How GNFZ certification helps compliance with SFDR and EMAS

This is Part Three in a three-part series on EU sustainability regulations.  

GNFZ helps with each of the EU sustainability directives/ schemes introduced in part 1 by providing a credible, verified framework for emissions reporting that aligns with EU criteria. The certification provides the data, processes, and third-party validation needed to demonstrate substantial environmental contributions and prevent "greenwashing" claims. 

In the following sections, we dive deeper into how the GNFZ net zero certification helps with two of the (currently) voluntary EU sustainability regulations.

GNFZ and SFDR

SFDR fights greenwashing in finance, while GNFZ certification fights greenwashing in net zero claims. They complement each other: a fund under SFDR could invest only in companies with credible net zero certifications like GNFZ.

GNFZ certification helps with SFDR requirements by:

• Providing robust, validated environmental data

  • Comprehensive metrics: GNFZ requires companies to assess and manage all three scopes of greenhouse gas (GHG) emissions (1, 2, and 3) using the widely accepted GHG Protocol.

  • Third-party validation: The certification is a third-party validation that a company has a credible, science-based net-zero plan. This is a crucial tactic against "greenwashing" and gives financial market participants confidence in the underlying environmental data.

  • Modular data: The certification provides modular and holistic GHG inventory assessments. This creates accurate and reliable data that can be easily plugged into ESG and SFDR reports. 

• Supporting Principal Adverse Impact (PAI) reporting: The SFDR requires financial firms to disclose how their investments' Principal Adverse Impacts (PAIs) negatively affect sustainability factors. GNFZ certification directly addresses several mandatory SFDR PAI indicators by providing audited data on a company's environmental footprint. 

  • Seven out of 18 indicators:  GNFZ framework addresses seven of the 18 mandatory SFDR indicators, either directly or indirectly, by providing detailed data on a company's environmental impact.

  • Climate and environment indicators: These metrics, including GHG emissions, align with SFDR's demand for data-driven assessments of environmental performance. 

• Facilitating classification under Articles 8 and 9

  • Article 8 funds (environmental characteristics): GNFZ certification strengthens the case for investee companies to be included in Article 8 funds, which promote environmental and/or social characteristics. The validated net-zero plan offers strong evidence of the company's environmental commitment. 

  • Article 9 funds (sustainable objective): To classify a fund as Article 9, the underlying investments must have a sustainable objective. GNFZ certification offers tangible proof of an investee company's credible climate action, which helps fund managers demonstrate that the investment meets this objective.

• Enhancing overall credibility and investor confidence: Beyond meeting technical requirements, GNFZ certification adds a layer of credibility that benefits companies by enhancing their appeal to sustainability-focused investors. 

  • Supports climate transition plans: GNFZ helps businesses create structured decarbonization pathways, which aligns with SFDR requirements for robust climate transition plans.

  • Attracts sustainable capital: The validated data and transparent process demonstrate a company's commitment to climate action, making it more attractive for inclusion in investment portfolios seeking to channel capital toward sustainable solutions.

  • Avoids "greenwashing": Third-party verification helps prevent the false or exaggerated sustainability claims that the SFDR was designed to eliminate, creating more transparent and reliable disclosures. 

GNFZ and EMAS

While EMAS offers a comprehensive environmental management system for continuous improvement, GNFZ provides the specific methodology and verification needed to achieve net-zero emissions targets. GNFZ helps companies in Europe by providing specific pathways to meet EMAS environmental goals, offering third-party validation for emissions data, and potentially securing incentives offered for EMAS registration. 

GNFZ supports the EMAS framework by providing:

• Carbon Accounting & Foot printing

  • Focus on Scope 1, 2, and 3 emissions: EMAS requires an organization to measure, evaluate, and report on its environmental performance. GNFZ provides the specialized tools to precisely calculate and certify emissions across all three GHG Protocol scopes, including often-complex Scope 3 emissions (the full value chain).

• Alignment with EU Climate Policies

  • GNFZ aligns with the EU Taxonomy, CSRD, and Fit for 55, ensuring that the climate transition aspects of EMAS are fully supported. EMAS emphasizes continuous improvement and compliance with EU environmental law.

  • Structured, incremental process: GNFZ offers multiple milestone certificates for each stage of the net-zero journey, from initial assessment to final achievement. This incremental progress tracking aligns with EMAS's emphasis on continuous environmental improvement and makes the journey toward ambitious net-zero targets more manageable.

• Third-Party Verification

  • Improved credibility and risk management: EMAS registration requires independent verification and leads to enhanced reputation. GNFZ offers additional, independent third-party verification specifically for net-zero progress, which further substantiates a company's climate credentials and provides a strong defense against greenwashing claims.

  • Data integrity and management: The GNFZ digital platform allows for the digital tracking, monitoring, and verification of climate data. This supports EMAS's requirement for robust environmental performance reporting by ensuring data accuracy, traceability, and transparency.

• Net Zero Targets & Transition Planning

  • EMAS requires organizations to demonstrate improvement in environmental performance. GNFZ adds value by requiring science-based decarbonization roadmaps and net zero commitments, which strengthens EMAS improvement plans.

  • Holistic emissions reduction: GNFZ certification covers multiple areas beyond just energy and emissions, including water and waste reduction. This aligns with and helps fulfill the broader environmental performance requirements of an EMAS-registered organization. 

• Stakeholder Transparency

  • EMAS obliges organizations to publish an environmental statement for public stakeholders. GNFZ certification supplies audited, credible climate data that can be integrated into the EMAS statement, boosting transparency and trust.

  • Stakeholder engagement and reporting: The transparent, data-driven approach of GNFZ—built on the GHG Protocol—generates detailed documentation that can be directly used to enrich an EMAS-registered company's annual public environmental statement. This demonstrates tangible, science-based progress to stakeholders, including employees, customers, and investors.

• Enhanced EMAS benefits

  • Greater access to EMAS incentives: EMAS-registered companies in some EU countries are eligible for regulatory benefits, such as reduced inspections or tax cuts. Pursuing GNFZ's verified net-zero targets helps a company demonstrate a high degree of commitment to EMAS's environmental improvement goals, strengthening its case for such incentives.

  • Market differentiation: With the added depth of a GNFZ certification, a company can go beyond standard EMAS compliance to achieve market leadership in sustainability. This can enhance brand reputation, attract talent, and capture greater market share, especially with the growing consumer preference for eco-friendly practices. 

Reach out to learn more about how GNFZ net zero certification can help with the EU regulations.