FAQs

An ESG (Environmental, Social, Governance) rating measures a company's exposure and risk to ESG factors. There is a broad scale of ESG rating agencies, using non-harmonised ESG methodologies with which to score companies on their ESG performance. The ESG score any company is given can thus depend on the particular methodology used and can vary among the rating agencies. In the KnowESG Company Profiles section we have selected the three most prominent ESG metrics and ratings - Sustainalytics, Refinitiv, and MSCI - to showcase the sustainability performance of selected companies.

There are different ratings approaches simply because companies have different structures and needs, and no single ratings system adequately captures the full breadth of ESG information. At KnowESG, we are developing a comprehensive listing of not just major corporates, but also SMEs, to give you insight into where companies are making progress with ESG ratings from varying indices, and via the most recent company sustainability reports. Follow this link to start browsing.

Also known as socially responsible investing, sustainable investing, or impact investing. An ESG investor typically seeks a balance between the financial performance (ROI - return on investment) and the ESG performance of ESG funds, and ESG ratings play a significant role in evaluating companies' non-financial performance. Opting for an ESG investing vs. a 'non-ESG' stock also may not provide, in general, a huge difference in performance. In fact, both choices tend, on average, to perform similarly.

However, if that is the case, then it demonstrates how following an an ESG data-driven investment strategy, based on whichever ESG criteria or defined ESG risks, means that companies can continue to perform to expectations while actually doing measurable 'good', a purpose statement of shifting operations towards mitigating the issues associated with anthropogenic climate change.

Additionally, ESG strategy means investment choices that work over the long-term. Sustainable investing is just that, sustainable. It continues. Similarly, as companies build growth around ESG considerations, develop better ESG ratings and ESG targets, and place environmental, social, and governance investing at the heart of their corporate strategy, they will see compound growth across these areas that benefits the business, improves current investor relations and corporate structure, reduces risk, and attracts institutional investors and other stakeholders due to increased stability.

Sustainable or green finance is the set of financial regulations, standards, norms and products that pursue an environmental objective, and in particular to facilitate the energy transition. It allows the financial system to connect with the economy and the population by financing its agents while maintaining a growth objective. The long-standing concept is promoted with the adoption of the Paris Climate Agreement, which stipulates that parties must make "finance flows consistent with a pathway towards low greenhouse gas emissions and climate-resilient development."

There is plenty of discussion about what merits 'sustainable', but it may be more helpful to visualise in terms of how much 'commitment' is overtly displayed towards climate mitigation initiatives. Check out below video demonstrating how, when tacked to the UN SDGs, we can at least categorise commitment, then scale it from 'financing' to 'philanthropy'.

The Sustainable Development Goals (SDGs) or Global Goals are a collection of 17 interlinked global goals designed to be a "blueprint to achieve a better and more sustainable future for all". The SDGs were set up in 2005 by the United Nations General Assembly and are intended to be achieved by 2030. Perhaps the most effective way to consider the SDGs in the context of business is that "all our jobs are now sustainability jobs".

The goals are necessarily comprehensive, distilled as far as possible to capture the fundamental range areas where sustainability must be implemented. This makes the SDGs indispensable for business, simply because they can always be used as a reference point where ESG strategies and priorities need to be made. The SDGs connect the overarching world of climate regulation, treaties and geopolitics, with the day-to-day of any kind of company. Check out the below video from the World Business Council for Sustainable Development (WBCSD).

Green bonds are fixed-income financial instruments that are used to fund projects that have positive environmental and/or climate benefits.

Generally, some aspect of the bond- interest rate or restrictive covenant - kicks in if a business (or another issuing party) does not meet its sustainability targets specified in the green bond. However, there is usually no financial consequence of not meeting the targets. Green bonds may carry tax incentives as well. In 2020, the total issuance of green bonds was worth almost $270 billion, according to the Climate Bonds Initiative, who have created a solid explainer video as shown below.

