Blog Post

ESG Glossary

8th September 2021

Within the investment funds industry, ESG is synonymous with driving real change but it is riddled with various acronyms and the list of new vocabulary and terminology is ever-expanding.

Zeidler Group’s ESG glossary contains a list of ESG and industry-related terminologies, regulations and definitions to help you better navigate the ESG landscape.

Download a pdf version of our Glossary here.

Biodiversity

A term that describes the variety of life on Earth and is specifically used to refer to all of the species in one region or ecosystem.

Source: https://www.nationalgeographic.org/encyclopedia/biodiversity/

BREEAM

Building Research Establishment Environmental Assessment Method.

Source: https://www.breeam.com

Brown Industries

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

Carbon dioxide / CO2

A greenhouse gas that has been linked to global warming.

Source: https://www.britannica.com/science/carbondioxide

Carbon footprint

The measure of the total greenhouse gas emissions produced by an individual, group, or company.

Source: https://timeforchange.org/what-is-a-carbonfootprint- definition/

Carbon offset

Carbon offsets are reductions in CO2 or other GHG made to compensate for emissions made elsewhere; measured in tonnes of carbon
dioxide-equivalent (CO2e).

Source: https://www.weforum.org/agenda/2019/06/what-iscarbon-offsetting/

CDP

Carbon Disclosure Project (CDP), a not-for-profit that runs a disclosure system for investors and companies.

Source: https://www.cdp.net/en

COP / Conference of the Parties

The COP is the decision-making body of the UN Convention on Climate Change (UNFCC) which meets annually with government, public and private organisations and officials who are
involved in addressing climate change.

Source: https://www.unccd.int/convention/conferenceparties-cop

Circular Economy

A circular economy is a systematic approach to economic development with the goal of eliminating waste by focusing on a regenerative design and attempting to promote growth while reducing the consumption of finite resources.

Source: https://ellenmacarthurfoundation.org/topics/circulareconomy-introduction/overview

CSR Report

Corporate Social Responsibility report.

Source: https://online.hbs.edu/blog/post/what-is-a-csrreport

CSRD

The Corporate Sustainability ReportingDirective.

Source: https://ec.europa.eu/info/business-economyeuro/company-reporting-and-auditing/companyreporting/corporate-sustainability

Diversity and inclusion

Diversity refers to gender, sexual orientation, age, race, religion, disability, or other characteristics differences that people have. Inclusion is about celebrating those differences, challenging inequality and ensuring people feel respected.

DNSH

Do not significant Harm.

Source: https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:32020R0852

EGD

European Green Deal.

Source: https://ec.europa.eu/info/strategy/priorities-2019-2024/european-green-deal_en

EPC

Energy performance certificate.

Source: https://ec.europa.eu/energy/eu-buildingsfactsheets-topics-tree/energy-performancecertificates_en

Greenwashing

Promoting a product, service, or company as more environmentally friendly than it truly is by falsely advertising environmental benefits.

Source: https://dictionary.cambridge.org/dictionary/english/greenwashing

GRI

Global Reporting Initiative (GRI): GRI issues broad reporting standards for sustainability. After a recent update, it now consists of 36 individual reporting standards. Participating companies are required to incorporate three general standards, and are free to opt-in to additional subject-specific standards if they decide these standards are “material” to their business model.

The Global Reporting Initiative is an independent organization that lays out a set of international standards to help business and government entities understand and communicate their impact on issues like climate change and human rights.

Source: https://www.globalreporting.org

Impact Investing

Describes the approach to investments aimed at generating measurable and positive social and environmental outcomes, where financial
performance is not the priority but the outcomes are.

Source: https://thegiin.org/

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).

Source: https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A32020R0852&qid=1623452342782

MSEG

Member States Expert Group.

Source: https://ec.europa.eu/info/business-economyeuro/banking-and-finance/sustainable-finance/overviewsustainable-finance_en

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 (The Non-Financial Reporting Directive).

Source: https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:32014L0095

NACE classification of economic activities

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.

Source: https://eur-lex.europa.eu/legalcontent/

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 (The Non-Financial Reporting Directive).

Source: https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:32014L0095

PAIs

Principal Adverse Impacts.

