An ESG Glossary of Terms

Environment (E): The E in ESG commonly deals with a company’s relationship with the natural environment. It looks at how companies manage the environmental risks and impact of their actions, as well as how they manage their natural resources both in their direct operations and across their supply chains. 

Common terms associated with Environment include:

• Carbon Intensity: The amount of carbon dioxide (CO2) emissions produced per unit of economic output, often measured in terms of GDP.
• Carbon Neutrality: Achieving a balance between the amount of greenhouse gasses emitted and removed from the atmosphere such that your business does not generate a net increase in atmospheric CO2 levels.
• Climate Resilience: The ability of an organization to anticipate, prepare for, adapt to and mitigate the risks associated with hazardous events or trends related to climate change. 
• Corporate Social Responsibility (CSR): A business approach in which companies work consciously towards operating in ways that contribute positively to society and the environment while also generating profits.
• Emissions Intensity: The amount of emissions (e.g., CO2) produced per unit of activity, revenue, or other relevant metric.

Social (S): The S in ESG: The “social” of ESG broadly encompasses the ways companies interact and the impact they have on their employees, communities and stakeholders within their operating environment.

Common terms associated with Social include:

• Labor Standards: Guidelines and regulations that protect workers' rights, including issues related to wages, working hours, child labor, and workplace safety.
• Stakeholder Engagement: The process of involving individuals, groups, or organizations affected by or with an interest in a company's activities in decision-making and dialogue.
• Social Impact Assessment: A systematic process to identify, predict, and evaluate the social consequences of a proposed project, program, or policy.
• Supply Chain Auditing: The process of assessing the practices and conditions of suppliers to ensure they comply with social and ethical standards.
• Impact Investing: Investing in companies, organizations, and funds with the intention of generating both financial returns and positive social and environmental impacts.

Governance (G):The G in ESG refers largely to how the company is held accountable for its actions and decisions, which is related to the impact of its corporate policies on its various stakeholders. It includes how rights and responsibilities are assigned across the organization, how corporate performance is measured, and the rules and procedures in place. 

Common terms associated with Government include:

• Proxy Voting: A process where shareholders delegate their voting rights to a representative to vote on their behalf during company meetings.
• Materiality Assessment: A systematic evaluation of issues that are most relevant and significant to a company's operations and stakeholders, often used in sustainability reporting.
• ESG Integration: The practice of incorporating environmental, social, and governance factors into investment analysis and decision-making processes.
• Shareholder Resolution: A proposal submitted by shareholders for a vote at a company's annual general meeting, addressing issues related to ESG concerns.
• Whistleblower Policy: A policy that encourages employees and other stakeholders to report unethical or illegal behavior within an organization, while protecting them from retaliation.
• Board Effectiveness: The assessment of how well a company's board of directors fulfills its responsibilities and ensures the company's long-term success.

A:

• Accountability: The responsibility and obligation of an organization to disclose and manage its ESG impacts and performance.
• Anthropogenic Emissions: Greenhouse gas emissions that result from human activities, such as burning fossil fuels, deforestation, and industrial processes.

B:

• Baseline: The starting point or reference point against which progress or change is measured. In ESG reporting, it's often used to track improvements over time.
• Biodiversity: The variety of life forms within a given ecosystem, including plants, animals, microorganisms, and their genetic variations.
• Biofuel: Renewable fuels made from biological sources, such as ethanol from corn or biodiesel from vegetable oils.

C:

• Circular Economy: An economic model focused on minimizing waste and making the most of resources by encouraging product longevity, recycling, and reuse.Carbon Footprint: The total amount of greenhouse gas emissions, primarily carbon dioxide, directly or indirectly associated with an individual, organization, event, or product.
• Carbon Intensity: The amount of carbon dioxide (CO2) emissions produced per unit of economic output, often measured in terms of GDP.
• Carbon Neutrality: Achieving a balance between the amount of greenhouse gases emitted and removed from the atmosphere, resulting in no net increase in atmospheric CO2 levels.
• Climate Resilience: The ability of an organization to adapt to and mitigate the risks associated with climate change impacts.
• Corporate Social Responsibility (CSR): A business approach that aims to contribute positively to society and the environment while also generating profits.
• Carbon Capture and Storage (CCS): A technology that captures carbon dioxide emissions from industrial processes or power plants and stores them underground to prevent them from entering the atmosphere.
• Carbon Sequestration: The process of capturing and storing carbon dioxide, often in forests, soils, and other natural systems, to mitigate climate change.
• CFCs (Chlorofluorocarbons): Synthetic compounds once commonly used in refrigeration, aerosols, and solvents, known for depleting the ozone layer.
• Circular Economy: An economic model focused on minimizing waste and making the most of resources by encouraging product longevity, recycling, and reuse.
• Climate Adaptation: Strategies and actions taken to prepare for and respond to the impacts of climate change, such as rising sea levels and extreme weather events.
• Climate Mitigation: Actions taken to reduce or prevent the emission of greenhouse gases to mitigate the effects of climate change.

D:

• Deforestation: The process of clearing large areas of forests for agricultural, industrial, or urban development, resulting in loss of biodiversity and carbon storage
• Diversity and Inclusion: A commitment to embracing individuals from various backgrounds, demographics, and perspectives to create a more equitable and innovative workplace.