The framework for assessing the impact of the ESG practices of a company. And by impact, we also mean 'risk'. Environmental practices carry direct risk, such as polluting or degradation of habitat; indirect risks can be inaction or existing climate-related factors.

As part of an overall ESG strategy, companies can actively reduce resource use and emissions, improve current energy effectiveness, and switch to renewables to reduce environmental risks. Social practices carry reputation risk, especially if inaction or failure to address issues leads to poor public sentiment; regulatory risk is simply the violation of existing regulations, such as employee mistreatment, harassment, violation of working and hygiene conditions. Governance issues can be legal, financial, and reputational, and likewise follow when the regulations in place in these areas are abused, resulting in the potential for legal action, financial or reputational loss.

In reality, there are numerous mandatory and voluntary frameworks that are used in the context of ESG or sustainability reporting. Depending on the geography, type of organisation, or industry, several methodologies may apply. These could, for example, be commercial and specific, as with MSCI, or as overarching guidance, such as with the UN SDGs. See our summary below on the most relevant approaches to ESG reporting. We found below video helpful as an overview.

Global Reporting Initiative (GRI) Sustainability Reporting Standards are the most commonly accepted global standards for company sustainability reporting. GRI standards were developed to enable consistent reporting across companies and industries, providing clearer communication to stakeholders regarding sustainability matters and corporate governance. GRI standards are available for reporting across a wide range of ESG-related topics, ranging from anti-corruption practices to biodiversity and emissions.

The EU taxonomy for sustainable activities is a classification system established to clarify which investments are environmentally sustainable in the context of the European Green Deal. The aim of the taxonomy is to prevent greenwashing and to help investors make greener choices. It introduces disclosure under 6 criteria: climate change mitigation, climate change adaptation, the sustainable use and protection of water and marine resources, the transition to a circular economy, pollution prevention and control, and the protection and restoration of biodiversity and ecosystems. For a further walkthrough of the system, take a look at this Reuters explainer.

The Sustainable Finance Disclosure Regulation (SFDR) is a European regulation introduced to improve transparency in the market for sustainable investment products, to prevent greenwashing and to increase transparency around sustainability claims made by financial market participants. Here is a clear explainer on SFDR by Nordea Funds.

The Sustainability Accounting Standards Board (SASB) is a non-profit organisation, founded in 2011 in the US to develop sustainability accounting standards. SASB represents the ESG guidance framework that sets standards for the disclosure of financially material sustainability information by companies to their investors. It focuses on quantifying and reporting the outward material ESG issues, impacts and risks of an organisation's performance across 77 different industry standards, which are visualised graphically here. A quick, presentation-style overview helps define materiality and everything you concisely need to know on SASB here.

Headquartered in London, the Climate Disclosure Standards Board (CDSB) was a non-profit organisation working to provide material information for investors, stakeholders, and financial markets through the integration of climate change-related information into mainstream financial reporting. It formed a foundation for the Task Force for Climate-Related Financial Disclosures (TCFD) recommendations and sets out an approach for reporting environmental and social information in mainstream reports, such as annual reports, 10-K filings, or integrated reports. The International Financial Reporting Standards (IFRS) consolidated the CDSB in June 2022 to continue to supply high-quality climate and sustainability disclosures to global financial markets. An overview of this multi-pronged consolidation is available here.

The Task Force on Climate-Related Financial Disclosures (TCFD) provides information to investors about commercial risk management: what companies are doing to mitigate the climate risks; as well as be transparent about the way in which they are governed. It addresses how climate change might impact future financial performance and the organisation's ability to create value, and develops consistent disclosures for company use when advising investors and stakeholders. Check out this video by S&P for a concise overview of the TCFD final recommendations.

Integrated Reporting (IR) is a framework for corporate reporting in which corporate financial and sustainability information are integrated into one report. An integrated report includes material information about ESG strategy, governance factors, and a company's ESG performance.

