The Corporate Sustainability Reporting Directive (CSRD) sets requirements for the reporting of corporate responsibility information. What does this mean from the point of view of calculating and reporting greenhouse gas emissions? Will it be a game changer or can familiar calculation methods be used?
CSRD applies to companies' sustainability reporting, including dimensions related to environmental responsibility as well as social and economic responsibility. EFRAG PTF-ESRS (European Financial Reporting Advisory Group Project Task Force on European Sustainability reporting standards) has published a series of standards based on which sustainability reporting should be done. Among these standards, ESRS E1 deals with climate change and is the first environmental responsibility standard. The latest draft version of the standard has been published in November 2022, and the reporting requirements presented here are based on this draft standard.
The new CSRD replaces the earlier emission reporting requirements set by the NFRD (The Non-Financial Reporting Directive).
The directive’s reporting requirements applies to companies in three stages. In 2025, companies that were previously covered by the NFRD will report information according to the CSRD. The companies will report the data from the previous financial year, i.e. the report of the year 2025 contains the data from 2024. In 2026, the reporting requirement applies to large companies not covered by the NFRD. The SMEs that have been listed on the stock as well as small and non-complex credit institutions and captive insurance undertakings have to report according to CSRD in 2027.
The ESRS E1 standard presents 9 numbered reporting disclosures for companies (E1-1...E1-9) and, in addition to these, three reporting disclosures linked to the ESRS 2 standard, which are not separately numbered.
The first reporting disclosure (E1-1) concerns the implementation of the transition plan for climate change mitigation, and the next two (E1-2 and E1-3) strategic company-level policies related to climate change mitigation and adaptation, as well as related actions and resources. Disclosure E1-4 concerns targets related to climate change mitigation and adaptation, and disclosure E1-5 concerns energy consumption and mix. From the point of view of emissions calculation, disclosure E1-6 is the most important and it covers scope 1, 2 and 3 emissions as well as total GHG emissions at the company level.
Disclosure E1-7 applies to greenhouse gas removals and mitigation projects financed through carbon credits, and E1-8 to internal carbon pricing. Disclosure E1-9, on the other hand, is related to the potential financial effects of climate-related risks and opportunities.
Among the non-numbered reporting disclosures, the first concerns the integration of sustainability-related performance in incentive schemes, the second concerns material impacts, risks and opportunities and their interaction with strategy and business models, and the third concerns the description of processes used to identify and assess material climate-related impacts, risks and opportunities.
The reporting disclosures for greenhouse gas emissions are based on an approach according to the GHG Protocol standards. The company must calculate its Scope 1, Scope 2 and Scope 3 emissions, total emissions and GHG intensity based on the net revenue. Both location- and market-based methods shall be applied to calculate Scope 2 emissions related to purchased energy. Each significant Scope 3 emission category shall be included in the calculation of Scope 3 emissions. According to the GHG Protocol standards, Scope 3 emissions are divided into fifteen emission categories. In addition, significant emissions related to cloud computing and data centre services can be reported separately under sub-category of purchased goods and services. Alternatively, the emission categories may also be grouped based on the value chain as follows : 1) Upstream purchasing, 2) Downstream sold products, 3) Goods transportation, 4) Travels, and 5) Financial investments.
Total emissions are reported on both a location and market basis.
The company may disaggregate its Scope 1, 2 and 3 emissions by country, economic activity, operating segment, subsidiary, greenhouse gas (CO2, CH4, N2O, HFCs, PFCs, SF6, NF3) or by emission source, if appropriate. Biogenic CO2 emissions from combustion and biodegradation of carbon must also be reported separately from Scope 1 emissions, but other greenhouse gas emissions (in particular nitrous oxide) must be included in the calculation. Offsetting (carbon credits and emission allowances) may not be included in the emissions calculation.
The reporting instructions for emission calculation presented in the ESRS E1 standard draft do not differ from the guidelines in the generally used emission calculation standards. However, the new standard clarifies the guidance by concluding the essential points into a few pages.
Companies that have already done emission calculations and included their scope 3 emissions in the calculation do not need to worry about the requirements set by the CSRD directive for emission reporting. On the other hand, companies that have not yet started their emissions calculation, are in hurry to get started.
The tools on the OpenCO2.net platform are CSRD-compatible. Our organization-specific emissions calculator is based on GHG Protocol standards and includes all scope 1, 2 and 3 emission categories. Our service also includes tools for setting emission targets and monitoring emissions. Our extensive emissions database also provides reliable and up-to-date emission factors for your calculations.
Contact us via the form or directly to our expert, and we can figure out together which OpenCO2.net calculator would work best for your organization.
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