Source: https://eur-lex.europa.eu/eli/reg/2019/2088/oj

Paris Agreement

A legally binding international treaty on climate change, to limit global warming. It was adopted by 196 Parties at COP 21 in Paris in December 2015 and entered into force on 4 November 2016.

Source: https://unfccc.int/process-and-meetings/theparis-agreement/

PRI

The United Nations Principles for Responsible Investments.

Source: https://www.unpri.org

Renewable energy

Energy is attained from perpetual, unending sources, such as a collection of energy with solar panels or wind turbines.

Source: https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A32018L2001

SASB

Sustainability Accounting Standards Board (SASB): SASB has developed industry-specific standards for company sustainability. It has convened a series of consultative groups
comprised of industry, civil society and academic experts over the last several years to develop means for evaluating 79 industries in 10 sectors.

Source: https://www.sasb.org

SBTs

Science-Based Targets.

Source: https://sciencebasedtargets.org

Scope 1 Activities

Carbon Emissions: Company‘s activities (scope 1-2): company‘s vehicles and energy (Fossil fuels).

Source: https://compareyourfootprint.com/differencescope-1-2-3-emissions/

Scope 2 Activities

Carbon Emissions: Company‘s activities (scope 1-2): company‘s vehicles and energy (energy).

Source: https://compareyourfootprint.com/differencescope-1-2-3-emissions/

Scope 3 Activities

Carbon Emissions of upstream and downstream activities.

Source: https://compareyourfootprint.com/differencescope-1-2-3-emissions/

SDGs

United Nations Sustainable Development Goals.

Source: https://sdgs.un.org/goals

SFDR

Regulation (EU) 2019/2088 of the European Parliament and of the Council of 27 November 2019 on sustainability-related disclosures in the
financial services sector (The Sustainable Finance Disclosure Regulation).

Source: https://eur-lex.europa.eu/eli/reg/2019/2088/oj

Stewardship

This term in the context of the fund management industry relates to the responsibility of investment managers to act responsibly in accordance with their fiduciary duty. It requires promoting sounds corporate governance practices and business practices consistent with long-term value creation for shareholders in the company.

Source: https://www.frc.org.uk/investors/ukstewardship-code

Stranded Assets

An asset that once produced value or profit, but doesn’t anymore due to impacts caused by regulatory, societal changes or other mega-trends.

Source: https://carbontracker.org/terms/strandedassets/

Sustainable Activities

Economic activities that qualify as sustainable in relation to ESG matters.

Source: https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A32020R0852&qid=1623452342782

Sustainable Investments

Sustainable Investments place an emphasis on investing with environmental, social, and governance-related (ESG) insights to improve
long-term outcomes.

Source: https://www.cfainstitute.org/en/research/esginvesting/sustainable-investing

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).

Source: https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:32020R0852

TCFD

The Task Force on Climate-related Financial Disclosures established by the Financial Stability Board (FSB) to develop recommendations for more effective climate-related disclosures. The TCFD’s 2017 Final Report sets out recommendations for helping businesses disclose climate-related financial information.

Source: https://www.fsb-tcfd.org

TEG

Technical Expert Group on Sustainable Finance.

Source: https://ec.europa.eu/info/publications/sustainablefinance-technical-expert-group_en

Transition Activities

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

Source: https://www.europarl.europa.eu/news/en/pressroom/20191217IPR69202/climate-change-new-rulesagreed-to-determine-which-nvestments-are-green

Transition Risks

Transition risks relate to risks associated with moving towards a less polluting, green economy.

Source: https://www.weforum.org/agenda/2021/03/climatepolicies-transition-risks

UN Global Compact

A global corporate sustainability initiative, calling on companies, investors and other participants to align their strategies and operations with universal principles on human rights, labour, environment and anti-corruption.

Source: https://www.unglobalcompact.org

UNGPRF

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

Source: https://www.ungpreporting.org/frameworkguidance/

WBA

World Benchmarking Alliance.

Source: https://www.worldbenchmarkingalliance.org

Zero waste

A set of principles focussed on products and productions having no waste is sent to landfills.

Source: https://zwia.org/

 

This resource will be updated periodically to reflect any additional ESG related terminology. Please note this document was last updated on 8 September 2021.

Download a copy of our ESG Glossary here.

For any ESG and SFDR, related queries get in touch with Zeidler’s ESG legal advisory services team.

Head of ESG

Elisa Forletta-Fehrenberg