ESG Investing Glossary

A goal of preventing waste and keeping materials in circulation so that little or no waste is sent to landfill, incineration or the environment.

The representation of people with different backgrounds, identities, experiences and perspectives across the workforce and leadership.

The ways workers express concerns, preferences and influence workplace decisions individually or collectively.

The reporting of suspected misconduct, illegal activity or serious risk through protected internal or external channels.

A broader condition reflecting pressure on water resources, including quantity, quality, accessibility, seasonal variability and competing users.

A condition in which available water is insufficient to meet demand, whether because of physical shortage, infrastructure or institutional constraints.

A measure of water consumed and polluted directly and indirectly by an organisation, product or activity within a defined boundary.

A priority order for waste management: prevention, reduction, reuse, recycling, recovery and disposal.

A simplified European sustainability reporting standard designed for non-listed small and medium-sized enterprises that report voluntarily.

An initiative providing guidance for credible corporate use of high-quality carbon credits and related climate claims.

A market in which entities buy and retire carbon credits outside mandatory compliance schemes.

Greenhouse gas emissions occurring in upstream suppliers and downstream use, distribution, end-of-life or financed activities.

The full range of upstream and downstream activities, resources and relationships involved in creating and delivering an organisation's products or services.

A large, diversified, long-term investor whose returns depend partly on the health of the overall economy and environmental and social systems.

The global framework for states and businesses to protect, respect and remedy human-rights impacts.

A voluntary initiative asking companies to align strategies and operations with ten principles on human rights, labour, environment and anti-corruption.

The international treaty framework under which governments negotiate and coordinate action on climate change.

A partnership between the United Nations Environment Programme and the global financial sector to advance sustainable finance.

Risk arising from policy, legal, technology, market and reputational changes during the shift to a lower-carbon economy.

Financing that supports credible, time-bound transformation of high-emitting or environmentally intensive activities toward alignment with climate and sustainability goals.

Investing in assets linked to long-term environmental or social themes such as clean energy, water, health or inclusion.

Disclosure and governance concerning an organisation's tax strategy, payments, jurisdictions, incentives and approach to tax risk.

A market-led framework for identifying, assessing, managing and disclosing nature-related dependencies, impacts, risks and opportunities.

A legacy framework of climate-related recommendations structured around governance, strategy, risk management, and metrics and targets.

Purchasing decisions that consider life-cycle environmental, social, ethical and economic impacts as well as price and performance.

The European Union framework requiring financial market participants and advisers to disclose sustainability information at entity and product level.

Financial activities that integrate environmental, social and governance considerations and channel capital toward sustainable or transition outcomes.

Seventeen global goals adopted by United Nations member states for achieving sustainable development by 2030.

Development that meets present needs without compromising the ability of future generations to meet their own needs.

Environmental, social or governance conditions that could affect an entity's prospects, or create opportunities, over the short, medium or long term.

A loan whose pricing or other terms are linked to the borrower's achievement of predefined sustainability performance targets.

A bond whose financial or structural terms change depending on whether the issuer achieves predefined sustainability performance targets.

A use-of-proceeds bond financing a combination of eligible green and social projects.

The capacity to create enduring economic and social value while protecting environmental systems and meeting present needs without undermining future generations.

The ability to track the origin, movement, processing and custody of materials, products or components through the supply chain.

Assets that lose economic value earlier than expected because of market, technology, policy, environmental or social change.

The responsible allocation, management and oversight of capital to create long-term value for clients and beneficiaries and, where relevant, sustainable benefits for the economy, environment and society.

A planned process of dialogue with people or groups affected by, interested in or able to influence an organisation.

An individual or group whose interests are affected, or could be affected, by an organisation's activities and decisions.

An investment approach that combines financial objectives with ethical, social or environmental criteria, often using screens and shareholder action.

The ongoing acceptance or approval of an organisation's activities by affected communities and wider stakeholders.

