When investors address concerns over environmental, social and governance (ESG) issues through voting or by engaging corporate managers and directors on them.
A group of securities (see below) with similar characteristics and subject to the same laws and regulations. There are three main asset classes: equities (stocks), fixed income (bonds), and cash or cash equivalents. Other asset classes can include real estate, commodities, futures, other financial derivatives and even cryptocurrencies.
In the context of sustainable finance, this refers to the assets or investments that are leaders in their sector in terms of ESG criteria.
The sustainable use of ocean resources for economic growth, improved livelihoods, and jobs while preserving the health of ocean ecosystems.
Investments dedicated to financing activities that contribute to ocean protection or improved water management.
The measurable variation in a physical, chemical, or biological variable of ocean ecosystems or water-related systems as expressed by a quantitative indicator.
A loan aligned with the Green Loan Principles, where proceeds are exclusively dedicated to activities that protect oceans or improve water management.
A debt investment in which an investor loans money to an entity for a defined period of time at a variable or fixed interest rate.
A sustainable investing strategy that uses a general sustainability policy or approach rather than a product-specific policy, such as the seven strategies listed by GSIA, or a combination of themCarbon finance: resources provided to a project to purchase reductions in greenhouse gases.
Trading systems where carbon credits are bought and sold, allowing companies or individuals to offset their greenhouse gas emissions.
Achieving net-zero carbon dioxide emissions, which can be achieved by either balancing emissions with the removal of carbon from the atmosphere, or eliminating carbon emissions entirely.
The purchasing of credits through carbon trading schemes or emissions reductions projects in order to reduce carbon emissions.
A tax or price applied to carbon pollution to encourage reductions in CO2 emissions and control warming temperatures.
A tax on the carbon content of fossil fuels to directly set a price on carbon.
The process of verifying that financial products meet specific environmental standards, often involving external reviews.
An economic system aimed at minimizing waste and making the most of resources by reusing, recycling, and repairing products.
Adjustments made to reduce vulnerability to the harmful effects of climate change while taking advantage of potential beneficial opportunities.
Efforts aimed at reducing greenhouse gas emissions and stabilizing climate systems to prevent significant human interference.
Financing drawn from various sources aimed at supporting actions that address climate change through mitigation and adaptation efforts.
Financial resources at the multilateral, bilateral or national levels aimed at addressing climate change, such as the Green Climate Fund, Adaptation Fund, Least Developed Countries Fund and Climate Investment Funds
The assessed risk of the probabilities and consequences of climate change impacts (e.g. the risk of potential financial losses caused by climate hazards)
A pathway to a climate-resilient economy, supported by policies and initiative.
A joint effort by individuals to pool money to support a wide range of activities, including social and environmental activities.
The obtainment of services, ideas or content from a large group of people, which also includes crowdfunding.
The 26th United Nations Climate Change Conference held in Glasgow from October to November 2021, focused on accelerating goals set out in the Paris Agreement.
Reducing the amount of carbon (e.g., carbon dioxide or methane) emitted from an agricultural, industrial, or other process.
The opposite of an investment, e.g. selling rather than buying an asset such as shares in a firm.
A concept requiring companies to report on both financial risks from sustainability issues and their own impacts on people and the environment.
A set of standards that should be upheld by companies to allow for socially responsible investments. Promoting ESGs will encourage greater investment.
A risk management framework for financial institutions to assess and manage environmental and social risks in projects.
The process of integrating Environmental, Social, and Governance (ESG) factors into investment practices.
Including ESG factors in investment analysis to manage risks better and improve returns.
An initiative aimed at advancing ESG information in credit markets by streamlining ESG reporting for private companies.
A stock or other security representing a share of ownership in a company.
Fuel that is formed from the decayed remains of plants or animals, such as coal and oil.
Investment strategies that intentionally consider gender equality in decision-making processes and outcomes.
An alliance of CEOs from major global financial institutions aiming to mobilize finance for sustainable development.
An organization providing a framework for businesses to report on their environmental and social impacts.
A metric used to identify whether banks are financing sustainable activities aligned with climate goals based on the EU taxonomy.
Fixed-income securities designed specifically for climate-related projects, encouraging investment with positive environmental impacts.
An enterprise whose actions do not negatively impact the environment while positively impacting society and the economy.
Qualities and actions that demonstrate a business’s commitment to environmental protection and sustainability.
Any financial initiative designed to protect the natural environment and support the transition to a sustainable, low-carbon world.
Loans specifically provided to finance or refinance projects that meet environmental sustainability criteria as defined by the Green Loan Principles (GLP).
