Climate crisis, mobility turnaround, new work or digitalization: the topic of sustainability has many facets. In our "Sustainability Knowledge" section, we provide you with various insights into current and relevant sustainability issues and how you can use ID-Report to manage them.
The Corporate Carbon Footprint (CCF) captures all greenhouse gas emissions caused directly and indirectly by a company’s activities - structured according to Scope 1 (direct emissions), Scope 2 (indirect energy-related emissions), and Scope 3 (indirect emissions from the upstream and downstream value chain). The basis for the accounting is the internationally recognized Greenhouse Gas Protocol (GHG Protocol). An accurate corporate carbon footprint is not only a prerequisite for fulfilling regulatory reporting obligations such as the CSRD/ ESRS, but also the starting point for any credible decarbonization strategy - regardless of whether it is validated according to the SBTi guidelines or not.
With the SMARTsolution Emission Essentials and GHG accounting using the CSR solution ID-Report, abat offers field-tested solutions for the efficient preparation of your greenhouse gas inventory.
For questions regarding GHG accounting or CO2 reduction, learn more here.
The Corporate Sustainability Due Diligence Directive (CSDDD), formally Directive (EU) 2024/1760, entered into force on 25 July 2024 and establishes a harmonized legal framework for corporate sustainability due diligence obligations across the European Union.
As part of the EU’s Omnibus Initiative, the scope of companies affected by this EU Supply Chain Act was narrowed compared to the original legislation, and implementation deadlines were postponed.
Companies with more than 5,000 employees and a net turnover of 1.5 billion euros are directly affected. Non-EU companies fall within the scope of application if they generate more than 1.5 billion euros in net turnover within the EU. In addition, companies with franchising or licensing agreements are included if the royalties within the EU exceed 75 million euros and the net turnover exceeds 275 million euros. Companies must comply with the CSDDD starting July 26, 2029.
Companies are required to use a risk-based approach to identify human rights and environmental impacts within their own business operations, subsidiaries, and business partners throughout the upstream and downstream supply chain. In the event of potential adverse impacts, preventive measures must be taken; in the event of actual impacts, these must be addressed and remedial measures implemented. In addition, a complaints procedure and a notification mechanism must be established. Furthermore, annual communication regarding due diligence obligations must take place.
The EU Directive must be fully transposed into the national legislation of member states by July 26, 2028. In Germany, this is expected to be done through a new “Law on International Corporate Responsibility” (Gesetz über die internationale Unternehmensverantwortung). This is intended to replace the existing German Supply Chain Due Diligence Act (Lieferkettensorgfaltspflichtengesetz - LkSG).
The LkSG has been in effect since January 1, 2023, for companies with at least 3,000 employees, and since January 1, 2024, for companies with 1,000 or more employees. During the transition period until the CSDDD is implemented into national law, the LkSG is to be amended to remove the reporting requirement. The Federal Office for Economic Affairs and Export Control (BAFA) has already ceased fulfilling the LkSG reporting requirement. However, the due diligence obligations remain in effect.
For more information on why it is relevant for companies to address supply chain risks regardless of regulatory developments, please visit here.
The Corporate Sustainability Reporting Directive (CSRD) is the European Union’s central directive on corporate sustainability reporting and replaces the previous Non-Financial Reporting Directive (NFRD). Companies with at least 1,000 employees and net revenue of 450 million euros are directly affected. Companies that were already subject to the NFRD are already required to report (in Germany, the delayed process of national implementation must be taken into account), and all other companies that exceed these thresholds will be required to report starting in the 2027 fiscal year.
The basis for this is the Directive (EU) 2022/2464, which entered into force on January 5, 2023. This directive was developed, among other things, with the aim of significantly expanding the group of companies required to disclose sustainability-related information. In addition, the requirement to integrate this information into the management report and the obligation for external audit were introduced.
Furthermore, the scope of the information to be disclosed should be expanded and standardized. The double materiality principle was introduced to determine material sustainability topics. Under this approach, companies assess sustainability matters from two perspectives: first, the impact of their business activities on the environment and on people (inside-out), and second, the financial risks and opportunities for the company itself (outside-in). Consequently, the impacts, risks, and opportunities (IROs) related to ESG issues must be identified and used as a starting point for identifying the material data points.
The European Sustainability Reporting Standards (“ESRS”) specify the reporting requirements and the information to be disclosed.
