In this article, we’ll explain what ESG banking is, why it is important, and how you can apply ESG in banking.

Applying ESG in Banking

Businesses today have a lot more to deal with than ever before, such as appealing to younger consumers concerned with climate change and aligning their finances to fit the mold of ESG banking and sustainable finance.

The typical business finance model isn’t as simple as it used to be anymore, meaning that companies wishing to grow their business sustainably will need to find ethical investments and apply ESG banking to their financial activities. 

ESG in banking refers to financial activities that take the environment, society, and governance factors into account – such as by avoiding an investment that would cause excess GHG emissions or would harm a local community. 


💡 As opposed to traditional banking, where the main goal is financial growth, ESG in banking will seek to prioritise ESG values being met over profits.

In order to practice ESG banking, companies and individuals alike must consider the impact a particular investment may have on the environmental, society, or governance factors.

Explore how banks and financial companies are integrating ESG (Environmental, Social, and Governance) factors into their operations in this insightful video. We cover:

Introduction to ESG in banking
The growing importance of ESG factors in finance
How banks incorporate ESG into their operations
ESG-focused lending policies, investment strategies, and risk management
Benefits of ESG for banks and financial companies
Real-life case studies highlighting success stories
Conclusion: Future trends in ESG banking

Join us to understand how ESG is transforming the financial sector and driving sustainable finance practices.

Lindsay Hampson is the Founder and ESG & Sustainability Consultant at ThisRock Inc. Lindsay has her FSA Credential from the IFRS, and holds a Sustainability Leadership Certification from the University of Toronto. 

Read our ESG Banking blog here: https://thisrockesg.com/esg/esg-banking/ 

Learn more about our ESG consulting services across reviews, assessments, strategy, implementation, communications and training for your organization at ThisRock at www.ThisRockESG.com  

#ESGBanking #SustainableFinance #GreenFinance #FinanceTrends #CaseStudies #BankingInnovation #FutureOfFinance #ESGFactors

How Banks & Financial Companies Use ESG

Here’s a breakdown of how ESG in banking works:

Several big-name banks across the world are still primarily concerned with providing their customers with the best interest rates possible as opposed to protecting the environment – such as with the top 6 banks in the United States having previously helped to finance fossil fuels to the tune of $1.8 trillion.

💡 Luckily, some of these top tier banks, such as Wells Fargo – have since made the effort to address carbon emission, energy usage, and how their projects are financed. For example, Wells Fargo has finally set net-zero by 2050 emission reduction targets for 2030.

Applying the ‘E’ in ESG banking will require:

Banks to re-evaluate how their investments and financial projects impact climate change, energy usage, and various emissions

Banks to set targets in line with international agreements such as the Paris Agreement

Banks to remain aware of current and future environmental impacts as a result of their financial and business activities  

Certain banks may address societal issues more consistently than others, such as with Climate First Bank’s effort to help society by donating $100 to non profit organisations to help uninsured residents of Florida gain access to healthcare – a massive struggle in the United States, especially in the midst of the most recent presidential election.

Applying the ‘S’ in ESG banking will require:

Banks to determine their current impact on local and larger communities, such as by evaluating criteria like ethical labor practices, human rights, and other DEI values

Banks to partner with non profit organisations, such as Climate First Bank’s efforts, to help support low-income communities during difficult times and to illustrate they care about their societal impact

Banks to prioritise loans to smaller businesses over big-name corporations to help boost diversity and inclusion 

Often one of the the more overlooked factors of applying ESG in banking, governance refers to how a bank takes accountability for their actions – essentially, striving to be the opposite of the Deutsche Bank scandal. 

Governance is imperative when applying ESG in banking as it is one of the most important factors to cultivate long-lasting sustainability and trust in business relationships – all of which are essential to develop a lucrative banking business in today’s more ethically-conscious world.

Applying the ‘G’ in ESG banking will require:

Banks to determine how and if they can improve their current ethical practices and efforts to comply with environmental regulations

Banks to develop new anti-corruption policies and ensure diversity 

Banks to take full accountability for any greenwashing scandal or business mishaps that may occur

Here are some well known examples of ESG in banking:

Green Financing – This refers to issuing green bonds and loans for renewable energy projects, adhering to the ‘E’ in ESG banking. 
ESG Reporting – Working towards clear-cut communication in terms of a bank’s ESG efforts can help them to align with global frameworks like the UN’s Sustainable Development Goals (SDGs) or the Task Force on Climate-related Financial Disclosures (TCFD), adhering to the ‘G’ in ESG banking.

Donating to Non-Profit Organisations – Allowing customers to choose a donation as a result of signing up for a new bank account can help to adhere to the ‘S’ in ESG banking.