A positive or negative change in people's rights, wellbeing, opportunities or communities caused or influenced by an organisation.

Negotiation, consultation and exchange of information among governments, employers and workers or their representatives.

A bond whose proceeds are exclusively used for eligible projects intended to address social issues or deliver positive social outcomes.

A proposal submitted by shareholders for a vote at a company's general meeting.

Dialogue between investors and investee companies intended to understand or influence strategy, governance, performance or disclosure.

All other indirect greenhouse gas emissions in an organisation's value chain, grouped into 15 upstream and downstream categories under the GHG Protocol.

Indirect greenhouse gas emissions from the generation of purchased or acquired electricity, steam, heat or cooling consumed by the organisation.

Direct greenhouse gas emissions from sources owned or controlled by the reporting organisation.

A greenhouse gas reduction target aligned with the pace of decarbonisation required by climate science to meet temperature goals.

An organisation that develops standards and validates corporate and financial-institution greenhouse gas targets against climate science.

Industry-based disclosure standards identifying sustainability topics and metrics that are likely to be financially material in 77 industries.

A multi-stakeholder certification system and standard for more sustainable palm oil production and supply chains.

A revision of previously reported sustainability information because of errors, methodology changes, structural changes or improved data.

Procurement and supply-chain practices that consider environmental, human-rights, labour, ethical and traceability risks alongside cost, quality and delivery.

An approach that incorporates sustainability and governance issues into investment and stewardship decisions.

The design, deployment and governance of artificial intelligence in ways that are lawful, safe, transparent, accountable and respectful of human rights.

The delivery of more value or output with less material, energy, water and waste.

Emissions that remain after feasible emissions reductions have been implemented at the net-zero target date.

The time span covered by sustainability information, normally aligned with the financial reporting period.

The organisational and value-chain limits within which sustainability information is measured and disclosed.

Energy from sources that are naturally replenished, such as solar, wind, hydro, geothermal and sustainably managed biomass.

Actions that restore affected people as far as possible to the position they would have been in had harm not occurred, or otherwise provide appropriate redress.

A high, though not absolute, level of assurance based on more extensive evidence and procedures than limited assurance.

A service provider that analyses shareholder meeting proposals and provides voting research or recommendations to investors.

The exercise of shareholder voting rights without attending a meeting in person, often through electronic or appointed proxy processes.

Shared responsibility for reducing a product's environmental, health and safety impacts across its life cycle.

The duty to design, manufacture, market and support products and services so that foreseeable risks to users and others are controlled.

The greenhouse gas emissions associated with a product across defined life-cycle stages, expressed in CO2e per functional unit.

A global investor initiative built around six voluntary principles for incorporating ESG issues into investment and ownership practices.

Indicators and disclosures under the EU sustainable finance framework concerning significant negative effects of investment decisions on sustainability factors.

Actions that avoid or reduce pollution at source rather than controlling or cleaning it after generation.

The introduction of substances, energy or organisms into the environment at levels that cause harm or unacceptable risk.

Financial or in-kind support for political activity and efforts to influence public policy or regulation.

Risk arising from acute events such as storms, floods and wildfires or chronic shifts such as heat, drought and sea-level rise.

The duration for which carbon remains stored and the degree to which reversal risk is controlled.

A financial-industry initiative and standard for measuring and disclosing emissions associated with loans, investments, insurance and other financial activities.

The international climate agreement aiming to hold warming well below 2°C and pursue efforts to limit it to 1.5°C.

Government-backed recommendations to multinational enterprises on human rights, labour, environment, disclosure, corruption, consumer interests, science, competition and tax.

The prevention of work-related injury, ill health and fatality through risk identification, controls, worker participation and continual improvement.

An objective under which biodiversity losses from an activity are balanced by equivalent gains after applying the mitigation hierarchy.

A state in which anthropogenic greenhouse gas emissions are reduced deeply and any residual emissions are balanced by durable removals.

