ESG & Sustainability Glossary
Clear, authoritative definitions of 50+ ESG and sustainability terms – from CSRD and double materiality to net zero and scope 3 emissions.
The Citable ESG Orgs. glossary provides concise, expert definitions of the most important terms in environmental, social, and governance (ESG) practice. Whether you are navigating CSRD compliance requirements, understanding the difference between carbon neutrality and net zero, or learning about emerging frameworks like TNFD and ISSB – this glossary is your reference. Each term includes context on why it matters, related concepts, and links to relevant organisations in our directory.
B
B Corp Certification
B Corp Certification is awarded by the non-profit B Lab to companies that meet rigorous standards of social and environmental performance, accountability, and transparency. The certification process involves a comprehensive assessment (the B Impact Assessment) covering governance, workers, community, environment, and customers. B Corps are legally required to consider the impact of their decisions on all stakeholders.
Biodiversity
Biodiversity refers to the variety of life on Earth at all levels, from genes to ecosystems, and the ecological processes that sustain them. It encompasses the diversity within species, between species, and of ecosystems. Loss of biodiversity threatens ecosystem services that human societies depend on, including food production, clean water, and climate regulation.
Board Diversity
Board diversity refers to the composition of a company's board of directors in terms of gender, ethnicity, age, professional background, and other dimensions of difference. Diverse boards bring varied perspectives that improve decision-making, risk oversight, and innovation. Many jurisdictions now mandate or recommend minimum levels of board diversity.
BREEAM
BREEAM (Building Research Establishment Environmental Assessment Method) is the world's first and one of the most widely used sustainability assessment methods for buildings and infrastructure projects. Developed in the UK, it evaluates performance across categories including energy, health, materials, waste, ecology, and management. BREEAM ratings range from Pass to Outstanding.
C
Carbon Credit
A carbon credit is a tradeable certificate representing the right to emit one metric tonne of carbon dioxide or its equivalent in other greenhouse gases. Credits are generated through verified emission reduction or removal projects and can be traded on voluntary or compliance carbon markets. They serve as a market-based mechanism for incentivising emissions reduction.
Carbon Footprint
A carbon footprint is the total amount of greenhouse gas emissions caused directly and indirectly by an individual, organisation, event, or product. It is usually expressed in tonnes of carbon dioxide equivalent (tCO2e). The measurement encompasses emissions across an entity's entire value chain.
Carbon Neutrality
Carbon neutrality means achieving a state where the net carbon dioxide emissions associated with an entity or activity are zero. This is typically achieved by measuring emissions, reducing them as far as possible, and then compensating for remaining emissions through carbon offsets. Carbon neutrality differs from net zero, which usually requires deeper absolute emission reductions.
Carbon Offset
A carbon offset is a reduction or removal of greenhouse gas emissions made to compensate for emissions occurring elsewhere. Offsets are typically measured in metric tonnes of CO2 equivalent and can be generated through projects such as reforestation, renewable energy, or methane capture. They are purchased as credits on voluntary or compliance carbon markets.
CDP (formerly Carbon Disclosure Project)
CDP is a global non-profit that runs the world's leading environmental disclosure system for companies, cities, states, and regions. Through annual questionnaires, CDP collects and scores data on climate change, water security, and forests. Over 23,000 companies disclose through CDP, making it the most comprehensive source of self-reported corporate environmental data.
Circular Economy
A circular economy is an economic model that aims to eliminate waste and the continual use of resources through designing for durability, reuse, remanufacturing, and recycling. It contrasts with the traditional linear model of take-make-dispose. The goal is to keep products, materials, and resources in use for as long as possible.
Climate Risk
Climate risk refers to the potential negative impacts of climate change on organisations, economies, and ecosystems. It is typically divided into physical risks (extreme weather, sea-level rise) and transition risks (policy changes, technology shifts, market repricing). Understanding climate risk is essential for long-term strategic planning and investment decisions.
Corporate Governance
Corporate governance is the system of rules, practices, and processes by which a company is directed and controlled. It defines the distribution of rights and responsibilities among the board of directors, management, shareholders, and other stakeholders. Good governance ensures accountability, fairness, transparency, and responsible decision-making.
CSRD (Corporate Sustainability Reporting Directive)
The Corporate Sustainability Reporting Directive (CSRD) is EU legislation that significantly expands mandatory sustainability reporting requirements for companies operating in Europe. It introduces the European Sustainability Reporting Standards (ESRS) and requires double materiality assessments, third-party assurance, and digital tagging of reports. The CSRD applies to approximately 50,000 companies, including non-EU companies with significant EU operations.
