Sustainability glossary

Glossary

Complex CSRD and sustainability terminology explained

Actions

Actions are plans and decisions made by an organization to meet targets and address climate-related impacts, risks, and opportunities. This includes allocating resources such as money, people, and technology to support these plans.

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Actor in the value chain

Individuals or entities in the supply chain. Downstream actors receive products or services from a company, while upstream actors provide products or services used in the company's production process.

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Adequate wage

A fair wage that meets the worker's and their family's needs, taking into account the country's economic and social conditions.

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Administrative, management and supervisory bodies

The highest decision-making bodies in an organization, including committees. If there are no members from the administrative, management, or supervisory bodies, the CEO and deputy CEO (if applicable) should be included. In some cases, governance systems have two tiers, with separate supervision and management.

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Affected Communities

People or groups whose lives or livelihoods are impacted by a company’s operations or value chain. This includes local communities and indigenous peoples, particularly where business activities cause environmental harm, displacement, or negative social outcomes.

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Annual total remuneration

Annual total remuneration to own workforce refers to the overall compensation given to employees, including salary, bonuses, stock and option awards, non-equity incentives, pension value changes, and deferred compensation earnings, provided within a year.

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Anticipated financial effects

Financial impacts that do not meet the requirements for being included in the financial statements and are not accounted for in the current financial effects.

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Area at water risk

A water catchment is an area where various factors can cause water bodies to become polluted or decrease in quality, leading to problems with water availability, accessibility, and affordability for communities and facilities.

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Area of high-water stress

Regions with high or extremely high water withdrawal rates can be identified using the Aqueduct Water Risk Atlas tool by the World Resources Institute (WRI).

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Associated process materials

Auxiliary materials used in manufacturing, like lubricants for machinery, which are necessary for the production process but do not become part of the end product.

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Audit readiness (sustainability reporting)

A company’s preparedness to undergo external assurance on its sustainability reporting.

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BREF or EU Best Available Techniques reference documents

A report created under Directive 2010/75/EU that provides information on industrial emissions, techniques used, consumption levels, and emerging techniques. It considers criteria listed in Annex III of the directive.

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Best Available Technique-Associated Emission Level (BAT-AEL)

BAT-associated emission level is the average emission range achieved using the best available techniques (BAT) during normal operations. It is measured over a specific time period and under defined reference conditions.

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Best Available Technique-Associated Environmental Performance Level (BATAEPL

The term "best available techniques" refers to the most effective and advanced methods of operation and technology used in activities to reduce emissions and minimize environmental impact. These techniques should be economically and technically viable and accessible to operators.

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Best Available Techniques (BAT) conclusions

A document that includes information on best available techniques, their description, emission levels, environmental performance levels, benchmarks for environmental management systems, monitoring, consumption levels, and site remediation measures.

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Biodiversity loss

Biodiversity loss refers to the decrease in genetic, species, and ecosystem diversity in a specific area due to death, destruction, or removal. It can occur at various scales, leading to reduced overall diversity.

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Biodiversity or biological diversity

Biodiversity refers to the diversity of living organisms in different ecosystems, including genetic, physical, and functional variations. It also encompasses changes in population and distribution over time and space within and between species, communities, and ecosystems.

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Biodiversity sensitive area

Protected zones such as Natura 2000, UNESCO World Heritage sites, and Key Biodiversity Areas (KBAs), and are defined in Regulation (EU) 2021/2139. Under CSRD and EUDR, companies must assess and disclose their impacts on these areas, including value chain interactions and geospatial traceability.

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Biosphere integrity or ecological integrity

Ecosystem resilience refers to the capacity of a natural system to sustain ecological processes and a wide range of organisms.

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Blue economy

The blue economy includes industries and sectors connected to oceans, seas, and coasts, both in the marine environment (like shipping and fisheries) and on land (such as ports and coastal tourism).

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Bribery

Bribery: Illegitimate practice of influencing someone's actions in one's own interest through the offering of money or other incentives.

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Business model

The process of converting resources into results to achieve a company's goals and generate value in the short, medium, and long term. It is acknowledged that companies may have multiple business models.

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Business relationships

Business relationships refer to the connections a company has with its partners, entities in its value chain, and other non-State or State entities that are directly linked to its operations, products, or services. These relationships can be both direct and indirect, including shareholding positions in joint ventures or investments.

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By-product

A byproduct is a substance or object that is produced during a production process, but is not considered waste if it meets certain conditions, including being certain to be used, not needing further processing, and meeting all relevant requirements.

