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Frequently asked questions

Answers to the most common questions regarding our Sustainability Platform and related sustainability topics. This section is ever evolving, we add questions and answers as needed.

The Greenhouse Gas Protocol explained

The Greenhouse Gas Protocol Initiative is a multi-stakeholder partnership of businesses, non-governmental organizations (NGOs), governments, and others convened by the World Resources Institute (WRI), a U.S.-based environmental NGO, and the World Business Council for Sustainable Development (WBCSD), a Geneva-based coalition of 170 international companies. Launched in 1998, the Initiative’s mission is to develop internationally accepted greenhouse gas (GHG) accounting and reporting standards for business and to promote their broad adoption. Learn more about the Greenhouse Gas Protocol

The GHG Protocol Initiative comprises two separate but linked standards:

Explain the concept of “scope”

Introducing the concept of “ scope”

To help delineate direct and indirect emission sources, improve transparency, and provide utility for different types of organizations and different types of climate policies and business goals, three “scopes” (scope 1, scope 2, and scope 3) are defined for GHG accounting and reporting purposes. Scopes 1 and 2 are carefully defined in this standard to ensure that two or more companies will not account for emissions in the same scope. This makes the scopes amenable for use in GHG programs where double counting matters. Companies shall separately account for and report on scopes 1 and 2 at a minimum.

Source: The Greenhouse Gas Protocol, p. 25

What are Scope 1 emissions?

Scope 1: Direct GHG emissions

Direct GHG emissions occur from sources that are owned or controlled by the company, for example, emissions from combustion in owned or controlled boilers, furnaces, vehicles, etc.; emissions from chemical production in owned or controlled process equipment.

Direct CO2 emissions from the combustion of biomass shall not be included in scope 1 but reported separately.

GHG emissions not covered by the Kyoto Protocol, e.g. CFCs, NOx, etc. shall not be included in scope 1 but may be reported separately

Source: The Greenhouse Gas Protocol, p. 25

What are Scope 2 emissions?

Scope 2: Electricity indirect GHG emissions

Scope 2 accounts for GHG emissions from the generation of purchased electricity2 consumed by the company.

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.

Source: The Greenhouse Gas Protocol, p. 25

What are Scope 3 emissions?

Scope 3: Other indirect GHG emissions

Scope 3 is an optional reporting category that allows for the treatment of all other indirect emissions. Scope 3 emissions are a consequence of the activities of the company, but occur from sources not owned or controlled by the company. Some examples of scope 3 activities are extraction and production of purchased materials; transportation of purchased fuels; and use of sold products and services.

Source: The Greenhouse Gas Protocol, p. 25

What does ESG mean?

ESG stands for Environmental, Social and Governance. ESG criteria is used in investment terms and viewed as critical factor measuring the ethical and sustainability impact of an investment in a company.

Companies report not only on CO2 emissions and environmental aspects but also on employee matters (such as equality) and management aspects (such as Codes of Conduct and policies).

What is sustainability reporting?

Sustainability reporting is the communication of environmental, social, and governance (ESG) criteria goals set by the company, as well as a company's progression in regards to set ESG goals.

A sustainability report is the most important available tool to voluntarily communicate organisations or companies performance, positive or negative, in environmental, social and governance (ESG) matters.

What is ESG reporting?

The ESG reporting is considered the non-financial side of business operations (although plenty of financial health can be discovered through this reporting) and many investors worldwide are beginning to appreciate the need for broader consideration of all business practices, not just financial prospects and operational performance. The GHG Protocol is an excellent weapon to use in the strategy to provide as much accuracy and transparency in environmental accounting and reporting.

Verified carbon-credit from Icelandic forests

The production of verified carbon credits pending at Klappir goes through a special process that is done to ensure their value and traceability. The process is based on international standards and methodologies, which is a key element in building a responsible carbon market in Iceland. Offering verified carbon credit is a major and important task for us to meet the climate challenge and restore land quality.

Reliable carbon market

Klappir and many other stakeholders have committed themselves to working together to develop a transparent, reliable carbon market in Iceland that is based on internationally recognized methodologies and standards.

The main stakeholders include: Íslenska ríkið, Kolviður, Skógræktarfélag Íslands, Skógræktin, Landgræðslan, Bændasamtökin, Skógarbændur, YGG, Votlendissjóður , Loftslagsskrá, iCert o.fl.

