/climate-reporting/introduction section Find useful information about our climate reporting tool for your ERP or accounting system. 2026-03-06T07:52:37+01:00 # Introduction to climate- and sustainability reporting Find useful information about our climate reporting tool for your ERP or accounting system. Ducky and Visma Software simplifies climate and sustainability reporting for businesses through ERP integration /climate-reporting/introduction/short-intro page A brief introduction to how Ducky and Visma Software simplify climate and sustainability reporting for businesses through ERP system integration. 2026-03-06T07:52:37+01:00 # Getting started with Climate Reporting A brief introduction to how Ducky and Visma Software simplify climate and sustainability reporting for businesses through ERP system integration. ## Easier sustainability reporting for small and medium-sized enterprises Ducky develops, in collaboration with Visma, a tool specially designed to help small and medium-sized companies get started with sustainability management and reporting in their business. The product will be launched at the Visma tech festival on 12 September, and will be made available to all Visma Software customers. ## What is included at launch? The tool is launched with a sustainability reporting module, which gives you as a customer an automatic overview of emissions from your business, by connecting you to your accounting system (available with Business NXT integration at launch). A detailed overview of money spent in the business (also called the spend method) is used to calculate the emissions from various accounts in the accounting system using the SAF-T ID. In addition, you as a customer will be able to increase the precision of the data by adding activity data with integration such as Visma Expense and Elhub. The sustainability reporting module gives you as a customer an automatic overview of climate emissions from your business in a dashboard, and the option to download your climate report to be shared or further worked on in Excel. The climate report that is downloaded is structured in GHG protocol format, with emissions divided into Scope 1, 2 and 3. ## What about other sustainability information? Functionality will be launched continuously, which you as a customer will have access to. During 2025, Climate Reporting will offer a full sustainability management system that covers the reporting needs that small and medium-sized businesses have from customers, financial partners, owners, banks or certifications, by extracting data that exists in your ERP system (A-message , Expense, Electric hub etc.) and little manual inputs. ## How can I test this already? There is a few available spots for pilot testing, please contact us at [support@ducky.eco](mailto:support@ducky.eco) if you are interested in testing before it becomes available on the market. --- /climate-reporting/introduction/what-are-the-drivers page Explore the key drivers and motivations for climate and sustainability reporting in the Norwegian SME market, including legal requirements, market access, and competitive advantages. 2026-03-06T07:52:37+01:00 # Overview of the Primary Drivers for Climate Reporting in the Norwegian SME Market Explore the key drivers and motivations for climate and sustainability reporting in the Norwegian SME market, including legal requirements, market access, and competitive advantages. ## Get an Overview of the Primary Drivers for Climate and Sustainability Reporting in the Norwegian SME Market ## Introduction **Why climate and sustainability reporting – what is the long-term goal?** Small and medium-sized enterprises (SMEs) play a vital role in the transition to a more sustainable and inclusive economy. By addressing environmental, social, and governance (ESG) challenges—such as greenhouse gas emissions—these companies can strengthen their competitiveness and better prepare for the future. Climate and sustainability reporting helps businesses meet the requirements of investors and lenders, while simultaneously providing necessary data to larger corporations requesting sustainability information from their suppliers. This makes it easier for SMEs to access financing and compete in an increasingly challenging market that often favors large corporations. ### What is Sustainability Reporting? Sustainability reporting involves documenting and sharing standardized information about how a company impacts the environment, society, and how it is governed (often referred to as **ESG** – Environmental, Social, and Governance). Companies that report transparently provide customers, investors, and other stakeholders with a better understanding of the company's impact, risks, opportunities, and performance. ### What is Climate Reporting? Climate reporting involves mapping greenhouse gas emissions across the company’s entire operations. While it is just one part of sustainability reporting, it is often time-consuming and complex. Climate reporting is typically divided into "Scopes," which categorize direct and indirect emissions: * **Scope 1** covers the company's **direct emissions** from production and transport. This can include fuel combustion in factories to produce energy, production and process emissions, refrigerant leaks, and the use of company-owned vehicles. * **Scope 2** covers the company's **indirect emissions from purchased energy**, including electricity consumption, district heating, steam, and cooling. * **Scope 3** addresses **indirect emissions from the company's value chain**. This includes all emissions from business travel, events, and the purchase and sale of goods and services (both up- and downstream). In most cases, climate reporting requires robust management of all areas affecting emissions—such as energy consumption, fuel use, and procurement. Historically, this has involved significant manual labor, often requiring full-time resources that only the largest companies could afford. ### Why is Climate and Sustainability Reporting Important for SMEs? Climate and sustainability reporting is becoming increasingly essential for the survival of SMEs. It helps them compete against larger firms with better sustainability scores, win tenders, retain key contracts with major customers, reduce risk for partners, and protect their reputation. By working systematically with climate and sustainability, businesses contribute to solving global problems while becoming more resilient. Here are the primary reasons why SMEs should report: * **Requirements from Partners and Customers:** Large corporations are already mandated to report on sustainability, which affects smaller businesses in their value chain. SMEs may be asked to demonstrate how they reduce sustainability risks to maintain these partnerships. * **Access to Financing:** Banks and investors increasingly set sustainability criteria for loans and investments. SMEs that document their efforts have a better chance of securing capital and obtaining favorable terms. * **Consumer and Employee Expectations:** Today’s consumers and employees expect companies to take responsibility for environmental and social issues. Transparency builds trust and a strong brand. * **Legal Requirements:** The EU and Norway have passed laws requiring sustainability considerations in business, such as in public procurement. Even if an SME is not directly mandated to report, they will be affected as large companies must collect data from their suppliers. * **Climate Change Impacts:** Extreme weather, supply chain disruptions, and damaged infrastructure pose real risks. Systematic sustainability work helps SMEs prepare for these risks while uncovering new opportunities for innovation. --- ## How Does Sustainability Reporting Work? Sustainability reporting consists of three main components: **frameworks, standards, and protocols.** * **Frameworks:** High-level guidelines that help companies identify what to report (e.g., **GRI** or **CSRD**). They aim to improve transparency and accountability. * **Standards:** Detailed instructions on *what* must be reported, such as specific metrics for emissions or water use. The most prominent today is the **ESRS** (European Sustainability Reporting Standards). * **Protocols:** Practical methods or tools for *how* to collect and calculate data consistently. The most well-known is the **GHG Protocol**. In short: Frameworks explain **why** (principles), standards tell you **what** (requirements), and protocols show you **how** (methods). --- ## Who Must Report Today? The largest listed companies have included sustainability in their annual reports for years. The scope of the EU's **CSRD** is expanding; from January 1, 2024, all companies with more than 250 employees, high turnover, and/or significant equity are included. These firms must submit reports for the 2024 fiscal year in 2025. This affects approximately 2,000 companies in Norway, plus all their subsidiaries. There are over 650,000 SMEs in Norway. While it is uncertain exactly how many are indirectly affected by these mandates today, the number is growing. We expect most businesses will encounter reporting requirements by the end of 2027. --- ## Practical Implications for Norwegian SMEs ### 1. Applying for Bank Loans Banks face regulatory requirements to collect sustainability data from customers. * **EU Taxonomy & GAR:** Banks must report their "Green Asset Ratio" (GAR). It is cheaper for banks to lend to "green" projects, which can translate into better interest rates for you. * **Green Loans:** Many banks now offer differentiated terms for projects that reduce emissions or energy use. * **Risk Assessment:** As large corporations, banks must report on their own value chains, meaning they will request climate accounts from borrowers