Exclusion Policies –  Banks that work to avoid financing industries with significant negative environmental impacts, such as coal mining – can adhere to the ‘E’ in ESG banking.

👉 ESG is becoming a cornerstone of modern banking, shaping how financial institutions operate and contribute to sustainable development.

ESG in baking is important since banks are one of the last industries to get on board with ESG values and sustainability – meaning that their environmental and societal impact remains colossal, and that applying ESG in banking can help them to reduce their current ESG footprint. 


💡Unlike fast fashion or travel, which are extracurricular activities and hobbies, next to everyone in the world has a bank account – whether it be for business or to pay your personal bills. 

In addition to this, businesses that choose ESG banking can help to grow their business in a sustainable way – as ESG-related finances tend to be more modest and less risky than traditional investments.

 Here are some more reasons why ESG banking is important:

Comply with Environmental Regulations – Major banks across the world may struggle to comply with ESG mandated compliance requirements, but seeking to apply ESG in banking can help companies to comply with current and future regulations.

Risk Mitigation – Applying ESG in banking can help banks to determine their current risks associated with ESG factors, and help them to avoid greenwashing or loss of transparency – all of which are paramount to maintain an effective and sustainable business. 

Stakeholder Engagement – Increasingly, stakeholders and investors alike prefer banks that demonstrate strong ESG performance, reflecting a long-term, sustainable strategy.

👉 Furthermore, several banks are not on track to achieve net-zero emissions by 2050 – even if they have committed to emission reduction targets. This demonstrates that consumer incentive to choose truly ethical and ESG-committed banks is essential to reduce emissions in the financial sector.

The table below will share big-name banks and their current efforts to employ ESG:

<table border="1">
  <tr>
    <th>Bank</th>
    <th>ESG Initiatives</th>
  </tr>
  <tr>
    <td>Chase (JPMorgan Chase)</td>
    <td>
      Invested $2.5 trillion in sustainable development and climate-related initiatives from 2021 to 2030, including renewable energy and energy efficiency projects.
    </td>
  </tr>
  <tr>
    <td>Bank of America</td>
    <td>
      Achieved carbon neutrality in 2019 and committed to $1.5 trillion in sustainable financing by 2030. Implements robust ESG governance and provides extensive ESG disclosures to stakeholders.
    </td>
  </tr>
  <tr>
    <td>HSBC</td>
    <td>
      Pledged to provide $1 trillion in sustainable financing by 2030. Set goals to achieve net-zero carbon emissions from its financed portfolio by 2050.
    </td>
  </tr>
  <tr>
    <td>Wells Fargo</td>
    <td>
      Launched a 10-year Banking Inclusion Initiative to support underbanked communities. Committed to $500 billion in sustainable finance by 2030 and enhanced community-focused programs.
    </td>
  </tr>
  <tr>
    <td>Capital One</td>
    <td>
      Focused on creating environmental impact through green buildings and reducing carbon footprints while supporting financial inclusion and education for underserved communities.
    </td>
  </tr>
  <tr>
    <td>BNP Paribas (France)</td>
    <td>
      Strong advocate for renewable energy financing, exiting coal power by 2030 in OECD countries, and by 2040 globally. Provides green bonds and sustainable investment products.
    </td>
  </tr>
</table>


What are the benefits of applying ESG in banking?

There are numerous benefits for banks that choose to apply ESG in banking, such as by allowing greater access to capital, enhanced customer loyalty, more sustainable business growth, and boosting overall transparency. 


💡 Applying ESG in banking can help banks to improve both their business partnerships and customer relationships, allowing for new opportunities to expand business growth.  

It is important to remember that customers will also have benefits of using a bank that applies ESG to its business model, as they can feel better about the environmental impact of their investments and ensure their bank is committed to long-term, sustainable growth.

How can applying ESG in banking help your business to grow?

Here are some of the benefits for banks that choose to apply ESG in their business models:

Boost Brand Reputation – Banks that make an effort to apply ESG are often viewed as more ethical and desirable amongst customers. As consumers become more concerned with associating themselves with eco-friendly products and services, this means that applying ESG in banking could help a banking business to grow. 

New Access to Capital – Investors are becoming increasingly interested in banks that align with ESG factors, meaning that applying ESG in banking could help financial firms to gain access to new financial opportunities.

Greater Customer Loyalty – A whopping 77% of consumers want companies to become more cognisant in terms of ESG, meaning that applying ESG in banking could help to attract new customers.

Reduced Business Risk – Banks that choose to incorporate ESG values into their business models can ensure reduced financial risks for both insurers and investors, making the bank more competitive and attractive to current and potential customers.

Potential for Partnerships – Choosing to apply ESG in banking can allow for new business relationships to be fostered, such as with various non-profit organisations, investment researchers, or data providers – all of which can help to expand your banking business. 