The exclusion of sectors, issuers, activities or securities from an investment universe based on defined ESG, ethical or norms-based criteria.

A connected set of concepts describing how an organisation relies on nature, affects nature, and experiences resulting risks or opportunities.

A goal of halting and reversing nature loss so that nature is measurably improving relative to a baseline.

The stock of renewable and non-renewable natural resources, such as air, water, soil, minerals and living systems, that provide benefits to people and the economy.

A national climate plan submitted under the Paris Agreement describing a country's emissions targets and related actions.

An umbrella term covering severe exploitation such as forced labour, debt bondage, servitude, human trafficking and slavery-like practices.

A sequence for managing environmental and social impacts by first avoiding them, then minimising, restoring or rehabilitating, and finally addressing residual impacts.

A potent greenhouse gas emitted from fossil-fuel systems, agriculture, waste and natural sources.

A structured process to identify, evaluate and prioritise sustainability matters for management and disclosure.

The principle used to determine which information or sustainability matters could reasonably influence decisions or require accountability.

A Scope 2 accounting method using emissions factors from contractual instruments such as supplier-specific products or energy attribute certificates.

A Scope 2 accounting method using average emissions factors for the grids or energy systems where consumption occurs.

Remuneration sufficient for a worker and their family to afford a decent standard of living in a particular place.

A moderate level of assurance based on less extensive evidence and procedures than reasonable assurance.

A method for evaluating environmental impacts associated with a product, process or service across defined life-cycle stages.

TNFD's voluntary assessment process to Locate interfaces with nature, Evaluate dependencies and impacts, Assess risks and opportunities, and Prepare to respond and report.

An increase in emissions or environmental harm outside a project boundary caused by the project or intervention.

A change in the purpose, management or cover of land, such as conversion of forest or grassland to agriculture or infrastructure.

The GHG Protocol standard for accounting for land emissions, land-use change, biogenic products and specified carbon dioxide removals and storage.

Rights and protections relating to fair treatment, wages, working time, safety, non-discrimination, association, bargaining and freedom from forced and child labour.

A transition to a low-carbon and environmentally sustainable economy that is fair and inclusive for workers, communities and affected groups.

An international standard specifying requirements for an occupational health and safety management system.

An international standard specifying requirements for an environmental management system.

The IFRS Foundation board that develops the global baseline of investor-focused sustainability disclosure standards.

Five categories of fundamental labour rights: freedom of association and collective bargaining, elimination of forced labour, abolition of child labour, elimination of discrimination, and a safe and healthy working environment.

A price an organisation assigns internally to greenhouse gas emissions for decision-making, even where no external charge applies.

The United Nations body that assesses scientific knowledge on climate change, its impacts, risks, mitigation and adaptation.

A principles-based framework for explaining how an organisation's strategy, governance, performance and prospects create, preserve or erode value over time.

Greenhouse gas emissions attributed to insurance and reinsurance underwriting portfolios using a defined accounting methodology.

Unequal distribution of income, wealth, opportunity, rights, services or exposure to harm among people or groups.

Distinct peoples with historical continuity, collective identities, cultural institutions and relationships with ancestral lands and resources.

Overstating or misrepresenting the positive social or environmental impact of an investment, product or organisation.

The processes used to define intended impacts, select metrics, collect evidence, assess outcomes and use findings to improve decisions.

The significance of an organisation's actual or potential positive or negative impacts on people or the environment.

Investing with the intention to generate positive, measurable social or environmental impact alongside a financial return.

The ISSB's climate disclosure standard for material climate-related risks and opportunities.

The ISSB's general standard for disclosing material sustainability-related risks and opportunities useful to primary users of general purpose financial reports.

An ongoing process to identify, prevent, mitigate, track and communicate how an organisation addresses adverse human-rights impacts.

Universal rights and freedoms inherent to all people, including rights relating to life, dignity, equality, work, health, privacy and participation.