As such, it is an important tool in improve the understanding of the relationship between financial and non-financial factors that determine a company's performance and how it creates sustainable value in the longer-term. Since IR sits at the core of a company's ability to define exactly how its ESG program is viable as both an operational direction as well as its bottom line, the International Integrated Reporting Council (IIRC) explains everything you need to know.

Principles for Responsible Investment (PRI) is a UN-supported international network of investors founded in 2006, working together to implement its six principles:

• Principle 1: We will incorporate ESG issues into investment analysis and decision-making processes.

• Principle 2: We will be active owners and incorporate ESG issues into our ownership policies and practices.

• Principle 3: We will seek appropriate disclosure on ESG issues by the entities in which we invest.

• Principle 4: We will promote acceptance and implementation of the Principles within the investment industry.

• Principle 5: We will work together to enhance our effectiveness in implementing the Principles.

• Principle 6: We will each report on our activities and progress towards implementing the Principles.

A sustainable crypto currency is one with low energy consumption and a minimal carbon footprint. It doesn't require vast amounts of energy to power its transactions and is constantly working on reducing its environmental impact. The community of such a currency is dedicated to organising various eco-initiatives. In practical terms, this means guaranteeing that the energy sources used to power the algorithms for 'mining operations' are renewable. In 2020, Bitcoin activities alone used more energy than Argentina, underlining how the quest to digitise and securitise our financial world comes in the guise of a gold rush fueled by fossils. The World Economic Forum (WEF) has a helpful piece on this, with links to further reading.

Clean technology, in short cleantech, refers to any technological solutions developed with the goal to reduce negative environmental impacts. The term typifies a growing class of 'green' technologies, such as renewables (solar, wind, tidal, hydro, geothermal, etc.), biofuels, resource-saving solutions, and many, many more emerging approaches.

Perhaps it's more logical to consider 'clean', and that it denotes how the vast majority of industrial processes and technologies we have developed to power our world and structure our societies have been overtly, environmentally destructive, thus 'dirty'. A quick explainer is available here.

With the growing use of the mantra "all our jobs are sustainability jobs", we can begin to envision how, whichever sector of the economy we operate in, there are always opportunities to improve things away from 'destructive' to the paradigm of 'sustainable', and even better, 'restorative' or 'regenerative'.

To make things simple, we highly recommend that you start with the work that Project Regeneration is driving, its Nexus initiative details the breadth of clean technologies and clean approaches that are experiencing both huge evolution and investment.

Similar to cleantech, ESG tech solutions reduce negative environmental impact. The notional difference is that they also offer solutions under the other two pillars of ESG - social & governance. As such, ESG tech products and services can offer solutions in the areas of governance reporting, cybersecurity, diversity, access to finance, access to healthcare, etc.

'Technology' can mean more than digital, writing systems are 'technologies' too, as are methods of communication, and the rules that govern interactive processes are all 'technology'. In this sense, 'ESG Tech' can denote the systems we develop to track and capture the progress we make in the transition to sustainability and beyond. In this sense, ESG Ratings systems are also 'tech'.

The definition of 'ESG Tech' should remain open to interpretation, so that each of us can define it as befits our particular circumstances. The point is that our global, civilisational, cultural and economic systems begin to incorporate such technological aspects, so that we re-orient away from our current, destructive approaches, towards regenerative models of interaction. Again, follow both Project Regeneration and also Project Drawdown to get a wide-lens view of the sheer diversity of creative energy that is driving real change in ESG Tech.

The Paris Agreement, also referred to as the Paris Accords of the Paris Climate Accords, is an international treaty on climate change adopted in 2015. It covers climate change mitigation, adaptation, and finance. Its objective is to limit the global temperature increase in this century to below 2 degrees Celsius above pre-industrial levels, and to work toward limiting the increase to 1.5 degree Celsius.

Specifically, the Agreement provides several key action points: 1. Substantially reduce global greenhouse gas emissions to limit the global temperature increase in this century to 2 degrees Celsius while pursuing efforts to limit the increase even further to 1.5 degrees; 2. Review countries’ commitments every five years; 3. Provide financing to developing countries to mitigate climate change, strengthen resilience and enhance abilities to adapt to climate impacts. Read more on the Paris Agreement here.

