Insights
Clear definitions of the sustainability, climate, and ESG terms that matter most — from CBAM and CSRD to SBTi and PCAF. Written by Semtrio's advisory team.
CBAM is a European Union mechanism that prices the carbon content of certain goods imported from outside the EU, requiring non-EU producers to provide verified embedded emissions data and EU importers to purchase carbon certificates equivalent to the carbon cost that would have applied under the EU Emissions Trading System.
CDP is a global non-profit organization that operates the world's largest environmental disclosure system — through which companies, cities, and regions report their environmental data on climate change, water security, and forests — with scores from D to A used by over 740 financial institutions and procurement organizations to assess environmental performance, risk exposure, and management quality.
CSRD is a European Union directive that requires large companies and listed SMEs to report on their environmental, social, and governance impacts and risks in accordance with the European Sustainability Reporting Standards (ESRS) — including a mandatory double materiality assessment, value chain coverage, and third-party assurance.
Double materiality is a concept requiring organizations to assess sustainability topics from two perspectives simultaneously — the financial impact of sustainability risks and opportunities on the organization (financial materiality), and the organization's impact on people and the environment (impact materiality) — with a topic being material if it meets either or both criteria.
If you're working through a regulatory framework or sustainability challenge and need clarity on a specific term or concept — our team is here to help directly.
EcoVadis is a sustainability ratings platform that assesses companies across four themes — environment, labor and human rights, ethics, and sustainable procurement — producing a scorecard used by over 1,000 large corporations globally to qualify, tier, and engage their suppliers on ESG performance.
The EU Taxonomy for Sustainable Activities is a science-based classification system established by EU law that defines which economic activities can be considered environmentally sustainable — enabling investors, companies, and financial market participants to identify and direct capital toward genuinely green activities and avoid greenwashing.
ESRS are the mandatory European Sustainability Reporting Standards that define what large EU companies must disclose under the Corporate Sustainability Reporting Directive — covering environmental, social, and governance topics across 10 topic-specific standards, underpinned by two cross-cutting standards that apply to all in-scope companies.
Financed emissions are the greenhouse gas emissions associated with a financial institution's lending, investment, and underwriting activities — representing the Scope 3 Category 15 emissions of banks, asset managers, insurers, and other financial institutions — accounted for using the PCAF standard and increasingly required under ESRS E1, IFRS S2, and institutional net zero frameworks.
