Home » Blog

Category: Blog

What does scope 1, 2 and 3 emissions mean?

The most internationally used standard for measuring and reporting greenhouse emissions is the GHG protocol (Greenhouse Gas Protocol), where emissions are divided into three different categories: scope 1, scope 2 and scope 3. 

When reporting on the climate impacts of business operations, it is customary to classify emissions into scope 1, 2 and 3 categories in accordance with the GHG protocol. Classification of emissions reduces the risk of double counting between emission calculations of different companies and helps the company and the company’s stakeholders to understand the most significant emission sources of the company’s business in its own and value chain operations. 

Many companies also report value chain emissions in more detail, broken down into fifteen different emission categories. By utilizing emission data, the company is able to identify the most relevant emission sources for its operations and optimize its business to reduce the burden on the environment. 

Greenhouse gas emissions caused by the company’s operations, such as carbon dioxide (CO2), methane (CH4) and nitrogen oxide (N2O) emissions, are a significant environmental aspect related to the business. 

Growing reporting obligations, such as the CSRD sustainability reporting directive, now and in the future require companies to report in detail the environmental impacts of their business operations  

Scope 1, scope 2 and scope 3 classification

In accordance with the Greenhouse Gas protocol, emissions are classified as follows: 

  • Scope 1 includes all direct greenhouse emissions that are formed as a result of the company’s operations 
  • Scope 2 includes greenhouse emissions caused by the production of purchased and consumed energy 
  • Scope 3 includes all other indirect greenhouse emissions that are formed as a result of the company’s operations, but the emission sources themselves are not owned or controlled by the company. Such emission sources include, for example, emissions from the primary production of purchases and emissions caused by travel and transport. Scope 3 emissions are broken down into fifteen different emission categories. 

Scope 1: direct greenhouse emissions 

Scope 1 emissions consist of direct emissions from resources owned or controlled by the company. Emissions are created as a direct result of the company’s operations, and these emission sources are typically the easiest to control. 

Scope 1 emissions can be divided into four groups: 

Process emissions 

Process emissions refer to direct greenhouse gas emissions, such as methane emissions from anaerobic fermentation or natural gas flaring, generated in the company’s operations. 

Own energy production 

If the company produces operational energy either for its own use or that of other operators, the emissions resulting from energy production are included in the scope 1 emissions of the reporting company. 

Fuel consumption 

Emissions caused by fuel consumption in machines, equipment and vehicles owned or managed by the company. 

Fugitive emissions 

Fugitive emissions are so-called leak emissions, which are caused, for example, as a result of pipe and equipment leaks. They occur not only in industry but also in ordinary home and office conditions, such as, for example, malfunctioning refrigerators and air conditioners. These emissions can be reduced or completely avoided by taking care of the equipment’s condition and maintenance appropriately and by repairing or replacing malfunctioning equipment. 

Scope 1 emissions therefore include greenhouse gas emissions directly caused by the company’s own operations. Since Scope 1 emissions are generated as a result of the company’s own operations, it is also the easiest to influence them. 

Scope 2: indirect greenhouse emissions of energy consumption

Scope 2 emissions include all greenhouse gas emissions that arise from the production of energy purchased from another party. This includes emissions from the production of purchased electricity, heat, steam or cooling. 

Electricity and heat purchased for most companies are the main sources of scope 2 emissions. However, it should be noted that for some companies, the separate procurement of steam and cooling can also cause scope 2 emissions. On the other hand, if the company produces some or all of its own energy, the emissions from production are taken into account as part of the calculation of scope 1 emissions. 

By identifying the most essential scope 2 emission sources, the company can develop its energy consumption and procurement in a more sustainable direction and reduce the emissions of its business. 

Scope 3: indirect greenhouse emissions of the value chain 

Scope 3 emissions cover all indirect greenhouse gas emissions that occur as a result of the company’s operations, but the emission sources are not directly owned or controlled by the company. These emissions include, for example, emissions caused by the supply chain, emissions from transport, emissions from the use of sold products and emissions from waste treatment. 