ESG reporting refers to the practice of publicly reporting a company's environmental, social, and governance (ESG) performance and initiatives. ESG reporting typically includes information on a company's environmental impact, such as greenhouse gas emissions and waste management, as well as its social impact, such as labour practices and community engagement. Governance-related factors, such as board composition and executive compensation, may also be included in ESG reporting. The purpose of such ESG initiatives and reporting is to provide transparency and accountability to stakeholders, such as investors and customers, regarding a company's sustainability and responsible business practices.

Renewable energy is energy generated from natural, renewable resources that are replenished over time, such as sunlight, wind, water, and geothermal heat. Renewable energy is considered clean and sustainable because it does not emit greenhouse gases and does not deplete natural resources.  Investing in renewable energy can help reduce dependence on fossil fuels and contribute to a low carbon economy.

ESG reporting includes information about a company's investments in renewable energy, as well as the potential environmental and social impacts of those investments. Companies may also include information about their efforts to reduce emissions from their operations, shift to cleaner production methods, or implement energy efficiency policies by using renewable resources.

A carbon footprint is a measure of the total amount of greenhouse gas emissions (primarily carbon dioxide) produced by an individual, organisation, event, or product, expressed in equivalent tons of CO2. A carbon footprint is calculated by considering all emissions from sources such as burning fossil fuels for transportation and electricity, industrial processes, and deforestation. The total emissions are then compared to a standardised unit of measurement, such as a tonne (1,000 kilograms) of CO2. By understanding and reducing an organiation's carbon footprint as part of effective ESG practices, companies can become more sustainable and reduce their environmental footprint.

Greenwashing occurs when a company or organization attempts to portray itself as environmentally friendly or using sustainable practices, while doing nothing to minimise its environmental effect, all while its actions harm the environment. It is essentially a marketing technique aimed at creating an illusion of ecological and ethical responsibility, of claiming ESG standards as part of a greater sense of corporate social responsibility.

Companies may use greenwashing to make their operations seem more environmentally conscious than they actually are. Examples of greenwashing include: advertising a product as 'green' without proof of being so; making unsubstantiated claims about environmental benefits; or using misleading labels and packaging to imply environmental friendliness.

Climate adaptation involves adjusting to to both the current and projected impacts of climate change. The objective is to lessen our vulnerability to the negative consequences of climate change. It also includes making the most of any potential beneficial opportunities associated with climate change.

Examples of adaptation strategies include improving infrastructure, increasing water storage and efficiency, managing land use to increase resilience to climate change, and investing in renewable energy sources. Adaptation also requires us to consider the possible impacts of extreme weather events like floods and storms, as well as long-term changes in temperature and precipitation patterns.

Climate mitigation involves reducing the flow of heat-trapping greenhouse gases into the atmosphere, either by reducing sources of these gases or enhancing the ‘sinks’ that accumulate and store these gases. Mitigation might include employing new technologies and renewable energies, retrofitting aging equipment to be more energy efficient, or modifying management procedures and customer behaviour.

By reducing the sources of GHG emissions, it may be possible to slow down global heating to a certain extent, opening up the time required to develop more resilient mitigation strategies. Since mitigation activities are necessarily ESG activities, most companies can, with ESG-led thought leadership, create socio-economic benefits by creating jobs and improving public health, while involving stakeholders in business issues related to climate and reducing exposure to climate risks.

‘Net zero’ is a term used to describe a balance between the amount of emissions produced and the amount removed from the atmosphere. It means achieving a state where the emissions of greenhouse gases are equal to the amount removed or offset, resulting in no net increase in the concentration of greenhouse gases in the atmosphere. Achieving net zero emissions is a key goal of reducing global warming, as it ensures that international collaborative progress is being made that defines measurable impact, and ultimately that regulatory bodies are effective in implementing the legal requirements to accurately monitor a company's operations.

