Climate change is the defining challenge of our generation—and companies around the world are stepping up with ambitious net zero commitments. Our climate and sustainability consulting team helps clients turn those pledges into action. Avoiding the most devastating impacts of a warming planet demands a step change. But while the task ahead is significant, there are signs that a fundamental shift to mitigate climate change is well underway. Changes to address climate concerns and broader threats to the planetary boundaries are sweeping every industry. The early-movers are reimagining their businesses and capturing value created by the push for sustainability. Our Climate Change and Sustainability Services International Expertise House for ESG works with clients to accelerate their climate and sustainability journey. We help them identify and harness climate innovation, embed sustainability at scale into their business, and capture the value they create. Our work is as far-reaching as the challenge. Sustainability Strategy and Transformation Many companies underestimate the pace and scope of change required to achieve sustainability at scale. We work with clients to transform their business for a new decarbonized era. Climate Risk, Adaptation, and Resilience Societies and economies must take action today to thrive in the future. We work with national and local governments and corporations to build their climate-risk resiliency. Sustainable Finance and Investing A growing number of large institutional investors today are incorporating sustainable finance into their portfolios. Learn more about sustainable finance from BCG's social impact experts. Energy Transition Decarbonizing the global economy will require the rapid expansion of renewable energy sources and a firm embrace of business sustainability strategy by heavy industry. We are working with clients to pave the way forward. Alternative Proteins Our experts help clients seize opportunities in the fast-growing alternative proteins industry—and create a more sustainable future. Close-up of nuts in wicker baskets Food Systems and Security Agriculture is a major driver of global greenhouse gas emissions. Our sustainability consulting team works with clients to develop strategies for addressing those emissions while strengthening the stabilit

SFDR Sustainable Finance Disclosure Regulation The Sustainable Finance Disclosure Regulation (SFDR) imposes mandatory ESG disclosure obligations for asset managers and other financial markets participants with substantive provisions of the regulation effective from 10 March 2021. The Sustainable Finance Disclosure Regulation (SFDR) mandates ESG disclosure requirements for asset managers and other participants in financial markets. Introduced by the European Commission, the SFDR, alongside the Taxonomy Regulation and the Low Carbon Benchmarks Regulation, constitutes a series of legislative measures stemming from the European Commission's Sustainable Finance Action Plan. Who reports? The regulation extends to all financial market participants (FMPs) and financial advisors (FAs) operating within the EU, including those with EU shareholders and those marketing themselves within the EU FMPs encompass various entities such as insurance companies offering insurance- based investment products, investment firms providing portfolio management services, institutions managing retirement provisions, manufacturers of pension products, alternative investment fund managers, providers of pan-European personal pension products, managers of qualifying venture capital and social entrepreneurship funds, management companies for UCITS, and credit institutions offering portfolio management services. What is reported? The SFDR disclosure requirements are categorized into three segments: 1 Disclosure of Adverse impacts on Sustainability Fadors from Investment Decisions Firms obligated under SFDR must reveal the potential adverse effects that investment decisions may have on sustainability factors and detail their efforts to mitigate these impacts 2 Integration of Sustainability (ESG) Risk into Investment Processes Firms are required to disclose instances where environmental, social, or governance (ESG) events could negatively affect significant investments and align their remuneration policies with the management of sustainability risks. 3 Provision of Sustainability Information for Financial Products Benefits Combats greenwashing and exaggeration of environmentally friendly claims Prioritizes ESG risks in investment processes Addresses gaps in mandatory rules for ESGdisclosure. Instigates a behavioral shift in financial market participan Additional disclosures are necessary for financial products categorised as Article 8 or Article 9 products, as defined by SFDR

SEC The SEC Climate Disclosure Rule aims to enhance the climate-related disclosures of US publicly traded companies by including information relating to climate-related risks Originally set for a 2023 implementation, various delays have led to a potential finalisation of rules in Spring 2024. MANDATORY - INTERNATIONAL CLIMATE RISK - FINANCIAL RISK Who reports? Regulations will apply to US publicly traded companies and are applicable to both foreign and domestic organisations The regulations would likely be applicable to FY2024 and FY2025 for smaller companies. What is reported? SEC regulation is broadly aligned to the fours pillars of TOFD but with some key differences: Governance Includes a requirement to disclose whether board management have climate-nak expertise -Disclosures relating to opportunities are not mandatory, unlike TCFD Strategy, business model, and outlook -Include impacts of climate-related events and transition activities on using pre-defined KPIs -CSA disclosure is only required if undertaken by the organisation. Under TCFD it is a core pillar Rask Management: -Disclose the impacts of climate-related risks on specific line items in the organisation's financial statement GHG emission metrics: -Disclose scope 182 emissions intensities -Requires limited assurance of scope 182 emissions -Discicse details of RECs and offsets used by the organisation Exemptions exist for smaller companies regarding scope 3 disclosures. Information to be disclosed in financial statements and annual reports eg Form 10-K Benefits Improve the transparency of climate-related risk information for investors of US-based companies

