E Pillar, Glossary

Pillar E

All | # A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
There are currently 39 Environment Pillar terms in this directory
Carbon Finance
Generic term for financial services related to mitigation of and adaptation to climate change. It specifically refers to investments in greenhouse gas emission reduction projects and the related creation of CO2-certificates, financial instruments that are tradable on carbon markets. [Source: Swiss Sustainable Finance]

Carbon Footprint
A measure of the total greenhouse gas emissions, expressed in tons of carbon dioxide. It is one way to assess the potential impact of climate change on a portfolio. Emissions can be classified as Scope 1,2 and 3. [Source: Schroders]

Carbon Neutral
This occurs when an organisation’s net carbon emissions is equal to zero. The process requires measuring total CO2 emissions, taking active steps to reduce emissions where the company can, and then purchasing CO2-certificates to offset CO2 emissions that cannot be eliminated from a company's operations. The CO2- certificates contribute to financing projects reducing CO2-emissions (i.e. by replacing fossil power generation with renewable energy projects). [Source: Swiss Sustainable Finance]

Carbon Pricing
The cost of emitting CO2 into the atmosphere, either in the form of a fee per tonne of CO2 emitted, or an incentive that’s offered for emitting less. Putting an economic cost on emissions is widely considered the most efficient way to encourage polluters to reduce what they release into the atmosphere. [Source: Allianz]

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]

Circular Economy
An economic system designed to produce no waste or pollution. [Source: Schroders]

Clean Technology
A range of products, services and processes that reduce the use of natural resources, cut or eliminate emissions and waste. It was considered a niche area of investment two decades ago but has become a focus for most major companies. [Source: Allianz]

Climate change
Significant long-term change in the climate of a given region. Global scientific consensus is that the planet is currently experiencing a change in climate with over 97% of actively publishing climate scientists agreeing that this is the case. [Source: Invesco]

Climate Risk
The investment risk resulting from a failure to keep global temperature rises to below 2°C above pre-industrial levels. [Source: Schroders]

Echo Voting
A system through which the proxies of a passive investment strategy are voted at the direction of an actively managed investment strategy. [Source: Invesco]

Environmental Funds
Funds that are primarily exposed to sustainable environmental themes such as clean energy, water and waste, or invest in companies with positive environmental management. [Source: Schroders]

Environmental Lending
Refers to lending activities for environmental projects or companies often provided by multinational development banks. The term also covers lending activities with clear procedures to assess environmental risks of projects or companies. In some cases, banks provide preferential interest rates for environmental projects (i.e. environmental mortgages for low energy buildings). [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]

GHG - Greenhouse Gases
GHG is any gas that absorbs infrared radiation in the atmosphere, thereby trapping heat and contributing to the greenhouse effect. Greenhouse gases include, but are not limited to, water vapor, carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), chlorofluorocarbons (CFCs), hydrochlorofluorocarbons (HCFCs), ozone (O3), hydrofluorocarbons (HFCs), perfluorocarbons (PFCs), and sulfur hexafluoride (SF6). [Source: Global Affairs Associates]

Green Bonds
Green bonds are broadly defined as fixed-income securities that raise capital for a project with specific environmental benefits. The majority of green bonds issued to date have raised money for renewable energy projects, energy efficiency measures, mass transit and water technology. Most green bonds have been either plain vanilla treasury-style retail bonds (with a fixed rate of interest and redeemable in full on maturity), or asset-backed securities tied to specific green infrastructure projects. [Source: Swiss Sustainable Finance]

Green Investing
Investment in businesses contributing to sustainable solutions in environmental topics including investments in renewable energy, energy efficiency, clean technology, low-carbon transportation infrastructure, water treatment and resource efficiency. [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]

IEHN - Investor Environmental Health Network
This network of investment managers, advised by nongovernmental organizations, encourages companies to adopt policies to reduce and eliminate toxic chemicals in their products. [Source: First Affirmative Financial Network]

IIGCC - Institutional Investors Group on Climate Change
A forum for collaboration on climate change for investors. IIGCC provides investors with a collaborative platform to encourage public policies, investment practices, and corporate behaviour that address long-term risks and opportunities associated with climate change. [Source: Swiss Sustainable Finance]

