ESG glossary
Get definitions for sustainability and ESG terminology, acronyms, reporting standards & organisations in our ESG glossary.
A-B Active Ownership refers to the use of shareholder rights to influence a company’s business operations. This terminology is often used when shareholders use their influence to push companies towards more ESG oriented conduct and goals. Acute Risks refer to climate-related risks that are short-term or one-off risks, such as a typhoon. Anthropogenic CO2 means carbon dioxide that is emitted into the air due to human activities such as burning fossil fuels, deforestation, livestock farming, fertilisation, etc. Aqueduct Water Risk Atlas is a tool made by the World Resources Institute, which helps companies, investors, governments, and other users understand where and how water risks and opportunities are emerging worldwide. Use the tool here. B Corporation is a business that has been certified for having achieved high standards of verified performance, accountability, and transparency. These businesses lead the way in the global movement for an inclusive, equitable, and regenerative economy. Learn more: What is a B Corp? Biodiversity is the term used to describe the enormous variety of life on Earth, which is under threat by human activity. It is rapidly rising to the top of the priority list of issues for corporate ESG programs and reporting. Learn more: Why is Biodiversity Important? Bioeconomy means “the production, utilization and conservation of biological resources, including related knowledge, science, technology, and innovation, to provide information, products, processes and services across all economic sectors aiming toward a sustainable economy.” (Food and Agriculture Organization of the United Nations) Biomimicry is the practice of learning from and mimicking natural solutions and strategies to solve human challenges. A famous example of biomimicry is Velcro, which was inspired by plant burrs. Bioremediation is the practice of using living organisms, like microbes and bacteria, to remove contaminants, pollutants, and toxins from soil, water, and other environments. Bloomberg ESG provides a “1 to 100” score to companies based only on their level of ESG and sustainability disclosure. Brundtland Commission Report was a report published by the World Commission on Environment and Development in 1987, which developed guiding principles for sustainable development as it is generally understood today. Building Research Establishment Environmental Assessment Method is an environmental assessment standard developed by the Building Research Establishment (BRE) for rating the sustainability of buildings.
C-D Cap and Trade is an approach that incentivises companies to reduce their carbon emissions. It works by allowing the market to determine a price on carbon. Carbon Budget refers to the amount of greenhouse gases that can be emitted for a given level of global warming. If we exceed this budget, global temperatures will become higher. Carbon Credit refers to a permit that can be bought by companies to offset carbon dioxide emissions. Each credit represents 1 ton of carbon dioxide removed from the atmosphere usually via agricultural or forestry practices. Carbon Footprint is the total amount of greenhouse gases generated by our actions. Carbon Labeling is the practice of adding information relating to the carbon footprint of a product onto that product, so that consumers can understand the impact of the item they are purchasing or consuming. Carbon Neutral means a net zero release of carbon dioxide into the atmosphere. Carbon Offset is a reduction of GHG emissions to make up for emissions that are happening elsewhere. Carbon Tax is a tax on fossil fuels, such as petrol, which is designed to reduce carbon emissions. Carrying Capacity refers to the maximum population of a species in a certain habitat before resources are consumed at a greater rate than they replenish. CPD, or Carbon Disclosure Project, is a not-for-profit organisation that runs the global disclosure system for investors, companies, cities, states and regions to manage their environmental impacts. CCAF stands for the Center for Climate Aligned Finance. It was established to help the financial sector transition the global economy towards a zero-carbon, 1.5°C future. CDSB means the Climate Disclosure Standards Board, which is an international consortium of business and environmental NGOs “committed to advancing and aligning the global mainstream corporate reporting model to equate natural capital with financial capital.” Visit their website here. CEO Water Mandate a UN Global Compact initiative that mobilises business leaders on water, sanitation, and the Sustainable Development Goals. CERES stands for Coalition for Environmentally Responsible Economies and is a non-profit organisation that works with the most influential capital market leaders to solve the world's greatest sustainability challenges. Chronic Risks are persistent and ongoing risks to the environment, such as gradual changes in weather patterns, temperature increases and rising sea levels. Circular Economy is a model of production and consumption that involves reusing, repairing, refurbishing and recycling products and materials instead of throwing them away. Cleantech is a broad term for a variety of environmentally-friendly