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Staying on top of the terms and “lingo” used to describe ESG environmental, social and governance (ESG) and sustainability can seem daunting. Here’s a quick guide so you can understand and properly use some of the most common terms and definitions.
A network of business leaders, investors, and policymakers that are prioritizing a future of sustainable economic development through stakeholder-driven decision-making. This organization prioritizes regenerative, transparent, and inclusive principles to create systemic change in both the public and private sectors
An organizational-level certification that evaluates social and environmental impacts with emphasis on ethical governance and transparency. The certification requires a rigorous verification process of documentation, public statements, and submitted data. B Corporations include small businesses to multinational corporations across all sectors.
The practice of measuring and comparing ESG performance with other companies in your sector or geography to understand where your company fits among your competitors. For accurate benchmarking, alignment with ESG frameworks, standards, and measurement methodologies is essential.
A degradable material that, under the proper conditions (heat and aerobic digestion), can degrade. Not all products that are labeled as “biodegradable” are healthy for soils and should be left to decompose. Many plastic products can naturally degrade into microplastics, polluting water sources and accumulating in food chains (bioaccumulation).
Refers to the diversity of living organisms in an ecosystem. Biodiversity can be measured at the genetic, species, or ecosystem level.
Carbon credits, or carbon offsets, are permits that allow the holder to emit a certain amount of greenhouse gasses. It is part of a larger “cap and trade” program aimed at reducing overall industry emissions. This system creates monetary incentives for companies to reduce their emissions over time and fosters innovation in energy usage.
The total amount of greenhouse gasses emitted during the lifecycle of a product, service, activity or lifestyle. Carbon footprints can also be applied to companies, businesses, and geographic areas.
Used to offset the amount of carbon that an individual or institution emits into the atmosphere. Carbon offsets work in a financial system where, instead of reducing its own carbon use, a company can comply with emissions caps by purchasing carbon credits from an independent organization. The organization will then use that money to fund a project that reduces carbon in the atmosphere. An individual can also engage with this system and similarly pay to offset his or her own personal carbon usage instead of, or in addition to, taking direct measures such as driving less or recycling.
Companies or institutions most often use carbon offsets to reduce their carbon footprint without polluting less. Most offsets involve renewable energy. For example, a company in Massachusetts can pay to build a wind turbine off the coast. By using its money to create renewable energy, that company thereby offsetting its own carbon use.
Offers reports and resources around three focus areas: climate change, water, and forests. Organizations complete a questionnaire and with that information, CDP assigns each a score (A+, B, C, etc.) A scored questionnaire can be exported and shared with key stakeholders.
A model in which products, materials, and services stay in circulation. Products are designed with high-quality materials, services are more mindful of resource consumption, and there is a new market to recapture what would be “waste” to create new products from still-viable resources.
The average weather and patterns measured over a defined period of time, such as a number of years, decades, or centuries. For an analogy, if the weather were individual meals, the climate would be the overall, long-term diet.
The combining of GHG emissions data from separate operations that belong to one or a group of companies.
CSR is a voluntary way for companies to commit to ethical business practices and improve their social responsibility and positive impact.
A circular system in which materials can be infinitely utilized. Cradle to Cradle spans a product’s raw material extraction through to the end of its initial lifecycle after which it can be turned into a new product by utilizing its remaining viable resources.
The linear system of a product life cycle in which a product is created, used, then disposed of after its intended initial purpose, without utilizing the remaining viable resources to create a new product.
The process of reducing or completely eliminating carbon emissions. Total decarbonization requires eliminating the production of carbon and removing carbon currently in the atmosphere.
Tracks the stock performance of leading ESG companies to improve shareholder value and sustainability-oriented investor portfolios.
Used by more than 95,000 businesses across 200 industry categories and 175 countries, EcoVadis provides ratings on environmental, social and governance-related (ESG) issues and helps create plans for companies to improve their score.
Unlike most ESG ratings providers, the bulk of EcoVadis’ coverage is of smaller companies that often make up the majority of larger companies’ supply chains.
GHG emissions are released into the atmosphere through economic activities or processes that emit hydrocarbons. To measure these, a carbon dioxide equivalent (CO2e) value is given relative to the activity associated with the release of the GHG; this is known as an emission factor.
Emission factors are how activity data is converted into GHG emissions. The number of activities that necessitate EFs to measure their GHG emissions is huge, these activities include things like fuel combustion, waste landfilling, electricity consumption, vehicle travel, purchased heat and steam, animal agriculture, etc.
An independent executive agency of the United States federal government tasked with environmental protection matters. President Richard Nixon proposed the establishment of the EPA on July 9, 1970. It began operation on December 2, 1970, after Nixon signed an executive order. The EPA publishes emission factor sets.
ESG are the three overarching pillars through which an organization’s effect on the environment and society can be measured. Initially used as a tool for investors to understand a company’s long-term financial performance, ESG is now central to business strategies. It assesses a company’s ability to deal with risk and opportunity in addressing issues such as the climate crisis, environmental degradation, social injustice, and inequality.
Fossil fuel is a generic term for organic material (from decayed plants and animals) that has been exposed to heat and pressure from the earth’s crust for hundreds of millions of years and converted into oil, coal, or natural gasses.
Emissions that are not physically controlled but result from the intentional or unintentional releases of GHGs. They commonly arise from the production, processing, transmission, storage, and use of fuels and other chemicals, often through joints, seals, packing, gaskets, etc.
Or Carbon Sink – is any physical unit or process that stores greenhouse gasses. This usually refers to forests and underground or deep sea reservoirs of CO2.
Any physical unit or process that releases GHG into the atmosphere.
Created in 1997, the GHGP is the original carbon accounting standard. It provides guidelines for organizations to develop greenhouse gas (GHG) emissions inventories. Under the GHGP, all emissions are broken down into three scopes. Scopes 1 and 2 are required to be measured, whereas Scope 3 is currently optional.
An average increase in the temperature of the atmosphere near the Earth’s surface and in the troposphere can contribute to changes in global climate patterns. Global warming can occur from a variety of causes, both natural and human-induced. In common usage, “global warming” often refers to the warming that can occur as a result of increased emissions of greenhouse gasses from human activities.
The act of a company portraying a more sustainable, ethical, or “green” image of themselves for marketing purposes. There are nine types of greenwash that occur when a company misinforms or makes unsubstantiated claims for a competitive advantage. Some jurisdictions have begun to legislate to combat greenwash. The EU’s taxonomy regulation is one example of a piece of legislation designed to prevent greenwashing behavior.
Founded in 1997 following public outcry over the Exxon Valdez oil spill, the GRI created the first global standards for sustainability reporting (the GRI Standards) and is today one of the most commonly used reporting frameworks, helping businesses, governments, and other organizations understand and communicate the impact of companies on critical sustainability issues.
An intergovernmental body of the United Nations responsible for advancing knowledge on human-induced climate change. It provides policymakers with regular scientific assessments of climate change, its implications, and potential future risks and puts forward adaptation and mitigation options.
A global standardization body that takes different standardizing metrics from around the world, compiles them from expert opinion, and produces an international standard across industries that can be certified under ISO. ISO 14064 measures and reports greenhouse gas emissions. ISO 14001 focuses on environmental management systems and ISO 26000 focuses on social responsibility.
A standardized framework provides global investors with a complete ESG portfolio of climate-related risks and opportunities for better investment strategies. This framework is still in the planning and development stages (as of October 2022).
Measurements of performance used for decision-making, operational improvement, and goal tracking in an organization. Examples include tracking Scope 1, 2, and 3 emissions, water use, or volume of waste.
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