The greenhouse effect is a natural process that occurs when certain gases in the Earth's atmosphere, known as greenhouse gases, trap and retain heat from the sun. These gases, including carbon dioxide (CO2), methane (CH4), and water vapor (H2O), act like the glass walls of a greenhouse, allowing sunlight to pass through while trapping heat inside. This natural process helps to keep the Earth's surface warm and habitable, with an average temperature of around 59°F (15°C). However, human activities that release large amounts of greenhouse gases, particularly CO2 from the burning of fossil fuels, are causing an increase in the concentration of these gases in the atmosphere, leading to an enhanced greenhouse effect and resulting global warming.

Diversity, Equity, and Inclusion (DEI) refers to the attitudes, beliefs, values, and behaviours that promote respect, fairness, and equal treatment for all individuals, regardless of their race, ethnicity, gender, sexual orientation, age, ability, or any other ‘protected characteristics’. A positive DEI climate fosters a sense of belonging, transparently upheld tolerance of racial diversity, and encourages individuals to bring their authentic selves to the workplace, creating a more inclusive and diverse environment. Positive DEI indicates that business leaders put human rights, not just 'Human Resources', at the centre of business issues.

ESG funds are investment funds that prioritise companies with strong environmental, social, and governance (ESG) and financial performance. These funds seek to achieve both financial returns and positive social or environmental impact by investing in companies that are deemed to have sustainable and responsible practices. ESG funds are seen as a way for investors to show their support for public companies that promote diversity, inclusion, and ethical practices. They also provide an opportunity for investors to diversify their portfolios and reduce risk while investing in companies with strong DEI initiatives.

Ultimately, they offer a way to make positive investments that align with the investor’s values. ESG funds can also be beneficial to companies, as they are often rewarded with above-average returns and better access to capital. By investing in businesses that meet certain criteria for sustainability or corporate responsibility, investors can help those businesses evolve their existing frameworks to become more accountable and support greater transparency in corporate governance. Ultimately, this could lead to a positive impact on the world at large.

The terms Scope 1, 2, and 3 refer to the various categories of carbon emissions. Scope 1 refers to direct emissions from controlled or owned sources while the indirect emissions from sources such as purchased electricity, heat, or cooling falls under Scope 2. Finally, emissions from the value chain, which includes sources like product use, suppliers etc., are referred to as Scope 3 emissions. 

The impact on the ecosystem caused by activities such as environmental changes, natural events, and human actions is referred to as biodiversity impact. Such incidents can be categorized into positive and negative impacts. Conservation efforts intended to restore habitats fall under positive impacts while activities like pollution and deforestation fall under negative impacts. The impact adversely affects jobs that rely on natural resources and food security, among others. 

An economy that focuses on not just using but also reusing and recycling materials as a way to reduce waste and its impact on the environment. Using a three-step process that includes repair, refurbishment, and recycling, it attempts to use materials for the longest time. As a result, we are able to preserve natural resources and minimize carbon emissions.

When organizations take the onus of the impact their activities have on the environment, society, and the economy, it sums up the essence of Corporate Social Responsibility (CSR). In terms of the activities that fall under CSR, we can include the following:

• Lowering carbon emissions

• Implementing impartial labor practices

• Advocating ethical business operations

Organizations need to recognize, prevent, and handle any issues that are likely to adversely impact people’s rights. To that end, the process they follow is known as Human Rights Due Diligence (HRDD). In other words, they examine the risks involved and incorporate appropriate measures to resolve those issues. All in all, they attempt to ensure that humans and their rights are protected in their operations and supply chains. Core issues that fall under HRDD include providing safe working conditions, fair wages, and freedom from discrimination. 

Board Diversity refers to the inclusion of a range of people from varied backgrounds, experiences, and views on an organization’s board of directors. Diversity refers to differences in terms of ethnicity, gender, skills, age, and professional experiences. With varied opinions, the board can help the organization enhance innovation, corporate governance, and make better decisions.