to assess risk. ### 2. Reporting to Owners Financial investors are also subject to the EU Taxonomy. SMEs with professional investors will encounter demands for both direct (Scope 1 and 2) and indirect (Scope 3) climate data. Within corporate groups, the **CSRD** is the strongest driver, as parent companies must account for all subsidiaries in detail. ### 3. Winning Contracts and Retaining Large Customers This is where most SMEs meet reporting demands today. * **Value Chain Accountability:** Large customers are legally obliged (via CSRD, the Norwegian Transparency Act, or CSDDD) to account for risks in their supply chain. * **Code of Conduct:** Most large companies bake "Code of Conduct" clauses into contracts. Some require certifications like **Eco-Lighthouse (Miljøfyrtårn)**, **ISO 14001**, or **SBTi**. * **The Transparency Act:** Companies with 50+ employees may be directly covered, but all are affected indirectly as customers seek to identify risks regarding human rights and working conditions. ### 4. Public Procurement and Tenders Public entities in Norway are now mandated to weigh climate and environment at **30%** in most tenders. While certifications are often used as qualification requirements, a specific **climate budget** for a project can earn you points and win you the contract. --- ## The Role of the ERP Provider ERP systems already contain much of the data needed for sustainability reporting. Data in these systems is traceable and standardized, which is a major advantage for auditors and banks. * **Accounting Data as a Starting Point:** The general ledger provides a standardized overview of spending, which is an excellent basis for estimating emissions. Using audited financial data significantly reduces the risk of error compared to manual spreadsheets. * **Integration and Automation:** The next step involves integrating smart power meters and expense systems for business travel. This replaces estimates with actual **activity data** (kWh, kilometers). The ERP provider is an expert in their own system and serves as a vital partner in guiding customers toward accurate sustainability accounting. The potential for efficiency and increased competitiveness for SMEs is enormous. ## Summary It is vital for SMEs to prepare for the requirements coming from various stakeholders. These challenges are already here: lack of security for "green" loans, lack of capacity to apply for grants, and losing tenders to larger competitors with established management systems. **Ducky Climate Reporting** aims to help small and medium-sized enterprises maintain their competitiveness and simplify the transition to becoming a greener business. --- /climate-reporting/introduction/common-abbreviations page An overview of commonly-used abbreviations and acronyms in climate and sustainability reporting, with short descriptions of what they mean. 2026-03-06T07:52:37+01:00 # Commonly-used abbreviations An overview of commonly-used abbreviations and acronyms in climate and sustainability reporting, with short descriptions of what they mean. ## Commonly-used abbreviations In this article you can find the most commonly-used abbreviations in the context of climate and sustainability reporting, including acronyms and short descriptions. * **EFRAG (European Financial Reporting Advisory Group):** The EU organisation responsible for standardising financial and sustainability reporting. * **CSRD (Corporate Sustainability Reporting Directive):** EU regulation which requires large companies to do sustainability reporting. In Norway this affects about 1200 companies. Put into effect through a recent update for the [Norwegian Accounting Act.](https://lovdata.no/dokument/NL/lov/2024-06-21-42) * **LSME (Sustainability Reporting for Listed SMEs):** The upcoming EU regulation which requires listed small and medium sized companies to do sustainability reporting (only about 70 in Norway). * **VSME (Voluntary Reporting Standard for SMEs):** The upcoming EU standard for voluntary and simpler reporting for all non-listed small and medium sized companies (tens of thousands in Norway). [See the EFRAG website](https://www.efrag.org/en/projects/voluntary-reporting-standard-for-smes-vsme/concluded) for the concluded project details. In the most recent updates autumn 2024 the draft standard was simplified substantially, postponing the business partner reporting module. * **ESRS (European Sustainability Reporting Standards):** Set of reporting standards and guidelines that companies must follow to meet the requirements of the CSRD. * **ESRS-LSME (ESRS for Listed SMEs):** The EU standard for simplified sustainability reporting for small and medium sized companies that are listed on the stock exchange. Might be useful for daughter company reporting to mother/consolidated group reporting. * **ESEF (European Single Electronic Format):** An established EU standard format for both financial and sustainability reporting. It serves many purposes, including the standardisation of XBRL. * **XBRL/iXBRL ((inline) eXtensible Business Reporting Language):** Global standard for digital reporting. It is the standardized file format for electronically communicating financial and business data. Used for, among other things, CSRD reporting. Exists in both a purely machine-readable XML format and an inline-format which can also be viewed in a browser. XBRL-software (e.g., Arelle, CoreFiling) can allow us to experiment and create draft files. * **ESRS XBRL Taxonomy:** Enables companies to digitally tag their sustainability reports in compliance with ESRS. Tagging rules will be adopted later but meanwhile we can apply provisional tags from ESRS. [See the EFRAG website](https://www.efrag.org/en/projects/voluntary-reporting-standard-for-smes-vsme/concluded) for current developments. Currently being implemented by Altinn for CSRD reporting file upload in 2025. * **SAF-T (Standard Audit File-Tax):** An electronic exchange standard in XML file format to report business transactional data between companies and external parties such as tax administrations, auditing systems and others. Luckily, it can be exported from any accounting system. The new [v1.3 standard valid from 2025 can be found on Skatteetaten.](https://www.skatteetaten.no/en/business-and-organisation/start-and-run/best-practices-accounting-and-cash-register-systems/saf-t-financial/) * **CSDDD (Corporate Sustainability Due Diligence Directive):** Upcoming EU legislation requiring due diligence from large companies to prevent adverse human rights and environmental impacts from their value chain (like the Norwegian Transparency Act but stricter). Will be a powerful driver for sustainability reporting from small suppliers to large purchasers. * **SMEs (Small and Medium Enterprises):** Companies that are NEITHER defined as micro or large in the [Accounting Act.](https://lovdata.no/dokument/NL/lov/1998-07-17-56/KAPITTEL_1#%C2%A71-5) Meaning they fulfill none or just one of these three criteria for large companies (yes it's hard to wrap your head around): * balance sheet total: NOK 290 million * sales revenue: NOK 580 million * average number of employees in the financial year: 250 full-time equivalents * **GHG Protocol (Greenhouse Gas Protocol):** Provides tools, standards and guidance to measure and track greenhouse gas emissions. * **ERP system (Enterprise Resource Planning system):** Any IT system used by companies to keep control of their resources, like accounts and inventories. * **NACE (European Classification of Economic Activities):** European Union’s industry standard classification system for economic activities. It is a four-digit classification providing the framework for classifying economic activities in the EU. /climate-reporting/introduction/vsme page Learn about the VSME standard for sustainability reporting, designed to simplify reporting for small and medium-sized enterprises and help them meet stakeholder requirements. 2026-03-06T07:52:37+01:00 # The VSME standard: simpler sustainability reporting for small enterprises Learn about the VSME standard for sustainability reporting, designed to simplify reporting for small and medium-sized enterprises and help them meet stakeholder requirements. **See what the newly launched VSME standard includes and how it can help your small or medium-sized business save money, strengthen your brand, and give investors, customers, and lenders exactly what they’re looking for.