Encourage Other Businesses to Utilise ESG Practices – ESG banking may encourage small businesses and clients to employ the same ESG practices in their own companies or day-to-day lives, which can help to further reduce our global environmental and social impact. 

👉 Ultimately, ESG in banking can help businesses and banking clients alike to reduce their ESG impact and make long-term adjustments to go green in both their personal and professional lives.

Businesses can apply ESG in baking by implementing sustainable practices across their business interactions, such as in their investment choices and how they interact with customers.

Here are some ways that businesses can employ ESG banking:

Green Financing – This can allow businesses to fund various projects such as energy efficient buildings or sustainable farming. 

Sustainable Investments – Utilising green bonds and eco-friendly stocks can help to ensure no investments support fossil fuel usage.

Reducing Emissions – Any efforts to reduce energy consumption, use renewable energy sources, or cut back on waste can help to employ ESG in banking. 

Inclusive Banking – Developing financial products and services accessible to all communities or smaller businesses could help to attract customers of all kinds while also  adhering to the ‘S’ in ESG banking.

DEI Policies –  Cultivating a workplace that allows all genders and minorities to be represented can make employees, clients, and business partners feel more comfortable and motivated to invest in your bank or company. 

Partnerships – Teaming up with local organisations to support recent natural disasters or local hardships can help foster a greater sense of community. 

Publicly Disclose Information – Making a greater effort to be transparent such as by sharing annual ESG or progress reports can help your business to align with global frameworks such as the Global Reporting Initiative (GRI).

Encourage Ethical Business Practices – Banks that develop stronger anti-corruption policies can ensure compliance and a level of safety and satisfaction from clients and stakeholders alike. 

Use Carbon Accounting to Track New Regulations –  Using third party organisations like Greenly can help ensure that your business is up-to-date with all current and future regulations. 

Additional ways to employ ESG in banking include:

Improving the screening process for investments and loans to ensure they align with ESG protocols

Educating customers with various information to help them make more ESG-friendly investments

Implementing relevant technology to help measure ESG risks in real-time

Working with non-profit organisations and government agencies to promote the importance of ESG in banking

👉Alongside this, opting for more eco-friendly banks can help to make applying ESG in banking easier.

Think of how going to the gym with a personal trainer is much easier than going alone and trying to figure out which exercise or the right machinery to use to achieve your goals. The same goes for having a guide who is already experienced in ESG banking, as choosing a bank already committed to ESG principles can provide multiple paths to help your company achieve its ESG financing goals.

Here are some of the most ethical banks to choose from to help kick-start your journey in ESG banking:

Climate First Bank – Excellent choice for those who value diversity and want to support local communities.

Amalgamated Bank – Great for customers who want to ensure their investments do not finance fossil fuel related projects. 

Clean Energy Credit Union – Best green bank for those looking for loans to be used for green energy projects.

Spring Bank – Good choice for those who want a local bank dedicated to offsetting their emissions. 

Overall, applying ESG in banking can help to reduce the finance industry's current environmental and social impact – while also inspiring business partners and clients to do the same.

If reading this article on applying ESG banking to your business has made you interested in reducing your carbon emissions to further fight against climate change – Greenly can help you!

It can be overwhelming to figure out how to effectively reduce your environmental impact in terms of finances, but don’t worry – Greenly is here to help. Click here to schedule a demo to see how Greenly can help you find ways to ensure your company is complying with all current and future environmental regulations. 

Greenly can help you make an environmental change for the better, starting with a carbon footprint assessment to know how much carbon emissions your company produces.

In this article, we’ll explore the evolution of the RoHS Directive, its goals, and its impact on the electronics industry.

Restriction of Hazardous Substances Directive

Electronics power the modern world, from the smartphones in our hands to the medical devices saving lives. But what happens when these indispensable technologies come at a cost to our health and environment? The European Union’s Restriction of Hazardous Substances (RoHS) Directive offers a solution, tackling the risks posed by hazardous materials in electrical and electronic equipment (EEE). By setting strict limits on substances like lead, mercury, and cadmium, RoHS is driving the global shift toward safer, more sustainable manufacturing.

This directive isn’t just about ticking boxes - it’s a critical tool in reducing electronic waste, protecting ecosystems, and ensuring that the devices we rely on are safe. With its influence expanding far beyond Europe, RoHS has become a benchmark for responsible production.

👉 In this article, we’ll explore the evolution of the RoHS Directive, its goals, and its impact on the electronics industry.

The Restriction of Hazardous Substances (RoHS) Directive is a European Union regulation designed to limit the use of specific hazardous substances in electrical and electronic equipment (EEE). First introduced in 2003, it was one of the earliest global efforts to address the environmental and health risks posed by electronic waste and manufacturing processes. By setting strict thresholds for substances like lead, mercury, and cadmium, RoHS aims to protect human health, improve product safety, and promote environmentally sustainable electronics.