Guidelines providing a consistent methodology for green loans across the market, ensuring transparency and accountability.
Mortgages offered at preferential rates for properties meeting certain environmental standards or for renovations improving sustainability.
Green tagging refers to a systematic process where banks
identify the environmental attributes of their loans and
underlying asset collateral as a tool for scaling up sustainable
finance.
This refers to the act of not making genuine sustainability
claims in case they may be associated with providers pursuing
misconduct.
The practice of misleading consumers about the environmental benefits of a product or service that does not meet basic environmental standards.
Investments made with the intention of generating positive social and environmental impacts alongside financial returns.
Overstating or falsely claiming an investment’s positive impact on society or the environment.
Implied Temperature Rise. A metric designed to show the temperature alignment of companies, portfolios, and investments with global temperature goals. Investors can use ITR to set targets that support decarbonisation and engage in climate risk management.
Measurable values used to assess how effectively a company is achieving its objectives, particularly in sustainability contexts.
Public finance (e.g. from international finance institutions) in the form of loans, risk guarantees, insurance or private equity, used to encourage private investors to back a project by reducing its perceived risk.
Risks to a business from legal prosecution related to climate and environmental claims that drive adaptation or mitigation practices.
The relevance of information based on its nature or magnitude concerning an entity’s financial reporting objectives.
A source of financial services for individuals or small businesses that lack access to traditional banking services.
Refers to natural elements providing valuable goods and services, including geology, soil, air, water, and all living things.
Achieving a balance between greenhouse gas emissions produced and removed from the atmosphere, requiring significant reductions in emissions.
The exclusion of certain sectors, companies, or projects due to not meeting ESG criteria.
Risks associated with physical changes to the climate such as property destruction or disruption of distribution networks.
Investment in sectors, companies, or projects that have invested highly in ESG factors relative to industry standards.
The process of withdrawing investments from carbon-intensive assets and reallocating them into more sustainable options.
These are a voluntary and aspirational set of investment
principles that offer a menu of possible actions for
incorporating ESG issues into investment practice.
Energy sourced from resources that are not depleted when used or are naturally replenished within a human timescale.
Investment practices that incorporate ESG factors into decisions while promoting long-term value creation. This should maximise gains and minimise the risks involved in new climate initiatives.
A tradable financial instrument with some type of monetary value; includes bonds, stocks and options
Greenhouse gas emissions are grouped into three scopes by the Greenhouse Gas Protocol.
Scope 1: Direct emissions from operations. These emissions are within control of companies and should be regulated.
Scope 2: Indirect emissions from purchased energy. Since these emissions have essentially been bought, they can be controlled through contractual agreements.
Scope 3: All other emissions associated with a company’s activities such as employees commuting, waste disposal, distribution etc.
This refers to the process of applying filters to lists of potential
investments, ruling borrowers/issuers in or out of contention for
investment based on an investor’s preferences, values or ethics.
Financing that supports actions that mitigate or address a social issue (e.g. affordable basic infrastructure).
An investment strategy that attempts to screen out investments in companies or industries that do not align with a client’s values (i.e. a negative screening process).
Adopted by the United Nations in 2015, the goals ultimately aim to provide a prosperous and peaceful life to everyone by 2030. There is also a focus on ending poverty and protecting the environment from harm. The 17 interconnected goals cover a wide range of areas which should provide a sustainable future for everyone.
The inclusion of economic, environmental and social factors in an organisation’s strategy, management, activities and operations; combined with the financing of sustainable economic, environmental and social objectives
A role responsible for overseeing sustainability initiatives within financial transactions or projects.
Specific objectives set within Sustainability Linked Loans that determine financial terms based on sustainability performance achievements.
Loans where economic characteristics can change based on whether predetermined sustainability performance objectives are met.
Guidelines outlining the framework for SLLs ensuring clarity on their characteristics and objectives.
A group aimed at improving climate-related financial reporting across sectors.
A classification system to help understand whether an economic activity is environmentally sustainable, such as the E.U. taxonomy for sustainable activities
An approach which focuses on ESG trends rather than specific
companies or sectors, enabling investors to access structural
shifts that can change an entire industry.
Financial support helping high-carbon companies implement long-term changes towards greener operations.
Business-related risks entities face during the transition to a low-carbon economy due to policy changes, market shifts, legal issues, etc.
A business strategy prioritizing people, planet, and profit equally to avoid exploitation of workers or the environment.
Markets where carbon credits are purchased, usually by organizations, for voluntary use rather than to comply with legally binding emissions reduction obligations.
