The method for dividing emissions between several products made in the same process. For example, when one production line makes a main product and a by-product, the emissions have to be split between them. ISO 14067 asks companies to avoid splitting where possible, then to split by physical measures such as mass, and to use economic value only when the others don’t work. The method chosen must be stated in the report.

A list of every material and part needed to make one product, with the amount of each. Manufacturers already use BOMs for production and purchasing. For a product carbon footprint, the BOM works as the product’s recipe: each material is matched with an emission factor, and the results are added up to find the footprint of the materials.

An EU regulation that puts a carbon price on certain goods imported into the EU, so they pay a similar carbon cost to goods made inside the EU. It currently covers cement, iron and steel, aluminium, fertilisers, hydrogen and electricity. Importers must report the emissions released when making these goods (called embedded emissions), and for goods imported from 2026 onwards, they must pay for those emissions. Accurate product-level emissions data from producers lets importers report their actual emissions, which are often lower than the EU’s default values.

CO₂e (Carbon Dioxide Equivalent) is a standard unit for measuring and comparing the total greenhouse gas emissions based on their global warming potential relative to carbon dioxide. To calculate CO₂e, each greenhouse gas is multiplied by a conversion factor to convert it into a single unit of measure. The specific conversion factors for each greenhouse gas may change over time depending on the concentration of the gas in the atmosphere.

A measure of the greenhouse gas emissions released into the atmosphere by a person, company, product, or activity. A larger carbon footprint indicates a bigger contribution to climate change. Calculating a carbon footprint involves summing up GHG emissions produced in three main categories: Scope 1, 2, and 3 emissions, and the final sum is typically presented in units of Carbon Dioxide Equivalent (CO2e).

The Carbon Disclosure Project (CDP) is an international organization that has set a framework of standards for environmental reporting, including climate change, water security, and deforestation. The CDP works with individual companies, cities, and large regions to report their environmental information and receive a score based on their responses, serving to benchmark their performance, promote transparency into their operations, and identify risks and opportunities related to climate change.

A system designed to maximize the lifespan of products and materials by maintaining them in use for as long as possible. This approach contrasts with the traditional "linear economy," which involves extracting raw materials, manufacturing products, and disposing of them at the end of their life. In a circular economy, the goal is to minimize waste and the use of harmful substances by redesigning, reusing, recycling, and regenerating products and materials. This model promotes resource efficiency, reduces environmental impact, and creates value from waste by reintegrating it into the production process.

A way of testing how a company’s business would hold up under different possible climate futures, for example a world that limits warming to 1.5°C through fast policy change, or a hotter world with more extreme weather. Companies estimate the effect of each scenario on their sites, costs and revenue. IFRS S2 requires companies to use climate-related scenario analysis to assess their climate resilience, at a level of detail that suits their circumstances.

The ways climate change, and the world’s response to it, could affect a company’s business. Risks include physical damage from extreme weather and the costs of moving to a low-carbon economy, such as carbon pricing or changing customer demand. Opportunities include new low-carbon products, lower energy costs and access to green finance. IFRS S2 and other climate reporting standards ask companies to report the ones that could affect their cash flows, access to finance or cost of capital.

In the context of the circular economy, closing the loop refers to the practice of ensuring that materials and products are reused, recycled, or repurposed at the end of their lifecycle, rather than being discarded as waste. "The loop" represents the continuous cycle of resources within the economy, where products and materials are kept in circulation for as long as possible. When a company says they are "closing the loop," they mean they are implementing strategies to reclaim, recycle, or repurpose materials from used products, thereby reintegrating them into the production process. This approach helps reduce waste, conserve natural resources, and minimize environmental impact.

The total greenhouse gas emissions of a whole company over one year. A CCF covers Scope 1 emissions (from sources the company owns), Scope 2 emissions (from the energy it buys) and Scope 3 emissions (from its value chain, such as suppliers and transport). It is usually calculated with the GHG Protocol Corporate Standard and reported in tonnes of CO₂e. Companies use it for sustainability reports, climate targets and regulations such as the CSRD.