In most companies, the majority of greenhouse gas emissions are generated in the company’s value chain, either upstream or downstream in relation to the company’s own operations. 

Upstream emission sources include all indirect emissions that occur in the company’s value chain up to the moment of handing over one’s own product or service. 

The GHG protocol divides these emission sources into eight different categories: 

  • Purchased products and services 
  • Fixed assets 
  • Activities related to fuels and energy that have not been taken into account as part of the scope 1 & 2 calculation 
  • Upstream transportation and distribution 
  • Handling of waste generated in operations 
  • Business trips 
  • Business trips 
  • Property leased by the company 
  • Downstream emission sources include all indirect emissions that occur after the product or service is delivered to the customer. 

The GHG protocol divides these emission sources into seven different categories: 

  • Downstream transportation and distribution 
  • Processing of sold products 
  • Emissions from the use of sold products 
  • Emissions from the final processing of sold products 
  • Downstream leased property 
  • Franchise Business Emissions 
  • Emissions from investment activities 

Why is monitoring the company’s emissions important? 

Carbon footprint monitoring and reporting is an important way for companies to take responsibility for their environmental impact. Since 2014, all companies employing at least 500 people have been obliged to report on their social and environmental impacts in accordance with the European Union’s NFR (Non-Financial Reporting Directive). 

With the Corporate Sustainability Reporting Directive (CSRD), responsibility reporting will become even more precise and demanding for companies. 

With the new CSRD directive, it was intended to expand the scope of the corporate reporting guidelines and more uniform reporting standards. In addition, the reporting obligation will gradually extend to all listed companies. 

Scope 1, 2 and 3 emissions included in responsibility reporting  

In the EU, various directives oblige companies to report on the environmental harm and social impact of their business operations. 

Since 2014, the European Union’s NFR Directive (Non-Financial Reporting Directive) has obliged all companies employing more than 500 people to report on their social and environmental impacts. This obligation also applies to the reporting of greenhouse gas emissions. 

From 2024, the reporting obligation according to the new CSRD (Corporate Sustainability Reporting Directive) will enter into force, and with it, reporting will move to an approach in accordance with the new guidelines. 

The CSRD directive aims to expand the scope of reporting and establish more uniform reporting standards. CSRD requires companies to ensure that the company’s operations are in line with the goals of the Paris Climate Agreement. Meeting this requirement requires companies to monitor greenhouse gas emissions even more closely and to achieve ambitious and goal-oriented emission reductions. 

Management of climate effects particularly responsible business activities

Finding out the sources of greenhouse gas emissions that are relevant to the company’s operations and calculating the emissions is the first step in managing the company’s climate impacts. By identifying the most significant emission sources, the company can set appropriate and effective emission reduction targets for its own operations. 

Timely and targeted measures make it possible to reduce emissions in the company’s business in the short and long term. In the future, it will no longer be enough to manage the emissions of one’s own operations (scope 1&2), but it is also necessary to apply emission reduction measures to the emissions of the value chain (scope 3). 

It is important to include the management and planned reduction of climate impacts as part of the company’s responsibility strategy, because the company’s climate responsibility is an inseparable part of sustainable business operations. The stricter requirements and expectations of stakeholders and legislation regarding responsibility require ambitious and effective climate measures. 

Although not all small and medium-sized companies are necessarily under the same pressure in terms of emission reductions, the emission reduction measures and targets of large companies trickle down the value chain to smaller companies as well. For this reason, it is also time for SMEs to include climate issues as part of their responsibility strategy and to prepare well in advance for possible future claims. 

Ecobio’s team of experts are happy to help you with all questions related to greenhouse gases and their monitoring and reporting. 

Submit your question via the form below and we’ll get back to you shortly. 



    Corporate Sustainability Reporting Directive (CSRD) explained

    Corporate Sustainability Reporting Directive (CSRD) is in action since January 2023. CSRD will strengthen and standardize the rules for how companies are required to report on their social and environmental activities and their impact on people and the planet. Currently Corporate Sustainability Reporting Directive impacts approximately 50 000 companies in Europe.