As part of the EU’s Omnibus Initiative, the scope of data points to be reported is currently being reduced, resulting in a revision of the ESRS. The finalization of these “simplified ESRS” is expected by mid-2026. In addition, the scope of companies affected by the CSRD has been reduced compared to the original legislation, and implementation deadlines have been postponed. However, you can learn why this postponement is no reason to let your guard down in our blog post. If you are no longer directly affected by the CSRD, you can find here more information on how to proceed with sustainability.
Implementing the CSRD - particularly creating the necessary information base in accordance with ESRS requirements - often poses significant challenges for companies. CSR software such as ID-Report offers a solution for efficient data collection, ensuring data quality, and providing comprehensive documentation for external audits.
To learn how sustainability can be incorporated into integrated management systems to prepare for CSRD implementation, read our success story featuring PETROFER.
The Directive on Empowering Consumers for the Green Transition (EmpCo), Directive (EU) 2024/825, entered into force on March 26, 2024, and aims to strengthen consumer protection in connection with environmental advertising and sustainability claims. The goal of the EmpCo Directive is to increase the transparency of environmental and sustainability claims, prevent misleading advertising (greenwashing), and enable consumers to make informed purchasing decisions.
In principle, the requirements must be implemented by all companies that offer or advertise products or services to consumers in the EU internal market. The new regulations will apply starting September 27, 2026.
In particular, the Empowering Consumers Directive introduces stricter requirements for the use of environmental and sustainability claims. General statements such as “environmentally friendly,” “green,” “climate neutral,” or similar claims may only be used in the future if they can be substantiated by reliable, verifiable, and traceable evidence. Climate neutrality claims may not be based on offsets. Furthermore, sustainability labels without independent certification or a transparent basis are expressly restricted or prohibited. Additionally, information requirements regarding the durability, reparability, and software updates of products are being introduced.
Companies therefore need to take action, particularly in reviewing advertising claims, sustainability promises, environmental labels, and all sustainability communications. All environmental claims must be reviewed for legal admissibility, verifiability, and transparency and adjusted as necessary.
Since EmpCo is an EU directive, it does not take effect immediately but must be transposed into national law by the member states. In Germany, implementation is carried out in particular through amendments to Act against Unfair Competition (Gesetzes gegen den unlauteren Wettbewerb - UWG) and other consumer protection regulations.
The EmpCo Directive should not be confused with the Green Claims Directive (GCD). The GCD was intended to introduce supplementary requirements for substantiating environmental claims and labels, as well as for their independent verification. However, the legislative process was suspended due to significant political and economic concerns.
The European Sustainability Reporting Standards (ESRS) are the central framework for sustainability reporting under the Corporate Sustainability Reporting Directive (CSRD). Developed by the European Financial Reporting Advisory Group (EFRAG) on behalf of the European Commission, they define which environmental, social, and governance (ESG) information must be disclosed - based on the principle of double materiality. The 12 standards include both cross-cutting standards and topic standards:
ESRS 1 General Requirements
ESRS 2 General Disclosures
Environment
Social
Governance
Since the scope of the data points to be reported is currently being reduced as part of the EU’s Omnibus Initiative, the ESRS are currently being revised. The “simplified ESRS” are expected to be finalized by mid-2026. However, companies should not delay preparations for implementing the CSRD. You can read more about this in our blog post.
Creating a valid and audit-proof information base in accordance with ESRS requirements often poses significant challenges for companies. With CSR software such as ID-Report data collections can be efficiently organized, the necessary data quality ensured, and transparent documentation for external audits implemented.
The EU Taxonomy is the European Union’s central classification system for environmentally sustainable economic activities. For reporting companies, taxonomy compliance is an essential component of CSRD reporting and thus a central element of sustainability management.
The basis for this is the Taxonomy Regulation (EU) 2020/852, which has been in force since July 12, 2020. As part of the European Green Deal, the goal of the EU Taxonomy is to promote investment in sustainable economic activities.
To this end, it clarifies which economic activities contribute to achieving the European Union’s environmental targets. These include the following six environmental objectives:
An economic activity is considered environmentally sustainable if it:
The precise definition of which economic activities make a substantial contribution to the various environmental objectives, and when it can be assumed that there is no significant harm, is determined by technical screening criteria. These criteria are set out in delegated acts under the Taxonomy Regulation.
Under the EU Taxonomy, the taxonomy-eligible and taxonomy-aligned portions of turnover, capital expenditures (CapEx), and operating expenses (OpEx) must be reported. To learn why the CSRD - and thus the disclosure of taxonomy KPIs - should continue to be given attention even after the Omnibus Package, read our blog post.