Are you curious about what the Restriction of Hazardous Substances (RoHS) Directive means for you? Look no further! In our latest explainer video, we unpack the key aspects of RoHS, outlining its global impact on the electronics industry and consumer safety.
RoHS compliance is critical in today’s marketplace, and it’s vital for manufacturers to understand its significance. This video takes a deep dive into RoHS, examining how it affects the production and disposal of electronic and electrical equipment.
Plus, we provide insights into how businesses can adapt to RoHS regulations and the potential penalties for non-compliance. Whether you're involved in manufacturing or product development, or simply interested in the greener side of technology, this video is packed with information that will shed light on the impact RoHS has on manufacturers.
Don't forget to subscribe to our channel for more informative content on environmental policies and their impact on our world. If you found value in our RoHS video, please give us a like, leave a comment with your thoughts, and share this video with others who might benefit from this crucial information.

What is ROHS

The RoHS Directive was created in response to the growing realisation that electronic waste - commonly known as e-waste - was becoming a significant environmental and health hazard. As consumers worldwide embraced rapid technological advancements, the volume of discarded electronics surged, often containing harmful substances like lead and mercury. These toxic materials leached into the environment, posing risks to ecosystems, water supplies, and human health.

In 2003, the European Union took a bold step by introducing Directive 2002/95/EC, commonly referred to as RoHS 1. Its mission was straightforward: to restrict six hazardous substances in electrical and electronic equipment, marking a turning point in sustainable manufacturing. For the first time, companies were held accountable for the materials they used in their products, forcing a reevaluation of supply chains and manufacturing processes.

In 2011, the EU recast the directive as Directive 2011/65/EU, also known as RoHS 2, to address emerging challenges. This update expanded the scope of the directive to include a broader range of products and added new administrative requirements, such as the need for a Declaration of Conformity (DoC) and the affixing of the CE marking on compliant products. RoHS 2 also introduced stricter enforcement measures, signaling a commitment to ensuring compliance across the electronics industry.

RoHS has continued to evolve in response to technological advancements and growing environmental priorities. In recent years, additional hazardous substances have been added to the list of restricted materials, bringing the total to ten. Notably, phthalates such as DEHP and DIBP (commonly used as plasticisers) are now included under the directive. 

The EU made further adjustments to RoHS in 2024, reflecting its commitment to balancing environmental goals with practical solutions for manufacturers:

A New Exemption for Recycled Materials: The 2024 amendments introduced an exemption for small amounts of cadmium and lead in recycled plastic used in electrical windows and doors. This change aligns with the EU’s recycling goals, allowing limited use of these substances to encourage the reuse of rigid PVC materials. To ensure transparency, any products containing lead levels of 0.1% or higher must now be clearly labeled. This exemption is temporary and will expire in 2028, providing time for safer alternatives to emerge.

Amendments for Cadmium in LED Chips: A recent amendment narrows the scope of the exemption for cadmium in LED chips (used in specific lighting applications). The revised exemption reflects advancements in LED technology and is now under stricter conditions. This exemption will expire in November 2025 unless renewed.

Proposed Additions to Restricted Substances: The EU is considering adding Tetrabromobisphenol A (TBBPA), a flame retardant, and Medium Chain Chlorinated Paraffins (MCCPs) to the restricted list. These chemicals are linked to environmental and health concerns, but their inclusion has been delayed, leaving manufacturers uncertain about future compliance requirements.

Expiring Exemptions: Several exemptions for specific uses of restricted substances in industrial and other specialised equipment are set to expire in 2024. This will require manufacturers to adapt quickly, either by redesigning products or sourcing compliant materials.

The Restriction of Hazardous Substances (RoHS) Directive was created to address two pressing issues: protecting human health and minimising the environmental harm caused by hazardous substances in electrical and electronic equipment (EEE). By restricting the use of specific toxic materials, the directive aims to reduce risks associated with the manufacturing, use, and disposal of electronics while promoting safer alternatives. 

Key Objectives of RoHSProtecting Human Health:

Hazardous substances like lead, mercury, and cadmium can pose serious risks to human health, especially when products containing these materials are improperly disposed of or recycled. RoHS reduces these risks by restricting these substances at the source.

Environmental Protection: E-waste is one of the fastest-growing waste streams globally. RoHS helps limit the environmental impact of discarded electronics by preventing harmful materials from entering landfills, water systems, and ecosystems.

Encouraging Safer Alternatives: By pushing manufacturers to find non-toxic substitutes for restricted substances, RoHS drives innovation in materials science and encourages the development of cleaner production processes.

Facilitating Recycling: The directive also promotes the use of materials that can be more easily and safely recycled, contributing to the circular economy and reducing the need for virgin resources.