    CSRD timeline and what to expect in the future

    The Corporate Sustainability Reporting Directive applies to companies in the following order:

    • From January 2024, listed companies with more than 500 people (i.e. those already covered by the NFRD are obliged to prepare a statement of non-financial information and publish information according to the EU taxonomy).
    • From January 2025, listed and unlisted companies that meet at least two of the following criteria: more than 250 employees, revenue of 20 million euros or more than 40 million euros in turnover.
    • Listed SMEs from 1 January 2026.
    • From January 2028 CSRD expands to third-country companies with turnover over 150 million euros.

    Companies subject to the CSRD will have to report according to European Sustainability Reporting Standards (ESRS).

    ESRS entered a four-week feedback period for the first set of Sustainability Reporting Standards, the feedback period lasts from 9th of June to 7th of July 2023.

    These mandatory reporting standards aim to ensure that companies are fully transparent about their impact on people and the environment. The standards will also be a key tool in trying to extinguish green washing. The new standards will assist companies in communicating and managing their sustainability performance more efficiently.

    After the four week feedback period, the commission will consider the feedback given and then finalise the standards. When adopted, the standards will be used by companies that are subjected to CSRD (Corporate Sustainability Reporting Directive) reporting requirements. This will be another step forward to the goal to achieve a sustainable EU economy.The requirements for different companies will be phased in gradually, depending on factors such as company size and revenue.

    Additionally, all sustainability reports must be verified by an independent assurance provider, to ensurereliable information. CSRD also supports and requires reporting in digital format.

    Prepare now for CSRD reporting

    In 2023 prepare reporting systems. Ensure you have clear Key Performance Indicators (KPI’s), goals and a plan in place for 2024 reporting requirements.

    In 2024 gather data trough out the year for 2025 reporting and review it with your accountant.  Note, if your company is subjected to NFRD you are required to report on 2024 data in 2025.

    In 2025 review your reporting activities and systems to establish or improve for 2026 reporting. It is also good to note that many companies that are not yet in the scope of CSRD will have to report for the companies that are in the scope because they need information about their supply chain’s impacts.

    CSRD explained by Ecobio

    Corporate Sustainability Reporting Directive reporting requirements

    CSRD is adding requirements on top of the Non-Financial Reporting Directive (NFRD). According to the NFRD, large companies must report on:

    • environmental matters
    • social matters and treatment of employees
    • respect for human rights
    • anti-corruption and bribery
    • diversity on company boards (in terms of age, gender, educational and professional background)

    With the Corporate Sustainability Reporting Directive companies need to also report on:

    • governance relating to sustainability impacts, risks and opportunities
    • impacts of sustainability-related risks and opportunities on the company’s strategy, business and financial planning
    • processes for identifying and assessing sustainability impacts, risks and opportunities
    • metrics and targets that are used to assess and manage sustainability risks and opportunities

    Corporate Sustainability Reporting Directive impact on business strategy

    Sustainability will in the future have a bigger role in the evaluation of companies. In addition to the reporting obligations, CSRD sets other requirements for companies. For example, in the future companies must plan how to take climate and other sustainability risks into account in the business model and strategy, as well as the transition to a climate-neutral economy.

    The role of the company’s management and board of directors must now be strengthened in accordance with sustainability goals. The interest of customers and investors in responsible and environmentally sustainable businesses has grown. This contributes to the financing companies receive for sustainable and responsible projects.

    The direction is clear even for those who have not yet been able to participate in creating responsible businesses. Common sustainable development rules accelerate the market, creating new growth opportunities for companies.

    Large companies are already obliged to annually publish information on how much of their operations are in line with the EU taxonomy’s climate and environmental goals. The first EU taxonomy reporting was due in the first months of 2023.