The European Commission has created EU Taxonomie Navigator with various tools and information to provide practical guidance.
The EU Deforestation Regulation (EUDR), Regulation (EU) 2023/1115, entered into force on June 29, 2023, and regulates corporate due diligence obligations regarding deforestation-free supply chains.
The regulation applies to companies that place certain raw materials and relevant products made from these raw materials on the EU market, make them available, or export them from the EU. These raw materials include cattle, cocoa, coffee, oil palm, rubber, soy, and wood. A wide range of products that contain the aforementioned raw materials, have been fed with them, or have been manufactured using them also fall within the scope of the regulation - for example, tires, furniture, or chocolate.
For large and medium-sized enterprises, as well as for small1 downstream companies companies , the respective requirements will apply starting December 30, 2026. For small first-time placers on the market, the regulation will apply starting December 30, 2027 (with the exception of products covered by the EU Timber Regulation (EUTR)).
The purpose of the regulation is to reduce global deforestation and forest degradation, as well as to lower greenhouse gas emissions and the loss of biodiversity.
The obligations under the EU Deforestation Regulation for companies depend on their respective role within the supply chain and the size of the company. In particular, companies that place relevant raw materials or products on the EU market for the first time must provide a due diligence statement. Proof of deforestation-free status means that the raw materials were produced on land where no deforestation has occurred since December 31, 2020, or, in the case of wood and wood products, where no forest degradation has occurred. Simplified requirements apply to micro or small primary operators.
In the downstream supply chain, information such as the reference numbers of the due diligence statements must be collected and stored. If downstream companies obtain information indicating that due diligence obligations may not have been met, authorities must be notified or internal audits must be conducted. The exact obligations that apply depend, on the one hand, on the size of the company and, on the other hand, on whether the first distributor is a direct supplier to the company or whether the company is further down the supply chain.
For companies, this means a comprehensive duty of transparency throughout the supply chain, coupled with significant due diligence obligations in procurement, documentation, and risk analysis.
1 Size categories pursuant to Sections 267 and 267a of the German Commercial Code (HGB) (based on EU Accounting Directive 2013/34/EU): The decisive factor is whether at least 2 out of 3 thresholds are exceeded.
FLAG emissions (Forest, Land, and Agriculture) encompass all greenhouse gas emissions and removals associated with land use/land management and land use changes. Land use changes include, for example, emissions from deforestation or peatland drainage, while land use includes those resulting from, for example, the use of fertilizers and soil management. The sector is responsible for approximately 22 % of global greenhouse gas emissions, making it the third-largest emitter worldwide.
According to Science Based Targets initiative (SBTi), companies in land-intensive industries - such as food production - are required to report FLAG targets separately within their emissions reduction targets. Companies in other sectors must also take action if FLAG emissions account for more than 20 % of their total Scope 1, 2, and 3 emissions. The SBTi FLAG Guidance is closely aligned with the Land Sector and Removals Standard of the GHG Protocol.
Accounting for FLAG emissions introduces new, more complex requirements for GHG accounting.
In case of more fundamental questions regarding emissions accounting, visit here for further information.
The International Sustainability Standards Board (ISSB) was established in November 2021 within the IFRS Foundation. With the IFRS Sustainability Disclosure Standards the ISSB provides a global standard for sustainability reporting that is specifically tailored to the information needs of investors and banks. While IFRS S1 sets out general requirements for the disclosure of sustainability risks and opportunities, IFRS S2 focuses on climate-related information and builds on the TCFD recommendations. The SASB standards also serve as a guide for identifying sustainability-related risks and opportunities across various industries and are intended to facilitate decision-relevant communication regarding industry-specific sustainability issues.
For internationally active companies, the ISSB standards are an important complement to European CSRD-/ESRS-reporting and create a global basis for comparison for investors.
For companies that are no longer subject to reporting requirements following the revision of the CSRD, the question arises as to whether ISSB could now be a suitable option for ESG reporting. Our blog post provides guidance on the path forward following the end of CSRD requirements.
The Product Carbon Footprint (PCF) quantifies all greenhouse gas emissions of a product over its entire life cycle - from raw material extraction to disposal. Methodologically, it is based on Life Cycle Assessment (LCA) and is expressed in CO2 equivalents.