practices and technologies. Climate Finance is local, national, or transnational financing used to address climate change issues by reducing greenhouse gas emissions. Commission on Sustainable Development, or CSD, is a body that was established by the UN General Assembly to ensure the advancement of outcomes from the United Nations Conference on Environment and Development (UNCED), also known as the Earth Summit. Conscious Capitalism is a way of thinking about and executing business that is more socially and environmentally responsible. Context-Based Sustainability is a new approach to corporate sustainability management that takes social, economic and environmental thresholds in the world explicitly into account. It is considered by many to be an advancement on Corporate Social Responsibility best practices. Convention on Biodiversity, aka CBD, is the equivalent of the United Nations Framework Convention on Climate Change (UNFCCC) but relating to global initiatives to halt the destruction of Earth’s biodiversity. Corporate Governance refers to the system of rules, policies and practices that help a board of directors to oversee, direct, control and manage a company effectively. Cradle to Cradle means products that, at the end of their lifespan, can be truly recycled, imitating nature's own cycle whereby waste goes back to the earth and nourishes new life. Cradle to Grave is the opposite idea to Cradle to Cradle and refers to products that are disposed of at the end of their life cycle. CSR stands for Corporate Social Responsibility, which is a corporate discipline that incorporates social factors into its business operations. Many consider it to be the precursor to ESG. Decarbonisation literally means the removal of carbon. There are two aspects to decarbonisation. The first is the reduction of greenhouse gas emissions and the second is the absorption of carbon in the atmosphere through activities like forestation. DJSI means the Dow Jones Sustainability Index, which ranks organisations according to long-term economic, environmental, and social criteria as identified through the S&P Global Corporate Sustainability Assessment (CSA). It represents the top 10% of the largest 2,500 companies in the S&P Global BMI. Visit the Index here. Double Bottom Line, also known as DBL or 2BL, is when, in addition to the conventional bottom line, which measures fiscal performance, a business also measures its performance in terms of positive social impact. See also: Triple Bottom Line Double Materiality is a combination of financial materiality and impact materiality. EU organisations must report on both matters that have a direct impact on enterprise value and those that affect the economy, environment, and community. Downcycling is the process of recycling a product, which will never be as structurally strong as it was when made of virgin (unrecycled) materials, into a different type of product that doesn’t require the same level of strength. Dynamic Materiality is a precursor to double materiality. It prioritises financial materiality but introduces the concept of reporting on ‘pre-financial information’.
E-F Eco-Efficiency refers to business practices that focus on reduction of energy, water and virgin material use; reduction of waste and pollution levels; extension of function and therefore product/service life; consideration of the usefulness and recyclability of products/services at the end of their useful life. Ecolabelling is a voluntary method of certification and labeling whereby certification is provided by an impartial third party for products or services that meet transparent environmental criteria. These criteria are especially focused on life cycle considerations. E-cycling is the process of reusing or repurposing electronic equipment and components instead of discarding them at the end of their life cycle. EFRAG is a private association established in 2001 with the encouragement of the European Commission to serve the public interest. EFRAG extended its mission in 2022, providing Technical Advice to the European Commission in the form of fully prepared draft EU Sustainability Reporting Standards. You can access the draft standards here. Employee Diversity and Inclusion refers to the variety of individuals that make up the workforce and how they are treated. Workplaces that prioritise diversity and inclusion efforts have been shown to be safer, happier, and more productive environments. Learn more: Diversity, Equity and Inclusion End-of-Life Product Disposal, in the context of ESG, means the considerations required to dispose of a product responsibly. Energy Management System (EMS) refers to the process of managing the usage of a building’s energy. For companies with significant real estate, EMS can be a way of achieving important ESG goals. Energy Savings Opportunity Scheme (ESOS) is a mandatory energy assessment scheme for organisations in the UK that meet certain qualification criteria. Learn more about ESOS here. Enterprise Risk Management or ERM is the process by which organisations minimise risk on their capital and earnings. An ERM process involves planning, organising, directing, and controlling your company’s activities when it comes to financial risk, strategic risk, operational risk, and risks associated with accidental losses. Environmental Factor, in