    Benefits of CSRD directive

    According to the European Parliament, The CSRD will improve the existing legislation (NFRD) by requiring more detailed information from companies’ impact on the environment, human rights and social standards, that are in line with the EU’s climate goals.

    What we can expect from adapting to CSRD is

    • Standardized reporting on companies’ activities on people and the planet, therefore providing the opportunity to compare sustainability reports to one another.
    • Direct finances and investments to activities and businesses that create a positive or ‘net-zero’ impact on the planet and people.
    • CSRD pushes management to adapt to or improve their strategies to be aligned with sustainability and EU climate goals.
    • CSRD enforces companies’ capability to mitigate risks, such as climate risks that will help companies to ensure longevity.

    Adapting to CSRD requirements as soon as possible is recommended, due to the vast scope of the directive. Where to start from depends on the company’s status with sustainability matters and how well they are documented and reported in the past.

    Building a reporting system with Double Materiality assessment is a highly recommended starting point as it is required in the directive to be analysed.

    If you wish to talk more about CSRD, don’t hesitate to contact us below or send an email to info@ecobio.fi.



      Science-based targets (SBT)

      Science-Based Targets Initiative

      The Science-based targets initiative (SBTi) was created to promote climate action in the private sector, helping companies to set science-based emission reduction targets for their own operations.

      The initiative sets clear action guidelines for companies to reduce greenhouse gas emissions. These measures help prevent the worst effects of climate change and support the growth of a climate-friendly business.

      Goals are considered “science-based” if they are consistent with what the latest climate science considers necessary to achieve the goals of the Paris Climate Agreement: goals support limiting global warming to well below 2°C compared to pre-industrial times and support efforts to limit warming to 1.5°C.

      According to SBTi’s report for last year, during 2015–2020, companies committed to SBTi have significantly reduced emissions related to their own operations compared to the global average.

      Science-Based targets initiative annual progress report 2021

      Watch the Ecobio webinar: Science-Based Targets – what and why?

      In Science-Based Targets – what and why? -webinar leading consultant Inka Koskinen and consultant Mai Kärppä summarize what Science-Based Targets mean, what kind of obligations the regulation imposes on companies and why companies should join the SBT initiative. The webinar is in Finnish.

      Webinar Agenda:

      • New obligations come from regulation
      • Science-based Targets initiative
      • Joining the initiative
      • Emission calculation required by SBTi
      • Setting emission reduction targets
      • Benefits of joining the initiative

      Watch the recording to find out how you too can reduce business emissions and how to get started with the SBT initiative!

      If you wish to download the webinar recording, you can find it here. 

      How to get started with the SBT initiative!

      The SBT initiative requires the determination of planned goals for the business. Short-term emission reduction targets are set for 5–10 years or a long-term target in which emissions are reduced by at least 90% by 2050.

      Determining the emission reduction targets also means calculating the emissions of the base year so that the development can be monitored. This means calculating the carbon footprint of the business according to the GHG protocol. The goals must also comply with SBTi’s criteria in order to be considered science-based.

      Ecobio services related to the SBT initiative

      Our consultants will clarify for you what the measures outlined in SBTi mean for your business. We help determine the carbon footprint of your operation and set emission reduction goals in accordance with SBTi. We advise what actions you need to take in your business structures and value chain in order to achieve the set goals.

      Please contact us below



        Voluntary information as part of Taxonomy-eligibility reporting

        Last December, the EU’s Taxonomy Platform published considerations on voluntary information as part of Taxonomy-eligibility reporting, which gives supplementary guidance for disclosures.

        In addition to mandatory reporting, voluntary reporting under the Taxonomy framework can enable non-financial companies and financial institutions to explain the eligibility proportion of their entire operations, investment profile, or balance sheet since it may include both Non-Financial Reporting Directive (NFRD) and non-NFRD companies, for example.

        Voluntary disclosures should be made regarding the same scope and timeline as the financial and non-financial statements of the firm and in line with the reporting obligations. Voluntary reporting should be prepared on the basis that it does not contradict or misrepresent the mandatory information according to the disclosures delegated act, and it should not be given more prominence than the mandatory disclosures. Where an undertaking includes voluntary reporting, this should be accompanied with information on the basis used for its preparation and a clear explanation of how it differs from mandatory reporting.