The internationally recognized Greenhouse Gas Protocol (GHG Protocol) and ISO 14067 provide an established framework for accounting. The goal of product-based accounting is to identify emissions across the entire life cycle, enable informed decisions regarding product development, manufacturing processes, and other phases, and thereby reduce CO2 emissions. PCF is becoming increasingly relevant for companies, as customers and suppliers are demanding it as proof of sustainable products, and regulatory initiatives such as the EmpCo are further increasing its importance.
With the SMARTsolution Emission Essentials abat supports you in the systematic calculation and communication of your product CO2 footprints.
For questions regarding PCF creation, general GHG accounting, or CO2 reduction, learn more here.
The Packaging and Packaging Waste Regulation (PPWR), Regulation (EU) 2025/40, entered into force on February 11, 2025, and replaces the Packaging Directive 94/62/EC. The aim of the Packaging Regulation is to harmonize packaging regulations within the EU internal market, reduce the volume of packaging waste, and promote the reuse and recycling of packaging within the framework of a circular economy.
In principle, all companies along supply chains are affected: this may include, among others, economic operators who supply packaging/packaging materials, manufacture packaging or packaged products, place packaging from a third country on the EU market, or make packaging available on the EU market. Certain exemptions apply only to micro-enterprises, i.e., companies with fewer than 10 employees and an annual turnover or balance sheet total of no more than 2 million euros. In principle, all packaging falls within the scope of application, regardless of the industry. The PPWR will be implemented in phases, with the first requirements to be implemented by companies starting August 12, 2026.
From the outset, obligations include compliance with technical limits, technical documentation, and declarations of conformity, various labeling requirements on packaging, as well as the verification of the conformity assessment procedure, technical documentation, and labeling. Subsequently, requirements will be added, particularly regarding reuse rates, recyclability, compostability, the use of recycled materials, and further labeling obligations.
A company’s specific obligations depend on its respective role. The role as a supplier, manufacturer, importer, producer, or distributor may differ depending on the packaging in question and may vary within a single company ( ).
Since this is an EU regulation, the PPWR applies directly without national implementation. However, the Packaging Law Implementation Act (Verpackungsrecht-Durchführungsgesetz - VerpackDG) will align German packaging law with the new EU requirements.
The Science Based Targets initiative (SBTi) is an international initiative that supports companies in defining and validating science-based climate targets. These targets take into account the requirements of the Paris Agreement – i.e., they aim to ensure that global warming is limited to a maximum of 1.5°C or well below 2°C compared to pre-industrial levels.
Companies that set SBTi targets commit to measurable emissions reductions in Scopes 1, 2, and 3. Setting science-based targets sends a strong signal to investors, customers, and employees and is increasingly viewed as a minimum requirement for credible climate strategies.
When defining targets, a distinction is made between “near-term targets” and “net-zero targets.” While near-term targets refer to emissions reductions over the next 5–10 years, net-zero targets entail a reduction of at least 90% by the year 2050.
The SBTi sets comprehensive criteria for both emissions accounting and the definition of reduction targets. Both cross-sector and sector-specific guidelines exist for this purpose.
For questions regarding GHG accounting or CO2 reduction, learn more here.
The VSME (Voluntary Sustainability Reporting Standard for SMEs) is a voluntary standard developed by the European Financial Reporting Advisory Group (EFRAG) designed to provide unlisted small and medium-sized enterprises (SMEs) and micro-enterprises with a pragmatic introduction to structured sustainability reporting. The main reason for this is that while these companies are not subject to the reporting requirements of the Corporate Sustainability Reporting Directive (CSRD) , they are nonetheless indirectly affected. Companies subject to reporting requirements request sustainability data along their entire supply chain. For SMEs that act as suppliers to large corporations, a framework such as the VSME is therefore becoming increasingly relevant.
Since the scope of CSRD users has changed significantly as part of the EU’s Omnibus Initiative, significantly larger companies are now also exempt from reporting requirements. A voluntary standard can therefore now be just as important for larger companies as it is for the SMEs and micro-enterprises for which the VSME was originally developed. For this reason, it is to be converted into the Voluntary Standard (VS). This standard gains additional relevance by protecting companies not subject to reporting requirements from information requests by companies that are required to report. This is to be achieved by limiting the data that may be requested (“value chain gap”).
Especially for companies that are no longer subject to reporting requirements following the revision of the CSRD, the question arises as to whether the VSME/ VS could now be a suitable standard. Our blog post provides guidance on the path forward following the CSRD requirements.
