ESG and sustainability glossary

Much of this vocabulary is defined text rather than description, and the wrong word can put a disclosure outside the standard it claims to follow. Each term below is the one its issuing body uses, grouped under five headings.

Standards and reporting frameworks

CSRD (Corporate Sustainability Reporting Directive)

The EU directive requiring companies in its scope to publish sustainability information inside their management report. Scope and dates are in our CSRD and ESRS guide.

ESRS (European Sustainability Reporting Standards)

The standards setting out what a company in scope of the CSRD discloses, datapoint by datapoint. Adopted by the European Commission and revised in 2026.

EFRAG

Technical adviser to the Commission on the ESRS. Its implementation guidance is what most reporting teams actually work from.

ISSB (International Sustainability Standards Board)

Issues the global baseline of disclosure standards: IFRS S1 for general sustainability-related financial disclosures, IFRS S2 for climate. Each applies once a jurisdiction adopts it.

GRI (Global Reporting Initiative)

The most widely used voluntary reporting framework, built on impact materiality and stakeholder inclusion. Reporting in accordance with GRI includes a content index.

TCFD and the SASB Standards

The climate recommendations most reporting still rests on, and the industry-specific metrics beside them. Both now sit under the ISSB.

Voluntary Standard (formerly VSME)

The proportionate standard for undertakings outside the scope of the CSRD: one data set instead of dozens of buyer questionnaires.

IFC Performance Standards

The framework lenders use to test how a project manages environmental and social risk. Our mining case study shows that subject matter in the field.

CDP

The global platform on which companies disclose climate, water security and forests data to investors and buyers, and are scored on it.

Climate and carbon

GHG Protocol

The accounting rules behind almost every emissions figure. They define organizational and operational boundaries, emission factors and the base year.

Scope 1, 2 and 3 emissions

Scope 1 is direct emissions from owned or controlled sources; scope 2 comes from purchased energy; scope 3 covers the rest of the value chain and is usually the largest.

Carbon footprint

Total greenhouse gas emissions caused directly and indirectly by an organisation, product or activity, in carbon dioxide equivalent (CO₂e). The company-wide account is a GHG emissions inventory.

Net zero

Cutting emissions as far as possible and balancing the remainder with removals. Credibility comes from a validated target, not from the claim.

SBTi (Science Based Targets initiative)

Validates corporate science-based targets against what the Paris Agreement requires. Its Corporate Net-Zero Standard defines what a net-zero target must contain.

Climate neutrality

The EU objective of balancing all greenhouse gas emissions with removals by 2050. Broader than carbon neutrality, which covers carbon dioxide alone.

Life cycle assessment (LCA)

The ISO 14040 method for assessing a product's environmental impacts across its whole life, from raw material to disposal. Assessment, not analysis.

Circular economy

An economic model that keeps resources in use, designs waste out and reuses and recycles products, in place of take, make, dispose.

Regulation and compliance

CBAM (Carbon Border Adjustment Mechanism)

Applies a carbon cost to carbon-intensive imports into the EU: cement, iron and steel, aluminium, fertilisers, electricity and hydrogen. Its definitive regime began on 1 January 2026.

Embedded emissions

The emissions released in producing an imported good, which a non-EU producer calculates and passes to its EU customer. Embedded, not embodied.

The European Green Deal

The policy package built around the EU objective of climate neutrality by 2050. CBAM, the CSRD and the EU Taxonomy sit beneath it.

The EU Taxonomy

The classification system defining which economic activities count as environmentally sustainable. An activity qualifies only if it does no significant harm to the other objectives.

Value chain cap

The statutory limit on what a CSRD reporter may require from a supplier with fewer than 1,000 employees. The ceiling is the Voluntary Standard.

Assurance engagement

Independent verification of reported sustainability information under ISSA 5000. Limited assurance is what the CSRD requires; reasonable assurance is closer to a financial audit.

TSRS (Turkish Sustainability Reporting Standards)

Mandatory standards in Türkiye, based on IFRS S1 and S2, with limited assurance from the first year. A European group with an operation there meets them on financial materiality.

KGK

The Public Oversight, Accounting and Auditing Standards Authority, which issues the TSRS. Our reporting service covers group and local obligations together.

Greenwashing

Exaggerated or unsupported claims that make sustainability performance look better than it is. As EU rules on environmental claims tighten, it is a compliance risk.

Materiality, stakeholders and social performance

Materiality

Whether a sustainability matter is significant enough to influence investor or stakeholder decisions. A defined term in IFRS S1 and ESRS 1: materiality, never importance.

Double materiality

Assessing a matter both for its effect on the company (financial materiality) and for the company's effect on people and the environment (impact materiality). The basis of the ESRS.

Material topics

The topics a materiality assessment finds significant, and what the report is built around. GRI 3 expects a prioritised list rather than a matrix.

Stakeholder engagement

Identifying the parties a company affects or is affected by, and taking their expectations into account through a documented process. A stakeholder is not a shareholder.

Affected communities

The people around an operation whose livelihoods, health, land or services it changes. A reporting topic under the ESRS and core to the IFC Performance Standards.

Value chain and supply chain

The value chain covers everything upstream and downstream, product use included; the supply chain is the supplier side alone. Scope 3 uses the wider one.

Human rights due diligence

Identifying, preventing and mitigating adverse human rights impacts in a company's own operations and value chain, including forced labour and child labour.

ESIA and ESDD

An impact assessment establishes a project's effects before it proceeds; due diligence tests an existing operation or transaction against lender requirements. Both on our due diligence page.

WEPs (Women's Empowerment Principles)

Seven principles for advancing gender equality at work, in the marketplace and in the community, from UN Women and the UN Global Compact.

SROI (Social Return on Investment)

A method expressing the social value a programme creates as a ratio against what was invested.

General concepts

Sustainability

Meeting the needs of the present without compromising future generations' ability to meet their own; in a company, managing environmental, social and economic performance together.

ESG (Environmental, Social and Governance)

The three-part frame against which a company's sustainability performance is assessed, and increasingly decisive in investment, lending and procurement decisions.

SDGs (Sustainable Development Goals)

The seventeen United Nations goals under the 2030 Agenda. Companies map programmes to them, which works only where the mapping is specific.

Biodiversity

The variety of species, genes and habitats in an ecosystem. Managing an operation's effect on nature is now a reporting topic and a condition of finance.