C
Carbon footprint
The total greenhouse gas emissions produced by an individual, group, or company.
Carbon offset
A reduction in carbon dioxide or other greenhouse gas designed to compensate for emissions made elsewhere, typically measured in tons of carbon dioxide equivalent (CO2e).
Carbon neutral
A state that companies, processes, or products can achieve when their carbon footprint and carbon offsets are equivalent.
Corporate governance
A system of rules, practices, and processes that determines how companies are directed, or how companies balance the interests of various stakeholders, including shareholders, executives, customers, suppliers, financiers, the government, and the community.
D
Diversity and inclusion:
Programs designed to ensure the inclusion of a wide range of people with respect to differences in gender, sexual orientation, age, race, religion, disability, or other characteristics. Diversity and inclusion celebrate these differences and challenge inequality.
E
ESG integration
The consideration of ESG factors along with financial factors in the investment decision-making process.
ESG-funds
Funds that have integrated ESG factors into the portfolio and investment process.
EU taxonomy
A classification system that establishes clear global standards for determining whether an economic activity can be considered environmentally sustainable.
European Securities and Markets Authority (ESMA)
ESMA is an independent EU authority based in Paris which seeks to safeguard the stability of the EU’s financial system. ESMA’s mandate on sustainability reporting relates to companies with securities listed on a regulated market, including their disclosure under the Non-Financial Reporting Directive (NFRD).
F
Financial Stability Board (FSB)
FSB is an international body that monitors and makes recommendations about the global financial system. It also addresses climate-related financial risks and developed the TCFD reporting framework.
G
Green bond
A fixed-income instrument that is specifically earmarked to raise money for climate and environmental projects.
Greenwashing
Falsely claiming or exaggerating the sustainable characteristics or environmental benefits of a fund, business practice, or company.
Global Reporting Initiative (GRI)
An independent organization that establishes international standards that help business and government entities understand and communicate their impact on issues like climate change and human rights.
I
Impact investing
A strategy designed to generate specific social or environmental benefits as well as financial gains. The point of impact investing is using investment capital for positive social results.
Integrated reporting
Providing a comprehensive report that includes both sustainability data (from a corporate responsibility report) and financial information (from an annual report).
IFRS
The International Financial Reporting Standards (IFRS) stand as universally acknowledged benchmarks for financial reporting, enshrined in legislation across 132 jurisdictions worldwide. This includes widespread adoption in prominent regions such as the EU, the UK, and numerous nations across the Americas and Asia.
M
Materiality
The effectiveness and financial significance of a specific measure as part of a company’s overall ESG framework.
N
Negative screening
Finding and excluding securities of companies with operations deemed “unsustainable” from an ESG standpoint.
Net-zero
Achieving a balance between the greenhouse gas emissions a company produces and those it removes from the atmosphere.
NFRD
Non-Financial Reporting Directive (NFRD), a precursor to the comprehensive Corporate Sustainability Reporting Directive (CSRD) within the European Union. The NFRD mandated specific sustainability disclosures, binding large EU-based companies of public interest .
P
Paris Agreement
An international accord designed to keep the rise in global average temperatures below 2°C above pre-industrial levels by the end of the current century, and pursue efforts that will limit it to 1.5°C.
Positive screening
Finding and including securities of companies making active, impactful contributions to social or environmental change.
S
Scope 1,2,3 emissions
Categories of greenhouse gas emissions that reflect where emissions occur in the value chain. Scope 1 includes direct emissions. Scope 2 includes indirect emissions generated by purchased electricity. Scope 3 includes other indirect emissions, such as those in the supply chain or those that occur when customers use the product.
Sustainable finance
Taking ESG factors into account when making investment decisions, ideally leading to more long-term investments for sustainable economic activities and projects.
Sustainable Finance Disclosure Regulation (SFDR)
A European regulation introduced to improve transparency in the market for sustainable investment products, to prevent greenwashing, and to verify sustainability claims made by financial market participants.
Sustainability Accounting Standards Board (SASB)
A non-profit organization founded to develop accounting standards that identify ESG issues most relevant to financial performance in each industry.
T
Task Force on Climate-Related Financial Disclosures (TCFD)
An organization established in 2015 to develop voluntary climate-related financial risk disclosures that would ideally be adopted by companies and help inform investors and the public about risks related to climate change.
Task Force on Nature-Related Financial Disclosures (TNFD)
TNFD framework is a voluntary, market-led initiative to enable companies to report on nature- and biodiversity-related risks and opportunities.
U
United Nations Principles for Responsible Investment (UNPRI)
An international organization that promotes the incorporation of ESG factors into investment decision-making.
