ESG Frameworks, Glossary

ESG Frameworks

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There are currently 34 ESG Frameworks in this directory
Carbon Tracker
An initiative working to align capital markets with climate change objectives. [Source: Schroders]

CDP - Carbon Disclosure Project
CDP is a voluntary survey and score for companies and governments to disclose their environmental impact. Investors are the primary audience. Disclosures are made via the CDP survey/database. [Source: Global Affairs Associates]

CDSB - Climate Disclosure Standards Board
A voluntary reporting framework for disclosing material environmental information in mainstream financial reports and natural capital and climate change-related information. CDSB was set up to promote greater alignment between natural and financial capital through disclosure standards, research and advocacy. [Source: Global Affairs Associates]

Core SI
Sustainable investment products (investment funds and discretionary mandates) with a written sustainability investment policy as part of the prospectus or contract are considered Core SI. Usually, such sustainable investment products apply multiple approaches (i.e. exclusion criteria in combination with a best-in-class approach or an ESG integration approach in combination with ESG voting and engagement). [Source: Swiss Sustainable Finance]

Corporate Governance Codes
A set of standards detailing good practice in relation to board leadership and effectiveness, remuneration, accountability and relations with shareholders. These purposeful dialogues are established by local regulators on a country-by-country basis. [Source: Schroders]

Development Finance
Official Development Finance (ODF) describes funds from official development finance institutions to developing nations with the objective of reducing poverty and developing the economy of recipient countries. This includes (A) bilateral official development assistance (ODA), (B) grants and concessional and non-concessional development lending by multilateral financial institutions, and (C) other official flows for development purposes (including refinancing Loans) which have too low a Grant Element to qualify as ODA. [Source: Swiss Sustainable Finance]

Development Investments
Term established by SFF to describe investments with a clear intention to improve the social/environmental/economic situation in developing and emerging markets while targeting market or above-market returns. [Source: Swiss Sustainable Finance]

Equator Principles
The Equator Principles is a risk management framework, adopted by financial institutions, for determining, assessing and managing environmental and social risk in project finance and is primarily intended to provide a minimum standard for due diligence to support responsible risk decision-making. [Source: Swiss Sustainable Finance]

FPIC - Free, prior and informed consent
Named by The Forest Peoples Programme, this names the value that a community has the right to voice an opinion on projects taking place on the lands they own and should be included in the conversation of use. [Source: First Affirmative Financial Network]

GEAK
Gebäudeausweis der Kantone (GEAK) is a Swiss tool to measure and indicate the energy consumption of a building. It forms an easy tool to compare the energy efficiency of different buildings both for buyers and investors. [Source: Swiss Sustainable Finance]

GIIRS - Global Impact Investing Ratings System
A system for assessing the social and environmental impact of companies and funds. [Source: Swiss Sustainable Finance]

Global Reporting Initiative (GRI)
The Global Reporting Initiative is the most widely used global framework for the standardized reporting of economic, social and environmental performance. The GRI guidelines are created through a multi-stakeholder, consensus-seeking process that involves an international network of business, civil society, labour and professional institutions. [Source: Swiss Sustainable Finance]

Greenhouse Gas Protocol
The most widely used international accounting tool for government and business to understand, quantify, and manage greenhouse gas emissions. [Source: Global Affairs Associates]

GRESB - Global Real Estate Sustainability Benchmark
GRESB is the global environmental, social and governance benchmark for real estate and infrastructure investments, providing standardized and validated ESG data to the capital markets. [Source: Global Affairs Associates]

GRI - Global Reporting Initiative
A voluntary global reporting framework used by thousands of companies and governments worldwide. It is a modular reporting framework that covers economic, environmental, and social impacts addressing all stakeholders groups. Disclosures are typically made in sustainability reports. [Source: Global Affairs Associates]

ILO Conventions
ILO conventions encompass international labour standards which are integrated into legally binding international treaties, setting out basic principles and rights at work. Those legal instruments are ratified in all participating countries. The eight fundamental conventions cover the topics freedom of association and the effective recognition of the right to collective bargaining; the elimination of all forms of forced or compulsory labour; the effective abolition of child labour; and the elimination of discrimination in respect of employment and occupation. They are frequently used as the basis for exclusion and engagement approaches. [Source: Swiss Sustainable Finance]

Integrated Reporting
An integrated report (IR) combines a company's financial report and sustainability report in order to give a concise view about how an organisation’s strategy, governance, performance and prospects lead to the creation of value over the short, medium and long term. [Source: Swiss Sustainable Finance]

