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CDP Climate Change 2022 Reporting Guidance

Glossary - Climate Change

    • Acquisition: Obtaining ownership and control by one firm, in whole or in part, of another firm or business entity.
    • Adaptation: Adjustment to climate change current or expected effects so the consequences to the business and environment are alleviated and beneficial opportunities are realized.
    • Attribute: Descriptive or performance characteristics of a particular generation resource. For Scope 2 GHG accounting, the GHG emission rate attribute of the energy generation is required to be included in a contractual instrument in order to make a claim.
    • Best available technique (BAT): Best available technique (BAT) refers to the available techniques which are the best for preventing or minimizing emissions and impacts on the environment. BAT include both the technology used, and the way your installation is designed, built, maintained, operated and decommissioned.
    • Biogas: A mixture of methane (CH4) and carbon dioxide (CO2) used as fuel and produced by bacterial degradation of organic matter or through gasification of biomass. Included in this category are landfill gas and sludge gas (sewage gas and gas from animal slurries) and other biogas.
    • Biogenic carbon: This refers to carbon which is contained in biomass (both above-ground and below-ground), dead organic matter, soil organic matter, and harvested products.
    • Biomass: any organic matter, i.e. biological material, available on a renewable basis. Includes feedstock derived from animals or plants, such as wood and agricultural crops, and organic waste from municipal and industrial sources. Biomass fuels should be sustainably sourced and certified where possible, and include:

- Solid biofuels - solid fuels derived from biomass. Includes feedstock derived from animals or plants, such as wood and agricultural crops, and organic waste from municipal and industrial sources.
- Biogas - a mixture of methane (CH4) and carbon dioxide (CO2) used as fuel and produced by bacterial degradation of organic matter or through gasification of biomass.
- Liquid biofuels – liquid fuels derived from biomass such as ethanol and biodiesel.