Carbon accounting

By automating data collection and emission calculations, you can focus on what really matters, such as reducing negative environmental impact. 
 The Sustainability Platform helps you account for both direct (Scope 1) and indirect (Scope 2 & 3) emissions in accordance with the Greenhouse Gas Protocol. Our extensive emission factor database is constantly updated to ensure that calculations are as accurate as possible.

Carbon offset

Carbon offsets are defined in the Climate Act: "When a party intervenes in another party's actions to reduce greenhouse gas emissions and / or sequester carbon from the atmosphere and uses confirmation of such contraction or sequestration to offset its own emissions in part or in full degree".

To put it simply, carbon offsetting involves individuals or legal entities compensating for their own greenhouse gas (GHG) emissions by financing projects that a) prevent the emission of the corresponding amount of GHG elsewhere or b) remove the corresponding amount of GHG from the atmosphere.

Source: Carbon Offset Guide

Carbon unit

The CO2 equivalent, or carbon dioxide equivalent, is the unit of measurement used to keep track of greenhouse gas emission figures. Thus, one tonne of CO2 equivalent corresponds to one tonne of carbon dioxide or the amount of other greenhouse gases (eg methane, mercury or F-gases) that have comparable global warming potential.

There is talk of the warming power of different greenhouse gases. Because carbon dioxide emissions are many times higher than those of other greenhouse gases, they are the most important greenhouse gas. Nevertheless, it is important to take into account the different effects of different gases when assessing total greenhouse gas emissions. To this end, each gas is given a specific coefficient based on these different global warming effects, and all emissions are then converted to CO2 equivalents.

Carbon dioxide equivalent (CO2 equivalent)

One tonne of carbon dioxide equivalent corresponds to one tonne of carbon dioxide or the amount of greenhouse gases with comparable global warming potential.

Verified carbon unit pending (PIU)

A verified carbon unit pending (PIO) is a carbon unit that is listed in the Climate Register as a verified unconfirmed carbon unit that will be activated after a certain time when the binding has been confirmed.

In order to verify a carbon unit, the certified standards must be followed and the verification body must determine whether the manufacturer complies with the standards in the production of carbon units, ie. meet the obligations required to obtain certification.

It is also important that there is no double-counting of carbon units when it comes to using carbon sequestration to offset emissions, so that there is no doubt about carbon neutral claims. This is ensured by registering carbon units in a separate carbon register. The carbon register keeps track of credits, transactions and delistings of certified carbon units.

Carbon projects must ensure that carbon sequestration is certified according to recognized standards, e.g. Carbon, VERRA - Verified Carbon Standard (VCS) or Gold Standard. These are independent standards that have been drawn up by independent third parties. Certification is a rigorous process that provides independent confirmation of emissions and ensures that your carbon offsets are real and lasting. The quality of carbon units will therefore not be guaranteed without certification from such a party. When choosing carbon sequestration, look for either certified or a.m.k.a. confirmed projects to ensure the quality of your investment and that there is genuine carbon sequestration.

Voluntary carbon offset

Trade in carbon units is largely conducted in so-called voluntary carbon markets. Sellers in such markets may be e.g. companies, funds and institutions that mediate in providing funds for projects in the field of carbon offsets. It is also common for carbon units to be purchased directly from project developers. The purchase of carbon units through an voluntary carbon market is a so-called optional carbon sequestration, or optional, unconfirmed or unverified carbon unit. These units are not registered in the Climate Register and are therefore not registered with international organizations.

What is carbon neutrality?

Carbon neutrality is a state of net-zero carbon dioxide emissions. Carbon neutrality describes a situation where a balance has been struck between greenhouse gas emissions and sequestration. Carbon neutrality is a key objective of the Paris Agreement, which is driven by the goal of keeping global warming below 2 ° C and as close to 1.5 ° C as possible. This calls for global emissions to peak immediately and to decline rapidly, until equilibrium is reached by mid-century. The countries of the world, municipalities, cities and companies are now starting to think about carbon neutrality, because the global goal needs to be broken down into smaller units.

The Icelandic government has set a goal of achieving carbon neutrality no later than 2040. This action plan looks at a reduction in greenhouse gas emissions by 2030, but also lays the foundation for achieving the goal of carbon neutrality. Rapid reductions in emissions are important, and the plan includes greatly increased measures to sequester carbon from the atmosphere and stop emissions from land. A special carbon neutrality plan will be drawn up.