The Corporate Carbon Footprint (CCF) captures all greenhouse gas emissions caused directly and indirectly by a company’s activities - structured according to Scope 1 (direct emissions), Scope 2 (indirect energy-related emissions), and Scope 3 (indirect emissions from the upstream and downstream value chain). The basis for the accounting is the internationally recognized Greenhouse Gas Protocol (GHG Protocol). An accurate corporate carbon footprint is not only a prerequisite for fulfilling regulatory reporting obligations such as the CSRD/ ESRS, but also the starting point for any credible decarbonization strategy - regardless of whether it is validated according to the SBTi guidelines or not.
With the SMARTsolution Emission Essentials and GHG accounting using the CSR solution ID-Report, abat offers field-tested solutions for the efficient preparation of your greenhouse gas inventory.
For questions regarding GHG accounting or CO2 reduction, learn more here.
The Corporate Sustainability Due Diligence Directive (CSDDD), formally Directive (EU) 2024/1760, entered into force on 25 July 2024 and establishes a harmonized legal framework for corporate sustainability due diligence obligations across the European Union.
As part of the EU’s Omnibus Initiative, the scope of companies affected by this EU Supply Chain Act was narrowed compared to the original legislation, and implementation deadlines were postponed.
Companies with more than 5,000 employees and a net turnover of 1.5 billion euros are directly affected. Non-EU companies fall within the scope of application if they generate more than 1.5 billion euros in net turnover within the EU. In addition, companies with franchising or licensing agreements are included if the royalties within the EU exceed 75 million euros and the net turnover exceeds 275 million euros. Companies must comply with the CSDDD starting July 26, 2029.
Companies are required to use a risk-based approach to identify human rights and environmental impacts within their own business operations, subsidiaries, and business partners throughout the upstream and downstream supply chain. In the event of potential adverse impacts, preventive measures must be taken; in the event of actual impacts, these must be addressed and remedial measures implemented. In addition, a complaints procedure and a notification mechanism must be established. Furthermore, annual communication regarding due diligence obligations must take place.
The EU Directive must be fully transposed into the national legislation of member states by July 26, 2028. In Germany, this is expected to be done through a new “Law on International Corporate Responsibility” (Gesetz über die internationale Unternehmensverantwortung). This is intended to replace the existing German Supply Chain Due Diligence Act (Lieferkettensorgfaltspflichtengesetz - LkSG).
The LkSG has been in effect since January 1, 2023, for companies with at least 3,000 employees, and since January 1, 2024, for companies with 1,000 or more employees. During the transition period until the CSDDD is implemented into national law, the LkSG is to be amended to remove the reporting requirement. The Federal Office for Economic Affairs and Export Control (BAFA) has already ceased fulfilling the LkSG reporting requirement. However, the due diligence obligations remain in effect.
For more information on why it is relevant for companies to address supply chain risks regardless of regulatory developments, please visit here.
The Corporate Sustainability Reporting Directive (CSRD) is the European Union’s central directive on corporate sustainability reporting and replaces the previous Non-Financial Reporting Directive (NFRD). Companies with at least 1,000 employees and net revenue of 450 million euros are directly affected. Companies that were already subject to the NFRD are already required to report (in Germany, the delayed process of national implementation must be taken into account), and all other companies that exceed these thresholds will be required to report starting in the 2027 fiscal year.
The basis for this is the Directive (EU) 2022/2464, which entered into force on January 5, 2023. This directive was developed, among other things, with the aim of significantly expanding the group of companies required to disclose sustainability-related information. In addition, the requirement to integrate this information into the management report and the obligation for external audit were introduced.
Furthermore, the scope of the information to be disclosed should be expanded and standardized. The double materiality principle was introduced to determine material sustainability topics. Under this approach, companies assess sustainability matters from two perspectives: first, the impact of their business activities on the environment and on people (inside-out), and second, the financial risks and opportunities for the company itself (outside-in). Consequently, the impacts, risks, and opportunities (IROs) related to ESG issues must be identified and used as a starting point for identifying the material data points.
The European Sustainability Reporting Standards (“ESRS”) specify the reporting requirements and the information to be disclosed.
As part of the EU’s Omnibus Initiative, the scope of data points to be reported is currently being reduced, resulting in a revision of the ESRS. The finalization of these “simplified ESRS” is expected by mid-2026. In addition, the scope of companies affected by the CSRD has been reduced compared to the original legislation, and implementation deadlines have been postponed. However, you can learn why this postponement is no reason to let your guard down in our blog post. If you are no longer directly affected by the CSRD, you can find here more information on how to proceed with sustainability.