International Integrated Reporting Framework
Created IIRC, the International Integrated Reporting Framework is used to accelerate the adoption of integrated reporting across the world. An integrated report is a concise communication about how an organization’s strategy, governance, performance and prospects, in the context of its external environment, lead to the creation of value in the short, medium and long term. [Source: Global Affairs Associates]

IRIS
IRIS is a catalogue of generally accepted performance metrics that impact investors use to measure social, environmental, and financial success, evaluate deals, and improve the credibility of the impact investing industry. The catalogue is prepared by the Global Impact Investing Network (GIIN), a non-profit organisation dedicated to increasing the scale and effectiveness of impact investing. [Source: Swiss Sustainable Finance]

Montreal Carbon Pledge
Launched in September 2014, signatories of the Montreal Carbon Pledge commit to measure and publicly disclose the carbon footprint of their investment portfolios on an annual basis. [Source: Swiss Sustainable Finance]

OECD Guidelines for Multinational Enterprises
This is a comprehensive set of government-backed recommendations on responsible business. The governments who aim to adhere to the Guidelines intend to encourage and maximise the positive impact multinational enterprises can make to sustainable development and enduring social progress. [Source: Swiss Sustainable Finance]

Official Development Finance / Development Finance
Official Development Finance (ODF) describes funds from official development finance institutions to developing nations with the objective of reducing poverty and developing the economy of recipient countries. This includes (a) bilateral official development assistance (ODA), (b) grants and concessional and non-concessional development lending by multilateral financial institutions, and (c) other official flows for development purposes (including refinancing Loans) which have too low a Grant Element to qualify as ODA. [Source: Swiss Sustainable Finance]

PSI - Principles for Sustainable Insurance
Launched by UNEP FI in 2012, The Principles for Sustainable Insurance (PSI) serve as a global framework for the insurance industry to address environmental, social and governance risks and opportunities. The purpose of the PSI Initiative is to better understand, prevent and reduce environmental, social and governance risks, and better manage opportunities to provide quality and reliable risk protection. [Source: Swiss Sustainable Finance]

SBTs - Science Based Targets
Targets adopted by companies to reduce greenhouse gas (GHG) emissions are considered “science-based” if they are in line with the level of decarbonization required to keep global temperature increase below 2 degrees Celsius compared to pre- industrial temperatures, as described in the Fifth Assessment Report of the Intergovernmental Panel on Climate Change (IPCC AR5). The Science Based Targets initiative (SBTi) is a collaboration between CDP, the United Nations Global Compact (UNGC), World Resources Institute (WRI), and the World Wide Fund for Nature (WWF) and one of the We Mean Business Coalition commitments, to champion science-based target setting as a powerful way of boosting companies' competitive advantage in the transition to a low carbon economy. [Source: Global Affairs Associates]

Socially Screened or SRI Mutual Funds
SRI mutual funds integrate ESG analysis into the investment process—generally seeking to avoid owning companies with a harmful impact on society, and seeking to own the most responsible companies with the highest profit potential. Such funds may represent any asset class and many different investment strategies, including domestic and international investments. A growing range of products is available, including hedge funds and ETFs (exchange traded funds). [Source: First Affirmative Financial Network]

SRI - Socially Responsible Investing
Socially Responsible Investing (SRI) is the term previously used for sustainable or responsible investing. SRI had its origin in the Anglo-Saxon investment world, where it originally referred to investments based on exclusionary screening and later to investments with a best-in-class approach and other forms of sustainable investments. Some players still use it as a generic term for sustainable investing. Socially responsible investing is the practice of investing money in companies and funds that have positive social impacts. It is investment strategy which seeks to consider both financial return and social/environmental good. [Source: Swiss Sustainable Finance]

Sustainable Investment Mandate
Investment mandate based on an investment process integrating ESG criteria in different forms (i.e. best-in-class, ESG integration, exclusionary screening). [Source: Swiss Sustainable Finance]

Triple Bottom Line
An accounting framework originally developed in an effort to measure sustainability. Triple bottom line is also referred to as TBL or 3BL. TBL goes beyond traditional measures to incorporate three additional dimensions of performance: social, environmental (or ecological) and economic. Michael Porter has more recently popularized a Shared Value framework that has similar elements and emphasizes the importance of expanding the value created for shareholders to all stakeholders. [Source: Schroders]