The term indicates an organization’s willingness to share critical data concerning its finances, operations, and decision-making. Transparency indicates honesty and clarity while disclosure indicates the openness in terms of sharing information concerning sustainability efforts, financial reports, and business risks. The process is crucial to build a level of trust among practitioners, customers, investors, and the general public. 

An assessment that focuses on pointing out the most significant Environmental, Social, and Governance issues that are likely to affect an entity and its stakeholders. The aim of the analysis is to help organizations determine and concentrate on sustainability and reporting priorities. 

Global environmental concerns such as biodiversity loss, climate change, and pollution need to be addressed through rules, policies, and cooperation. The collection of policies, rules, and cooperation is the essence of Earth System Governance. Essentially, it aims to ensure that natural resources are used wisely so that future generations can use them for their benefit. It’s also important to add that the process includes organizations, communities, and governments working collectively to frame sustainable goals.

The Earth System Law provides a legal outline meant to deal with global environmental challenges by recognizing the integrated nature of human beings, nature, and the planet. While the intent is to frame laws that focus on a robust Earth for generations to come, it also works on preserving the ecosystem and controlling climate action, not to mention advocating worldwide sustainability.  

Green Taxonomy shares recommendations that organizations and investors can use to select projects focused on climate goals like lowering pollution levels or clean energy. Simply put, the system helps identify environmentally sustainable economic activities. 

The word ‘double’ here refers to two perspectives of sustainability: One, the impact of social and environmental issues on an organization and two, how, in turn, its activities impact the planet and its people. While helping companies make wise decisions and share reports on risks and responsibilities, it enables lucid and responsible corporate sustainability reporting.

Just Transition is a concept that focuses on making the transition to a greener economy just and inclusive by protecting communities, workers, and industries impacted by discontinuing the use of fossil fuels. It strikes a balance between environmental sustainability and economic and social justice by generating new jobs, reskilling workers, and providing adequate help to those in dire need. 

Refers to the process of enabling products to be manufactured and delivered using eco-friendly materials, minimizing waste, and lowering carbon emissions. The process ensures that the products delivered are ideal for the planet and its people. In the end, it creates a responsible and ethical supply chain that balances profits with sustainability.

Financial statements that throw light on an organization’s social and environmental impact over and above the custom financial metrics. They present the real-world impact of activities such as employee well-being, carbon emissions, or community benefits, monetarily. 

Incorporating Environmental, Social, and Governance (ESG) factors into business and investment decisions. Organizations and investors analyze sustainability-related risks and opportunities like labor practices, climate change, and corporate ethics. In the end, the intent is to choose responsibly so that the society and financial performance are positively impacted. 

Sustainability-Linked Bonds refer to an investment type where organizations raise money for the sole purpose of meeting certain sustainability goals such enhancing social impact or lowering carbon emissions. Coughing up higher interest rates is the consequence of failing to meet stipulated targets. 

While conventional influencers compel people to buy specific products, Deinfleuncing promotes the concept of mindful consumption so that people stay away from puffed-up and non-essential products. In other words, deinfluencers offer tips on what products to avoid so that consumers can contribute to less waste production, save more money, and advocate sustainability. 

The process by which an organization’s environmental and social impact is corroborated to establish their trustworthiness and authenticity is referred to as Sustainability Assurance. Through transparency and accountability, the process cultivates trust among customers, investors, and stakeholders. 

ESG Activism refers to the process by which consumers, investors, and advocacy groups drive organizations to get their acts together in terms of ESG practices. They (organizations) may be instructed to implement measures concerning anything from fair labor conditions, ethical leadership, or climate change. Organizations are pulled up to incorporate the necessary changes through measures like shareholder voting, public campaigns, and policy advocacy. 

Science-Based Targets (SBTs) refer to company-set goals intended to lower its greenhouse gas emissions to align with scientists’ recommendations, for the sole purpose of reducing global warming. These targets pave the way for organizations to attain carbon emission levels that support global climate goals, akin to those outlined in the Paris Agreement. Overall, SBTs help companies take appropriate actions toward achieving sustainability. 

