What is the relationship between CO₂ Performance Ladder, CSRD and SBTi?

Absolutely. Many of the topics and requirements will overlap (such as determining scope 1, 2, and 3 emissions), or at least be closely related (such as developing a communication plan or collaborating with partners). Where there is overlap, version 4.0 of the CO₂ Performance Ladder is designed to allow for one combined report to meet the requirements of different frameworks. On other topics, the Ladder offers an excellent complement, also helping to enhance the impact of CSRD and SBTi.

Although there is some overlap, the approaches are different. First, the number of themes in the double materiality analysis (DMA) is much broader than climate change: it also covers, for instance, pollution, human rights, good governance, and water use. If we focus on climate change, one half of the DMA concerns the financial impact of climate change/policy on the organisation. This falls outside the scope of the Ladder. The other half concerns the organisation’s impact on climate change. This is also the focus of the impact and influence analysis. One key difference is that the Ladder looks beyond scope 1, 2, and 3 by also including biogenic emissions, CO₂ removals, and avoided emissions. Another difference is that the Ladder provides a more structured approach, using a table that incorporates quantitative data to establish a ranking.

All organisations that draw electricity from the grid can only report zero emissions from electricity if they purchase Guarantees of Origin (GOs) from their own country. It does not matter whether they have supplied electricity to the grid at another time (e.g., from solar panels). Read more about the Ladder and green electricity.

The footprint is always reviewed during the external audit. For more extensive emissions inventories, this may involve sampling, whereby the focus of the audit can vary from year to year.

An organisation starting now can choose either system. However, there are some considerations, such as the fact that audits for version 4.0 can only take place from 14 July 2025 onwards, and the question of when contracting authorities are likely to switch. For a more detailed explanation, see this article.

The Ladder is stricter than the CSRD in this regard: an organisation is expected to achieve its short-term targets or implement its planned short-term measures at all levels. In line with the management system approach, there is of course room for continuous improvement if achieving these targets or measures turns out to be impossible. This is referred to as comply-or-explain. Since ‘comply’ is the starting point, the organisation must provide a well-substantiated explanation if ‘explain’ proves necessary.

SMEs with fewer than 250 FTEs (among other criteria) were already exempt from CSRD reporting requirements. Under the new proposal, it is also less likely that they will be included in the value chain of a CSRD-obligated company. As a result, they are expected to be asked to provide sustainability reports less frequently.

The main difference is that, under the climate transition plan (CTP) of the Ladder, the organisation must look beyond its own chain(s) and therefore beyond scope 1, 2, and 3. This is referred to as other influenceable emissions (OIE). Another difference is that the Ladder does not address the financial impacts of climate change or climate policy on the organisation (which CSRD does), but focuses solely on the organisation’s impact on the climate. A further difference is that CSRD reporting is verified by an accountant, while the CO₂ Performance Ladder is audited by a certification body. Finally, the Ladder only looks at the organisation’s CO₂ reduction potential and does not allow for offsetting with carbon credits, as the CSRD may. Read more about the relationship between the Ladder and the CSRD.

Read all about the transitional arrangements in this article.

If all competitors in a tender process are certified at the same level, then the CO₂ Performance Ladder certificate will not provide a competitive advantage for that specific tender. However, in practice, this is still far from the case in many (sub)sectors: many organisations are not yet certified, or there is significant variation in the levels achieved. This variation is only expected to increase with the introduction of version 4.0 and its higher level of ambition.

Zero emissions literally means: no emissions of fossil greenhouse gases. This is the ultimate goal of the climate transition plan at level 3. Version 4.0, like earlier manuals, does not allow for CO₂ offsetting. CO₂ offsetting refers to the idea that a portion of an organisation’s scope 1, 2 or 3 emissions could be cancelled out using carbon credits purchased on the voluntary carbon market. If offsetting is used, this would be referred to as ‘net zero’ or net-zero emissions.

The Omnibus package is a proposal by the European Commission to combine, simplify, and postpone several sustainability regulations, including the CSRD. Although the package has not yet been approved by the EU Member States and the European Parliament, it currently means that fewer organisations are obliged to comply with the CSRD in the short term. Read this article for more information on the topic.

From 14 July 2025 onwards. Read all about the transitional arrangements here.

If the package is adopted, companies with at least 1,000 FTEs and either a turnover of at least €50 million or a balance sheet total of at least €25 million will remain subject to CSRD. Read more about the Omnibus proposal here.

Unlike large companies, municipalities are not required to comply with the CSRD. For them, both CSRD and the Ladder are voluntary choices. Municipalities that opt for the Ladder are unlikely to gain much added value on the topic of climate from a CSRD report. In many cases, the Ladder already goes further than the CSRD in this area. On all other topics—such as human rights and good governance—the CSRD can, of course, be useful.