Implementing the CSRD - particularly creating the necessary information base in accordance with ESRS requirements - often poses significant challenges for companies. CSR software such as ID-Report offers a solution for efficient data collection, ensuring data quality, and providing comprehensive documentation for external audits.
To learn how sustainability can be incorporated into integrated management systems to prepare for CSRD implementation, read our success story featuring PETROFER.
The Directive on Empowering Consumers for the Green Transition (EmpCo), Directive (EU) 2024/825, entered into force on March 26, 2024, and aims to strengthen consumer protection in connection with environmental advertising and sustainability claims. The goal of the EmpCo Directive is to increase the transparency of environmental and sustainability claims, prevent misleading advertising (greenwashing), and enable consumers to make informed purchasing decisions.
In principle, the requirements must be implemented by all companies that offer or advertise products or services to consumers in the EU internal market. The new regulations will apply starting September 27, 2026.
In particular, the Empowering Consumers Directive introduces stricter requirements for the use of environmental and sustainability claims. General statements such as “environmentally friendly,” “green,” “climate neutral,” or similar claims may only be used in the future if they can be substantiated by reliable, verifiable, and traceable evidence. Climate neutrality claims may not be based on offsets. Furthermore, sustainability labels without independent certification or a transparent basis are expressly restricted or prohibited. Additionally, information requirements regarding the durability, reparability, and software updates of products are being introduced.
Companies therefore need to take action, particularly in reviewing advertising claims, sustainability promises, environmental labels, and all sustainability communications. All environmental claims must be reviewed for legal admissibility, verifiability, and transparency and adjusted as necessary.
Since EmpCo is an EU directive, it does not take effect immediately but must be transposed into national law by the member states. In Germany, implementation is carried out in particular through amendments to Act against Unfair Competition (Gesetzes gegen den unlauteren Wettbewerb - UWG) and other consumer protection regulations.
The EmpCo Directive should not be confused with the Green Claims Directive (GCD). The GCD was intended to introduce supplementary requirements for substantiating environmental claims and labels, as well as for their independent verification. However, the legislative process was suspended due to significant political and economic concerns.
The European Sustainability Reporting Standards (ESRS) are the central framework for sustainability reporting under the Corporate Sustainability Reporting Directive (CSRD). Developed by the European Financial Reporting Advisory Group (EFRAG) on behalf of the European Commission, they define which environmental, social, and governance (ESG) information must be disclosed - based on the principle of double materiality. The 12 standards include both cross-cutting standards and topic standards:
ESRS 1 General Requirements
ESRS 2 General Disclosures
Environment
Social
Governance
Since the scope of the data points to be reported is currently being reduced as part of the EU’s Omnibus Initiative, the ESRS are currently being revised. The “simplified ESRS” are expected to be finalized by mid-2026. However, companies should not delay preparations for implementing the CSRD. You can read more about this in our blog post.
Creating a valid and audit-proof information base in accordance with ESRS requirements often poses significant challenges for companies. With CSR software such as ID-Report data collections can be efficiently organized, the necessary data quality ensured, and transparent documentation for external audits implemented.
The EU Taxonomy is the European Union’s central classification system for environmentally sustainable economic activities. For reporting companies, taxonomy compliance is an essential component of CSRD reporting and thus a central element of sustainability management.
The basis for this is the Taxonomy Regulation (EU) 2020/852, which has been in force since July 12, 2020. As part of the European Green Deal, the goal of the EU Taxonomy is to promote investment in sustainable economic activities.
To this end, it clarifies which economic activities contribute to achieving the European Union’s environmental targets. These include the following six environmental objectives:
An economic activity is considered environmentally sustainable if it:
The precise definition of which economic activities make a substantial contribution to the various environmental objectives, and when it can be assumed that there is no significant harm, is determined by technical screening criteria. These criteria are set out in delegated acts under the Taxonomy Regulation.
Under the EU Taxonomy, the taxonomy-eligible and taxonomy-aligned portions of turnover, capital expenditures (CapEx), and operating expenses (OpEx) must be reported. To learn why the CSRD - and thus the disclosure of taxonomy KPIs - should continue to be given attention even after the Omnibus Package, read our blog post.
The European Commission has created EU Taxonomie Navigator with various tools and information to provide practical guidance.
The EU Deforestation Regulation (EUDR), Regulation (EU) 2023/1115, entered into force on June 29, 2023, and regulates corporate due diligence obligations regarding deforestation-free supply chains.