    • Board: Or “Board of Directors” refers to a body of elected or appointed members who jointly oversee the activities of a company or organization. Some countries use a two-tiered system where “board” refers to the “supervisory board” while “key executives” refers to the “management board".
    • C-suite: A term used to collectively refer to the most senior executive team.
    • Capital allocation: Refers to distributing and investing a company's financial resources in ways that will increase its efficiency and maximize its profits. Some options for allocating capital could include returning cash to shareholders via dividends, repurchasing shares of stock, issuing a special dividend, or increasing a research and development (R&D) budget. Alternatively, the company may opt to invest in growth initiatives, which could include acquisitions and organic growth expenditures.
    • Capital expenditure: A measure of the value of purchases of fixed assets such as property, buildings, an industrial plant, technology, or equipment. Put differently, CapEx is any type of expense that a company capitalizes, or shows on its balance sheet as an investment, rather than on its income statement as an expenditure.
    • Carbon capture and storage (CCS): As defined by the IEA, a family of technologies and techniques that enable the capture of carbon dioxide (CO2) from fuel combustion or industrial processes, the transport of CO2 via ships or pipelines, and its storage underground, in depleted oil and gas fields and deep saline formations.
    • Carbon capture, utilization and storage (CCUS): A family of technologies and techniques in which carbon dioxide (CO2) is captured and utilized/used. Examples of direct utilization include CO2 use in the food and drink industry and for enhanced oil recovery. CO2 can also be converted into chemicals or fuels. If CO2 is stored but not utilized, then the process should be classified as CCS.
    • Climate-related risk: In line with the TCFD, this refers to the potential negative impacts of climate change on an organization. Physical risks emanating from climate change can be event-driven (acute) such as increased severity of extreme weather events (e.g., cyclones, droughts, floods, and fires). They can also relate to longer-term shifts (chronic) in precipitation, temperature and increased variability in weather patterns (e.g., sea level rise). Climate-related risks can also be associated with the transition to a lower-carbon global economy, the most common of which relate to policy and legal actions, technology changes, market responses, and reputational considerations.
    • Climate-related opportunity: In line with the TCFD, this refers to the potential positive impacts on an organization resulting from efforts to mitigate and adapt to climate change, such as through resource efficiency and cost savings, the adoption and utilization of low-emission energy sources, the development of new products and services, and building resilience along the supply chain. Climate-related opportunities will vary depending on the region, market, and industry in which an organization operates.
    • Climate transition plan: a time-bound action plan that clearly outlines how an organization will achieve its strategy to pivot its existing assets, operations, and entire business model towards a trajectory that aligns with the latest and most ambitious climate science recommendations, i.e., halving greenhouse gas (GHG) emissions by 2030 and reaching net-zero by 2050 at the latest, thereby limiting global warming to 1.5 degrees Celsius. Please refer to the CDP Climate Transition Plan technical note for more details.
    • Combustion: Combustion refers to combustion within the company’s boundary giving rise to emissions of CO2, N2O, and CH4. Sources may include boilers, heaters, furnaces, incinerators, internal combustion engines, and turbines. Scope 1 GHG emissions exclude emissions of CO2 arising from the combustion and fermentation of biomass and biofuels; these emissions are reported as a separate category.
    • Company: Throughout this questionnaire, “your company” refers collectively to all the companies, businesses, organizations, other entities or groups that fall within your definition of the reporting boundary.This term is used interchangeably with “your organization”, but CDP recognizes that some disclosing organizations may not consider themselves to be, or be formally classified, as “companies”.
    • Consolidation approach: The identification of companies, businesses, organizations etc. for inclusion within the reporting boundary of the responding organization is known as the “consolidation approach”. The way in which you report information for the companies that are included within the reporting boundary is known as the “consolidation approach” because, unless stated otherwise, the information you provide in response to the questionnaire should be presented as one “consolidated” result covering all of the companies, entities, businesses etc within your reporting boundary. The GHG Protocol states that two distinct approaches may be used to consolidate GHG emissions; the equity share and the control approaches. Control can be defined in either financial (financial control) or operational (operational control) terms.
    • Consumption: Consumption includes the use of goods, waste disposal and end of life treatment of products sold by the reporting organization.
    • Contractual instrument (or 'instrument'): Any type of contract between two parties for the sale and purchase of energy bundled with attributes about the energy generation, or for unbundled attribute claims. Markets differ as to what contractual instruments are commonly available or used by companies to purchase energy or claim specific attributes about it, but they can include energy attribute certificates (e.g. RECs, GOs), direct contracts (PPAs), green tariffs and other instruments.
    • Direct costs: Also known as “costs of goods or services sold”. These expenses can be attributed to the manufacture of a particular product or the provision of a particular service.
    • Divestment: A process for selling assets for financial, environmental, political or social goals.
    • Electricity: In line with GHG Protocol, this term is used as shorthand for electricity, steam, and heating/cooling. Purchased electricity is defined as electricity that is purchased or otherwise brought into the organizational boundary of the company. Scope 2 emissions physically occur at the facility where electricity is generated.
    • Energy attribute certificates: A category of contractual instruments used in the energy sector to convey information about energy generation to other entities involved in the sale, distribution, consumption, or regulation of electricity.
    • Feedstocks: Feedstocks are starting materials, ranging from fossil fuels to biomass-based resources. These materials are fed into a process, and converted into other commodities or resources, which are either used directly or further transformed . For example, in the steel industry, coking coal is converted to coke, which is used in the steel production. In the petrochemical industry, gaseous feedstocks (ethane, propane, or butane) are used to produce high value chemicals.
    • Financial planning: In line with the TCFD recommendations, refers to an organization’s consideration of how it will achieve and fund its objectives and strategic goals. Financial planning allows organizations to assess future financial positions and determine how resources can be utilized in pursuit of short- and long-term objectives. As part of financial planning, organizations often create “financial plans” that outline the specific actions, assets, and resources (including capital) necessary to achieve these objectives over a 1- 5 year period. However, financial planning is broader than the development of a financial plan as it includes long-term capital allocation and other considerations that may extend beyond the typical 3-5 year financial plan (e.g., investment, research and development, manufacturing, and markets).
    • Fugitives: Fugitives comprises all intentional or unintentional releases of carbon dioxide (CO2) methane (CH4) and other greenhouse gases. The primary sources of these emissions may include fugitive equipment leaks, evaporation losses, venting, flaring and accidental releases. Further examples of leak sources include valves, fittings, flanges, compressor seals, other compressor related leaks, heaters, dehydrators, and pipelines. Accidental fugitive emissions can be individually found and fixed in order to make the emissions near zero. Emissions from non-point sources, such as wastewater treatment and surface impoundments, should be accounted for under fugitive emissions.
    • gCO2/kWh: Grams of carbon dioxide (gCO2) per kilowatt hour (kWh)of electricity consumed.
    • gCO2e/kWh: Grams of carbon dioxide equivalents (CO2e) emitted per kilowatt hour (kWh) of electricity consumed. CO2-equivalents allow for other Greenhouse Gases (GHGs) to be expressed in relation to CO2 based on their Global Warming Potentials (GWPs).
    • GHG inventory: A quantified list of an organization’s greenhouse gas emissions and sources.
    • Global warming potential (GWP): The Intergovernmental Panel on Climate Change (IPPC)’s Fifth Assessment Report (AR5) defines the Global Warming Potential (GWP) as “an index, based on radiative properties of greenhouse gases, measuring the radiative forcing following a pulse emission of a unit mass of a given greenhouse gas in the present day atmosphere integrated over a chosen time horizon, relative to that of carbon dioxide. The GWP represents the combined effect of the differing times these gases remain in the atmosphere and their relative effectiveness in causing radiative forcing. The Kyoto Protocol is based on GWPs from pulse emissions over a 100-year time frame.” By using GWPs, GHG emissions from multiple gases can be standardized to a carbon dioxide equivalent (CO2e).
    • Greenhouse gases: In line with Kyoto Protocol to the United Nations Framework Convention on Climate Change (UNFCCC) and amendment issued by the Greenhouse Gas Protocol on May 2013 the basket of greenhouse gases (GHGs) consists of:

    - Carbon dioxide (CO2);
    - Methane (CH4);
    - Nitrous oxide (N2O);
    - Hydrofluorocarbon family of gases (HFCs);
    - Perfluorocarbon family of gases (PFCs);
    - Sulfur hexafluoride (SF6), and;
    - Nitrogen trifluoride (NF3).

    Nitrogen trifluoride (NF3) is now considered a potent contributor to climate change and is therefore mandated to be included in national inventories under the UNFCCC. NF3 should also be included in GHG inventories under the GHG Protocol Corporate Standard, and the GHG Protocol Corporate Value Chain (Scope 3) Standard.

    • Heating Value: Lower heating value (LHV) and Higher heating value (HHV), also known as net calorific value (NCV) and gross calorific value (GCV) respectively, are different measures of heat energy released from fuel combustion. Figures measured in HHV are larger because HHV includes the latent heat of water vaporization from combustion, whereas LHV does not. The difference between LHV and HHV is related to the fuel’s hydrogen content.
    • Indirect (operating) costs: Refers to the essential expenses incurred in order to maintain the business including wages, rent, transport, energy (electricity, fuel, etc.), maintenance, and so on. These expenses cannot be attributed to the manufacture of a particular product or the provision of a particular service - they are standard costs that apply regardless of the volume of goods produced.
    • Intensity metrics : Intensity metrics describe an organization’s CO2e emissions in the context of another business metric. In this way, the emissions are normalized to account for growth. Intensity is calculated by dividing the CO2e emissions figure (the numerator) by an alternative business metric (the denominator), such as the number of full-time equivalent employees, the revenue or tons of aggregate produced.
    • Land use: Land use is based on the functional dimension of land for different human purposes or economic activities. Typical categories for land use are dwellings, industrial use, transport, recreational use or nature protection areas. Additional land use metrics can relate to the climate-related arrangements, activities, and inputs regarding these categories that organizations engage in, and can include land use change and land use management metrics.
    • Low-carbon energy: In line with the IEA definition, low-carbon technologies are technologies that produce low – or zero – greenhouse-gas emissions while operating. In the power sector this includes fossil-fuel plants fitted with carbon capture and storage, nuclear plants and renewable-based generation technologies. Natural gas, combined cycle gas turbine and fossil fuel-based combined heat and power (cogeneration), despite being less carbon intensive than other means of electricity production like coal, are not considered low-carbon.
    • Low-carbon product or service: CDP broadly defines a low-carbon product/service as a product or service which has comparatively lower emissions across its entire life cycle (i.e. from material acquisition through to product end-of-life) when compared to a baseline (business-as-usual) scenario or reference product of a similar function. Note that a product can only be considered low-carbon if its production and use does not prevent and/or contributes to reaching net-zero by 2050 or sooner. To define whether the product or service is low-carbon, CDP encourages the use of existing industry taxonomies and frameworks such as Climate Bonds Taxonomy, the IEA Energy Technology Perspectives (ETP) Clean Energy Technology Guide, and the EU Taxonomy for Environmentally Sustainable Economic Activities.
    • Mainstream reports: In line with CDSB, this refers to the annual reporting packages in which organizations are required to deliver their audited financial results under the corporate, compliance or securities laws of the country in which they are incorporated or, if relevant, operate. Mainstream reports are traditionally publicly available. They provide information to existing and prospective investors about the financial position and financial performance of the organisation. The exact provisions under which companies are required to deliver mainstream financial reports differ internationally, but will generally contain financial statements and other financial reporting, including governance statements and management commentary.
    • Metric tons of CO2 (tCO2): a metric ton of carbon dioxide (CO2) has a mass of 1000 kg, equivalent to 2204.62 lbs. The “long ton”, a term generally used in Britain, is equivalent to 2,240lbs and the “short ton” is generally used in the USA and is equivalent to 2,000 lbs.
    • Metric tons of CO2-equivalent (tCO2e): a metric that allows for other Greenhouse Gases (GHGs) to be expressed in relation to CO2 based on their Global Warming Potentials (GWPs). A metric ton is 1000 kg, equivalent to 2204.62 lbs.
    • Mitigation: or "climate change mitigation" refers to efforts to reduce or prevent emission of greenhouse gases.
    • Organization: Throughout this questionnaire, “your organization” refers collectively to all the companies, businesses, other entities or groups that fall within the definition of your reporting boundary (provided in C0.5). This term is used interchangeably with “your company”. CDP recognizes that some disclosing organizations may not consider themselves to be, or be formally classified, as “companies”.
    • Process emissions: emissions from industrial production processes which chemically or physically transform materials (e.g. CO2 from the calcinations step in cement manufacturing, CO2 from catalytic cracking in petrochemical processing, PFC emissions from aluminum smelting, etc.)
    • Purchased or acquired electricity, steam, heat, and/or cooling: Specific information on these energy carriers can be found in section 5.3.1 and Appendix A of the GHG Protocol Scope 2 Guidance. The terms ‘purchased’ and ‘acquired’ are used when your organization has received the energy from a third party. This rules out energy that is sourced from within the organizational/sector boundary. It should be noted that purchased or acquired heat does not include the heat content, or calorific value, of fuels that are purchased or acquired by the organization. This is accounted for at the point of fuel consumption, which falls inside the Scope 1 boundary. You should also be aware that steam, heat or cooling received via direct line as ‘waste’ from an industrial process, should still be accounted for if it is consumed.
    • Renewable energy: CDP follows the definition of renewable energy given in the GHG Protocol: “Energy taken from sources that are inexhaustible, e.g. wind, water, solar, geothermal energy and biofuels.”
    • Reporting boundary: This determines which organizational entities, such as groups, businesses and companies, are included in or excluded from your disclosure. These may be included according to your financial control, operational control, equity share or another measure. Please consistently apply this organizational boundary when responding to questions unless you are specifically asked for data about another category of activities.
    • Research and development (R&D): Refers to the activities companies undertake to innovate and introduce new products and services. It is often the first stage in the development process. Investment in R&D is a type of expense associated with the research and development of a company's goods or services
    • Revenue: Income arising in the course of an entity’s ordinary activities (less returns, allowances and discounts) - before deducting costs for the goods/services sold and operating expenses to arrive at profit (based on the International Financial Reporting Standard)
    • Risk management: Risk management involves identifying, assessing and responding to risk to make sure organizations achieve their objectives. It must be proportionate to the complexity and type of organization involved (based on Institute of Risk Management, 2016).
    • Scenario analysis: A scenario describes a potential path of development that will lead to a particular outcome or goal. Scenario analysis is the process of highlighting central elements of a possible future and drawing attention to key factors (or critical uncertainties). It is a tool to enhance critical strategic thinking by challenging “business-as-usual” assumptions, and to explore alternatives based on their relative impact and likelihood of occurrence. Scenarios are not forecasts or predictions, but tools to describe potential pathways that lead to a particular outcome or goal.

