Simplifying Complexity
ESG Glossary
Pitchstone Consulting’s glossary of over 150 sustainability and ESG terms and definitions.
A-Z glossary of ESG terms
A
Absolute Emissions
Absolute Emissions are the total quantity of greenhouse gases (GHGs) being released into the atmosphere by a specific source over a set period, typically measured in tonnes of CO2e (see Carbon Equivalent).
Active Stewardship
Active Stewardship is the proactive, hands-on management of resources, whether they are financial, environmental, or organisational. It moves beyond “passive” oversight (simply observing or following rules) and enters the realm of direct engagement and influence.
Acute Hazards
An Acute Hazard refers to an event that is discrete, intense, and occurs over a short period. In a climate change sense, these are regarded as “shocks” to a system – sudden occurrences that cause immediate physical damage or disruption. Examples include cyclones, extreme wind and flooding.
Adaptation
In a climate change sense, Adaptation is the process of adjusting our behaviour, systems, and infrastructure to minimise the damage caused by climate changes that are already happening or are expected to happen.
Avoidance
In the context of climate change, Avoidance refers to the strategy of preventing greenhouse gas emissions from entering the atmosphere in the first place. This is achieved through two main ways, either protecting existing carbon sinks – ensuring the carbon currently stored in nature remains there e.g. protection of natural capital; or through displacing higher-carbon alternatives, for example replacing virgin primary raw materials with secondary recycled content.
B
Best in Class
Best in Class is a positive screening strategy used to identify the top-performing companies within a specific sector, industry, or category. In an ESG context, investors determine threshold criteria and screen for investments with superior ESG characteristics within that particular peer or sector group.
Biodiversity Net Gain (BNG)
Biodiversity Net Gain (BNG) is a strategy used in development and land management to ensure that the natural environment is left in a measurably better state than it was before the development took place.
For example, where a development destroys or degrades a certain amount of habitat, a developer must not only replace what was lost but actually increase the overall value of the local wildlife and ecosystems.
Biocapacity
Biocapacity is a measure of nature’s budget. It represents the capacity of a specific biologically productive area to generate an ongoing supply of renewable resources and to absorb the waste materials produced. Unsustainable practice occurs when this natural biocapacity is exceeded.
Biodesign
Biodesign is an approach to product development that can help reduce primary resource demand and impacts by integrating living organisms like bacteria, fungi, algae, or cells, directly into the design process or the final product. Examples include growing mushrooms to produce packaging or leather alternatives.
Bioenergy with CCS (BECCS)
BECCS, or Bioenergy with Carbon Capture and Storage, is a greenhouse gas removal technology that aims to achieve negative emissions by combining renewable energy production with permanent carbon disposal.
Biomimicry
Biomimicry is the practice of looking to nature’s models and then emulating these designs and processes to solve human challenges.
Blue Economy
The Blue Economy is a concept that challenges the traditional business-as-usual approach to the ocean. While the Ocean Economy refers to economic activity involving the sea (e.g. offshore oil drilling or industrial fishing), the Blue Economy specifically refers to the use of ocean resources. Industries related to the Blue Economy include renewable energy, sustainable fisheries, aquaculture, maritime transport, waste management and tourism.
C
Carbon Border Adjustment Mechanism (CBAM)
The Carbon Border Adjustment Mechanism (CBAM) is an EU (and recently adopted by the UK) environmental policy aimed at putting a fair price on the carbon emitted during the production of carbon-intensive goods entering the market. It aims to ensure imported goods face the same carbon costs as products made domestically.
Carbon Capture Storage (CCS)
Carbon Capture and Storage (CCS) is a set of technologies designed to prevent large amounts of carbon dioxide CO2 from being released into the atmosphere from fossil fuel power generation and other industrial processes. It involves capturing emissions, compressing them into a liquid-like state for transport and then injecting them into permanent storage underground where natural processes effectively lock in the CO2.
Carbon Capture, Utilisation and Storage (CCUS)
Similar to CCS, with the exception that captured emissions may be reused as a raw material for other products e.g. in carbonated drinks, concrete and synthetic fuels. Where not, permanent storage underground is the final destination.
Carbon Credits (Regulated)
A Carbon Credit is a form of tradable compliance certificate that represents the removal or prevention of one metric tonne of carbon dioxide CO2 or its equivalent in other greenhouse gases CO2e from the atmosphere. In its strictest sense, credits typically refer to the regulated Compliance (cap and trade) market, e.g. Emissions Trading Schemes (see ETS) where companies buy and sell credits depending on whether they have exceeded or remained below their sector or industry emissions allowance.
Carbon Equivalent
To make GHG gases comparable, Carbon Dioxide Equivalent (CO2e) is used in carbon footprinting. This converts the impact of each gas into the amount of CO2 that would create the same amount of warming over a 100-year period (Global Warming Potential).
Carbon Intensity
Carbon Intensity is used to gauge the efficiency of an activity or process by comparing its emissions to a specific unit of output (e.g. total revenue, tonne of product, or distance travelled). It is calculated by dividing the amount of carbon dioxide equivalent CO2e emitted by a specific metric of productivity. An example would be X tonnes CO2e per kWh.
Carbon Neutral
Carbon Neutral or Neutrality means that any carbon dioxide CO2 released into the atmosphere from a company, person, or country’s activities is balanced by an equivalent amount being removed, often using Carbon Offsets. It is noted that carbon neutrality claims may be limited, focusing only on the carbon dioxide element of emissions, and excluding contribution of other GHGs. They may also refer to just Scope 1 and Scope 2 GHG emissions, as Scope 3 disclosure remains voluntary. As such, neutrality claims tended to have been used by organisations as a means to focus on simple ‘operational’ emissions. The use of carbon neutrality has increasingly been superseded by other more comprehensive ways to account for emissions, such as Net Zero and Science Based approaches.
Carbon Offsets
Carbon Offsets include ‘credits’ to reduce or remove emissions and are bought on a voluntary market. A company typically purchases offsets to invest in a share of third party projects (e.g. reforestation or renewable energy projects) that reduce or remove emissions, to compensate for its own continued generation of emissions. They remain useful where it is no longer feasible to a make further emission reductions within the purchasing organisation. The quality of credits / offsets offered between voluntary providers can vary significantly. Where credits / offsets are the only remaining option over in-company carbon reduction and removal activities, the use of high quality and validated credits that adhere to strict additionality, no double counting and permanence criteria is advisable.
Carbon Pricing
Carbon pricing is a market-based strategy for emissions reduction, with a financial cost applied to every tonne of carbon emissions released. There are two main ways carbon emissions are priced globally – either through a government set carbon tax (e.g. CBAM), or through a market-based emissions trading system (e.g. ETS). Also see Internal Carbon Pricing.