IFRS I and IFRS II The sustainability standards of the ISSB (International Sustainability Standards Board) INTERNATIONAL CLIMATE RISK In June 2023, the ISSB published its first St (general) and S2 (climate) reporting standards to help companies communicate their sustainability efforts. Applicable from 2024 for reporting in 2025, these standards will make it easier to measure the risks and opportunities across an organisation's entire value chain in the short, medium and long term. IFRS I and II are based on the principle of simple materiality with a focus on dimate risk analysis, while integrating the measurement of emissions in the 3 scopes, emission reduction commitments, carbon offsetting and the internal price of carbon, among others. Who reports? Any company can voluntarily use these standards as the basis for its annual reporting It should be noted that governments may make it compulsory for companies to adopt these standards. The United Kingdom, Japan and Canada (among others) have already expressed an interest in introducing IFRS-based reporting requirements Benefits • Interoperability of these standarde with numerous climate indicators of the CSRD Recommendation to publish specific indicators on resilience, financial positions, metrics and trajectones. New basis for supporting investors in redirecting their capital according to companies commitments. What is reported? The SSBs extra-financial standards incorporate the TCFDs recommendations and are based on IFRS (International Financial Reporting Standards) accounting standards This standard sets out general financial reporting requirements relating to sustainable development, specifically on the risks and opportunities. The following information will be disclosed: The processes used by the organisation to identify, assess, prioritise and monitor risks and opportunities The organisation's strategy for managing these risks and opportunities; The governance processes, controls and procedures for monitoring, managing and overseeing masks and opportunities; The organisation's performance in relation to risks and opportunities, including progress towards achieving objectives it has set or is required to meet by law or regulation This standard will oblige companies to analyse the physical and transitional risis associated with climate change, as well as the resulting opportunibes, throughout the value chain (with an additional year to apply this

EcoVadis VOLUNTARY EcoVadis is an online data collection portal used by companies to collect information from their suppliers. The portal ensures information is collected in a standardieed format and is collated efficiently. ESG The portal's sustainability framework provides ratings and performance improvement recommendations for companies within global supply chains Companies or investors can request their suppliers respond or require their suppliers to have a certain rating. INTERNATIONAL Who reports? Those requested to by companies connected to them in supply chains. What is reported? Sector based questions which are tailored to the company. Environmental, Governance and Social metrics are scored Assesses companies based on 21 sustainability metrics across 4 pillars: environment, labour and human rights, ethics, and sustainable procurement A company's performance is compared with all rated companies in the database over the previous 12 months. The percentile rank is calculated across all companies in al industries, not per industry. Platinum-Top T%(99+ percentile) Gold-Top 5% (95+ percentile) Silver-Top 15% (35+ percentile) Bronze-Top 35% (65+ percentile) There are also badges for Committed and Fast Mover companies. Where is it reported? Requesting customers are given the results directly through EcoVadis Responding companies receive scores and recommendations for improvements. Companies often publish results in annual reports Benefits Designed specifically for supply chains Enables companies to gain greater transparency of supplier sustainability and practice. Shows customes that your company has met standardised sustainability criteria Covers major sectors Encompasses significant emittens across power, industry, buildings, waste, transport, and domestic aviation

The GRESB rating The GRESB (Global Real Estate Sustainability Benchmark) rating is a quintile rating system that categorizes participating entities based on their ESG performance as assessed in the GRESB survey. This rating ranges from one to five stars, with five stars denoting entities that are leading the charge in implementing effective sustainability practices. The GRESB rating is designed to provide investors, stakeholders, and the market at large with a clear, relative positioning of real estate entities' sustainability performance. The foundation of the GRESB rating lies in the GRESB score, which is an absolute measure of an entity's sustainability performance across various ESG criteria. This score is calculated based on data submitted by entities, covering aspects such as energy consumption, water usage, waste management, and policies on sustainability and stakeholder engagement. The GRESB score is presented as a percentage, with 100% representing the pinnacle of sustainability performance. The GRESB rating, on the other hand, is a relative measure. It is determined by comparing an entity's GRESB score against those of its peers within the same investment type and region. The rating system divides entities into quintiles based on their scores, with the top 20% receiving a five-star rating, the next 20% receiving four stars, and so forth. This method ensures that the rating not only reflects an entity's individual ESG achievements but also its performance in the context of the broader real estate industry. Why GRESB is important Participation in GRESB provides organizations with several benefits: Benchmarking: GRESB offers a platform for benchmarking the sustainability performance of real estate investments, providing participants with a clear understanding of their standing against peers and industry best practices. Investor Relations: By participating in GRESB, companies and funds can communicate their sustainability achievements and commitments to investors in a structured and globally recognized format. This transparency can enhance investor confidence and attract ESG-focused investments. Performance Improvement: The assessment process itself encourages companies to identify areas for improvement in their sustainability strategy and practices. GRESB provides feedback and resources to help participants enhance their ESG performance over time. Market Recognition: Achieving a high GRESB score or demonstrating year-on-year improvement can

