ESG Terms and Definitions
Carbon Neutral (PAS 2060) – Generally accepted to mean achieving zero sum carbon emissions for a particular scope of the GHG protocol, or a predefined scope, usually scope 1 and 2.
Carbon Offsetting – A reduction in emissions of CO2 or other greenhouse gases made in order to compensate for emissions made elsewhere. Offsetting should be used as a last resort and reserved only for emissions that are unavoidable if the organisation is to continue to provide the same services, as per the energy hierarchy.
Career opportunities – Any opportunities that support career progression and take you closer towards your career goals.
Charity – An organisation set up to help people in need for a specific cause.
Charity and Community Partnerships – A collaboration between a business and a charity who share a passion and commitment to sustainable change. Generally, it’s considered most appropriate to support and contribute to an organisation’s objectives and visions.
Circular Economy – Similarly to cradle to cradle, circular economy seeks to maximise the use of resources but extends beyond consumer products. It promotes systems thinking to eliminate waste and pollution (avoid use, use new technology or plan for re-use), circulate products and materials (cradle to cradle) and regenerate nature by considering impacts on nature at every stage of the value chain.
Community Impact – The net effect, or outcome, of an activity on a community and the wellbeing of individuals and families.
Community involvement – Meaningful, consistent participation in activities that support and improve upon social wellbeing.
Cradle to Cradle – Designing a product to be reused, disassembled or recycled at the end of it’s life as opposed to cradle to grave where a product is disposed of at the end of its usable life.
CSR – Corporate Social Responsibility. Traditionally this focuses on the social impacts of an organisation including volunteering and charity activities, but for some organisations this also includes environmental impacts. CSR is commonly used interchangeably with ESG in some industries, while others still see it has social impact focused.
Cultural value and land ownership – Cultural values are a series of principles passed on generation after generation by the ancestors of a community or people. Land ownership refers to the owner or proprietor of land, considering any claims of ancestral rights where there may be no legal document to demonstrate ownership but where it can be demonstrated land has been populated or used by a particular group for generations.
Customer service and operations – Direct interaction between a customer making a purchase and a representative of the company that is selling it, or the systems and processes a customer interact with.
Diversity, Equality & Inclusion – Fair treatment and opportunity for all, free from prejudice and discrimination.
Ecology & Biodiversity – Ecology is the scientific study of the processes influencing natural life and habitats. Biodiversity is the variety of natural life and habitats on earth including flora (plants), fauna (animals) and funga (fungi).
Ecology and biodiversity impact – The effect that a change to the environment has on ecology and biodiversity and the outcome.
Employee Engagement – Employee engagement is a workplace approach resulting in the right conditions for all members of an organisation to give of their best each day, committed to their organisation’s goals and values, motivated to contribute to organisational success, with an enhanced sense of their own well-being. A two way communication between an organisation and its members. A higher level increases the chance of business success, as well as higher productivity and an improved sense of wellbeing.
Employee Welfare – Include such services, facilities, and amenities as may be established in or in the vicinity of undertakings to enable the persons employed in them to perform their work in healthy, congenial surroundings and to provide them with amenities conducive to good health and high morale.
Employment Contracts – A legally binding agreement between an employer and employee.
Energy and carbon – Energy and carbon go hand in hand, referring to energy generation, use and efficiency, as well as carbon emissions generated from human activities. The generation of energy through incineration results in the release of carbon and other GHG’s into the atmosphere. The term ‘carbon’ is generally used to imply the release of all types of greenhouse gases, even those not carbon based (see definition of tCO2e and GWP for more information).
Decarbonisation hierarchy – The order in which organisations should maximise energy efficiency: Business efficiency; reduce direct emissions; reduce energy needs; decarbonise energy supply; capture carbon; offset emissions.
ESG – Stands for Environmental Social and Governance. It captures a company’s collective approach to managing their impact on Environmental and Social issues through effective governance. Many industries now use ESG in place of CSR to reflect the expanded scope of the topics covered.
Environmental impact – Any change to the environment, either adverse or beneficial, wholly or partially resulting from an organisations activities and the outcomes of the change.