A product footprint that counts emissions from extracting raw materials up to the moment the finished product leaves the factory gate. It covers materials, inbound transport and manufacturing. It leaves out delivery to customers, product use and disposal. Cradle-to-gate is the most common scope for materials and parts that other manufacturers buy, because the supplier usually can’t know how the product will be used. Some reports also add delivery to the customer, called cradle-to-customer.

A product footprint that counts emissions across a product’s full life: raw materials, manufacturing, transport, use and disposal or recycling. It is often used for finished goods sold to consumers, where the use phase (such as the electricity a device uses) can be a large share of the total. It is the widest scope a product footprint can have.

The Corporate Sustainability Reporting Directive (CSRD) is an obligatory reporting framework enacted by the European Parliament that applies to certain companies with operations taking place in the European Union. The mandate requires companies to report on specific ESG metrics, conduct a double materiality assessment (considering both the impact of the company on the environment and the impact of environmental issues on the company), and undergo third party assurance to verify the accuracy and reliability of their ESG disclosures.

A digital record of a product’s key information, such as what it’s made of, how to repair or recycle it, and its environmental impact, usually opened by scanning a QR code. The EU is introducing DPPs under its Ecodesign for Sustainable Products Regulation (ESPR), one product group at a time, starting with batteries. For many products, the passport will include environmental data such as the carbon footprint.

Counting the same emissions twice in one calculation. In product footprints, this often happens with transport: if a supplier’s emission factor already includes delivery and the delivery is added again, the footprint comes out too high. Avoiding double counting means checking what each emission factor already covers before adding anything to it.

Evaluates not just how the company’s operations affect the broader environment and society, but how external environmental and social issues may impact the company's financial performance and reputation. The CSRD mandate requires companies to report only on ESG issues deemed material, supported by their double materiality assessments. This approach provides a comprehensive understanding of risks and opportunities essential for navigating today's business landscape.

EcoVadis is a globally recognized sustainability rating platform that assesses a company’s environmental, social, and ethical performance across key areas such as Environment, Labor & Human Rights, Ethics, and Sustainable Procurement.

The greenhouse gas emissions from making, transporting and installing a material or product, before it is used. The term is most common in construction, where it describes emissions from materials such as steel, cement and glass. Builders and architects use embodied carbon figures, often taken from EPDs, to choose lower-carbon materials.

A number that converts an activity into greenhouse gas emissions. For example, an emission factor tells you how much CO₂e is released per kilowatt-hour of electricity, per kilogram of steel or per tonne-kilometre of truck transport. Multiplying the activity by its emission factor gives the emissions. Factors come from suppliers, national governments and published databases.

A certificate that proves a set amount of electricity (usually one megawatt-hour) came from a specific source, such as a wind or solar farm. Once a company uses a certificate to claim that electricity, the certificate is “retired” and no one else can claim it. Companies buy EACs to show that the electricity they use is renewable, which lowers their market-based Scope 2 emissions. EACs can be bought together with electricity or on their own. Countries use different names for them, such as RECs in North America and Guarantees of Origin in Europe.

A public, independently verified document that reports a product’s environmental impacts, based on a life cycle assessment. An EPD covers several impacts, such as climate change, water use and resource use, and follows Product Category Rules so products of the same type are measured the same way. EPDs are registered with an EPD programme and are common in construction, where architects and builders use them to choose materials.

ESG (Environmental, Social, Governance) is a comprehensive framework used to evaluate a company's commitment to sustainable and ethical practices. ESG encompasses three key areas: Environmental factors, such as a company's carbon footprint, resource usage, and environmental stewardship; Social factors, including employee relations, community involvement, and human rights; and Governance factors, which assess corporate leadership, transparency, ethical behavior, and stakeholder engagement. ESG criteria help stakeholders understand and evaluate a company's long-term sustainability and ethical impact on the world, guiding investment and operational decisions.

A detailed review of the Environmental, Social, and Governmental factors affecting a company and its stakeholders, including investors, employees, customers, communities, and shareholders. By considering these factors, stakeholders can get a more holistic and comprehensive view of the company's risks, opportunities, and impact. It examines the company's environmental impact (e.g., pollution, greenhouse gas emissions, biodiversity, water usage), social impact (e.g., employee welfare, community engagement, labor rights), and governance practices (e.g., corporate conduct, ethics, conflicts of interest).