** Requirements for transparency around how companies treat the environment and their employees are becoming increasingly stringent. It is no longer only large corporations that are scrutinised – small and medium-sized enterprises (SMEs) must also demonstrate what they stand for. Investors, customers, lenders, and large clients expect facts to be put on the table. This is where the voluntary standard for sustainability reporting for small and medium-sized enterprises (VSME) comes into play. It is designed to help smaller businesses communicate their sustainability efforts – without drowning in paperwork or complex technical language. The VSME standard was submitted by the EU’s standard-setting body EFRAG to the European Commission on December 17, 2024. We expect the standard to be formally adopted by the Commission in the near future and to be implemented in Norway in a similar way to CSRD, which has already been incorporated into the Accounting Act. VSME is also compatible with the data standard underpinning CSRD, ensuring that information is as comparable as possible across companies. In this article, we explain the VSME standard in a clear and accessible way. We take a closer look at one of the most important areas in particular – B3: Energy and Greenhouse Gas Emissions. You do not need a team of consultants or weeks of heavy work to get started. There are tools available (such as NSRS and Ducky Climate Reporting) that help you collect data, perform calculations, and publish a report that is both robust and easy to understand – without costing a fortune. --- ## Why the VSME Standard? The VSME standard has been developed to give smaller businesses a clear path to high-quality sustainability reporting, turn sustainability into a competitive advantage, and reduce the burden created by today’s situation where different stakeholders demand different information. It is about demonstrating that your supply chain does not harm the environment, that employees are treated fairly, and that your business is not driven solely by short-term profit. For small companies, time and money are often scarce resources. Large, expensive ESG reports are simply not feasible. The VSME standard strips away unnecessary complexity and helps you focus on what truly matters. This makes it easier to meet the expectations of larger customers and lenders who are increasingly asking for more transparency. --- ### How is the Standard Structured? The VSME standard consists of two modules: **Basic Module:** A good starting point for the smallest companies or for the first reporting year. It covers essential topics such as energy consumption and working conditions. **Comprehensive Module:** For companies that want to go further. This module provides a more detailed picture of the company’s environmental and social footprint. All information must be relevant, honest, comparable, understandable, and verifiable. The goal is to provide an open and transparent view of how your business operates. --- ### What Does the Basic Module Contain? The basic module covers a range of topics, each with its own code: **B1 – Basis for Reporting:** How the report is structured. **B2 – Policies, Practices, and Future Plans:** Current sustainability measures and plans going forward. **Environmental Topics:** **B3 – Energy and Greenhouse Gas Emissions:** The main focus of this article. **B4 – Pollution:** Emissions to air, water, and soil. **B5 – Biodiversity:** Your impact on plants and wildlife. **B6 – Water:** Consumption and management. **B7 – Resource Use and Waste:** How materials and waste are handled. **Social Topics:** **B8 – Workforce:** Who works for you, employment types, and diversity. **B9 – Health and Safety:** Measures to protect employees. **B10 – Pay, Negotiations, and Training:** How employees are developed and rewarded. **Governance and Ethics:** **B11 – Corruption and Bribery:** Ensuring business is conducted with integrity. --- ### Focus on B3: Energy and Greenhouse Gas Emissions Why is B3 so important? Because climate change is a major global challenge, and energy use and greenhouse gas emissions are at the core of the problem. Even small businesses contribute. B3 helps you understand how much energy you use, how large your emissions are, and where improvements can be made. With these figures, you can make smarter decisions, reduce costs, and document that you take climate responsibility seriously. **What is Measured?** - **Total Energy Consumption:** Electricity, fuel for production, and transport, including a breakdown of renewable versus fossil energy. - **Direct Greenhouse Gas Emissions (Scope 1):** Emissions from sources you own or control, such as a gas-fired oven in production or a diesel-powered delivery van. - **Indirect Greenhouse Gas Emissions from Purchased Energy (Scope 2):** Emissions from purchased electricity and district heating, where the emissions occur outside your own operations. - **Emission Intensity:** Emissions per unit (for example, per million NOK in revenue) to track improvements over time and compare performance. --- ### An Example: From Nut Roasting to Energy Savings Imagine you run a small snack company that roasts nuts. You have electric ovens, one gas oven, and a delivery van. **Total Energy Consumption:** - Electricity: 100 MWh (100% renewable with guarantees of origin) - Natural gas: 50 MWh - Diesel: 10 MWh **Greenhouse Gas Emissions:** - You calculate emissions from gas and diesel and end up with 50 tonnes of CO₂ equivalents. - In this case, electricity results in zero emissions. **Emission Intensity:** - If your turnover is NOK 10 million, your emission intensity is 5 tonnes of CO₂e per million. - Next year, you might choose greener energy sources or a more fuel-efficient vehicle. The number should then decrease, demonstrating real improvement. --- ### Why Working with B3 Pays Off Measuring energy use and emissions is not just about pleasing environmentally conscious customers. It can also reduce costs. You might switch to LED lighting, adjust production schedules, or upgrade transport solutions. The result? Lower bills, reduced emissions, and a stronger brand. Your customers are not naïve – they recognise greenwashing when they see it. Quantified targets and real results build credibility. This makes it easier to secure loans, win larger contracts, and stay ahead of new requirements and regulations. --- ### No Need to Panic – Tools are Available Reporting can seem complicated, but there is no need to worry. Tools – including ours – guide you through the entire process. You do not need to dig out every electricity bill or perform manual calculations. Simply follow the instructions, enter the figures, and, just like that, you have a report that complies with the VSME standard. With the right tools, reporting does not become a repetitive annual burden. Instead, it becomes a useful management tool. You can track progress, identify inefficiencies, and plan effective improvement measures. It becomes more than just a report – it becomes your roadmap to a smarter, greener business. --- ### Other Topics: A Brief Overview B3 is important, but the rest of the standard also matters. Each section contributes to the overall picture: - **B4 – Pollution:** Understanding harmful emissions makes it easier to take action. - **B5 – Biodiversity:** Can small steps help protect local nature? - **B6 – Water:** Water is a limited resource. Insight today can prevent problems tomorrow. - **B7 – Resources and Waste:** Waste costs money. Less waste equals a stronger bottom line. - **B8–B10 – Workforce:** A good working environment creates loyal and motivated employees. - **B11 – Corruption:** Ethical business builds trust with investors, customers, and society. Over time, you can expand your reporting, explore more topics in depth, and become a true sustainability frontrunner within your niche. We should also mention NSRS.eu, a free tool that supports holistic sustainability work, including key processes such as materiality assessments. It is an excellent place to start. A special thanks goes to Regnskap Norge for leading the way and contributing valuable input and experience from the development of this tool to EU regulation. --- ### Why This Matters The VSME standard exists because the world is changing. Ignoring sustainability can cost you customers, financing, and, in the worst case, your business itself. This standard gives SMEs a simple, step-by-step way to meet new expectations. It also helps prevent greenwashing. With a shared standard, everyone knows what counts and what does not. This builds trust – with lenders, investors, large customers, and all other stakeholders you need to convince. At the same time, it is an opportunity to run a better business. If you have never measured energy use and emissions before, you may be missing easy wins. Perhaps warehouse lights are left on all night for no reason. Perhaps valuable materials are being discarded instead of reused or recycled. The data you collect can highlight improvements that strengthen competitiveness and deliver real savings. --- ### From Insight to Action Once you know the numbers, you can set targets. Should you cut emissions by 10%, increase the share of renewable energy, or reduce water consumption? Track progress and let next year’s report demonstrate improvement. That is the essence of sustainability reporting. --- ### Use a Tool That Makes it Easier We know time is limited. That is why we have developed a tool that simplifies the process. Enter the figures, and we take care of calculations, formatting, and guidance. This removes the headache and gives you a clear, credible report. Over time, you will see the benefits in the form of reduced costs, a stronger reputation, and better relationships with stakeholders who value transparency and genuine effort. --- ### Ready to Get Started? You have a choice: wait until reporting is imposed on you under time pressure, or start now on your own terms. By adopting the VSME standard, you show that you understand where things are heading and that you are keeping pace in a world where sustainability and business performance go hand in hand. **Your Next Steps:** 1. Review the basic module and identify which data you already have. 2. Start with B3 – this is the area everyone is watching. Gather energy and fuel data and enter them into a tool. 3. Gradually expand to other areas and aim to cover the full basic module within a defined timeframe. 4. Implement improvements based on your findings – reduce energy use, cut waste, and take care of your people. 5. Share the results to show customers, investors, and others what kind of business you run. Now is the time to show that you’re not just talking about sustainability, but actually doing something about it. The VSME standard makes the task manageable, and with the right tool, you can create positive change without losing sleep. /climate-reporting/introduction/climate-reporting-2025 page An overview of sustainability reporting in 2025, including the EU's Omnibus proposal, the VSME standard, and how SMEs can get started with climate reporting. 