The RoHS Directive applies to a wide range of electrical and electronic equipment. Below is a table summarising the categories and examples of covered products: 

<table>
  <tr>
    <th>Category</th>
    <th>Examples of Covered Products</th>
  </tr>
  <tr>
    <td>Consumer Electronics</td>
    <td>Smartphones, laptops, TVs, gaming consoles, cameras</td>
  </tr>
  <tr>
    <td>Household Appliances</td>
    <td>Refrigerators, washing machines, vacuum cleaners, microwaves</td>
  </tr>
  <tr>
    <td>Industrial Equipment</td>
    <td>Manufacturing machinery, control systems, diagnostic tools</td>
  </tr>
  <tr>
    <td>Medical Devices</td>
    <td>Patient monitors, imaging systems, diagnostic instruments</td>
  </tr>
  <tr>
    <td>Lighting Products</td>
    <td>LED bulbs, fluorescent lamps, other lighting devices</td>
  </tr>
  <tr>
    <td>Toys and Recreation</td>
    <td>Electronic toys, gaming consoles, recreational equipment</td>
  </tr>
</table>


💡 Certain products are exempt, such as military equipment, space-bound technology, and some scientific instruments, where safer alternatives may not yet exist. 

The directive limits the use of ten hazardous substances, referred to as the RoHS 10. The table below outlines these substances and examples of the types of products that often contain them: 

<table>
  <tr>
    <th>Substance</th>
    <th>Common Use</th>
    <th>Examples of Products</th>
  </tr>
  <tr>
    <td>Lead (Pb)</td>
    <td>Soldering, glass in CRT displays, batteries</td>
    <td>TVs, older monitors, circuit boards</td>
  </tr>
  <tr>
    <td>Mercury (Hg)</td>
    <td>Fluorescent lamps, switches, batteries</td>
    <td>Thermometers, lighting products</td>
  </tr>
  <tr>
    <td>Cadmium (Cd)</td>
    <td>Rechargeable batteries, pigments, coatings</td>
    <td>Remote controls, batteries, older LEDs</td>
  </tr>
  <tr>
    <td>Hexavalent Chromium (Cr6+)</td>
    <td>Anti-corrosion coatings, metal finishes</td>
    <td>Automotive electronics, industrial equipment</td>
  </tr>
  <tr>
    <td>Polybrominated Biphenyls (PBB)</td>
    <td>Flame retardants in plastics</td>
    <td>Housings for electronics like TVs or consoles</td>
  </tr>
  <tr>
    <td>Polybrominated Diphenyl Ethers (PBDE)</td>
    <td>Flame retardants in foam and plastics</td>
    <td>Cable insulation, appliance housings</td>
  </tr>
  <tr>
    <td>Bis(2-Ethylhexyl) Phthalate (DEHP)</td>
    <td>Plasticiser in flexible plastics</td>
    <td>Cables, vinyl coatings</td>
  </tr>
  <tr>
    <td>Benzyl Butyl Phthalate (BBP)</td>
    <td>Plasticiser for adhesives and vinyls</td>
    <td>Vinyl flooring, circuit boards</td>
  </tr>
  <tr>
    <td>Dibutyl Phthalate (DBP)</td>
    <td>Softening agent in plastics and resins</td>
    <td>Printed circuit boards, plastic films</td>
  </tr>
  <tr>
    <td>Diisobutyl Phthalate (DIBP)</td>
    <td>Plasticiser for films and coatings</td>
    <td>Coated wires, electronic housings</td>
  </tr>
</table>


These substances are restricted to a concentration of 0.1% by weight in homogeneous materials (0.01% for cadmium). The list of restricted substances is under continuous review, with possible additions like TBBPA and MCCPs on the horizon. 

Ensuring compliance with the RoHS Directive is essential for manufacturers, importers, and distributors who produce or sell electrical and electronic equipment (EEE) in the EU. Non-compliance can result in hefty fines, market restrictions, or even product recalls. To navigate these challenges, companies must follow a clear set of requirements to demonstrate their adherence to RoHS regulations. 

Conduct a thorough analysis of all materials and components used in the product to identify any restricted substances.

Collaborate with suppliers to gather detailed information on material content.

If there’s uncertainty about the presence of restricted substances, lab testing may be required.

Testing ensures the product meets the directive's limits, such as 0.1% for most restricted substances (0.01% for cadmium).

Obtain material declarations or compliance certificates from suppliers to confirm that their components meet RoHS requirements.

Ensure traceability of components throughout the supply chain.

Maintain detailed records of compliance efforts, including testing results, supplier declarations, and risk assessments.

These records serve as proof of due diligence in case of regulatory inspections.

Issue a DoC stating that the product complies with the RoHS Directive.

