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esg tERMS

A-Z ESG Glossary: Understand Sustainability in Simple Terms

A

Acute Risks

The TCFD categorizes climate-related physical risks as acute or chronic. Acute Risks include the increased severity of typhoons and floods. 

Afforestation

Planting trees in a barren land to grow a forest. Afforestation differs from Reforestation, which is planting native trees in areas with a dwindling tree population.

Adaptation

The process of adjusting to climate change impacts by modifying behaviors, policies, and infrastructure to minimize risks and enhance resilience.

Assurance

Independent verification of ESG data and reports to ensure transparency, accuracy, and credibility for stakeholders.

  

B

Biodiversity

The variety of life on Earth, including species, ecosystems, and genetic diversity, is essential for environmental balance and sustainability.

Business Ethics

A framework of moral principles guiding corporate decision-making, ensuring fair practices, accountability, and stakeholder trust.


C

Carbon Footprint

The total amount of greenhouse gases emitted directly or indirectly by an individual, organization, or product, is measured in CO2 equivalent.

Circular Economy

An economic system focused on reducing waste by designing products for reuse, recycling, and sustainability instead of single-use disposal.


D

Decarbonization

The process of reducing carbon dioxide emissions through cleaner energy sources, energy efficiency, and carbon capture technologies.

Due Diligence

A comprehensive assessment of ESG risks and opportunities before making investment or business decisions.


E

Environmental Impact Assessment (EIA)

A systematic evaluation of potential environmental effects of a project before implementation, aiming to prevent negative consequences.

Ethical Investing

An investment approach that considers environmental, social, and governance factors alongside financial returns.


F

Fossil Fuel Divestment

The process of withdrawing investments from companies involved in fossil fuels to reduce carbon exposure and support sustainability.

Fair Trade

A certification ensuring ethical production practices, fair wages, and sustainable farming in global supply chains.


G

Greenwashing

A misleading practice where companies falsely claim to be environmentally friendly without taking substantial actions.

Governance Structure

The framework of rules, practices, and processes used to direct and manage an organization, ensuring accountability and ethical leadership.


H

Human Rights Due Diligence

A process to identify, prevent, and address human rights risks within a company’s operations and supply chain.

Hazardous Waste Management

The responsible handling, treatment, and disposal of dangerous waste materials to protect health and the environment.


I

Impact Investing

Investing in projects and businesses that generate measurable social and environmental benefits alongside financial returns.

Integrated Reporting

A corporate reporting framework that combines financial and ESG disclosures to provide a holistic view of business performance.


J

Just Transition

A framework ensuring that the shift to a low-carbon economy is fair, considering workers' rights and social equity.

Job Creation through ESG

Sustainable employment opportunities generated by the transition to green and ethical business practices.


K

Key ESG Metrics

Standardized indicators used to assess environmental, social, and governance performance.

Knowledge Sharing in ESG

The practice of exchanging best practices, research, and case studies to drive sustainability improvements.


L

Life Cycle Assessment (LCA)

A technique to evaluate the environmental impact of a product or service throughout its entire life cycle.

Low-Carbon Economy

An economic model based on minimizing carbon emissions by shifting to clean energy and sustainable practices.


M

Materiality Assessment

A process used to identify ESG issues most relevant to an organization’s stakeholders and long-term success.

Microfinance for Sustainability

Small loans and financial services provided to low-income individuals to support sustainable businesses.


N

Net Zero

A state where greenhouse gas emissions are balanced by carbon removal efforts, resulting in no additional emissions in the atmosphere.

Natural Capital

The world’s stock of natural resources, including air, water, soil, and biodiversity, essential for economic sustainability.


O

Occupational Health & Safety (OHS)

Policies and procedures designed to ensure workplace safety, protecting employees from hazards and risks.

Offsetting Carbon Emissions

Investing in environmental projects, like reforestation, to compensate for unavoidable carbon emissions.


P

Paris Agreement

An international treaty aimed at limiting global warming to below 2°C and striving for 1.5°C through national emissions reduction commitments.

Product Stewardship

A responsible approach to designing, producing, and managing products to minimize their environmental and social impact.


Q

Quantifying ESG Risks

The measurement of potential risks associated with environmental, social, and governance factors in business operations.


R

Renewable Energy

Energy sourced from naturally replenishing elements like solar, wind, and hydropower, reducing dependence on fossil fuels.

Responsible Sourcing

Procurement practices ensuring ethical labor conditions and sustainable environmental practices in supply chains.


S

Scope 1, 2, and 3 Emissions

  • Scope 1:     Direct emissions from owned or controlled sources.
  • Scope 2:     Indirect emissions from purchased energy.
  • Scope 3:     All other indirect emissions from supply chains and product use.

Sustainable Development Goals (SDGs)

A set of 17 global goals established by the UN to address environmental, social, and economic challenges by 2030.


T

Task Force on Climate-related Financial Disclosures (TCFD)

A framework guiding companies on climate risk reporting to improve financial decision-making.

Triple Bottom Line (TBL)

An accounting framework measuring business success based on three factors: People, Planet, and Profit.


U

UN Global Compact

A voluntary initiative encouraging businesses to adopt sustainable and socially responsible policies.

Urban Sustainability

Development strategies that promote eco-friendly city planning, reducing carbon footprints in urban areas.


V

Value Chain Sustainability

An approach ensuring that all stages of a product's life cycle adhere to ESG best practices.

Voluntary Carbon Markets

Trading systems where companies buy and sell carbon credits to offset their emissions.


W

Water Stewardship

Efficient and responsible management of water resources to ensure long-term sustainability.

Waste-to-Energy

A technology that converts waste materials into usable energy, reducing landfill impact.


X

X-Efficiency in Sustainability

A concept where companies maximize ESG performance with minimal resource wastage.


Y

Youth Engagement in ESG

Programs and initiatives that encourage young people to participate in sustainability efforts and governance.


Z

Zero Waste

A philosophy focused on reducing waste through recycling, composting, and sustainable consumption.

Deep Dive into ESG Topics

What is ESG – A beginner-friendly guide explaining ESG in detail.

Why ESG Matters – Key benefits of ESG for businesses and investors.

The Future of ESG – Trends and predictions for sustainability.

Find out more

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