2026-03-06T07:52:37+01:00 # Climate reporting in 2025 An overview of sustainability reporting in 2025, including the EU's Omnibus proposal, the VSME standard, and how SMEs can get started with climate reporting. ## Omnibus, Competitiveness, and Why It Matters Stay updated on the EU's new sustainability reporting, including "Omnibus" and VSME. Find out how simplified requirements affect SMEs and how you can easily get started in Tripletex. Sustainability has long been a topic for large corporations, but today, small and medium-sized enterprises (SMEs) are also feeling increasing pressure. Not necessarily because they are directly required to report by law—but because their customers, banks, and public procurers are. The EU's sustainability directive (**CSRD**) marks a shift in how companies in Europe must document their work regarding climate, environment, and social conditions. For large companies, the requirements are direct; for SMEs, they come indirectly. The consequences are real: reduced competitiveness, lost tenders, and harder access to capital if they cannot document their emissions and sustainability efforts. --- ## What Is Sustainability Reporting, and Why Does It Also Apply to SMEs? Sustainability reporting is about highlighting how a business affects—and is affected by—climate, environment, and social conditions. This can include everything from greenhouse gas emissions and energy use to waste and gender equality. The purpose is to provide better insight into risk factors, areas for improvement, and opportunities. Even though CSRD primarily applies to the largest companies, the requirements ripple down the value chain. Large companies must collect data from their suppliers to fulfill their own requirements—which in turn means that smaller companies may also be asked to deliver on sustainability. This is often called "indirect reporting obligation," and it can appear from several directions: * **Large Customers and Value Chain Pressure:** Larger companies are covered by CSRD and will increasingly demand climate data from their suppliers and sub-suppliers. More SMEs will therefore have to report to retain existing customers or win new contracts. * **Banks and Financial Actors:** Banks are now assessing sustainability risk when lending. This results in better terms for companies with a clear overview and climate goals, while those without reporting may be considered riskier. * **Investors and Owners:** ESG data is becoming increasingly important for securing investments, raising capital, and maintaining a position within a corporate group. Documenting sustainability work can therefore be crucial for showing value and reducing risk. * **Public Tenders and Procurement:** Authorities have introduced requirements stating that at least 30% of the weighting in public tenders must be based on sustainability. For SMEs wanting to deliver to the public sector, good reporting can be the deciding factor in whether you win—or lose—the tender. --- ## Simplifications in 2025: The EU's "Omnibus" Proposal – But Still a Need for Control Over the Numbers In February 2025, the EU proposed significant simplifications to climate and sustainability reporting requirements, often referred to as "Omnibus." The goal is for smaller companies to avoid the most extensive requirements, while larger companies get more time to prepare. Even if the bureaucracy decreases for some, it is still crucial to have good control over emission figures. Investors, banks, insurance companies, and parent companies will still ask for documentation, even if you are not directly required to report. --- ## VSME – A Simple Way to Get Started For most SMEs, creating extensive reports with hundreds of indicators is not practical. Therefore, the EU has developed a voluntary standard for small and medium-sized companies—**VSME (Voluntary Standard for SMEs)**—which covers approximately 50 key sustainability topics. The standard covers the most important requirements you may encounter and provides a practical entry point into sustainability work. It is based on the principle of double materiality, meaning both: 1. How the company affects climate, environment, and people. 2. How climate change and societal developments affect the company's operations and risks. VSME provides a structured approach and reduces the risk of greenwashing or misreporting. It also makes it easier to communicate with customers, financial actors, and public authorities in a common language—and you are better prepared when requirements tighten. --- ## Easier Climate Reporting, Integrated into Tripletex Even though the overall requirements have been somewhat eased, the need for robust emission figures and documentation remains. By having a robust and simple reporting tool, you can save significant time and money while meeting the demands and expectations of your stakeholders. This is where **Ducky** can be a good solution. Integrated into Tripletex, the tool is simple, automatic, and provides a solid foundation for meeting requirements from investors, customers, tenders, CSRD, and the VSME standard. > **Our Tip:** Start small. Find a tool that provides concrete numbers and build from there. This makes the transition much easier as requirements increase. > Good luck! --- ## A Brief Summary * The EU's new sustainability requirements apply first to the largest companies but have ripple effects for SMEs. * The "Omnibus" proposal in 2025 provides simplifications and more time, but in many cases, you must still document emissions and sustainability work. * The VSME standard makes it easier for smaller companies to report on around 50 key sustainability topics. * Good documentation provides better competitive conditions—whether you are competing for customers, tenders, loans, or investors. * Climate reporting by Ducky, integrated into Tripletex, helps you maintain an overview and fulfill requirements—quickly, affordably, and easily. --- /climate-reporting/introduction/csrd page An introduction to the Corporate Sustainability Reporting Directive (CSRD), what it requires of companies, and how it impacts sustainability reporting. 2026-03-06T07:52:37+01:00 # An introduction to CSRD An introduction to the Corporate Sustainability Reporting Directive (CSRD), what it requires of companies, and how it impacts sustainability reporting. ## CSRD Learn about the Corporate Sustainability Reporting Directive (CSRD) and what it requires of companies. The Corporate Sustainability Reporting Directive (CSRD) is a European Union regulation that significantly expands non-financial reporting requirements for companies operating within or doing business in the EU. It replaces the earlier Non-Financial Reporting Directive (NFRD) and was officially adopted on November 28, 2022, coming into effect on January 5, 2023. The CSRD aims to improve transparency and comparability of corporate sustainability information by standardising how companies disclose environmental, social, and governance (ESG) data. It ensures stakeholders receive reliable insights into a company’s sustainability performance and risks, builds consumer trust, enhances reputation and access to capital. As of 2025, the CSRD is being significantly [revised through the Omnibus package](https://finance.ec.europa.eu/news/omnibus-package-2025-04-01_en). The European Commission has agreed to a two-year postponement of reporting requirements. This delay means large companies with more than 250 employees must report in 2028 instead of in 2026 as was expected. Some proposed changes include simplifications to the European Sustainability Reporting Standards (ESRS) by reducing the number of disclosures and datapoints, and significant changes to eligibility thresholds. The criteria for reporting is expected to increase from 250 to 1,000 employees for EU companies, and from €150 million to €450 million in net turnover for non-EU companies. If adopted, these amendments will substantially narrow the CSRD’s scope, and make it irrelevant in markets where small and medium-sized enterprises (SMEs) prevail. Companies affected from delayed applicability or exemption should consider the Voluntary Sustainability Reporting Standards for SMEs (VSME) as an alternative. [For more information, consult our article on VSME here](https://www.ducky.eco/en/support/vsme-standard). ## Who’s required to report under the CSRD and when? Under the preceding NFDR, only large listed companies, banks and insurance companies (public interest entities) with more than 500 employees were required to report their non-financial performance. The CSRD expands this criteria by making it mandatory for a larger number of companies to comply with sustainability reporting. As of today, EU companies that meet two of the following criteria will have to comply with the CSRD: * € 50 million or more in annual revenue * € 25 million or more in assets * 250 or more employees (expected to increase to 1,000 employees) These requirements are expected to be significantly raised by the Omnibus proposal mentioned above. Non-EU companies with more than € 150 million turnover (expected to increase to € 450 million) and operations in the EU will also have to comply with the CSRD. CSRD compliance is structured around a phased timeline, with different company types required to begin reporting in stages from 2024 through 2028, but the recent regulatory updates mentioned above have delayed some deadlines for large companies and SMEs. ## Which sustainability metrics are required to report under CSRD? The CSRD requires companies to report a broad set of sustainability metrics organised under the European Sustainability Reporting Standards (ESRS), spread across environmental, social, and governance dimensions. These metrics are designed to provide