E:

• Eco-Efficiency: Achieving higher economic value while using fewer resources and causing less environmental impact.
• Emissions Intensity: The amount of emissions (e.g., CO2) produced per unit of activity, revenue, or other relevant metric.
• Emission Factor: A coefficient that relates the quantity of emissions generated by a specific activity or process to a unit of input or output (e.g., CO2 emitted per unit of energy produced).
• Emission Reduction: The process of decreasing the amount of greenhouse gas emissions released into the atmosphere.

Eutrophication: The excessive enrichment of water bodies with nutrients, leading to the growth of harmful algal blooms and oxygen depletion.

F:

• Flaring: The controlled burning of natural gas that cannot be processed or sold, often occurring at oil and gas extraction sites.
• Footprint Analysis: Assessing the impact of an organization's activities on the environment, such as carbon footprint, water footprint, and ecological footprint.

G:

• GHG Inventory: A comprehensive record of an organization's greenhouse gas emissions and removals, typically reported annually.
• Global Reporting Initiative (GRI): An independent organization that provides a comprehensive framework for sustainability reporting, widely used by companies to disclose ESG information.
• Greenwashing: Misleading or deceptive claims about the environmental benefits of a product, service, or company, often to appear more environmentally friendly than reality.
• Greenhouse Gas (GHG): Gasses that trap heat in the Earth's atmosphere, contributing to the greenhouse effect and climate change. Common GHGs include carbon dioxide, methane, nitrous oxide, and fluorinated gasses.

I:

• Impact Investing: Investing with the intention of generating positive social and environmental impact alongside financial returns.
• Integrated Reporting: A reporting approach that combines financial and non-financial (ESG) information to provide a holistic view of an organization's performance.

K:

• Key Performance Indicators (KPIs): Specific metrics used to measure progress toward ESG goals and objectives.

L:

• LCA (Life Cycle Assessment): A systematic analysis of the environmental impacts of a product or service throughout its entire life cycle, from raw material extraction to disposal.
• Low-Carbon Economy: An economy that aims to reduce its carbon emissions through energy efficiency, renewable energy adoption, and carbon reduction initiatives.

M:

• Materiality: The significance of an ESG issue to a company's business operations, performance, and stakeholder concerns.
• Methane (CH4): A potent greenhouse gas with a higher warming potential than carbon dioxide over the short term. It's released during activities such as livestock digestion, rice cultivation, and fossil fuel extraction.
• Mitigation: Actions taken to reduce or prevent the emission of greenhouse gases, often involving the adoption of cleaner technologies and practices.

N:

Nitrous Oxide (N2O): A greenhouse gas produced by agricultural and industrial activities, as well as the combustion of fossil fuels.

P:

• Particulate Matter (PM): Tiny solid particles and liquid droplets suspended in the air, often emitted from combustion processes and industrial activities.

R:

• Radiative Forcing: The measure of the change in energy balance at the Earth's surface due to a change in the concentration of greenhouse gases, aerosols, or other factors that influence the climate.
• Renewable Energy: Energy derived from sources that are naturally replenished, such as solar, wind, hydro, and geothermal power.
• Resilience: The ability of systems, communities, and organizations to anticipate, prepare for, respond to, and recover from environmental challenges and disturbances.

S:

• Stakeholder Engagement: Involving individuals and groups affected by or interested in a company's operations in decision-making and dialogue.
• Sustainability Accounting Standards Board (SASB): An organization that provides industry-specific standards for reporting financially material sustainability information.
• Sustainable Development Goals (SDGs): A set of 17 global goals established by the United Nations to address social, economic, and environmental challenges by 2030.
• Scope 1 Emissions: Direct greenhouse gas emissions from sources owned or controlled by an organization, such as on-site combustion of fossil fuels.
• Scope 2 Emissions: Indirect greenhouse gas emissions from the generation of purchased electricity, heat, or steam consumed by an organization.
• Scope 3 Emissions: Indirect greenhouse gas emissions from activities in an organization's value chain, including transportation, procurement, and waste disposal.
• Sustainable Agriculture: Farming practices that prioritize environmental conservation, soil health, and minimizing negative impacts on ecosystems.
• Sustainable Development: Development that meets the needs of the present without compromising the ability of future generations to meet their own needs.
• Sustainable Water Management: Practices that ensure the responsible use, conservation, and protection of water resources to meet present and future needs.

T:

• Task Force on Climate-related Financial Disclosures (TCFD): An initiative that provides recommendations for disclosing climate-related financial risks and opportunities in corporate reporting.
• Tailpipe Emissions: The pollutants and greenhouse gases released directly from a vehicle's exhaust system, often associated with transportation-related emissions.
• Transboundary Emissions: Emissions that cross national or regional borders, affecting neighboring countries or regions

U:

• United Nations Sustainable Development Goals: A global ESG standards framework that covers all aspects of human activity on all three dimensions of sustainable development.

V:

• Value Chain: The series of activities involved in producing, distributing, and delivering a product or service, including suppliers, manufacturers, distributors, retailers, and customers.

W:

• Water Footprint: The total volume of freshwater used, directly and indirectly, to produce goods and services consumed by an individual, organization, or community.
• Workforce Disclosure Initiative: The only investor-backed platform for disclosure of company workforce data covering both direct operations and supply chains.