ecosystem functions are considered as value-neutral.
Ecosystem values are measures of how much ecosystem services are worth to people. Science measures the value of ecosystem services to people by estimating the amount people are willing to pay to preserve or enhance the services.
Emission Factor (EF)
An emission factor (EF) is a coefficient which allows the conversion of activity data into GHG emissions. It is the average emission rate of a given source, relative to units of activity or processes. For example, it could be the extra emissions associated with spending 1 Euro on clothing or transportation, or purchasing 1 kg of textile or 1 litre of fuel. If a company reports how much it has spent on various products and services, spend-based EFs allow an estimation of the company’s emissions."
Emission rights refers to any right, interest, credit, entitlement, benefit or allowance to emit (present or future) GHG emissions that may be created under any regulatory or legal regime. Under a cap and trade scheme, companies are allocated emission rights, which they can either use for their own emissions, or sell to other companies that want to emit more than their allocated share.
In this context, emissions refer to greenhouse gas emissions, and are measured in terms of carbon dioxide equivalents (CO₂ e).
Emission reduction describes the reduction of greenhouse gases released into the atmosphere. Mankind has two options to reduce emissions, either to curb and reduce energy consumption or to use energy efficient technologies.
An ESG report is a report published by a company about its Environmental, Social, and Governance impact. Investors are increasingly applying these non-financial factors as part of their analysis process to identify material risks and growth opportunities.
EU Emission Trading System (EU ETS)
A cap-and-trade system established by the European Union to help member states meet their commitments under the Kyoto Protocol and the Paris Agreement to reduce greenhouse gas emissions. The EU ETS sets a cap on the total amount of certain greenhouse gases that may be emitted by power plants and industrial facilities in participating countries. Companies receive or purchase emissions allowances, which they can then trade on the open market. The EU Emissions Trading Scheme is considered one of the largest carbon markets in the world.
The EU taxonomy is a framework that provides firms, investors and policymakers alike with a common language for determining which economic activities are environmentally sustainable.
Fugitive emissions are leaks of gases and vapours. They are considered part of a company’s Scope 1 emissions.
Global Reporting Initiative (GRI)
The GRI provides a set of standards for companies to use when reporting their environmental impact, including general best practices and industry-specific guidance.
Gold Standard (GS)
A standard for certifying the environmental and sustainable development benefits of carbon offset projects. It is a certification system that sets strict guidelines for the development of renewable energy and energy efficiency projects that generate carbon offset credits, such as the Verified Carbon Standard (VCS) or the Climate, Community, and Biodiversity Standard (CCBS). Gold Standard certified carbon offset projects must demonstrate that they not only reduce emissions but also contribute to sustainable development in the host community and country.
Greenhouse Gas (GHG)
A GHG is a gas that absorbs and emits radiant energy within the thermal infrared range, causing the greenhouse effect and contributing to a warming of the environment.
Greenhouse Gas Protocol
The GHG Protocol provides the most widely used greenhouse gas accounting standards, describing requirements and giving guidance to companies. It serves as the basis for virtually every corporate reporting program in the world.
Greenwashing occurs when a company provides misleading or false information about the sustainability of its business activities. Often this may be because companies do not realise the majority of their emissions are in Scope 3, or that many carbon offsets are of dubious efficacy. Greenwashing can happen unintentionally as well as intentionally.
A company’s indirect emissions arise from both their purchased energy (Scope 2 emissions) and their value chain (Scope 3 emissions).
International Climate Regime
A set of international agreements, protocols, and institutions established to address global warming and climate change. The main goal of the international climate regime is to reduce greenhouse gas emissions and stabilize the concentration of greenhouse gases in the atmosphere to prevent dangerous human interference with the climate system.
ISO stands for International Organization for Standardization and is an independent, non-governmental organization that operates at the organizational and project levels. ISO 14064-1 supports you in recording the GHG emissions of your company in a structured manner and working specifically on reducing the CO₂ footprint. It consists of three parts and serves as a basis for recording, balancing and verifying direct (Scope 1) and indirect (Scope 2) greenhouse gas emissions caused by energy. The standard supports the use of scientific knowledge and tools in the fight against climate change and ensures that organizations follow transparent and consistent methods to measure and report their emissions.
Is an international agreement made in 1997 to reduce greenhouse gas emissions by industrialized countries. The first commitment period under the protocol was from 2008 to 2012. It was not ratified by the United States and did not include binding targets for developing countries. The protocol was succeeded by the Paris Agreement in 2017.
A carbon removal project is considered to have “leakage” if its implementation will lead to negative consequences elsewhere. Avoiding such leakage is therefore an important principle of high-quality climate investments.
Life Cycle Assessment (LCA)
Life Cycle Assessment (LCA) is a method for evaluating the environmental impact of a commercial product or service. Ideally the scopes of such a study are set from cradle (raw material extraction) to grave (final disposal) to account for all impacts at every stage of its life cycle. The setting of the scope and the data quality are crucial for the meaningfulness of the study.