The European Union (EU) Taxonomy is part of the European Green Deal, the ElJs plan to reach cimate neutrality by 2050, and is a crucial element of the European Sustainable Finance Strategy. It is a classification establishing which economic activities are sustainable according to climate, environmental and social criteria. Who reports? The EU Taxonomy currently applies to more than 11.000 organisations: Large companies and financial institutions with more than 500 employees (with a balance sheet of more than 20MC or a turnover of more than 40MC) which are already required to provide a declaration of extra-financial performance under the Non-Financial Reporting Directive Organisations that use this information: financial market players, financial supervisory institutions (such as central banks) as well as all Member States when they establish public measures, standards or labels for green financial products or green bonds. From 2024, large companies and financial institutions that are already required to provide a declaration under the NFRD and meet 2 of the 3 following cnteria: 250 employees; A balance sheet of more than 25M Euros; Aturnover of more than 50M Euros From 2025 the timeline will align with that of CSRD -From the 2025 financial year (publication in 2026): large companies not subject to the NFRD What is reported? Since January 2022, companies and financial institutions have been required to publish their analysis of eligibility for the European taxonomy. In 2023 for companies and in 2024 for financial institutions, alignment will have to be communicated publicly The eligibility analysis represents an analysis of the activities of the company or the activities financed that are considered by the European Union to be able to contribute contribute significantly to the ecological transition. The shares of tumover, operating expenditure (OPEX) and capital expenditure (CAPEX) of these activities must be published. The alignment study consists of verifying that the eligible activities meet the technical criteria ensuring that they are sustainable. The economic activities must contribute to one of the six environmental objectives below and not harm the other objectives, while respecting social rights: 1. Climate change mitigation 2. Climate change adaptation 3. Sustainable use and protection of water and marine resources 4. Transition to a circular economy 5 Pollution prevention and control 6. Protection and restoration of biodiversiy

California Climate Disclosure Bill The California Climate Disclosure Bill consists of Senate Bill (SB) 253, which mandates the disclosure of ermissions, and SB 261, which mandates disclosures in line with the recommendations of the TCFD. These regulations are set to come into force from 2026 MANDATORY - INTERNATIONAL CLIMATE RISK - FINANCIAL RISK $ Who reports? SB 253 applies to US companies doing business in Califomia with annual global revenues exceeding Sibillion SB 261 applies to US companies doing business in Califomia with annual global revenues >$500 milion What is reported? The requirements of the bill are mostly aligned to the four pillars of the TOFD with a few additions: Governance: Fully aligned to TCFD Strategy Fully aligned to TCFD Risk Management Companies must evaluate climate-related financial risk based on immediate and long-term financial outcomes" Metrics and Targets Scope 3 emissions disclosure is required Limited assurance of scope Tand 2 emissions up until 2030, and then reasonable assurance thereafter Scope 3 emissions will need to be assured to a limited standard by 2030 Scope 3 emissions must be disclosed no later than 180 days after disclosing scope land 2 emissions Benefits Enhance transparency for investors. Standardise disclosures for companies operating in Califomia Align public investment with climate goals Non-compliance Companies not in compliance of SB253 may face penalties up to $500,000 per year Companies anies not in compliance of SB261 may face up to $50,000 in penalties per year