Source: Goverment of Iceland

What are Iceland's goals and commitments in climate matters?

Iceland is a party to the United Nations Framework Convention on Climate Change and all implementation of climate goals in this country takes into account international and European regulations. It ensures that Iceland's goals are clear, understandable and comparable in the international arena.

When the Paris Agreement was adopted in 2015, Iceland, like other member states of the Climate Agreement, submitted a so-called national target for reducing emissions by 2030. Iceland announced that it would participate in the common European goal of a 40% reduction in greenhouse gas emissions by 2021-2030 compared to 1990.

With this arrangement, Iceland, Norway and the EU member states have one joint contribution to the Paris Agreement, but the internal rules of the states determine the share and obligations of each state. When calculating the target of individual countries, one looked at, among other things, GDP per capita and the cost-effectiveness of measures in the country in question. Greece's minimum contribution is, for example, a 16% contraction compared to 2005, Norway 40%, the Czech Republic 14%, Germany 38% and Iceland 29%. However, the Icelandic government still aims to reduce emissions by at least 40%.

It can be said that Iceland has committed itself internationally to achieve a 29% contraction by the year 2030, but the goals of the current government are higher; or at least a 40% contraction. The government has also set a goal for Iceland's carbon neutrality by 2040.

Source: Government of Iceland

CSRD - Corporate Sustainability Reporting Directive.

CSRD is an EU directive which will replace and build on the NFRD in order to encourage more companies to disclose detailed and extended sustainability reports.

CSRD, the Corporate Sustainability Reporting Directive, is a directive from the European Union which seeks to ensure that companies report and follow a standard for reporting on sustainability. The CSRD will replace the Non-Financial Reporting Disclosure (NFRD) that contains sustainability reporting guidelines for EU companies above a certain size. The new directive will include several Environmental, Social and Governmental (ESG) topics such as policies, risks and impact on the planet and society.

The European Financial Reporting Advisory Group (EFRAG) is responsible for drafting the standard, and the European Parliament and the Member States are expected to settle on a final legislative text by mid/end 2022. The directive will be put into force in 2024 and cover the fiscal year of 2023, which is why it is so important to start to understand the directive immediately.

Article on CSRD

NFRD - Non-Financial Reporting Disclosure.

EU law requires certain large companies to disclose information on the way they operate and manage social and environmental challenges.

This helps investors, civil society organisations, consumers, policy makers and other stakeholders to evaluate the non-financial performance of large companies and encourages these companies to develop a responsible approach to business.

Directive 2014/95/EUDirective 2014/95/EU – also called the Non-Financial Reporting Directive (NFRD) – lays down the rules on disclosure of non-financial and diversity information by certain large companies. This directive amends the Accounting Directive 2013/34/EU.

Companies that must comply

EU rules on non-financial reporting currently apply to large public-interest companies with more than 500 employees. This covers approximately 11 700 large companies and groups across the EU, including

  • listed companies
  • banks
  • insurance companies
  • other companies designated by national authorities as public-interest entities

Information to be disclosed

Under Directive 2014/95/EU, large companies have to publish information related to

  • environmental matters
  • social matters and treatment of employees
  • respect for human rights
  • anti-corruption and bribery
  • diversity on company boards (in terms of age, gender, educational and professional background)

EFRAG - The European Financial Reporting Advisory Group

EFRAG - The European Financial Reporting Advisory Group was established in 2001. Although mostly financed by the EU, it relies on a public-private partnership model. Its role has been to advise the European Commission on the adoption of international financial reporting standards into EU law.

SFRD - Sustainable Finance Disclosure Reporting

SFRD - Sustainable Finance Disclosure Reporting requires financial market participants to provide detailed information about their investments and the efforts they take to reduce any possible negative impacts on society and the environment. These new requirements will help to assess the sustainability performance of financial products.

EU Taxonomy

EU Taxonomy - EU taxonomy is a classification system, establishing a list of environmentally sustainable economic activities. It should create security for investors, protect private investors from greenwashing, help companies to become more climate-friendly, mitigate market fragmentation and help shift investments where they are most needed.

Further information on EU Taxonomy