transparent, comparable, and comprehensive sustainability data for stakeholders and regulatory compliance purposes. In practice, companies must conduct a thorough double materiality assessment to identify which metrics are relevant for them. Double materiality requires companies to evaluate sustainability topics from two perspectives: how their business activities impact society and the environment (impact materiality), and how societal and environmental impacts can affect their own financial performance and business prospects (financial materiality). It ensures that sustainability reporting addresses both the company's role in broader societal and environmental contexts and its exposure to societal and environmental risks. A typical report covers hundreds of individual data points: such as total water use, emissions per sector, workforce diversity statistics, and board oversight practice; with the full ESRS including more than 1,000 data points. Below you can find some commonly reported data points. ### Environmental metrics (ESRS E1-E5) * **GHG Emissions:** Total Scope 1, 2, and 3 greenhouse gas emissions with breakdowns by category, GHG emissions intensity per net revenue. * **Energy consumption:** Total energy consumption, with the breakdown of different energy sources. * **Water usage:** Total water consumption, intensity of operations, mitigation actions in water risk areas. * **Biodiversity:** Number and area of sites affecting biodiversity-sensitive areas, financial impact of biodiversity offsets. * **Waste:** Total waste generation, percentage recycled, hazardous/radioactive waste levels. * **Circular economy:** recycling rates, product lifespan vs. average, secondary material consumption. * **Pollution:** air emissions, soil and water impacts. ### Social metrics (ESRS S1-S4) * **Own workforce:** Employee count, diversity, gender pay gap, working conditions, occupational health and safety rates, training hours. * **Supply chain workforce:** Metrics on contractors and supply chain employees, including labor rights and working conditions. * **Affected communities:** Community engagement, impact assessments, and mitigation actions regarding local populations. * **Consumers and end-users:** Customer satisfaction, product safety, responsible marketing, access to products/services. ### Governance metrics (ESRS G1) * **Business conduct:** Anti-corruption measures, bribery prevention, whistleblower statistics, board diversity, executive compensation structure. * **Transparency:** Disclosure of stakeholder engagement practices and management process transparency. * **Oversight of sustainability strategy:** roles, responsibilities, organizational structures for ESG management. ## How can a company ensure compliance with the CSRD? A company must have performed all the steps mentioned below to be CSRD compliant: * **Reporting standards:** Report according to the European Sustainability Reporting Standards (ESRS), covering environmental, social, and governance topic. * **Double materiality assessment:** Evaluate and disclose both financial and impact materiality. * **Value chain coverage:** Include material sustainability impacts across the value chain (e.g., supply chain Scope 3 GHG emissions, social and human labor impacts). * **Assurance:** Report must be externally audited for reliability. * **Digital reporting format:** Report should be delivered in the European Single Electronic Format (ESEF) and disclosures should be tagged for machine readability and comparability. * **Integration with management report:** Companies must report sustainability information as an integrated part of their management reports, not separately. * **Governance and strategy:** Report on their governance, strategy, and long-term objectives related to sustainability. * **Transparency of process:** Well documented and transparent processes for data collection and internal controls. These requirements, even though rigorous, combine to create a high bar for transparency, completeness, and accountability in corporate sustainability reporting. /climate-reporting/introduction/climate-gases page An overview of various greenhouse gas reporting schemes, including the GHG Protocol, EU ETS, and other standards used in sustainability reporting. 2026-03-06T07:52:37+01:00 # Greenhouse gas reporting schemes An overview of various greenhouse gas reporting schemes, including the GHG Protocol, EU ETS, and other standards used in sustainability reporting. ## Greenhouse gas reporting schemes Learn about the various greenhouse gas reporting schemes popular in the market today. A greenhouse gas reporting scheme is a framework or program established to require businesses, or countries to measure, document, and report their greenhouse gas (GHG) emissions. These schemes are designed to provide transparency, accountability, and systematic data collection about emissions of different greenhouse gases such as carbon dioxide, methane, nitrous oxide etc. The reported data helps inform climate policy, supports emission reduction strategies, and can be used for compliance with regulations or participation in emissions trading schemes. Greenhouse gas reporting schemes vary widely in their methodologies, meaning they are often incomparable. They are also often open to subjective interpretation (or misinterpretation), leaving some of the most impactful decisions completely up to the reporter. ## Overview of GHG reporting schemes | Name | Scope of reporting | Regulatory nature | Coverage | | --- | --- | --- | --- | | US EPA Greenhouse Gas Reporting Program (GHGRP) | Mandatory reporting of large point sources and suppliers | Mandatory | Facilities in the United States emitting ≥25,000 metric tonnes CO2e | | Greenhouse Gas Protocol (GHG Protocol) | Comprehensive guidance for corporate GHG accounting | Mandated in ESRS (CSRD) and VSME | Companies, governments, NGOs | | European Union Emissions Trading Scheme (EU ETS) | Trading and reporting of emissions from certain sectors | Mandatory | Power plants, industries, airlines in the European Union | | Global Reporting Initiative (GRI): 305 | Report and disclose greenhouse gas emissions | Voluntary | Organisations globally | | ISO 14064 Standard | International standard for GHG quantification and reporting | Mandated in ESRS (CSRD) | Organisations globally | ## Relationship between GHG reporting and sustainability reporting ### Global sustainability reporting standards Many sustainability reporting frameworks mandate or recommend specific GHG reporting standards for emissions disclosures. For instance, if reporting to fulfill the Corporate Sustainability Reporting Directive (CSRD), entities must align with ESRS, which requires following the GHG Protocol or ISO 14064 for greenhouse gas accounting. Similarly, the Voluntary SME (VSME) standard requires mandatory Scope 1 and 2, and voluntary Scope 3 emissions reporting following the GHG Protocol. For details, see our articles on [CSRD requirements](https://www.ducky.eco/en/support/csrd-requirements) and the [VSME standard](https://www.ducky.eco/en/support/vsme-standard). ### Nordic sustainability reporting standards NSRS and Eco-Lighthouse (Miljøfyrtårn) are voluntary sustainability reporting frameworks originating in the Nordics, both in line with VSME. | Name | Scope of reporting | Regulatory nature | Coverage | | --- | --- | --- | --- | | Eco-Lighthouse (Miljøfyrtårn) | Reporting on various ESG metrics | Voluntary | Municipalities, counties, companies in the Nordics | | Nordic Sustainability Reporting Standard (NSRS) | Reporting on various ESG metrics | Voluntary | Small and medium-sized companies in the Nordics | /climate-reporting/introduction/scope1 page An introduction to Scope 1 greenhouse gas emissions, how they are defined, calculated, and reported according to the GHG Protocol. 2026-03-06T07:52:37+01:00 # An introduction to Scope 1 greenhouse gas emissions An introduction to Scope 1 greenhouse gas emissions, how they are defined, calculated, and reported according to the GHG Protocol. ## An introduction to Scope 1 greenhouse gas emissions Learn how the Greenhouse Gas (GHG) Protocol defines Scope 1 emissions, how they are calculated and the requirements an organisation needs to follow when reporting their Scope 1 emissions. ## How are Scope 1 emissions defined in the GHG Protocol? As per the GHG Protocol, all reporting organisations must disclose GHG emissions associated with their operations and categorise them as direct or indirect. Direct emissions are emissions from sources that are owned or controlled by the company. Indirect emissions occur as a consequence of the activities performed by the reporting company but the actual emissions of greenhouse gases occur at sources owned or controlled by another company. Emissions are further divided into three scopes. Direct emissions are included in scope 1, meanwhile indirect emissions are included in scope 2 and scope 3. While a company has control over its direct emissions, it has influence over its indirect emissions. Scope 1 includes emissions resulting from activities such as the generation of electricity, heat, or steam; the manufacture or processing of chemicals and materials; the transportation of materials, products, and waste; and the uncontrolled release of gases or vapors from industrial equipment. There are four different types of Scope 1 emissions: * **Stationary combustion:** Emissions from burning fuels in stationary equipment such as boilers, furnaces, and generators used to produce electricity, heat or steam. Example: Burning natural gas in a factory boiler to generate steam for an industrial process. * **Mobile combustion:** Emissions from fuel burned in company-owned vehicles, such as cars, trucks, and vans. Example: A company car used for