D
DEI (Diversity, Equity & Inclusion)
Diversity, Equity, and Inclusion (DEI) is a framework for promoting the fair treatment, full participation, and equitable outcomes for all people within an organisation. Diversity refers to the representation of different identities; equity addresses systemic barriers to fair treatment; and inclusion ensures everyone feels valued and can contribute fully. DEI initiatives span recruitment, retention, leadership development, and organisational culture.
Double Materiality
Double materiality is the principle that companies should report on sustainability matters from two perspectives: how ESG issues affect the company's financial performance (financial materiality) and how the company's activities impact people and the environment (impact materiality). This concept is central to the EU's CSRD and European Sustainability Reporting Standards. It represents a broader view than the single financial materiality approach used by ISSB.
E
EcoVadis
EcoVadis is a business sustainability ratings platform that assesses companies across four themes: environment, labour and human rights, ethics, and sustainable procurement. Using a combination of documentation review, industry benchmarking, and third-party data, EcoVadis provides a scorecard from 0 to 100 with medal levels. Over 130,000 companies across 175 countries have been rated.
ESG Integration
ESG integration is the systematic inclusion of environmental, social, and governance factors into investment analysis and decision-making processes. Unlike negative screening or exclusion, ESG integration uses ESG data alongside traditional financial analysis to build a more complete picture of risk and opportunity. It is the most widely practised responsible investment approach globally.
ESG Rating
An ESG rating is an assessment of a company's exposure to and management of environmental, social, and governance risks and opportunities. Provided by agencies such as MSCI, Sustainalytics, and S&P Global, ESG ratings aggregate data from corporate disclosures, news sources, and stakeholder reports. Ratings are used by investors to screen, compare, and evaluate companies on sustainability performance.
Ethical Supply Chain
An ethical supply chain is one in which all participants – from raw material suppliers to final distributors – operate in compliance with environmental, social, and governance standards. This includes fair labour practices, safe working conditions, environmental responsibility, and anti-corruption measures. Managing ethical supply chains requires ongoing due diligence, auditing, and supplier engagement.
EU Taxonomy
The EU Taxonomy is a classification system establishing a list of environmentally sustainable economic activities based on science-based technical screening criteria. It provides a common language for investors, companies, and policymakers to determine which activities can be considered genuinely sustainable. Activities must substantially contribute to at least one of six environmental objectives without significantly harming the others.
G
Green Bond
A green bond is a fixed-income financial instrument specifically earmarked to raise capital for projects with environmental benefits, such as renewable energy, clean transport, or sustainable water management. Green bonds follow established standards like the ICMA Green Bond Principles and increasingly the EU Green Bond Standard. They provide investors with a way to finance the transition to a low-carbon economy.
Green Building
Green building refers to the practice of designing, constructing, and operating buildings in a way that reduces their environmental impact and enhances occupant health. This includes energy efficiency, water conservation, sustainable materials, and indoor air quality. Green building certifications like LEED and BREEAM provide standardised benchmarks.
Greenwashing
Greenwashing is the practice of making misleading or unsubstantiated claims about the environmental benefits of a product, service, or company practice. It can range from vague or irrelevant green claims to outright fabrication of environmental credentials. Greenwashing undermines consumer trust and diverts resources from genuinely sustainable alternatives.
GRI (Global Reporting Initiative)
The Global Reporting Initiative (GRI) is an independent international organisation that provides the world's most widely used standards for sustainability reporting. GRI Standards help organisations report on their economic, environmental, and social impacts in a structured, comparable way. The framework emphasises stakeholder inclusiveness and materiality.
I
Impact Investing
Impact investing refers to investments made with the intention of generating positive, measurable social or environmental impact alongside a financial return. It spans asset classes including private equity, debt, and public equities, targeting outcomes aligned with the SDGs. Impact investments are distinguished from ESG integration by their explicit intentionality and impact measurement requirements.
ISO 14001
ISO 14001 is an internationally recognised standard for environmental management systems (EMS) published by the International Organization for Standardization. It provides a framework for organisations to systematically manage their environmental responsibilities, reduce waste, and improve resource efficiency. Certification requires third-party auditing and ongoing compliance.
ISSB (International Sustainability Standards Board)
The International Sustainability Standards Board (ISSB) was established by the IFRS Foundation to develop a global baseline of sustainability disclosure standards for the capital markets. Its inaugural standards, IFRS S1 (General Requirements) and IFRS S2 (Climate-related Disclosures), consolidate and build upon TCFD, SASB, and other frameworks. The ISSB aims to create consistency and comparability in sustainability reporting worldwide.
L
LEED (Leadership in Energy and Environmental Design)
LEED is a globally recognised green building certification system developed by the US Green Building Council. It provides a framework for healthy, efficient, and cost-saving buildings across several categories including new construction, interiors, and operations. Projects earn points across categories such as energy, water, materials, and indoor environmental quality to achieve certification levels from Certified to Platinum.