Nationally Determined Contributions (NDC)
Under the United Nations Framework Convention on Climate Change (UNFCCC), NDCs are the greenhouse gas emission reduction targets that countries voluntarily submit to the UNFCCC. These targets are intended to be part of each country's efforts to meet the Paris Agreement goal of thus limiting global warming to well below 2 degrees Celsius. The NDCs are to be updated every five years, with each new NDC representing progress over the previous one.
Nature-based Solutions (NbS)
Nature-based Solutions (NbS) are actions that protect, sustainably manage, and restore natural or modified ecosystems that address societal challenges, including those related to climate change, food/ water security, human health, well-being, and disaster risk reduction. NbS can provide multiple benefits to people and nature while also supporting economic growth. These solutions focus on the use of natural processes, organisms, and ecosystems to provide services such as carbon sequestration, water regulation, and biodiversity conservation.
Net zero means cutting greenhouse gas emissions to as close to zero as possible, with any remaining emissions re-absorbed from the atmosphere, by oceans and forests for instance. The ‘net’ in net zero is important because it will be very difficult to reduce all emissions to zero on the timescale needed. As well as deep and widespread cuts in emissions, we will likely need to scale up removals. In order for net zero to be effective, it must be permanent. Permanence means that removed greenhouse gas does not return into the atmosphere over time, for example through the destruction of forests or improper carbon storage.
Net Zero Journey
This describes the process of reaching net zero. A company’s net zero journey involves first measuring its entire carbon footprint, then reducing all possible sources of emissions, and finally compensating the remainder with high-quality climate investments.
Non Offsetting Carbon Credits
Non-offset carbon credits, are credits that come from projects that would not have been undertaken without the financial incentives of the carbon market. These projects are therefore additional to non-project development and help reduce emissions beyond the usual level.
Non-Financial Reporting Directive (NFRD)
The NFRD came into effect in all EU member states in 2018. All 28 countries have since adapted the Directive into national law, and it is now up to companies to comply. It requires large companies to disclose information regarding environmental impact, as well as other societal and corporate impacts. Companies are recommended to disclose Scope 1, 2, and 3 emissions, as well as absolute reduction targets. It is recommended that banks and insurance companies focus on their Scope 3 emissions, despite the difficulties in measuring this category. Nevertheless, the NFRD is set to be replaced by the CSR (Corporate Sustainability Reporting Directive).
Carbon offsetting is the process of balancing a business’s carbon emissions by removing a proportionate amount of carbon from the atmosphere. The key concept is that offset credits are used to convey a net climate benefit from one entity to another. Because GHGs mix globally in the atmosphere, it does not matter where exactly they are reduced. In practice, the term “carbon offsetting” has become associated with low-quality activities which can be much less effective than the businesses that purchase them believe. This can lead companies to unintentionally engage in “greenwashing” by only compensating a fraction of their actual carbon footprint.
Paris Climate Agreement
The Paris Climate Agreement is an international treaty on climate change, adopted in 2015 and ratified by almost every country in the world. The Agreement commits its signatories to keep global warming to well below 2°C above pre-Industrial levels, and preferably limiting the increase to 1.5°C. The full Agreement can be found here.
Permanence is a principle for evaluating carbon removal projects. A carbon removal project is permanent if it will result in a quantifiable piece of carbon being kept out of the air for a very long time (e.g. 100 years).
Plan Vivo (PVC)
Plan Vivo is a certification system for carbon offset projects that helps communities to reduce emissions through sustainable land use and preservation of biodiversity. It verifies the carbon sequestration and additional benefits of the projects and can be used to offset emissions through carbon offset schemes such as the Clean Development Mechanism.
REDD+ (Reducing emissions from deforestation and forest degradation)
Is an initiative under the United Nations Framework Convention on Climate Change (UNFCCC) that aims to reduce greenhouse gas emissions from deforestation and forest degradation by providing financial incentives to developing countries. The "+" in REDD+ represents additional activities such as conservation, sustainable management of forests and increasing carbon stocks. The initiative aims to provide results-based payments for verified emissions reductions.
Science-based Targets Initiative (SBTi)
SBTi provides companies with a clearly-defined path to reduce emissions in line with the Paris Agreement goals. They provide general as well as industry-specific guidance on how to meet these targets.
Scope 1 emissions are direct greenhouse (GHG) emissions that occur from sources that are controlled or owned by an organization (e.g., emissions associated with fuel combustion in boilers, furnaces, vehicles).
Scope 2 emissions are the indirect emissions generated by the production of purchased energy.
Scope 3 emissions are all indirect emissions (not included in Scope 2) that occur in the value chain of the reporting company, including both upstream and downstream emissions. These emissions are a consequence of the company’s business activities, but occur from sources the company does not own or control. Businesses have found that developing corporate value chain (Scope 3) and product GHG inventories delivers a positive return on investment. Scope 3 emissions include the following: * Emissions generated in the company’s supply chain, such as extraction, production, and transportation of purchased materials and fuels. * Emissions generated from the use of sold products and services. * Emissions generated from waste disposal, including disposal of waste generated both in operations and in the production of purchased materials and fuels, as well as disposal of sold products at the end of their life.
