ESG Glossary

Absolute Target

Refers to a target that aims to reduce total GHG emissions by a set amount. For example, a company sets a target to reduce total GHG emissions by 50% by 2030. See also Intensity Target.

Active ownership

An approach that uses the right sand position of asset ownership to influence the activities or behaviors of the issuing entity. This approach is most applied in listed equities but can be exercised in other asset classes.

Activist Investing

Is investing in a company and/or obtaining seats in a company with the intention to drive major change in a company.

Adaptation

Anticipating the adverse effects of climate change and taking appropriate action to prevent or minimize the damage they can cause or taking advantage of opportunities that may arise. Examples of adaptation measures include large-scale infrastructure changes, such as building defenses to protect against sea-level rise, as well behavioral shifts, such as individuals reducing their food waste. In essence, adaptation can be understood as the process of adjusting to the current and future effects of climate change.

Anti-Corruption, Governance

Anti-corruption activities inhibit corruptive practices and prevent fraudulent conduct. These activities could include corporate policy or commitment statements tied to bribery, anti-corruption, or whistle-blowing systems.

Anti-Corruption Measures

Measures that work to ensure that the demand to have responsible businesses and investment starts to rely on indicators that go beyond financial returns, understanding the ways corruption can occur in the private and public sector. As a first step, understanding whether environmental, social and governance standards are appropriately addressed. The most common form of corruption is bribery, conflict of interest, embezzlement, lobbying, undue influence, and sextortion.

ASC

Accounting Standards Codification is the current single source of United States Generally Accepted Accounting Principles (GAAP). It is maintained by the Financial Accounting Standards Board (FASB).

B

Bank

A financial institution licensed to receive deposits and make loans. Banks may also provide financial services, such as wealth management, currency exchange and safe-deposit boxes. Commercial banks with lending activities should not sign the PRI; instead, they are encouraged to sign the Principles for Responsible Banking (PRB). In the case of universal banks, PRI usually recommends signing up their asset-management or wealth-management subsidiaries.

B corp

B Corp Certification is a designation that a business is meeting high standards of verified performance, accountability, and transparency on factors from employee benefits and charitable giving to supply chain practices and input materials.

To achieve certification, a company must:

• Demonstrate high social and environmental performance by achieving a B Impact Assessment score of 80 or above and passing our risk review. Multinational corporations must also meet baseline requirement standards

• Make a legal commitment by changing their corporate governance structure to be accountable to all stakeholders, not just shareholders, and achieve benefit corporation status if available in their jurisdiction

• Exhibit transparency by allowing information about their performance measured against B Lab’s standards to be publicly available on their B Corp profile on B Lab’s website

Benchmarking

The process in ESG that involves measuring the performance of your business against competitors in the same market across similar metrics. Sustainability benchmarks are a way of systematically evaluating the sustainability performance of voluntary standards, certifications, companies, or other entities that aim to implement sustainability measures or create positive impacts. For example, in Real estate this could be comparing emissions per square foot across properties used for similar use or in manufacturing comparing emissions per ton of material produced.

Best Available Technique (BAT)

Best available technique refers to the available techniques which are the best for preventing or minimizing emissions and impacts on the environment. BAT include both the technology used, and the way your installation is designed, built, maintained, operated, and decommissioned.

Best in class

The inclusion of investment opportunities demonstrating higher performance on ESG factors than their peers.

Biodegradable

Is a term used to describe substances or object that is capable of being decomposed by bacteria or other living organisms.

Biodiversity

Is the measure of variation at the genetic and species level of life on earth.

Biodiversity credits

According to the New South Wales government, biodiversity credits are the common unit of measure for offsets in the Biodiversity Offsets Scheme. Biodiversity credits created at a stewardship site via a Biodiversity Stewardship Agreement, can be used to offset the loss of biodiversity values on development site (a credit obligation) by being traded and retired.  

Biodiversity credits are used to measure both: 

Impacts on biodiversity from development and clearing at a site  

The predicted improvement in biodiversity condition at a site  

The Biodiversity Assessment Method (BAM) defines two types of biodiversity credits used to measure impacts: 

Ecosystem credits – measure the value of threatened ecological communities, threatened species habitat for species that can be reliably predicted to occur with a Plant Community Type (PCT), and PCTs generally 

Species credits – apply to all other threatened species which are found to occur at that location and cannot be reliably predicted to occur within the identified ecological communities at the development site

Bioenergy

Waste-to-energy, also called bioenergy, has been used in Europe, East Asia, and the United States for decades to destroy waste that would otherwise go to landfills.

The waste is burned as feedstock at high temperatures to create fuel, gas or steam that drives a turbine and churns out electricity.

Biofuel

Any fuel that is derived from biomass, that is plants or algae material or animal waste. Biofuels are a renewable source of energy since they can be replenished readily.

Biogas

A mixture of methane (CH4) and carbon dioxide (CO2) used as fuel and produced by bacterial degradation of organic matter or through gasification of biomass. Included in this category are landfill gas and sludge gas (sewage gas and gas from animal slurries) and another biogas.

Biogenic carbon

This refers to carbon which is contained in biomass (both above-ground and below- ground), dead organic matter, soil organic matter, and harvested products.

Biomass

Any organic matter, i.e., biological material, available on a renewable basis. Includes feedstock derived from animals or plants, such as wood and agricultural crops, and organic waste from municipal and industrial sources. Biomass fuels should be sustainably sourced and certified where possible, and include:

Solid biofuels - solid fuels derived from biomass. Includes feedstock derived from animals or plants, such as wood and agricultural crops, and organic waste from municipal and industrial sources.

Biogas - a mixture of methane (CH4) and carbon dioxide (CO2) used as fuel and produced by bacterial degradation of organic matter or through the gasification of biomass.

Liquid biofuels – liquid fuels derived from biomass such as ethanol and biodiesel.

Biomimicry

Is the design of materials, processes and structures that emulate biological entities and processes.

Bio sequestration

Is the capture and storage of the atmospheric greenhouse gas carbon dioxide by continual or enhanced biological processes.

Bloomberg ESG

Bloomberg ESG provides a “1 to 100” score to companies based only on their level of ESG and sustainability disclosure. Bloomberg does not indicate whether it has a mechanism for companies to verify information or provide feedback on their ESG disclosure score.

Blue bond

Blue Bonds are a bond instrument that raise capital for projects with marine or ocean-based benefits. The first blue bond was issued in 2018.

Blue carbon

The term for carbon captured by the world's ocean and coastal ecosystems. Sea grasses, mangroves, and salt marshes along our coast "capture and hold" carbon, acting as something called a carbon sink. These coastal systems, though much smaller in size than the planet's forests, sequester this carbon at a much faster rate, and can continue to do so for millions of years. Most of the carbon taken up by these ecosystems is stored below ground where we can't see it, but it is still there. The carbon found in coastal soil is often thousands of years old.

Blue economy

According to the World Bank, the blue economy is the "sustainable use of ocean resources for economic growth, improved livelihoods, and jobs while preserving the health of ocean ecosystem.”

Blue washing

Blue washing refers to the practice of businesses to sign up for the UN global compact and use their association with the United Nations to enhance their image and shift attention from their controversial business practices.

Brown industries

A term to refer to the highest greenhouse gas emitting industries.

Building Research Establishment Environmental Assessment Method (BREEAM)

Building Research Establishment Environmental Assessment Method is used to masterplan projects, infrastructure, and buildings.

Business roundtable

In August 2019 at the Business Roundtable 181 CEOs signed a new Statement on the Purpose of a Corporation. These CEOs committed to lead their companies for the benefit of all stakeholders – customers, employees, suppliers, communities, and shareholders.

Carbon accounting

Which is sometimes also referred to as “greenhouse gas accounting,” refers to the techniques that are used to estimate how much carbon dioxide equivalents a business emits.

Carbon Capture and Storage (CCS)

As defined by the IEA, a family of technologies and techniques that enable the capture of carbon dioxide (CO2) from fuel combustion or industrial processes, the transport of CO2 via ships or pipelines, and its storage underground, in depleted oil and gas fields and deep saline formations.

Carbon Capture, Utilization, and Storage (CCUS)

A family of technologies and techniques in which carbon dioxide (CO2) is captured and used. Examples of direct utilization include CO2 used in the food and drink industry and for enhanced oil recovery. CO2 can also be converted into chemicals or fuels. If CO2 is stored but not utilized, then the process should be classified as Carbon Capture and Storage (CCS).

Carbon credit

A carbon credit is a transferrable instrument certified by governments or independent certification bodies to represent an emission reduction of one metric ton of CO2, or an equivalent amount of other GHGs. The purchaser of an offset credit can “retire” it to claim the underlying reduction towards their own GHG reduction goals.

Carbon Disclosure Project (CDP)

CDP manages a global environmental disclosure system used by more than 8,400 companies. Companies disclose by completing any or all the three CDP questionnaires of climate change, forests, and water security. Each year, CDP takes the information supplied in its annual reporting process and scores companies and cities based on their journey through disclosures and towards environmental leadership. Through its independent scoring methodology, corporate and city progress is measured, and organizations are incented to take greater action on climate change, forests, and water security.

Carbon dioxide / CO2

A greenhouse gas that has been linked to global warming.

Carbon footprint

A carbon footprint is the total greenhouse gas (GHG) emissions caused by an individual, event, organization, service, place, or product, expressed as carbon dioxide equivalent (CO2e).

Carbon in-setting

Is the implementation of nature-based solutions such as reforestation, agroforestry, renewable energy, and regenerative agriculture. While an important tool, carbon offsetting can't be considered a substitute for direct emissions reductions by corporates.

Carbon intensity

Volume of carbon emissions per million dollars of revenue (carbon efficiency of a portfolio), expressed in tons CO2e (carbon dioxide equivalent) / $M revenue. This is in line with the TCFD’s definition.

Carbon neutral

Means that any CO2 released into the atmosphere from a company’s activities is balanced by an equivalent amount being removed.

Carbon offsets

A carbon offset broadly refers to a reduction in GHG emissions – or an increase in carbon storage (e.g., through land restoration or the planting of trees) – that is used to compensate for emissions that occur elsewhere.

Carbon pricing

Is an instrument that is used to calculate the financial cost of climate change. In its essence, it creates financial incentives for companies and countries to lower their emissions by either becoming more efficient or adopting cleaner fuels.

Carbon Risk Real Estate Monitor (CRREM)

Provides the real estate industry with transparent, science-based decarbonization pathways aligned with the Paris Climate Goals of limiting global temperature rise to 2°C, with ambition towards 1.5°C.

Carbon sequestration

The process of capturing and storing atmospheric carbon dioxide. It is one method of reducing the amount of carbon dioxide in the atmosphere.

Carbon sink

Is anything natural or artificial that can accumulate and store some carbon-containing compounds for an indefinite period thereby reducing carbon dioxide in the atmosphere.

Carbon tracker

Is a non-profit headquartered in London that researches the impact of climate change on financial markets. Carbon Tracker popularized the notion of a “carbon bubble”, which describes the incompatibility between the continued development of fossil fuel projects and combating climate change.

Central bank

A public institution that manages the currency of a country or group of countries and controls the money supply. The main objective of a central bank is to maintain price stability by setting interest rates. A central bank is not a commercial bank and, therefore, is not motivated by profit; hence, it is considered a PRI asset owner.

Center for Climate Aligned Finance (CCAF)

Means the organization founded in July 2020 by the Rocky Mountain Institute, together with Wells Fargo, Goldman Sachs, Bank of America, and JPMorgan Chase. CCAF encourages the financial sector’s “climate alignment” with the goals of the Paris Agreement and seeks to partner with financial, industrial, and political stakeholders to “facilitate a transition in the global economy to net-zero emissions by mid-century.” CCAF’s webpage is available here.

Centers for Education and Research in Environmental Strategies (CERES)

Is a nonprofit organization transforming the economy to build a just and sustainable future for people and the planet.

Certified Emission Reductions (CER)

Issued by CDM (Clean Development Mechanism). One CER represents the successful emissions reduction equivalent to one tone of carbon dioxide equivalent (tCO2e). In 2008, price of 1 CER was $20. In 2018, it was €8. In 2019, €25.

Chief Executives for Corporate Purpose (CECP)

Is a CEO-led coalition that believes that a company's social strategy — how it engages with key stakeholders including employees, communities, investors, and customers —determines company success.

Chief Sustainability Officer (CSO)

Is the corporate title of an executive position in charge of that organizations environmental or sustainability programs.

Circular economy

The circular economy refers to an approach that seeks to eliminate waste, circulate products and materials, and to regenerate nature. The use of renewable energy and materials, and the reduction of consumption of finite resources, plays a key role. The term is typically used in contrast to a ‘linear economy’, which refers to the process by which resources are extracted, products are manufactured, and waste is discarded.

Clean Development Mechanism (CDM)

A carbon offset scheme run by UN. It allows a country to fund emission-reduction projects in another country, so that the sponsoring country can claim a part in lowered emissions and get closer to international emission targets. The CDM is supervised by the CDM Executive Board (CDM EB) under the guidance of the Conference of the Parties (COP/MOP) of the United Nations Framework Convention on Climate Change (UNFCCC).

Clean tech

In finance, the term cleantech—short for clean technology—is used to refer to various companies and technologies that aim to improve environmental sustainability. Usage of the term has varied over the years, with some users treating it synonymously with terms such as “green technology” to refer to renewable energy sources, new methods of recycling, and other environmentally friendly practices.

Climate action 100+

An investor initiative set up to ensure the most significant global greenhouse gas emitters, as well as other companies, take necessary action in driving the clean energy transition and tackling climate change.

Climate change

A shift in weather patterns due to a heating of the Earth's atmosphere, highly attributed to the burning of fossil fuels and other polluting activities that cause a release of greenhouse gasses.

Climate Disclosure Standards Board (CDSB)

The Climate Disclosure Standards Board is an international association of business and environmental NGOs. Its aim is to align mainstream corporate reporting to equate natural capital with financial capital, offering companies a framework with which to do this.

Climate disclosures 

Climate risk disclosure is when a company discloses the risks they are facing due to the physical impacts of climate change and the transition to a low carbon economy.

Climate-related opportunities

Business or financial opportunities resulting from efforts to address climate change. Efforts to mitigate and adapt to climate change can produce opportunities for organizations, such as through resource efficiency and cost saving, the adoption and utilization of low-emission energy sources, the development of new products and services and building resilience along the supply chain. Climate-related opportunities will vary depending on the region, market, and industry in which an organization operates. This is in line with the TCFD’s definition.

Climate bonds

Climate Bonds are fixed income bonds for climate change solutions/mitigation.

Climate Bonds Initiative (CBI)

An international, investor-focused not-for-profit project. An organization working solely on mobilizing the $100 trillion bond market for climate change solutions. It develops the Climate Bonds Standard and Certification Scheme, Policy Engagement and Market Intelligence work.

Climate risk 

Climate risks that can affect the financial performance of an investment may be broadly categorized in two ways: physical risks and transition risks. Physical risks may have financial implications for organizations, such as direct damage to assets and indirect impacts from supply chain disruption. Separately, transitioning to a lower-carbon economy may entail extensive policy, legal, technology, and market changes to address mitigation and adaptation requirements related to climate change.

Closed loop

Is an engineering term which has been used to define systems that automatically regulate around a set point to generate little deviation. In sustainability the term has been coined to describe systems that generate little to no waste and attempts to find use for all materials.

Collaborative engagement/ collaborative initiative

An engagement that an investor conducts jointly with other investors. This might include:

(1) groups of investors working together without the involvement of a formal investor network or other membership organization; or

(2) groups of investors working together with the support of a formal investor network or other membership organization, including the PRI.

Combined Heat and Power (CHP)

CHP is an energy-efficient technology that generates electricity and captures the heat that would otherwise be wasted to provide useful thermal energy—such as steam or hot water—that can be used for space heating, cooling, domestic hot water, and industrial processes. CHP can be located at an individual facility or building or be district energy or utility resource. CHP is typically located at facilities where there is a need for both electricity and thermal energy. Also known as cogeneration. See also: District Heating.