The process of comparing a company's ESG performance to competitors in its industry. This can often be challenging as there is not a universal standard to normalize the data and easily compare it. Undergoing this process allows companies to identify the strengths and weaknesses of their ESG practices, ensure compliance with regulatory requirements, and leverage their ESG performance to apply for sustainability finance tools.

The quantitative and qualitative information a company collects to measure its environmental, social, and governance (ESG) performance. This includes metrics such as energy use, greenhouse gas emissions, water consumption, waste, employee diversity, health and safety incidents, and board composition, gathered from across the business and its value chain. Accurate, well-documented ESG data is the foundation of sustainability reporting under frameworks such as the CSRD and GRI, and it is what auditors review during third-party assurance.

A score used to compare the ESG activities of different companies, that is commonly used by investors and customers to evaluate a company's risk and impact. Some popular ratings providers include: The Carbon Disclosure Project (CDP), MSCI, and Sustainalytics, among others. To achieve an ESG rating, companies typically have to undergo third party assurance for their ESG data in accordance with the rating agency's criteria.

A test for deciding which information belongs in a report. Information is material if leaving it out, getting it wrong or hiding it could reasonably influence the decisions of investors, lenders and other creditors. IFRS S1 uses this test, so companies report the sustainability topics that could affect their cash flows, access to finance or cost of capital. Financial materiality is also one of the two sides of a double materiality assessment.

The unit of product that a carbon footprint or life cycle assessment is calculated for, such as 1 kg of material, one bottle or one square metre of flooring. Every number in the footprint is calculated per functional unit, so results can be compared fairly. Two footprints can only be compared if they use the same functional unit.

A standard from the Greenhouse Gas Protocol for calculating and reporting the greenhouse gas emissions of a product across its life. Published in 2011, it sits alongside the GHG Protocol Corporate Standard, which covers a whole company. It sets rules for system boundaries, data quality, allocation and reporting, and is widely used together with ISO 14067.

A measure of how much heat a greenhouse gas traps in the atmosphere compared with carbon dioxide over a set period, usually 100 years (known as GWP100). Carbon dioxide has a GWP of 1. Methane traps far more heat, so it has a much higher GWP. GWP values are used to convert all greenhouse gases into one unit, CO₂e, and are published by the IPCC.

An electricity plan from a utility or energy supplier that provides electricity from renewable sources, such as wind or solar. The supplier usually backs the plan with energy attribute certificates on the customer’s behalf, so the company can count that electricity as renewable in its market-based Scope 2 emissions. A green tariff is one of the simplest ways for a company to buy renewable electricity.

Gasses that allow light and heat from the sun to enter the earth's atmosphere, but trap heat on earth, preventing it from being released back into space. These gasses are believed responsible for human-caused (anthropogenic) climate change. The main GHGs that have an effect on climate change include: carbon dioxide (CO2), nitrous oxide (N2O), methane gas (CH4), refrigerant gasses (HFCs).

The action of a company choosing not to share its environmental, social, and governance (ESG) information with the public, including stakeholders and investors. This may be done to avoid accusations of greenwashing, manage concerns from investors, keep competitive secrets, or because their ESG practices are not strong or are uncertain due to changing regulations. By not sharing this information, the company limits transparency and makes it harder for others to evaluate how sustainable and responsible it really is.

A phenomenon where a company makes misleading or false claims to convince consumers that its products are more environmentally friendly or have a greater positive environmental impact than they truly do. This is often viewed as a critique of Environmental, Social, and Governance (ESG) practices because it undermines the credibility and effectiveness of ESG efforts.

The Global Reporting Initiative (GRI) is an ESG reporting framework of universal standards, and industry-specific standards. They are the world's most widely used sustainability standards focusing on how a company's ESG reporting affects the economy. Reporting with the GRI is voluntary but are often employed to meet stakeholder expectations and adhere to regulations.