the context of company ESG, is something that concerns the preservation of our natural world. ESG environmental issues also take into account the use of natural resources by businesses and the effect their operations have on the environment. Environmental Management System or EMS is a framework that allows your company to reduce environmental impact while maintaining operational efficiency. ESG stands for Environmental, Social, and Governance. These are critical criteria relating to sustainability, community, and the responsible administration of an organization that now inform investment decision-making. ESG Software refers to a computer application, which can either be installed or exists in the cloud, that facilitates the planning and execution of your sustainability strategy, ESG compliance and reporting. Learn more about Ansarada’s ESG tools. Ethical Consumerism is the concept of purchasing products and services produced in a way that minimiSes social and/or environmental damage. EU 2030 Climate and Energy Framework contains EU-wide targets and policy objectives in terms of climate change for the period from 2021 to 2030. Learn more on the European Commission website. Fair Trade is an ethical system of certification that aims to ensure a set of standards are met in the production and across the supply chain of a product. Food Miles refers to the distance food travels from the point at which it is produced to the point at which it is available to the consumer. It’s just one factor in determining the environmental impact of food. Fossil Fuels are finite natural resources that are consumed to produce energy, such as coal, gas, and oil. Fracking is the common terminology for “hydraulic fracturing”, which is a drilling technique used for extracting natural resources, such as oil and gas, from deep underground.
G-H GHG is the acronym for greenhouse gases, such as carbon dioxide, methane, and nitrous oxide, that trap heat in the atmosphere and warm the planet. Global Warming is the term used to describe the rapid increase in Earth’s surface temperature as a result of greenhouse gases released into the atmosphere through human activities. Good Life Goals Business Guide is a guide to making the Sustainable Development Goals relevant to organisations’ employees and customers. You can view the guide here. Governance Factor, in the context of ESG, is something that concerns how the company is managed and its success measured. This includes things like corporate policies and stakeholder rights and responsibilities. GRC is the acronym for Governance, Risk & Compliance. GRC refers to the procedures and processes that help your company manage governance, risk and compliance in order to achieve its objectives, address uncertainty and act with integrity. Learn more: GRC GRC Software refers to a computer application, which can either be installed or exists in the cloud, that facilitates the planning and execution of your GRC strategy, compliance and risk reporting. Learn more about Ansarada’s GRC tools. Green Labeling is another term for ecolabelling. Greenhouse Gas Protocol is an international body that produces the world's most widely used greenhouse gas accounting standards. Visit their website here. Greenwashing is the term used to describe when an organisation represents itself to consumers as environmentally conscious or responsible, but makes little positive contribution to environmental efforts in reality. This impression is often made using clever marketing tactics, such as the use of green or natural looking colours on packaging. GRI stands for Global Reporting Initiative, an independent, international organisation that “helps businesses and other organisations take responsibility for their impacts by providing them with a global common language to communicate those impacts.” This common language is in the form of the GRI Standards.
I-J IIRC means the International Integrated Reporting Council, a body that enhances accountability and stewardship for the broad base of capitals (financial, manufactured, intellectual, human, social and relationship, and natural) and promotes understanding of their independencies. Visit their website here. Impact Materiality is a definition of materiality in ESG developed by GRI, which highlights that that there are other issues organisations should report on because they affect the economy, environment, and people. Industrial Ecology is the study of industrial systems that operate more like natural ecosystems (source). Intergovernmental Panel on Climate Change or IPCC is the United Nations body for assessing the science related to climate change. International Organization for Standardization or ISO is an independent, non-governmental international organisation that publishes international standards. ISO 26000 refers to the international standard providing guidance to businesses and organisations committed to operating in a socially responsible way. Application of ISO 26000 is increasingly viewed as a way of assessing an organisation’s commitment to sustainability and its overall performance. Find out more about the standard here. ISSB, or International Sustainability Standards Board, was formed after COP26 by the Trustees of the IFRS Foundation to develop a comprehensive global baseline of sustainability disclosures. Access the standards here.