Combustion

Combustion refers to combustion within the company’s boundary giving rise to emissions of CO2, N2O, and CH4. Sources may include boilers, heaters, furnaces, incinerators, internal combustion engines, and turbines. Scope 1 GHG emissions exclude emissions of CO2 arising from the combustion and fermentation of biomass and biofuels; these emissions are reported as a separate category.

Commodities

A physical good attributable to a natural resource that is tradable and supplied without substantial differentiation by the public, traded in physical (spot) markers and in futures and forward markets. These include direct investments in physical assets, long exposure to commodities through commodity futures contracts and commodity exchange-traded funds (ETFs).

Commodity trading advisor

An organization or individual that provides advice on the buying and selling of futures contracts, options on futures or certain foreign-exchange contracts, often relating to commodities.

Community Development Financial Institutions (CDFI)

Is a financial institution that provides credit and financial services to underserved markets and populations, primarily in the USA but also in the UK.

Community impact investing

Means directing investment capital to communities that are underserved by traditional financial services institutions. Such initiatives generally provide access to credit, equity, capital, and basic banking products that these communities would otherwise lack.

Confidence-building measures

Different practices ranging from basic internal control mechanisms to internal audit and third-party assurance. Such measures aim to increase the confidence of both the organization itself and external stakeholders in the rigor and robustness of the process to collect the information presented in external ESG reports (e.g., PRI transparency reports).

Conflict of interest

A conflict of interest occurs when an individual's personal interests – family, friendships, financial, or social factors – could compromise his or her judgment, decisions, or actions in the workplace.

Consumer protection

Consumer protection ensures that consumer rights are upheld and aims to prevent unfair practices in the marketplace. These rights include the right to be informed, the right to choose, the right to have problems corrected, the right to be heard, the right to safety (e.g., ensuring data privacy), the right to consumer education and the right to service. This contributes to the idea of a company's having equal commitment to all stakeholders.

Consolidation approach

The identification of companies, businesses, organizations etc. for inclusion within the reporting boundary of the responding organization is known as the “consolidation approach”. The GHG Protocol states that two distinct approaches may be used to consolidate GHG emissions; the equity share and the control approaches. Control can be defined in either financial (financial control) or operational (operational control) terms.

Consumption

Consumption includes the use of goods, waste disposal and end of life treatment of products sold by the reporting organization.

Contractual instrument

Any type of contract between two parties for the sale and purchase of energy bundled with attributes about the energy generation, or for unbundled attribute claims. Markets differ as to what contractual instruments are commonly available or used by companies to purchase energy or claim specific attributes about it, but they can include energy attribute certificates (e.g., RECs, GOs), direct contracts (PPAs), green tariffs and other instruments.

Co-operative

A co-operative bank is a bank controlled by its members. Customers and members are represented in the bank’s governance structure and can become members/owners with relatively small investments. They tend to invest locally, focusing on SMEs and households.

Corporate

Debt securities issued by public or private financial and non-financial companies, including banks and insurers. This includes senior or subordinated publicly listed debt, project finance and infrastructure; it excludes assets in a lending portfolio, such as deposits and loans, where an organization runs a banking division.

Corporate disclosure guidelines

Help investors and other stakeholders access company data on ESG risks and opportunities. Can be voluntary or mandatory, governmental, or private initiatives.

Corporate governance

The system of rules and practices through which a company is run and controlled.

Corporate Social Responsibility (CSR)

CSR is a self-regulating business model that helps a company be socially accountable to itself, its stakeholders, and the public. By practicing corporate social responsibility, also called corporate citizenship, companies can be conscious of the kind of impact they are having on all aspects of society, including economic, social, and environmental.

Corporate Sustainability Assessment (CSA)

The S&P Global Corporate Sustainability Assessment annually evaluates the sustainability practices of more than 10,000 companies. Participants choose to fill out a questionnaire specific to their industry, and CSA assigns a sustainability score for each completed questionnaire. These scores help companies compare their sustainability performance to peer companies. Since 1999 CSA focuses on sustainability criteria that are both industry-specific and financially material.

Cradle to cradle

Is a sustainable business strategy that mimics the regenerative cycle of nature in which waste is reused. In nature, when a tree or animal dies or creates waste, that waste breaks down and becomes nutrients for another process.

Corporate Social Responsibility (CSR)

Corporate social responsibility (CSR) is a self-regulating business model that helps a company be socially accountable to itself, its stakeholders, and the public. By practicing corporate social responsibility, also called corporate citizenship, companies can be conscious of the kind of impact they are having on all aspects of society, including economic, social, and environmental.

Corporate Sustainability Reporting Directive (CSRD)

Announced in April 2021 to replace NFRD. The obligation coverage expanded from 11,700 companies to 49,000 companies; all large companies and all companies listed on regulated markets (except listed micro-enterprises). It requires the audit (assurance) of reported information. It introduces more detailed reporting requirements, and a requirement to report according to mandatory EU sustainability reporting standards. The mandatory reporting standards will be developed by EFRAG (European Financial Reporting Advisory Group) possibly by the end of 2022. It requires companies to digitally ‘tag’ the reported information, so it is machine readable and feeds into the European single access point envisaged in the capital markets union action plan.

Conference of the Parties (COP)

The COP is the supreme decision-making body of the Convention. All States that are Parties to the Convention are represented at the COP, at which they review the implementation of the Convention and any other legal instruments that the COP adopts and take decisions necessary to promote the effective implementation of the Convention, including institutional and administrative arrangements.

COP1

The first UNFCCC Conference of the Parties took place from 28 March to 7 April 1995 in Berlin, Germany. It voiced concerns about the adequacy of countries' abilities to meet commitments under the Body for Scientific and Technological Advice (BSTA) and the Subsidiary Body for Implementation (SBI). COP 1 agreed on "Activities Implemented Jointly", first joint measures in international climate action.

COP2

COP 2 took place in July 1996 in Geneva, Switzerland. Its ministerial declaration was noted (but not adopted) on 18 July 1996 and reflected a United States position statement presented by Timothy Wirth, former Under Secretary for Global Affairs for the United States Department of State at that meeting.

COP3

Took place in 01 - 10 December 1997 in Kyoto, Japan. After intensive negotiations, it adopted the Kyoto Protocol, which outlined the greenhouse gas emissions reduction obligation for Annex I countries, along with what came to be known as Kyoto mechanisms such as emissions trading, clean development mechanism and joint implementation. In a separate decision of the Conference of Parties, countries agreed to a range of national security exemptions which stated that bunker fuels and emissions from multilateral military operations would not be part of national emissions totals and would be reported outside of those totals. Most industrialized countries and some central European economies in transition (all defined as Annex B countries) agreed to legally binding reductions in greenhouse gas emissions of an average of 6 to 8% below 1990 levels between the years 2008–2012, defined as the first emissions budget period. The United States would be required to reduce its total emissions an average of 7% below 1990 levels; however Congress did not ratify the treaty after Clinton signed it. The Bush administration explicitly rejected the protocol in 2001.

COP4

COP 4 took place in November 1998 in Buenos Aires. It had been expected that the remaining issues unresolved in Kyoto would be finalized at this meeting. However, the complexity and difficulty of finding agreement on these issues proved insurmountable, and instead the parties adopted a 2-year "Plan of Action" to advance efforts and to devise mechanisms for implementing the Kyoto Protocol, to be completed by 2000. During COP4, Argentina and Kazakhstan expressed their commitment to take on the greenhouse gas emissions reduction obligation, the first two non-Annex countries to do so.

COP5

COP 5 took place between 25 October and 5 November 1999, in Bonn, Germany. It was primarily a technical meeting and did not reach major conclusions.

COP6

COP 6 took place on 13–25 November 2000, in The Hague, Netherlands. The discussions evolved rapidly into a high-level negotiation over the major political issues. These included major controversy over the United States' proposal to allow credit for carbon "sinks" in forests and agricultural lands that would satisfy a major proportion of the U.S. emissions reductions in this way; disagreements over consequences for non-compliance by countries that did not meet their emission reduction targets; and difficulties in resolving how developing countries could obtain financial assistance to deal with adverse effects of climate change and meet their obligations to plan for measuring and possibly reducing greenhouse gas emissions. In the final hours of COP 6, despite some compromises agreed between the United States and some EU countries, notably the United Kingdom, the EU countries, led by Denmark and Germany, rejected the compromise positions, and the talks in The Hague collapsed. Jan Pronk, the President of COP 6, suspended COP-6 without agreement, with the expectation that negotiations would later resume. It was later announced that the COP 6 meetings (termed "COP 6 bis") would be resumed in Bonn, Germany, in the second half of July. The next regularly scheduled meeting of the parties to the UNFCCC, COP 7, had been set for Marrakech, Morocco, in October–November 2001.

COP7

At the COP 7 meeting in Marrakech, Morocco from 29 October to 10 November 2001, negotiators wrapped up the work on the Buenos Aires Plan of Action, finalizing most of the operational details and setting the stage for nations to ratify the Kyoto Protocol. The completed package of decisions is known as the Marrakech Accords. The United States delegation maintained its observer role, declining to participate actively in the negotiations. Other parties continued to express hope that the United States would re-engage in the process at some point and worked to achieve ratification of the Kyoto Protocol by the requisite number of countries to bring it into force (55 countries needed to ratify it, including those accounting for 55% of developed-country emissions of carbon dioxide in 1990). The date of the World Summit on Sustainable Development (August–September 2002) was put forward as a target to bring the Kyoto Protocol into force.

COP8

Took place from 23 October to 1 November 2002, in New Delhi COP 8 adopted the Delhi Ministerial Declaration that, amongst others, called for efforts by developed countries to transfer technology and minimize the impact of climate change on developing countries. It is also approved the New Delhi work programme on Article 6 of the Convention. The COP8 was marked by Russia's hesitation, stating that it needed more time to think it over. The Kyoto Protocol could enter into force once it was ratified by 55 countries, including countries responsible for 55 per cent of the developed world's 1990 carbon dioxide emissions. With the United States (36.1 per cent share of developed-world carbon dioxide) and Australia refusing ratification, Russia's agreement (17% of global emissions in 1990) was required to meet the ratification criteria and therefore Russia could delay the process.

COP9

COP 9 took place on 1–12 December 2003 in Milan. The parties agreed to use the Adaptation Fund established at COP7 in 2001 primarily in supporting developing countries better adapt to climate change. The fund would also be used for capacity-building through technology transfer. At COP9, the parties also agreed to review the first national reports submitted by 110 non-Annex I countries.

COP10

COP10 discussed the progress made since the first Conference of the Parties 10 years ago and its future challenges, with special emphasis on climate change mitigation and adaptation. To promote developing countries better adapt to climate change, the Buenos Aires Plan of Action was adopted. The parties also began discussing the post-Kyoto mechanism, on how to allocate emission reduction obligation following 2012, when the first commitment period ends.

COP11

COP 11/CMP 1 took place between 28 November and 9 December 2005, in Montreal, Quebec, Canada. It was the first Conference of the Parties serving as the Meeting of the Parties to the Kyoto Protocol (CMP 1) since their initial meeting in Kyoto in 1997. It was one of the largest intergovernmental conferences on climate change ever. The event marked the entry into force of the Kyoto Protocol. Hosting more than 10,000 delegates, it was one of Canada's largest international events ever and the largest gathering in Montreal since Expo 67. The Montreal Action Plan was an agreement to "extend the life of the Kyoto Protocol beyond its 2012 expiration date and negotiate deeper cuts in greenhouse-gas emissions". Canada's environment minister, at the time, Stéphane Dion, said the agreement provides a "map for the future".

COP12

COP 12/CMP 2 took place on 6–17 November 2006 in Nairobi, Kenya. At the meeting, BBC reporter Richard Black coined the phrase "climate tourists" to describe some delegates who attended "to see Africa, take snaps of the wildlife, the poor, dying African children and women". Black also noted that due to delegates concerns over economic costs and possible losses of competitiveness, most of the discussions avoided any mention of reducing emissions. Black concluded that was a disconnect between the political process and the scientific imperative. Despite such criticism, certain strides were made at COP12, including in the areas of support for developing countries and clean development mechanism. The parties adopted a five-year plan of work to support climate change adaptation by developing countries and agreed on the procedures and modalities for the Adaptation Fund. They also agreed to improve the projects for clean development mechanism.

COP13

COP 13/CMP 3 took place on 3–17 December 2007, at Nusa Dua, in Bali, Indonesia. Agreement on a timeline and structured negotiation on the post-2012 framework (the end of the first commitment period of the Kyoto Protocol) was achieved with the adoption of the Bali Action Plan (Decision 1/CP.13). The Ad Hoc Working Group on Long-term Cooperative Action under the Convention (AWG-LCA) was established as a new subsidiary body to conduct the negotiations aimed at urgently enhancing the implementation of the Convention up to and beyond 2012. Decision 9/CP.13 is an Amended to the New Delhi work programme. These negotiations took place during 2008 (leading to COP 14/CMP 4 in Poznan, Poland) and 2009 (leading to COP 15/CMP 5 in Copenhagen).

COP14

COP 14/CMP 4 took place on 1–12 December 2008 in Poznań, Poland. Delegates agreed on principles for the financing of a fund to help the poorest nations cope with the effects of climate change and they approved a mechanism to incorporate forest protection into the efforts of the international community to combat climate change. Negotiations on a successor to the Kyoto Protocol were the primary focus of the conference.

COP15

COP 15 took place in Copenhagen, Denmark, on 7–18 December 2009.The overall goal for the COP 15/CMP 5 United Nations Climate Change Conference in Denmark was to establish an ambitious global climate agreement for the period from 2012 when the first commitment period under the Kyoto Protocol expires. However, on 14 November 2009, the New York Times announced that "President Obama and other world leaders have decided to put off the difficult task of reaching a climate change agreement... agreeing instead to make it the mission of the Copenhagen conference to reach a less specific "politically binding" agreement that would punt the most difficult issues into the future".

COP16

COP 16 was held in Cancún, Mexico, from 28 November to 10 December 2010. The outcome of the summit was an agreement adopted by the states' parties that called for the US$100 billion per annum "Green Climate Fund", and a "Climate Technology Centre" and network. However, the funding of the Green Climate Fund was not agreed upon. Nor was a commitment to a second period of the Kyoto Protocol agreed upon, but it was concluded that the base year shall be 1990 and the global warming potentials shall be those provided by the IPCC. All parties "Recognizing that climate change represents an urgent and potentially irreversible threat to human societies and the planet, and thus requires to be urgently addressed by all Parties".

COP17

The 2011 COP 17 was held in Durban, South Africa, from 28 November to 9 December 2011.The conference agreed to a start negotiation on a legally binding deal comprising all countries, to be adopted in 2015, governing the period post 2020. There was also progress regarding the creation of a Green Climate Fund (GCF) for which a management framework was adopted. The fund is to distribute US$100 billion per year to help poor countries adapt to climate impacts. While the president of the conference, Maite Nkoana-Mashabane, declared it a success, scientists and environmental groups warned that the deal was not sufficient to avoid global warming beyond 2 °C as more urgent action is needed.

COP18

Qatar hosted COP 18 which took place in Doha, Qatar, from 26 November to 7 December 2012. The Conference produced a package of documents collectively titled The Doha Climate Gateway. The conference made little progress towards the funding of the Green Climate Fund. Russia, Belarus, and Ukraine objected at the end of the session, [clarification needed] as they had a right to under the session's rules. In closing the conference, the President said that he would note these objections in his final report.

COP19

COP 19 was the 19th yearly session of the Conference of the Parties (COP) to the 1992 United Nations Framework Convention on Climate Change (UNFCCC) and the 9th session of the Meeting of the Parties (CMP) to the 1997 Kyoto Protocol (the protocol having been developed under the UNFCCC's charter). The conference was held in Warsaw, Poland from 11 to 23 November 2013.

COP20

On 1–12 December 2014, Lima, Peru hosted the 20th yearly session of the Conference of the Parties (COP) to the 1992 United Nations Framework Convention on Climate Change (UNFCCC) and the 10th session of the Meeting of the Parties (CMP) to the 1997 Kyoto Protocol (the protocol having been developed under the UNFCCC's charter). The pre-COP conference was held in Venezuela.