The knowledge, skills, capabilities, health, experience and motivation of people that contribute to organisational performance.

A classification framework developed by the Hong Kong Monetary Authority to identify green and transition economic activities.

Hong Kong Sustainability Disclosure Standards fully aligned with IFRS S1 and IFRS S2, with a Hong Kong effective date.

Appendix C2 of the Hong Kong Stock Exchange Listing Rules, setting mandatory and 'comply or explain' ESG disclosure requirements for listed issuers.

Waste that poses substantial or potential threats to human health or the environment because of properties such as toxicity, flammability, corrosivity or reactivity.

The natural or modified place in which a species or ecological community lives and obtains the conditions needed to survive.

A formal channel through which workers, communities, consumers or other stakeholders can raise concerns and seek resolution.

The GRI Topic Standard for reporting energy-related impacts, policies, consumption, intensity and reductions.

The GRI Topic Standard for reporting an organisation's climate-change impacts, transition plans, targets, adaptation and just-transition considerations.

The GRI Topic Standard for reporting biodiversity impacts, including their drivers, locations, value-chain context and management.

Misleading communication or conduct that makes an organisation, product or investment appear more environmentally or sustainably beneficial than it is.

A gas that absorbs and re-emits infrared radiation, contributing to the greenhouse effect.

The natural process by which greenhouse gases trap heat in the atmosphere and warm the Earth's surface.

A loan whose proceeds are used exclusively to finance or refinance eligible green projects.

Financing that supports environmental objectives such as climate mitigation, adaptation, pollution prevention, biodiversity or circularity.

Greenhouse gas emissions expressed per unit of output, revenue, floor area, energy, passenger-kilometre or another normalising factor.

A coefficient that converts activity data, such as fuel use or electricity consumption, into estimated emissions.

Greenhouse gas emissions associated with materials and construction processes across a building or product life cycle, excluding or distinguishing operational energy emissions.

Benefits people and economies obtain from ecosystems, including provisioning, regulating, cultural and supporting services.

A dynamic complex of plants, animals, microorganisms and their non-living environment interacting as a functional unit.

The integration of environmental considerations into product or service design across its life cycle.

A reporting approach that considers both how sustainability matters affect enterprise value and how the organisation affects people and the environment.

The cumulative amount of carbon dioxide that can be emitted while retaining a stated probability of limiting warming to a specified temperature.

A policy that applies a carbon-related charge or certificate requirement to specified imported goods based on their embedded emissions.

The measurement, calculation and reporting of greenhouse gas emissions, removals and related information.

Principles and systems guiding honest, fair, responsible and lawful organisational conduct.

The degree to which directors can exercise objective judgement without relationships or interests that compromise their decisions.

The board's responsibility for supervising material sustainability impacts, risks, opportunities, strategy, controls and disclosure.

Environmental statements about a product, service, organisation or activity, such as claims of recyclability, low carbon or carbon neutrality.

A bond whose proceeds are exclusively used to finance or refinance eligible green projects.

A factor comparing the heat-trapping effect of a greenhouse gas with carbon dioxide over a specified time horizon.

An independent standard setter whose Standards enable organisations to report their most significant impacts on the economy, environment and people.

A global network that supports the development of impact investing through research, tools, market infrastructure and shared practice.

The Kunming-Montreal Global Biodiversity Framework, adopted under the Convention on Biological Diversity, sets global goals and targets for halting and reversing biodiversity loss by 2030 and 2050.

The widely used suite of standards and guidance for corporate, value-chain, project and product greenhouse gas accounting.

A quantified account of greenhouse gas emissions and, where applicable, removals within defined organisational and operational boundaries.

The right of workers and employers to form and join organisations of their choosing without interference or retaliation.

A process through which Indigenous Peoples can give or withhold consent to activities affecting their lands, resources, rights or cultural heritage before decisions are made.

