CO2e (Carbon Dioxide Equivalent)
A metric for measuring and comparing the emissions of various greenhouse gases based on their global warming potential (GWP), expressed as the amount of CO2 that would have the same impact. Usually measured in g, kg or tons.
EPD (Environmental Product Declaration)
A document detailing the environmental impacts of a product throughout its life cycle. Verified EPDs are considered the gold standard of sustainability documentation and can be used to fulfill any regulatory or company-specific compliance initiative. They are based on comprehensive Life Cycle Assessments (LCA), adhering to standards like ISO 14025 and EN 15804, covering raw material extraction to disposal.
EPD Verification
EPD verification is an important step in creating traceable and reliable environmental impact data, ensuring compliance with standards, building stakeholder trust, and supporting informed decision-making. The process can usually take 1-6 months and cost between $10,000 to $30,000. Here's why it’s important:
Standards Compliance. Ensures adherence to ISO 14025, ISO 21930, and EN 15804 standards.
Data Accuracy. Verifies the accuracy and representativeness of life cycle inventory and impact assessment data.
Transparency and Consistency. Checks clarity and consistency of methods and assumptions used.
Documentation Review. Thorough review of all supporting documentation to validate the EPD’s integrity.
ESRS (European Sustainability Reporting Standard)
The CSRD’s technical rules known as the ESRS lay out what companies need to disclose and how. On July 31, 2023, the European Commission adopted 12 ESRS standards addressing environmental, social, and governance issues like climate change, biodiversity, and human rights. These standards use a “double materiality” approach, requiring companies to report both their impacts on people and the environment and how sustainability issues pose financial risks and opportunities. The phased implementation begins with companies applying the standards for the 2024 financial year, with reports due in 2025. The goal is to provide investors with insights into companies’ sustainability impacts.
We adhere to ESRS standards by using the Greenhouse Gas Protocol for comprehensive emissions measurement, ensuring independent third-party verification of our data.
ETS (Emissions Trading System)
A market-based approach to reducing greenhouse gas emissions by setting a cap on total emissions and allowing companies to buy and sell emission allowances.
LCA (Life Cycle Assessment)
A comprehensive method to assess the environmental impacts of a product from cradle to grave, including inventory analysis, impact assessment, and result interpretation. A typical life cycle from design to disposal is divided into four life cycle phases.
Product Phase. The life cycle stage where raw materials are extracted and processed into a finished product, involving manufacturing and quality control.
Distribution Phase. The stage where the product is transported from the manufacturer to the end user, including packaging, warehousing, and logistics.
Use Phase. The stage where the product is actively used by consumers, involving energy consumption, maintenance, and functional impacts.
End-of-Life Phase. The final stage of the product’s life cycle, involving disposal, recycling, or other waste management practices aimed at minimizing environmental impact.
PCF (Product carbon footprint), CCF (Corporate carbon footprint)
The product carbon footprint measure the emissions of the individual products manufactured and sold by a company. If the product carbon footprint includes all the full life cycle (product, distribution, use, end-of-life -> see above) of a product it is called "cradle-to-grave". If it only includes the product phase (essentially everything before the delivery to the customer) it is called "cradle-to-gate" or "embodied carbon".
The corporate carbon footprint includes not only the product carbon footprints of a company, but also all other emissions due to the activities of the company (e.g. heating an office or the commute of employees).
We focus on product carbon footprints as, in the electronics supply chain, these are the most difficult to obtain. You can use all our product carbon footprints as part of your corporate carbon footprint calculation.
Regulations in Europe
CBAM (Carbon Border Adjustment Mechanism)
An EU policy imposing a carbon price on imports to prevent carbon leakage and support the EU’s climate goals by equalizing the carbon costs faced by domestic and foreign producers.
Transitional Phase: Started on 1 October 2023
First Quarterly Reports Due: 31 January 2024
Definitive Period: Begins in January 2026, with financial obligations (buying and surrendering CBAM certificates) starting
CSDDD or CS3D (Corporate Sustainability Due Diligence Directive)
An EU directive requiring companies to address adverse human rights and environmental impacts in their operations and value chains, promoting sustainable and responsible business practices.
Applies to large EU companies with over 500 employees and €150 million in net global turnover, and non-EU companies with significant operations in the EU.
Requires electronics companies to conduct due diligence, identify, prevent, and mitigate adverse impacts in their operations, subsidiaries, and value chains.
Non-compliance can result in fines up to 5% of a company's global net turnover and liability for damages.
CSRD (Corporate Sustainability Reporting Directive)
An EU directive expanding sustainability reporting requirements for companies, ensuring transparency on environmental, social, and governance (ESG) matters. Its rules will start applying between 2024 and 2028.
Large public-interest companies: From January 1, 2024 with reports due in 2025
More than €150 million in net turnover from EU operations
Large companies: From January 1, 2025 with reports due in 2026
More than 250 employees and/or €40 million in turnover and/or €20 million in total assets
SMEs listed on EU regulated markets: From January 1, 2026 with reports due in 2027
€8+ million in net turnover of and/or €4+ million assets and/or 50+ employees
Reasonable assurance and the problem with spend-based carbon accounting
Just like financial reporting, sustainability reporting will need to be audited by third-parties to assure accuracy and completeness of the reports.
Initially, these audits can be rather superficial (the legal term is "limited assurance") but as time progresses they will need to satisfy "reasonable assurance". A common approach to satisfy the carbon footprint requirements with "limited assurance" is a spend-based guesstimate of your company's carbon footprint. "I spend X EUR on electronics, so I probably have a carbon footprint of Y."
The problem with the spend-based approach is that usually products with a higher carbon footprint tend to be cheaper than products with a lower carbon footprint, so the approach isn't very "reasonable".
What's more, the spend-based approach cannot be used to actually map emission hotspots and identify measures to lower the carbon footprint and thus is of no use if a company's reason for measuring CO2e goes beyond reporting.
EU Digital Passport
A digital document introduced by the European Union to provide detailed information about a product’s sustainability and compliance with environmental regulations. It enhances transparency and traceability by including data on materials, production processes, and environmental impact.
Entry into Force: Expected in June/July 2024
First Working Plan Adoption: March 2025
First Measures Adoption: 2026
First Product Requirements Apply: 2027/2028
For electronic products, component-level sustainability data for each MPN is needed to be compliant and maintain market access in the EU.
German Supply Chain Act
A law mandating German companies to ensure human rights and environmental standards are met throughout their supply chains, involving risk analysis and preventive measures.
Regulations in the U.S.
US SB 253 (Climate Corporate Data Accountability Act)
Disclosure. Large public and private companies in California must disclose Scope 1, 2, and 3 emissions starting in 2027 (based on 2026 data)
Verification: Emissions disclosures must be independently verified.
Registry: Disclosures will be housed on a public digital registry managed by a CARB-contracted organization.
Impacted Entities:
Target: Companies with annual revenue over $1 billion doing business in California.
Scope: Affects over 5,000 companies
Liability Implications:
Penalties: civil penalties up to $500,000 for violations.
Safe Harbor: Businesses are protected from penalties for Scope 3 misstatements made with a reasonable basis, per Assembly amendments.
US SB 261 (the Climate-Related Financial Risk Act, CRFRA)
U.S. entities doing business in California with annual revenue of $500M or more have to prepare and submit a climate financial risk report. The financial threshold for SB 261 is lower than that of SB 253 (>$1B in revenue). As a result, some companies exempt from emissions reporting under SB 253 will still need to report climate-related financial risks under SB 261