The IFRS (International Financial Reporting Standards) are globally recognized accounting and disclosure standards that guide how organizations should prepare and present their financial statements in a consistent, comparable way.

The IFRS Foundation oversees the International Sustainability Standards Board (ISSB), which has issued sustainability disclosure standards: IFRS S1 for general sustainability-related financial disclosures and IFRS S2 for climate-related disclosures.

IFRS S1 (General Requirements for Disclosure of Sustainability-related Financial Information) is a global standard by the ISSB that requires companies to disclose material sustainability-related risks and opportunities that could affect their enterprise value. The standard incorporates SASB Standards for industry-specific guidance and focuses on financially material ESG topics.

IFRS S2 (Climate-related Disclosures) is a global standard issued by the ISSB that requires companies to disclose climate-related risks and opportunities that could affect their financial position. Built on TCFD recommendations, IFRS S2 requires reporting of greenhouse gas emissions (Scope 1, 2, and 3), climate risks, and scenario analysis.

The international standard for calculating and reporting the carbon footprint of a product. Published by the International Organization for Standardization (ISO), the current version is ISO 14067:2018. It sets out how to choose a functional unit and system boundary, which data to collect, how to divide emissions between products, and what to include in the report. It builds on the life cycle assessment standards ISO 14040 and ISO 14044.

The global standard for independent assurance on sustainability information, issued by the International Auditing and Assurance Standards Board (IAASB) in 2024. Its full name is International Standard on Sustainability Assurance 5000, General Requirements for Sustainability Assurance Engagements. It covers both limited and reasonable assurance, works with any sustainability reporting framework, and can be used by accountants and other qualified assurance practitioners, for both voluntary and regulator-required assurance.

The ISSB (International Sustainability Standards Board) is a standard-setting body under the IFRS Foundation that develops globally consistent sustainability disclosure standards. The ISSB focuses on sustainability information that affects enterprise value and has issued two core standards: IFRS S1 for general sustainability-related financial disclosures and IFRS S2 for climate-related disclosures.

A method for measuring the environmental impact of a product across its life, from raw materials to disposal. An LCA can cover many types of impact, such as climate change, water use, air pollution and land use. It follows the ISO 14040 and ISO 14044 standards. A product carbon footprint uses the same method and looks at one impact only: greenhouse gas emissions.

The level of independent check most sustainability reports start with. The assurance practitioner reviews how the figures were prepared, asks questions and runs analysis, then states whether anything came to their attention suggesting the figures are materially wrong. It needs a lighter set of tests, so regulators often require it first, usually starting with Scope 1 and Scope 2 emissions, and raise the level over time.

A way of calculating Scope 2 emissions using the average emissions of the power grid where the electricity is used. It stays the same whatever electricity plan or certificates a company buys, so it shows the impact of the local grid. Companies following the GHG Protocol report Scope 2 emissions with both this method and the market-based method.

A way of calculating Scope 2 emissions that reflects the electricity a company chooses to buy. Renewable electricity bought through energy attribute certificates, a green tariff or a power purchase agreement lowers emissions under this method. Any electricity not covered is calculated using the grid’s average emissions, minus the renewable power others have already claimed (known as the residual mix). Companies following the GHG Protocol report Scope 2 emissions with both this method and the location-based method.

An inclusive exercise where companies engage with stakeholders to identify the most significant ESG factors relevant to them. This process recognizes all key stakeholders to the company, such as investors, customers, employees, communities, ESG rating agencies, regulatory bodies, among others. Companies then compile material topics relevant to each stakeholder group and prioritize them based on their potential impact on the company's long-term performance and reputation.

Net Zero is a goal for reducing global greenhouse gas emissions to the point where the amount of emissions produced is balanced by the amount removed from the atmosphere. Net Zero goals are adopted by individual companies, cities, and countries to align their operations with climate science. Achieving Net Zero involves reducing emissions as much as possible and using carbon removal technologies or offsetting strategies to balance any remaining emissions.