This document must include details about the product, manufacturer, and applicable regulations.

Apply the CE mark to the product to indicate compliance with RoHS and other relevant EU directives.

This mark is mandatory for products sold within the EU.

Establish procedures for regular compliance checks, such as periodic substance testing and supplier evaluations.

Stay updated on changes to RoHS regulations and exemptions.

Failure to comply with RoHS requirements can have severe consequences, including:

Market Restrictions: Non-compliant products may be banned from entering or sold in the EU market.

Fines and Penalties: Companies can face substantial financial penalties, which vary by member state and severity of the violation.

Product Recalls: Regulatory authorities may require companies to recall or withdraw non-compliant products, leading to reputational damage and financial loss.

Legal Action: Companies may face litigation from regulators or affected parties.


💡 RoHS compliance is not a one-time effort. It requires continuous monitoring, supply chain collaboration, and adaptation to regulatory updates. Manufacturers who adopt proactive compliance strategies not only avoid penalties but also gain a competitive edge by aligning with sustainability goals and consumer expectations.

The RoHS Directive includes exemptions to allow limited use of restricted substances in specific cases where compliance isn’t yet feasible. These exemptions are carefully reviewed and updated to balance technical challenges with environmental goals.

Exemptions permit certain restricted substances when:

Compliance would compromise product functionality or safety.

Cadmium in specialized LEDs for precise color rendering.

Lead in high-temperature solders for industrial equipment.

Mercury in specific fluorescent lamps where alternatives aren’t viable.

A new exemption allows small amounts of cadmium and lead in recycled rigid PVC used in electrical windows and doors.

This supports recycling goals but requires clear labeling for lead concentrations above 0.1%.

The scope for cadmium in LED chips has been narrowed, with the current exemption expiring in 2025.

The EU is considering adding TBBPA (a flame retardant) and MCCPs (a plasticiser) to the restricted list, though this is delayed.

Several exemptions for industrial and specialised equipment will expire in 2024, requiring manufacturers to find compliant alternatives.

The latest updates emphasise the need for manufacturers to:

Adapt products to meet stricter standards.

Develop alternative materials and processes.

❗️ These exemptions give industries time to transition, but the pressure to innovate and comply remains strong.

The RoHS Directive has had a significant impact beyond the European Union, inspiring similar regulations worldwide. As a pioneer in restricting hazardous substances, RoHS set a global standard for safer and more sustainable electronic manufacturing, influencing policies in major markets and shaping international trade practices. 

Many countries and regions have implemented their own versions of RoHS, often modeled after the EU directive. Key examples include:

<table>
  <tr>
    <th>Country/Region</th>
    <th>Details</th>
  </tr>
  <tr>
    <td>China</td>
    <td>Introduced in 2006, this regulation mirrors EU RoHS but places additional focus on labeling and packaging requirements for electronic products.</td>
  </tr>
  <tr>
    <td>Japan</td>
    <td>While not directly replicating RoHS, Japan enforces strict substance restrictions through its J-MOSS (Japanese Marking for Presence of Specific Chemical Substances) framework.</td>
  </tr>
  <tr>
    <td>United States</td>
    <td>Several states, including California and New Jersey, have adopted RoHS-like rules, particularly for consumer electronics and hazardous e-waste.</td>
  </tr>
  <tr>
    <td>India, South Korea, and Turkey</td>
    <td>These countries have established their own hazardous substance regulations to align with international trade and environmental standards.</td>
  </tr>
</table>


RoHS compliance has become a prerequisite for companies looking to access global markets. Manufacturers exporting electronics to the EU or countries with RoHS-like regulations must: 

Ensure their products meet substance restrictions.

Implement robust compliance systems to navigate different regulatory requirements.

Non-compliance can result in restricted market access, costly redesigns, or reputational damage.

Is the RoHS Relevant to Companies in the UK and US?  

The RoHS Directive is highly relevant to companies in the UK and US that manufacture, import, or sell electronic products. 

For UK businesses, RoHS compliance remains mandatory under the UK’s version of the directive, which closely mirrors EU regulations post-Brexit. 

In the US, while there is no federal RoHS law, several states, including California and New Jersey, have implemented RoHS-like regulations. 

Additionally, companies in both countries exporting to the EU must meet RoHS requirements to access its market. Compliance ensures legal access, avoids costly penalties, and aligns with growing consumer and investor demands for sustainable and eco-friendly products.

Introducing the Greenly Platform!

Greenly’s expertise in carbon management makes it easier for companies to navigate the complexities of sustainability while achieving measurable results.

Here’s how Greenly can help your company build a more sustainable operation:

Tracking and Analysing Emissions: Our platform provides detailed insights into your Scope 1, 2, and 3 emissions, helping you identify areas with the highest environmental impact.