Carbon Reduction Plan
A Carbon Reduction Plan (CRP) is a strategic document that outlines an organisation’s commitment to achieving Net Zero emissions. It details the specific measures, milestones, and data an organisation uses to track and reduce its environmental impact over time. They are a formal requirement in the UK (under Procurement Policy Note 006 (PPN 006)) for suppliers bidding for major government contracts valued over £5m per year.
CDP
Formerly known as the Carbon Disclosure Project, the CDP is a global non-profit organisation that provides a means of transparent disclosure on climate change, water scarcity, forests and oceans for companies, cities and governments for their investors and the public.
Chronic Hazards
In the context of climate change risk, a Chronic Hazard refers to long-term, slow-moving shifts in climate patterns. Chronic hazards are persistent and incremental, fundamentally altering the environment over years or decades. Examples include sea level rise, temperature patterns and drought.
Circularity / Circular Economy
Circularity or Circular Economy is a model of production and consumption that moves away from the traditional ‘take-make-waste’ mindset. Instead of extracting resources, using them once, and throwing them away, a circular system aims to keep materials and products in use for as long as possible.
Clean Tech
Clean Tech (short for Clean Technology) refers to any product, service, or process (generally focused on efficiency and productivity) that uses renewable resources and energy sources to drastically reduce negative environmental impact. Examples include solar panels, green hydrogen, electric vehicles, regenerative farming, vertical indoor farming and smart irrigation.
Climate Value at Risk (CVaR)
Climate Value at Risk (Climate VaR / CVaR) involves modelling by investors, banks, and companies to quantify the financial sensitivity of net present value (NPV) impacts of climate change risks and opportunities on a specific asset or investment portfolio. CVaR examines both physical and transition climate risks. An investor may use this approach to assess how much value a security may lose over the longer term due to climate-related factors.
Closed-Loop
A Closed-Loop system is a process where products are designed, manufactured, used and recycled in a continuous cycle. The goal is to eliminate waste entirely by ensuring that ‘end-of-life’ materials become the raw materials for a new product.
Conflict Minerals
Conflict Minerals refer to natural resources – primarily Tin (Casiterite ore), Tungsten (Wolframite ore), Tantalum (Coltan), and Gold (known collectively as 3TG) that are mined in areas of armed conflict and serious human rights abuses. The trade of these minerals is often used by armed groups to finance their activities, purchase weapons, and perpetuate violence.
Corporate Sustainability Due Diligence Directive (CSDDD / CS3D)
The Corporate Sustainability Due Diligence Directive (CSDDD), often also referred to as CS3D, is a piece of EU legislation that mandates large companies (that meet or exceed specific threshold criteria) to identify, prevent and address their negative impacts on human rights and the environment through using a risk-based due diligence process. The due diligence process includes an organisation’s operations, its subsidiaries and its wider supply chain.
Corporate Sustainability Reporting Directive (CSRD)
The Corporate Sustainability Reporting Directive (CSRD) is a significant piece of EU legislation that fundamentally changes how companies report on their environmental and social impacts. It replaces the Non-Financial Reporting Directive (NFRD) and aims to make sustainability / ESG reporting as rigorous, comparable and auditable as financial reporting. After recent regulatory simplification, the regulation now largely applies to organisations that meet or exceed >1,000 employees and a net turnover >€450m in the EU. However, other thresholds also exist for non-EU companies with substantial EU operations and Public Interest Entities. National transitional arrangements are ongoing.
Critical Raw Materials (CRMs)
Critical Raw Materials (CRMs) are substances that are considered essential to the economy but are vulnerable to supply chain risk and disruption. They typically include materials that are used in green technology, electronics, defence and aerospace. Examples include Lithium, Cobalt, Graphite, Silicon and Rare Earth Elements.
D
Decarbonisation
Decoupling
Decoupling refers to the ability of an economy to grow without a corresponding increase in environmental pressure. Relative decoupling occurs where an environmental impact still grows, but at a slower rate than the economic growth. Absolute decoupling involves a decrease in the environmental impact while economic activity grows.
Dematerialisation
Dematerialisation, typically of a product, is a approach closely related to resource efficiency whereby less or no material is used to deliver the same level of functionality or purpose to the user.
Design for Disassembly (DfD / D4D)
Design for Disassembly (DfD / D4D) is a design process with the core goal of developing products that are quick, easy and cost effective to disassemble so that their individual components can be reused or more effectively recycled at the product’s end of life.
Design for Sustainability (DfS / D4S)
Design for Sustainability (DfS / D4S) is an approach to creating products, services, and systems that maximise social and economic benefits while minimising negative environmental impacts. Unlike traditional design, which often focuses solely on aesthetics, function, and cost, DfS looks at the wider sustainability impacts over the long term. Designers utilise several approaches to achieve their goals, including Life Cycle Assessment (LCA), Circularity, Design for Disassembly and Biomimicry.
Digital Product Passport (DPP)
A Digital Product Passport (DPP) is essentially a ‘digital twin’ for physical goods. It acts as a comprehensive, unique, electronic record (delivered by Blockchain or Distributed Ledger Technology (DLT)) that travels with a product throughout its entire lifecycle – from raw material extraction to manufacturing, use, and eventually, recycling or disposal. The concept is part of the EU’s Ecodesign for Sustainable Products Regulation (ESPR) which is focused on promoting circularity and waste prevention; transparency on impacts; safety and environmental compliance; and the prevention of counterfeits. The first industries affected by the legislation include Batteries, Textiles, Electronics and Construction Products. Further industries (furniture, tyres, mattresses, iron and steel, aluminium and high-energy consuming materials) will be gradually affected after 2027.
Direct Air Capture with CCS (DACCS)
Direct Air Carbon Capture and Storage, DACCS, is a technology designed to tackle climate change by removing carbon dioxide directly from the ambient air and storing it underground permanently. Unlike traditional carbon capture, which captures emissions as they happen at their point source (e.g. emission stacks), DACCS pulls carbon dioxide from the atmosphere at any location regardless of the location of emission sources.
Do No Significant Harm (DNSH)
Do No Significant Harm (DNSH) is an EU regulatory principle to ensure that an investment that claims to be “green” or “sustainable” doesn’t cause unacceptable harm or impact in another area. For example building a windfarm that has positive environmental benefit, yet destroys a sensitive or protected habitat during construction or operation. Under EU Taxonomy, an economic activity is only considered sustainable if it makes a substantial contribution to one of six environmental objectives without significantly harming the other five. These objectives include: climate change mitigation; climate change adaptation; water and marine resources; circular economy; pollution prevention; and biodiversity and ecosystems.