DJSI Dow Jones Sustainability Indexes The Dow Jones Sustainability Indexes The DUSI is a set of benchmark indices for responsible investment. These indices, whether regional or national, assess the performance of companies' economic, social and governance (ESG) criteria and enable investors to make informed decisions to encourage more responsible investment portfolios. VOLUNTARY INTERNATIONAL ESG HIGH REPUTATION Who reports? DUSI voluntary with no exclusion criteria. Approximately 4.500 companies are invited to respond annually, but only the top 2,500 global companies by market capitalisation are eligible for inclusion Unlike the FTSE4Good, the DUS sends a questionnaire for companies to complete rather than undertaking an assessment on publicly available information The top 10% most sustainable market caps per industry are then included in the global index. based on their sustainability scores What is reported? The questionnaire covers three areas: Economic, Environmental and Social 50% of the questionnaire is industry-specific allowing companies to be compared directly against their sector peers. Where is it reported? The top 10% of eligible companies benchmarked by DJSI are included in the annual DUSI World Index (ie the 250 highest benchmarked companies globally) All additions and deletions to the index are also noted. Companies are required to enhance and refresh their sustainability initiatives in order to ensure they remain included. Companies can be deleted from the index if they fail to do so. Benefits Provides investors with a best-in-class benchmark Helps investors to account for sustainability in their decision-making process Well resourced, robust and well-respected methods of demonstrating environmental commitment through standardised testing Industry-specific questionnaires allows for peer comparisons

TNFD for Financial Institutions The Taskforce on Nature-related Financial Disclosures (TNFD) is a global science-based initiative with the mission to develop and deliver risk management and disclosure framework for organisations to report and act on evolving nature-related issues. The Task Force for Nature-related Financial Disclosures (TNFD) has released a draft form of sector-specific guidance for financial institutions on the TNFD recommendations, the TNFD metrics architecture, and additional sources and references on nature-related issues for financial institutions. Who reports? The additional TNFD guidance The a for financial institutions applies to banks, insurance companies, asset managers and owners, and development finance institutions. institutions offering portfolio management services What is reported? The Taskforce proposes an adaptation of the TNFD disclosure metrics architecture for financial institutions: 1. A metric that represents the financial exposure to a defined set of sectors considered to have maternal nature-related dependencies and impacts. 2. Ametric that represents the financial exposure to companies with activities in sensitive locations 3. Additional metrics aligned with nature change, as relevant to the financial institution Benefits Disclosure can allow companies to enhance and protect their reputation, attract capital, and track and benchmark progress The TNFD framework helps financial institutions to identify nature-related risks and opportunities

ICMA Green Bonds Principles The Green Bond Principles (GBP) are guidelines that enable issuers to finance sustainable projects. These guidelines promote transparency, disclosure and reporting within the green bond market. INTERNATIONAL FINANCIAL RISK $ Who reports? Any issuers of green bonds This may include banks or other corporates. What is reported? Under the recommendations of the principles, issuers should implement a green bond framework that aligns to four components: Use of proceeds-Proceeds of a green bond should finance green projects. The GBP define the categones of projects that can be labelled as green. Process for project evaluation and selection-Issuers should dedose the sustainability credentials of projects to their investors eg how the project is determined to be sustainable and the targets associated with the bond. Management of proceeds-There should be full transparency from the issuers as to how proceeds are managed Reporting-Report how proceeds are allocated to green projects. This can be within the issuers annual report Benefits Outlines the key components of investors strategies for achieving sustainability commitments. Ensures investments are aligned with sustainability goals

Carbon Reporting Services Carbon reporting is a means by which a company can present their greenhouse gas emission inventory and formulate a roadmap in order to achieve carbon emission reductions. Carbon reporting is now mandatory in over 40 countries around the world and an integral part of ESG for major organisations. Be it driven by statutory compliance, shareholder obligations or stakeholder pressure, the benefits of carbon reporting are not only a reduction in an organisation’s GHG emissions, which benefits the entire world but also in finding inefficiencies that can result in process cost savings. Scope Emissions GHG Emissions Helping clients identify GHG Emissions To be meaningful, carbon reporting should contain accurate and informative information that is useful to both the organisation in managing their GHG emissions and also to external parties who require the information to make informed decisions. We have helped our clients around the world in accurately identifying their GHG emissions from Scope 1 through to Scope 3 emissions. Defining the boundary of the assessments The selection of tools and guidance to be used is therefore crucial in defining the boundary of the assessment. Our carbon team support our clients achieve their net-zero ambitions by offering a bespoke service that adopts national and international standards and guidance, including: The Greenhouse Gas Protocol Science Based Targets Initiative (SBTi) Net-Zero Standard Energy Management Assessment of the life cycle greenhouse gas emissions of goods and services Carbon Neutrality With our support our clients can manage their climate change obligations and identify opportunities of excessive energy usage or other inefficiencies leading to cost effective process changes. Accurate analysis of GHG emission data Consistent means of tracking GHG emissions over time Provide an action plan for GHG emission reductions and cost savings