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CBAM

CBAM stands for Carbon Border Adjustment Mechanism. It is an EU climate policy that puts a carbon price on imported goods like steel, aluminium and cement.

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CO2 footprint

A CO2 footprint refers to the total amount of greenhouse gas (GHG) emissions that are directly or indirectly produced by an individual, organization, event, or product throughout its lifecycle.

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CSRD

CSRD stands for Corporate Sustainability Reporting Directive. It is an EU climate regulation requiring many companies to report on their environmental and social impact.

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Carbon credit

A carbon credit is a tradable unit that represents one metric tonne of CO2eq emission reduction or removal, issued and verified according to recognized quality standards.

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Carbon dioxide (CO2) equivalent (eq)

Global Warming Potential (GWP) is a universal unit of measurement that compares the impact of greenhouse gases to carbon dioxide. It helps assess the release or avoidance of different gases in a standardized manner.

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Carbon leakage

It occurs when companies move production to countries with weaker climate regulations to avoid carbon costs.

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Carbon offsetting

A strategy used to compensate for greenhouse gas (GHG) emissions by financing activities that remove or prevent an equivalent amount of emissions, typically through verified carbon credits.

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Carbon sink

A carbon sink is a system that absorbs a greater amount of carbon dioxide (CO2) from the atmosphere than it emits.

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Child labour

Child labor refers to work that is dangerous, harmful, or interferes with a child's education. The minimum age for work should be at least 15, but exceptions can be made for countries with underdeveloped economies. Children aged 13 to 15 may be allowed to do light work.

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Circular economy

A sustainable economic system that aims to maximize the use of products and resources, minimize waste and the release of harmful substances, and reduce the environmental impact throughout their entire life cycle.

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Circular economy principles

The European circular economy principles include usability, reusability, repairability, disassembly, remanufacturing, recycling, recirculation by the biological cycle, and other potential optimization of product and material use.

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Circular material use rate

Recirculation involves strategies like maintenance, reuse, refurbishment, and recycling to extend the lifespan of materials and reduce waste. The use rate measures the proportion of materials that are reused in comparison to overall material use.

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Classified information

EU classified information refers to information that is classified and protected according to the security rules outlined in Council Decision 2013/488/EU, or classified by a Member State and marked accordingly.

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Climate change adaptation

Climate adaptation refers to the actions taken to cope with the effects of climate change, both current and anticipated. It involves adjusting to the changing climate and its impacts.

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Climate change mitigation

Limiting global warming to 1.5°C above pre-industrial levels by reducing greenhouse gas emissions, as outlined in the Paris Agreement.

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Climate resilience

Climate resilience refers to an organization's ability to adapt and respond to climate change, including managing risks and taking advantage of opportunities. It encompasses both strategic and operational resilience to climate-related changes and uncertainties.

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Climate-related opportunity

Climate change mitigation and adaptation efforts can create opportunities for businesses. These opportunities will differ based on the location, market, and industry of the business.

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Climate-related physical risk (Physical risk from climate change)

Climate risks can be acute (event-driven) or chronic (long-term shifts). Acute risks include storms, floods, fires, and heatwaves. Chronic risks arise from temperature changes, rising sea levels, reduced water availability, biodiversity loss, and changes in land and soil productivity.

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Climate-related transition risk

Transition risks refer to the potential dangers associated with shifting towards a low-carbon and climate-resilient economy. These risks encompass policy, legal, technology, market, and reputational aspects.

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Collective bargaining

Collective bargaining refers to negotiations between employers and trade unions or worker representatives to determine working conditions, terms of employment, and regulate relations between employers and workers or their organizations.

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Confirmed incident (child or forced labour or human trafficking)

Confirmed incidents of child or forced labor or human trafficking that have been proven to be true. Excludes incidents that are still being investigated during the reporting period.

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Confirmed incident of corruption or bribery

Confirmed incidents of corruption or bribery that have been proven, excluding those still under investigation. Determination of substantiated cases can be made by a compliance officer or authority, without requiring a court ruling.

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Consumer

Consumers are people who buy and use products for personal use, not for selling or business purposes.

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Corporate culture

Corporate culture is the expression of goals through shared values and beliefs. It guides activities through assumptions, norms, and codes of conduct.

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Corruption

Corruption refers to the misuse of power for personal gain, involving practices like bribery, fraud, and money laundering. It includes offering or receiving gifts, loans, or rewards to influence dishonest or illegal actions, which can include cash, goods, or services.

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Credible proxies

Experienced individuals who engage with stakeholders from specific regions or contexts, such as women workers, indigenous peoples, or migrant workers. They can effectively communicate their concerns, with the help of NGOs, trade unions, civil society, and faith-based organizations.