The Non-Financial Reporting Directive (NFRD) is an obligatory reporting framework enacted by the European Parliament that applies to certain companies with operations taking place in the European Union. The NFRD was enacted in 2016 and replaced in 2024 by the Corporate Sustainability Reporting Directive (CSRD).

Guidance for calculating and sharing product carbon footprints between companies in a supply chain, created by PACT (the Partnership for Carbon Transparency), an initiative of the World Business Council for Sustainable Development (WBCSD). It builds on existing standards such as ISO 14067 and the GHG Protocol, and sets a common data format so suppliers and customers can exchange footprints in the same way.

The Philippine sustainability reporting standard for general sustainability-related disclosures. It adopts IFRS S1 for use in the Philippines, after approval by the Financial and Sustainability Reporting Standards Council (FSRSC) and the Professional Regulatory Board of Accountancy in October 2024. Companies report the sustainability-related risks and opportunities that could affect their cash flows, access to finance or cost of capital. The SEC made it mandatory for listed and large non-listed companies, in phases starting with FY2026.

The Philippine standard for climate-related disclosures. It adopts IFRS S2 for use in the Philippines, after approval by the Financial and Sustainability Reporting Standards Council (FSRSC) and the Professional Regulatory Board of Accountancy in October 2024. Companies report the climate-related risks and opportunities that could affect their business, how they plan to respond, and their greenhouse gas emissions across Scope 1, 2 and 3. Listed and large non-listed companies start using it in phases from FY2026.

Risk from the physical effects of climate change on a company’s sites, supply chain and workers. It can be acute, from events like storms, floods and heatwaves, or chronic, from slow shifts like rising sea levels, higher average temperatures and changing rainfall. IFRS S2 and other climate reporting standards ask companies to report physical risks that could affect their business, and lenders and insurers use this information when they price loans and cover.

A long-term contract in which a company agrees to buy electricity from a specific power plant, such as a wind or solar farm, usually for 10 to 20 years at an agreed price. The contract usually includes the plant’s energy attribute certificates, so the company can count that electricity as renewable in its market-based Scope 2 emissions. PPAs can also help pay for new renewable energy projects to be built.

Data measured directly from a company’s own operations or supplied by its suppliers, such as the electricity a factory used or a supplier’s own product footprint. Primary data reflects how a specific product is really made, so footprints built on it are more accurate. Product standards encourage using primary data wherever it is available.

The total greenhouse gas emissions linked to one product, calculated per kilogram, per item or another unit of that product. A PCF adds up emissions from raw materials, transport, energy and water used in manufacturing, and sometimes delivery, use and disposal. It is shown in kg CO₂e per unit of product. Manufacturers share PCFs with customers, who use them to calculate their own Scope 3 emissions, and many follow ISO 14067 to calculate them.

A set of rules for measuring the environmental impact of one type of product, such as cement, flooring or packaging. PCRs set the functional unit, system boundary and data requirements, so that products of the same type are assessed the same way. They are needed to create an Environmental Product Declaration and are published by EPD programmes.

The European Union’s method for measuring the environmental impact of a product across its life. PEF covers 16 impact categories, including climate change, water use and land use, and gives each product group its own rules so results can be compared. The EU uses it as a basis for green product claims and future product rules.

A high level of independent check on a sustainability report, similar to a financial statement audit. The assurance practitioner tests the company’s controls and gathers detailed evidence before giving a positive opinion that the information is fairly presented. It takes longer and costs more, so many regulators start with limited assurance and plan to move to reasonable assurance over time. Companies also seek it voluntarily when customers or investors want extra confidence in their figures.

The name used mainly in North America for energy attribute certificates. Each REC proves that one megawatt-hour of electricity was generated from a renewable source, such as wind or solar, and added to the power grid. Buying and retiring RECs lets a company count that renewable electricity as its own, even if its buildings run on the regular grid.

The Sustainability Accounting Standards Board (SASB) is framework that provides industry-specific standards to guide companies in reporting their ESG metrics. SASB standards highlight the most material ESG issues relevant to different industries, providing companies with specific guidelines to focus on in their reporting and decarbonization efforts.