Analyzing and augmenting the environmental and social ramifications of a business or investment can be termed Impact Management and Measurement (IMM). It involves a gamut of processes from tracking progress to measuring outcomes to making decisions backed by data, serving to optimize positive impact. IMM helps entities ensure their activities benefit people and the planet. 

The approval an organization needs from stakeholders and the community to operate its business. While it is not a legal permit, it does serve as a token of acceptance arising out of behaving in a responsible manner, reducing environmental harm, and respecting the locals. Should an entity not possess it, they are likely to encounter protests and boycotts, leading to severe damage to its name and reputation. 

Regenerative Agriculture refers to a farming methodology that augments biodiversity, combats climate change, and revives soil health, using a range of measures such as cover cropping, crop rotation, and very little tilling to enhance the land quality. Eventually, the goal is to manufacture food that serves future generations as well as the environment. 

Using electrolysis, the hydrogen that is produced using renewable energy such as wind or solar power, is referred to as Green Hydrogen. Interestingly, it is not just the cleanest form of hydrogen but also combats climate change. 

On the other hand, Blue Hydrogen is produced from natural gas; however, its carbon emissions are secured and stored to minimize environmental harm. 

When individuals and organizations make up for their carbon emissions by supporting projects focusing on either lowering or doing away with carbon levels from the atmosphere, it is known as Carbon Offsetting. This can be done by taking certain measures such as investing in clean energy, planting more trees, or securing carbon from the air, hoping that the removal of carbon will help in combating climate change. 

Carbon Neutrality seeks to attain a balance between a quantity of carbon dioxide released into the atmosphere with that of an equal amount  removed from the environment. Organizations and individuals perform this in two ways: One, by lowering the amount of carbon dioxide they emit and two, participating in reforestation or green energy projects. The aim is to attain a net-zero carbon footprint and contribute to climate change.

Products that reveal data on the quantity of carbon emissions produced while it is being manufactured, transported, and used is referred to as Carbon Labelling. It conveys an important lesson to customers in terms of being aware of the environmental impact of the products they buy. The intent is to motivate businesses to lower their carbon footprint while helping customers select more sustainable products. 

Permits allowing organizations to emit a specific amount of carbon dioxide into the environment are known as carbon credits. Companies that are successful in emitting less than the permitted limit have the freedom to sell extra credits to those entities that have gone beyond stipulated limits. In a word, carbon credits drive organizations to invest in cleaner technologies and lower their carbon footprint as a way to combat climate change. 

The quantity of carbon dioxide and greenhouse gases emitted by organizations is measured and tracked so that they can be aware of how much they are emitting and find ways to curtail or lower their emissions. The entire process is known as Carbon Accounting and it is critical from the perspective of reporting sustainability goals, meeting climate goals, and making more environmentally-conscious decisions. 

A process whereby an organization uses its own supply chain to lower or remove carbon emissions from the environment instead of balancing them out elsewhere. Some measures that fall under its scope include enhancing farming practices, planting trees on land owned by the entity, or even using green energy for production purposes. 

Efforts made to remove or lower carbon dioxide emissions from transportation, industries, and energy sources forms the essence of decarbonization. The solution involves transitioning to cleaner energy sources such as solar, wind, and electric vehicles and augmenting energy efficiency. In the end, the aim is to reduce the pace of climate change and move toward a more sustainable future. 

When money is borrowed for the sole purpose of funding environmentally-friendly or sustainable projects, we refer to it as a Green or Sustainable Loan. Projects could relate to energy-efficient buildings, clean energy, or initiatives focused on lowering pollution levels. Organizations take the help of these loans to participate in eco-friendly projects and meet financial goals.

A substitute to conventional jet fuel, Sustainable Aviation Fuel (SAF) is produced from clean energy sources such as waste oils, algae, or plants. It has two positive impacts on the environment: One, it lowers carbon emissions while making air travel more environmentally-safe, and two, its impact on climate change is minimal. 