Double / Dual Materiality
Double Materiality is an approach used in sustainability reporting (particularly CSRD), that evaluates how sustainability factors impact both a company’s financial performance (an Outside-In view), and how the company itself impacts the environment and society (an Inside-Out view).
Downcycling
Downcycling is a specific type of recycling where end-of-use materials or products are converted into a product of lesser quality or lower functional value than the original.
E
Ecodesign
Ecodesign is an approach to product development that aims to minimise environmental impact throughout a product’s entire life cycle – from ‘cradle to grave’.
Ecodesign for Sustainable Products Regulation (ESPR)
Ecodesign for Sustainable Products Regulation (ESPR) is a EU regulation designed to make sustainable products the norm. It replaced the former 2009 Ecodesign Directive, significantly expanding its scope from energy-using products (e.g. fridges and lightbulbs) to almost all physical goods sold in the EU. The ESPR introduces several key changes including the need for Digital Product Passports (DPP), a ban on destroying unsold goods and stricter design requirements that ensure durability, reliability, reuse and energy / resource efficiency. and Industries affected first include: Textiles, Iron and Steel, Aluminium, Furniture (including mattresses), Tyres, Detergents and Chemicals.
Ecolabel
An Ecolabel is a visual marker – typically a symbol or seal – placed on a product or service to certify that it meets specific sustainability performance standards. They help demonstrate the validity of the company’s claims. The International Organisation for Standardisation (ISO) categories ecolabels into three groups: Voluntary / Third Party; Self-Declared; and Environmental Declarations. Examples include Forest Stewardship Council (FSC), the EU Ecolabel, Fair Trade Certified and Energy Star.
ESG
ESG stands for Environmental, Social, and Governance. It is used by investors, companies, and organisations to evaluate material issues which could present risks and impacts on long-term business performance and suitability for investment.
ESG Integration
ESG Integration is the practice of explicitly and systematically including ESG factors into traditional financial analysis and investment decisions. It is focused on identifying material risks and opportunities that traditional financial statements might not identify or cover.
Embodied Carbon
Embodied Carbon refers to the GHG emissions arising from the entire life cycle of a product or building before it is even used, and after its life ends. It includes GHGs associated with material extraction, manufacturing, transportation, construction and end-of-life disposal or recovery. Materials with significant embodied carbon include concrete, steel and aluminium.
Emissions Trading Scheme (ETS)
An Emissions Trading Scheme (ETS), often called ‘cap and trade’, is a market-based tool used by governments to reduce greenhouse gas emissions. It turns carbon emissions into a commodity with a price tag, incentivising companies to go reduce emissions in order to reduce compliance costs. The system includes a ‘cap’, which is a government set limit on the total amount of GHGs that can be emitted by a specific sector (e.g. power plants). This cap is split into emission allowances – with one ‘allowance’ typically linked to one tonne of carbon dioxide and the cap is lowered over time to incentivise movement towards reduction. The ‘trade’ part covers the transactional process whereby companies that have reduced emissions will have a surplus of allowances that can be sold to companies that have exceeded their allowance.
Enablers
Enablers are the tools, technologies, and frameworks that make it possible to do more with less. They bridge the gap between wanting to be efficient and actually achieving a circular, low-waste system. Enablers include a range of solutions covering technology (e.g. real-time energy tracking via IoT), financial / economic (e.g. product as a service models), design and innovation (e.g. repairable modular electronics) and institutional (e.g. waste reduction legislation).
EU Climate Transition Benchmark (EU CTB)
The EU Climate Transition Benchmark (EU CTB) is a regulated label for investment indices designed to help investors identify funds that support the transition to a low-carbon economy. Introduced as part of the EU Benchmarks Regulation (BMR) and updated with stricter transparency rules effective January 1, 2026, the CTB is intended to provide clear, specific and legally defined minimum standards for decarbonisation. To be indexed under the CTB benchmark, a minimum Scope 1 and 2 (Scope 3 phased in during a four-year timeline) carbon intensity reduction of 30% compared to the investible universe is required alongside an annual 7% average year on year decarbonisation pathway. No activity exclusions (e.g. oil and gas sector) are prescribed, therefore permitting transitioning sectors to be included under this benchmark.
EU Green Bond Standard (EU GBS)
The EU Green Bond Standard (EU GBS) is a voluntary standard designed to help scale the green bond market, reduce greenwashing and promote transparency.
EU Paris-Aligned Benchmark (EU PAB)
The EU Paris-aligned Benchmark (PAB) is a regulated label for investment indices designed to align investment portfolios with the most ambitious goal of the Paris Agreement: limiting global warming to 1.5°C above pre-industrial levels. Stricter than the EU CTB, the inclusion under the EU PAB requires a minimum 50% Scope 1 and 2 (Scope 3 phased in over 4 years) carbon intensity reduction compared to the investible universe, alongside a 7% year on year decarbonisation pathway. There are stricter fossil fuel restrictions, with a limit on Coal (1% + revenues), Oil (10% + revenues), Natural Gas (50% revenues) and electricity producers with GHG intensity higher than 100g CO2e/kWh (50% + revenues).
European Sustainability Reporting Standards (ESRS)
The European Sustainability Reporting Standards (ESRS) are a set of mandatory frameworks designed to standardise how companies in the EU report their Environmental, Social, and Governance (ESG) impacts under the CSRD. There are 12 standards, divided across three main categories covering: mandatory cross cutting standards (including general requirements and general disclosures); materiality relevant topical standards (including environmental, social and governance matters); and sector-specific standards. Smaller companies that are not legally required to report under CSRD are able to report under a simplified Voluntary Standard (VSME) should they wish.
Exclusions
Exclusions, also referred to as negative screening, involve intentionally removing specific companies, sectors, or even entire countries from a portfolio’s investable universe because they fail to meet certain ethical or sustainability criteria. Examples include exclusions based on sectors (e.g. tobacco, weapons, gambling, adult entertainment, fossil fuels); norms (e.g. excluding violators of human rights or labour standards); and sovereignty (e.g. excluding countries with poor records on civil rights, corruption or environmental degradation).