COP21

The COP 21 was held in Paris from 30 November to 12 December 2015.Negotiations resulted in the adoption of the Paris Agreement on 12 December, governing climate change reduction measures from 2020. The adoption of this agreement ended the work of the Durban platform, established during COP17. The agreement will enter into force (and thus become fully effective) on 4 November 2016. On 4 October 2016 the threshold for adoption was reached with over 55 countries representing at least 55% of the world's greenhouse gas emissions ratifying the Agreement.

COP22

COP 22 was held in Marrakech, in the North-African country of Morocco, on 7–18 November 2016. A focal issue of COP 22 is that of water scarcity, water cleanliness, and water-related sustainability, a major problem in the developing world, including many African states. Prior to the event a special initiative on water was presided by Charafat Afailal, Morocco's Minister in Charge of Water and Aziz Mekouar, COP 22 Ambassador for Multilateral Negotiations. Another focal issue was the need to reduce greenhouse emissions and utilize low-carbon energy sources. Mr. Peter Thompson, President of the UN General Assembly, called for the transformation of the global economy in all sectors to achieve a low emissions global economy.

COP23

COP 23 was held on 6–17 November 2017. On Friday, 18 November 2016, the end of COP 22, the Chairperson of COP 23 from Fiji announced that it will be held in Bonn, Germany. (COP 23/CMP 13). Fijian Prime Minister and incoming President of COP 23, Frank Bainimarama, on 13 April launched the logo for this year's United Nations Climate Change Conference, to be held at UN Campus, Bonn in November.

COP24

COP 24 was held on 3–14 December 2018 in Katowice, Poland. The Polish government's vision for presidency states that the organization of COP 24 will provide an opportunity for convincing other countries that Poland does not hamper the process of tackling dangerous climate change and that Poland is one of the leaders of this process.

COP25

The UN Climate Change Conference COP 25 (2 – 13 December 2019) will take place under the Presidency of the Government of Chile and will be held with logistical support from the Government of Spain. SBSTA 51/ SBI 51 will take place 2-9 December 2019. The pre-sessional period is from 25 November - 1 December 2019. The President-Designate for the conference is Ms. Carolina Schmidt Zaldivar, Minister of Environment of Chile.

COP26

The 2021 United Nations Climate Change Conference, also known as COP26, is the 26th United Nations Climate Change conference. It is scheduled to be held in the city of Glasgow, Scotland, between 31 October and 12 November 2021, under the co-presidency of the United Kingdom and Italy.

COP27

On November 6th to 18th,2022, the Government of the Arab Republic of Egypt will host the 27th Conference of the Parties of the UNFCCC (COP 27), with a view to building on previous successes and paving the way for future ambition to effectively tackle the global challenge of climate change.

Corporate pension or superannuation or retirement or provident fund or plan

An organization that manages corporate retirement and/or pension plan-related assets. The organization may have trustees who are responsible for prudential operations, and some of the organization’s obligations might be codified by law.

Decarbonization

Is the reduction of carbon dioxide emissions through using low carbon power sources.

Deforestation

Is the purposeful clearing of forests historically, this has been done to make space for farming. However, in recent years the rate at which forests clearing has occurred has altered landscapes around the world.

Design for Environmental Sustainability (DfE)

Is a technical and operative contribution to the United Nations that provides a comprehensive supporting framework and a practical tool for the process of designing environmentally sustainable products.

Derivatives

Securities whose price depends upon or is derived from the fluctuations of one or more underlying assets (e.g., stocks, bonds, commodities, currencies, interest rates or market indices). The derivative itself is a contract between two or more parties, based upon the underlying asset(s). Derivatives are classified in two broad categories, namely, customized contracts (traded over the counter, such as forwards) or standardized contracts (traded on an exchange, such as warrants and futures).

Development finance institution

A financial institution that provides equity capital, loan capital or other forms of finance to fund activities or entities expected to contribute to economic development.

Difference between Net zero target and carbon neutrality

Apart from the specification needed for net zero CARBON or EMISSIONS; carbon neutral refers to a policy of not increasing carbon emissions and of achieving carbon reduction through offsets. While Net-zero carbon means making changes to reduce carbon emissions to the lowest amount – and offsetting as a last resort. The offsetting is used to counteract the essential emissions that remain after all available reduction initiatives have been implemented.

Direct physical climate risk

Risk of damage or impairment to assets because of extreme weather events and sea-level rise.

District heating

The distribution of thermal energy in the form of steam, hot water, or chilled liquids from a central source of production using a system of highly insulated pipes. The energy is distributed into buildings for the use of heating, hot water and sometimes cooling. See also: Combined Heat and Power (CHP).

Diversity and inclusion or diversity, equity and inclusion (DEI or D&I)

Diversity and inclusion or diversity, equity and inclusion broadly outline the efforts—programs and policies—that companies and organizations adopt to create a more welcoming environment and encourage representation and participation from a diverse group of people. Diversity and inclusion efforts generally focus on increasing the representation of women, people of color and members of the LGBTQ community, among others.

Divestment

The intentional removal of holdings from an investment strategy as a tool to both highlight an issue and to indicate the strategy’s directionality on the issue. The term is most frequently associated with fossil fuels.

Do No Significant Harm (DNSH)

Is an investment in an economic activity that contributes to an environmental or social objective, the investment does not significantly harm any social or environmental objectives and. the investee companies follow good governance practices.

Double materiality

The concept of double materiality acknowledges that a company should report simultaneously on sustainability matters that are:

1) financially material in influencing business value and

2) material to the market, the environment, and people

Double bottom line

Means the inclusion of both quantitative and qualitative analysis embraced by socially conscious investors, which extends the traditional bottom line measuring financial performance to include a “second” bottom line measuring non-financial performance measures, such as positive social impact.

Doughnot economy

An economic model for human prosperity in the 21st century, with the aim of meeting the needs of all people within the means of the living planet. The Doughnut consists of two concentric rings: a social foundation, to ensure that no one is left falling short on life’s essentials, and an ecological ceiling, to ensure that humanity does not collectively overshoot the planetary boundaries that protect Earth’s life-supporting systems. Between these two sets of boundaries lies a doughnut-shaped space that is both ecologically safe and socially just: a space in which humanity can thrive.

Dow Jones Sustainability Index (DJSI)

Dow Jones Sustainability Index, which was launched in 1999 and tracks the stock performance of the world’s leading companies in terms of economic, environmental, and social criteria.

Downstream industry

Petroleum products are refined, distributed, and sold to consumers in this stage of the process.

Due diligence

A systematic process to collect and interpret information about a prospective investment; includes both technical and financial due diligence.

Dynamic materiality

The concept of dynamic materiality acknowledges that the economic materiality of an issue can shift based on anticipated or unexpected circumstances. The concept of “dynamic materiality” was described by the World Economic Forum in a 2020 white paper: “One area in which investors have begun initial explorations is anticipating how issues might become financially material either across an entire industry or for a specific company. What is financially immaterial to a company or industry today can become material tomorrow, a process called ‘dynamic materiality.’”

Echo voting

A system through which the proxies of a passive investment strategy are voted at the direction of an actively managed investment strategy.

Electricity

In line with GHG Protocol, this term is used as shorthand for electricity, steam, and heating/cooling. Purchased electricity is defined as electricity that is purchased or otherwise brought into the organizational boundary of the company. Scope 2 emissions physically occur at the facility where electricity is generated.

Electrification

Is the transition of technologies that use fossil fuels with technologies that use electricity as a source of power.

Energy attribute certificates

A category of contractual instruments used in the energy sector to convey information about energy generation to other entities involved in the sale, distribution, consumption, or regulation of electricity.

Energy efficiency/clean technology (energy technologies)

Products, services, infrastructure, or technologies that proactively address the growing global demand for energy while minimizing effects on the environment. This includes technologies and systems that promote efficiency of industrial operations and industrial automation and controls and optimization systems; infrastructure, technologies and systems that increase the efficiency of power management, power distribution, power storage and demand-side management; and technologies and products that focus on using renewable energy sources to transport vehicles (including cars and buses).

Energy star

Energy Star is a program run by the U.S. Environmental Protection Agency and U.S. Department of Energy that promotes energy efficiency. The program provides information on the energy consumption of products and devices using different standardized methods

Energy transition

The process of replacing fossil fuels with low carbon alternatives. Energy transitions are seen as an essential step in the transformation needed to achieve carbon neutral operations globally.

Energy Performance Certificates (EPCs)

Are a rating scheme to summarize the energy efficiency of buildings.

Engagement

Interactions between an investor (or an engagement service provider) and current or potential investees (e.g., companies), conducted with the purpose of improving practice on an ESG issue, changing a sustainability outcome, or improving public disclosure. Engagements can also be carried out with non-issuer stakeholders, such as policymakers or standard setters.

Interactions that are not seeking change or an improvement in public disclosure are not considered engagement. This includes:

· Interactions with companies for data collection and/or for research purposes related to buy/ sell/ hold decisions;

· Standard questionnaires sent to companies for the purposes of information gathering and investment decision-making;

· Attendance at company presentations, AGMs or other company meetings without interactions or discussion, or where interactions are not seeking change or improved disclosure; and

· Bulk disclosure requests for ESG information, typically conducted via a third party.

Engagement targets

The entities that are the focus of investor engagement effort.

Environmental (E in ESG)

Criteria consider how a company safeguards the environment, including corporate policies addressing climate change, for example. Company environmental activities considered ESG factors include managing resources and preventing pollution, reducing emissions and climate impact, as well as executing environmental reporting or disclosure. Environmentally positive outcomes include avoiding or minimizing environmental liabilities; lowering costs and increasing profitability through energy and other efficiencies; and reducing regulatory, litigation, and reputational risk. There is an important evolution taking place, in which sustainability will not be sufficient. Regeneration and making things better than how the company found them will be a growing requirement.

Environmental Full-Cost Accounting (EFCA)

Is a cost accounting method that traces direct costs and allocates indirect costs by collecting and presenting information about the possible environmental, social, and economic costs and benefits or advantages (triple bottom line) for each proposed alternative.

Environment, Health, and Safety (EHS)

Is a general term used to refer to laws, rules, regulations, professions, programs, and workplace efforts to protect the health and safety of employees and the public as well as the environment from hazards associated with the workplace.

Environmental justice

Is a social movement to address the unfair exposure of poor and marginalized communities to harms associated with resource extraction, hazardous waste, and other land uses.

Environmental factors

Factors related to environmental performance used in the investment evaluation process. These include data points encompassing areas such as emissions, water use, energy consumption, waste generation, etc.

Environmental Protection Agency (EPA)

An independent executive agency of the United States federal government tasked with environmental protection matters. President Richard Nixon proposed the establishment of EPA on July 9, 1970; it began operation on December 2, 1970, after Nixon signed an executive order.

Equator Principles (EPs)

Are a risk management framework adopted by financial institutions for determining, assessing, and managing environmental and social risk in project finance. The EPs are primarily intended to provide a minimum standard for due diligence to support responsible risk decision-making.

ESG

Environmental, social, and governance (ESG) criteria are a set of standards for a company’s behavior used by socially conscious investors to screen potential investments.

ESG action plan

A detailed plan outlining actions needed to manage ESG-related risks and opportunities. An action plan has four major elements:

(1) Specific tasks: what will be done and by whom;

(2) Time horizon: when will it be done;

(3) Resource allocation: what specific funds are available for specific activities;

(4) Measurable outcomes.

ESG audit

The testing and verification of ESG claims for an organization’s fund, product, or policy, by someone independent of that organization.

ESG Circle of Real Estate (ECORE)

Is an emerging European initiative for ESG compliance in real estate portfolios.

ESG data convergence project

Private Equity’s first-ever collaboration to standardize ESG metrics, which received commitment of over 100 leading GPs and LPs to the partnership, representing $8.7 trillion in assets and over 1,400 underlying portfolio companies. The Project’s participating firms have agreed to report on a core set of ESG metrics across six categories and drawn from existing frameworks. The categories include greenhouse gas emissions, renewable energy, board diversity, work-related injuries, net new hires, and employee engagement.

ESG factors

Environmental, social and governance issues that are identified or assessed in responsible investment processes.

• Environmental factors are issues relating to the quality and functioning of the natural environment and natural systems.

• Social factors are issues relating to the rights, well-being and interests of people and communities.

• Governance factors are issues relating to the governance of companies and other investee entities.

ESG integration

In sustainable/green finance “ESG integration” refers to the systematic and explicit inclusion of material ESG factors into investment analysis and investment decisions. ESG Integration alone does not prohibit any investments. Such strategies could invest in any business, sector, or geography if the ESG risks of such investments are identified and considered.

ESG screening

Using ESG criteria as a filter for evaluating investments.

ESG incidents

Specific environmental, social or governance events that have a substantial negative impact on a security, issuer or investment and its key stakeholders including investors, employees, communities, and the environment.

ESG integration

The process of including ESG factors in investment analysis and decisions to better manage risks and improve returns. It is often used in combination with screening and thematic investing.

ESG incorporation

ESG incorporation the assessment, review, and consideration of ESG factors in existing investment practices through a combination of three approaches: integration, screening, and thematic investing. ESG incorporation generally functions alongside—or in combination with—stewardship or active ownership.

ESG materiality analysis

For an investor, this is the process of the identification, assessment, and incorporation of material environmental, social, governance, and emerging issues into the process of investment research, portfolio construction, or asset selection.

ESG rating

An ESG score is a measure of a company’s long-term exposure to ESG risks. ESG rating agencies help provide these scores, some of these are MSCI, Sustainalytics, Bloomberg, Refinitiv (formerly known as Thomson Reuters) as well as some credit agencies like Moody’s, S&P Global and Fitch.

ESG risks

Any negative financial impact on an institution stemming from the current or prospective impacts of ESG Factors on its counterparties or invested assets

Emissions Trading Scheme (ETS)

A trading scheme / standard in 2005 by EU concerning greenhouse gas emissions. It acts like a stock exchange for “right to emit GHG” or sell the surplus (of the allowed emission quota) to other companies.

Endowment

An investment fund often used by non-profits, universities, hospitals, and churches, funded by donations that may or may not have a stated purpose in the donor’s bequest. Many non-profit organizations set up an endowment to sustain their fundraising efforts over a long period because its principal balance remains intact and the interest it generates is used for operating or fundraising purposes. The investment income from dividends is usually devoted to charitable efforts.

Environmental factors

Issues relating to the quality and functioning of the natural environment and natural systems, identified, or assessed in responsible investment processes.

Environmental and social management systems

A management system consisting of procedures, management commitment, delineation of roles and responsibilities and guidance followed, to review and manage environmental and social issues and risks.

EU Green Bond Standard (EUGBS)

It was a recommendation by HLEG, and it was created based on recommendation by TEG. It is a voluntary standard to help scale up and raise the environmental ambitions of the green bond market. this proposed Regulation will set a gold standard for how companies and public authorities can use green bonds to raise funds on capital markets to finance such ambitious large-scale investments, while meeting tough sustainability requirements and protecting investors.

EU green deal

Aims to boost the efficient use of resources by moving to a clean, circular economy and stop climate change, revert biodiversity loss and cut pollution. It outlines investments needed and financing tools available and explains how to ensure a just and inclusive transition.

EU taxonomy

It is an EU classification system designed by the TEG on Sustainable Finance to determine whether an economic activity is environmentally sustainable. A social taxonomy is also being created for the same purpose. European companies are required to use the taxonomy while disclosing corporate sustainability information.

European Federation of Financial Analysts Societies (EFFAS)

In 2008, they published a set of Key Performance Indicators to help companies and analysts integrate ESG information into financial reporting and analysis.

European Financial Reporting Advisory Group (EFRAG)

A private association established with the encouragement from European Commission. EFRAG carries its assessments of IFRS throughout the standard-setting process.

European green deal

A parent commitment in the form of a set of policy initiatives by European Commission to meet the goals of Paris Agreement, which is briefly a carbon-neutral Europe by 2050.

European Sustainable Investment Forum (EUROSIF)

A European coalition for the promotion and advancement of sustainable and responsible investment across Europe, for the benefit of its members. Eurosif members are local Sustainable Investment Forums, which are membership-based sustainable and responsible investment organizations.

