Sustainability, explained plainly

The three lenses used to judge how responsibly a business operates.

Remember it as Earth, Society and Guardrails. Investors, lenders and customers use ESG to assess risks and impacts that don't show up in traditional financial accounts.

In practice: When someone sends you an 'ESG questionnaire' they want evidence across all three: environmental data, how you treat people, and how the business is run.

The three categories used to split a carbon footprint.

Scope 1 is fuel you burn directly (boilers, company vehicles) and refrigerant leaks. Scope 2 is purchased electricity, heat and steam. Scope 3 is everything else in your value chain — purchased goods, transport, business travel, commuting, use and disposal of your products.

In practice: Start with Scope 1 & 2 from your energy and fuel bills. Most customers ask for these first; Scope 3 comes later and is usually the largest.

A single unit that expresses all greenhouse gases as the warming effect of CO₂.

Methane, nitrous oxide and refrigerant gases trap more heat than CO₂. Converting them using their global warming potential (GWP) lets you add everything up into one number.

Numbers that turn activity data (kWh, litres, km) into emissions.

You multiply what you used by a published factor — e.g. kWh of electricity × the grid factor. Governments publish official factors each year, and using the right year and country matters.

In practice: UK businesses should use the annual government conversion factors; the Granular carbon estimator uses simplified, indicative factors.

Two ways of calculating Scope 2 electricity emissions.

Location-based uses the average emissions of the grid where you are. Market-based reflects the contracts you buy, such as a certified renewable tariff or power purchase agreement. Best practice is to report both.

Cutting emissions as far as possible, and neutralising only what's left with permanent removals.

Credible net zero means deep reductions first — typically 90% or more across all scopes — on a science-based pathway. It is not the same as buying offsets to cancel out today's emissions.

In practice: A public net zero commitment by 2050 is required for UK government Carbon Reduction Plans, and many large customers ask suppliers for one.

Credits representing emissions avoided or removed elsewhere.

Avoidance credits (e.g. protecting a forest) prevent emissions; removal credits (e.g. reforestation, direct air capture) take CO₂ out of the air. Quality varies widely. Claims like 'carbon neutral' based mainly on offsets are increasingly challenged as greenwashing.

In practice: Reduce first. If you buy credits, use high-integrity ones and describe them as a contribution, not a cancellation of your footprint.

Looking at sustainability from two directions: your impact on the world, and the world's impact on you.

Impact materiality asks how the business affects people and the environment. Financial materiality asks how sustainability issues create risks or opportunities for the business. EU reporting uses both; ISSB-based standards focus on the financial side.

In practice: A materiality assessment helps you decide which topics to measure and report — so you focus effort where it matters.

How a company will change its strategy, operations and investment to meet its climate targets.

A good plan sets targets, lists the specific actions and investments to reach them, assigns accountability and explains dependencies (e.g. on grid decarbonisation or supplier action).

Keeping products and materials in use for as long as possible instead of 'take, make, waste'.

Design out waste, keep products in use through repair, reuse and remanufacture, and regenerate natural systems. It often saves money on materials and disposal.

Making producers pay for the end-of-life of the packaging and products they put on the market.

EPR schemes require businesses above certain thresholds to report what they place on the market and fund its collection and recycling. They exist for packaging, electronics, batteries and increasingly textiles.

A wage based on the actual cost of living — usually higher than the legal minimum.

Living wages are calculated independently from what people need to cover essentials. Paying one (including to contractors such as cleaners and security) is one of the clearest social commitments a business can make.

An ongoing process to identify, prevent and address human-rights harms in your operations and supply chain.

It means mapping risks (e.g. forced labour, unsafe conditions), acting on the most severe, tracking whether actions work, and being open about it. It underpins modern slavery reporting and EU due diligence law.

An independent check of sustainability data, similar to a financial audit.

'Limited' assurance (a review) is most common; 'reasonable' assurance is a fuller audit. Assured data carries more weight with investors, customers and regulators.

Making environmental claims that are misleading, vague or can't be backed up.