Extended Producer Responsibility (EPR)
Extended Producer Responsibility (EPR) is a polluter-pays policy approach and environmental strategy that shifts the physical and financial responsibility for a product’s entire life cycle, particularly its end-of-life disposal, back to the producer. Covered by national legislation in the UK and EU, compliance typically involves one of two routes – accepting financial responsibility whereby a producer pays into a fund that finances the collection and recycling infrastructure, or accepting physical responsibility whereby a producer directly manages the ‘take-back’ and recovery / recycling of their products at end-of-life or replacement. EU EPR programmes are in effect (to varying degrees by country) across the following categories: Electronics (e-Waste) (e.g. computers, phones, large household appliances); Batteries (e.g. lead-acid and rechargeable lithium-ion); Packaging (e.g. paper/card, aluminium, glass, wood); Hazardous Waste (e.g. paint, pesticides) and Bulky Goods (e.g. mattresses and furniture).
F
Feedback Loop
A Feedback Loop is a process where the output of a system ‘loops back’ as an input, either accelerating or decelerating the original process. Understanding these loops is critical because they determine whether a system (like a forest or the entire planet) remains stable or spirals toward a ‘Tipping Point‘. There are positive and negative feedback loops. Positive feedback loops experience a self-reinforcing effect, with changes amplified, for example the creation of an undesired runaway effect. Negative feedback loops experience a self-regulating, balancing effect and help maintain stability within a system.
Financed Emissions
Financed Emissions are the GHG emissions linked to the investment and lending activities of financial institutions. For example, the carbon footprint of the companies a bank lends to, or a private capital fund chooses to invest in.
Financial Materiality
In an investing sense, Financial Materiality is the threshold used to determine whether a specific piece of information is important enough to influence the investment decisions of a reasonable person. It is determined using professional judgement, based on a quantitative and qualitative financial factors.
Forever Chemicals
Forever Chemicals is a common name for a range of Per-and Polyfluoroalkyl Substances (PFAS). Comprising a group of thousands of synthetic chemicals, they have been used in consumer and industrial products since the 1940s. PFAS have been used in a wide range of industrial and household applications, including non-stick cookware, water and stain resistant fabrics, food packaging, fire-fighting foam and personal care products. Their mobility and persistence is now considered to be an increasing human health and environmental concern.
G
Greenhouse Gases (GHG)
Greenhouse Gases (GHGs) are specific gases in Earth’s atmosphere that trap heat. They allow sunlight to pass through the atmosphere that warms the planet’s surface, but they absorb the infrared radiation (heat) that the Earth tries to reflect back into space. This process is known as the Greenhouse Effect. While there are many GHGs, the main ones routinely included and monitored in carbon footprints are: Carbon Dioxide (CO2), Methane (CH4), Nitrous Oxide (N2O), Hydrofluorocarbons (HFCs), Perfluorocarbons (PFCs), Sulphur Hexafluoride (SF6) and Nitrogen Trifluoride (NF3).
Greenhouse Warming Potential (GWP)
Greenhouse Warming Potential (GWP) measures the degree of contribution to global warming, over a specified time, for each GHG in the atmosphere compared to carbon dioxide (which has a GWP of 1). Factors that determine the GWP value include the GHG’s ability to absorb infrared radiation (its radiative efficiency), its concentration, and how long the GHG persists in the atmosphere (e.g. its lifetime). Gases with higher GWPs have greater potential to trap heat and contribute to global warming. Many refrigerants (e.g. HFCs) used in cooling systems comprise high GWP compounds.
Global Impact Investing Network (GIIN)
The Global Impact Investing Network (GIIN) is a non-for-profit organisation, founded in 2009, dedicated to increasing the global scale and effectiveness of Impact Investing.
Global Reporting Initiative (GRI)
The Global Reporting Initiative (GRI) is a not-for-profit international organisation that develops and provides frameworks and standards for sustainability reporting.
Green and Blue Infrastructure (GBI)
Green and Blue Infrastructure (GBI) employs the use of natural capital and nature based solutions (NbS), e.g. forests, green spaces, wetlands, rivers, floodplains to support additional benefits (e.g. habitat creation, wellbeing, temperature regulation, air quality improvement, amenity use), over the use of Grey Infrastructure.
Green Bond
A Green Bond is a debt security available through capital markets (private and public) that is designed to fund investment in green assets, business activities or projects that deliver environmental benefits. Green bonds typically include the funding of projects in renewable energy, energy efficiency, clean transportation, sustainable water and the circular economy. Also see EU Green Bond Standard.
Green Chemistry
Green Chemistry (also known as sustainable chemistry) is the design of chemical products and processes that reduce or eliminate the use and generation of hazardous substances. Design principles are focused on reducing waste, improving efficiency, using less hazardous substances – especially solvents – and the use of renewable feedstocks.
Green Loan
A Green Loan is a private credit facility (between a lender and borrower) where the use of proceeds are invested in green assets or projects with environmental benefits. Lenders (e.g. banks) often utilise the Green Loan Principles to ensure transparency and integrity in how the finance is managed.
Greenhushing
Greenhushing occurs when a company or organisation deliberately chooses to stay quiet about its sustainability goals or climate achievements, even if those achievements are legitimate. This corporate behaviour is typically driven by either a lack of understanding of how to present ‘the science’ responsibly, or by the perception (founded or unfounded) that the company may be accused of greenwashing, experience consumer backlash or be exposed to litigation or regulatory fines. Greenhushing practices can lead to a ‘knowledge vacuum’ and consumer mis-trust, making it difficult for consumers to understand progress with a company’s sustainability goals. They also disrupt the advancement of a collective development and the sharing of best industry practice.
Greenwashing
Greenwashing is a marketing / PR tactic where a company or organisation spends more time and money on presenting themselves as environmentally friendly than on actually minimising their environmental impact. Sustainability claims made about goods or services that are considered to be greenwash will often have unsubstantiated, vague, inaccurate or misleading elements (e.g. typically using vague terms of ‘eco-friendly’, ‘sustainable’ or ‘green’, without verified proof). Both the Financial Conduct Authority and European Securities Markets Association have issued recent guidance regarding sustainability claims made in financial-products and services. In the consumer market especially, the UK Competition and Markets Authority can issue substantial fines for misleading goods or service claims.
Grey Infrastructure
Grey Infrastructure refers to the human-engineered, built systems that provide essential services such as water, transportation, and energy. The term grey is associated with the use of concrete, asphalt and steel in these structures.
H
Hybrid Infrastructure
Hybrid Infrastructure is infrastructure that combines Green / Blue Infrastructure with traditional Grey Infrastructure.
Human Capital
Human Capital is the economic value of a person’s collective set of abilities, skills, knowledge, experience and health.
Hydrofluorocarbons (HFCs)
Hydrofluorocarbons (HFCs) are synthesised compounds often used as refrigerants in air conditioning and cooling systems. Many exhibit high Greenhouse Warming Potentials (GWP) and as such are being increasingly regulated and subject to programmes of phase-out.