Exclusionary screening

The intentional exclusion of investment opportunities based on industry or geographic exposure, non-financial performance indicators, moral considerations, or other elements of concern to a defined set of investors.

Execution and advisory

Services offered by wealth managers that exclude investment decision-making. Advisory services refer to structures in which the wealth manager provides investment recommendations and suggestions to the client, who makes the final investment decision. Execution-only services refer to structures in which the wealth manager solely carries out the investment decisions made by the client, following the client’s instructions.

Externalities

Are the costs and benefits of economic activities experienced by an unrelated third party. Externalities can be negative and positive. Examples of negative externalities include air pollution; water pollution and noise pollution and examples of positive externalities can be increased tourism bettering the lives of communities.

Farmland

All forms of farmland and agriculture-related investments, including direct investments, farmland funds and managed investment schemes.

Feedstocks

Feedstocks are raw materials, ranging from fossil fuels to biomass-based resources. These materials are fed into a process, and converted into other commodities or resources, which are either used directly or further transformed. For example, in the steel industry, coking coal is converted to coke, which is used in the steel production. In the petrochemical industry, gaseous feedstocks (ethane, propane, or butane) are used to produce high value chemicals.

Financial Accounting Standards Board (FASB)

FASB is a private standard-setting body whose primary purpose is to establish and improve Generally Accepted Accounting Principles (GAAP) within the United States in the public's interest. The Securities and Exchange Commission (SEC) designated the FASB as the organization responsible for setting accounting standards for public companies in the US. The FASB replaced the American Institute of Certified Public Accountants' (AICPA) Accounting Principles Board (APB) on July 1, 1973. The FASB is run by the nonprofit Financial Accounting Foundation.

FASB accounting standards are accepted as authoritative by many organizations, including state Boards of Accountancy and the American Institute of CPAs (AICPA).

Financial materiality

Sustainability issues that are likely to affect the financial condition or operating performance of companies.

Financial Stability Board (FSB)

It is an international coalition that monitors and makes recommendations about the global finance system. It coordinates national financial authorities and international standard-setting bodies as they work toward developing strong regulatory, supervisory, and other financial sector policies. It was established after the G20 London summit in April 2009. Members are all G20 major economies, FSF members, and the European Commission.

Fit for 55

A part of the European Green Deal, Fit for 55 is an intermediate step towards climate neutrality (to be reached by 2050 by EU). The EU has raised its 2030 climate ambition, committing to cutting emissions by at least 55% by 2030.

Fitwel

Is a green building certification system that focuses on improving, enhancing, and safeguarding the health and wellbeing of tenants and residents in office buildings, multifamily residential buildings, and retail space.

Fixed income

Any form of debt financing by investors (whether through loans, the purchase of bonds or any other debt instrument such as commercial paper or convertible bonds and notes) to borrowers that can be sovereign, sub-sovereign, supranational or corporate entities (in the latter case, also their subsidiaries or special-purpose vehicles).

Fixed income passive

Fixed income investments that mirror the performance of an index and follow a predetermined buy-and-hold strategy that does not involve active forecasting. Examples include investments in broad capital-market indices, ESG-weighted indices, themed indices, passively managed ETFs, or indices with ESG-based exclusions.

Forestry

All forms of forestry-related investments, including direct investments, forestry funds and managed investment schemes.

Four core components of the GBP and SBP

The Fore Core Components of the GBP and the SBP outline the necessary qualifications for a Green or Social Bond. They are:

1. Use of Proceeds

2. Process for Project Evaluation and Selection

3. Management

4. Reporting

Fossil fuels

Naturally produced energy sources, such as coal, oil, and gas. It is scientifically proven that gases released from burning fossil fuels (such as carbon dioxide) are a leading cause of climate change.

Fossil fuel free

An investment strategy that intentionally excludes investments with ties to the fossil fuel industry. This typically includes exploration, extraction, refining, transportation, and sale of fossil fuels as well as energy production based on such fuels but may be extended to include more indirect or peripheral participants in the fossil fuel industry.

Foundation

A charitable non-governmental non-profit organization that usually derives its money from a family, an individual, or a corporation. Its principal fund is managed by its own trustees or directors. A private foundation generates income by investing its initial donation, often disbursing the bulk of its investment income each year to desired charitable activities.

Friends of greening national investment plans in Africa and developing countries initiatives

The Initiative aims at shaping the process of planning and designing the economic policies in a manner that factors in the impact of climate change, quantifying the efforts made in mitigation and adaptation, while also identifying the gaps and support needed, and proposing a set of essential guidelines, criteria, and policy advice, to expedite the implementation of the UNFCCC, Paris Agreement and the NDCs.

Fugitives

Fugitives comprises all intentional or unintentional releases of carbon dioxide (CO2) methane (CH4) and other greenhouse gases. The primary sources of these emissions may include fugitive equipment leaks, evaporation losses, venting, flaring and accidental releases. Further examples of leak sources include valves, fittings, flanges, compressor seals, other compressor related leaks, heaters, dehydrators, and pipelines. Accidental fugitive emissions can be individually found and fixed to make the emissions near zero. Emissions from non- point sources, such as wastewater treatment and surface impoundments, should be accounted for under fugitive emissions.

Fund of Funds (FOF)

Also known as a multi-manager investment—is an investment vehicle that invests in other funds. Its portfolio contains different underlying portfolios of other funds. These holdings replace any direct investment in bonds, stocks, and other types of securities. This also includes funds of hedge funds. A manager of managers (MoM) approach is a type of oversight investment strategy whereby a manager chooses managers for an investment program and regularly monitors their performance. A sub-advised fund is a fund managed by a management team or firm different from the management team or firm that holds the assets. A sub-advised fund may consist of specialty or niche investments, for which the main fund managers seek outside expertise.

Fund management

An investment firm that invests directly in companies and other assets and not via third-party funds. This includes investors that perform investment research internally and provide list(s) of eligible (or ineligible) securities to sub-advisor(s).

G20

The G20 or Group of Twenty is an intergovernmental forum comprising 19 countries and the European Union (EU). It works to address major issues related to the global economy, such as international financial stability, climate change mitigation, and sustainable development. The G20 was founded in 1999 in response to several world economic crises.

gCO2/kWh

Grams of carbon dioxide (gCO2) per kilowatt hour (kWh) of electricity consumed.

gCO2e/kWh

Grams of carbon dioxide equivalents (CO2e) emitted per kilowatt hour (kWh) of electricity consumed. CO2-equivalents allow for other Greenhouse Gases (GHGs) to be expressed in relation to CO2 based on their Global Warming Potentials (GWPs). See Global Warming Potential.

Gender equity

Is the process of being fair to women and men. To ensure fairness, strategies and measures must often be available to compensate for women's historical and social disadvantages that prevent women and men from otherwise operating on a level playing field. Equity leads to equality.

Gender Lens Investing (GLI)

Is a strategy or approach to investing that takes into consideration gender-based factors across the investment process to advance gender equality and better inform investment decisions.

Gender pay gap

Is the average difference in remuneration for men and women who are art of the workforce. Commonly, two averages are used being the non-adjusted vs the adjusted pay gap. The adjusted typically considers differences in hours worked, occupation, education, and experience. In the US the non-adjusted average female’s annual salary is 79% that of the average male compared to the adjusted which is 95%.

GHG inventory

A quantified list of an organization’s greenhouse gas emissions and sources.

Glasgow Financial Alliance for Net Zero (GFANZ)

Is a global coalition of leading financial institutions committed to accelerating the decarbonization of the economy

Global compact

A voluntary initiative based on CEO commitments to implement universal sustainability principles and to take steps to support UN goals. Local networks, such as Global Compact France, advances the principles at country level. It has no pre-defined reporting guidelines or enforcement positions. It is an initiative to develop governing principles, but it does not evaluate companies.

Global Impact Investing Network (GIIN)

Is the global champion of impact investing, dedicated to increasing the scale and effectiveness of impact investing around the world.

Global Industry Classification Standard (GICS)

Is an industry taxonomy developed in 1999 by MSCI and Standard & Poor's (S&P) for use by the global financial community. The GICS structure consists of 11 sectors, 24 industry groups, 69 industries and 158 sub-industries into which S&P has categorized all major public companies. The system is like ICB (Industry Classification Benchmark), a classification structure maintained by FTSE Group.

GICS is used as a basis for S&P and MSCI financial market indexes in which each company is assigned to a sub-industry, and to an industry, industry group, and sector, by its principal business activity. "GICS" is a registered trademark of McGraw Hill Financial and MSCI Inc.

Global macro

Hedge fund strategies that utilize investments in assets, securities, or other financial instruments to construct portfolios based on analysis of macroeconomics. Examples might include currency fluctuations, interest rate changes and economic growth.

Global Real Estate Sustainability Benchmark (GRESB)

GRESB is the global environmental, social and governance benchmark for real estate and infrastructure investments, providing standardized and validated ESG data to the capital markets. The GRESB reporting standard benchmarks the ESG performance of real assets. Real estate and ESG investors, managers, and the wider industry actively participate in the development of GRESB Assessments to ensure sustainability performance metrics reflect the issues most material to the industry. Data reported to the GRESB assessments are validated by a third party and scored before being used to the generate the ESG benchmarks for given industries: Real Estate, Real Estate Development, Infrastructure Fund, Infrastructure Asset.

Global Reporting Initiative (GRI)

Are a set of standards published by the GRI, which anticipate that companies will choose their own level of disclosure on a wide variety of ESG and sustainability topics and publish annual sustainability reports.

Global waste initiative 50 by 2050

The initiative aims to treat and recycle at least 50% of the solid waste produced in Africa by 2050. It will leverage voluntary engagements from over 180 countries at the international level for Africa to achieve this target. The initiative is the first of its kind global coalition that proposes a collaborative platform for all stakeholders involved in waste management to holistically address all solid waste types and contribute to an ambitious target at the scale of the African continent.

Global warming potential (GWP)

The Intergovernmental Panel on Climate Change (IPCC) defines the Global Warming Potential (GWP) as “an index, based on radiative properties of greenhouse gases, measuring the radiative forcing following a pulse emission of a unit mass of a given greenhouse gas in the present-day atmosphere integrated over a chosen time horizon, relative to that of carbon dioxide. The GWP represents the combined effect of the differing times these gases remain in the atmosphere and their relative effectiveness in causing radiative forcing. The Kyoto Protocol is based on GWPs from pulse emissions over a 100-year time frame.” By using GWPs, GHG emissions from multiple gases can be standardized to a carbon dioxide equivalent (CO2e).

Greenhouse gases

In line with Kyoto Protocol to the United Nations Framework Convention on Climate Change (UNFCCC) and amendment issued by the Greenhouse Gas Protocol on May 2013 the basket of greenhouse gases (GHGs) consists of:

Carbon dioxide (CO2).

Methane (CH4).

Nitrous oxide (N2O); Hydrofluorocarbon family of gases (HFCs).

Perfluorocarbon family of gases (PFCs).

Sulfur hexafluoride (SF6), and Nitrogen trifluoride (NF3).

Nitrogen trifluoride (NF3) is now considered a potent contributor to climate change and is therefore mandated to be included in national inventories under the UNFCCC. NF3 should also be included in GHG inventories under the GHG Protocol Corporate Standard, and the GHG Protocol Corporate Value Chain (Scope 3) Standard.

Greenhouse Gas Protocol (GHGP)

Provides accounting and reporting standards, sector guidance, calculation tools and trainings for businesses and local and national governments.

Green and sustainable chemistry

Is an area of chemistry and chemical engineering focused on the design of products and processes that minimize or eliminate the use and generation of hazardous substances.

Green bonds

A green bond is a bond specifically earmarked to be used for environmental and climate-related projects. These bonds are typically asset-linked and backed by the issuer's balance sheet. Climate bonds are a subset of green bonds.

Green Bond Principles (GBP)

Green Bond Principles are voluntary guidelines set by the International Capital Market Association (ICMA) that recommend transparency, disclosure, and reporting in the Green Bond Market. They outline the necessary qualifications that must be met for a Green Bond.

Green bleaching

Is when fund managers invest in sustainable activities but refrain from claiming so to avoid the data problems arising from the disclosure obligations

Green buildings

Buildings designed, constructed, operated, maintained, renovated, and destroyed using environmentally friendly and resource-efficient processes.

Green Climate Fund (GCF)

Is a fund established within the framework of the UNFCCC (United Nations Framework Convention on Climate Change) as an operating entity of the Financial Mechanism to assist developing countries in adaptation and mitigation practices to counter climate change. The GCF is based in Incheon, South Korea.

Green financing

Green financing is to increase level of financial flows (from banking, micro-credit, insurance and investment) from the public, private and not-for-profit sectors to sustainable development priorities.

Green funds

A green fund invests its assets in sectors and activities that benefit the environment, incorporating specific investment selection strategies into its investment decisions and processes.

Green growth

Means fostering economic growth and development, whilst ensuring that natural assets. continue to provide the resources and environmental services on which our well- being relies

Green hydrogen

Is defined as hydrogen produced by splitting water into hydrogen and oxygen using renewable electricity. Green hydrogen has significantly lower carbon emissions than grey hydrogen, which is produced by steam reforming of natural gas, which makes up the bulk of the hydrogen market.

Green industries

Typically refers to a company that seeks to minimize the impact of its business on the environment.

Green investing

An investment approach that emphasizes criteria relating to the environmental impact of the underlying investment.

Green lease

A lease for a property that, within its terms or through an attached schedule, includes provisions that encourage the landlord, occupier, or both to carry out their roles in a sustainable way. The details of the provisions and the means of encouraging sustainable behavior are negotiated between the parties, but typically relate to the achievement of specific ESG targets (e.g., for energy, water use and waste management). Clauses in green leases may also include the use of sustainable materials when possible and sharing of environmental data between landlord and occupier.

Green premium

Is the additional cost of choosing a clean technology over one that emits a greater amount of greenhouse gases.

Green steel

Is a process that leverages high temperature reactions in electric arc furnace (EAF) steelmaking to transform waste tires and plastics in the production of high‐quality steel.

Green tariff

Offered by electricity companies, green tariffs are programs that allow large commercial and industrial customers to buy renewable electricity through a special utility tariff rate. The units of electricity which originate from a renewable energy source vary but they can help companies meet their sustainability and renewable energy targets.

Green Technical Advisory Group (GTAG)

Is independent group in the UK that provides independent advice to the government on implementing a UK Green taxonomy framework. The goal is to set the bar for investments that can be defined as environmentally sustainable.

Greenwashing

This term is popularly used to label activities and behavior by a company that seem environmentally friendly but instead don’t have the reported effects.

Global Reporting Initiative (GRI)

Are a set of standards published by the GRI, which anticipate that companies will choose their own level of disclosure on a wide variety of ESG and sustainability topics and publish annual sustainability reports.

Growth capital

Investments with a minority or majority stake in relatively mature companies at a critical stage in their development (e.g., to expand or restructure operations).

Governance (in ESG)

Deals with a company’s leadership, executive pay, audits, internal controls, and shareholder rights. Governance addresses areas such as corporate brand independence and diversity, corporate risk management, and excessive executive compensation, through company governance activities such as increasing diversity and accountability of the board, protecting shareholders and their rights, and reporting and disclosing information. Governance positive outcomes include aligning interests of shareholders and management and avoiding financial surprises.

Governance factors

Factors related to the governance structure of an investment opportunity. These include data points such as executive compensation, board composition, shareholder access, etc.

Guarantee of Origin (GO)

Refers to a tracking instrument defined in article 15 of the European Directive 2009/28/EC. A GO labels electricity from renewable sources to provide information to electricity customers on the source of their energy. Also used alongside RECS, see RECS.

Health and safety, social

The concepts of health and safety ensure that employees can work in good health and in a safe environment. This includes preventing workers’ departures because of health caused by working conditions and placing workers in environments catered to their physiological and psychological capabilities.

Heat pump

Is a device that can heat a building by transferring thermal energy from the outside using the refrigeration cycle. Many heat pumps can also operate in the opposite direction, cooling the building by removing heat from the enclosed space and rejecting it outside.

