Sustainability guide:

terms and concepts explained

With so many different terms and abbreviations being used around sustainability today, many people struggle to see the forest for the trees. There is such a multitude of terms and abbreviations that it’s unclear what they mean and to whom they apply. On this page, we list the most important of these terms and explain exactly what similarities and differences there are between them. This will give you a better insight into what the various laws and frameworks around sustainability are all about. 

We will help you navigate the jungle of concepts and terms by first explaining general overarching concepts. Next, we will discuss the international laws and regulations, and we will conclude with the Dutch guidelines for the built environment.

Duurzaamheid 101: termen en begrippen uitgelegd

SDGs: Sustainable Development Goals

Let’s start with a term that many people have probably heard quite often: SDGs. The Sustainable Development Goals underpin all the various other terms, so it’s important to understand them because they give context to other terms. The SDGs have been drawn up by the United Nations and have the universal goal of ending poverty and protecting nature. The targets were formulated in 2015 with the ambition to achieve them by 2030.

There are 17 SDGs, divided into different themes, all of which reflect the idea of striking a balance between social, economic and environmental sustainability. These targets make up a global commitment that must be translated into national policies. So they act as a kind of compass.

European Green Deal

The European Green Deal is a set of policy initiatives supporting a ‘Green Transition’ that ultimately aims to make Europe climate-neutral by 2050, a goal set out in the Paris Agreement. The Green Deal initiatives consist of policies on climate, environment, energy, transport, industry, agriculture and sustainable finance, all of which are strongly interlinked. At the national level, agreements are being made in various sectors. Examples include the Green Deal for Sustainable Care, Green Deal for Neighbourhoods and Green Deal for Green Roofs.

Read more about the Green Deals at European level here.

ESG: Environmental, Social & Governance

ESG is an umbrella term that includes not only environmental indicators, but also social and policy factors. It’s a framework that ensures measurability of business performance in areas such as energy consumption, climate, health and good corporate governance. The metrics-based nature of ESG ensures that ESG reports can serve as a benchmark and provide insight to stakeholders, such as investors. ESG also provides useful standards to ensure compliance with the CSRD reporting requirement.

CFP works with ESG scorecards, which are useful for several purposes, including for CSRD materiality assessments. Want to learn more? Find out how these scorecards helped property developer Van der Vorm Vastgoed to prepare for the ESG legislation.

Duurzaamheid 101

Sustainability in business

There are many factors for companies to consider today. In terms of regulations, this ranges from mandatory to non-mandatory measures, reports and investments. Below, we list the key concepts encountered by companies and organisations.

CSRD: Corporate Sustainability Reporting Directive

The CSRD is a European Directive on reporting on the sustainability of business activities on the basis of various sustainability criteria which large companies must adhere to. As of 2024, large companies previously subject to the NFRD are required to draw up this sustainability report. From 2025, large companies previously not subject to the NFRD will also be required to report under the CSRD. You are a ‘large company’ if your business ticks at least two of the three following boxes:

  1. More than 250 employees
  2. Annual turnover of more than €50 million
  3. More than €25 million on the balance sheet

 

From 2026, the CSRD will also apply to listed SMEs, and it’s expected that unlisted SMEs will follow after that.

If you don’t have to comply with the CSRD (are at least not yet), that does not mean this legislation won’t have any impact on you. Your relations may have to deal with it and may also need information from your company to get their reporting in order.

The CSRD is based on ESG aspects and particularly focuses on the specific reporting and transparency requirements related to sustainability efforts in large companies. These requirements are detailed in the European Sustainabilty Reporting Standards (ESRS).

Both the SFDR and the CSRD are part of the EU’s Sustainable Finance Action Plan (SFAP).

 

If you are getting started with CSRD and looking for ESRS-compliant carbon reporting, CFP can support you in this. Find out how our experts can help you comply with the reporting legislation.