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Current financial effects

Financial impacts in the present reporting period that are acknowledged in the main financial statements.

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DNSH principle

It stands for Do not Significant Harm. It is a requirement under the EU Taxonomy that ensures economic activities do not negatively affect other environmental or social objectives.

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Decarbonization

Decarbonization is the process of reducing carbon dioxide (CO2) and other greenhouse gas (GHG) emissions to achieve a significant reduction in the carbon footprint of an industry, sector, or the entire economy.

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Decarbonization levers

Mitigation actions include energy efficiency, electrification, fuel switching, renewable energy use, product change, and supply-chain decarbonisation, tailored to specific undertakings.

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Deforestation

Deforestation refers to the human-driven process of converting forested areas into non-forested land, either temporarily or permanently.

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Deforestation-free principle

Key requirement under the EUDR, this principle ensures that commodities (soy, palm oil, cocoa, and wood) placed on or exported from the EU market are not linked to deforestation or forest degradation after December 31, 2020.

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Degradation or degraded ecosystem

Chronic human impacts cause biodiversity loss and disrupt the structure, composition, and functionality of ecosystems.

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Dependencies

The reliance of a business on natural, human, and social resources for its operations.

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Deposit in water and soil

Accumulation refers to the build-up of substances in the environment, whether from regular activities, incidents, or disposals. It can occur at the production site or elsewhere.

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Desertification

Land degradation in arid regions caused by climate change and human actions. Desertification excludes the natural growth of deserts.

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Discharge

Wastewater discharge refers to the release of water or substances into a water body from a specific or general source. Sewage effluent is the treated sewage that is discharged from a sewage treatment plant.

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Discrimination

Discrimination can be direct or indirect. Direct discrimination is when someone is treated unfairly because of a specific characteristic, while indirect discrimination is when a seemingly neutral rule puts a person or group at a disadvantage compared to others.

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Double materiality

A core concept of CSRD that requires companies to assess how their activities affect people and the environment (impact materiality), and how sustainability issues affect business performance, risks, or opportunities (financial materiality). A topic is material if it meets either threshold.

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Double materiality assessment

Assessment for figuring out which sustainability topics must be included in reports.

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Durability of a product, component or material

Resilience refers to the capacity of a product, component, or material to maintain its functionality and relevance when utilized as intended.

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ESG

ESG stands for Environmental, Social, and Governance. It is an acronym commonly used to refer to a set of criteria or factors that are used to evaluate the sustainability and ethical impact of an organization's operations.

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ESRS

The ESRS, developed by EFRAG, stands for European Sustainability Reporting Standards. ESRS provides the detailed reporting requirements under the CSRD, it covers environmental, social, and governance (ESG) topics and helps companies structure their sustainability disclosures using a materiality-based approach.

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EU Taxonomy Regulation

The EU Taxonomy Regulation is a regulatory framework introduced by the European Union (EU) to establish a classification system for sustainable economic activities.

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EU allowances

Tradable permits under the EU Emissions Trading System cap-and-trade porgram for regulated sectors (EU ETS). One EUA allows a company to emit one tonne of CO₂ equivalent.

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EUDR

The EUDR stands for EU Deforestation Regulation, a new law designed to ensure that certain commodities placed on or exported from the EU market are deforestation-free. This means that companies must ensure their products are not linked to deforestation or forest degradation after December 31, 2020, and that they comply with local laws in their countries of origin.

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EUDR commodities

Also called primary product or primary goods, can be either sold for production or consumption, always as they were found in nature.

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EUDR due diligence statement

Mandatory declaration under the EUDR confirming that a product is deforestation-free and legally produced backed-up by verifiable data on geolocation, supply chain documentation, and risk assessments.

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EUDR due diligence system

Central pillar of the EUDR, a company placing or exporting regulated products to or from the EU must be able to trace its supply chain, assess risks of deforestation or illegality, and mitigate those risks before any goods can enter the market.

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EUDR operators

Under the EUDR, operators are all companies that place regulated products on the EU market or export them outside the EU.

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EUDR traders

Under the EUDR, traders are all companies that buy and sell regulated products that have already been placed on the EU market.

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Ecological threshold

Ecological threshold is the tipping point where a slight alteration in external factors triggers a sudden transformation in an ecosystem. Once crossed, the ecosystem may lose its ability to recover through its natural resilience.

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Ecosystem extent

Ecosystem asset refers to the size of a specific ecosystem type, which includes both living and non-living components and their interactions within a contiguous space.