Spend-based data takes the financial value of a purchased good or service and multiplies it by an emission factor. This will return a rough estimate of emissions per financial unit. However, this is only a rough estimate which lacks specificity, as spend-based emission factors are derived from an industry average of emissions levels, typically at a national level -and sometimes even broader. For example: if you buy a chair, a spend-based approach would only factor in that you bought a piece of furniture, and wouldn’t account for whether the chair was made of iron or wood. Activity data is generally more reliable.
Supply Chain Emissions
Supply chain emissions are emissions that occur upstream in the company’s supply chain. They are part of Scope 3 emissions and are also known as upstream emissions.
Through sustainability reporting, companies communicate their performance and impacts on a wide range of sustainability topics, spanning environmental, social and governance parameters. It enables companies to be more transparent about the risks and opportunities they face, giving stakeholders greater insight into performance beyond the bottom line.
Sustainable Development Goals (SDG)
The SDG are the blueprint to achieve a better and more sustainable future for all. They address the global challenges we face, including poverty, inequality, climate change, environmental degradation, peace and justice. For example, Goal 13 is to “take urgent action to combat climate change and its impacts by regulating emissions and promoting developments in renewable energy.”
Sustainable Finance Disclosure Regulation (SFDR)
SFDR imposes mandatory ESG disclosure obligations for asset managers and other financial markets participants, aiming to bring a level playing field and transparency.
Task Force on Climate-related Financial Disclosures (TCFD)
The TCFD to improve and increase reporting of climate-related financial information.
The Corporate Sustainability Reporting Directive (CSRD)
EU law requires certain large companies to disclose information on the way they operate and manage social and environmental challenges. The Corporate Sustainability Reporting Directive (CSRD), adopted in late 2022, sets the standard by which nearly 50,000 European companies will report their climate and environmental impact. Companies will likely need to start reporting to the new sustainability reporting standards in 2024, using the information from the 2023 financial year.
The Sustainability Accounting Standards Board (SASB)
SASB identify the subset of sustainability issues most relevant to financial performance in 77 industries.
Because trees use carbon dioxide to build their trunks, branches, roots and leaves, they are natural carbon absorbers and help to clean the air. There are two types of tree-planting projects: reforestation projects to restore existing forests, or afforestation projects to plant trees in newly forested areas. However, a variety of factors mean some methods of tree planting are less effective than they seem, and companies who use these methods may risk allegations of greenwashing.
United Nations Global Compact (UN GC)
The UN GC is a voluntary initiative based on company commitments to implement universal sustainability principles and to undertake work towards environmentally and socially sustainable practices, and disclose their progress.
United Nations System Convention on Climate Change (UNFCCC)
Is an international agreement adopted in 1992 to stabilise greenhouse gas concentrations in the atmosphere and prevent dangerous human-induced climate change. The Convention established a framework for cooperation among countries to address climate change and established the Conference of the Parties (COP) as the supreme decision-making body.
Upstream emissions are the greenhouse gas (GHG) emissions associated with the production, processing, transmission, storage and distribution of a fossil fuel, beginning with the extraction of raw materials from the fossil fuel origin and ending with the delivery of the fossil fuel to the site of use.emissions that occur upstream in the company’s supply chain. Upstream emissions fall under the Scope 3 emissions category and are also known as supply chain emissions.
Value Chain Emissions
Value chain emissions (also known as Scope 3 emissions) are the result of activities from assets not owned or controlled by the reporting organization, but that the organization indirectly impacts in its value chain. For many companies, value chain emissions make up 90% of their total emissions, making it crucial for these emissions to be taken into account when setting reduction targets.
Verified Carbon Standard (VCS)
The Verified Carbon Standard (VCS) is a voluntary program for carbon offset projects that provides assurance that the carbon credits generated by a project are real, permanent, and additional to any that would have occurred without the project. The VCS program provides third-party verification and certification of carbon credits generated by projects in various sectors including renewable energy, energy efficiency, afforestation and reforestation, and landfill gas. These credits can be used by companies, governments, and organizations to offset their greenhouse gas emissions and achieve carbon-neutrality. The VCS is one of the most widely used carbon offset standards and is accepted by various carbon offset platforms, carbon funds and other buyers.
Voluntary Carbon Market (VCM)
Is a market for carbon offset credits generated from projects that reduce greenhouse gas emissions, such as renewable energy, energy efficiency and reforestation projects. These credits can be purchased by companies, organisations and individuals voluntarily to offset their carbon footprint, and not subject to mandatory emissions regulations. It operates on the principles of voluntary actions, self-regulation andself-declaration of emissions. It aims to support the development of new technologies and promote sustainable practices.