Heating value

Lower heating value (LHV) and Higher heating value (HHV), also known as net calorific value (NCV) and gross calorific value (GCV) respectively, are different measures of heat energy released from fuel combustion. Figures measured in HHV are larger because HHV includes the latent heat of water vaporization from combustion, whereas LHV does not. The difference between LHV and HHV is related to the fuel’s hydrogen content.

Hedge funds

Alternative investments that employ a range of investment strategies to deliver returns and manage risk. Typically offered through pooled private investment vehicles that offer limited liquidity compared to mutual funds and other investment vehicles. Hedge funds are generally only accessible to professional investors and face fewer regulatory constraints than some traditional investments.

Hedge fund strategy

Hedge funds can follow a wide range of investment strategies, trading different asset classes, types, and financial instruments, including derivatives, for various durations. Hedge funds can seek to profit from price increases (by taking long positions) and from price declines (by taking short positions).

High Level Expert Group on Sustainable Finance (HLEG)

Established by EU Commission in Dec 2016. The HLEG comprised 20 senior experts from civil society, the finance sector, academia, and observers from European and international institutions. The group was mandated to provide advice to the Commission on how to steer the flow of public and private capital towards sustainable investments identify the steps that financial institutions and supervisors should take to protect the stability of the financial system from risks related to the environment deploy these policies on a pan-European scale.

Human rights

Are universal, cutting across civil, political, economic, social, cultural, and environmental issues (privacy, housing and a healthy environment), not a subset of niche social topics (child labor and human trafficking).

Human Rights Watch (HRW)

is an international non-governmental organization, headquartered in New York City, which investigates and reports on human rights abuses around the world.

Impact investing

Investments made with the intention of generating positive, measurable social and environmental impacts, where impact has priority over financial performance.

Impact-weighted accounts

Are line items on a financial statement, such as an income statement or a balance sheet, which are added to supplement the statement of financial health and performance by reflecting a company's positive and negative impacts on employees, customers, the environment, and the broader society.

Implied temperature rise

Is an intuitive, forward-looking metric, expressed in degrees Celsius, designed to show the temperature alignment of companies, portfolios, and funds with global temperature goals. Investors can use Implied Temperature Rise to set decarbonization targets and support engagement on climate risk. The ITR measure, which is also designed to support reporting for the Task Force on Climate-related Financial Disclosures (TCFD), is part of a platform of analytical tools from MSCI ESG Research for institutional investors to navigate the transition to net-zero at every stage.

Inclusionary focus

An investment strategy that may include companies or issuers that don’t necessarily have a high ESG ranking but that have the potential to improve or have a strategy to improve.

Independent directors

Directors that serve on a company’s board but are not salaried employees of the company. They may receive “sitting fees” for Board duties. Their role is to provide independent oversight and sit on committees dealing with sensitive issues such as executive remuneration.

Indirect operating costs

Refers to the essential expenses incurred to maintain the business including wages, rent, transport, energy (electricity, fuel, etc.), maintenance, and so on. These expenses cannot be attributed to the manufacture of a particular product or the provision of a particular service - they are standard costs that apply regardless of the volume of goods produced.

Indirect physical climate risk

Risk of damage or impairment to assets because of second- or third-order impacts of climate change, such as disruption to trade because of an extreme weather event or impact on food prices because of prolonged drought.

Infrastructure

An asset class that includes direct or indirect exposure to physical or real assets. This includes real assets such as electricity distribution systems, road and rail transportation, telecommunication systems, pipelines, and a wide variety of similar assets. This is in line with GRESB’s definition.

Institutional Investors Group on Climate Change (IIGCC)

Institutional Investors Group on Climate Change is a leading global investor membership body and the largest one focusing specifically on climate change

Institutional Shareholder Services (ISS)

Institutional Shareholder Services, Inc., launched an Environmental & Social QualityScore Disclosure and Transparency Signal scoring tool that provides a metric for institutional investors to use, together with ISS’ Governance QualityScore, to more fully evaluate the ESG risk of their portfolio companies.

Insurance company

A financial institution that sells insurance or provides reinsurance services in the life and/or non-life insurance markets. Insurance companies are asset owners insofar as they have invested capital. This category does not include insurance consultants or insurance brokers. It does include those insurance companies that offer pension, superannuation, or retirement products, along with more conventional insurance products.

Integrated reporting framework

The International Integrated Reporting Framework is used to accelerate the global adoption of integrating reporting with an aim to improve the quality of information available to providers of financial capital, promote more cohesive and efficient approach to corporate reporting, enhance accountability and stewardship for the broad base of capitals and support integrated thinking.

Intensity metrics

Intensity metrics describe an organization’s CO2e emissions in the context of another business metric. In this way, the emissions are normalized to account for growth. Intensity is calculated by dividing the CO2e emissions figure (the numerator) by an alternative business metric (the denominator), such as the number of full-time equivalent employees, the revenue or tons of aggregate produced.

Intensity target

Refers to a normalized metric that sets out a company’s emissions target relative to some sort of economic output such as number of employees or revenue. This target therefore accounts for growth/decline of a company. See also: Absolute target.

Intergovernmental negotiating committee (INC)

The instrument is to be based on a comprehensive approach that addresses the full life cycle of plastic. The INC will consider how to promote sustainable production and consumption of plastics from product design to environmentally sound waste management through resource efficiency and circular economy approaches.

Intergovernmental Panel on Climate Change (IPCC)

The IPCC was established jointly by the United Nations Environment Program and the World Meteorological Organization in 1988. The purpose of the IPCC is to assess information related to all significant components of the issue of climate change by drawing upon hundreds of the world’s expert scientists as authors and thousands more as expert reviewers. IPCC releases periodic assessments of the scientific underpinnings for understanding global climate change and its consequences. The IPCC is looked to as the official advisory body to the world’s governments on the state of the science on climate change.  

IPCC's Fifth Assessment Report: the IPCC's Fifth Assessment Report was a critical scientific input into the UNFCCC's Paris Agreement in 2015. IPCC input also played a major part in the Business Roundtable's Statement on the Purpose of a Corporation, signed by 181 CEOs who commit to lead their companies for the benefit of all stakeholders – customers, employees, suppliers, communities, and shareholders.

Internal audit

An independent, objective assurance and consulting activity performed by the organization’s internal-audit function, designed to add value, and improve an organization’s operations. It helps an organization accomplish its objectives by bringing a systematic, disciplined approach to evaluating and improving the effectiveness of risk management, control, and governance processes.

Internal carbon price

An internally developed estimated cost of carbon emissions. Internal carbon pricing can be used as a planning tool to help identify revenue opportunities and risks, as an incentive to drive energy efficiencies to reduce costs, and to guide capital investment decisions.

International Accounting Standards (IAS)

International Accounting Standards is a set of international reporting practices.

International Accounting Standards Board (IASB)

International Accounting Standards Board is the independent accounting standard-setting body of the IFRS Foundation. The IASB was founded on April 1, 2001, as the successor to the International Accounting Standards Committee (IASC). It is responsible for developing International Financial Reporting Standards (IFRS) and for promoting their use and application.

International Energy Agency (IEA)

The IEA is an intergovernmental organization with a broad mandate, including providing statistics and analysis, and advocating for policies focused on enhancing the reliability, affordability, and sustainability of energy. Its membership represents c.75% of global energy consumption

International Corporate Governance Network (ICGN)

An investor-led coalition, with a mission to promote effective standards of corporate governance and investor stewardship to advance efficient markets and sustainable economies worldwide. Led by investors responsible for assets under management more than US$59 trillion.

International Finance Corporation (IFC)

An international benchmark for identifying and managing environmental and social risk, adopted by many organizations as a key component of their environmental and social risk management.

International Financial Reporting Standards (IFRS)

The IFRS Foundation is a not-for-profit, public interest organisation established to develop high-quality, understandable, enforceable and globally accepted accounting and sustainability disclosure standards. Their standards are developed by our two standard-setting boards, the International Accounting Standards Board (IASB) and International Sustainability Standards Board (ISSB).

International Integrated Reporting Council (IIRC)

Is powerful, international cross section of leaders from the corporate, investment, accounting, securities, regulatory, academic, and standard-setting sectors as well as civil society, formed in 2010 by The Prince of Wales’s Accounting for Sustainability Project. The development of Integrated Reporting is designed to enhance and consolidate existing reporting practices to move towards a reporting framework that provides the information needed to develop the global economic model to meet the challenges of the 21st century.

International Sustainability Standards Board (ISSB)

International Sustainability Standards Board is a standard-setting body established in 2021-2022 under the IFRS Foundation, whose mandate is the creation and development of sustainability-related financial reporting standards to meet investors' needs for sustainability reporting.

International Organization of Securities Commission (IOSCO)

The leading international policy forum for securities regulators and is recognized as the global standard setter for securities regulation. The organization’s membership regulates more than 95% of the world’s securities markets in some 130 jurisdictions, and it continues to expand.

Investment committee

A decision-making body that oversees and advises management on an organization’s investment assets. This committee usually has the primary responsibility for investment strategies, objectives, processes, and investment decisions. The committee often works with investment consultants or advisors and its responsibilities differ depending on local regulations.

ISO 26000

The International Organization for Standardization (ISO) created the 26000:2010 Standard on Social Responsibility to provide guidance to organizations on how to become more socially responsible. It is a set of guiding principles for businesses and organizations to use to steer them in a more socially responsible direction. Compliance with the principles is voluntary, and as such cannot be certified. The standards suggests that all organizations work to improve the following seven core subjects: Governance, Human Rights, Labor Practices, The Environment, Fair Operating Practices, Consumer Issues, Community Involvement and Development

Just transition

Is a framework developed by the trade union movement to encompass a range of social interventions needed to secure workers' rights and livelihoods when economies are shifting to sustainable production, primarily combating climate change and protecting biodiversity.

Land use

Land use is based on the functional dimension of land for different human purposes or economic activities. Typical categories for land use are dwellings, industrial use, transport, recreational use, or nature protection areas. Additional land use metrics can relate to the climate- related arrangements, activities, and inputs regarding these categories that organizations engage in, and can include land use change and land use management metrics.

Life Cycle Assessment (LCA)

is defined as the systematic analysis of the potential environmental impacts of products during their entire life cycles.

Leadership in Energy and Environmental Design (LEED)

LEED is an ecology-oriented building certification program run under the auspices of the U.S. Green Building Council (USGBC). LEED concentrates its efforts on improving performance across five key areas of environmental and human health: energy efficiency, indoor environmental quality, materials selection, sustainable site development and water savings. LEED has special rating systems that apply to all kinds of structures, including schools, retail, and healthcare facilities. Rating systems are available for new construction and major renovations as well as existing buildings.

LGBTQIA+

Is an inclusive term that includes people of all genders and sexualities, such as lesbian, gay, bisexual, transgender, questioning, queer, intersex, asexual, pansexual, and allies. While each letter in LGBTQIA+ stands for a specific group of people, the term encompasses the entire spectrum of gender fluidity and sexual identities.

Local Law 97 (LL97)

Is a law passed as a part of the Climate Mobilization Act by the New York City Council in March 2019, requires large existing buildings in New York City reduce their emissions by 40% by 2030 and 80% by 2050.

Low-Carbon Benchmark Regulation (LCBMR)

Regulation (EU) 2019/2089 of the European Parliament and of the Council of 27 November 2019 amending Regulation (EU) 2016/1011 as regards EU Climate Transition Benchmarks, EU Paris aligned Benchmarks and sustainability-related disclosures for benchmarks (The Low-Carbon Benchmark Regulation).

Low-carbon energy

In line with the International Energy Agency (IEA) definition, low-carbon technologies are technologies that produce low – or zero – greenhouse-gas emissions while operating. In the power sector this includes fossil-fuel plants fitted with carbon capture and storage, nuclear plants, and renewable-based generation technologies. Natural gas, combined cycle gas turbine and fossil fuel-based combined heat and power (cogeneration), despite being less carbon intensive than other means of electricity production like coal, are not considered low-carbon.

Low-carbon product or service

Despite the increasing focus on low- carbon investments, there is no precise and generally accepted definition of low- carbon products/services. It is loosely defined as a product or service that leads to absolute reduction in GHG emissions or to reduced carbon intensity of an activity.

To define whether the product or service is low-carbon, CDP encourages the use of existing industry taxonomies and frameworks such as the Climate Bonds Taxonomy, the Global Investor Coalition on Climate Change’s Low Carbon Investment Registry, and the EU Taxonomy for Environmentally Sustainable Economic Activities.

Low-carbon transition plan

A plan on how to transition the company to a business model compatible with a net-zero carbon economy. The Oxford Martin Net Zero Carbon Investment Initiative proposes a set of principles to facilitate engagement between investors and companies on long-term climate strategies.

According to these principles, companies should:

(1) Commit to a timeframe to reach net- zero emissions in line with the Paris goals;

(2) Demonstrate that they will be able to continue to be profitable once they reach net-zero emissions; and

(3) Set quantitative mid-term targets to be able to demonstrate progress against their long-term goals. The transition plan defines how the business model, its associated products and production methods, growth strategy and capital investments need to develop over time to respond to climate-related risks and to capitalize on opportunities.

A transition plan is therefore a plan that outlines how a company will transition from where it is now to where it needs to get to thrive in a net-zero carbon world in the future.

Low carbon transport for urban sustainability initiative (LᶜO₂TUS)

The transformative initiative aims to activate systemic change to improve and decarbonize the urban mobility landscape. The initiative will focus on improving access to low carbon and resilient urban mobility solutions and strengthening the foundational enablers of change as the first-order priorities. To set sustainable low-carbon mobility as a top priority, LOTUS allows existing efforts to be scaled and replicated across geographies.

Mainstream reports

In line with CDSB, this refers to the annual reporting packages in which organizations are required to deliver their audited financial results under the corporate, compliance or securities laws of the country in which they are incorporated or, if relevant, operate.

Mainstream reports are traditionally publicly available. They provide information to existing and prospective investors about the financial position and financial performance of the organization.

The exact provisions under which companies are required to deliver mainstream financial reports differ internationally but will generally contain financial statements and other financial reporting, including governance statements and management commentary.

Major renovations (RE)

Alterations that affect more than 50 per cent of the total building floor area or cause relocation of more than 50 per cent of regular building occupants. Major renovation projects refer to buildings that were under construction at any time during the reporting year.

Market-Based

Market-based approaches use business models and market forces to address development and humanitarian challenges more sustainably and/or at scale. A market-based approach can engage low- income people as customers and supply them with products and services they can afford; or, as business associates (suppliers, agents, or distributors), to provide them with improved incomes.

Material ESG factors

Material ESG factors or issues have a substantial impact on the current and future financial, economic, reputational, and legal prospects of an issuer, security, investment, or asset class. At a corporate or issuer level, the disclosure of a material ESG issue or factor would be reasonably expected by investors, as its omission would result in an incomplete understanding of current or future financial prospects.

Materiality

In the context of environmental, social, and corporate governance (ESG), refers to the effectiveness and financial significance of a specific measure as part of a company's overall ESG analysis. Material factors are financial elements deemed fundamental to the long-term success of a company's ESG strategy.

Member States Expert Group (MSEG)

A dedicated expert group created by the European Commission for the purpose of sustainable finance. The European Commission adopted its 'Action Plan on Financing Sustainable Growth' on 8 March 2018 which proposes concrete actions that will help achieve the Sustainable Development Goals and the objectives set in the Paris Agreement on Climate Change drawing on the recommendations of the High-Level Expert Group on Sustainable Finance. In its Action Plan, the European Commission has called on other players, such as EU Member States, to support implementing sustainable finance actions and promote the transformation in their territories. For this purpose, the European Commission is created a dedicated EU Member States expert group on sustainable finance.

Metric tons of CO2 (tCO2)

A "metric ton" of carbon dioxide (CO2) has a mass of 1000 kg, equivalent to 2,204.62 lbs. The "long ton", a term generally used in Britain, is equivalent to 2,240lbs and the "short ton" is generally used in the USA and is equivalent to 2,000 lbs.

Metric tons of CO2-equivalent (tCO2e)

A metric that allows for other Greenhouse Gases (GHGs) to be expressed in relation to CO2 based on their Global Warming Potentials (GWPs). A metric ton is 1000 kg, equivalent to 2,204.62 lbs.