        Ecobio Manager – Our proposal for the first-period reporting

        We provide a free trial account for Ecobio Manager’s Taxonomy classification and reporting tool for non-financial companies. By which, your team can disclose according to the first period’s requirements. The offering is valid until the end of March 2022. Its value is 3000 euros.

        Act now! Please contact us and request your access to Ecobio Manager and book a demo presentation: sales@ecobiomanager.com.

        Text: Sanna Perkiö

        Source: https://ec.europa.eu/info/files/sustainable-finance-taxonomy-eligibility-reporting-voluntary-information_en

        Define total turnover, Capital expenditure and Operating expenses, of the Taxonomy-eligible economic activities in non-financial companies

        Last December, The European Council adopted the Delegated Act (2021/2178/EU) related to Taxonomy methodology and disclosure obligations for financial and non-financial companies.

        In 2022, non-financial companies shall disclose only information of Taxonomy-eligible activities for the environmental objectives of climate change mitigation and climate change adaptation.

        From 1 January 2022 until 31 December 2022, non-financial undertakings shall only disclose the proportion of Taxonomy-eligible and Taxonomy non-eligible economic activities in their

        • total turnover,
        • capital expenditures, and
        • operational expenditures.

        In addition, non-financial undertakings need to provide relevant qualitative information associated with the eligibility proportions.

        Ecobio has published a whitepaper that provides more implementation guidance on the EU Taxonomy classification and reporting for non-financial companies. Please find the latest whitepaper here.

        Upcoming for non-financial companies

        In Q1/2021, the European Union will adopt

        • Taxonomy classification criteria for nuclear power and natural gas, and
        • Technical Screening Criteria for remaining environmental objectives.

        Ecobio Manager – Our proposal for the first-period reporting

        We provide a free trial account for Ecobio Manager’s Taxonomy classification and reporting tool for non-financial companies. By which, your team can disclose according to the first period’s requirements. The offering is valid until the end of March 2022. Its value is 3000 euros.

        Act now! Please contact us and request your access to Ecobio Manager and book a demo presentation: sales@ecobiomanager.com.

        With best regards,

        Ecobio’s Taxonomy team

         

        Katrine Hoset

        Senior Consultant, Account Manager, PhD.

         

         

        Sanna Perkiö

        Head of Innovations, D.Sc.

         

         

        Malena WeurlanderMalena Weuerlander

        Key Account Manager

        Ecobio Whitepaper: EU Taxonomy Classification and Reporting in 2022 – Five Steps for Compliance

        Download Ecobio's Free Whitepaper Five Steps to Comply with the Taxonomy Regulation

        Update:

        EU Taxonomy classification and reporting in 2023 – Eight steps to compliance whitepaper available now

        The new whitepaper aims to provide implementation guidance on EU Taxonomy Classification and Reporting requirements valid from 2023. 

        EU Taxonomy classification and reporting in 2023 – Eight steps to compliance whitepaper

        This whitepaper aims to provide implementation guidance on EU Taxonomy Classification and Reporting requirements valid from 2023. The document deals with the actions needed by companies in the non-financial sector. Read the latest whitepaper to learn more about:

        • What is the EU Taxonomy Regulation?
        •  Which companies are required to act now?
        •  Eight steps for compliant EU Taxonomy classification and reporting from 2023

        Click for more here.

        In 2022, the Taxonomy classification and reporting requirements are limited. Non-financial undertakings are required to disclose the share of their turnover, capital, and operational expenditure associated with environmentally sustainable economic activities. Our new whitepaper contains the five steps for compliant EU Taxonomy classification and reporting in 2022.

        The whitepaper provides implementation guidance on EU Taxonomy Classification and Reporting 2022. The document deals with the actions needed in non-financial undertakings. The five-step work pipeline in the whitepaper will help you fulfil the actual Taxonomy requirements in your entity.