The regulation applies to companies that place certain raw materials and relevant products made from these raw materials on the EU market, make them available, or export them from the EU. These raw materials include cattle, cocoa, coffee, oil palm, rubber, soy, and wood. A wide range of products that contain the aforementioned raw materials, have been fed with them, or have been manufactured using them also fall within the scope of the regulation - for example, tires, furniture, or chocolate.
For large and medium-sized enterprises, as well as for small1 downstream companies companies , the respective requirements will apply starting December 30, 2026. For small first-time placers on the market, the regulation will apply starting December 30, 2027 (with the exception of products covered by the EU Timber Regulation (EUTR)).
The purpose of the regulation is to reduce global deforestation and forest degradation, as well as to lower greenhouse gas emissions and the loss of biodiversity.
The obligations under the EU Deforestation Regulation for companies depend on their respective role within the supply chain and the size of the company. In particular, companies that place relevant raw materials or products on the EU market for the first time must provide a due diligence statement. Proof of deforestation-free status means that the raw materials were produced on land where no deforestation has occurred since December 31, 2020, or, in the case of wood and wood products, where no forest degradation has occurred. Simplified requirements apply to micro or small primary operators.
In the downstream supply chain, information such as the reference numbers of the due diligence statements must be collected and stored. If downstream companies obtain information indicating that due diligence obligations may not have been met, authorities must be notified or internal audits must be conducted. The exact obligations that apply depend, on the one hand, on the size of the company and, on the other hand, on whether the first distributor is a direct supplier to the company or whether the company is further down the supply chain.
For companies, this means a comprehensive duty of transparency throughout the supply chain, coupled with significant due diligence obligations in procurement, documentation, and risk analysis.
1 Size categories pursuant to Sections 267 and 267a of the German Commercial Code (HGB) (based on EU Accounting Directive 2013/34/EU): The decisive factor is whether at least 2 out of 3 thresholds are exceeded.
FLAG emissions (Forest, Land, and Agriculture) encompass all greenhouse gas emissions and removals associated with land use/land management and land use changes. Land use changes include, for example, emissions from deforestation or peatland drainage, while land use includes those resulting from, for example, the use of fertilizers and soil management. The sector is responsible for approximately 22 % of global greenhouse gas emissions, making it the third-largest emitter worldwide.
According to Science Based Targets initiative (SBTi), companies in land-intensive industries - such as food production - are required to report FLAG targets separately within their emissions reduction targets. Companies in other sectors must also take action if FLAG emissions account for more than 20 % of their total Scope 1, 2, and 3 emissions. The SBTi FLAG Guidance is closely aligned with the Land Sector and Removals Standard of the GHG Protocol.
Accounting for FLAG emissions introduces new, more complex requirements for GHG accounting.
In case of more fundamental questions regarding emissions accounting, visit here for further information.
The International Sustainability Standards Board (ISSB) was established in November 2021 within the IFRS Foundation. With the IFRS Sustainability Disclosure Standards the ISSB provides a global standard for sustainability reporting that is specifically tailored to the information needs of investors and banks. While IFRS S1 sets out general requirements for the disclosure of sustainability risks and opportunities, IFRS S2 focuses on climate-related information and builds on the TCFD recommendations. The SASB standards also serve as a guide for identifying sustainability-related risks and opportunities across various industries and are intended to facilitate decision-relevant communication regarding industry-specific sustainability issues.
For internationally active companies, the ISSB standards are an important complement to European CSRD-/ESRS-reporting and create a global basis for comparison for investors.
For companies that are no longer subject to reporting requirements following the revision of the CSRD, the question arises as to whether ISSB could now be a suitable option for ESG reporting. Our blog post provides guidance on the path forward following the end of CSRD requirements.
The Product Carbon Footprint (PCF) quantifies all greenhouse gas emissions of a product over its entire life cycle - from raw material extraction to disposal. Methodologically, it is based on Life Cycle Assessment (LCA) and is expressed in CO2 equivalents.
The internationally recognized Greenhouse Gas Protocol (GHG Protocol) and ISO 14067 provide an established framework for accounting. The goal of product-based accounting is to identify emissions across the entire life cycle, enable informed decisions regarding product development, manufacturing processes, and other phases, and thereby reduce CO2 emissions. PCF is becoming increasingly relevant for companies, as customers and suppliers are demanding it as proof of sustainable products, and regulatory initiatives such as the EmpCo are further increasing its importance.