Coal, oil and natural gas formed from ancient organic matter and used primarily for energy and industrial feedstocks.

A certification system for forests and forest-based products intended to promote environmentally appropriate, socially beneficial and economically viable forest management.

Work or service exacted under threat of penalty and not offered voluntarily.

The significance of a sustainability-related risk or opportunity to an organisation's cash flows, access to finance, cost of capital or prospects.

A legal or equitable duty to act loyally, prudently and in the best interests of beneficiaries or the organisation.

A cost or benefit created by an activity that is not fully reflected in its market price and is borne or enjoyed by others.

A policy approach that makes producers responsible for specified environmental impacts of products, especially collection, recycling and end-of-life management.

The salary, incentives, benefits and other compensation awarded to senior executives.

The standards used by companies reporting under the CSRD, covering cross-cutting, environmental, social and governance disclosures.

The European Union classification system defining criteria for environmentally sustainable economic activities.

A voluntary European Union standard for bonds whose proceeds are allocated to activities aligned with the EU Taxonomy and subject to specified disclosure and review.

European Union rules requiring specified commodities and products placed on or exported from the EU market to be deforestation-free and legally produced.

An investment approach that selects or excludes assets according to moral, religious or values-based criteria.

Executive or employee pay that is partly determined by performance against specified ESG measures.

A time-bound qualitative or quantitative commitment to improve a defined ESG outcome or performance measure.

The possibility that environmental, social or governance factors adversely affect an organisation's strategy, operations, financial position, reputation or stakeholders.

An assessment that scores an entity, security or fund on selected ESG risks, practices or performance using a provider's methodology.

A measure used to track an environmental, social or governance topic, such as emissions intensity, injury rate or board independence.

The explicit and systematic inclusion of material ESG factors in investment analysis and decision-making.

Qualitative and quantitative information used to assess sustainability performance, risks, opportunities and impacts.

A significant event or allegation involving environmental harm, social misconduct, governance failure or breach of recognised norms.

Environmental, social and governance factors used to evaluate how an organisation manages sustainability-related impacts, risks, opportunities and conduct.

The use of stronger stewardship actions when initial engagement does not achieve sufficient progress.

The principle of providing equal remuneration for work of equal value without discrimination.

A structured system for identifying environmental aspects, setting objectives, assigning controls, monitoring performance and driving continual improvement.

A formal process for identifying, predicting and evaluating the environmental effects of a proposed project before approval or implementation.

Using less energy to deliver the same or improved output, service or comfort.

A tradable certificate representing the environmental attributes of a unit of electricity generation, such as a renewable energy certificate or guarantee of origin.

The degree of employees' commitment, motivation, connection and willingness to contribute to organisational goals.

A cap-and-trade programme that sets an overall emissions limit and allows covered entities to trade allowances.

A situation in which the same emissions reduction, removal, credit or renewable-energy attribute is claimed, issued or counted more than once.

A principle requiring an activity that contributes to one environmental objective not to cause significant harm to other specified environmental objectives.

Policies and practices that recognise differences, address structural barriers and create fair access, participation and belonging.

The conversion of forest to non-forest land use, whether permanent or long term.

Productive work that provides fair income, security, social protection, rights at work, voice and equal opportunity.

The process of reducing greenhouse gas emissions from energy, industry, transport, buildings, land use and value chains.

The responsible and lawful collection, use, sharing, retention and protection of personal data.

The framework of ownership, standards, controls and accountability for data quality, access, security, lineage and use.

The governance, technologies and processes used to protect systems, networks, devices and data from unauthorised access, disruption or attack.

European Union legislation requiring in-scope companies to report sustainability information using European Sustainability Reporting Standards.

European Union legislation requiring in-scope companies to address specified adverse human-rights and environmental impacts in their operations and chains of activities.

The structures, rights, processes and relationships through which an organisation is directed, controlled and held accountable.

