Dictionary

Acute Physical RisksRisk

Acute physical risks are defined as those that arise from short-term, extreme weather events such as cyclones, hurricanes, floods, and heatwaves. These risks can cause immediate and severe impacts on assets, operations, and supply chains

Basic Quantitative AssessmentClassification

A basic quantitative assessment uses high-level tools or frameworks that are typically publicly available and that identify the main risks and provide basic quantitative estimates of financial implications, but not a comprehensive coverage of company-specific operations and/or value chain and context and typically cover only a single scope, timeline, and scenario.

BiodiversityEnvironmental

The variety of life in the world or a particular habitat, often considered in ESG reporting for its connection to ecosystem services.

Carbon CalculatorClassification

A carbon calculator is a tool that measures the amount of greenhouse gas (GHG) emissions associated with a particular activity, product, or organization. It calculates the carbon footprint by quantifying the emissions of carbon dioxide (CO2) and other GHGs, such as methane (CH4) and nitrous oxide (N2O), using standardized methods and data.A carbon calculator can be used to:

Measure Scope 1, 2, and 3 emissions (direct, indirect, and value chain emissions)
Identify areas for emission reduction
Track progress towards emission reduction goals
Inform sustainable decision-making

Benefits: By using a carbon calculator, individuals and organizations can better understand their GHG impact and take steps to reduce their carbon footprint.

Carbon FootprintMetric

A measure of the amount of carbon dioxide emissions released into the atmosphere as a result of the activities of a particular company and its value chain. It represents an indirect indicator of the consumption of energy, products, and services and measures the amount of carbon footprint which corresponds to a company’s activities or products.

Chronic Physical RisksRisk

Chronic physical risks as those that arise from long-term changes in climate patterns, such as sustained higher temperatures, sea level rise, and changes in precipitation patterns. These risks can lead to gradual but significant impacts on assets, operations, and supply chains.

Dedicated Specialist StaffClassification

Dedicated specialized staff possesses formal E&S training and expertise in specific E&S areas and is solely responsible for addressing E&S activities.

ESGAcronym

Environmental, Social, and Governance – the three central factors used to measure the sustainability and ethical impact of an investment.

Fugitive EmissionsClassification

Fugitive emissions are unintended releases of gases or vapors from pressurized equipment, typically occurring through leaks in valves, seals, pipes, or storage tanks in industrial settings. These emissions often involve greenhouse gases or hazardous chemicals and can contribute to air pollution, climate change, and health risks. Common sources include oil and gas operations, chemical plants, refineries, and landfills.

Generalist StaffClassification

Generalist E&S staff have limited formal E&S experience and training, and are responsible for other buiness activities beyond E&S.

Green ProductsClassification

Products and services with a core function to positively contribute to environmental objectives such as: climate change mitigation, climate change adaptation, natural resource conservation, biodiversity conservation, and pollution prevention and control.

Greenhouse EffectClassification

The greenhouse effect is the process by which greenhouse gases trap heat in the Earth’s atmosphere, leading to an increase in global temperatures and contributing to climate change.

Greenhouse Gases (GHG)Classification

Greenhouse gases (GHGs) are gases that trap heat in the atmosphere, contributing to the greenhouse effect. The primary GHGs covered by the GHG Protocol include carbon dioxide, methane, nitrous oxide and hydrofluorocarbons.

GreenwashingRisk

The act of misleading stakeholders into believing that a company’s products or practices are more sustainable than they truly are.

MaterialityConcept

The relevance of a sustainability issue to a company’s financial performance or stakeholders’ decision-making.

Net ZeroGoal

A state where a company or country’s greenhouse gas emissions are balanced by removals, resulting in no net increase in atmospheric GHGs.

Physical RisksRisk

Physical risks, such as extreme weather events and natural disasters, can disrupt supply chains, damage assets and infrastructure, and lead to increased operational costs for regular businesses.

Qualitative AssessmentClassification

A qualitative assessment only uses qualitative insights and sources to identify the main risks that a company faces, but such methods are generally unable to translate these risks into quantified financial exposure. These are often based on publicly available information like industry reports.

ScenariosClassification

Please note these transition scenarios are based on those set out in the International Energy Agency (IEA) World Energy Outlook Report (2022)

Scope 1Classification

Scope 1 emissions are direct greenhouse gas emissions that occur from sources that are owned or controlled by the company, such as company-owned vehicles and onsite fuel combustion.

Scope 2Classification

Scope 2 emissions are indirect greenhouse gas emissions associated with purchased electricity, heating, and cooling. For example, emissions from purchased electricity used to power operations are categorized as Scope 2 emissions.

Scope 3Classification

Scope 3 emissions encompass all other indirect emissions in a company's value chain, including those from purchased goods and services, business travel, and product disposal. For instance, emissions from the transportation of goods purchased by the company would be considered Scope 3 emissions. Additionally, emissions from employee commuting, upstream transportation of raw materials, and emissions from leased assets used by the company are all examples of Scope 3 emissions.

Sophisticated Quantitative AssessmentClassification

Sophisticated quantitative assessments thoroughly evaluate the company- and value chain-specific implications of transition risks using tailor-made solutions grounded in advanced climate models, and can compare different scopes, timelines and scenarios. Such solutions typically come from service providers and build on widely-used frameworks and sources like the NGFS and IPCC.

Stakeholder EngagementPractice

The process by which an organization involves people who may be affected by its decisions or can influence its implementation.

Transition RiskRisk

Transition risks are a specific category of climate risk facing the business community. Transition risks result from the relative uncertainty created by the global shift towards a more sustainable, net-zero economy. Examples of transition risks are regulatory changes and the devaluation of fossil fuel assets, as well as challenges posed by technological advancements like automation, necessitating substantial investments in workforce retraining.

Reference Standards

Navigating sustainability