    - Qualitative scenarios: A high level, narrative approach to scenario analysis, suitable for organizations familiarizing themselves with the process. Qualitative scenario analysis explores relationships and trends for which little or no numerical data is available.
    - Quantitative scenarios: A more detailed method for conducting scenario analysis, with greater rigor and sophistication in the use of data sets and quantitative models which may warrant further analysis. Quantitative scenario analysis can be used to assess measurable trends and relationships using models and other analytical techniques.
    - 2°C or lower scenario: A core element of the TCFD’s Strategy recommendation c) “Describe the resilience of the organization’s strategy, taking into consideration different climate-related scenarios, including a 2°C or lower scenario”. As noted on page 26 of the TCFD Guidance on Scenario Analysis for Non-Financial Companies, the TCFD now recommends that in assessing transition risks, companies should consider using or developing a 1.5°C scenario for the “2°C or lower scenario”, stating that “a 1.5°C scenario would provide stronger diversity in assumptions about future policies and technologies. A 1.5°C scenario also aligns with the latest scientific research from the IPCC, the growing momentum of pledges to limit emissions to net-zero by 2050, and the spirit of the Paris Agreement, demonstrating a company’s alignment to recognized temperature targets.”
    - Publicly available scenarios: Taken from TCFD recommendations, “Publicly available scenarios” refer to scenarios which are:

    - used/referenced and issued by an independent body;
    - wherever possible, supported by publicly available datasets;
    - updated on a regular basis; and linked to functional tools (e.g., visualizers, calculators, and mapping tools) that can be applied by organizations.

    • Sequestration of CO2: The fixation of atmospheric carbon dioxide in a carbon sink through biological or physical processes.
    • Strategy: In line with TCFD recommendations, refers to an organization’s desired future state. An organization’s strategy establishes a foundation against which it can monitor and measure its progress in reaching that desired state. Strategy formulation generally involves establishing the purpose and scope of the organization’s activities and the nature of its businesses, taking into account the risks and opportunities it faces and the environment in which it operates.
    • Substantive impact: An impact that has a considerable or relatively significant effect on an organization at the corporate level. This could include operational, financial or strategic effects that undermine the entire business or part of the business.