I
ICMA Harmonised Framework for Impact Reporting
The ICMA Harmonised Framework for Impact Reporting unites frameworks for impact reporting and include two main documents; a Green Bond handbook and a Social Bond handbook. Specific indicators are provided for use across different sectors, for example; renewable energy and energy efficiency; water and wastewater; waste management and resource-efficiency; clean transportation; biodiversity; climate change adaptation; circular economy; green buildings; living natural resources and land; affordable housing and access to essential services.
Impact Investing
Impact Investing involves investments made with the intention of realising specific, measurable and positive environmental and social impacts alongside a financial return. Impact investors actively seek to employ capital in companies, organisations and industries that are directly helping address our global sustainability challenges and issues.
Industrial Ecology
Industrial Ecology (IE) is the study of material and energy flows through industrial systems. Rather than viewing an industrial process as an isolated entity that takes in resources and pumps out waste, IE views it as a part of a larger, interconnected ecosystem, much like a biological one. The ultimate goal is to transition from a linear system (take-make-dispose) to a closed-loop system where waste from one process becomes the raw material for another.
Industrial Symbiosis
Industrial Symbiosis is a collaborative and synergistic strategy where the waste or by-products of one industry become the raw materials for another. It is a subfield of industrial ecology that mimics natural ecosystems – where nothing is truly ‘waste’ and every output serves as an input for someone else. By sharing resources, utilities and infrastructure, companies can reduce costs, minimise environmental impact and improve local economic resilience.
Integrated Assessment Models (IAMs)
Integrated Assessment Models (IAMs) are sophisticated tools commonly used in climate-financial scenario analysis to understand the interactions between Earth’s physical climate systems and impacts; technological and economic systems; human systems and society. Through consideration of systems thinking, users are better able to determine where Feedback Loops exist and the wider impacts of changes.
Intergovernmental Panel on Climate Change (IPCC)
The Intergovernmental Panel on Climate Change (IPCC), established in 1988, is the United Nations body for assessing the science related to climate change.
Internal Carbon Pricing
Internal Carbon Pricing is a financial tool used by organisations and companies to voluntarily place a monetary value on the impact of their own GHGs. Through assigning a value (shadow price, internal carbon fee / tax, or an implicit price) to every tonne of GHGs emitted, a climate-related cost of their investments and activities can be developed. Understanding the impact of costs across a business or organisation assists with developing proactive and effective energy, emission and cost reduction plans and incentivises investment.
International Sustainability Standards Board (ISSB)
The International Sustainability Standards Board (ISSB), established in 2021, is an independent standard-setting body operating under the oversight of the IFRS Foundation that develops investor-focused sustainability disclosure standards. The ISSB has released two main standards; IFRS S1 General Requirements and IFRS S2 Climate-related Disclosures, which primarily focus on financial materiality, as opposed to Double Materiality as specified by the CSRD.
IRIS+
J
Just Transition
Just Transition is the idea that the global shift toward a sustainable, low-carbon economy should be as fair and inclusive as possible for everyone involved. It is acknowledged that while moving away from fossil fuels is necessary to combat climate change, that shift should not come at the expense of the workers and communities whose livelihoods currently depend on high-carbon industries (e.g. coal mining, oil and gas). Without careful energy transition planning lies the risk of creating deep social unrest and economic inequality.
K
Kyoto Protocol
The Kyoto Protocol is an international treaty which commits industrialised countries and economies in transition to limit and reduce specified GHGs in accordance with agreed targets. The protocol led to the establishment of flexible market mechanisms (e.g. ETS, Clean Development Mechanisms and Joint Implementation). In 2012 the Doha Amendment brought in new commitments and a revised list of reportable GHGs.
L
Life Cycle Assessment (LCA)
A Life Cycle Assessment (LCA) is a systematic, “cradle-to-grave” approach to evaluating the environmental impacts of a product, process, or service throughout its entire existence. Instead of considering environmental impacts during just the manufacturing phase, LCA models everything from raw material extraction through transportation, manufacturing, distribution, use and final disposal or recovery. LCA is used by companies and organisations to determine the wider impacts of goods and services, to help compare alternative designs and functions and to evidence reductions stated in environmental product claims.
M
Marginal Abatement Cost Curves (MACC)
Within the context of corporate climate strategy, a Marginal Abatement Cost Curve (MACC) is a powerful visualisation tool used to compare the cost-effectiveness of different ways to reduce GHG emissions. Delivered as a bar chart, decarbonisation options are plotted from left to right, with low cost – high return options on the left; low to moderate cost – break even initiatives in the middle; and high cost – lower return initiatives on the right. A MACC allows companies to review which carbon-reducing measures are the most cost effective and attractive for investment.
Materiality
Within the sustainable investing world, ‘Materiality’ is the filter used to determine which sustainability topics over time actually matter to, and drive value for, a company’s business and its stakeholders.
Mitigation
In a climate change sense, Mitgation refers to any action taken to eliminate or reduce the long-term risks and hazards of climate change. While ‘Adaptation‘ is about learning to live with the changes (e.g. building sea walls), ‘Mitigation’ is about attacking the root cause: greenhouse gas (GHG) emissions.
N
Natural Capital
Natural Capital comprises Earth’s natural assets and ecosystems that provide valuable goods and services. It includes the stock of assets; rock, soil, water, air and all living things that provide ‘flows’ of ecosystem services (e.g. a forest, mineral deposit or water source) that have ‘value’ (e.g. clean water, food, recreation, clean air). For example, mangrove forests may be worth millions in free sea-water flood protection, a value that would be lost if the forests are cleared for short-term gain. Where natural capital is consumed faster than it can regenerate, the capital can become depleted or irreparably damaged (e.g. collapsed fish stocks, infertile land, extinct species).
Nature Based Solutions (NbS)
Nature-based Solutions (NbS) are strategic actions to protect, manage and restore ecosystems to address modern environmental and societal challenges (e.g. climate change, water security, food security, human health) while simultaneously providing further human well-being and biodiversity benefits. Examples often replace the need for Grey Infrastructure, e.g. slope reforestation in preference over steel stability pinning, gabions and netting, or green roofs and tree canopies to reduce air-conditioning use.
Negative Emissions Technologies (NETs)
Negative Screening
Negative Screening is an ‘avoidance’ method where investors purposefully exclude industries such as tobacco, gambling, weapons, or fossil fuels.
Network for Greening the Financial System (NGFS)
The Network for Greening the Financial System (NGFS), established in 2017, is a coalition of central banks and financial supervisors that aims to accelerate the integration of green finance and develop recommendations for central banks’ role for climate change.