Ethical – Discipline concerned with what is morally right and wrong. It’s important to take holistic view of ESG to ensure appropriate resources are devoted to the different aspects and to avoid unintended consequences. It’s also important to understand that many issues are interconnected and making a decision when focusing on one scope can have an impact elsewhere. Only focusing on only one aspect of an issue results in tunnel vision and is most common for carbon and can result in overlooking other important impacts.
Fair Pay & Benefits – When an employer provides the same pay and conditions for employees during work that requires similar levels of effort, skills, knowledge and responsibility. Fair pay ensures the effects of inflation and the rising cost of living are accounted for appropriately and ensures that at least the living wage is received. It also covers issues such as the gender pay gap and the wage of executives in comparison to the organisations median.
GHG – Greenhouse gases which contribute to global warming, not just carbon dioxide. This includes substances like methane and F-Gases. The Green House Gas Protocol is an internationally recognised approach to reporting GHG emissions and is broken down into three scopes:
- Scope 1 emissions are direct emissions from owned or controlled sources (Gas boilers).
- Scope 2 emissions are indirect emissions from the generation of purchased energy (i.e. electricity provided by a utility company).
- Scope 3 emissions are all indirect emissions (not included in scope 2) that occur in the value chain of the reporting company, including both upstream and downstream emissions (the emissions form the production of purchased goods and services, emissions from the disposal of waste produced during operations and emissions from the use of your sold products and disposal at the end of life.
Government Subsidies & Incentives – Payments, tax breaks or other forms of economic support given by Governments to certain industries or sectors to incentivise certain actions.
GWP – The multiplier applied to greenhouse gases, such as methane and nitrous oxide, to equate the impact they have on global warming with that of Carbon Dioxide. Values are determined based on a GHG’s warming potential over a 100-year period. For example, Carbon dioxide has a GWP of 1, so another GHG with a GWP of 2 has twice the impact of carbon dioxide for the same quantity. Methane has a 100-year GWP of ca. 28, meaning that the release of 1kg of methane contributes to global warming as much as 28Kg of CO2. Some F-Gases have GWP ratings in the tens of thousands.
IT, infrastructure and equipment – Refers to the quality and availability of technology and resources present within an organisation to effectively support the delivery of work objectives. Basic examples include the provision of computers that are of good enough quality to complete the required task, or having a good enough internet connection. Infrastructure may include the facilities available, such as meeting rooms.
Materials & Sourcing – Concerned with the materials used for business activities, including manufacturing, construction and general office use, and where these materials and products originate from and all the stages of the supply chain, from the sites at which materials are extracted, through to refinement, manufacturing, transport and final delivery. Possible issues along the supply chain include environmental impacts at sources of extraction, labour conditions and health & safety. This links to training, knowledge and development which is defined as a planned effort by an organisation to facilitate learning of job-related behaviour on the part of its employees.
Net Zero – The pursuit of having zero sum carbon emissions across all GHG scopes (1,2 and 3). This should be achieved first and foremost through efficiency with carbon offsetting used only for emissions that it has not possible to eliminate through other means.
Noise and Nuisance – An environmental and social issue regarding the disturbance of nearby communities and species, potentially leading to health issues and property or habitat damage.
Organisational culture – The collection of values, expectations and practises that guide and inform the actions of all team members and members of an organisation.
Philanthropy impact – Charitable giving that creates lasting change in society.
Pollution Prevention – Any practise that reduces, eliminates or prevents pollution at its source before it’s created. Measures that can be taken vary depending on the pollution risk but may include the monitoring of activities, material selection or spill management.
Profitability – A measure of an organisation’s profit relative to its expenses.
Recruitment & Retention – Recruitment is the process of actively seeking out, finding and hiring candidates for a specific position. Retention is the organisational goal of keeping productive and talented workers.
Reputation – The general opinion that people have about someone or something. An organisations reputation can be affected by a number of factors, for example performance in the different aspects of ESG. The impacts of a negative reputation may extend to issues such as attracting and retaining staff, attaining investment and winning & keeping customers.
Responsible Finance and Tax – Responsible finance is offering financial services in an accountable, transparent and ethical manner. Responsible tax is an approach to tax that is open, developmental and considers the interest of all stakeholders.
Responsible Investment – An investment approach that explicitly acknowledges the relevance to the investor of environmental, social and governance factors. The objective of responsible investment is to invest in projects that have ESG benefits.