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Ecosystem restoration

Ecological restoration refers to deliberate actions taken to speed up the recovery of a damaged ecosystem and bring it back to its original healthy state.

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Ecosystem services

Ecosystem services refer to the benefits that ecosystems provide to humans. These benefits can be categorized into supporting, regulating, provisioning, and cultural services. The Common International Classification of Ecosystem Services (CICES) classifies different types of ecosystem services.

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Ecosystem(s)

An ecosystem is a dynamic system where plants, animals, microorganisms, and their environment interact. The IUCN Global Ecosystem Typology 2.0 categorizes different types of ecosystems.

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Emission

Emissions refer to the release of substances, vibrations, heat, or noise into the air, water, or soil from various sources, either directly or indirectly.

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Employee

An employee is someone who works for a company or organization and is legally recognized as being in an employment relationship, as defined by national laws and practices.

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End-users

Individuals who ultimately use or are intended to ultimately use a particular product or service. Under ESRS S4, end-users are considered in relation to product safety, accessibility, and social impact, especially where products may affect rights, well-being, or vulnerable groups.

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Environmental Management Systems

An Environmental Management System (EMS) is a structured approach that organizations use to manage and minimize their environmental impact.

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Equal opportunities

Ensuring fair and inclusive access to education, employment, and power, regardless of gender, race, nationality, religion, disability, age, or sexual orientation, without any form of discrimination.

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Equal treatment

Equal treatment is a principle in European law that requires treating similar situations or parties in the same way. In the context of ESRS S1, it also means no discrimination based on factors like sex, race, religion, disability, or sexual orientation.

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Financial effects

Impacts on a company's financial status, performance, and cash flow resulting from risks and opportunities, occurring in the short, medium, or long term.

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Financial materiality

As defined by the CSRD and ESRS a matter is financially material if it affects a company’s future profitability. This includes factors like global warming, supply chain challenges, and future regulations.

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Forced labour

Forced labor refers to any work or service that is demanded from someone under the threat of punishment, without their voluntary agreement. It includes both historical and modern forms of coercion, such as human trafficking and modern slavery.

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Fossil fuel

Non-renewable carbon-based energy sources include solid fuels, natural gas, and oil. These sources contribute to climate change and are not sustainable in the long term.

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Framework Interoperability

The alignment between different sustainability reporting standards, such as CSRD and VSME, that enables companies to transition between frameworks without duplicating effort.

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Free, Prior and Informed Consent (FPIC)

Free, Prior, and Informed Consent (FPIC) is a fundamental right of indigenous peoples, encompassing their right to be consulted, participate, and have control over their lands, territories, and resources. It is recognized under international human rights law, including the UNDRIP.

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Freshwater

Groundwater and surface water have a low salinity level of less than 0.5 ‰, which is the maximum limit stated in the Water Framework Directive's Annex II.

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GHG emission reduction

Emission reductions refer to a decrease in greenhouse gas emissions by a company or organization. This can be achieved through various means such as energy efficiency, decarbonization of suppliers, or changes in activities. Removals and avoided emissions are not considered as emission reductions.

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GHG removal and storage

Anthropogenic removals are deliberate actions by humans to withdraw greenhouse gases (GHGs) from the atmosphere. This can be done through enhancing CO2 sinks and using chemical engineering for long-term storage. Carbon capture and storage (CCS) can remove CO2 if combined with bioenergy production. Reversals occur when stored GHGs are released back into the atmosphere, such as when a forest that was grown to capture CO2 is destroyed by a wildfire.

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Global warming potential (GWP)

Global Warming Potential (GWP) is a measure of how much a greenhouse gas (GHG) contributes to climate change compared to carbon dioxide (CO2). It quantifies the relative harm caused by different GHGs.

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Greenhouse Gas Protocol

The Greenhouse Gas Protocol (GHG Protocol) is a globally recognized and widely adopted emissions accounting framework developed.

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Greenhouse Gases (GHG)

The gases listed in Part 2 of Annex V of Regulation (EU) 2018/1999 include CO2, CH4, N2O, SF6, NF3, HFCs, and PFCs. These gases contribute to climate change and are regulated by the European Parliament and Council.

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Greenwashing

Greenwashing refers to the practice of misleadingly portraying a company, product, or service as more environmentally friendly or sustainable than it actually is.

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Grievance mechanism

Grievance mechanisms are processes for stakeholders to raise concerns and seek resolution. Examples include courts, government agencies, and industry associations. Operational-level mechanisms are directly accessible and help prevent harm and provide feedback. Effective mechanisms are legitimate, accessible, predictable, equitable, transparent, rights-compatible, and promote learning.

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