K-L Land Use and Ecological Impacts refers to the important role that land use plays in the climate system and the impact it has on global climate change. Leachate is the liquid formed when waste breaks down in landfill and water naturally filters through that waste. This contaminated water is highly toxic and can pollute both land and water. Leadership in Energy and Environmental Design (LEED) is an international green building certification system recognised as a benchmark for industry excellence in sustainability (source). Life Cycle Assessment is a way of determining the environmental impact of a product and all the stages of its life cycle. Low-Carbon Economy is the term used to describe an economy that produces low levels of GHG emissions, the most damaging of which, in terms of climate change, is carbon dioxide.
M-N Materiality is the term used to describe whether or not a topic is relevant and important to a company's Environmental, Social and Governance (ESG) plan. Learn more: What is Materiality? Materiality Assessment is an analysis of ESG issues that are critical to your organisation and how important these issues are to stakeholders. Take the Ansarada ESG pulse check now. Materiality Map is a snapshot of likely material sustainability issues on an industry-by-industry basis. Materiality Matrix is a visualisation of an organisation’s materiality assessment. It plots relevant issues on X-Y axes, most commonly business impact vs. stakeholder importance. Natural Capital describes natural assets, generally broken down into three principal categories: natural resource stocks, land and ecosystems. Natural Capital Protocol is a decision-making framework that enables organisations to identify, measure and value their direct and indirect impacts and dependencies on natural capital (source). Negative Screening is the process of finding companies that score poorly on environmental, social and governance (ESG) factors and eliminating them as a potential investment opportunity. Newsweek Green Ranking is a respected ranking of corporate bodies based on their environmental credentials. It ranks the 500 largest publicly-traded companies in the United States and the 500 largest publicly-traded companies globally on overall environmental performance. Non-Virgin Inflow (in the context of the Circular Economy) refers to materials that have been previously used.
O-P OECD or Organization for Economic Co-operation and Development is a unique forum where the governments of 37 democracies with market-based economies collaborate to develop policy standards to promote sustainable economic growth (source). OECD Guidelines for Multinational Enterprises is a set of government-backed standards for responsible business conduct in a global context. View the guidelines here. PACTA means the Paris Agreement Capital Transition Assessment, which is a free, open-source software application that enables users to measure the alignment of financial portfolios with climate scenarios. It also analyses companies within these parameters. Paris Agreement means the international treaty on climate change that was adopted by 196 Parties at COP 21 on 12 December 2015. It is legally binding and was entered into force on 4 November 2016. Its goal is to limit global warming to preferably to within 1.5 degrees Celsius of pre-industrial levels. Polluter Pays Principle is the idea that companies that pollute the environment should have to pay for whatever activities are necessary to negate the harm. Poseidon Principles is a framework for assessing and disclosing the climate alignment of ship finance portfolios with the aim of enabling financial institutions to align their portfolios with responsible environmental impacts. Positive Screening is the process of finding companies that score well relative to their peers on ESG factors and shortlisting them as a potential investment opportunity. Post-Consumer Waste is the household waste produced by the consumer when a product has reached the end of its lifecycle. Examples include packaging and food waste. Pre-Consumer Waste covers materials that are discarded before they reach the consumer. Examples include material off-cuts and faulty items. Principles for Responsible Banking (PRB) are standards set by the United Nations for a sustainable, future-proof banking system aligned with goals outlined in the United Nations Sustainable Development Goals and the Paris Agreement. Principles for Responsible Investment (PRI) are United Nations-supported best practices for incorporating ESG issues into investing. Product Stewardship is the idea that everyone who imports, designs, produces, sells, uses, and disposes of products has a shared responsibility to reduce the environmental and safety impacts of those products.
Q-R Redefining Value is a program delivered by WBCSD that helps companies understand environmental, social and governance (ESG) information through collaborations, guidance, case studies, engagement and education. Renewable Inflow, in the context of the Circular Economy, refers to materials that can be renewed by nature when they are used. R-Factor is short for “Responsibility-Factor”, which is a transparent ESG scoring system developed by State Street Global Advisors. Rio Declaration refers to the United Nations Conference on Sustainable Development that took place in Rio de Janeiro, Brazil on 20-22 June 2012. It resulted in a focused political outcome document containing practical measures for implementing sustainable development.