Responsible sourcing – The incorporation of ethical, sustainable and socially conscious principles into supply chain management practises. The aim of responsible sourcing is to reduce the negative and maximise the positive potential environmental and social impacts associated with the production of goods or delivery of services.
Social Value – This is the value an organisation provides to society and the economy through helping people with skills and employment, or contributing to amenities that people will benefit from, particularly disadvantaged groups. It is typically broken down as follows:
- Jobs: Promoting local skills and employment for all
- Growth: Supporting the growth of responsible local business
- Social: Fostering healthier, safer and more resilient communities
- Environment: Providing cleaner and greener spaces, promoting sustainable procurement and safeguarding the planet
- Innovation: Promoting new ideas and social innovation.
Sponsorship Impact – The benefits attained from the promotion, support or financial backing of an individual or scheme, such as increased brand awareness. The recipient of sponsorship will benefit from increased resources, namely financial, enabling them to engage in activities they otherwise wouldn’t have been able to.
Supplier/Contractor Management – The collection of processes that enables a company to identify, qualify, onboard, transact and collaborate with their right suppliers for their business. Good supplier management is necessary for improved delivery of goods and services, ESG performance and overall reputation.
Sustainability – There are numerous definitions of sustainability, the most commonly used in business is the triple bottom line balance between Environmental, Social and Economic Impact. This is also known as the Three P’s: People; Planet; and Profit. Another common definition is from the 1987 Brundtland report ´Our Common Future` which defined sustainability as “development that meets the needs of the present without compromising the ability of future generations to meet their own needs”. Sustainability is often incorrectly used to refer only to environmental impacts which can cause confusion. It should be used collectively as an approach to enhance an organisations positive impact on all stakeholders, aspects and receptors.
tCO2e – Tonnes (t) of carbon dioxide (CO2) equivalent (e) is the measure of the quantity of a GHG compared to that of carbon dioxide considering the GHG’s GWP. This allows all GHG’s to be reported with comparable units and all GHG’s are assigned a conversion factor or GWP to unify reporting.
Transport & Travel – The environmental and social impacts of products or people moving from one place to another. Different modes of transport can have varying environmental impacts, with the main areas of issue being related to GHG emissions and air quality.
Volunteering – A free will activity that is not undertaken for financial gain.
Volunteering impact – The benefits of the outcomes of volunteering observed by the recipient of volunteering activities and the wider community.
Waste Hierarchy and the 3 R’s – Reduce, reuse, recycle are the steps that should be explored before anything is disposed of as waste. This comes from the waste hierarchy, which all produces legally have to consider, and is stipulated in the UK Waste Regulations. This further expands the 3 R’s to include:
Waste management & Recycling – The collection, transport, processing, recycling or disposal and monitoring of waste material. The order of preferable treatment is listed in the waste hierarchy; Prevent, Reduce, Reuse, Recycle, Recover, Landfill.
Water management – Includes activities such as proper planning, efficient distribution and efficient use of water to conserve its use as much as possible.
Wealth Distribution – The distribution of wealth among various people of a particular community.
Working Environment – Elements that comprise the setting in which employees work and impact workers. Benefits of a better working environment enhances the productivity and satisfaction of employees.
Certifications and Schemes
1% for the Planet – The intent of 1% for the Planet is to help fund these diverse environmental organizations so that collectively they can be a more powerful source in solving the world’s problems.
Achilles – Achilles’s range of online tools and reports help your procurement, sustainability and risk teams quickly see a supplier’s pre-qualification status, and view critical documents and information relating to their standards and capabilities. There’s one simple, online platform for everything.
AirRated – AirRated provides a certification for Indoor Air Quality (IAQ). Using the latest sensor technology, AirRated collect detailed information about your IAQ, then grade it based on leading medical research and industry best practice. This process determines your building’s AirScore.
ASI – The Aluminium Stewardship Initiative (ASI) is a global non-profit standards setting and certification organisation. ASI brings together producers, users and stakeholders in the aluminium value chain with a commitment to maximise the contribution of aluminium to a sustainable society. The aim is to collaboratively foster responsible production, sourcing and stewardship of aluminium.
AWS – AWS is a global membership collaboration comprising businesses, NGOs and the public sector. Members contribute to the sustainability of local water-resources through their adoption and promotion of a universal framework for the sustainable use of water – the International Water Stewardship Standard, or AWS Standard – that drives, recognizes and rewards good water stewardship performance.