Net Zero
At its simplest, Net Zero is about reaching a state where the amount of greenhouse gases added to the atmosphere is no longer greater than the amount removed. The global push for Net Zero by 2050 is driven by the Paris Agreement, national legislation and a need to limit global warming to 1.5°C above pre-industrial levels to avoid the most catastrophic effects of climate change. As Scope 1, 2 and 3 GHG emissions are included, companies and organisations need to work closely with suppliers and customers to understand, avoid and reduce emissions across their value chain.
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Ocean Acidification
The ocean acts as a carbon sink and is thought to absorb approximately 30% of the carbon dioxide released to the atmosphere. However, as atmospheric CO2 levels increase, increasing amounts are dissolved in seawater lowering pH and increasing acidity, which results in Ocean Acidification. Rising acidity levels in seawater have significant repercussions for shell-fish, corals and other biological and chemical processes.
Offsets
See Carbon Offsets.
Open-Loop
Open-Loop recycling is a process where a product is recycled into a different type of product or material. In open-loop recycling the intrinsic properties of the material can often change during the process due to a loss of material strength or quality. Examples include converting office paper recycling into egg cartons, or plastic bottles into fleece-clothing.
Operational Carbon
Operational Carbon emissions refer to the emissions released during the in-use (operational) phase of a building (e.g. emissions from consuming electricity and gas for heating) or product (e.g. fuel burnt in a car).
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Partnership for Carbon Accounting Financials (PCAF)
The Partnership for Carbon Accounting Financials (PCAF) is a global initiative that helps standardise the way financial institutions assess, measure, assess and report GHG emissions associated with their Financed Emissions.
Passive Investing
Passive Investing is a long-term strategy of following specified indices and benchmarks by mirroring their holdings and matching the market’s performance.
Permaculture
Permaculture is a systems-based design approach modelled after the patterns and relationships found in nature. The practice involves developing sustainable human habitats that are as resilient and efficient as natural systems. The practice is used predominantly in agro-forestry and farming, but is increasingly used in housing and community design.
Physical (Climate) Risks
Planetary Boundaries
The Planetary Boundaries framework is a scientific concept that defines the established limits and ‘safe operating space’ for humanity while maintaining stability and resilience of Earth systems. Nine processes have been identified that regulate stability and resilience: climate change; biosphere integrity; land-system change; freshwater change; biogeochemical flows; Ocean Acidification; atmospheric aerosol loading; stratospheric ozone depletion; and novel entities (e.g. man-made pollutants that do not exist naturally).
Portfolio Temperature Alignment (PTA)
In sustainable finance, Portfolio Temperature Alignment (PTA) is a metric used to describe the extent to which an investment asset or portfolio is consistent with the trajectory of current global climate goals. It involves allocation of a carbon budget to a portfolio or asset (according to market share or absolute sector intensity factors) and estimates how it will perform relative to a temperature benchmark, such as the Paris Benchmark (e.g. 1.5°C, 2.0°C). Companies that are not aligned with a low-carbon future may become ‘stranded assets’, uninvestable, or face increased carbon taxation.
Portfolio Warming Potential (PWP)
Portfolio Warming Potential (PWP) (as with PTA) is used to measure how well a portfolio is aligned with current global climate goals and the estimated impact of a portfolio on global warming. A warming function is derived from multiple scenarios and data set assumptions, with multiple transitional pathways to create a bounded range of temperatures associated with a rate of decarbonisation.
Positive Screening
Positive Screening is an inclusive investment strategy used to select assets and portfolios that outperform the market across specific ESG categories. Also see Best in Class.
Principal Adverse Impact (PAI)
Principal Adverse Impacts (PAI) are the impacts of investment decisions and advice that may cause, contribute to or be directly linked to sustainability impacts that may be material or likely to be material or negative. Investors are required to report on environmental and social PAIs of investment decisions under Article 7 of the Sustainable Finance Disclosure Regulations (SFDR).
Principles for Responsible Investment (PRI)
The Principles for Responsible Investment (PRI) is a United Nations-supported international network of investors working together to implement a set of six voluntary principles for Responsible Investment. Signatories include asset owners, investment managers and service providers.
Produced Capital
In the context of sustainability, and specifically the Five Capitals Model, Produced Capital (or manufactured capital) refers to the human-made goods and infrastructure that contribute to the production process or provide essential services. Produced capital from natural resources typically includes: infrastructure (e.g. roads, energy grids, water systems), buildings, physical assets (e.g. tools, machinery) and products (e.g. goods for consumption).
Product as a Service (PaaS)
Product as a Service (PaaS) supports the move from a transactional economy to a subscription or access-based economy. It refers to the provision of a service where consumers pay for the use or performance of a product rather than owning the item itself. Examples include subscription services to rent designer clothes or ‘light as a service’ where a company provides and maintains the lighting and guarantees illumination levels.
Proxy Voting
Proxy Voting is a form of voting whereby institutional investors that are unable to attend an AGM can instruct another party to vote on their behalf across a variety of issues.
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Rare Earth Elements (REE)
Rare Earth Elements (REE) are a group of 17 metallic elements seldom found in high enough concentrations to make extraction easy or inexpensive. These elements are often used in technology applications as they can possess magnetic, luminscent and electrochemical properties.
Renewable Natural Resources
Renewable Natural Resources are materials or energy sources provided by nature that can be replenished naturally over time. Examples of renewable resources include solar energy, wind energy, biomass, geothermal energy, air and soil.
Representative Concentration Pathways (RCPs)
Representative Concentration Pathways (RCPs) are a set of climate model scenarios developed by the IPCC to assess how the climate might change in the future as a result of GHG emissions. Scenarios refer to trajectories of approximate radiative forcing (watts/m2) present by the year 2100. Examples include RCP4.5 which refers to a radiative forcing of 4.5 watts/m2, which equates to a 2.0-3.0°C global temperature by 2100 and is used for transition modelling, while RCP8.5 refers to a radiative forcing of 8.5 watts/m2 (4.0-5.0°C) and is used for ‘business as usual’ and physical risk modelling. RCP2.6 is the low scenario, requiring aggressive cuts to GHG emissions and which projects a 1.5-2.0°C global temperature by 2100. The higher the RCP number, the more heat is trapped, leading to higher global temperatures. The RCPs, while relevant for assessing physical climate science aspects, the Shared Socioeconomic Pathways (SSPs) have been used as the primary framework for climate scenarios in the IPCC’s sixth assessment report.
Resilience Bond
A Resilience Bond is a relatively new financial instrument where the proceeds are invested in adaptation and resilience-related assets, activities and projects. They are designed to help cities and governments with infrastructure projects that proactively reduce the risk of climate-related and natural disasters.
