ESG Glossary
10th May 2022
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.
Adaption
The process of changing to suit different conditions. In the context of climate change, this is
to be understood as the process in which a company or a group of people or a person changes slightly over time to be
able to continue to exist in a particular environment or a change in accordance to suit the new environment.
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/
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.
Source: https://www.eea.europa.eu/help/glossary/eeaglossary/carbin-sequestration
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.
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 no significant Harm.
Source: https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:32020R0852
Double Materiality
Refers to a company’s perspective on: 1) “the extent necessary for an understanding of the company’s development, performance and position” and “in the broad sense of affecting the value of the company”;
2) environmental and social impact of the company’s activities on a broad range of stakeholders. This concept implies the need to assess the interconnectivity of the two.
Note: this does not refer to the concept of Materiality in the financial sense but is only to be understood in the context of nonfinancial information and sustainability.
Source: https://www.globalreporting.org/media/jrbntbyv/griwhitepaper-publications.pdf
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
ESG
Environmental, Social and Governance
ETS
Emission trading systems.
Source: https://ec.europa.eu/clima/policies/ets_en
Green-bleaching
Fund managers that invest in sustainable activities but refrain from claiming so to avoid the data problems arising from the disclosure obligations.
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
IPCC
The International Panel on Climate Change is a body created by the United Nations with the intention of providing scientific assessments on climate change, its impact, and future risks, as well as suggestions for mitigating impact and
disruptions.
Source: https://www.ipcc.ch
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
Mitigation
Reduction of something harmful or the reduction of its harmful effects.
Source: https://climate.nasa.gov/solutions/adaptationmitigation/
MSEG
Member States Expert Group.
Nature-based Solutions
Solutions that are inspired and supported by nature, which are cost-effective, simultaneously provide environmental, social and economic benefits and help build resilience. Such solutions bring more, and
more diverse, nature and natural features and processes into cities, landscapes and seascapes, through locally adapted, resource efficient and systemic interventions.
Source: https://ec.europa.eu/info/research-andinnovation/research-area/environment/nature-basedsolutions_en
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
TNFD
The Taskforce on Nature-related Financial Disclosures aims to develop and deliver a risk management and disclosure framework for organisations to report and act on evolving nature-related risks, with the ultimate aim of supporting a shift in global financial flows away from nature negative outcomes and toward nature-positive outcomes.
Source: https://tnfd.global/about/
Transition Activities
Refers to activities that facilitate the transition to a carbon-neutral economy.
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 10 May 2022.
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.