        2022 whitepaper covered the topics of:

        • What the EU’s Taxonomy Regulation implicates
        • How your company is affected by Eu taxonomy
        • What the current timeline for the Taxonomy looks like
        • Which requirements apply to your company
        • Five most important steps to meet the Taxonomy Requirements

        This whitepaper is no longer available for download.

        EU Taxonomy classification and reporting in 2022

        The EU Taxonomy Regulation and related statutes direct investments toward sustainable economic activities. They formulate a robust and science-based framework for companies and investors that provides environmental criteria for determining which economic activities substantially contribute to the EU Green Deal objectives.

        The EU Taxonomy Regulation (2020/852/EU) sets technical screening criteria to determine if an economic activity can be considered sustainable for six environmental objectives. Currently, the screening criteria are available for the two objectives: climate change mitigation and climate change adaptation. The screening criteria for the remaining objectives will be published in spring 2022.

        Read more about our EU Taxonomy digital solution here and our sustainable finance consultancy services here.

        Webinar 27.1: EU Taxonomy Reporting in 2022 – What are the obligations and how to use digitalization in reporting?

        EU Taxonomy Reporting in 2022 - What are the obligations and how to use digitalization in reporting?

        Join our EU Taxonomy webinar on the 27th of January!

        Register here

        In our webinar, Ecobio’s EU taxonomy experts will briefly review the current environmental classification and reporting obligations of the EU Taxonomy for large companies and entities regarding 2022 reporting. The webinar focuses on the requirements of large listed companies and non-financial entities.

        Why is EU taxonomy reporting timely?

        The EU Taxonomy Regulation requires large organizations to assess and report annually the financial impact of environmentally classified activities. In the spring of 2022, large listed companies and other non-profit organizations will report for the first time in accordance with the regulation.

        The EU Commission has created a complex system that makes it easy for companies to get lost without expert help and a systematic way of working. Our webinar presents the steps of first-year taxonomy reporting and introduces an easy and comprehensive digital solution to meet the complex requirements. The taxonomy requirements will expand next spring, making it profitable to take advantage of the efficiency offered by digitalization. As an added benefit, we offer a free trial use of Ecobio Manager for taxonomy-obliged participants for a limited time.

        Webinar agenda

        Our taxonomy experts will answer the following questions in the webinar:

        1. What are the benefits of the EU taxonomy regulation?
        2. Which entities will be affected by the EU taxonomy in 2022, and what are the obligations?
        3. How are economic activities identified, and how do you perform an eligibility assessment?
        4. What key performance indicators should be reported and how?
        5. What else is required for financial reporting?
        6. How will the EU taxonomy develop in 2023 and the future?
        7. How can digitalization help with environmental classification and reporting?

        During the event, it is possible to ask questions of our experts in the chat.

        To whom?

        The webinar is aimed at financial and sustainability reporting officers of listed companies and other public interest entities, financial- and sustainability experts and those in charge of EU Green Bonds.

        What are the additional benefits for the webinar participants?

        We offer your company a free trial (worth 3 000 €) to our digital taxonomy solution, Ecobio Manager, until the end of March 2022. During the trial, you can conveniently use digitalization to classify and report your data according to the first year’s requirements. The offer is intended for participants with taxonomy obligations.

        We give you the opportunity to take advantage of the added benefit even before the webinar. Contact us by email at sales@ecobiomanager.com, and we will open the service for your company.

        When?

        The free webinar in English will be held on Thursday, January 27, 2022, from 11:00 to 11:40 (UTC+2)!

        In case you are interested in the topic but would prefer to listen to the webinar in Finnish you can register for the Finnish webinar (27.1.2022 at 10.00-10.40) here.

        Welcome to listen and ask about the current EU environmental classification!

        Register here

        Read more about Ecobio here and Ecobio Manager here.