Ten principles developed by the Integrity Council for the Voluntary Carbon Market to identify high-integrity carbon credits and crediting programmes.

Policies and practices that protect customers from unsafe products, unfair treatment, misleading information, exploitation or misuse of data.

The governing meeting of countries that are parties to an international convention, most commonly referring in ESG to the annual UN climate COP.

A regulated market in which covered entities must surrender allowances or credits to meet legally enforceable emissions obligations.

A structured process of involving communities affected by an organisation's activities in decisions, risk assessment and impact management.

Coordinated engagement by multiple investors or stakeholders with one or more companies on shared concerns.

Negotiation between employers and workers' organisations on terms and conditions of employment and other workplace matters.

A time-bound action plan explaining how an organisation will adapt its strategy, business model, operations and capital allocation toward a lower-carbon economy.

A method for exploring how an organisation may perform under plausible future climate and transition conditions.

The ability of an organisation, asset, community or system to anticipate, withstand, adapt to and recover from climate-related shocks and stresses.

A potential benefit arising from climate change or the transition to a lower-carbon and climate-resilient economy.

Actions that reduce greenhouse gas emissions or enhance removals to limit the magnitude of climate change.

Long-term shifts in climate conditions, now primarily driven by human-caused greenhouse gas emissions.

Adjustments in systems, infrastructure, operations or behaviour to reduce harm or capture benefits from actual or expected climate effects.

An economic model that keeps products and materials in use, designs out waste and pollution, and regenerates natural systems.

Work performed by a child that is below the applicable minimum age or is hazardous, exploitative or harmful to the child's health, safety, development or education.

A global environmental disclosure system through which companies, cities, states and regions report information on climate, water and forests.

A levy based on the greenhouse gas emissions or carbon content of fuels, products or activities.

The capture and storage of carbon in forests, soils, oceans, geological formations or long-lived products.

A process that transfers carbon dioxide from the atmosphere and stores it in biological, geological, mineral or product reservoirs.

A monetary value assigned to greenhouse gas emissions through a tax, emissions trading system, internal price or market transaction.

A carbon credit retired to compensate for emissions occurring elsewhere.

A claim that a defined amount of greenhouse gas emissions has been balanced by reductions, removals or offsets over a stated period and boundary.

A system in which emissions allowances or carbon credits are issued, bought, sold or retired.

The total greenhouse gas emissions associated with an organisation, product, activity, event or person within a defined boundary.

A common unit that expresses the warming effect of different greenhouse gases relative to carbon dioxide using global warming potentials.

A naturally occurring greenhouse gas released through respiration, decomposition, combustion and industrial processes and removed by oceans, vegetation and other sinks.

A tradable unit representing one metric tonne of carbon dioxide equivalent reduced, avoided or removed under a carbon-crediting programme.

The mix of relevant backgrounds, skills, experience, gender, ethnicity, age and perspectives represented on a board.

Carbon contained in biomass or released from biogenic sources such as plants, soils and bio-based products.

The decline in the variety, abundance, integrity or resilience of genes, species and ecosystems.

The variability among living organisms at genetic, species and ecosystem levels.

An investment approach that favours issuers with stronger ESG performance relative to peers in the same sector or category.

A historical year against which future performance, emissions, energy use or other ESG metrics are compared.

Estimated emissions that do not occur because a product, service or project replaces a higher-emitting alternative, measured against a defined baseline.

Independent work that increases confidence in sustainability information by evaluating it against suitable criteria.

Policies, controls and conduct intended to prevent bribery, facilitation payments, corruption, extortion and improper influence.

The physical and mental state of an animal in relation to the conditions in which it lives and dies.

An actual or potential negative effect that an organisation causes, contributes to, or is directly linked to through its operations, products, services or business relationships.

The requirement that a claimed environmental benefit would not have occurred without the incentive or intervention provided by a project, policy or finance.

The use of ownership rights and influence by investors to protect and enhance long-term value, including engagement and voting.