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GBA: Sustainability and Corporate Social Responsibility

GBA · Work through your exam, one topic at a time.

All guide sections

Sustainability and Corporate Social Responsibility

What this domain tests

Sustainability and Corporate Social Responsibility tests whether you can apply reporting frameworks correctly, compute emissions, and distinguish credible target-setting from greenwashing.

Core rules and concepts

  • Materiality - GRI is impact materiality (effects on economy, environment and people); SASB is financial materiality by industry; CSRD/ESRS requires double materiality, covering both.
  • Climate disclosure - TCFD's four pillars (governance, strategy, risk management, metrics and targets) are embedded in ISSB IFRS S1 and S2, which build on SASB metrics.
  • GHG Protocol scopes - Scope 1 direct; Scope 2 purchased energy; Scope 3 value chain across 15 categories. Scope 3 usually dominates total emissions.
  • Scope 2 methods - location-based uses the grid average; market-based uses contractual instruments such as guarantees of origin or PPAs. Report both.
  • Targets - SBTi requires near-term targets aligned to 1.5C and net-zero targets covering at least 95% of Scope 1 and 2, with deep long-term decarbonisation; offsets cannot be counted as reductions.
  • Due diligence - UN Guiding Principles on Business and Human Rights: identify salient issues, act, track, communicate, remediate.
  • Assurance and claims - CSRD requires third-party assurance; unsubstantiated green claims are increasingly enforceable.

Worked example

A plant consumes 50,000 MWh of electricity. The grid factor is 0.40 tCO2e/MWh. It holds guarantees of origin for 45,000 MWh and a PPA for 5,000 MWh, with a residual supplier factor of 0.05 tCO2e/MWh. Location-based Scope 2 = 50,000 x 0.40 = 20,000 tCO2e. Market-based Scope 2 = 50,000 x 0.05 = 2,500 tCO2e. Report both, state the instruments and their retirement, and use the market-based figure for progress against a market-based target. Do not describe the 17,500 t difference as an emission reduction achieved at the site - it is an accounting effect from procuring contractual instruments. A claim resting only on the market-based number while the physical grid is unchanged is a greenwashing risk.

Traps that cost marks

  • Treating carbon offsets as delivering Scope 1 reductions.
  • Reporting only market-based or only location-based Scope 2.
  • Using GRI as if it were a financial-materiality standard.
  • Omitting Scope 3 because data is hard to obtain.
  • Setting a net-zero date without interim targets or stated scope coverage.