        The Climate Delegated Act to the EU Taxonomy Approved and Ready to Be Applied

        European Commission

        The delegated act on the climate part of the EU regulation (2020/852) on taxonomy – the first delegated act presented by the European Commission – was approved by the majority of the Member States. The delegated act specifies the technical screening criteria for environmental objectives of climate change mitigation and climate change adaption – two of six environmental objectives included in the EU Taxonomy. The Official Journal has published the decision on Thursday, the 9th December 2021.

        This approval means that the large public-interest companies with more than 500 employees can accelerate their preparations to disclose this year’s taxonomy eligible economic activities as defined in the climate delegated act.

        Before the end of the year, the Commission will present a complementary delegated act concerning the inclusion of fossil gas and nuclear in the taxonomy. No official date has yet been set.

        Would you like to have more information about EU Taxonomy?

        Please subscribe to Ecobio’s EU Taxonomy News here and book a presentation for Ecobio Manager’s digital taxonomy tool here.

        Text: Sanna Perkiö & Katrine Hoset

        Picture: Shutterstock

        Source: European Parliament, 9.12.2021

        Three steps for EU Taxonomy Reporting – Deadline coming soon

        Three steps for EU Taxonomy Reporting – Deadline coming soon

        Are you ready to report EU Taxonomy eligibility as a non-financial entity? In the EU, this year will be the first EU Taxonomy reporting period to disclose in 2022 for non-financial listed companies with over 500 employees on average during the reporting period (Prop. 2021/22:11).

        During the first year, non-financial companies shall disclose the proportion of total turnover, total CapEx and total OpEx that consist of environmentally sustainable economic activities eligible with the EU Taxonomy. I.e., the activities within one of the defined categories for which the Taxonomy regulation provides sustainability criteria. Reporting on eligibility already in 2022 will ensure that companies required to report complete KPIs on Taxonomy alignment from 2023 will be better prepared for the work of classifying and defining the financial reporting level necessary to comply with the Taxonomy regulation.

        Three steps for EU Taxonomy Reporting

        The following three steps guides reporting for the first year:

        Step 1. Economic activity. Identify each potential economic activity, including a subset of transitional and enabling economic activities

        Step 2. Eligibility. Assess eligibility by comparing your economic activity with the Taxonomy defined activity category descriptions and NACE codes.

        Step 3. Reporting KPIs. Report eligibility as the proportion of total turnover, total CapEx and total OpEx, including relevant contextual information on how eligibility has been determined and implemented in the necessary calculations.

        The turnover KPI represents the proportion of the net turnover derived from products or services that are taxonomy eligible. The turnover KPI gives a static view of the company’s contribution to environmental goals.

        The CapEx KPI represents the proportion of the capital expenditure of an activity that is either already taxonomy-aligned or is part of a credible plan to extend or reach taxonomy alignment. CapEx provides a dynamic and forward-looking view of companies’ plans to transform their business activities.

        The OpEx KPI represents the proportion of the operating expenditure associated with taxonomy-aligned activities or the CapEx plan. The operating expenditure covers direct non-capitalised costs relating to research and development, renovation measures, short-term lease, maintenance, and other direct expenditures relating to the day-to-day servicing of property, plant and equipment assets that are necessary to ensure continued and effective use of such assets.

        The European Council will make a final decision about the schedule on the 8th of December, 2021.

        Digitalise your EU Taxonomy work process

        With the deadline for the first reporting requirements regarding EU Taxonomy is approaching, it is beneficial to already from the beginning take advantage of the efficiency offered by digitalisation. Ecobio Manager is the world’s first comprehensive taxonomy solution, including a smooth classification process and up-to-date legal databases, as well as an environmental risk assessment protocol. So far, there has been no service with similar coverage in the global market.