The Science Based Targets Initiative (SBTi) is a voluntary initiative that provides companies with a roadmap for creating a reasonable and actionable decarbonization plan grounded in climate science. The SBTi ensures that targets set by companies are in line with the latest climate science necessary to meet the goals of the Paris Agreement, promoting credible and ambitious climate action.

Greenhouse gasses that are directly emitted from the company's operational facilities and on-site vehicles. This can be the result of fossil fuel combustion (ie. burning coal for electricity, or gasoline from cars and trucks) or the release of refrigerants from industrial facilities. Data sources used for calculating scope 1 emissions can range from meter readings and invoices (most accurate), to company-wide financial data (least accurate).

Emissions resulting from energy that was purchased by an organization from external sources (primarily electricity and steam). Like scope 1 emissions, scope 2 emission data sources range from meter readings and invoices (most accurate), to company-wide financial data (least accurate). Scope 2 emission calculations require additional data on the electricity mix of a regional or national power grid in a given year.

Indirect emissions involved in producing a product, including upstream and downstream emissions. Upstream emissions relate to those activities that support the production of your product before manufacturing (ie. production and transportation of raw materials, business travel, capital goods, etc.) and Downstream emissions support the distribution and end-of-life of your product (processing of sold products, waste disposal, use of product, etc.) Scope 3 emissions are often the hardest to collect and typically account for the majority of emissions stemming from a product's production (for non-vertically integrated companies.

The Philippine Securities and Exchange Commission rule, issued in December 2025, that makes PFRS S1 and PFRS S2 mandatory and replaces the 2019 sustainability reporting guidelines. It phases companies in by size: listed companies with a market capitalisation above PHP 50 billion start with FY2026, those between PHP 3 billion and PHP 50 billion with FY2027, and smaller listed companies, debt-only listed companies and non-listed companies with revenue above PHP 15 billion with FY2028. It also sets assurance rules and transition reliefs.

Data that doesn’t come from a company’s own operations or suppliers, such as industry averages and figures from published emission factor databases. Secondary data fills the gaps when primary data isn’t available, for example when a supplier hasn’t calculated its own footprint yet. It should be replaced with primary data over time.

An emission factor provided by a supplier for the exact material or part it sells, usually taken from the supplier’s own product carbon footprint. It reflects how that supplier really makes the product, including its energy sources and processes. Using supplier-specific factors gives a more accurate footprint and lets a company see the effect of choosing lower-carbon suppliers.

A variety of financial instruments that take ESG factors into account when determining more attractive loan conditions or new investments. A sustainability-linked loan (or ESG-linked loan) is one example of this, where the terms of the loan are linked to the borrower's score on ESG indicators, including carbon reduction targets. Both the terms and indicators are tailored to the specific industry of the borrower.

The line that sets which stages of a product’s life a footprint includes. For example, it may stop at the factory gate (cradle-to-gate) or run to the end of the product’s life (cradle-to-grave). The system boundary must be stated in every product footprint report, because two footprints with different boundaries can’t be compared.

The verification and validation of your sustainability report by an independent and qualified external auditor. The review process can be conducted to examine your data, methodologies, and disclosures against established standards, frameworks, or principles (e.g. the Carbon Disclosure Project (CDP), Corporate Sustainability Reporting Directive (CSRD), and many more). There are two different levels of assurance that can be received, limited (lower cost but less rigorous) and reasonable (more thorough and provides a higher level of confidence in the ESG data).

Risk that comes from the shift to a low-carbon economy. It covers new policies and laws, such as carbon pricing or emissions limits, new technology that makes older equipment less competitive, changing customer and investor preferences, and damage to reputation. IFRS S2 and other climate reporting standards ask companies to report transition risks that could affect their business, so investors can see how exposed it is to climate policy and market change.

A temporary allowance that lets a company report less in its first years under a new reporting standard, while its data and processes catch up. Common reliefs include reporting only on climate at first, skipping comparative figures for the previous year, publishing the sustainability report after the financial statements, and leaving out Scope 3 emissions for a period. IFRS S1 and IFRS S2 include reliefs like these, and regulators that adopt the standards can extend them for local companies.