B Corp – Certified B Corps are a new kind of business that balances purpose and profit. They are legally required to consider the impact of their decisions on their workers, customers, suppliers, community, and the environment. This is a community of leaders, driving of a global movement of people using businesses as a force for good.
BES 6001 – Enable construction product manufacturers to ensure and then prove that their products have been made with constituent materials that have been responsibly sourced.
BREEAM – BREEAM is the world’s leading sustainability assessment method for masterplanning projects, infrastructure and buildings. It recognises and reflects the value in higher performing assets across the built environment lifecycle, from new construction to in-use and refurbishment.
Carbon Neutral Certification (PAS 2060) – A carbon neutral certification demonstrates an organisation’s commitment to sustainability, reduction of carbon emissions and the support of environmental projects.
Carbon Trust Standard for Zero Waste to Landfill – Recognising organisations that take a best practice approach to waste management and actively divert all appropriate waste streams from landfill.
CDP – CDP is a not-for-profit charity that runs the global disclosure system for investors, companies, cities, states and regions to manage their environmental impacts.
Certified Carbon Neutral – The CarbonNeutral Protocol gives businesses a rigorous and transparent framework to deliver carbon neutrality for their business, products and/or activities.
CHAS – CHAS helps clients (buyers) and contractors (suppliers) ensure compliance across the different areas of risk management, and mitigate risks across the supply chain. CHAS offer accreditation schemes that can help businesses achieve compliance, mitigate supply chain risks and support efficient supply chain management.
Construction Line – Construction Line builds value from beginning to end in the supply chain and procurement cycle, making it easy for you to optimise performance, minimise risk and realise opportunities. Company information is collected, verified and monitored through a question set that is aligned to PAS 91 and offer a range of allied services and opportunities, all designed to assist you in your day-to-day activities.
DJSI – The Dow Jones Sustainability Indices (DJSI) are a family of best-in-class benchmarks for investors who have recognized that sustainable business practices are critical to generating long-term shareholder value and who wish to reflect their sustainability convictions in their investment portfolios.
EcoLabel – The EU Ecolabel is a label of environmental excellence that is awarded to products and services meeting high environmental standards throughout their life-cycle: from raw material extraction, to production, distribution and disposal. The EU Ecolabel promotes the circular economy by encouraging producers to generate less waste and CO2 during the manufacturing process. The EU Ecolabel criteria also encourages companies to develop products that are durable, easy to repair and recycle.
EcoVadis – EcoVadis helps you manage your network both upstream and downstream, either by sharing your performance with your stakeholders or monitoring the performance of your own upstream value chain.
Energy Star – ENERGY STAR is the simple choice for energy efficiency, making it easy for consumers and businesses to purchase products that save them money and protect the environment.
EPD – Environmental Product Declarations (EPD) present transparent, verified and comparable information about the life-cycle environmental impact of products.
EU Organic Farming – The organic farming legislation describes the underlying objectives and principles of organic agriculture and sets organic production requirements. The Regulation legally defines what organic farming actually is and formulates certain claims with respect to environmental protection, preservation of natural resources (including biodiversity), application of high animal welfare standards and production method based on natural substances and processes. Furthermore, it defines requirements with regard to controls, trade with third countries (i.e. not EU Member States) and labelling of organic food products and sets a regulatory framework for supply-chain activities. By defining these two areas, the Regulation aims to provide the basis for the sustainable development of organic production.
Fair Trade – Fairtrade is about better prices, decent working conditions, local sustainability, and fair terms of trade for farmers and workers in the developing world.
FORS – The Fleet Operator Recognition Scheme (FORS) is a voluntary accreditation scheme for fleet operators which aims to raise the level of quality within fleet operations, and to demonstrate which operators are achieving exemplary levels of best practice in safety, efficiency, and environmental protection.
FSC – As the original pioneers of forest certification, FSC has 25 years of experience in sustainable forest management. Expertise is used to promote the responsible management of the world’s forests, bringing together experts from the environmental, economic and social spheres.
Green Seal – Green Seal® is a global nonprofit organization that pioneered the ecolabeling movement with a mission to transform the economy for a healthier, greener world.