Responsible Investing
Responsible Investment is an approach to investing that incorporates environmental, social, and governance (ESG) factors into investment decisions and active ownership. It considers how ESG can have a material impact on the financial performance of an investment as well as having an impact on the environment and society.
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Science-Based Targets
Science-Based Targets (SBTs) are calculated climate goals to avert the worst effects of climate change. Targets are considered science-based if they align with the latest climate science and the goals of the Paris Agreement, which are to limit global warming to well below 2.0°C above pre-industrial levels, while pursuing efforts to limit the increase to 1.5°C.
Scoped Emissions
Scoped emissions comprise three scopes to help organisations assess and understand their GHG emissions.
– Scope 1 includes direct emissions (emissions that an organisation owns or controls directly), which include fuels consumed in boilers and refrigerant leaks from on-site cooling systems.
– Scope 2 includes indirect emissions (purchased but not directly operated / controlled), which include emissions from the generation of purchased energy (e.g. electricity, steam).
– Scope 3 includes indirect emissions from the value chain (upstream and downstream) which covers a wide range of emissions (e.g. business travel, commuting, raw materials purchasing, waste disposal and distribution) and which typically make up the bulk majority of all emissions across an organisation.
Shared Socioeconomic Pathways (SSPs)
Shared Socioeconomic Pathways (SSPs) are a set of five scenarios (SSP1-5) used by climate researchers to model how the global society, demographics, and economy might evolve over the next century. Developed by the IPCC, each pathway incorporates assumptions on a wide range of variables, including demographics, economic growth, environment and technology. Scenarios refer to approximate radiative forcing levels by the year 2100, with lower numbers referring to the lowest emissions scenarios, e.g. SSP1 and 1.9 watts/m2 of radiative forcing by 2100. While RCPs examine specific physical climate science aspects, SSPs include the human and societal aspect. They are often considered together for a more holistic view.
Social Capital
In a sustainability context, Social Capital is the economic and social value derived from the network of relationships, trust, well-being and shared values within a community.
Socially Responsible Investing (SRI)
Socially Responsible Investing (SRI) is an investment strategy that aims to generate financial returns while also driving positive social or environmental change. Historically, SRI was largely focused on exclusion (avoiding ‘sin stocks’ such as tobacco, gambling or weapons). Today, it has evolved into a more proactive approach where investors seek out companies that actively contribute to positive impact and outcomes.
Stewardship
Stewardship is the active process of investors using their influence to ensure that the companies they invest in are managed sustainably and ethically. It is the bridge between holding a share and driving real-world change.
Stranded Assets
Stranded Assets are resources that are at risk of becoming liabilities or facing significant impairment before their expected economic life due to regulatory and policy shifts, technological innovation or physical environmental change. Examples of stranded assets are typically linked to changes with the transition to a low-carbon economy, e.g. coal reserves that stay in the ground in order to meet regulations and climate goals. The assets are valued on the company balance sheet, but may never be sold.
Sustainability Accounting Standards Board (SASB)
The Sustainability Accounting Standards Board (SASB) is a non-profit organisation, founded in 2011, that provides industry-specific sustainability disclosure standards to help companies report on decision-useful and material ESG matters to investors. The standards are arranged over five board categories: environment; Social Capital; Human Capital; business model & innovation; and leadership & governance.
Sustainability Gap
As first defined by Pitchstone Consulting, the Sustainability Gap is the mis-alignment between a company’s actual sustainability position and the needs of its key stakeholders.
Sustainability-Linked Bond (SLB)
A Sustainability-Linked Bond (SLB) is a type of fixed-income instrument where the financial and/or structural characteristics of the bond (like the interest rate) are tied to whether the issuer achieves specific, pre-defined environmental, social, or governance (ESG) targets. The most common feature of an SLB is a coupon step-up. If the company fails to meet its targets by a specific date, the interest rate it pays to investors increases. This creates a direct financial incentive for the company to be more sustainable. Unlike Green Bonds where the funds must go to green projects, SLBs can be used for general corporate use. SLBs typically follow the Sustainability-Linked Bond Principles (SLBP).
Sustainability-Linked Loan (SLL)
Similar to an SLB, a Sustainability-Linked Loan (SLL) is a type of lending instrument that incentivises a borrower to achieve ambitious, pre-determined environmental, social, or governance (ESG) targets. The defining feature of an SLL is the pricing mechanism. The interest rate of the loan is tied to the borrower’s performance against specific Key Performance Indicators (KPIs). Where the company fails to meet the targets, the interest rate typically increases. SLLs typically follow the Sustainability-Linked Loan Principles (SLLP).
Sustainable Development Goals (SDGs)
The Sustainable Development Goals (SDGs) are a set of global goals adopted by the UN in 2015 which succeed the Millennium Development Goals. The goals are a call for action to address global and societal challenges across 17 areas including health, education, climate change, poverty, inequality and biodiversity by 2030.
Sustainability Disclosure Requirements (SDR)
The Sustainability Disclosure Requirements (SDR) is a comprehensive regulatory framework introduced by the UK’s Financial Conduct Authority (FCA). Its primary goal is to combat ‘greenwashing’ by ensuring that sustainability-related claims made about investment products are accurate, clear, and backed by evidence. The SDR has several facets with a focus on: an anti-greenwashing rule; investment labels (for example labels covering sustainability focus, improvers, impact and mixed goals); naming and marketing rules; and disclosure tiering (for example consumer facing, product level and entity level disclosures).
Sustainability Reporting Standards (UK SRS)
The Sustainability Reporting Standards (SRS) are a framework for corporate sustainability disclosures in the UK. These standards are the UK-endorsed versions of the global ISSB standards and are being phased-in as a mandatory requirement from 2026.
Sustainable Finance Disclosure Regulations (SFDR)
The Sustainable Finance Disclosure Regulation (SFDR) is an EU regulation that requires asset managers, owners of financial products and other financial market participants to assess and disclose ESG / sustainability matters relevant to their investment decisions, labelled products and advice. It aims to improve transparency and help investors make informed choices about sustainable investments. The current version of SFDR classifies financial products into three categories: Article 6 (no sustainability integration), Article 8 (promotes environmental/social characteristics), and Article 9 (sustainable investments as the objective). The EC has published a formal proposal to revise the SFDR.
Sustainable Investing
Sustainable Investing is an investing strategy that considers ESG issues, long-term value creation and impact, by directing capital to companies that promote sustainable models and strategies, while also seeking to generate long-term financial returns. It is a broad category of investing that includes Responsible, Positive Screening, Negative Screening, Impact and Thematic investing approaches.