S-T SASB Standards guide the disclosure of financially material sustainability information by companies to their investors. Available for 77 industries, the Standards identify the subset of environmental, social, and governance issues most relevant to financial performance in each industry (source). SBTI, or the Science Based Targets Initiative, is a partnership between CDP, the United Nations Global Compact, World Resources Institute (WRI) and the World Wide Fund for Nature (WWF). It shows organisations how much and how quickly they need to reduce their greenhouse gas (GHG) emissions to prevent the worst effects of climate change. SDG Indicators refers to the global indicator framework for the Sustainable Development Goals and targets of the 2030 Agenda for Sustainable Development. Sharing Economy connects workers to customers through a digital platform. Examples of businesses using this model are Uber, Upwork, Airbnb, and Airtasker. Social License to Operate (SLO) refers to the acceptance or approval provided by stakeholders and communities to a project, site, company, or industry. Social Return on Investment (SROI) is a method for measuring values that are not traditionally reflected in financial statements, including social, economic, and environmental factors (source). SRI means Socially Responsible Investing, which is an investment strategy that aims to generate both social change and financial returns for an investor (source). Standard for Sustainable and Resilient Infrastructure, also known as SuRe Standard, is a third-party-verified, global voluntary standard to drive the integration of sustainability and resilience aspects into infrastructure development. Steady State Economy means an economy that remains in a steady state due to a stable and constant stock of physical wealth (capital) vs population size. In terms of ESG, a steady state economy seeks to find a balance between production growth and population growth such that resources aren’t depleted. STOXX Global ESG Leaders Index offers a representation of the global leading companies in terms of governance criteria (source). Sustainability, in the context of ESG, is the broad term that describes the relationship between a company and the environment. Learn more: What is Sustainability? Sustainability Report is the report produced by an organisation to inform stakeholders about its ESG policies, programs, and performance. Sustainability reports are sometimes referred to as corporate citizenship reports, or CSR reports. Sustainable Development Goals (SDGs) are 17 UN-established goals that provide a blueprint for peace and prosperity for people and the planet, now and into the future. Learn more about the goals here. TCFD stands for the Taskforce on Climate-related Financial Disclosures, which was created by the Financial Stability Board to improve and increase reporting of climate-related financial information. Thomson Reuters ESG Scores measure a company's relative ESG performance across ten key themes. Transition Risks are business-related risks that follow societal and economic shifts toward a low-carbon and more climate-friendly future (source). Triple Bottom Line (TBL) means measuring a company’s performance in terms of 3 key things: profit, people, and the planet. See also: Double Bottom Line
U-V UN Environment Programme (UNEP) is the global authority for the environment with programmes focusing on climate, nature, pollution, sustainable development and more. Visit their website here. UNGC means the United Nations Global Compact, which is the world’s largest corporate sustainability initiative. It supports companies to align their strategies and operations with the UNGC’s 10 Principles and collaborate to advance broader societal goals. UNPRB means the United Nations Principles for Responsible Banking, which is the a global sustainable banking framework, with almost half the world’s banking industry committed signatories. UNPRI means the United Nations Principles for Responsible Investment, which is the UN’s framework for sustainable and socially responsible investment. UTZ Certified, also known as UTZ, is a program and a label for sustainable farming. Vice Stocks, also known as Sin Stocks, are shares of public companies whose business is considered unethical, immoral, or unsavoury. Traditionally, the term's been applied to alcohol, tobacco, gambling, and defense (source). Virgin Inflow, as part of the Circular Economy, means a material that has not previously been used and is non-renewable.
W-X Waste Hierarchy refers to the pyramid or triangle model that illustrates activities to do with waste, positioning them from most to least favourable in terms of their environmental impact. WBCSD stands for World Business Council for Sustainable Development, which is a global, CEO-led community of over 200 of the world’s leading sustainable businesses. WFE ESG Guidance and Metrics is the World Federation Exchanges ESG Guidance and Metrics. These are designed to provide a reference point for stock exchanges looking to introduce, improve or require ESG reporting in their markets. World Energy Outlook (WEO) is an independent critical analysis of trends in energy demand and supply, and their consequences for energy security, environmental protection and economic development.
Y-Z Zero Carbon means that no carbon emissions are being produced from a product or service (for example, a wind farm generating electricity). Zero Waste is an approach that seeks to maximise recycling, minimise waste, reduce consumption and ensure that products are made to be reused, repaired or recycled back into nature or the marketplace.