Green Star – Green Star aims to transform the built environment by:
– Reducing the impact of climate change
– Enhancing human health & quality of life
– Restoring and protecting Earths biodiversity and ecosystems
– Driving resilient outcomes for buildings, fitouts, and communities
– Contributing to market transformation and a sustainable economy
GRESB – More than 100 institutional investors, with over USD 22 trillion AUM, use GRESB data to monitor their investments, engage with their managers, and make decisions that lead to a more sustainable real asset industry. The 2019 real estate benchmark covers more than 1,000 property companies, real estate investment trusts (REITs), funds, and developers.
GRI – GRI helps businesses and governments worldwide understand and communicate their impact on critical sustainability issues such as climate change, human rights, governance and social well-being. This enables real action to create social, environmental and economic benefits for everyone.
Guaranteed Fair Trade – Guaranteed Fair Trade is the global community of social enterprises that practice Fair Trade. Their Guarantee System verifies that members are truly Fair Trade Enterprises. This means they pioneer models of business that put people and planet first.
HQM – HQM provides impartial information from independent experts on a new home’s quality. It clearly indicates to home buyers and renters the overall expected costs, health and wellbeing benefits, and environmental footprint associated with living in the home. In short, HQM helps everyone to fully understand the quality, performance and attributes of a new-build home.
INREV – INREV is the European Association for Investors in Non-Listed Real Estate Vehicles. INREV is Europe’s leading platform for sharing knowledge on the non-listed (unlisted) real estate industry. The company’s goal is to improve transparency, professionalism and best practices across the sector, making the asset class more accessible and attractive to investors.
Investors in People – Your people are your most valuable commodity. Central to the success of any organisation – whatever their size or sector – is the right blend of talent, motivation and leadership. And for this reason, investing in your people is not only the right thing to do, it’s proven to be essential in delivering sustainable results, especially in a crisis. Organisations that lead, support and develop their workforce effectively are 17% more productive and 21% more profitable.
ISO 14001 Environmental Management – For companies and organizations of any type that require practical tools to manage their environmental responsibilities.
ISO 20121 Sustainable Events – Events take a heavy toll on resources, society and the environment, often generating significant waste. In addition to promoting more responsible consumption, this International Standard has been developed to relieve the strain on local infrastructure and utilities, reducing the potential for conflict in communities where events are hosted.
ISO 20400 Sustainable Procurement – ISO 20400:2017 provides guidance to organizations, independent of their activity or size, on integrating sustainability within procurement, as described in ISO 26000. It is intended for stakeholders involved in, or impacted by, procurement decisions and processes.
ISO 45001 Health and Safety – For organizations that are serious about improving employee safety, reducing workplace risks and creating better, safer working conditions
ISO 50001 Energy Management – For organizations committed to addressing their impact, conserving resources and improving the bottom line through efficient energy management
ISO 9001 Quality Management – For organizations asking how to improve the quality of their products and services and consistently meet their customers’ expectations.
Leaping Bunny – The CCIC promotes a single comprehensive standard and an internationally recognized Leaping Bunny Logo. The organisation works with companies to help make shopping for animal-friendly products easier and more trustworthy.
LEED – LEED believe green buildings are the foundation of something bigger: helping people, and the communities and cities they reside in—safely, healthily and sustainably thrive. Green building efforts must go well beyond construction and efficiency, and the materials that make up buildings. Focus is placed on what matters most within a building: humans beings.
MSC – MSC’s mission is to use their ecolabel and fishery certification program to contribute to the health of the world’s oceans by recognising and rewarding sustainable fishing practices, influencing the choices people make when buying seafood and working with partners to transform the seafood market to a sustainable basis.
NABERS – NABERS UK is a simple, reliable system for rating the energy efficiency of office buildings across England, Wales, Scotland and Northern Ireland.
– Like the efficiency star ratings that you get on your fridge or washing machine, NABERS provides a rating from one to six stars for offices.
– This helps building owners to understand their building’s performance versus other similar buildings, providing a benchmark for progress.
NextGeneration – The NextGeneration benchmark criteria cover the following 15 focus areas: company strategy and governance, reporting, future proofing, environmental site management, minimum sustainability standards, ecology and urban drainage, energy and carbon, water, waste, transport, procurement, health and safety, community and customer engagement, design and placemaking and economic development.