IFRS: International Financial Reporting Standards

IFRS provides the foundation for the laws on financial reporting enacted worldwide. Financial materiality plays a major role in this. The institute that manages IFRS also rolled out the International Sustianability Standards Board (ISSB), which includes the Sustainability Accounting Standards Board (SASB).

SASB: Sustainability Accounting Standards Board

The Sustainability Accounting Standards Board (SASB) is working on clear sustainability standards for financial reporting. To this end, the SASB takes a sector-based approach and develops standards for specific sectors. The SASB Materiality Map is a good example: this tool makes it easy to display the relevance of sustainability issues. This helps companies find out what factors affect their financial performance and what they therefore need to focus on. It also provides investors with important information for making decisions.

The SASB sets sustainability guidelines by sector, which largely correspond to the GRI requirements. One difference is that the SASB looks more at the external factors affecting a company’s financial status, whereas GRI takes the opposite approach and looks more at how business decisions impact the environment and society.

In 2021, the COP26 climate conference decided to incorporate the SASB, along with other entities, into the Value Reporting Foundation.

GRI: Global Reporting Initiative

The GRI is an international organisation that creates guidelines for sustainability reporting. It’s a framework that helps companies and organisations worldwide “identify, gather and report ESG information in a clear and comparable manner”. GRI thus facilitates communication about ESG factors and how companies deal with them, regardless of their size, industry or country of establishment. A CSRD report often includes reporting under guidelines such as the GRI. The GRI is the most widely used standard for sustainability reporting and was developed in 1997.

TCFD: Task Force on Climate-related Financial Disclosures TCFD

The TCFD also stems from the 2015 Paris Agreement. The TCFD was created by the G20 – an international forum comprising 19 countries, the European Union and the African Union – together with the international Financial Stability Board (FSB). The TCFD is a framework that makes recommendations on managing and reporting climate risks. It mainly addresses financial risks, in order to ensure that banks, shareholders and investors can monitor a company’s ESG efforts. It was created with the aim of helping companies understand how climate change could affect their business.

Whereas the TCFD focuses on guidelines for measuring and reporting the financial impact of climate risks, the GRI has a broader scope that includes social factors.

SFDR: Sustainable Finance Disclosure Regulation

The SFDR is a European Regulation that aims to increase the transparency of financial institutions, particularly with regard to how they consider sustainability risks and opportunities in their investment decisions. It also requires institutions to adjusted their remuneration policy on the basis of sustainability risks.

One of the key differences between the SFDR and the TCFD is the target group. The TCFD is aimed at companies worldwide and the guidelines serve their stakeholders, such as investors. The SFDR operates at the European rather than global level and applies to financial actors such as banks, investment advisers and managers of large assets. Like the TCFD, the SFDR serves investors by facilitating fair and comparable reporting, thus putting an end to greenwashing.

NFRD: Non-Financial Reporting Directive

The NFRD is the precursor to the CSRD; both are European Union Directives. The NFRD operated on a much smaller scope and focused only on public interest entities (PIEs) with more than 500 employees. So the scope of the CSRD is a lot wider.

The NFRD was created in 2014 with the aim to “strengthen accountability and help stakeholders monitor and assess companies’ ESG performance”. That meant it also focused on how sustainability factors affect companies’ operations and vice versa.

EU Taxonomy

The EU Taxonomy provides guidance on investments in sustainability. It clarifies which economic activities are and are not allowed to be called ‘sustainable’ based on their “scientifically tested contribution to preventing climate change or mitigating its effects”. Technical screening criteria have been established to determine whether an activity contributes to at least one of the goals set by the EU Taxonomy. This is called the ‘substantial contribution’ requirement.

Besides this requirement, two conditions apply. First of all, the ‘Do no significant harm’ principle. This ensures a focus on preventing damage to the environment.

The other condition focuses on social sustainability and is called ‘Minimum social safeguards’. To be allowed to be called sustainable, an activity must be in line with various guidelines on human rights, working conditions, social responsibility and anti-corruption.

