A-Z of ESG terms

Accountability

The act of being responsible for what an organisation does and being able to give a satisfactory reason for it, or the degree to which this happens.

Different types/levels of accountability are likely to be owed to a different group of interested parties depending on the entity involved. For example, a charity is likely to owe a higher degree of accountability to regulators, funders and those the charity seeks to serve. A listed company is likely to owe a higher degree of accountability to institutional investors, staff and suppliers.

Sports organisations might be accountable to a range of different stakeholders. These could include: participants and athletes, funders, fans and customers, national governing bodies, international federations, integrity bodies, regulators and others, depending on the areas of activity.

Adverse weather events

Adverse weather events, extreme weather or extreme climate events can include unexpected, unusual, severe, or unseasonal weather such as tornados, hurricanes or cyclones, blizzards, dust storms, floods, drought, hail and ice storms. Such events are generally seen as unusual and may adversely impact the way the public and business undertake their activities.

There is evidence to suggest that the frequency and intensity of some extreme or adverse weather events is increasing, globally and across the UK.

These can negatively affect an organisation’s business activity due to cancelled matches or events, the loss or degradation of the environment in which a particular sport may operate, as well as impact the comfort, safety, capability or motivation of athletes/participants, officials and spectators.

Here's more from the Met Office on extreme weather. 

Affordable and renewable energy

Renewable energy solutions are becoming cheaper, more reliable and more efficient (for instance, see article on Electricity from Renewable Energy Sources is Now Cheaper than Ever). Reliance on fossil fuels is unsustainable and harmful to the planet. Renewable energy sources include: solar energy from the sun; geothermal energy from the heat inside the earth’s core; wind energy; biomass from plants; hydropower from flowing water; tidal power; and hydrogen (see article on What Are the 7 Types of Renewable Energy?).

Affordable and renewable energy is the seventh goal of the UN SDGs (Affordable and clean energy: Ensure access to affordable, reliable, sustainable and modern energy for all).

Air Quality Index: AQI

AQI is a way of measuring air pollution. It combines the impact on air quality by differentiating between the impact of ozone, nitrogen dioxide and small particulate matter (such as soot) in the air.

AQI is not a standardised formula with different countries calculating air quality differently.

See ‘Pollution’ for more about air pollution.

Biodiversity

Biodiversity is the term given to describe the wide variety of all life on Earth. A biodiverse environment is seen as a positive aspect of the health of a given area, and a decline in biodiversity can be seen as a warning sign of environmental danger.

The fifteenth goal in the UN SDGs deals with the need to preserve biodiversity (Life on land: Protect, restore and promote sustainable use of terrestrial ecosystems, sustainably manage forests, combat desertification, and halt and reverse land degradation and halt biodiversity loss).

Biofuel

A source of renewable energy that is derived from plants and animals, such as wood pellets and waste by-products.

Biomass power

Bioenergy is renewable energy derived from an organic matter that comes from recently living plants and organisms. According to Smarter Business, Biomass can be used to create energy in several different ways, but the most common is combustion. This means burning agricultural waste or woody materials to heat water and produce steam.

Carbon budget

The total amount of carbon that can be released into the atmosphere before breaching agreed limits.

Carbon capture and storage (CCS)

An approach to capturing carbon dioxide emissions close to their source and locking them into a permanent environment that limits their risk of further polluting the air. 

Carbon capture utilisation and storage (CCUS)

Adds to the above by identifying a way to reuse carbon dioxide in more environmentally friendly ways, such as creating ‘green’ cement.

Carbon dioxide/CO2

The Center for Scientific Education defines Carbon dioxide as a colourless and non-flammable gas at normal temperature and pressure. Although much less abundant than nitrogen and oxygen in Earth's atmosphere, carbon dioxide is an important constituent of the air. A molecule of carbon dioxide (CO2) is made up of one carbon atom and two oxygen atoms.

Carbon footprint

An annual inventory of an organisation's greenhouse gas emissions.

Carbon leakage

The action or transferring activities that create CO2 to a country with less robust rules regarding carbon dioxide emissions.

Carbon neutral

Achieving a balance between the greenhouse gases put into the atmosphere and those taken out. This is different from ‘net zero’.

Carbon offsetting

Activity to compensate or balance out CO2 emissions into the atmosphere, such as the planting of trees or seagrass.

Carbon price

An artificial price that can be applied by either a tax or permit to carbon dioxide generating industries to incentivise businesses to reduce CO2 production and emissions. 

Carbon sequestration

The process of storing CO2 either naturally (in plants etc.) or through man-made carbon capture activities.

Charitable purposes

For an organisation to be recognised as a charity in the UK, it must generally have exclusively charitable purposes and provide public benefit. The definition of charitable purposes is different across the different jurisdictions of the UK. See:

• Charitable purposes England and Wales
• Charitable purposes Isle of Man
• Charitable purposes Jersey
• Charitable purposes Guernsey
• Charitable purposes Northern Ireland
• Charitable purposes Scotland

Charity trustee duties

Under charity law in England and Wales and in other jurisdictions of the UK, there are specific duties charity trustees must fulfil, as defined in charity and case law and regulations.

In England and Wales, the duties of charity trustees can be found in the Charity Commission’s CC3 - The essential trustee: what you need to know, what you need to do (CC3).

Guidance for charity trustees in Scotland can be found here.

Northern Ireland charity trustee guidance is here. 

Circular economy

A model of production and consumption which involves prolonging the use of materials and products for as long as possible. A circular economy can help to tackle climate change, biodiversity loss, waste and pollution through the better re-use and recycling of products and components of production.