Supply Chain Sustainability: Greenly helps you assess and improve your supply chain by offering a database of sustainable suppliers and tools to monitor emissions linked to upstream and downstream activities.

Lifecycle Assessments (LCAs): Conduct in-depth LCAs to understand the environmental footprint of your products, from raw material extraction to end-of-life disposal.

Science-Based Targets: Support in setting and achieving science-based emissions reduction targets that align with global sustainability goals.

Customised Action Plans: Develop tailored decarbonisation pathways with actionable steps to reduce your emissions and improve operational sustainability.

Greenly’s user-friendly platform not only helps you reduce your environmental impact but also positions your company as a leader in sustainability. By improving supply chain transparency and demonstrating a commitment to eco-friendly practices, you can enhance your brand image, attract conscious consumers, and gain investor confidence. Get in touch with us today to start your sustainability journey. 

How does carbon accounting work? Why is carbon accounting so important for your business in reducing greenhouse gas emissions?

Carbon Accounting: All You Need to Know

Finances are tricky to navigate when running a business, but did you know that keeping track of more than just your money, like carbon accounting, is just as important to monitor?

Accurate carbon accounting can help you and your company work towards a greener future and better environmental standards – such as developing an Environmental Management System or acquiring an ISO 14001 certification.

Why is carbon accounting a useful tactic to ensure your company is benefiting the environment?

👉 In this article, we'll explain what carbon accounting is, the methods used for carbon accounting, and how your company can get started with carbon accounting.

What is carbon accounting? Why is it important for your business? 

Greenly can help you make an environmental change for the better, starting with a carbon footprint assessment to know how much carbon emissions your company produces.

What is carbon accounting and how to do it?

Carbon accounting, also known as greenhouse gas (GHG) accounting, refers to the process of measuring, tracking, and reporting the carbon dioxide and other greenhouse gas (GHG) emissions associated with an organisation’s operations, products, or supply chains. This process provides a foundation for understanding environmental impact and helps organisations take informed actions to reduce emissions. 

💡 Why it matters: Carbon accounting enables businesses to identify key sources of emissions, monitor progress over time, comply with regulations, and align with global sustainability goals. It also plays a crucial role in strategies like carbon credit trading and contributing towards global net-zero aspirations. 

Carbon accounting has many practical uses including:

<table>
  <thead>
    <tr>
      <th>Purpose</th>
      <th>Description</th>
    </tr>
  </thead>
  <tbody>
    <tr>
      <td>Regulatory Compliance</td>
      <td>Ensures adherence to local, national, and international environmental laws and carbon reporting requirements.</td>
    </tr>
    <tr>
      <td>Tracking Emissions</td>
      <td>Provides a clear picture of direct (Scope 1), indirect (Scope 2), and value chain (Scope 3) emissions.</td>
    </tr>
    <tr>
      <td>Carbon Reduction Planning</td>
      <td>Identifies high-emission areas to develop targeted reduction strategies.</td>
    </tr>
    <tr>
      <td>Sustainability Reporting</td>
      <td>Communicates an organization’s environmental performance to stakeholders through reports like CDP, GRI, or TCFD.</td>
    </tr>
    <tr>
      <td>Carbon Market Participation</td>
      <td>Facilitates the trading of carbon credits or offsets, enabling cost-effective emissions reductions.</td>
    </tr>
    <tr>
      <td>Stakeholder Engagement</td>
      <td>Demonstrates accountability and commitment to sustainability for customers, investors, and employees.</td>
    </tr>
    <tr>
      <td>Cost Savings</td>
      <td>Highlights inefficiencies in energy or resource use, potentially reducing operational costs.</td>
    </tr>
    <tr>
      <td>Risk Management</td>
      <td>Identifies potential risks from carbon-related regulatory changes or reputational damage.</td>
    </tr>
    <tr>
      <td>Product Lifecycle Analysis</td>
      <td>Assesses the carbon footprint of products, aiding eco-design and sustainable supply chain decisions.</td>
    </tr>
    <tr>
      <td>Alignment with Global Goals</td>
      <td>Supports compliance with initiatives like the Paris Agreement or science-based targets (SBTs).</td>
    </tr>
  </tbody>
</table>


💡 Calculating your company's GHG emissions and overall carbon footprint often requires the collection of precise emissions data regarding both your direct and indirect emissions. this can prove challenging but luckily there are several available types of carbon accounting software to choose from to make calculating your total greenhouse gas emissions easier, including our own platform at Greenly!

What Is the Difference Between Carbon Accounting and Carbon Assessment?

Carbon accounting solely refers to the process of measuring the amount of greenhouse gas emissions a company is responsible for producing, whereas a carbon assessment is more complex.