Regulators increasingly enforce against claims like 'eco-friendly' or 'carbon neutral' without evidence. Claims should be specific, accurate, consider the full life cycle and not omit important information.

In practice: Before you publish a green claim, check you can evidence it — and prefer specific facts ('100% renewable electricity since 2025') over broad labels.

An EU limit on how much data large companies can demand from smaller suppliers.

Introduced with the 2025–26 Omnibus simplification, it means companies reporting under CSRD should not require more from suppliers with fewer than 1,000 employees than the voluntary SME standard (VSME) covers.

The global standard for measuring and reporting greenhouse gas emissions.

Developed by WRI and WBCSD, it defines Scopes 1, 2 and 3 and how to calculate them. Almost every climate law, rating and target-setting scheme relies on it.

The global baseline for investor-focused sustainability and climate disclosures.

Issued by the International Sustainability Standards Board in 2023. S1 covers general sustainability risks and opportunities; S2 covers climate. Adopted or being adopted in many jurisdictions, including the UK (UK SRS), Australia, Japan and Singapore.

The original framework for disclosing climate risks under four headings: governance, strategy, risk management, and metrics & targets.

TCFD's recommendations were fully incorporated into the ISSB standards and the task force disbanded in 2023, but its four-pillar structure still underpins UK and other climate disclosure rules.

A TCFD-style framework for nature and biodiversity risks.

Helps businesses assess their dependencies and impacts on nature — such as water, soil and pollinators — using the LEAP approach (Locate, Evaluate, Assess, Prepare).

The most widely used standards for reporting a company's impacts on the economy, environment and people.

GRI focuses on impact materiality and is used by thousands of organisations worldwide. It is modular: universal standards plus topic and sector standards.

Industry-specific sustainability metrics for 77 industries, now maintained by the ISSB.

Useful for working out which ESG topics are financially material in your sector, and what to measure for each.

The detailed standards companies use to report under the EU's CSRD.

Cover climate, pollution, water, biodiversity, resources, own workforce, value-chain workers, communities, consumers and business conduct. Being simplified following the 2025–26 Omnibus package.

A short, proportionate ESG reporting template designed for small and medium businesses.

Has a Basic module (core metrics on energy, emissions, waste, workforce and governance) and a Comprehensive module. Designed to answer bank and customer data requests in one go — useful far beyond the EU.

In practice: If customers keep sending you different ESG questionnaires, preparing a VSME report gives you one reusable answer.

International standards for quantifying, reporting and verifying greenhouse gas emissions.

Part 1 covers organisation-level inventories, Part 2 projects, and Part 3 verification. Closely aligned with the GHG Protocol and often used when getting a footprint verified.

The EU law requiring the largest companies to publish detailed, assured sustainability reports.

After the 2025–26 Omnibus simplification it applies to EU companies with more than 1,000 employees and €450m turnover, and to large non-EU groups with significant EU activity. Reports follow ESRS and use double materiality.

EU law requiring very large companies to carry out human-rights and environmental due diligence.

Scoped to companies with 5,000+ employees and €1.5bn+ turnover after the Omnibus changes, phased in from 2029. Their suppliers will feel it through contract clauses and questionnaires.

A classification system defining which economic activities count as environmentally sustainable.

Sets technical criteria for activities that substantially contribute to climate or environmental objectives without doing significant harm. Used by investors and lenders to label green finance.

EU rules on how investment funds disclose sustainability.

Explains why fund managers and banks may ask your business for ESG data — they need it for their own disclosures.

A carbon price on imports of carbon-intensive goods.

The EU's CBAM covers iron and steel, aluminium, cement, fertilisers, hydrogen and electricity, with its definitive phase from 2026. The UK introduces its own CBAM from January 2027.

Requires proof that cattle, cocoa, coffee, palm oil, rubber, soya and wood products aren't linked to deforestation.

Operators and traders must collect geolocation data and submit due diligence statements. Application has been postponed twice; check the latest dates.

EU-wide rules on packaging design, recyclability, recycled content and reuse.

Applies from August 2026 with requirements phasing in through 2030 and beyond, alongside national EPR schemes.