        With Ecobio Manager, you can turn the complex set of EU Taxonomy reporting requirements into a smooth and straightforward digital work process for your team. The digital solution includes a demanding entity of requirements always available and effectively managed. Our easy and comprehensive tool contains everything you need to meet the requirements of EU Taxonomy classification and reporting

        Get expert advice and join our presentation

        Presentation of our digital solution

        Do you need help with EU Taxonomy classification and reporting? Join our presentation of the world’s first comprehensive digital solution for the EU Taxonomy! During our 30 min presentation, we present our easy and comprehensive tool containing all you need to meet the EU Taxonomy classification and reporting requirements.

        Register here!

        Expert advice and personal demo account

        Do you have questions regarding EU Taxonomy and need advisory? Do you want a presentation of our digital solution regarding EU Taxonomy? Contact our EU Taxonomy expert Katrine Hoset to get expert advice and an in-depth presentation of the comprehensive solution. Do not hesitate to ask our expert about a personal demo account to try out our platform.

        Please get in touch with us

        Katrine Hoset

        Account Manager, Senior Consultant

        katrine.hoset@ecobio.fi

        +358 (0)20 756 2306

        Read more about our EU Taxonomy digital solution here and our sustainable finance consultancy services here.

        Safer Chemicals Conference 2021

        Safer Chemicals Conference 2021

        The European Chemicals Agency (ECHA) organized a virtual Safer Chemicals Conference on 6 October 2021. Ecobio attended the event.

        The conference focused on the chemical strategy and several related themes, which will affect e.g. the chemicals legislation and substance restrictions. The goal is a non-toxic environment where chemicals contribute to society while avoiding harm to the environment and humans. Three core issues of the chemicals strategy are 1) increasing the protection of the environment and people 2) innovation and 3) simplifying and consolidating the current legal framework.

        The issues raised by the conference presentations and speeches included:

        • New safe chemicals and materials are needed, and innovation is an integral part of it.
        • Definition and criteria for a sustainable chemical are needed. Criteria must be introduced.
        • Research funding should support the development of safe and sustainable chemicals.
        • The chemicals strategy is not only about sustainability, but also includes measures for the circular economy and digitalisation.
        • A full life cycle assessment of chemicals is needed to ensure safety and sustainability.

        The presentations addressed the grouping of substances to speed up and harmonize restrictive measures, the replacement of hazardous solvents by less harmful ones, PFA restrictions, the new Clean Drinking Water Directive, and nanomaterials. In addition, PCN and SCIP notifications and changes made in relation to them were reviewed.

        Additionally, one of the themes of the event was compliance. Conformity and enforcement of products and chemicals will be strengthened through more frequent checks. ECHA supports companies in compliance e.g. with informal reviews through the Voluntary Action Plan.

        The new features of PCN notifications for hazardous mixtures were reviewed. For example, it is possible to make notifications for several mixtures at the same time, provided that they have the same classification. Discontinuation of the product may also be indicated in the notices. Furthermore, new situations where the notification needs to be updated were discussed. Updates have also been made to the PCN format and the submission of notifications has been improved, e.g. through the System-to-System (S2S) service.

        Obligation for notifying on Substances of Concern In articles as such or in complex objects (Products) was discussed as well as the preparation of the notification, and the public SCIP database and its use. A SCIP notification or a Simplified SCIP notification (SSN) must be made for articles containing more than 0.1 % of any Substance of Very High Concern (SVHC). Companies’ challenges in the SCIP notification obligation include the relatively short notice that was given to prepare for the new obligation and gather the necessary information in complex supply chains. Despite the difficulties, a significant number of SCIP notifications have already been made to the SCIP database.

        In addition, the concerns of the companies were heard in the discussions and chat rooms of the event. The following ideas were put forward:

        • Companies need clear criteria and direction to invest in as quickly as possible. It takes time to achieve the given goals and make the necessary changes.
        • There must also be a market for sustainable and safe chemicals. Companies may face questions such as: How much more can a sustainable chemical cost? How much of the product’s properties are allowed to deteriorate?
        • In companies, a decrease in the consumption of chemicals may mean a decrease in growth.

        The materials and recordings of the event are available at ECHA’s website here.

        Text: Anne Kallioinen & Mikael Hirn

        Picture: Shutterstock