Basically, carbon accounting is nothing more than a number. Carbon accounting is like getting a test score back. Some people will get a bad grade on their last exam and have newfound motivation to want to do better. For others, the poor mark is nothing more than that – and it won't provoke any action or concern for potential improvement.  

👉 Carbon accounting doesn't require someone to reduce their carbon emissions, whereas a carbon assessment suggests that they would like to reduce their carbon footprint – as it is the process of using the data revealed through carbon accounting to implement new, better environmental habits. 

💡 Greenly provides comprehensive carbon assessments to support our clients in their journey toward becoming more eco-friendly and sustainable.

The main goal of carbon accounting is to measure, track, and report the greenhouse gas (GHG) emissions associated with an organisation's operations, products, or supply chains. This enables businesses to identify emission sources, develop reduction strategies, comply with regulations, and align with sustainability goals.

Overview of key objectives of carbon accounting:

Better Understanding of Emissions
Many companies struggle to grasp concepts like carbon dioxide equivalents (CO₂e) and emission factors, both of which are essential for tracking and reducing carbon emissions. Carbon accounting enables businesses to quantify and report their emissions accurately using established methodologies. This understanding lays the groundwork for effective emissions management.

Compliance with Environmental Regulations
As regulations mandating greenhouse gas (GHG) reporting expand globally, corporate carbon accounting has become crucial for staying compliant. By calculating and reporting emissions in line with legal requirements, companies can avoid fines and demonstrate accountability. This includes tracking GHG emissions, supply chain activity, and other environmental impacts to meet regional and international standards.

Identifying Opportunities to Reduce Emissions
Carbon accounting breaks down emissions into categories such as Scope 1, 2, and 3 emissions, as defined by the Greenhouse Gas Protocol. This granular approach allows organisations to pinpoint high-impact areas and develop strategies to reduce emissions, such as optimising energy consumption and decarbonising supply chains. By identifying these opportunities, businesses can work toward sustainable development and long-term emissions reductions.

Promoting Accountability
Carbon accounting raises awareness about the negative impacts of global warming and the role businesses play in contributing to emissions. By tracking supply chain emissions and corporate carbon footprints, companies are empowered to take responsibility and act on their climate impact. This accountability not only enhances brand reputation but also motivates organisations to meet their emissions reduction targets.

Informing Strategic Decision-Making
With a comprehensive overview of their emissions, businesses gain valuable insights to guide better decision-making. Carbon accounting helps companies identify inefficiencies, reduce indirect emissions, and align with global agreements like the Paris Climate Accord. These informed decisions can mitigate climate risks and improve overall sustainability practices.

Achieving Emissions Reduction Targets More Effectively
Many companies are unaware of their greenhouse gas emissions until they conduct carbon accounting. By creating GHG inventories and providing accurate data, carbon accounting enables organisations to track progress, implement reduction strategies, and improve their carbon management. This systematic approach makes hitting emissions reduction targets more feasible and achievable.

What Are the Main Methodologies Used in Carbon Accounting?

There are two main methods used in carbon accounting: the spend based method and the activity based method. 

The first approach to carbon accounting is the spend based method.

The spend based method works by multiplying the economic value of a product or service purchased by the relevant carbon emissions in order to calculate the amount of greenhouse gas emissions produced. The spend based method of carbon accounting utilises environmentally extended input and output models, otherwise known as EEIO models, and is often less mathematically complex or time-consuming to calculate.

While using the spend based method for carbon accounting is simpler, it isn't always reliable given the economy and the tendency for prices to constantly fluctuate. Also, the inconsistency of exchange rates between foreign currencies makes it difficult to rely on the spend based method.

💡 Is the spend-based method of carbon accounting worth using?  The spend based method of carbon accounting is the best approach if the carbon calculations need to be done quickly. However, since financial data is often influenced by uncontrollable factors like inflation or currency exchange rate fluctuations, it can introduce inaccuracies, making it a less reliable basis for carbon accounting.

CARBON ACCOUNTING❓- This is what you need to know - There are two main approaches when performing Life Cycle Assessments: Spend-based and Activity-based approaches. Choosing one or the other can significantly impact the understanding of your emissions.

ReFlow has developed a platform that makes it easy to perform LCA assessments based on the Activity-based approach, which provides the clearest picture and uses more data through its granular approach.

The video below introduces Climate Chats, a concept that aims to discuss and explain relevant sustainability topics. Once a month or more, our in-house engineers will discuss these topics.

This time we are sitting down with our teammate Xueqian Zhang, who has a Ph.D. in Eco-industrial System Analysis and is an LCA Specialist at ReFlow - the environmental performance experts

Have a topic in mind? Feel free to suggest topics to us, as we aim to answer questions that are relevant to you!

Read our blog post on the topic: https://www.re-flow.io/2022/04/08/carbon-footprint-accounting-ghg/

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