Systems Thinking
Systems Thinking is the process of looking at how environmental, social and economic aspects influence one another, as a whole, instead of as isolated parts or silos. In the natural environment, water, air, soil and nature are interconnected and affecting one part of system impacts another. Feedback loops are closely interrelated with such changes, and in a sustainability context, systems thinking is used to develop new models and strategies to help avoid unintended consequences. Systems thinking is commonly applied in regenerative agriculture and circularity.
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Taskforce on Climate-Related Financial Disclosures (TCFD)
The Taskforce on Climate-Related Financial Disclosures (TCFD) is a framework for company reporting on climate change, covering physical and transitional risks and opportunities. It is structured around four areas, comprising governance, strategy, risk management, and metrics and targets. While the TCFD was officially disbanded in 2023, the recommendations were fully incorporated into the ISSB‘s IFRS S1 and S2 Standards. The TCFD framework remains relevant for some organisations and those transitioning to ISSB Standards.
Taskforce on Nature-Related Financial Disclosures (TNFD)
The Taskforce on Nature-related Financial Disclosures (TNFD), is a global, market-led initiative designed to help organisations assess, report and act on evolving nature-related impacts, risks and opportunities. It is structured around the same four pillars of the TCFD and utilises a Double Materiality approach.
Taxonomy (EU)
The EU Taxonomy classification system provides definition on what economic activities are ‘sustainable’. In the original EU Taxonomy scheme, sustainable activities must meet three criteria: they must make a substantial contribution; they shall do no significant harm (DNSH); and they shall comply with basic social and labour standards. Under recent EU simplification rules that apply from 1 January 2026, new materiality rules for reporting; OpEx reporting relief; simplified reporting templates; and DNSH criteria adjustments, have been introduced.
Thematic Investing
Thematic Investing is a forward-looking investment strategy that focuses on long-term, structural shifts in the world rather than specific companies, sectors, or countries. Thematic investors identify megatrends and global challenges that are changing how we live, work, and conduct business and invest in the companies poised to benefit from them. In a sustainability context, these may include investments in companies focused on clean energy, water scarcity, sustainable food systems, regenerative agriculture, circular economy and technology for good.
Tilting (Portfolio Exposure)
Tilting a portfolio is a strategy where an investor deliberately adjusts the weights of specific holdings in a portfolio to favour companies with better Environmental, Social, and Governance (ESG) attributes or scores, while still maintaining a broad market profile. It helps to reduce exposure to companies at higher risk of environmental regulatory fines, adverse media and stranded assets.
Tipping Point
A Tipping Point is a critical threshold where a small additional change, or positive Feedback Loop, becomes so strong that it pushes a system into a completely new state, often one that is irreversible or difficult to repair.
Transition Bond
A Transition Bond is a specific type of debt instrument where the proceeds are used exclusively for transition assets or projects, e.g. decarbonising carbon intensive or hard-to-abate industries such as steel, cement, chemicals, shipping and oil and gas.
Transition (Climate) Risks
Transition (Climate) Risks are the financial and economic risks that occur during efforts to reduce emissions and mitigate climate change. They stem from changes in policy, legislation, technology or consumer behaviour.
Transition Pathway Initative (TPI)
The Transition Pathway Initiative (TPI) is a global, asset-owner-led initiative, founded in 2017, that assesses how companies are preparing for the transition to a low-carbon economy. It provides institutional investors with data to understand how their investments align with the goals of the Paris Agreement across two key facets: Management Quality (e.g. the degree of a company’s climate governance arrangements) and Carbon Performance (e.g. how well aligned the company is to the climate benchmark).
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Use of Proceeds Bond
A Use of Proceeds Bond is a fixed-income instrument where the capital raised is earmarked for specific projects that provide environmental or social benefits, e.g. Green Bonds, Social Bonds, Transition Bonds, and Resilience Bonds.
UN Global Compact
The UN Global Compact (UNGC), launched in 2000, is a voluntary initiative encouraging businesses and organisations to adopt sustainable and socially responsible practice. Signatories align their strategies and operations with ten principles across four core areas concerning human rights, labour, environment and anti-corruption.
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Value Chain
A Value Chain is the full range of activities a company performs to bring a product or service from its initial conception to its final delivery to the customer. There are two main activities; primary activities (e.g. actions directly involved in creating, selling and maintaining the product – logistics, operations, marketing and sales, service); and support activities (e.g. allowing the primary activities to function efficiently – procurement, technology, human resources, infrastructure).
Value Creation
Value Creation in private equity investment, refers to the strategies and actions taken to increase the value of their portfolio companies, typically through operational improvements, revenue growth and financial engineering. Taking a sustainability view, value is protected by mitigating ESG risks and liabilities; driven through operational resource efficiency improvements; and expanded through strategic growth in sustainable products and markets.
Vertical Farming
Vertical Farming is a revolutionary approach to agriculture where crops are grown in vertically stacked layers rather than spread out horizontally across fields. Instead of relying on traditional soil and natural sunlight, these systems typically use controlled-environment agriculture (CEA) technology (e.g. hydroponics, aeroponics, aquaponics, LED lighting, climate control and data sensors) to optimise plant growth.
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Weighted Average Carbon Intensity (WACI)
Weighted Average Carbon Intensity (WACI) is a portfolio level carbon emissions footprint that assesses a portfolio’s exposure to carbon intensive companies. WACI adjusts for how much is invested in each portfolio company and measures carbon efficiency, e.g. tonnes of CO2 emitted per million in sales revenue. It is important to note that while WACI usually only covers Scope 1 and 2 emissions, it is a useful technique for comparing portfolio companies between sectors, and which portfolios are most at risk of changes to climate policy, regulation and carbon taxes.
Whole Life Carbon
In sustainable architecture and construction, Whole Life Carbon (WLC) is the sum total of all greenhouse gas emissions associated with a building over its entire lifespan. It includes Embodied Carbon and Operational Carbon.
World Business Council for Sustainable Development (WBCSD)
The World Business Council for Sustainable Development (WBCSD) is a CEO-led organisation of over 250 leading global businesses working together to accelerate the transition to a sustainable world. Their work is primarily organised into three ‘imperatives’; climate action; nature action; and equity action, with focus areas including: agriculture and food; built environment; circular economy; and products and mobility.
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XRBL - Extensible Business Reporting Language
In sustainability reporting, XBRL is a digital language used to tag specific pieces of Environmental, Social, and Governance (ESG) data so that they are machine-readable.
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Zero Waste
Zero Waste is a philosophy and a design principle that extends beyond simple recycling. It involves transitioning from a ‘linear’ take-make-waste economy to a circular economy where little is wasted. While Zero Waste in reality is difficult to achieve fully, it is the aim.