ESG and Sustainability Reporting Glossary: Key Terms Explained

ESG and sustainability reporting come with a thicket of acronyms and overlapping frameworks. This glossary explains the terms finance professionals meet most often, in plain English, with links to fuller guides on the bigger topics. Keep it handy as a quick reference.

Core concepts

ESG

Environmental, Social and Governance — the three broad pillars used to assess an organisation's sustainability and ethical impact.

Materiality

The principle of focusing reporting on the issues that genuinely matter. In sustainability there are two lenses: impact materiality and financial materiality.

Double materiality

The combination of impact materiality (the organisation's effect on the world) and financial materiality (how sustainability issues affect the organisation). See our double materiality guide.

Greenwashing

Making misleading or unsubstantiated claims about environmental performance — a growing regulatory and reputational risk.

Net zero

Reducing greenhouse gas emissions as far as possible and balancing any residual emissions through removals, so the net contribution to the atmosphere is zero.

Frameworks and standards

ISSB / IFRS S1 and S2

The International Sustainability Standards Board and its standards (S1 general requirements, S2 climate), focused on financial materiality for investors. See our ISSB standards guide.

GRI

The Global Reporting Initiative, the most widely used framework, focused on impact materiality.

ESRS

European Sustainability Reporting Standards, the detailed standards underpinning the EU's Corporate Sustainability Reporting Directive (CSRD).

CSRD

The EU's Corporate Sustainability Reporting Directive, which expands mandatory sustainability reporting and requires assurance.

TCFD

The Task Force on Climate-related Financial Disclosures, whose four-pillar structure shaped much of today's climate reporting. See our TCFD guide.

TNFD

The Taskforce on Nature-related Financial Disclosures, applying a TCFD-style approach to nature and biodiversity.

SASB

The Sustainability Accounting Standards Board, industry-specific standards now consolidated under the IFRS Foundation and used within the ISSB framework.

Emissions and assurance

GHG Protocol

The Greenhouse Gas Protocol, the most widely used standard for measuring and reporting emissions.

Scope 1, 2 and 3 emissions

Scope 1 is direct emissions from owned sources; Scope 2 is indirect emissions from purchased energy; Scope 3 is all other value-chain emissions, often the largest and hardest to measure.

Carbon offset

A reduction or removal of emissions elsewhere used to compensate for an organisation's own emissions; quality and credibility vary widely.

Sustainability assurance

Independent checking of reported sustainability information, increasingly required by regulation and now governed globally by the standard ISSA 5000.

Limited vs reasonable assurance

Limited assurance provides a lower level of confidence with a negatively phrased conclusion; reasonable assurance is more rigorous, closer to a financial audit.

Finance and regulation terms

EU Taxonomy

A classification system defining which economic activities count as environmentally sustainable, used to direct investment and underpin parts of EU disclosure rules.

Transition plan

An organisation's plan setting out how it will adapt its business model and operations to a low-carbon economy, including interim targets on the way to net zero.

Sustainability-linked finance

Loans or bonds whose terms — such as the interest rate — are tied to the borrower meeting defined sustainability performance targets.

Stewardship

The responsible allocation, management and oversight of capital by investors to create long-term value, including engaging with companies on ESG issues.

Carbon credit

A tradable instrument representing a tonne of greenhouse gas reduced or removed; used to offset emissions, with quality and integrity varying significantly between schemes.

Just transition

The principle that the shift to a sustainable economy should be fair, considering the impact on workers, communities and regions dependent on high-carbon industries.

Assurance provider

The independent firm or practitioner that checks reported sustainability information, now working to the global standard ISSA 5000.

The frameworks will keep evolving, but the underlying vocabulary is stabilising. For structured learning that turns these terms into practical capability, explore our ESG and sustainability CPD courses.