With the SMARTsolution Emission Essentials abat supports you in the systematic calculation and communication of your product CO2 footprints.
For questions regarding PCF creation, general GHG accounting, or CO2 reduction, learn more here.
The Packaging and Packaging Waste Regulation (PPWR), Regulation (EU) 2025/40, entered into force on February 11, 2025, and replaces the Packaging Directive 94/62/EC. The aim of the Packaging Regulation is to harmonize packaging regulations within the EU internal market, reduce the volume of packaging waste, and promote the reuse and recycling of packaging within the framework of a circular economy.
In principle, all companies along supply chains are affected: this may include, among others, economic operators who supply packaging/packaging materials, manufacture packaging or packaged products, place packaging from a third country on the EU market, or make packaging available on the EU market. Certain exemptions apply only to micro-enterprises, i.e., companies with fewer than 10 employees and an annual turnover or balance sheet total of no more than 2 million euros. In principle, all packaging falls within the scope of application, regardless of the industry. The PPWR will be implemented in phases, with the first requirements to be implemented by companies starting August 12, 2026.
From the outset, obligations include compliance with technical limits, technical documentation, and declarations of conformity, various labeling requirements on packaging, as well as the verification of the conformity assessment procedure, technical documentation, and labeling. Subsequently, requirements will be added, particularly regarding reuse rates, recyclability, compostability, the use of recycled materials, and further labeling obligations.
A company’s specific obligations depend on its respective role. The role as a supplier, manufacturer, importer, producer, or distributor may differ depending on the packaging in question and may vary within a single company ( ).
Since this is an EU regulation, the PPWR applies directly without national implementation. However, the Packaging Law Implementation Act (Verpackungsrecht-Durchführungsgesetz - VerpackDG) will align German packaging law with the new EU requirements.
The Science Based Targets initiative (SBTi) is an international initiative that supports companies in defining and validating science-based climate targets. These targets take into account the requirements of the Paris Agreement – i.e., they aim to ensure that global warming is limited to a maximum of 1.5°C or well below 2°C compared to pre-industrial levels.
Companies that set SBTi targets commit to measurable emissions reductions in Scopes 1, 2, and 3. Setting science-based targets sends a strong signal to investors, customers, and employees and is increasingly viewed as a minimum requirement for credible climate strategies.
When defining targets, a distinction is made between “near-term targets” and “net-zero targets.” While near-term targets refer to emissions reductions over the next 5–10 years, net-zero targets entail a reduction of at least 90% by the year 2050.
The SBTi sets comprehensive criteria for both emissions accounting and the definition of reduction targets. Both cross-sector and sector-specific guidelines exist for this purpose.
For questions regarding GHG accounting or CO2 reduction, learn more here.
The VSME (Voluntary Sustainability Reporting Standard for SMEs) is a voluntary standard developed by the European Financial Reporting Advisory Group (EFRAG) designed to provide unlisted small and medium-sized enterprises (SMEs) and micro-enterprises with a pragmatic introduction to structured sustainability reporting. The main reason for this is that while these companies are not subject to the reporting requirements of the Corporate Sustainability Reporting Directive (CSRD) , they are nonetheless indirectly affected. Companies subject to reporting requirements request sustainability data along their entire supply chain. For SMEs that act as suppliers to large corporations, a framework such as the VSME is therefore becoming increasingly relevant.
Since the scope of CSRD users has changed significantly as part of the EU’s Omnibus Initiative, significantly larger companies are now also exempt from reporting requirements. A voluntary standard can therefore now be just as important for larger companies as it is for the SMEs and micro-enterprises for which the VSME was originally developed. For this reason, it is to be converted into the Voluntary Standard (VS). This standard gains additional relevance by protecting companies not subject to reporting requirements from information requests by companies that are required to report. This is to be achieved by limiting the data that may be requested (“value chain gap”).
Especially for companies that are no longer subject to reporting requirements following the revision of the CSRD, the question arises as to whether the VSME/ VS could now be a suitable standard. Our blog post provides guidance on the path forward following the CSRD requirements.
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If you would like to learn more about our own efforts to become a more sustainable company, you can find our understanding of corporate responsibility and our respective Communication on Progress for the United Nations Global Compact here. You can also find more measures and opportunities with which we support the transformation to sustainability here:
on the subject of sustainability management
This information only covers some of the challenges companies face on their path to greater sustainability. If you have any questions that aren't answered on our website, please contact us via email at sustain@abat.de. We will work with you to find solutions.