Glossary - sustainability

CSDDD (Corporate Sustainable Due Diligence Directive)

The CSDD, or EU Corporate Due Diligence Directive, aims to oblige large companies to identify, prevent and mitigate the negative impacts of their activities on human rights and the environment. The new regulations make companies responsible for monitoring the entire supply chain, which means they must track not only their own actions, but also those of their business partners.

The directive requires more stringent risk management and attention to sustainable development on a global level. This is in response to growing social and regulatory expectations of companies that operate internationally. The regulations are intended to reduce companies' negative impact on the environment and society and promote more responsible business practices.

CSRD (Corporate Sustainability Reporting Directive)

The CSRD (Corporate Sustainability Reporting Directive) is a new European Union regulation that aims to introduce more detailed and standardized reporting requirements for ESG (Environmental, Social and Governance) issues. It replaces the earlier NFRD (Non-Financial Reporting Directive) and aims to increase transparency and comparability of corporate sustainability information.

Companies required to report under the CSRD:

From January 1, 2024, large public interest companies with > 500 employees subject to the NFRD. Reporting deadline in 2025.

From January 1, 2025, large companies that are not currently subject to the NFRD, with > 250 employees, and/or with €40 million in turnover and/or €20 million in total assets. Deadline for reporting in 2026.

From January 1, 2026, listed SMEs and other companies. Reporting deadline in 2027 SMEs can defer reporting until 2028.

Decarbonization

Decarbonization is the process of seeking to reduce carbon dioxide (CO2) and other greenhouse gas emissions into the atmosphere in order to reduce the impact of human activity on climate change. For companies, this means transforming their business models, investing in new technologies and adopting new and creative solutions to reduce their carbon footprint. Many industries, including energy, transportation and manufacturing, face the need to reduce emissions and switch to more sustainable energy sources. As part of global climate commitments and regulations, companies are encouraged to develop long-term decarbonization strategies that range from modernizing production processes to sustainable resource management.

Due diligence

ESG due diligence is understood as an environmental, social and governance due diligence process. It refers to companies' efforts to identify, assess and manage risks. Companies are required to regularly monitor their impact on these three areas and implement appropriate risk management procedures. The due diligence approach helps companies identify potential risks that may arise from their operations and cooperation with partners. This process not only minimizes risks, but also contributes to building a responsible and sustainable business model. Properly conducted ESG due diligence also increases a company's transparency and builds trust with stakeholders.

ESRS (European Sustainability Reporting Standards)

ESRS standards (European Sustainability Reporting Standards) are a set of guidelines developed within the European Union and described in the CSRD. They are designed to make it easier for companies to provide transparent and comparable information on their ESG activities. The ESRS sets out detailed requirements for environmental, social and corporate governance reporting. Implementing these standards allows companies not only to meet regulatory requirements, but also to improve their relationships with investors and stakeholders through greater transparency and credibility. With ESRS, companies have a tool to better understand their impact on the environment and make more informed business decisions.

GRI Standard (Global Reporting Initiative)

The GRI Standard, or Global Reporting Initiative, is an international sustainability reporting standard that helps companies report transparently on their ESG activities. The standard provides guidelines for reporting on environmental, social and corporate governance issues, allowing companies to provide comparable and reliable information to stakeholders. With GRI Standard, companies can better communicate their sustainability achievements and challenges.

The introduction of the CSRD and ESRS guidelines has significantly affected the use of the GRI standard. It still remains an important tool for reporting companies. However, the ESRS introduces more detailed requirements and clarifies reporting at the European level.

However, the GRI is often seen as a tool that can support companies in meeting CSRD requirements, as the two sets of standards are somewhat compatible in terms of the scope of topics. Companies that already report according to GRI may have an easier time adapting to the ESRS guidelines, as many of the reported indicators overlap.

Climate neutrality

Climate neutrality means that a company strives to offset carbon emissions through reduction and offsetting, in such a way as to achieve a net zero emissions balance. For companies, this means implementing decarbonization strategies, investing in renewable energy sources and carbon offsetting initiatives such as planting trees or investing in CO2-absorbing projects. Companies pursuing climate neutrality are building more sustainable business models that are more resilient to market and legislative changes.

Corporate Social Responsibility (CSR)

CSR (Corporate Social Responsibility) is a concept whereby companies voluntarily integrate social, environmental and ethical aspects into their strategy and daily operations. The goal of CSR is to conduct business in a sustainable and responsible manner that benefits not only the company, but also its stakeholders - employees, customers, local communities, suppliers and the environment. CSR is part of the broader concept of sustainable development, which refers to harmonious development in three main areas: economic, social and environmental. CSR helps companies contribute to the Sustainable Development Goals (SDGs) set by the United Nations.

Carbon footprint

Carbon footprint is a measure of the greenhouse gas emissions generated by a company or product throughout its life cycle. It is a key indicator that allows companies to monitor and minimize their environmental impact. Reducing the carbon footprint has become a priority for companies pursuing zero-emission, especially in the context of global efforts to combat climate change. Conscious carbon footprint management includes identifying emission sources, implementing solutions to reduce emissions, and reporting results according to international standards.

EU taxonomy

The EU Taxonomy is a system of uniform criteria for determining which investments and economic activities can be considered environmentally sustainable. It was created to help identify projects and businesses that make a real contribution to the EU's climate goals, such as achieving climate neutrality by 2050.

In addition, the EU Taxonomy is intended to support the reduction of greenwashing, the practice of misrepresenting products as green. The regulation introduces clear criteria for, among other things, reducing greenhouse gas emissions, conserving natural resources and adapting to climate change.

Zero-emission

Zero-emission is a state in which the activities of a company, country or person generate no net greenhouse gas emissions. This means that all emissions are reduced to a minimum, and the remaining emissions are offset by offsetting activities.

To achieve zero-emissions, it is necessary:

Reducing emissions - optimizing processes, switching to renewable energy sources (solar, wind), improving energy efficiency.

Offsetting other emissions - investing in offsetting projects, such as purchasing carbon credits or reforestation projects.

Application of new technologies - such as the development of carbon capture and storage (CCS) technologies

Sustainability

Sustainability is a concept that involves balancing economic growth, environmental protection and social well-being. Companies implementing sustainability must consider the impact of their operations on three key areas:

Environmental protection - reducing CO2 emissions, minimizing consumption of natural resources, managing waste and promoting a closed loop economy.

Social responsibility - taking care of employees, ethical working conditions, supporting local communities and respecting human rights.

➔ Transparent governance - adherence to corporate governance, financial transparency and anti-corruption.

Implementing sustainability not only makes companies more competitive, but also builds their reputations and prepares them for the growing market and regulatory demands associated with responsible business.