Annual General Meeting (AGM)
A formal gathering of shareholders to conduct official business of a company.
Automation
Technology that performs tasks with minimal human assistance.
Best-in-class Investment
Selecting top companies based on ESG criteria.
Carbon Footprint
The total greenhouse gas emissions associated with a person, organization, product, or activity, usually measured in metric tons of CO₂ or CO₂-equivalents per year.
Circular Economy
An economic model focusing on reuse, recycling, and sustainability.
Climate Change Adaptation
Adjusting to actual or expected future climate events to increase resilience.
Climate Change Mitigation
Reducing sources of greenhouse gas emissions or enhancing natural sinks.
Climate Change
Changes in climate directly or indirectly attributed to human activity.
Engagement
Active process of dialogue with a company where the investor is seeking specific change.
Consumer Protection
Laws designed to protect the rights of consumers.
Digital Disruption
The impact of new digital technologies on existing goods and services.
Green Bonds
Bonds used in green finance for environmental-related products.
Impact Investing
Investments generating positive, measurable social and environmental impact.
Materiality
A factor that drives long-term financial value in ESG investing.
Product Liability
Legal responsibility for defective goods.
Social Investment
Capital allocated to assets addressing social challenges.
Transition Risk
Risks from climate and energy policy changes.
Strategic Asset Allocation
A long-term investment strategy with minimal short-term adjustments.
Stakeholder Capitalism
A business philosophy that prioritizes the interests of all stakeholders, employees, customers, communities, not just shareholders.
Social Auditing
The process of assessing a company’s social practices, particularly in supply chains, covering labor rights, health and safety, and human trafficking.
Responsible Banking
Banking practices that align lending and investment portfolios with environmental and social priorities.
Green Premium
The additional cost of choosing a clean or sustainable option over a cheaper, unsustainable one.
ESG Ratings
Third-party scores or rankings of a company’s ESG performance. Ratings can vary widely depending on methodology.
Adaptation Finance
Capital deployed to support climate change adaptation, like flood defense, climate-resilient infrastructure, and food security.
Biodiversity Risk
The potential financial and operational exposure resulting from the loss of biodiversity and ecosystem services.
Carbon Border Adjustment Mechanism (CBAM)
An EU policy tool that applies a carbon price to imports of carbon-intensive goods from countries with weaker climate rules; goal is to prevent carbon leakage and ensure imported goods face a similar carbon cost as those produced in the EU.
Carbon Intensity
The amount of carbon dioxide (CO₂) emitted per unit of economic output, energy, or revenue; key metric for measuring environmental efficiency and is used to compare emissions across sectors, countries, or products.
Decarbonization
The process of reducing carbon dioxide emissions from economic activities, especially energy production and industry.
Double Materiality
A concept recognizing that companies are affected by sustainability issues and also impact society and the environment.
Divestment
The process of selling off assets, particularly investments in companies or industries deemed unsustainable or unethical.
Environmental Justice
The fair treatment and involvement of all people regardless of race, color, or income with respect to environmental laws and policies.
Fiduciary Duty
A legal and ethical obligation for investment professionals to act in the best interest of their clients, including ESG factors.
Greenwashing
Making misleading or unsubstantiated claims about the environmental benefits of a product, service, or company practices.
Just Transition
A framework for ensuring that the move to a low-carbon economy is fair and inclusive, protecting workers and communities.
Net Zero
A state in which greenhouse gas emissions produced are balanced by those removed from the atmosphere.
Physical Risk (Climate)
Risks to assets, operations, or supply chains arising from acute or chronic physical impacts of climate change.
Principle Adverse Impacts (PAI)
Negative effects that investment decisions might have on environmental or social factors, as defined by EU regulation.
Proxy Voting
The exercise of shareholder voting rights on corporate matters, often including ESG issues, by proxy on behalf of investors.
Renewable Energy Certificates (RECs)
Tradable certificates that prove electricity has been generated from a renewable energy resource.
Scope 1, 2, and 3 Emissions
Scope 1: Direct emissions; Scope 2: Indirect emissions from purchased energy; Scope 3: All other indirect emissions in a company’s value chain.
Science-Based Targets
Greenhouse gas reduction goals aligned with climate science to keep global temperature increase below 2°C.
Social License to Operate
Ongoing acceptance or approval of a company’s activities by local communities and stakeholders.
Stewardship
Responsible management of investments, including active engagement and proxy voting, to promote long-term value and sustainability.
Stranded Assets
Assets that have suffered from unanticipated or premature write-downs, devaluations, or conversion to liabilities due to environmental or regulatory changes.
Sustainable Development Goals (SDGs)
A collection of 17 global goals set by the United Nations to address social, environmental, and economic challenges by 2030.
Task Force on Climate-related Financial Disclosures (TCFD)
An international framework providing recommendations for companies to disclose climate-related financial risks and opportunities.
Transition Finance
Financial products and services that help high-emitting sectors move toward lower-carbon business models.
Triple Bottom Line
A business framework that includes social, environmental, and financial performance, often summarized as “people, planet, profit.”
UN Principles for Responsible Investment (PRI)
A set of voluntary investment principles that encourage the integration of ESG factors into investment decision-making and ownership practices.
Value Chain Emissions
Greenhouse gas emissions produced across a company’s entire value chain, including upstream and downstream activities.
Abiotic Resources
Non-renewable natural resources (such as mineral resources and fossil fuels).
Boundary Problem
When regulation for one sector is tightened, business will shift to other sectors with less or no requirements.