ESG 101: A glossary for businesses

ESG. GRI. CSRD. When it comes to the current conversations about sustainability and compliance, it’s natural if it all feels a bit like alphabet soup.  

So what is all the jargon surrounding the domain of Environmental, Social, and Governance (ESG), and what exactly do these key terms mean? We recently hosted a webinar on this very topic, but wanted to outline some of the terms discussed. Check out our ESG and Contracting Glossary below for help navigating the intersection of these two important topics. 

Carbon count – a metric used to quantify the amount of carbon dioxide emissions generated by an individual’s daily lifestyle choices. It takes into account activities such as transportation, electricity consumption, and other carbon-intensive habits. 

Carbon accounting – Carbon accounting is a framework of methods to measure and track how much greenhouse gas an organization emits. 

Carbon Neutral vs. Net Zero – Carbon-neutral refers to balancing out the total amount of carbon emissions, while net-zero carbon means no carbon was emitted from the onset.  

CDP – The CDP (formerly known as the Carbon Disclosure Project) is an investor-minded global not-for-profit that encourages businesses to voluntarily report every year on various climate, supply chain, and environmental indicators. Not just for businesses and investors, the CDP also provides support and reporting opportunities to cities, states, and regional governments to demonstrate progress on their sustainability challenges and unique climate impacts. Reports are publicly available and included in annual aggregate reports on supply chains, water risk management, climate, forests, and other criteria. 

Corporate carbon footprint – A company’s carbon footprint, also known as Corporate Carbon Footprint (CCF), is the total amount of GHG emissions that are directly or indirectly caused by a company’s activities. Calculating the CCF is usually the first step toward carbon neutrality, because it provides clarity on your emissions hotspots. 

CSR, also known as CSI – Corporate social responsibility (or corporate social impact) is a form of international private business self-regulation that aims to contribute to societal goals of a philanthropic, activist, or charitable organization. 

CSRD  – Once adopted, the Corporate Sustainability Reporting Directive will be a reporting requirement that expands on existing European Union corporate sustainability disclosures to include value and supply chains to cover more than an estimated 49,000 companies operating throughout the EU. 

Decarbonization – The process of reducing or eliminating carbon dioxide emissions from a process such as manufacturing or the production of energy or an environment. 

GHG – Greenhouse gas. Greenhouse gases are the gases in the atmosphere that raise the surface temperature of planets such as the Earth. What distinguishes them from other gases is that they absorb the wavelengths of radiation that a planet emits, resulting in the greenhouse effect. 

Green Market Revolution – Coined by Forrester, the Green Market Revolution gives businesses the opportunity to offer new environmentally-sustainable products and services for everything from how we make products to how we get goods and even to what we eat and our methods of transportation. 

GRI – The Global Reporting Initiative is an international independent standards organization that helps businesses, governments, and other organizations understand and communicate their impacts on issues such as climate change, human rights, and corruption. 

Science-Based Targets – The Science Based Targets initiative (SBTi) drives ambitious climate action in the private sector by enabling organizations to set science-based emissions reduction targets. 

Scope 1 Emissions – Direct emissions from sources owned or controlled by a company. 

Scope 2 Emissions – Indirect emissions from purchased electricity, steam, heat, and cooling. 

Scope 3 Emissions – All other emissions associated with a company’s activities.  

Supply Codes of Conduct – A supplier code of conduct is created for the purpose of ensuring that a company’s suppliers adhere to high standards of safe working conditions, fair and respectful treatment of employees, and ethical practices. 

TCFD – The Taskforce on Climate-Related Financial Disclosures makes recommendations on climate-related financial disclosures for mainstream financial filings. 

VPAT reports – Voluntary Product Accessibility Template (VPAT) is a template containing information regarding how a product or service conforms with Section 508 of the Rehabilitation Act of 1973. 

To learn more about ESG and how it will impact legal in the coming months and years, watch our recent webinar “Decoding ESG Jargon: The What, Why, Who, and How.”