Climate

Climate is the long-term pattern of weather in a particular area. A region's weather patterns, usually tracked for at least 30 years, are considered its climate. Climate can be different for discrete parts of the Earth.

Climate action

According to the United Nations Development Programme, climate action ‘means stepped-up efforts to reduce greenhouse gas emissions and strengthen resilience and adaptive capacity to climate-induced impacts, including: climate-related hazards in all countries; integrating climate change measures into national policies, strategies and planning; and improving education, awareness-raising and human and institutional capacity with respect to climate change mitigation, adaptation, impact reduction and early warning.’

It is the thirteenth goal of the UN SDGs (Climate action: Take urgent action to combat climate change and its impacts).

Climate change

The impact on the climatology and weather systems impacts local environments and the planet more widely. Climate change is often linked to the effects of global warming, though the impact of that change will differ according to a variety of factors. It is generally agreed that climate change is a real phenomenon exacerbated by human activity.

Climate Change Act 2008

UK legislation that detailed a number of actions and commitments, including:

• setting a target for the year 2050 for the reduction of targeted greenhouse gas emissions;
• providing for a system of carbon budgeting;
• establishing a Committee on Climate Change;
• conferring powers to establish trading schemes for the purpose of limiting greenhouse gas emissions or encouraging activities that reduce such emissions or remove greenhouse gas from the atmosphere;
• making provisions about adaptation to climate change;
• conferring powers to make schemes for financial incentives to produce less domestic waste and to recycle more of what is produced;
• provisions about the collection of household waste;
• powers to make provision about charging for single-use carrier bags; and
• miscellaneous provisions about climate change and for connected purposes.

Climate Disclosure Standards Board (CDSB)

An international consortium of business and environmental NGOs committed to advancing and aligning the global mainstream corporate reporting model to equate natural capital with financial capital. Has developed a framework for reporting environmental information to a similar degree as financial information for the benefit of investors.

For more on disclosure arrangements, see S for Standards.

Climate justice

According to Climate Just UK, climate justice refers to concerns about inequitable outcomes for different people and places associated with vulnerability to climate impacts and the fairness of policy and practice responses to address climate change and its consequences.

Climate litigation

Action taken by individuals, campaigns or groups against a government or company to reduce harmful activities, change government policy or improve disclosure. For example, Client Earth’s or the Friends of the Earth action against Shell in the Netherlands.

Climate resilience

The ability to anticipate, prepare for, and respond to hazardous events or disturbances (e.g. floods, extreme weather). Includes adaptation to climate change, resilience to adverse climate events, and community climate preparedness.

Climate scenario analysis

A recommendation in the TCFD for organisations to stress-test/scenario plan their resilience to a range of climate change situations.

Commonwealth Blue Charter

The Commonwealth Blue Charter is an agreement by all 54 Commonwealth countries to actively co-operate to: solve ocean-related problems; and meet commitments for sustainable ocean development.

Companies (Directors’ Report) and Limited Liability Partnerships (Energy and Carbon Report) 2018 Regulations

Regulations that introduced changes to the reporting requirements in the large and medium-sized companies and groups (Accounts and Reports) Regulations 2008 and in the Limited Liability Partnerships (Accounts and Audit) (Application of Companies Act 2006) Regulations 2008 (the LLP Regulations).

The amendments introduced new requirements on quoted companies to make statements in the directors’ report concerning the company’s energy use from its activities and action taken to increase its energy efficiency. Large unquoted companies also included to make statements in the directors’ report concerning the company’s greenhouse gas (GHG) emissions, energy use and action taken to increase energy efficiency within the UK.

However, these statements are not required where making the statement would be seriously prejudicial to the interests of the company or if the company has used a small amount of energy in the financial year to which the directors’ report relates.

The Companies (Strategic Report) (Climate-related Financial Disclosure) Regulations 2021

These Regulations came into force on 6 April 2022 and require traded and certain other companies to provide climate-related financial disclosures in their strategic report. There are some detailed requirements but, in general, a company having more than 500 employees or which has a turnover of more than £500 million is likely to fall within scope.

COP26 Declaration of Asset Owner Climate Expectations

A declaration founded by Friends Provident Foundation, Students Organising for Sustainability (SOS), the Charities Responsible Investment Network (CRIN) and the Responsible Investment Network Universities (RINU) to set out minimum standards of expectations regarding tackling climate change in the asset management industry. It offers eight minimum standards to be applied by organisations when considering asset manager appointment, reviews and re-appointments.

COP27

The 27^th conference of parties to the UN Framework Convention on Climate Change (UNFCCC – See U for more details) will take place in Sharm El-Sheikh, Egypt, on 7-18 November 2022. The event was moved back a year due to the travel restrictions and social distancing measures introduced because of the COVID-19 pandemic.

Corruption

Dishonest or fraudulent conduct by those in a position of power. Forms of corruption vary but can include bribery, lobbying, extortion, cronyism, nepotism, parochialism, patronage, influence peddling, graft, and embezzlement.

Corporate social responsibility: CSR

Refers to practices and policies undertaken by corporations intended to have a positive influence on the world. It is a means by which entities can be held to account for their social commitments.

Culture

The ideas, customs, values and social behaviour of a particular people or society. Organisational culture is the collection of values, expectations, and practices that guide and inform the actions of all those who work for or represent an organisation. It is possible for large entities to have more than one culture. 

The Chartered Governance Institute has developed a range of resources for different organisations to identify a healthy organisational culture:

• Academy Trusts
• Boardrooms
• Charities