UK requirement for quoted and large companies to report energy use and emissions in their annual report.

Includes UK energy use, Scope 1 & 2 emissions, at least one intensity ratio and a description of efficiency actions taken.

UK scheme requiring large undertakings to audit their energy use every four years.

Covers buildings, transport and industrial processes, and now requires an action plan with annual progress updates. ISO 50001 certification is an alternative compliance route.

The UK's endorsed versions of the ISSB standards.

Expected to form the basis of sustainability reporting by UK listed companies, with requirements set by the FCA.

Requires organisations with £36m+ turnover doing business in the UK to publish an annual modern slavery statement.

The statement should cover your structure and supply chains, policies, due diligence, risk assessment, effectiveness measures and training. Australia and Canada have similar laws.

Rules controlling fluorinated gases used in refrigeration, air conditioning and heat pumps.

F-gases can be thousands of times more potent than CO₂. Larger systems need regular leak checks by certified engineers and records; older high-GWP gases are being phased down.

The international standard for environmental management systems (EMS).

Sets out a Plan–Do–Check–Act cycle for managing environmental impacts: identify significant aspects and legal obligations, set objectives, control operations, monitor, audit and improve. Certification is by an accredited third party.

In practice: Frequently requested in tenders and by industrial customers. Smaller businesses can follow its structure without certifying, or start with a phased approach.

The international standard for energy management systems.

Helps organisations track energy performance, find savings and improve continuously. Often pays for itself through lower energy bills, and counts as an ESOS compliance route in the UK.

The international standard for occupational health and safety management.

Provides a framework to reduce workplace injuries and ill health, with worker participation at its core.

Guidance on social responsibility — not certifiable, but a useful map of the topics.

Covers seven core subjects: organisational governance, human rights, labour practices, environment, fair operating practices, consumer issues and community involvement.

The international standard for anti-bribery management systems.

Sets out controls to prevent, detect and respond to bribery — useful evidence of good governance in tenders.

A whole-business certification for social and environmental performance, accountability and transparency.

Companies are assessed across governance, workers, community, environment and customers, and must build stakeholder consideration into their legal structure. Standards were updated in 2025 with mandatory topic requirements.

A supplier sustainability rating used widely in corporate procurement.

Scores companies on environment, labour & human rights, ethics and sustainable procurement, awarding medals to top performers. Usually triggered by a customer invitation.

The global disclosure system for climate, water and forests, scored A to D-.

Investors and large buyers request CDP responses; supply-chain members send requests to their suppliers. SMEs have a simplified questionnaire.

Validates that a company's emission-reduction targets are in line with climate science.

Large companies submit near-term and net-zero targets for validation. SMEs can use a streamlined route with pre-defined targets and a lower fee.

17 global goals for 2030, from ending poverty to climate action.

Widely used as a shared language for impact. Businesses often map their activities to the most relevant goals — but should show real contributions, not just logos.

A voluntary initiative with ten principles on human rights, labour, environment and anti-corruption.

Participants commit to the principles and report progress annually. Open to businesses of all sizes.

The global standard for how businesses should respect human rights.

Built on three pillars: the state duty to protect, the corporate responsibility to respect, and access to remedy. The basis for most human-rights due diligence laws.

Government-backed recommendations for responsible business conduct.

Cover human rights, employment, environment, bribery, consumer interests and more, with a due diligence approach that many laws reference.

The 2015 international treaty to limit warming to well below 2°C, pursuing 1.5°C.

The reference point for 'science-based' and 'net zero' targets: global emissions need to roughly halve by 2030 and reach net zero around 2050.

Free tools and a recognised net-zero commitment for small businesses.

Offers a simple commitment (halve emissions by 2030, net zero by 2050), a carbon calculator and practical guides.

A free map of water risks such as scarcity, flooding and drought.

Enter your site locations to see whether they're in water-stressed areas — a quick, credible first water risk assessment.

A standard set of ESG metrics that private-equity investors collect from portfolio companies.

Covers emissions, renewable energy, board diversity, work-related injuries, net new hires and employee engagement.