business travel. * **Fugitive emissions:** Emissions from unintentional leaks or release of gases, often from industrial equipment. Example: A refrigerant leak from an air conditioning unit. * **Process emissions:** Emissions released directly from on-site chemical or industrial processes during manufacturing, excluding emissions resulting from fuel combustion. Example: Carbon dioxide generated during cement production or metal smelting. ## What are the requirements to be followed when reporting Scope 1 GHG emissions? The [GHG Corporate Standard](https://ghgprotocol.org/corporate-standard) provides a set of requirements that organisations must follow when calculating and reporting their Scope 1 emissions: * Consider the principles, requirements and guidance provided by the [GHG Protocol Corporate Standard](https://ghgprotocol.org/corporate-standard) and [GRI 305](https://www.globalreporting.org/publications/documents/english/gri-305-emissions-2016/) (Emissions 2016) * Follow the European Sustainability Reporting Standards [(ESRS 1)](https://xbrl.efrag.org/e-esrs/esrs-set1-2023.html) and define any reporting boundaries as per the standard , disclosing and explaining any exclusions. To know about the different reporting boundaries, [refer to our article on the GHG Protocol](https://www.ducky.eco/en/support/climate-reporting/the-ghg-protocol) * Companies must use emission factors that include the emissions of all greenhouse gases defined in the [Kyoto Protocol](https://ec.europa.eu/eurostat/statistics-explained/index.php?title=Glossary:Kyoto_basket). In Ducky, we use emission factors compliant with this requirement * Companies need to disclose the choice of method(s) and emission factors used for calculating Scope 1 emissions. * Companies should report Scope 1 emissions in tonnes of carbon dioxide equivalent (t CO₂e). ## How does the GHG Protocol recommend calculating Scope 1 emissions? The GHG Protocol recommends the following approach to calculate Scope 1 emissions: 1. **Identify direct emission sources:** Begin by identifying all company-owned or controlled sources that emit greenhouse gases directly by referring to the four source categories listed above. Process emissions are usually only relevant to certain industry sectors like oil and gas, aluminum, cement, etc. Manufacturing companies will likely have direct emissions from all the main source categories. Office-based organisations may have direct GHG emissions if they own or operate a vehicle, combustion, refrigeration and air-conditioning equipment. 2. **Collect activity data:** For each source, gather data that quantifies the activity responsible for emissions. Examples include: * Fuel consumption (e.g., liters of diesel used in boilers or vehicles) * Distance traveled (e.g., kilometers driven by company-owned vehicles) * Quantities of gases released during industrial processes This data can typically be obtained from fuel purchase records, metering and monitoring systems, financial accounts, or other operational logs. 3. **Apply emission factors:** Multiply the activity data for each source by the appropriate emission factor, which represents the amount of greenhouse gas emitted per unit of activity (e.g., kg CO₂-equivalents per liter of diesel burned). 4. **Aggregate:** Sum the emissions from all identified sources to calculate total Scope 1 emissions. Report the results in tonnes of carbon dioxide equivalent (t CO₂e). ## How are Scope 1 emissions calculated in Climate Reporting? As per the GHG Protocol, Scope 1 emissions should be calculated using the activity-data method. This involves collecting activity data (fuel consumption, distance travelled, fuel spend) and applying appropriate activity-based emission factors to determine emissions. There are several ways to collect activity data: * **Direct consumption data:** Use direct measurements of fuel consumption, typically in physical units such as kWh or MWh, obtained from meter readings or fuel bills (High accuracy). * **Estimates based on fuel spend:** If measured fuel consumption data is unavailable, one can estimate fuel use by dividing the total fuel spend (from fuel bills or financial accounts) by the average price of that fuel (Medium accuracy). * **Estimates based on distance traveled:** Estimate fuel use by multiplying total distance travelled (extracted from vehicle use logs or odometer readings) with the fuel efficiency of the vehicle (Medium accuracy). This is only applicable for mobile combustion sources (Please note that this method is not currently available in Climate Reporting). Climate reporting currently supports Scope 1 emission calculations for stationary and mobile combustion sources only. Scope 1 emissions are calculated using the activity-based method using one of the following activity data types: * **Fuel use from direct measurement:** Directly measured fuel consumption data in physical units (e.g., liters, or m³ of fuel consumed). This data must be manually entered by the user. (High accuracy) * **Fuel use from fuel spend:** If directly measured fuel consumption data is unavailable, fuel use is estimated from spending on fuels (using energy bills or financial accounts). To estimate fuel use from fuel spend, the total spending on each fuel type is divided by the average fuel price of that fuel. (Medium accuracy) After determining fuel use, the tool calculates Scope 1 emissions by multiplying the fuel use by relevant emission factors. Since the tool assumes the operational control approach for all companies, emissions from the operation of the owned or leased assets always come under Scope 1. ## Who can skip this category? Companies may exclude this category if they do not own or operate assets that can cause emissions. All other companies are required to report Scope 1 emissions, preferably using the activity-based method. /climate-reporting/introduction/scope2 page An introduction to Scope 2 greenhouse gas emissions, how they are defined, calculated, and reported according to the GHG Protocol. 2026-03-06T07:52:37+01:00 # An introduction to Scope 2 greenhouse gas emissions An introduction to Scope 2 greenhouse gas emissions, how they are defined, calculated, and reported according to the GHG Protocol. ## An introduction to Scope 2 greenhouse gas emissions Learn how the greenhouse gas (GHG) protocol defines Scope 2 emissions, how they are calculated and the requirements an organisation needs to follow when reporting their Scope 2 emissions. ### How are Scope 2 emissions defined in the GHG protocol? As per the GHG Protocol, all reporting organisations must disclose GHG emissions associated with their operations and categorise them as direct or indirect. Direct emissions are emissions from sources that are owned or controlled by the company. Indirect emissions occur as a consequence of the activities performed by the reporting company but the actual emissions of greenhouse gases occur at sources owned or controlled by another company. Emissions are further divided into three scopes. Direct emissions are included in scope 1, meanwhile indirect emissions are included in scope 2 and scope 3. While a company has control over its direct emissions, it has influence over its indirect emissions. Scope 2 encompasses emissions related to the consumption of purchased energy in the form of electricity, steam, heat or cooling. Emissions related to the production, extraction and transportation of purchased energy are included under Scope 3 category 3: Fuel and energy related activities. For accurate Scope 2 GHG accounting, the company should use total (or gross) energy purchases from the grid rather than “net” purchases. This means it should include the total energy purchased from the grid for Scope 2 (and not should subtract any electricity it sold to the grid). On-site generation should be counted as Scope 1. Head over to our support page for a general intro to the GHG Protocol and how it’s used for climate reporting. ### What are the requirements to be followed when reporting Scope 2 GHG emissions? The Scope 2 Guidance provides a set of requirements that organisations must follow when calculating and reporting their Scope 2 emissions: * Companies with operations in markets providing product or supplier-specific data or contractual instruments should account for Scope 2 emissions using both location-based and marked-based methods. * Companies must use emission factors that include the emissions of all greenhouse gases included in the [Kyoto Protocol](https://ec.europa.eu/eurostat/statistics-explained/index.php?title=Glossary:Kyoto_basket). In Ducky, we use emission factors compliant with this requirement. * Companies need to disclose the choice of method(s) and emission factors used for Scope 2 accounting. * Contractual instruments in the market-based method must meet a set of quality criteria to ensure that instruments are legitimate and no double counting of emissions between consumers takes place. * Companies must disclose the year chosen as the base year for Scope 2 emissions calculation. ### How does the GHG Protocol recommend calculating Scope 2 emissions? There are two main approaches for calculating GHG emissions from energy purchased by the reporting company. These are location-based and market-based methods. In short, the location-based method allocates emissions based on the average emissions intensity of the grid where energy is consumed, while the marked-based method allocates emissions based on active choices that the consumer has made with regards to its purchased energy, for instance by buying energy from specific suppliers or by buying contractual instruments. **Market-based method** The market-based method allocates GHG emissions from purchased energy based on the contractual instruments purchased