UN Guiding Principles on Business and Human Rights
The Guiding Principles for Business and Human Rights are meant to support the implementation of the United Nations “Protect, Respect and Remedy” Framework. This set of guidelines seeks to provide a global standard for preventing and addressing the risk of adverse human rights impacts linked to business activity. They were proposed by the UN Special Representative for Business and Human Rights, John Ruggie, and endorsed by the UN Human Rights Council in June 2011. As they cover all areas of business, they are also applicable to the financial sector. [Source: Swiss Sustainable Finance]

UN PRB - United Nations Principles of Responsible Banking
These are six principles that shape a framework for a sustainable banking system and will help the industry to demonstrate how it makes a positive contribution to society. The areas of strategy covered by these principles are alignment, impact & target setting, clients & customers, stakeholders, governance and culture, and transparency & accountability. The Principles for Responsible Banking were launched by 130 banks from 49 countries, representing more than USD $47 trillion in assets. [Source: Global Affairs Associates]

UN PRI - Principles for Responsible Investment
The United Nations-supported Principles for Responsible Investment (PRI) Initiative is an international network of investors and asset managers working together to put the six Principles for Responsible Investment into practice. Its goal is to understand the implications of sustainability for investors and support signatories to incorporate these issues into their investment decision making and ownership practices. Asset owners, investment managers and service providers can become signatories which obliges them to annually report on their progress regarding the six principles covering ESG integration, active ownership and promotion of sustainable investments. Organizations follow these principles to meet commitments to beneficiaries while aligning investment activities with the broader interests of society. As of 2019, there were 2,372 signatories with a combined USD $86 trillion in asset under management. [Source: Swiss Sustainable Finance]

UN SDGs - Sustainable Development Goals
The Sustainable Development Goals are a collection of 17 global goals designed to be a ""blueprint to achieve a better and more sustainable future for all."" The SDGs, set in 2015 by the United Nations General Assembly to be achieved by the year 2030. The goals recognize that ending poverty and other deprivations must go hand-in-hand with strategies that improve health and education, reduce inequality, and spur economic growth. They include goals such as no poverty, gender equality, decent work, sustainable consumption, climate action and reduced inequalities. The goals were developed to replace the Millennium Development Goals (MDGs) which ended in 2015. Unlike the MDGs, the SDG framework does not distinguish between ""developed"" and ""developing"" nations. [Source: Global Affairs Associates]

UNGC - United Nations Global Compact
UNGC is a non-binding United Nations agreement to encourage businesses worldwide to adopt sustainable and socially responsible policies grounded in 10 Principles on human rights, labor, environment, and anti-corruption. This UN initiative aims to encourage businesses worldwide to align their operations and strategies with the ten universally principles. Companies signing the UNGC commit to regularly reporting on progress on the ten principles. [Source: Global Affairs Associates]

WMA - Swiss Federal Act on War Material
The WMA is a piece of Swiss legislation in force since 1998. This Act focuses on the fulfilment of Switzerland's international obligations and the respect of its foreign policy principles by means of controlling the manufacture and transfer of war material and related technology. At the same time, it aims at maintaining Swiss industrial capacity adapted to the requirements of its national defense. The WMA was amended in 2013 to include the prohibition of the production as well as the direct financing of controversial weapons, encompassing cluster munition, anti-personal mines, as well as biological, chemical and nuclear weapons. Switzerland is one of the 13 countries regulating the financing of controversial weapons. [Source: Swiss Sustainable Finance]

Sources:

  1. Allianz Global Investors, ESG Glossary, Retrieved: September 12,2020
  2. First Affirmative Financial Network, Glossary of Responsible Investing Terms, Retrieved: September 12,2020
  3. Global Affairs Associates, ESG Glossary, Retrieved: September 12,2020
  4. Invesco Ltd., Glossary: Understanding ESG jargon, Retrieved: September 12,2020
  5. Nuveen, LLC., Glossary: Responsible investing, Retrieved: September 12,2020
  6. Schroders Investment Management North America Inc., Understanding sustainable investment and ESG investment terms, Retrieved: September 12,2020
  7. Stanford Graduate School of Business, Corporate Governance Research Initiative, Retrieved: September 12,2020
  8. Swiss Sustainable Finance, Glossary, Retrieved: September 12,2020

Disclaimer: This glossary is NOT intended to be an authoritative reference document. All information in this glossary is for educational use only. This glossary has been compiled based on public domain information available on the websites of the mentioned sources. While due care has been taken in compiling this glossary, ESGSense does not assume any liability for any inaccuracy or factual error. Any term or definition mentioned here does NOT constitute financial or investment advice. ESGSense assumes no liability for any financial decisions and/or investments made on the basis of information gained from this glossary.