A
Assurance: Independent evaluation of the accuracy and reliability of sustainability reports and data. In the context of CSRD, it refers to the requirement for third-party assurance of sustainability information.
Auditor Independence: The requirement that auditors reviewing sustainability reports must be independent from the company they are auditing, ensuring unbiased verification of the CSRD disclosures.
B
Biodiversity: The variety of life in the world or a particular habitat. CSRD requires companies to report on their impact on biodiversity.
C
Circular Economy: An economic system aimed at eliminating waste and the continual use of resources. CSRD encourages reporting on circular economy practices.
Climate Change: Long-term alteration of temperature and typical weather patterns in a place. Companies need to disclose their impact on climate change under CSRD.
Compliance: Adherence to laws, regulations, guidelines, and specifications relevant to sustainability reporting.
Compliance Statement: A declaration included in the sustainability report confirming that the company complies with the CSRD requirements and relevant European Sustainability Reporting Standards (ESRS).
Consultation Process: The period during which stakeholders, including companies, investors, and civil society, can provide feedback on draft ESRS developed by the European Financial Reporting Advisory Group (EFRAG).
Corporate Governance: The system by which companies are directed and controlled. Under CSRD, governance issues related to sustainability are reported.
D
Disclosure Requirement (DR): Specific information that companies are mandated to disclose under the CSRD, detailing various aspects of their sustainability performance.
Data Points (DP): Specific quantitative or qualitative data required to be reported under CSRD to provide measurable insights into a company's sustainability practices.
Due Diligence: The investigation or audit of a potential investment or product to confirm all facts. CSRD requires due diligence on sustainability issues.
E
Eligibility: Criteria that determine which companies are required to comply with CSRD. This includes large companies, listed companies, and public-interest entities that meet specific thresholds related to turnover, assets, and employees.
Emissions: The act of releasing something, especially gas or radiation. Companies must report greenhouse gas (GHG) emissions under CSRD.
Environmental Impact: The effect of human activities on the environment. CSRD mandates reporting on various environmental impacts.
ESG: Environmental, Social, and Governance. A set of criteria used to measure the sustainability and ethical impact of a company.
European Commission’s Delegated Acts: Legal acts that the European Commission adopts to update or specify certain elements of the CSRD, ensuring that the directive remains relevant and effective over time.
European Financial Reporting Advisory Group (EFRAG): The advisory body tasked with developing technical advice for the European Commission on the ESRS, ensuring the standards are practical and effective.
European Single Access Point (ESAP): A centralized database where all reported sustainability information under CSRD will be made publicly accessible, promoting transparency and comparability.
European Sustainability Reporting Standards (ESRS): Detailed reporting standards developed by EFRAG that specify the sustainability information companies must disclose under CSRD.
F
Financial Materiality: Information that could influence the economic decisions of users. CSRD requires the disclosure of financially material sustainability information.
G
Global Reporting Initiative (GRI): An international independent standards organization that helps businesses and governments understand and communicate their impacts on critical sustainability issues. CSRD encourages alignment with GRI standards.
Governance Disclosures: Part of the DR under CSRD, requiring companies to disclose their governance structures, policies, and practices related to sustainability.
Greenhouse Gas (GHG) Emissions Reporting: A mandatory disclosure under CSRD, requiring companies to report their direct and indirect GHG emissions according to defined scopes.
Greenwashing: Misleading consumers about the environmental practices of a company or the environmental benefits of a product or service. CSRD aims to prevent greenwashing through stringent reporting requirements.
H
Human Rights: Rights inherent to all human beings. Companies must report on their human rights impacts and policies under CSRD.
I
Impact Materiality: Part of the double materiality concept in CSRD, focusing on the significant impacts a company has on the environment and society.
Impact Reporting: Disclosure of the positive and negative impacts a company has on the environment and society. CSRD emphasizes the need for impact reporting.
K
Key Performance Indicators (KPIs): Quantifiable measures used to evaluate the success of an organization in achieving objectives. CSRD requires the disclosure of sustainability KPIs.
L
Lifecycle Assessment (LCA): A technique to assess environmental impacts associated with all the stages of a product's life. CSRD encourages reporting on LCA.
M
Mandatory Assurance: The requirement under CSRD for third-party verification of disclosed sustainability information to ensure accuracy and reliability.
Materiality Assessment: A process required under CSRD for companies to identify and prioritize the most relevant sustainability issues to be reported, considering both financial and impact materiality.
N
National Transposition: The process by which EU member states incorporate the CSRD into their national legal systems, ensuring that the directive's requirements are enforced at the national level.
Natural Capital: World's stocks of natural assets which include geology, soil, air, water, and all living things. CSRD involves reporting on natural capital.
Non-Financial Reporting Directive (NFRD): The previous directive that CSRD replaces, which initially required large public-interest entities to disclose certain non-financial information.
O
Operational Boundaries: The limits within which a company’s sustainability impacts are measured and reported, including all operations under the company’s control or influence.
P
Public Interest Entity (PIE): Under CSRD, this term refers to companies of significant public interest due to their size, number of employees, or nature of business, which are subject to stricter reporting requirements.
Q
Quantitative Metrics: Numerical data required under CSRD to measure a company’s sustainability performance, such as greenhouse gas emissions, energy consumption, and water usage.
R
Reasonable Assurance: A higher level of assurance provided by auditors where they conduct more extensive tests and procedures to verify the accuracy of sustainability disclosures as required under CSRD.
Reporting Framework: The structured approach defined by the CSRD and ESRS that companies must follow to prepare their sustainability reports.
Risk Assessment: The evaluation of potential risks related to sustainability that companies must disclose under CSRD.
S
Sector-Specific Standards: ESRS developed for different industries, acknowledging that sustainability impacts and reporting needs vary across sectors. These standards provide tailored requirements for each industry under the CSRD framework.
Scope 1, 2, and 3 Emissions: Categories of greenhouse gas emissions. Scope 1 are direct emissions, Scope 2 are indirect emissions from purchased energy, and Scope 3 are all other indirect emissions. CSRD requires detailed reporting on these emissions.
Social Impact: The effect of an organization's actions on the well-being of the community. Companies must report their social impacts under CSRD.
Sustainable Development Goals (SDGs): A collection of 17 global goals set by the United Nations to address global challenges. CSRD aligns with the reporting on progress towards SDGs.
Sustainability Report: A comprehensive document that companies must produce annually, detailing their sustainability performance and compliance with CSRD and ESRS.
Sustainability Risks: Risks related to environmental, social, and governance (ESG) factors that must be disclosed under CSRD, showing how they might impact the company’s operations and financial performance.
T
Task Force on Climate-related Financial Disclosures (TCFD): An organization that develops voluntary, consistent climate-related financial risk disclosures for companies. CSRD recommends alignment with TCFD recommendations.
Transparency: The quality of being open and honest; under CSRD, it involves clear, accurate, and comprehensive reporting of sustainability information.
Taxonomy Regulation: EU regulation that establishes criteria for determining whether an economic activity is environmentally sustainable. CSRD requires companies to report in accordance with the EU Taxonomy.
V
Value Chain: The full range of activities that businesses go through to bring a product or service to their customers. CSRD requires reporting on sustainability issues across the entire value chain.
Value Chain Reporting: Under CSRD, companies must disclose information about their entire value chain, including upstream and downstream activities, to provide a comprehensive view of their sustainability impact.
X
eXtensible Business Reporting Language (XBRL): A standard for digital business reporting that allows companies to tag their financial and sustainability data, making it easier to compare and analyze. CSRD requires the use of XBRL for reporting sustainability information.