OK Compost – Packaging or products featuring the OK Compost label (based on European standard EN 13432: 2000) are guaranteed as biodegradable & compostable in an industrial composting plant and applies to all components, inks and additives.
PAS 2050 – A standard for assessing the GHG emissions of a product during its lifecycle.
PEFC – Forest certification provides a mechanism to promote the sustainable management of forests and ensures that forest-based products reaching the marketplace have been sourced from sustainably managed forests.
PETA-Approved Vegan – The “PETA-Approved Vegan” logo is a way of recognising progressive compassionate businesses – and helping ethical consumers identify where to shop with confidence, safe in the knowledge that they’re not supporting the exploitation of animals.
Plamil Foods Vegan Label – Plamil Foods created the Plamil vegan logo in 2008 to meet the demand of consumers requiring a visual symbolic reassurance that the vegan product they purchase has been made to the highest vegan standard and does not have the possibility of contamination.
Route to net zero – Develop by the carbon trust this standard helps organisations measure and manage their carbon emissions, inform carbon reduction strategies and align targets for the future.
PRI – United Nations principles for responsible investment – The PRI is the world’s leading proponent of responsible investment. It works:
- To understand the investment implications of environmental, social and governance (ESG) factors;
- To support its international network of investor signatories in incorporating these factors into their investment and ownership decisions.
- The PRI acts in the long-term interests:
- of its signatories;
- of the financial markets and economies in which they operate;
- and ultimately of the environment and society as a whole.
Rainforest Alliance – The green frog certification seal indicates that a farm, forest, or tourism enterprise has been audited to meet standards that require environmental, social, and economic sustainability.
Red Tractor – The Red Tractor logo is a simple way for people to recognise food and drink that has been produced to high quality standards across the whole length of the food chain – from farm to pack. Food with the label is traceable, safe and farmed with care – so everyone can feel confident and good about their choices when shopping and eating out.
RSPCA Assured – The farms, hauliers and abattoirs approved by RSPCA Assured have been assessed to the RSPCA’s farm animal welfare standards. The RSPCA welfare standards cover beef cattle, chickens reared for meat, dairy cows, egg laying hens, pigs, sheep, salmon and trout, turkeys and veal calves.
RSPO – The RSPO has developed a set of environmental and social criteria which companies must comply with in order to produce Certified Sustainable Palm Oil (CSPO). When they are properly applied, these criteria can help to minimize the negative impact of palm oil cultivation on the environment and communities in palm oil-producing regions.
RTRS – The Round Table on Responsible Soy (RTRS) is an international initiative in which soy producers, merchants and processors work together with banks and social organisations to ensure the worldwide sustainable cultivation of soy and the social responsibility of the soy sector.
SA 8000 – The SA8000 Standard is the world’s leading social certification program. It provides a holistic framework allowing organizations of all types, in any industry, and in any country to demonstrate their dedication to the fair treatment of workers. Created by SAI in 1997 as the first credible social certification, it has led the industry for over 20 years. SA8000 is available for organizations of any size, in any industry, and in nearly every country of the world.
SBTi – Science-based targets show companies how much and how quickly they need to reduce their greenhouse gas (GHG) emissions to prevent the worst effects of climate change.
SKA – SKA rating helps landlords and tenants assess fit-out projects against a set of sustainability good practice criteria.
Soil Association Organic – No system of farming has higher levels of animal welfare than organic farms working to these standards. The organic standards use the EU organic regulation as their baseline, but in many cases the standards are more robust.
TCFD – The Task Force on Climate-related Financial Disclosures is a framework developed to help organisations effectively disclose climate related risks and opportunities. In recent years the framework has become increasingly common for organisations to use.
Utz – UTZ certification shows consumers that products have been sourced, from farm to shop shelf, in a sustainable manner. To become certified, all suppliers have to follow the UTZ Code of Conduct, which offers expert guidance on better farming methods, working conditions and care for nature. This in turn leads to better production, a better environment and a better life for everyone.
Vegan Society – The Vegan Society registers vegan products with its Vegan Trademark – ensures all products and its derivatives that are registered are free from animal ingredients and testing.
Vegetarian Society Vegan Approved – The Vegetarian Society Approved trademark accreditation involves independent ingredient and production method checking by experts at the Vegetarian Society.
WELL – WELL is the leading tool for advancing health and well-being in buildings globally.