Microcredit

Is a credit in the form of microloans provided to impoverished individuals and groups. The ideas were pioneered as a concept to grant small loans to people who otherwise would have no access to money to run a business. 

Midstream industry

Petroleum products are processed, stored, and transported in this stage of the process, linking the upstream and downstream processes.

Mitigation

Making the impacts of climate change less severe by preventing or reducing the emission of greenhouse gases (GHG) into the atmosphere. Mitigation is achieved either by reducing the sources of these gases — e.g., by increasing the share of renewable energies, or establishing a cleaner mobility system — or by enhancing the storage of these gases — e.g., by increasing the size of forests. In short, mitigation is a human intervention that reduces the sources of GHG emissions and/or enhances the sinks.

Money market

Fixed income securities, generally with maturities of one year or less. Examples include Banker’s Acceptance, Treasury Bills, Repurchase Agreements, Certificate of Deposits and Commercial Paper.

Morgan Stanley Capital International (MSCI)

Seeks to rate companies based on ESG risks and management’s response to those risks. MSCI considers 37 ESG indicators in its ratings. Data is collected from publicly available sources and monitored on an ongoing basis, but each company also receives an annual in-depth review. MSCI has a formal data verification process that companies may use to verify and comment on data.

Multi-strategy

Hedge fund strategies that utilize multiple investment strategies to construct client portfolios. Often, a central decision-making team or function will determine the portfolio’s exposure to the various strategies, sectors, or geographies at any given time, aiming to reduce risk and volatility while taking advantage of market opportunities.

Nationally Determined Contribution (NDC)

Refers to the post-2020 actions that a country intends to take under the international climate agreement adopted in Paris.

Nature-based solutions

Involve working with nature to address societal challenges, providing benefits for both human well-being and biodiversity.

Natural capital

Can be defined as the world's stocks of natural assets which include geology, soil, air, water, and all living things.

Nature positive

Enhancing the resilience of our planet and societies to halt and reverse nature loss.

Net zero

Net zero refers to a state in which the greenhouse gases going into the atmosphere are balanced by removal out of the atmosphere.

Net Zero Asset Managers (NZAM)

An initiative group of international asset managers committed to supporting the goal of net zero greenhouse gas emissions by 2050 or sooner, in line with global efforts to limit warming to 1.5°C; and to supporting investing aligned with net zero emissions by 2050 or sooner.

Net-Zero Asset Owner Alliance (NZAOA)

A group of international asset owners committed to transitioning their investment portfolios to net-zero greenhouse gas (GHG) emissions by 2050.

Net Zero Banking Alliance (NZBA)

Is a coalition of banks representing 40% of global banking assets, which are committed to aligning their lending and investment portfolios with net-zero emissions by 2050. Combining near-term action with accountability, this ambitious commitment sees signatory banks setting an intermediate target for 2030 or sooner, using robust, science-based guidelines.

Net-zero target

To reach a state of net zero emissions for companies implies two conditions:

1.To achieve a scale of value-chain emission reductions consistent with the depth of abatement achieved in pathways that limit warming to 1.5°C with no or limited overshoot and;

2.To neutralize the impact of any source of residual emissions that remains unfeasible to be eliminated by permanently removing an equivalent amount of atmospheric carbon dioxide.’

Negative screening

Excludes investments in companies that actively work against the investor's values, such as organizations with a history of international bribery or corruption.

Non-Financial Reporting Directive (NFRD)

Directive 2014/95/EU of the European Parliament and of the Council of 22 October 2014 amending Directive 2013/34/EU as regards disclosure of non-financial and diversity information by certain large undertakings and groups.

Non-Governmental Organization (NGO)

A non-governmental organization is an organization that generally is formed independent from government. They are typically nonprofit entities, and many of them are active in humanitarianism or the social sciences; they can also include clubs and associations that provide services to their members and others.

Norms-based screening

Screening investments against minimum standards of business practice based on international norms. Widely recognized frameworks for minimum standards of business practice include UN treaties, Security Council sanctions, UN Global Compact, Universal Declaration of Human Rights and OECD guidelines.

Occupational Safety and Health Administration (OSHA)

Is a large regulatory agency of the United States Department of Labor that originally had federal visitorial powers to inspect and examine workplaces.

One Earth Climate Model (OECM)

Provides a roadmap for sectoral decarbonization. Following two years of research and modelling, leading scientists at UTS Institute for Sustainable Futures, the German Aerospace Centre and the University of Melbourne have developed the One Earth Climate Model. The model demonstrates the feasibility of achieving the 1.5˚C target by 2050 through 100% renewable energy and natural climate solutions such as conservation and reforestation. The model is one of the most detailed climate and energy studies ever produced and was funded by the Leonardo DiCaprio Foundation and One Earth.

Organization for Economic Co-operation and Development (OECD)

OECD is an intergovernmental organization with 38 member countries, founded in 1961 to stimulate economic progress and world trade. It is a forum, and its members are countries which describe themselves as committed to democracy and the market economy, providing a platform to compare policy experiences, seek answers to common problems, identify good practices and coordinate domestic and international policies of its members.

Off-balance sheet

Accounting term for assets or liabilities that do not appear on a corporation’s balance sheet. This includes assets such as money markets, derivatives, cash and/or cash equivalents or overlays.

Operating assets

Assets where construction work has been completed and which are owned for the purpose of providing a service in exchange for an income. Also known as standing investments.

Paris Agreement

The Paris Agreement is an international treaty on climate change, adopted by 196 parties at the December 2015 UN Climate Change Conference in Paris. Its goal is to limit global warming to well below 2oC, preferably to 1.5oC, compared to pre-industrial levels. To achieve this long-term temperature goal, countries aim to reach global peaking of greenhouse gas (GHG) emissions as soon as possible.

Paris Agreement Capital Transition Assessment (PACTA)

A tool developed by 2DII to allow investors and financial institutions to assess the extent to which their portfolios’ attributable GHG emissions are aligned with certain climate scenarios and allow such institutions to stress test their portfolios.

Partnership for Carbon Accounting Financials (PCAF)

Is a global partnership of financial institutions that work together to develop and implement a harmonized approach to assess and disclose the greenhouse gas (GHG) emissions associated with their loans and investments.

Passive listed equity

Listed equity investments that mirror the performance of an index and follow a predetermined buy-and-hold strategy that does not involve active forecasting. Examples include investments in broad capital-market indices, ESG-weighted indices, themed indices, passively managed ETFs or indices with ESG-based exclusions.

Physical climate risks

Physical risks emanating from climate change can be event-driven (acute) such as increased severity of extreme weather events (e.g., cyclones, droughts, floods, and fires). They can also relate to longer-term shifts (chronic) in precipitation and temperature and increased variability in weather patterns or other long-term changes such as sea level rise. This is in line with the TCFD’s definition. These risks may often be more easily identifiable in alternative assets, such as infrastructure and property.

Pink washing

Emphasizing company’s support for LGBT rights, despite not making genuine efforts to erase sexual discrimination

Place based investing

The allocation of capital to investment strategies that directly benefit a defined geographic region.

Portfolio carbon footprint

Total carbon emissions for a portfolio normalized by the market value of the portfolio expressed in tones CO2e (carbon dioxide equivalent) / $M invested. This is in line with the TCFD’s definition.

Portfolio tilting

Investment strategy that overweighs a particular investment style.

Poseidon principles

Global framework for assessment and disclosure of the climate alignment of ship finance portfolios. The framework was designed to be consistent with the policies and goals of the International Maritime Organization, including the ambition to reduce annual GHG emissions from the shipping sector by at least 50% by 2050.

Precautionary principle

Is a broad epistemological, philosophical, and legal approach to innovations with potential for causing harm when extensive scientific knowledge on the matter is lacking. It emphasizes caution, pausing and review before leaping into new innovations that may prove disastrous.

Principal Adverse Impacts (PAI)

Since Q2 2021, in an effort towards increasing transparency and integrating sustainability risks, the Sustainable Finance Disclosure Regulation (SFDR) imposes mandatory ESG disclosure: investors must report on Principal Adverse Impacts (PAIs) of their portfolios.

PAI consist of a list of sustainability factors that firms need to consider for their investment policies and decisions. Those indicators relate to environmental and social topics. According to the regulation, asset managers, EU banks, venture capital funds, and all the other financial market participants (FMPs) must disclose on a set of mandatory indicators.

Principles for Responsible Banking (UN PRI)

Refers to the set of guidelines developed in coordination with the United Nations for banks to incorporate ESG and sustainability issues in their decision-making. More information on the Principles for Responsible Banking is available on their webpage here. The six principles are:

1. Principal 1: We will align our business strategy to be consistent with and contribute to individuals’ needs and society’s goals, as expressed in the Sustainable Development Goals, the Paris Climate Agreement, and relevant national and regional frameworks.

2. Principal 2: We will continuously increase our positive impacts while reducing the negative impacts on, and managing the risks to, people and environment resulting from our activities, products, and services. To this end, we will set and publish targets where we can have the most significant impacts.

3. Principal 3: We will work responsibly with our clients and our customers to encourage sustainable practices and enable economic activities that create shared prosperity for current and future generations.

4. Principal 4: We will proactively and responsibly consult, engage, and partner with relevant stakeholders to achieve society’s goals.

5. Principal 5: We will implement our commitment to these Principles through effective governance and a culture of responsible banking.

6. Principal 6: We will periodically review our individual and collective implementation of these Principles and be transparent about and accountable for our positive and negative impacts and our contribution to society’s goals.

Formal implementation of these principles requires the disclosure of certain assessment and reporting information.

Principles for Responsible Investment (PRI)

Refers to the organization that established a set of guidelines in coordination with the United Nations for investors to incorporate ESG and sustainability issues in their decision-making and to seek disclosure from companies in which they invest. More information on the Principles for Responsible Investment is available on their webpage here. The six principles are:

1. Principal 1: We will incorporate ESG issues into investment analysis and decision-making processes.

2. Principal 2: We will be active owners and incorporate ESG issues into our ownership policies and practices.

3. Principal 3: We will seek appropriate disclosure on ESG issues by the entities in which we invest.

4. Principal 4: We will promote acceptance and implementation of the principles within the investment industry.

5. Principal 5: We will work together to enhance our effectiveness in implementing the principles.

6. Principal 6: We will each report on our activities and progress towards implementing the principles.

Formal implementation of these principles requires the disclosure of certain assessment and reporting information.

Private debt

Debt investments not financed by banks and not issued or traded in an open market. The word ‘private’ refers to the investment instrument itself and not necessarily the borrower (i.e. public companies can borrow via private debt just as private companies can). Private debt falls into a broader category termed ‘alternative debt’ or ‘alternative credit’ and is used interchangeably with ‘direct lending’, ‘private lending’ and ‘private credit’.

Private equity

Equity stakes in privately held companies.

Process emissions

Emissions from industrial production processes which chemically or physically transform materials (e.g., CO2 from the calcinations step in cement manufacturing, CO2 from catalytic cracking in petrochemical processing, PFC emissions from aluminum smelting, etc.)

Proxy voting

A form of voting whereby the fund manager casts vote on behalf of their mutual fund shareholders on a variety of issues, that may include the election of board members, merger, or acquisition approvals, or approving a stock compensation plan.

Positive screening

Is the process of finding companies that score highly on environmental, social and governance (ESG) factors relative to their peers. These companies can then be selected for sustainable investing portfolios.

Power Purchase Agreement (PPA)

Often refers to a long-term electricity supply agreement between two parties, usually between a power producer and a customer (an electricity consumer or trader). The PPA defines the conditions of the agreement, such as the amount of electricity to be supplied, negotiated prices, accounting, and penalties for non-compliance. Since it is a bilateral agreement, a PPA can take many forms and is usually tailored to the specific application. Electricity can be supplied physically or on a balancing sheet. PPAs can be used to reduce market price risks, which is why they are frequently implemented by large electricity consumers to help reduce investment costs associated with planning or operating renewable energy plants.

Public Benefit Corporation (PBC)

A public benefit corporation is a legal incorporation available only in certain states that allows organizations to identify a purpose beyond maximizing shareholder value. Becoming a public benefit corporation “protects mission through capital raises and leadership changes, creates more flexibility when evaluating potential sale and liquidity options, and prepares businesses to lead a mission-driven life post-IPO,” according to benefitcorp.net. Public benefit corporation legislation varies from state to state.

Public policy

A course or principle of action adopted or proposed by government agencies and bodies. It encompasses the system of laws, regulatory measures, administrative mechanisms, courses of action and funding priorities concerning a given topic that a governmental entity or its representatives implement.

Publicly available 2°C scenarios

Taken from the TCFD recommendations, “Publicly available 2°C scenarios” refer to 2°C scenarios which are:

• used/referenced and issued by an independent body;

• wherever possible, supported by publicly available datasets;

• updated on a regular basis; and

• linked to functional tools (e.g., visualizers, calculators, and mapping tools) that can be applied by organizations.

Purchased or acquired electricity, steam, heat, and/or cooling

Specific information on these energy carriers can be found in section 5.3.1 and Appendix A of the GHG Protocol Scope 2 Guidance.

The terms ‘purchased’ and ‘acquired’ are used when your organization has received the energy from a third party.

These rules out energy that is sourced from within the organizational/sector boundary. It should be noted that purchased or acquired heat does not include the heat content, or calorific value, of fuels that are purchased or acquired by the organization.

This is accounted for at the point of fuel consumption, which falls inside the Scope 1 boundary. You should also be aware that steam, heat, or cooling received via direct line as ‘waste’ from an industrial process, should still be accounted for if it is consumed.

Qualitative scenarios

A high level, narrative approach to scenario analysis, suitable for organizations familiarizing themselves with the process. Qualitative scenario analysis explores relationships and trends for which little or no numerical data is available.

Quantitative scenarios

A more detailed method for conducting scenario analysis, with greater rigor and sophistication in the use of data sets and quantitative models which may warrant further analysis. Quantitative scenario analysis can be used to assess measurable trends and relationships using models and other analytical techniques.

Radiative forcing

Radiative forcing is the change in energy flux in the atmosphere caused by natural or anthropogenic factors of climate change as measured by watts / metre2. It is a scientific concept used to quantify and compare the external drivers of change to Earth's energy balance.

Race to zero

Is the UN-backed global campaign rallying non-state actors – including companies, cities, regions, financial and educational institutions – to take rigorous and immediate action to halve global emissions by 2030 and deliver a healthier, fairer zero carbon world in time. 

Rainbow-washing

Is when a business shows public support for the LGBTQ+ community but however in private engages in acts that negatively affect members of that community.

Real estate

An asset class that includes direct or indirect exposure to real property. This includes investments in non-listed real estate funds and investments in real estate companies that invest in real property.

Regenerative agriculture

Is a conservation and rehabilitation approach to food and farming systems. It focuses on topsoil regeneration, increasing biodiversity, improving the water cycle, enhancing ecosystem services, supporting Bio sequestration, increasing resilience to climate change, and strengthening the health and vitality of farm soil. 

Registration, Evaluation, Authorization and Restriction of Chemicals (REACH)

Is a European Union regulation dating from 18 December 2006. REACH addresses the production and use of chemical substances, and their potential impacts on both human health and the environment.

Renewable energy

Energy that is naturally replenished from sources such as solar, wind, water, and geothermal heat.

Renewable Energy Certificate (REC)

Is a market-based instrument that represents the property rights to the environmental, social, and other non-power attributes of renewable electricity generation. RECs are issued when one megawatt-hour (MWh) of electricity is generated and delivered to the electricity grid from a renewable energy resource: 

There are two types of RECs that you can purchase: bundled (typically just called "RECs") and unbundled RECs. Though RECs and electricity are produced concurrently, the two "products" are severable and represent different revenue streams for project developers. 

• When a REC is sold together with its associated energy, it is called a bundled REC. Bundled RECs often come from new-build projects because in order for developers to receive financing and construct the project, they must show guaranteed revenue streams for the expected energy rather than merely the severed REC. Buying a bundled REC (i.e. electricity + REC) from a yet-to-be-built project allows your company to make "additionality" claims, meaning that your company's investment directly added new, low-cost renewable energy to the grid and displaced higher-cost fossil power. 