by the consumer (such as energy attribute certificates, direct contracts or supplier specific emission rates). A consumer’s market-based emissions will be significantly lower if they’ve purchased contractual instruments. Through contractual instruments, consumers can claim that their electricity comes from a specific generator or supplier and apply the associated emissions factor (most often 0 g CO2e/kWh) in their Scope 2 calculations. By contrast, consumers that haven’t purchased any contractual instruments are mandated to use a residual mix in their Scope 2 reporting, which represents all energy for which the energy source is not verified by contractual instruments. In the European market, contractual instruments are only issued for renewable energy. As a result, the residual mix typically contains carbon intensive fuels like coal and gas, and has a high emissions intensity (535 g CO2e/kWh for Norway in 2024). In the EU and Norway, electricity suppliers are obliged by the revised Electricity Market Directive (2009/72/EC) to disclose the origin of their deliveries of electrical energy in the previous year through product declarations to consumers: * In cases where guarantees of origin have been purchased, the CO2e-intensity reported by a specific power plant can be used. * This number is often close to zero or even set to 0 g CO2e/kWh (omitting the life cycle impact of the power plant and electricity grid). * Electricity suppliers who do not purchase guarantees of origin must use a defined residual mix in their marketing materials and on electricity bills. * In Norway, [The Norwegian Energy Regulatory Authority (NVE)](https://lovdata.no/dokument/SF/forskrift/1999-03-11-301/KAPITTEL_8#%C2%A78-5) has the authority to define the residual mix. [The NVE electricity disclosure for 2024](https://www.nve.no/energi/energisystem/energibruk/stroemdeklarasjoner/) is calculated from a European residual mix, ending up at 535 g CO2e/kWh. * In Sweden, [Energimarknadsinspektionen (Ei)](https://ei.se/download/18.5b0e2a2a176843ef8f5b66/1615302978868/EIFS-om-ursprungsm%C3%A4rkning-av-el-EIFS-2013-6.pdf) has this authority. [The Ei electricity disclosure for 2024](https://ei.se/bransch/ursprungsmarkning-av-el/residualmix) is calculated from a Nordic residual mix and therefore is slightly lower, at 465 g CO2e/kWh. **Location-based method** The location-based method allocates GHG emissions from purchased energy based on the average emissions intensity of the energy generation within a defined geographic area and time period. Under this method, companies cannot lower their Scope 2 emissions by purchasing “clean” electricity - the only ways to reduce the electricity emissions are for the grid as a whole to grow cleaner or for consumer’s electricity use to be reduced. For location-based reporting, there are several interpretations of the grid on which electricity consumption occurs, ranging from local to global. All the alternatives have different trade-offs and use cases, and each option can have a significant effect on your organisation's calculated Scope 2 emissions. The GHG Protocol recommends using regional or sub-national grid average emission factors, with national level factors as a fallback when more granular data is unavailable. In Norway, national level emission factors are most commonly applied. For instance, [NVE’s physical electricity disclosure at 11.9 g CO2e/kWh](https://www.nve.no/energi/energisystem/energibruk/stroemdeklarasjoner/) (2024) is a commonly used emission factor for reporting location-based Scope 2 emissions. It includes emissions from Norwegian electricity production, while also factoring for imported and exported electricity. Broader ranges, such as the Nordic or European mix are usually not used in GHG reporting. These are more relevant for calculating the effect of an individual reducing their personal electricity consumption. ### How are Scope 2 emissions calculated in Climate Reporting? As per the GHG Protocol, Scope 2 emissions should be calculated using the activity-data method. This involves collecting activity data (meter readings, energy bills or energy spend) and applying appropriate activity-based emission factors to determine emissions. There are several ways to collect activity data: * **Direct meter readings or utility bills:** Use direct measurements of energy consumption, typically in physical units such as kWh or MWh, obtained from meter readings or energy bills. (High accuracy) * **Estimates based on energy spend:** If measured energy data is unavailable, one can estimate energy use by dividing the total energy spend (from utility bills or financial accounts) by the average price of that energy type. (Medium accuracy) * **Secondary estimation methods (e.g., Area method):** In cases where consumption data is not explicitly available, such as in shared spaces without individual meters, secondary estimation methods may be used, like the Area method. This allocates the building’s total electricity usage to tenants based on their occupied square footage and the building’s occupancy rate (Please note the Area method is not currently available in Climate Reporting). In Climate Reporting, Scope 2 emissions are calculated using the activity-based method using one of the following activity data types: * **Direct meter readings or utility bills:** Users manually enter directly measured energy consumption data in kWh or MWh based on meter readings or energy bills. (High accuracy) * **Estimates based on energy spend:** If directly measured data isn’t available, the tool estimates energy use from reported energy spending. The estimation divides total spending on energy by the average unit price of the energy. (Medium accuracy) After determining energy use, the tool calculates Scope 2 emissions by multiplying the energy use by relevant emission factors (see previous section for details). Since the tool assumes the operational control approach for all companies, emissions from purchased energy are always categorised as Scope 2, whether the assets using the energy are company-owned or leased. **Note:** If the reporting company rents or leases an asset (e.g., a building) and the energy bill is included in the lease or rental payment, the associated emissions will not be reported under Scope 2. Instead, they are accounted for under category 3.8 (upstream leased assets). ### Who can skip this category? Nearly all businesses will have Scope 2 emissions because they purchase energy to power their processes or services, unless they generate all the energy they need themselves. Therefore, companies should not exclude this category from their greenhouse gas reporting. ### Why do we need two different methods for calculating for Scope 2 GHG emissions? The two Scope 2 calculating methods each provide a different decision-making value. Both highlight different opportunities to reduce emissions and reduce risks. The ultimate goal should be system-wide emission reduction over time in order to limit global warming. Achieving this requires clarity on what kinds of decisions individual consumers can make to reduce both their own emissions as well as how they can contribute to emission reductions towards the grid as a whole. There are three types of decisions companies can make that impact overall electricity grid emissions: **Site of operations** A company’s choice of where to locate its office buildings, industrial facilities, distribution centers, or data centers directly affects its GHG emissions, as well as the grid on which its energy use is based. For instance, locating new facilities on a GHG-intensive grid means that energy demand will be met with higher GHG emissions. By contrast, locating operations in areas with low-carbon energy generation, or additional benefits such as natural ambient cooling or heat, can lead to lower GHG emissions and costs. Therefore, from a location-based perspective, a company’s shift in site of operations will result in use of a different grid average emission factor, and possibly a shift in energy supply overall. From a market-based perspective, a relocation could result in changes in suppliers (new utility service areas), changes in which contractual instruments are available, actions of other consumers in the market, or the residual mix used in that location. **Focus on energy efficiency** Once a company has established a location for its operations, it can reduce its emissions through lowering its own energy demands. A company can reduce energy consumption through measures such as choosing an energy-efficient building, carrying out energy-efficient retrofits, using more efficient electronics or lighting, and making behavioral decisions such as switching off appliances when not in use. Therefore, a company’s shift in energy demand will entail changes in reported Scope 2 emissions. A decrease in energy consumption will result in a decrease in the total Scope 2 emissions, for both location and marked-based methods. From a location-based perspective, collective changes in consumption contribute to changes in the grid average emission factor over time. Shifting energy consumption to periods of low-emissions generation on the grid (often non-peak hours) can further contribute to system-wide reductions. From a market-based perspective, reducing electricity demand can minimize the additional costs associated with purchasing contractual instruments at a premium above standard electricity costs. **Actions to influence energy mix of the grid** The mix of generation technologies on any given grid depends on multiple factors, including the availability of natural resources, local policies, and current market dynamics. Energy consumers can influence these factors directly or indirectly, by sending market signals, most