The CSRD is a reporting framework belonging to the EU Taxonomy classification system. The CSRD thus requires companies to report on their sustainability performance based on this guidance. The SFDR also expects financial institutions to be transparent about how their products follow EU Taxonomy standards.

Sustainability paragraph / DuPa 2.0

Valuers must also consider ESG and climate risks when valuing an office, distribution centre or shop. This can be done based on the Sustainability Paragraph, also referred to as the DuPa 2.0. It comprises eighty criteria focused on sustainability and climate risks.

CFP’s DuPa module provides instant insight into a building’s sustainability characteristics and how this translates into energy efficiency, climate resilience and the business case.

With the SP Module, our experts can show you which innovative and cost-saving sustainability measures can be implemented in a building. If you are interested, contact us here.

Duurzaamheid 101 begrippen en termen

Guidelines for the built environment

As a building owner, you not only encounter sustainability terms at the company level, but also specifically for the buildings you own, lease or use. Not only when you want to construct or a renovate building, but as a user of an existing building. That is because buildings account for over a third of the Netherlands’ total energy consumption.

EPBD: Energy Performance of Buildings Directive

EPC’s have been at the heart of building management for quite some time now. The EPBD provides the basis for all laws and regulations around the energy performance of buildings. The aim of this European legal framework is to boost the number of energy-efficient and carbon-neutral buildings by 2050, to provide a stable basis for investment decisions, and to facilitate more energy-saving and money-saving measures by companies and individuals.

 

The EPBD dates back to the early years of this century and has since been revised several times. The most recent update is that from EPBD III to IV, which affects the energy performance classes used in energy labels. All A+ to A++++ labels will soon be merged under A. You can read more about this amendment to the EPBD here.

The Dutch energy label C requirement for offices is an example of legislation arising from the EPBD. Non-residential buildings are also subject to energy label and renovation requirements under the (as yet non-binding) renovation standard.

BENG: Nearly zero energy buildings

BENG stands for Bijna Energieneutrale Gebouwen and refers to the nearly zero-energy building requirements set by the Dutch government for building permit applications. BENG is an elaboration of the European EPBD. BENG looks at kWh per square metre per year. This involves breaking down a building’s energy requirements into primary fossil energy consumption and renewable energy use.

Based on the BENG 2 requirements, the NTA 8800 was drawn up: the Dutch energy label methodology.

NTA 8800

The NTA 8800 certification is the Dutch methodology for assigning energy labels to buildings. In line with the BENG requirements, this method calculates a building energy’s requirement on the basis of kWh per m². Based on this energy requirement, an EPC is assigned to a building. The classification is subject to change and also varies by building type.

Want to know more about the NTA 8800? We explains the ins and outs in this article.

MPG: Environmental performance for buildings

Besides energy consumption, there are of course also other factors that influence the sustainability of buildings. In the Netherlands, the environmental performance for buildings (Milieuprestatie Gebouwen, MPG) plays a role when applying for permits under the Environment and Planning Act. The MPG comes into play with large-scale new-build office and housing developments. An MPG calculation looks at the environmental impact of materials used in the building, which is usually mapped by means of a life cycle assessment (LCA). The calculation results in an environmental costs indicator (Milieu Kosten Indicator, MKI).

Sustainability in practice

The terms and concepts are probably a lot clearer now. But how do you apply them in practice? If you want to know how you can comply with the various guidelines and reporting requirements, we are happy to help you. Contact us for customised advice.

Contact Apeldoorn

CFP Green Buildings
J.C. Wilslaan 29
7313 HK Apeldoorn
The Netherlands
+31 (0)55 355 5199
info@cfpgreenbuildings.com

Contact Naarden

CFP Green Buildings
Onderwal 16
1411 LV Naarden
The Netherlands
+31 (0)55 355 5199
info@cfpgreenbuildings.com

Contact Singapore

CFP Green Buildings Singapore
The Hive, High Street Center 1
North Bridge Road #08-08
Singapore 179094
+65 8893-2815
info@cfpgreenbuildings.com

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