ESG Frameworks & CSRD Flashcards

What is the role of the 'Do No Significant Harm' (DNSH) principle within the EU Taxonomy framework?

Answer: It requires that an economic activity substantially contributing to one environmental objective must not significantly harm any of the other five objectives

Under the EU Taxonomy, DNSH ensures that while an activity may substantially contribute to one of six environmental objectives, it cannot materially harm any of the remaining five.

Which ESG reporting framework is most widely used by companies globally for comprehensive sustainability reporting to multiple stakeholders?

Answer: GRI Standards

GRI Standards are the most widely used global sustainability reporting framework, applied by thousands of organizations across sectors and countries for stakeholder-focused disclosures.

Under CSRD's value chain reporting requirements, how are SME suppliers expected to be affected?

Answer: Large companies may request sustainability data from SME suppliers, creating indirect reporting pressure

While SMEs are not directly subject to CSRD, large companies' need for value chain data will create indirect pressure on SME suppliers to provide sustainability information.

The Science Based Targets initiative (SBTi) requires corporate targets to be consistent with limiting warming to what temperature threshold to qualify as 'science-based'?

Answer: 1.5°C above pre-industrial levels for near-term targets

SBTi requires near-term corporate targets to align with a 1.5°C pathway, consistent with the most ambitious goal of the Paris Agreement.

How does ESRS E1 address the concept of a 'climate transition plan'?

Answer: Companies must disclose their transition plan, including targets, actions, and resource allocation to decarbonize

ESRS E1 requires companies to disclose their climate transition plan, detailing how they will align their business model with the 1.5°C pathway, including targets, milestones, and financing.

Which principle in GRI's reporting standards requires that disclosures reflect the full range of the organization's significant sustainability impacts, positive and negative?

Answer: Completeness

GRI's Completeness principle requires reports to cover all significant topics and their boundaries to the degree necessary for stakeholders to assess the organization's impacts.

Which of the following best describes 'impact-weighted accounting' as an emerging ESG measurement concept?

Answer: Assigning monetary values to social and environmental impacts to integrate them into financial statements

Impact-weighted accounting monetizes social and environmental externalities — positive and negative — so they can be compared to and integrated with traditional financial performance metrics.