often through contractual purchasing agreements. When a company purchases a large volume of such instruments, their limited supply can drive up prices. Higher prices, in turn, signal the market to issue more instruments, which may be made possible by building new renewable energy capacity or importing more renewable energy from other regions. Over time, these procurement efforts can shift supply and demand patterns, influencing both consumer behavior and supplier investment decisions. As a result, the grid’s average emission factor and the cost of contractual instruments evolve, ultimately affecting both location-based and market-based emissions. ### How should emissions from energy use in leased assets be allocated? Energy use in leased buildings or from leased assets can be a significant source of emissions. To decide whether these emissions are relevant and which scope they belong to, companies need to assess who owns, operates, or controls the leased assets. According to the [GHG Corporate Standard](https://ghgprotocol.org/sites/default/files/2022-12/Categorizing%20GHG%20Emissions%20from%20Leased%20Assets.pdf), leases generally give operational control to the tenant (lessee) unless specified otherwise. This means that if a company leases space or uses a leased asset, emissions from all purchased energy should be reported under Scope 2. On the other hand, if a company owns an asset but leases it out without operating it, the related emissions may either be reported under Scope 3 or excluded from the inventory based on the [consolidation approach](https://www.ducky.eco/en/support/climate-reporting/the-ghg-protocol) chosen. For example, if your company leases an electric car, the emissions from charging the vehicle fall under your Scope 2, since operational control rests with the lessee. For the lessor, the emissions associated with the car would typically be reported under Scope 3, Category 13 (Downstream Leased Assets), or excluded from their inventory depending on the consolidation approach they follow. --- /climate-reporting/introduction/scope3 page An introduction to Scope 3 greenhouse gas emissions, how they are defined, calculated, and reported according to the GHG Protocol. 2026-03-06T07:52:37+01:00 # An introduction to Scope 3 greenhouse gas emissions An introduction to Scope 3 greenhouse gas emissions, how they are defined, calculated, and reported according to the GHG Protocol. ## An introduction to Scope 3 greenhouse gas emissions Learn how the Greenhouse Gas (GHG) Protocol defines Scope 3 emissions, how they are calculated and the requirements an organisation needs to follow when reporting their Scope 3 emissions. ## How are Scope 3 emissions defined in the GHG Protocol? As per the GHG Protocol, all reporting organisations must disclose GHG emissions associated with their operations and categorise them as direct or indirect. Direct emissions are emissions from sources that are owned or controlled by the company. Indirect emissions occur as a result of the reporting company’s activities but the actual emissions occur at sources owned or controlled by other entities. Emissions are further divided into three scopes. Direct emissions are included in scope 1, meanwhile indirect emissions are included in Scope 2 and Scope 3. Scope 2 consists solely of emissions arising from the generation of purchased energy, while Scope 3 encompasses all other indirect emissions that occur in a company’s value chain. While a company has control over its direct emissions, it has influence over its indirect emissions. The GHG Protocol divides Scope 3 emissions into 15 distinct value chain categories, which are explained in detail below. Scope 3 covers both ‘upstream’ emissions, those that occur in the supply chain before the company produces its product or service, and ‘downstream’ emissions, which occur after the product or service has been sold by the company. For instance, a clothing brand’s upstream emissions would include the farming and producing of fabric, while downstream emissions would include washing, wearing, and discarding the clothes by customers. Similarly, for an electronics company, upstream emissions come from extraction of metals and manufacturing of the product, while downstream emissions come from the use and eventual recycling or disposal of the devices. Scope 3 emissions often represent the largest share of a company's carbon emissions, sometimes around 90%, but are simultaneously the hardest to measure and reduce because they involve external actors and complex supply chains. ## What are the requirements to be followed when reporting Scope 3 GHG emissions? The [GHG Corporate Standard](https://ghgprotocol.org/corporate-standard) provides a set of requirements that organisations must follow when calculating and reporting their Scope 3 emissions: * Companies shall account for all Scope 3 emissions. If any Scope 3 category is excluded, the company must justify the reason for the exclusion. * Companies shall follow the [European Sustainability Reporting Standards (ESRS 1)](https://xbrl.efrag.org/e-esrs/esrs-set1-2023.html) and define the reporting boundaries as per the standard, disclosing and explaining any exclusions. To know about the different reporting boundaries, refer to our [article on the GHG Protocol](https://www.ducky.eco/en/support/climate-reporting/the-ghg-protocol). * Companies shall use emission factors that include the emissions of all greenhouse gases defined in the [Kyoto Protocol](https://ec.europa.eu/eurostat/statistics-explained/index.php?title=Glossary:Kyoto_basket). In Ducky, we use emission factors compliant with this requirement. * Companies shall disclose the choice of method(s) and emission factors used for calculating Scope 3 emissions. * Companies shall report Scope 3 emissions in tonnes of carbon dioxide equivalent (t CO₂-equivalent). ## How does the GHG Protocol recommend calculating Scope 3 emissions? The GHG Protocol groups Scope 3 emissions into 15 distinct value chain categories. For each category, it provides multiple calculation methods ranked by the specificity and quality of data, balancing accuracy with effort and data availability: ### Supplier-specific method * This method uses primary data from suppliers, including actual emissions related to the product or service supplied. * Data can be taken from life cycle assessments, product carbon footprints, or an environmental product declaration. * It provides the highest accuracy and reflects unique supplier-specific processes and efficiencies. However, it requires close collaboration with suppliers and significant data collection effort. * This method is preferred for Scope 3 categories where precision is critical such as Scope 3 Category 1 (Purchased goods and services) and Scope 3 Category 2 (Capital assets). ### Activity-based method * This method uses physical activity data such as litres of fuel burnt or kilometers traveled. * Emission factors correspond to these physical units (e.g., kg CO2-equivalent per km travelled). * It is suitable when companies have access to operational data but cannot obtain supplier-specific data. * It is more accurate than the spend-based method but requires collection and validation of activity data. ### Hybrid method * The hybrid approach combines use of accurate activity/supplier-specific data where available and fills remaining gaps with estimates based on secondary data (spend-based, described below). * This method balances accuracy with practicality and manages data gaps effectively. ### Spend-based method * This method estimates emissions based on the financial value of goods or services purchased. * Emission factors expressed as kilograms or tons of CO2-equivalent per unit of currency (e.g., per NOK or euro spent) are applied to the spend data. * It is a top-down approach used when physical activity data is unavailable. * The spend-based method is less precise because it assumes average emissions intensity across a sector or region. * It is primarily used for categories with limited activity data (for example: purchased services) or when conducting initial estimates. The GHG Protocol advises companies to select calculation methods based on the significance of emissions, data availability, business objectives, cost, and effort. Methods with higher specificity and accuracy are preferred for emission categories that have a greater impact. Companies may also apply different methods within a single category for various activities. The Protocol encourages the use of detailed activity data whenever possible to enhance accuracy. ## How are Scope 3 emissions calculated in Climate Reporting? The methodology used for calculating Scope 3 emissions varies across the 15 different Scope 3 categories. Each category employs specific calculation methods, which are chosen based on factors such as data availability and significance. Below, you will find brief explanations of all 15 Scope 3 categories, along with an overview of how each is calculated within Climate Reporting. ### Category 3.1: Purchased goods and services #### What is included in this category? Includes all upstream (i.e., cradle-to-gate) emissions from the production of goods and services purchased or acquired by the reporting company. #### How is this category calculated in Climate Reporting? This category is included in Climate Reporting and is calculated using the spend-based method by extracting the monetary value of purchased goods and services from a company’s financial accounts and multiplying it with relevant spend-based emission factors to calculate CO2-equivalents. #### What grounds are there to skip this category? This category accounts for the majority of emissions for most companies. Therefore, it is not recommended to skip this category. ---