Investing money into projects or organizations that are environmentally-safe while benefiting the society and involving ethical business practices is termed Sustainable Investing. To facilitate decision-making, investors take into account factors like fair labor conditions, green energy, and responsible governance because the aim is to earn profits and simultaneously ensure a secure future for the earth and its inhabitants. 

The extent to which an organization is able to manage the risks associated with Environmental Social Governance (ESG) can be referred to as ESG Risk Ratings. The rating is inversely proportional to the adeptness of an organization to handle ESG issues. In other words, if it has a low rating, it is more equipped to deal with the issues in question and vice versa. Finally, instances of such risks could include dire working conditions, pollution, and weak corporate ethics.

An action plan by the European Union to drive organizations and investors to support projects that are environmentally safe and socially responsible. This includes setting guidelines to channel funds toward more sustainable activities such as green energy and climate-friendly companies. The aim is two-fold: To achieve a greener economy and combat climate change at the same time. Under the plan, some core activities include setting green investment regulations, generating sustainability reporting with clarity, and setting stringent rules for financial institutions to take into account environmental and social risks.

The responsible use of natural resources to ensure their availability for future generations is termed Environmental Sustainability. Lowering of carbon emissions, preserving water, and reducing waste generation are some of the core measures it focuses on.

Preserving and protecting the environment through accountable actions is referred to as Environmental Stewardship. The process is implemented by organizations, governments, and individuals, through measures like restoration of habitats, reforestation, and prevention of pollution. 

To demonstrate their financial health and risk management practices, banks in the European Union (EU) are required to share certain reports referred to as EBA Pillar III Disclosures. The European Banking Authority (EBA) frames these rules, which include data concerning credit risks, a bank’s capital, and risks associated with environmental, social, governance factors. The objective is three-fold:

• Augment transparency

• Assist investors and regulators in analyzing financial stability 

• Ensure responsible risk management by banks

Products associated with deforestation are prevented from being sold in the EU, courtesy of a law referred to as the European Union Deforestation Regulation (EUDR). In fact, according to the law, organizations need to share evidence that items comprising palm oil, coffee, soy, and wood have not been grown on land cleared of forests after December 31, 2020. In a nutshell, the objective is to reduce deforestation, preserve ecosystems, and combat climate change through the entry of only sustainable products into the EU market. 

An EU law necessitating companies to share reports on their environmental, social, and governance (ESG) impacts is referred to as the Corporate Sustainability Reporting Directive (CSRD). The law requires them to share clear and comprehensive data on concerns such as diversity, carbon emissions, and ethical practices. In the end, the law aims to assist stakeholders and investors in making decisions backed by concrete data and implement more responsible business practices. 

The United Nations Sustainable Development Group (UNSDG) comprises a group of UN agencies collaborating to help countries meet the Sustainable Development Goals (SDGs) that may include eradication of poverty, advocating equality, and preserving the environment. By providing resources, support, and knowledge  to companies and governments all over the world, they aim to work toward a greener, more sustainable, and equitable future for everyone.

Global Reporting Initiative is an entity sharing rules and regulations which throw light on how organizations should report their environmental, social, and economic impacts. These standards are beneficial because organizations gain more clarity about issues such as labor rights, carbon emissions, and human rights. Ultimately, the idea is to help investors and customers comprehend organizations’ sustainability efforts and hold them responsible for any issues that might arise at any point. 

Supplier Diversity represents a concept that involves organizations working with a gamut of suppliers, which may include women-owned businesses, veterans, minorities, and underrepresented groups. The aim is three-fold and involves:

• Creating equitable opportunities 

• Supporting small-scale businesses

• Championing economic inclusion

An investigative process that looks into an organization’s involvement in social, ethical, or environmental issues comprising human rights violation, pollution, or corporate fraud is referred to as Controversies Research. The process is used by investors and stakeholders to analyze the risks  and decide if an organization incorporates responsible business practices. Eventually, it aims to help companies make data-driven decisions about investments and partnerships.