Investor Network on Climate Risk
Launched by Ceres, this network includes institutional investors, religious and labor funds, asset managers and socially responsible investment funds. Members actively engage with companies in their portfolios on climate and sustainability issues and advocate for strong climate and energy policies. [Source: First Affirmative Financial Network]

IPCC - Intergovernmental Panel on Climate Change
The IPCC was established jointly by the United Nations Environment Programme and the World Meteorological Organization in 1988. The purpose of the IPCC is to assess information related to all significant components of the issue of climate change by drawing upon hundreds of the world’s expert scientists as authors and thousands more as expert reviewers. IPCC releases periodic assessments of the scientific underpinnings for understanding global climate change and its consequences. The IPCC is looked to as the official advisory body to the world’s governments on the state of the science on climate change. [Source: Global Affairs Associates]

Low Carbon Funds
Funds that invest in companies with a low carbon strategy or low carbon emissions. [Source: Schroders]

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]

Natural Capital Finance Alliance
The Alliance and its Secretariat was originally formed to support the signatories of the Natural Capital Declaration (NCD), which was launched at the Rio+20 conference in 2012. The declaration has been signed by the CEOs of more than 40 financial institutions from around the world. It formalises their commitment to the integration of natural capital considerations into financial sector reporting. [Source: Swiss Sustainable Finance]

Portfolio Carbon Footprint
An aggregation of the carbon footprint of individual positions within an investment portfolio, relative to the share of the companies held by this portfolio. As a measure to assess the climate risk of an investment portfolio, this key performance indicator is used by institutional investors aiming to offer transparency and reduce the carbon intensity of their portfolios. [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]

Scope 1 Emissions
Direct carbon emissions from owned or controlled sources. [Source: Schroders]

Scope 2 Emissions
Indirect carbon emissions from the generation of purchased energy. [Source: Schroders]

Scope 3 Emissions
All indirect carbon emissions (not included in Scope 2) that occur in the value chain of the reporting company, including both upstream and downstream emissions. [Source: Schroders]

Stranded Assets
Stranded assets refers to a scenario in which the value of fossil fuel reserves falls due to rising operational costs associated with carbon prices. Fossil fuel assets could become ‘stranded’ as production becomes unprofitable. The possibility of increased regulation and public pressure, both domestic and international, poses additional risks. Stranded assets suffer from unanticipated or premature write-downs and are unable to operate to the end of their economic lives due to changes in the market and regulatory environment. The share price of fossil fuel companies could diminish considerably if political pressure to reduce carbon emissions strengthens. The risk of stranded assets is a growing concern for investors. [Source: Swiss Sustainable Finance]

TCFD - Task Force on Climate-related Financial Disclosures
TCFD is a powerful organization tasked by the global Financial Stability Board with bringing uniformity to climate-related corporate risk disclosure. It released a voluntary reporting framework for companies in G20 countries in financial and four non-financial industry groups. The four other industry groups are energy, transportation, materials and buildings, and agriculture (both food and forest products.) Investors, lenders and underwriters are the primary audience. TCFD emphasizes the use of climate risk scenario analysis to assess the resiliency of business strategies. TCFD prefers integrated disclosure in financial filings but leaves the option to companies as to where to disclose. The other frameworks, including GRI, SASB, CDP, and CDSB aligned their reporting frameworks to the TCFD recommendations. [Source: Global Affairs Associates]

Transition Risk
The financial risks that could result from significant policy, legal, technology and market changes as we transition to a lower-carbon global economy and climate resilient future. [Source: Allianz]

UNEP FI - United Nations Environment Program; Finance Initiative
UNEP FI is a global partnership between UNEP and the financial sector founded in 1992. UNEP FI’s mission is to bring about systemic change in finance to support a sustainable world, and is highlighted in its motto, “Changing finance, financing change”. Member organisations, representing banking, insurance and investment, recognize sustainability as part of a collective responsibility and support approaches to anticipate and prevent potential negative impacts of the financial industry on the environment and society. UNEP FI develops selective collaborations with other partner organisations, in order to increase awareness and raise support for critical activities. [Source: Swiss Sustainable Finance]

Water Funds
Funds that invest in companies providing technology, products and services relating to the water value chain, such as water distribution, management, treatment and analysis or irrigation. [Source: Schroders]

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.