Life Cycle Assessment
Life Cycle Assessment (LCA) is a systematic methodology for evaluating the environmental impacts of a product, process, or service throughout its entire life cycle. This includes raw material extraction, manufacturing, distribution, use, and end-of-life disposal or recycling. LCA helps identify the most significant environmental hotspots and improvement opportunities.
Living Wage
A living wage is the minimum income necessary for a worker to meet their basic needs, including food, housing, healthcare, and education, in the location where they live. It typically exceeds statutory minimum wages and is calculated based on local cost-of-living data. Paying a living wage is increasingly seen as a marker of responsible business practice.
N
Nature-Based Solutions
Nature-based solutions are actions that protect, sustainably manage, or restore natural ecosystems to address societal challenges such as climate change, biodiversity loss, and disaster risk. Examples include reforestation, wetland restoration, and sustainable agriculture. They provide co-benefits for both people and biodiversity.
Net Zero
Net zero refers to achieving a balance between the greenhouse gases emitted into the atmosphere and those removed from it. This means reducing emissions as much as possible and offsetting any remaining emissions through carbon removal projects. The goal is to limit global warming to 1.5°C above pre-industrial levels.
S
SASB (Sustainability Accounting Standards Board)
SASB provides industry-specific sustainability disclosure standards designed to help companies communicate financially material sustainability information to investors. Now part of the IFRS Foundation, SASB standards cover 77 industries across five dimensions: environment, social capital, human capital, business model, and leadership. They focus on the subset of ESG issues most likely to affect financial performance.
SBTi (Science Based Targets initiative)
The Science Based Targets initiative (SBTi) provides companies with a clearly defined pathway to reduce greenhouse gas emissions in line with the goals of the Paris Agreement. It validates corporate emission reduction targets against climate science to ensure they are ambitious enough. SBTi targets cover Scope 1, 2, and increasingly Scope 3 emissions, with a net-zero standard for long-term decarbonisation.
Scope 1 Emissions
Scope 1 emissions are direct greenhouse gas emissions from sources owned or controlled by an organisation. These include emissions from on-site fuel combustion, company vehicles, and industrial processes. They are the most straightforward emissions for a company to measure and reduce.
Scope 2 Emissions
Scope 2 emissions are indirect greenhouse gas emissions from the generation of purchased electricity, steam, heating, and cooling consumed by the reporting organisation. They occur at the facility where the energy is generated, not where it is consumed. Companies can reduce Scope 2 emissions by switching to renewable energy sources.
Scope 3 Emissions
Scope 3 emissions are all indirect greenhouse gas emissions that occur in a company's value chain, both upstream and downstream. They include emissions from purchased goods, business travel, employee commuting, waste disposal, and use of sold products. For most companies, Scope 3 represents the largest share of their total emissions.
SDGs (Sustainable Development Goals)
The Sustainable Development Goals are 17 interconnected global goals adopted by all UN Member States in 2015 as a shared blueprint for peace and prosperity for people and the planet by 2030. They address challenges including poverty, inequality, climate change, environmental degradation, and injustice. Organisations increasingly map their ESG strategies and impacts to specific SDGs.
Social Impact
Social impact refers to the significant positive or negative effects that an organisation's activities have on the well-being of communities and society at large. It encompasses outcomes related to health, education, employment, equity, and quality of life. Measuring social impact helps organisations understand and communicate their contribution to societal progress.
Social Licence to Operate
Social licence to operate (SLO) refers to the ongoing acceptance and approval of an organisation's activities by its stakeholders and the broader community. Unlike formal regulatory permits, an SLO is earned through trust, transparency, and demonstrated benefit to society. Losing social licence can result in protests, boycotts, regulatory intervention, and reputational damage.
Stakeholder Engagement
Stakeholder engagement is the systematic process of identifying, consulting, and involving individuals or groups that affect or are affected by an organisation's decisions and activities. It includes employees, customers, investors, communities, regulators, and civil society. Effective engagement is two-way, transparent, and ongoing rather than a one-off consultation.
Frequently asked questions
How are glossary terms selected?
Terms are selected based on relevance to ESG professionals, investors, and compliance teams. We cover regulatory frameworks, sustainability concepts, reporting standards, and emerging terminology.
How often is the glossary updated?
The glossary is regularly expanded with new terms as the ESG landscape evolves. We aim to cover 100+ terms across environmental, social, governance, frameworks, and finance categories.
Can I suggest a term?
Yes. Contact us with term suggestions and we will consider adding them to the glossary.
Are glossary definitions verified?
Definitions are written by ESG domain experts and cross-referenced with established standards bodies, regulatory frameworks, and industry publications.