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Carbon credits
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Tradeable credits (representing 1 tonne of carbon dioxide equivalent) generated through voluntary emissions reduction activities. Carbon credits can represent emissions reductions achieved through either avoidance (preventing GHG emissions from entering the atmosphere) or removal (taking GHGs from the atmosphere). Carbon crediting mechanisms include those administered by international organisations (e.g. Kyoto Protocol (including the Clean Development Mechanism)), non-governmental organisations (e.g. Verra and Gold Standard) and governments.
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Carbon tax
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A fee levied by a government on covered entities for their GHG emissions, with the government setting the price of emissions (the tax rate).
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CBAM or carbon border adjustment mechanism
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A policy tool, first implemented by the EU, to address carbon leakage by imposing a fair price on carbon emitted during the production of carbon-intensive goods entering the relevant jurisdiction and to encourage cleaner industrial production in other jurisdictions.
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Circular economy or circularity
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An economic model that promotes a more efficient use of resources by applying the three guiding principles of reduce, reuse and recycle to create a circular value chain. This is a departure from the traditional linear economic model, which is based on a take-make-consume-dispose pattern. Examples of circular economy policy instruments include eco-design requirements, EPR schemes for waste and green public procurement.
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Comply-or-explain
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An approach to disclosure whereby a company must either report on a provision or, if it does not, provide considered reasons for not doing so.
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CSDDD
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The EU’s Directive on Corporate Sustainability Due Diligence (Directive 2024/1760) as amended from time to time.
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Double materiality
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An approach to disclosure which assesses materiality by reference to information that is necessary to understand the reporting entity’s impacts on sustainability matters (impact materiality) and sustainability matters that could reasonably be expected to affect its financial prospects (financial materiality).
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EPR or extended producer responsibility
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A policy tool in which a producer’s responsibility for a product is extended to the post-consumer stage of a product’s life cycle, thereby shifting the cost of end-of-life management from local institutions and consumers to the producers (“polluter pays” principle) and fostering a circular economy.
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ESG
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Environmental, social and governance.
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ETS or emissions trading system
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In an ETS, the government places a limit on the amount of GHG emissions from covered entities. Typically, entities must surrender emission units (or allowances) to cover their emissions within a compliance period. Each emission unit represents the right to emit a certain volume of emissions and can be traded between covered entities or sometimes with other traders. The carbon price in these systems is usually a function of supply and demand for emission units.
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EU
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The European Union.
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FY
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Financial year.
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GHG or greenhouse gas
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The seven greenhouse gases listed in the Kyoto Protocol: carbon dioxide; methane; nitrous oxide; hydrofluorocarbons; nitrogen trifluoride; perfluorocarbons; and sulphur hexafluoride.
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GHG Protocol
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Greenhouse Gas Protocol: A Corporate Accounting and Reporting Standard (2004).
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GRI
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Global Reporting Initiative, an international independent standards organisation founded by, amongst others, the United Nations Environment Programme, to develop sustainability reporting standards.
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GRI Standards
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A set of interrelated sustainability reporting standards that enable organisations to report publicly on their economic, environmental and social impacts and contribution towards sustainable development developed by the Global Sustainability Standards Board of the GRI.
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Human rights and/or environmental due diligence
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The process through which enterprises identify, prevent, mitigate and account for how they address their actual and potential adverse human rights and/or environmental impacts in their own operations and their value chain.
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IFRS S1
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General Requirements for Disclosure of Sustainability-related Financial Information published by the ISSB in June 2023.
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IFRS S2
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Climate-related Disclosures published by the ISSB in June 2023.
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IFRS S2 December 2025 Amendments
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Amendments to IFRS S2 issued by the ISSB in December 2025, including certain reliefs and clarifications to (amongst others) limit the measurement and disclosure of Scope 3 Category 15 GHG emissions to financed emissions and clarify the jurisdictional relief from using the GHG Protocol.
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IOSCO
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International Organization of Securities Commissions.
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ISSB
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International Sustainability Standards Board, an independent, private-sector body that was established by the International Financial Reporting Standards Foundation to develop globally consistent sustainability-related financial reporting standards.
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ISSB Standards
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IFRS S1 and IFRS S2.
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NDCs or nationally determined contributions
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National climate action plans of each country under the Paris Agreement, outlining how it plans to reduce GHGs to help meet the global goal of limiting temperature rise to 1.5ºC and adapt to the impacts of climate change. The Paris Agreement requires that NDCs are updated every five years.
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SASB
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Sustainability Accounting Standards Board, a non-profit organisation, founded in 2011 to develop sustainability accounting standards.
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SASB Standards
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Industry-specific sustainability disclosure standards developed by the SASB. Responsibility for the SASB Standards was assumed by the ISSB in August 2022.
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Scope 1 emissions
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Direct GHG emissions that occur from sources that are owned or controlled by the reporting entity.
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Scope 2 emissions
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Indirect GHG emissions from the generation of purchased or acquired electricity, steam, heating or cooling consumed by the reporting entity.
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Scope 3 emissions
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All indirect GHG emissions (not included in Scope 2) that occur in the value chain of the reporting entity, including both upstream and downstream emissions.
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Single materiality
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An approach to disclosure which assesses materiality by reference to sustainability matters that could reasonably be expected to affect the reporting entity’s prospects (financial materiality).
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TCFD
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Task Force on Climate-related Financial Disclosures, a task force created by the Financial Stability Board to improve and increase reporting of climate-related financial information. On October 12, 2023, the TCFD fulfilled its remit and disbanded, passing responsibility for monitoring the progress of companies’ climate-related disclosures to the International Financial Reporting Standards Foundation.
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TCFD Recommendations
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The recommendations of the Task Force on Climate-related Financial Disclosures issued by the TCFD in June 2017.
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tCO₂e
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Tonnes of carbon dioxide equivalent.
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TNFD
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Task Force on Nature-related Financial Disclosures, a market-led and government-supported initiative to develop a set of disclosure recommendations and guidance that encourage and enable businesses and finance to assess, report and act on their nature-related dependencies, impacts, risks and opportunities.
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Transition plan
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A transition plan is generally understood to be an aspect of a company’s overall business strategy that outlines its action plan to mitigate or adapt to climate-related risks for its transition towards a lower carbon economy, including actions such as reducing its GHG emissions.
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UNFCCC
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United Nations Framework Convention on Climate Change.
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