• Unbundled RECs, however, can't garner additionality claims. That's because unbundled RECs aren't tied to their underlying power. Unbundled REC supply has far outpaced demand, which has driven the cost of unbundled RECs down. While companies can still purchase unbundled RECs to achieve sustainability goals, unbundled RECs don't have as positive an environmental impact because they don't lead to new renewable energy being generated and merely represent a re-shuffling of the existing renewable energy supply on the market today.

Residual mix

Residual mix refers to a set of electricity for which the origin is not verified with a guarantee of origin.

Resilience

Climate resilience is the ability to anticipate, prepare for, and respond to hazardous events, trends, or disturbances related to climate. Improving climate resilience involves assessing how climate change will create new, or alter current, climate-related risks, and taking steps to better cope with these risks.

Responsible investment

A broad term for describing investing that aims to invest responsibly. ESG investing is part of this aim.

Responsible investment policy

A document that captures an organization’s strategy to incorporate environmental, social and governance (ESG) factors in investment decisions and active ownership. An organization’s responsible investment policy can take many shapes. It may involve embedding responsible investment considerations into the organization’s main investment policy. It could also consist of a standalone responsible investment policy. Alternatively, it could be captured in high-level public statements or codes of business practice to which the organization adheres.

Risk management

The processes the organization uses to identify, assess, and manage risks.

Responsible sourcing

Is the incorporation of ethical, sustainable, and socially conscious principles into sourcing, procurement and overall supply chain management practices.

Scenario analysis

A scenario describes a potential path of development that will lead to a particular outcome or goal. Scenario analysis is the process of highlighting central elements of a possible future and drawing attention to key factors (or critical uncertainties). It is a tool to enhance critical strategic thinking by challenging “business-as-usual” assumptions and exploring alternatives based on their relative impact and likelihood of occurrence.

Scenarios are not forecasts or predictions, but tools to describe potential pathways that lead to a particular outcome or goal.

Scopes

Greenhouse gas emissions are categorized into three groups or 'Scopes' by the most widely used international accounting tool, the Greenhouse Gas (GHG) Protocol.

Scope 1 refers to all direct GHG emissions from owned or controlled sources.

Scope 2 refers to indirect GHG emissions from generation or consumption of purchased electricity, heat, or steam and cooling consumed by the reporting company.

Scope 3 refers to other indirect emissions not covered in Scope 2 that occur in the value chain of the reporting company, including both upstream and downstream emissions. Scope 3 emissions could include: the extraction and production of purchased materials and fuels, transport- related activities in vehicles not owned or controlled by the reporting entity, electricity-related activities (e.g., transmission and distribution losses), outsourced activities, and waste disposal.

Scenario analysis

A process for identifying and assessing the potential implications of a range of plausible future states under conditions of uncertainty. Scenarios are hypothetical constructs and not designed to deliver precise outcomes or forecasts. Instead, scenarios provide a way for organizations to consider how the future might look if certain trends continue or certain conditions are met.

For example, in the case of climate change, scenarios allow an organization to explore and develop an understanding of how various combinations of climate-related risks, both transition and physical risks, may affect its businesses, strategies and financial performance over time. Scenario analysis can be qualitative, relying on descriptive, written narratives, or quantitative, relying on numerical data and models, or some combination of both.

Science-based targets

Provide a clearly defined pathway for companies to reduce greenhouse gas (GHG) emissions, helping prevent the worst impacts of climate change and future-proof business growth. Targets are considered ‘science-based’ if they are in line with what the latest climate science deems necessary to meet the goals of the Paris Agreement – limiting global warming to well-below 2°C above pre-industrial levels and pursuing efforts to limit warming to 1.5°C

Science Based Targets Initiative (SBTi)

The SBTi mobilizes companies to set science- based targets and boost their competitive advantage in the transition to the low- carbon economy. The initiative is a collaboration of CDP, WRI, WWF, and the UN Global Compact. It launched the world’s first Net Zero Standard, which gives companies science-based certification of their net-zero targets.

Screening

The application of filters to lists of potential securities, issuers, investments, or sectors to rule investments in or out based on an investor’s preferences, such as ethics and values, and/or investment metrics, such as risk assessments. Screening covers screening conducted under a manager’s policy and client-directed screening.

Scope 1 emissions

Are direct emissions from company-owned and controlled resources. In other words, emissions are released into the atmosphere as a direct result of a set of activities, at a firm level. It is divided into four categories: stationary combustion (e.g. fuels, heating sources). All fuels that produce GHG emissions must be included in scope 1.

Scope 2 emissions

Are indirect emissions from the generation of purchased energy, from a utility provider. In other words, all GHG emissions released in the atmosphere, from the consumption of purchased electricity, steam, heat and cooling.

• The market-based method calculates emissions based on the electricity that organizations have chosen to purchase, often spelled out in contracts or instruments like Renewable Energy Certificates (RECs)

• The location-based method caculates emissions based on the emissions intensity of the local grid area where the electricity usage occurs

Scope 3 emissions

Are all indirect emissions – not included in scope 2 – that occur in the value chain of the reporting company, including both upstream and downstream emissions. In other words, emissions are linked to the company’s operations. According to GHG protocol, scope 3 emissions are separated into 15 categories.

Scope 4

Also referred to as avoided emissions or abated emissions are the emissions reductions that happen outside of a products lifecycle or value chain that occur due to the use of that product.

For example, if a company creates a product and optimizes it to emit less CO2 during its life cycle then emissions can be reported according to the making of the product from the beginning of the value chain until it reaches the end user, and then the estimated calculated emissions of what would be used during the product's life cycle. So the overall reduction has been made by optimizing the product and the emissions are now lower over the life cycle. (During the manufacturing and logistics processes the scopes 1 and 2 were counted for and scope 3 if they report the up and downstream emissions if the outside companies in the value chain don't count their scopes 1 and 2s). The avoided emissions are what would have been had the product never been optimized or complimented.

Securities and Exchange Commission (SEC)

In March 2022 the SEC proposed rule changes that would require registrants to include certain climate-related disclosures in their registration statements and periodic reports, including information about climate-related risks that are reasonably likely to have a material impact on their business, results of operations, or financial condition, and certain climate-related financial statement metrics in a note to their audited financial statements. The required information about climate-related risks also would include disclosure of a registrant’s greenhouse gas emissions, which have become a commonly used metric to assess a registrant’s exposure to such risks.

Sextortion

Refers to the broad category of sexual exploitation in which abuse of power is the means of coercion, as well as to the category of sexual exploitation in which threatened release of sexual images or information is the means of coercion.

SGD compass

It is a guide with an objective to help companies align their strategies as well as measure and manage their contribution to the SDGs. It is developed by UN Global Compact, the Global Reporting Initiative (GRI) and World Business Council for Sustainable Development (WBCSD). It is a collection of resources (analysis of the goals, indicators for businesses, tools for stakeholders) that companies can utilize in finding out their role in helping to achieve the SDGs.

Shaping sustainability outcomes

All investor actions – investment decisions and the use of tools of influence – shape positive and negative outcomes in the world. Investors can play different roles in shaping sustainability outcomes, which include:

• Causing outcomes, through their own business activities (e.g., outcomes for their own employees);

• Contributing to outcomes, through a business relationship or investment activity (actions or omissions) that induces or facilitates an outcome from an investee company or project;

• Being directly linked to outcomes, through the activities, products or services of an investee company or project.

Shareholder activism

Shareholders looking to change a company’s behavior. Increasingly used to describe those pushing for improvements to a company’s ESG policy and practices.

Shareholder engagement

The process of engaging with an entity as a shareholder to begin or continue a dialogue related to issues of concern to investors including ESG practices, disclosure, and other corporate behaviors.

Sin stocks

Are publicly traded companies involved in or associated with an activity that is considered unethical or immoral. Sin stocks are generally in sectors that deal directly with morally dubious actions. They are perceived as making money from exploiting human weaknesses and frailties.

Social bonds

Are a form of debt that allow investors to help raise funds for projects with positive social outcomes that in some cases, provide an investment return. They include projects on improving food security and access to education, as well as health care and financing.

Social in ESG

Social criteria examine how it manages relationships with employees, suppliers, customers, and the communities where it operates. They are addressed by company social activities such as promoting health and safety, encouraging labor-management relations, protecting human rights, reversing the gender gap, and focusing on product integrity. Social positive outcomes include increasing productivity and morale, reducing turnover and absenteeism, and improving brand loyalty.

Social equity

Abroad term used to encompass issues related to the provision of equal opportunity and access to traditionally disadvantaged populations including women, minorities, LGBTQ+, veterans, and individuals with disabilities, as well as regionally disadvantaged populations.

Social factors

Factors related to social performance used in the investment evaluation process. These include data points encompassing areas such as diversity, human rights, labor relations, etc.

Social impact

A significant or positive change that solves or at least addresses social injustice and challenges. Businesses or organizations achieve social impact goals through conscious and deliberate efforts or activities in their operations and administrations.

Social Progress Index (SPI)

Measures the extent to which countries provide for the social and environmental needs of their citizens. Fifty-four indicators in the areas of basic human needs, foundations of well-being, and opportunity to progress show the relative performance of nations.

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. They can identify how effectively a company uses its capital and other resources to create value for the community.

Social washing

Like greenwashing, an organization falsely suggests that is a socially conscious company, but it does not make tangible efforts in the direction.

Socially Responsible Investments (SRI)

A broad term that refers to an investment approach that considers the social implication of investment. This term tends to be substituted with ESG to include implications on environment and governance as well.

Socially Responsible Investing (SRI)

Socially Responsible Investing and refers to an investment discipline that considers ESG criteria to generate long-term competitive financial returns and positive societal impact through targeted investment decision-making.

Stewardship

The PRI defines stewardship as “the use of influence by institutional investors to maximize overall long-term value including the value of common economic, social and environmental assets, on which returns and clients’ and beneficiaries’ interests depend.

Stewardship code

Is a code requiring institutional investors to be transparent about their investment processes, engage with investee companies and vote at shareholders’ meetings. The first stewardship code was introduced in the United Kingdom in 2010, with the objective of enhancing the quality of engagement between asset managers and companies to help improve long-term risk-adjusted returns to shareholders.

Stranded assets

Are defined as assets that have suffered from unanticipated or premature write-downs, devaluation, or conversion to liabilities. In recent years, the issue of stranded assets caused by environmental factors, such as climate change and society's attitudes towards it, has become increasingly high profile. For example, an energy company having made significant investment into fossil fuels but due to many Net Zero commitments can no longer burn these fuels, therefore meaning they would have to write off the assets.

Sustainable Development Goals (SDGs)

Through the United Nations Global Compact and Reporting Initiative (GRI), corporations have begun reporting through the Reporting on SDGs initiative. Reporting on the SDGs leverages the GRI Standards and the Ten Principles of the UN Global Compact so businesses can incorporate SDG reporting into their existing processes.

Sustainable Finance Disclosure Regulations (SFDR)

Imposes mandatory ESG disclosure obligations for asset managers and other financial institutions

Sustainable Stock Exchanges Initiative (SSEI)

Sustainable Stock Exchanges Initiative is a UN partnership program intended to provide a global platform for exploring how exchanges, in collaboration with investors, companies, regulators, policymakers and relevant international organizations, can enhance performance on ESG issues and encourage sustainable investment, including the financing of the UN Sustainable Development Goals.

Sustainability

Sustainability focuses on meeting the needs of the present without compromising the ability of future generations to meet their needs. The concept of sustainability is composed of three pillars: economic, environmental, and social —also known informally as profit, planet, and people.

Sustainability and Health Initiative for NetPositive Enterprise (SHINE)

Is an initiative at the Massachusetts Institute of Technology and the Harvard T.H. Chan School of Public Health. In the first four years of SHINE’s existence, both the Handprints and Net Positive program and the worker well-being program were both situated at Harvard. Now, SHINE at MIT focuses on research on Handprints and Net Positivity. It is a joint initiative that strives to make the world a healthier, more sustainable place. The publications section includes white papers and case studies which resulted from the research on Handprints and Net Positive during the period from 2013-2017, before this program moved to MIT.

Sustainability Disclosure Requirements (SDR)

Sustainability Disclosure Requirements is a disclose practice for the environmental impact.

Statistical Classification of Economic Activities in the European Community (NACE)

The Statistical Classification of Economic Activities in the European Community commonly referred to as NACE is the industry-standard classification system used in the European Union. The current version is revision 2 and was established by Regulation (EC) No 1893/2006. It is the European implementation of the UN classification ISIC, revision 4.

Stewardship tools

Stewardship is implemented through investors’ individual and collaborative use of tools, including—but not limited to—engagement with issuers (in all asset classes and for both current and potential investees); voting at shareholder meetings; filing of shareholder resolutions/proposals; direct roles on investee boards and board committees; negotiation with and monitoring of the stewardship actions of suppliers in the investment chain; engagement with policymakers; engagement with standard setters; contributions to public goods (such as research) and public discourse (such as media) that support stewardship goals; and, where necessary, litigation.

Streamlined Energy and Carbon Reporting (SECR)

It is a requirement for UK companies concerning mandatory annual reporting and disclosure of energy and carbon information. SECR came into effect in 2019. It is mandatory for large companies that meet certain criteria. It is part of other mandatory reports required from UK companies. It is in line with TCFD recommendations. SECR does not provide a fixed template for reporting, it only specifies what information must be disclosed by the company.

Substantive impact

An impact that has a considerable or relatively significant effect on an organization at the corporate level. This could include operational, financial, or strategic effects that undermine the entire business or part of the business.

Sustainable Development Goals

The Sustainable Development Goals (SDGs) are a set of 17 goals set out by the United Nations General Assembly to be reached by 2030. The goals are aimed at resolving complex economic, social, and environmental issues at a global level as listed below:

1.No poverty

2.Zero hunger

3.Good health & well-being

4.Quality education

5.Gender equality

6.Clean water and sanitation

7.Affordable and clean energy

8.Decent work and economic growth

9.Industry, innovation, and infrastructure

10.Reduced inequalities

11.Sustainable cities and communities

12.Responsible consumption and production

13.Climate action

14.Life below water

15.Life on land

16.Peace, justice, and strong institutions

17.Partnership for the goals

The goals are broad in scope and interdependent. Each goal is split out into 169 targets, and 232 unique indicators (up to 3 per target) as a measure of progress.

Sustainable finance

A finance strategy that involves environmental, social and governance (ESG) considerations in investment decisions

Sustainable Finance Action Plan (SFAP)

It was launched European Commission in 2018.[23] It is part of broader efforts to connect finance with the specific needs of the European and global economy for the benefit of the planet and the society. It planned the creation of the EU Taxonomy.

Sustainable Finance Framework (SFF)

It can be used as a generic term in the context of a set of regulations and initiatives concerning sustainable finance. EU, sovereign states, financial institutions like banks can define their own Sustainable Finance Framework.

Sustainable investments

A broad term that is used to describe investments that directs capital to those companies that promote sustainable models and strategies to create long term value, while at the same time considering ESG considerations and impact.

Sustainable Urban Resilience for the next Generation initiatives (SURGe)

The SURGe initiative aims to effectively address some of the barriers that limit urban emissions reductions, adapting urban systems to climate change, and building urban system resilience. The initiative will track buildings and housing, urban water, urban mobility, urban waste and consumption, and urban energy, all of which will be supported by partnerships and collaborations with organizations from all over the world.

Sustainability Accounting Standards Board (SASB)

The Value Reporting Foundation’s (VRF) SASB Standards allow you to track and communicate sustainability actions most financially-material to your investors. There are 77 different industries specific SASB Standards. According to a joint statement from SASB and GRI, SASB provides “industry-specific standards to identify the subset of sustainability-related risks and opportunities most likely to affect a company’s financial condition (i.e., its balance sheet), operating performance (i.e., its income statement) or risk profile (i.e., its market valuation and cost of capital). SASB metrics are divided into five broad “sustainability dimensions”: Environment, Social Capital, Human Capital, Business Model and Innovation, Leadership and Governance. SASB also offers a Materiality Finder to explore and compare SASB Standards more quickly.

Sustainability bond

Bonds whose proceeds will be applied exclusively to finance or re-finance (in part or in full) new and/or existing projects which contribute to a combination of environmental objectives and positive social outcomes; within four core components (use of proceeds, process for project evaluation and selection, management of proceeds, and reporting). This is in line with ICMA’s definition.

Sustainability outcomes

Sustainability outcomes can be identified and assessed in terms of sustainability performance at the global level and the level of a particular asset, economic activity, company, sector, country, or region in the context of relevant thresholds.

• Sustainability outcomes include, for example, those that must be addressed for economies to operate within planetary boundaries, such as climate change, deforestation, and biodiversity loss; those that must be in place to drive inclusive societies, such as human rights (including decent work), diversity, equity, and inclusion; and those that are needed in corporate cultures for sustainability performance, such as tax fairness, responsible political engagement, and anti-corruption measures.

• Progress on sustainability outcomes can be assessed against recognized sustainability thresholds and timeframes. These include the Sustainable Development Goals (SDG) targets and indicators, thresholds set by the UNFCCC Paris Agreement, expectations set out in the Universal Declaration of Human Rights, and other environmental, social, governance, and development objectives established by political or socio-economic institutions.

• We describe impact as a change in outcome (i.e., an outcome shaped by an investor in line with the SDGs).

Sustainability report

Means the report produced by an organization to inform stakeholders about its policies, programs, and performance regarding ESG and other matters. Sustainability reports, sometimes referred to as corporate citizenship reports, or CSR reports, are usually voluntary, and are sometimes independently audited and/or integrated into financial reports. There is a growing trend toward integration and assurance.

Sustainalytics

Provides companies with an ESG risk rating score out of 100 and across five risk levels (negligible, low, medium, high, and severe) based on industry specific ESG indicators. Sustainalytics identifies areas of exposure to material ESG issues, analyzes management’s responses to manageable areas of exposure, provide discounts for controversies, and assign an overall ESG Risk Rating. Sustainalytics does not indicate whether it has a mechanism for companies to verify information or provide feedback on their ESG disclosure score.

Systemic sustainability issues

Those issues that have effects across multiple companies, sectors, markets and/or economies. Impacts caused by one market participant can lead to consequences across the system, including the common economic, environmental, and social assets on which returns, and beneficiary interests depend.

Universal owners and long-term investors in general are highly exposed to systemic sustainability issues and have limited ability to diversify away from them. However, they can (and should) influence such issues through responsible investment activities.

Swiss Sustainable Finance Association (SSF)

Currently SSF unites around 180 members and network partners from financial service providers, investors, universities and business schools, public sector entities and other interested organizations. Member of Eurosif.

Task Force on Climate-related Financial Disclosures (TFCD)

G20 Finance Ministers and Central Bank Governors asked the Financial Stability Board (FSB) to review how the financial sector can take account of climate- related issues. The FSB established the TCFD to guide companies on disclosing climate-related financial risks to investors, lenders, insurers, and other stakeholders. This guidance identifies multiple climate-related risks and opportunities to disclose. While the TCFD offers guidance around the type of information that should be disclosed, it is principles-based, and does not prescribe the specific metrics that should be used for such disclosure. Standard setters such as GRI, SASB and others have done work around mapping their standards to the TCFD.

Taxonomy

Regulation (EU) 2020/852 of the European Parliament and of the Council of 18 June 2020 on the establishment of a framework to facilitate sustainable investment and amending Regulation (EU) 2019/2088 (The Taxonomy Regulation).

Technical Expert Group (TEG)

Expert Group on sustainable finance. It was established by the European Commission in 2018. Its 35 members from civil society, academia, business, and the finance sector, as well as additional members and observers from EU and international public bodies work both through formal plenaries and subgroup meetings for each workstream. TEG develops the EU Taxonomy, EU Green Bond Standard, EU climate Benchmarks and disclosures for benchmarks and Climate-related disclosures.

Telesto ESG

Telesto supports private markets leaders as they get started and navigate their ESG journeys with the goal of elevating these questions to corporate strategy and business growth. With the increasing complexity around ESG and Sustainability topics, we find that leaders lack the resources to simplify this transition and have the meaningful impact that they are counting on. That’s where we come in. We offer a variety of ESG and Sustainability specific growth solutions, whether it’s related to net-zero planning, materiality assessments, ESG metrics, or simply to having a dedicated team to making your ESG program come to life.

The California Transparency in Supply Chains Act

Requires companies subject to the law to disclose information regarding their efforts to eradicate human trafficking and slavery within their supply chains on their website or, if a company does not have a website, through written disclosures. The law affects retail sellers and manufacturers doing business in California and have annual gross receipts more than $100,000,000 USD.

Thematic bonds

Debt securities issued by both public and private entities on the condition that the funds obtained are used to finance specific projects with positive social and/or environmental performance. Labelled thematic bonds are issued according to industry standards, such as those set by the Climate Bonds Initiative, the International Capital Markets Association, or the EU Taxonomy. Non-labelled thematic bonds do not follow these standards.

Thematic investing

Is an approach which focuses on predicted long-term trends rather than specific companies or sectors, enabling investors to access structural, one-off shifts that can change an entire industry.

Third-party assurance

Engagement conducted by someone who is independent of the organization, applying predefined criteria to evaluate certain data and/or processes against an appropriate standard. This engagement should result in a written conclusion, stating the level of confidence that the intended audience can have in the data or process.

Taskforce on Nature-related Financial Disclosures (TNFD)

The Taskforce on Nature-related Financial Disclosures aims to develop and deliver a risk management and disclosure framework for organizations to report and act on evolving nature-related risks, with the aim of supporting a shift in global financial flows away from nature negative outcomes and toward nature-positive outcomes.

Trade union

An organization whose members are usually workers or employees. Trade unions seek to protect their members’ interests through collective and enterprise bargaining, mediation, and members’ representation at disciplinary or grievance hearings. Trade unions can sign up with the PRI, where they have a significant reserve fund.

Transition activities

Refers to activities that facilitate the transition to a carbon-neutral economy.

Transition risks

Transition risks are business-related risks that follow societal and economic shifts toward a low-carbon and more climate-friendly future. These risks can include policy and regulatory risks, technological risks, market risks, reputational risks, and legal risks. These risks are interconnected and often top of mind for investors as they attempt to navigate an increasingly aggressive low-carbon agenda that can create capital and operational consequences to their assets.

Triple Bottom Line (TBL)

Is an accounting framework with three parts: social, environmental, and financial. Some organizations have adopted the TBL framework to evaluate their performance in a broader perspective to create greater business value.

Triple Net Lease (NNN)

Is a lease agreement on a property whereby the tenant or lessee promises to pay all the expenses of the property, including real estate taxes, building insurance, and maintenance. These expenses are in addition to the cost of rent and utilities. In contrast, in standard commercial lease agreements, some or all these payments are typically the responsibility of the landlord.

Total carbon emissions

The absolute greenhouse gas emissions associated with a portfolio, expressed in tons CO2e (carbon dioxide equivalent). This is in line with the TCFD’s definition.

Two (2°C) or lower scenario

A core element of the TCFD’s Strategy recommendation: “Describe the resilience of the organization’s strategy, taking into consideration different climate-related scenarios, including a 2°C or lower scenario”. A 2°C scenario provides a reference point that is generally aligned with the objectives of the Paris Agreement. There are publicly available scenarios (such as IEA 2DS, IEA 450, Deep Decarbonization Pathways Project, and International Renewable Energy Agency) organizations can use, as a direct tool or a reference point for tailored scenarios.

Universal owner

An institutional investor whose portfolio typically encompasses the entire market. As a result, the investor is exposed to all liabilities of the market and has limited ability to control the investment performance of their portfolio. Universal owners are uniquely positioned to support systematic market changes including support for disclosure on ESG issues and action to address liabilities and exposures that are identified through such disclosure.

UN 2030 agenda for sustainable development

Launched during a UN Summit in 2015, introduced the 17 Sustainable Development Goals (SDGs) and 169 associated targets. It seeks a world of universal respect for human rights and human dignity, environment, the rule of law, justice, equality, and non-discrimination.

UN Environment Assembly (UNEA)

In March 2022 representatives from 175 countries signed a resolution at the UN Environmental Assembly in Nairobi that negotiates an international legally binding agreement to end plastics pollution by 2024.

UN Environment Program Finance Initiative (UNEP FI)

Is a global partnership established between the United Nations Environment Program and the financial sector. UNEP FI catalyzes action across the financial system to align economies with sustainable development.

UN Framework Convention on Climate Change (UNFCCC)

Established an international environmental treaty to combat "dangerous human interference with the climate system", in part by stabilizing greenhouse gas concentrations in the atmosphere.

UN Global Compact (UNGC)

Is a non-binding United Nations pact to encourage businesses and firms worldwide to adopt sustainable and socially responsible policies, and to report on their implementation.

UN Sustainable Stock Exchanges Initiative (SSE)

A project that promotes corporate investment in sustainable development.

UN Guiding Principles Reporting Framework (UNGPRF)

UN Guiding Principles Reporting Framework provides a series of 31 questions to assist companies in communicating how they are integrating human rights considerations into their operations.

UN Principles for Responsible Banking (UN PRB)

UN works with the banking community through the UN Principles for Responsible Banking to accelerate a positive global transition for people and the planet. With over 300 signatory banks representing almost half of the global banking industry, the principles are the world’s foremost sustainable banking framework. Through the Principles, banks take action to align their core strategy, decision-making, lending and investment with the UN Sustainable Development Goals, and international agreements such as the Paris Climate Agreement.

UN Principles for Responsible Investment (UN PRI)

The PRI was established to encourage investors to implement six sustainable investment principles. Each signatory must report their responsible investment activities each year using the UNPRI Reporting Framework. The six principles were developed by investors for investors:

• We will incorporate ESG issues into investment analysis and decision making processes

• We will be active owners and incorporate ESG issues into our ownership policies and practices

• We will seek appropriate disclosure on ESG issues by the entities in which we invest

• We will promote acceptance and implementation of the principles within the investment industry

• We will work together to enhance our effectiveness in implementing the principles

• We will each report on our activities and progress towards implementing the principles

Refer to PRI’s starter guide for how GPs can manage ESG issues in PE. It outlines how to include ESG issues throughout the investment process, and in the relationships between the GP and LP.

Undue influence

Occurs when an individual can persuade another's decisions due to the relationship between the two parties. Often, one of the parties is in a position of power over the other due to elevated status, higher education, or emotional ties. The more powerful individual uses this advantage to coerce the other individual into making decisions that might not be in their long-term best interest.

United States Green Building Council (USGBCl)

The U.S. Green Building Council (USGBC) is a nonprofit organization that supports the development of prosperous, healthy and resilient communities through the transformation of the built environment. Through its Leadership in Energy and Environmental Design (LEED) green building program, USGBC is committed to transforming how our buildings and communities are designed, constructed and operated, enabling an environmentally and socially responsible, healthy, and prosperous environment that improves quality of life.

Upstream industry

This is the first stage in the production of petroleum products. Companies initially locate oil and natural gas deposits which are then subsequently extracted by mining and drilling.

Urban Land Institute (ULI)

The ULI Greenprint goal is to reduce the carbon emissions of its members' collective buildings under operational control to net zero by the year 2050. This net zero carbon operations goal is designed to meaningfully reduce the built environment's impact on climate change beyond existing efforts.

U.S. Dollar Equivalent (USDE)

Compliance with all such Dollar denominated amounts shall be based on the USD Equivalent of any amounts denominated or reported under a Loan Document in a currency other than Dollars and shall be determined by the Administrative Agent on any Reset Date.

Value chain

The entire sequence of activities or partners that provide value or receive value from an organization's products and services, either within, upstream or downstream of direct operations. For further details on reporting boundaries please consult the GHG Protocol Corporate Value Chain (Scope 3) Accounting and Reporting Standard.

Values-Based Investing

Is a term used to refer to an investment strategy that evaluates assets not only for potential for profit and risk, but also whether or not they align with core values. 

Venture capital

Investments provided in equity form to start-up or emerging companies. This category includes seed and early-stage capital.

Virtual Power Purchasing Agreement (VPPA)

Is purely a financial transaction, exchanging a fixed-price cash flow for a variable-priced cash flow and renewable energy certificates (RECs). Within a VPPA contract, the corporate buyer does not own and is not responsible for the physical electrons generated by the project. Because the VPPA is purely financial, the buyer still needs to meet its electricity load through traditional channels—therefore, the VPPA means the buyer’s relationship with its utility at the retail level remains unchanged.

Waste Electrical and Electronic Equipment (WEEE)

Is electrical and electronic equipment that is broken or unwanted. It is important to dispose responsibly of any appliance that runs on electricity (or that contains electrical parts) to avoid causing damage to the environment.

Waste-to-energy

Waste-to-energy, also called bioenergy, has been used in Europe, East Asia and the United States for decades to destroy waste that would otherwise go to landfills. The waste is burned as feedstock at high temperatures to create fuel, gas or steam that drives a turbine and churns out electricity.

Water consumed

Is the amount of water removed for use and not returned to its source.

Water neutral

Means that one reduces the water footprint of an activity as much as reasonably possible and offsets the negative externalities of the remaining water footprint.

Water positive

Is when companies are replenishing more water than they use. These water positive companies are typically defining water “use” as total water consumption.

Water withdrawn

Is the total volume removed from a water source such as a lake or river. Often, a portion of this water is returned to the source and is available to be used again.

Weighted Average Carbon Intensity (WACI)

(tCO2e/$M sales) measures a fund's exposure to carbon intensive companies. It is calculated as the sum of security weight (normalized for corporate positions only) multiplied by the security Carbon Intensity. This allows for comparisons between funds of different sizes.

World Benchmarking Alliance (WBA)

WBA Allies represent organizations working at global, regional, and local levels to shape the private sector’s contributions to achieving the SDGs. Echoing the true spirit of SDG17 – Partnerships for the Goals, our Allies are committed to WBA’s mission, vision, and values, and believe in the power of benchmarks and cross-sector partnerships to drive systemic progress on the SDGs.

World Business Council for Sustainable Development (WBCSD)

A CEO-led coalition of over 200 international companies. Membership granted for a fee and examination of the company commitment to sustainable development.

Workforce Disclosure Initiative (WDI)

The WDI aims to improve corporate transparency and accountability on workforce issues, provide companies and investors with comprehensive and comparable data and help increase the provision of good jobs worldwide.

World Economic Forum – International Business Council (WEF-IBC)

The WEF-IBC Stakeholder Capitalism Metrics and Disclosures are comprised of a set of 21 core ESG metrics and 34 recommended disclosures organized into the categories of Principles of Governance, Planet, People and Prosperity. The proposed metrics and disclosures are largely drawn from existing standards (such as GRI, SASB, TCFD and others) with the stated intent of “supporting convergence” among existing standard setters. The WEF-IBC encourages IBC members (and others), regardless of sector or country of operation, to report on these metrics in the mainstream annual reports, if material, on a comply or explain basis.

World Ocean Council (WOC)

Is a global, cross-sectoral ocean industry leadership alliance committed to “Corporate Ocean Responsibility”, developed by and for the private sector, with a unique and multi-sectoral approach to address cross-cutting issues affecting ocean sustainable development, science, and stewardship of the seas.

Wealth management

Organizations offering investment services that include portfolio management and financial planning services, primarily for high-net-worth individuals.

Weighted average carbon intensity

A portfolio’s exposure to carbon-intensive companies expressed in tones CO2e (carbon dioxide equivalent) / $M revenue. This is in line with the TCFD’s definition.

Well-to-Tank (WTT)

All greenhouse gas emissions from the production, transportation, transformation, and distribution of the fuel used to power the vehicle.

World Federation Exchanges ESG Guidance and Metrics (WFE)

Which are published for member exchanges to consider to “introduce, improve, or require ESG reporting in their markets.

World Resources Institute (WRI)

World Resources Institute is a global research non-profit organization established in 1982 with funding from the MacArthur Foundation under the leadership of James Gustave Speth. WRI's activities are focused on seven areas: food, forests, water, energy, cities, climate, and ocean.

Zero waste

Is a set of principles focused on waste prevention that encourages the redesign of resource life cycles so that all products are reused. The goal is for no trash to be sent to landfills, incinerators, or the ocean.