The Sustainability Reporting Glossary

Sustainability reporting has acronym soup, terminology that varies between frameworks, and definitions that have shifted over time. This glossary is a reference, not a tutorial. Each entry is short, precise, and sourced.

Definitions align to the most authoritative source for each term: GRI, the IFRS Foundation / ISSB, the GHG Protocol (WRI/WBCSD), EFRAG (for ESRS), the IAASB (for assurance standards), and the relevant regulators and bodies for jurisdiction-specific terms. Where a term has multiple recognised definitions, both are noted.

How to use this glossary

• Terms are organised alphabetically.
• Acronyms are listed under their full name with cross-references.
• "See also" notes link to closely related terms.
• Source attribution appears in parentheses after the definition (e.g., Source: GHG Protocol Corporate Standard).

A

AASB S1 / AASB S2

Australian Sustainability Reporting Standards, ISSB-aligned, issued by the Australian Accounting Standards Board. Mandatory for "Group 1" entities (largest reporters) from FY 2024–25, with Groups 2 and 3 phased in through FY 2026–27 and 2027–28. (Source: AASB)

Absolute target

A target to reduce total emissions or other impact in absolute terms (e.g., reduce Scope 1+2 emissions 50% by 2030 vs a 2020 base year), rather than per unit of output. Contrast with intensity target.

Activity data

The quantitative input multiplied by an emission factor to calculate emissions (e.g., kWh of electricity, litres of fuel, tonnes of waste). (Source: GHG Protocol)

Assurance

Independent verification of reported information against defined criteria, expressed at a specified level of confidence. Sustainability assurance is governed mainly by ISAE 3000 (Revised), ISAE 3410 (for GHG statements), and the new ISSA 5000. See also limited assurance, reasonable assurance.

Audit trail

The documented evidence chain from raw data through to reported figures, including methodology, emission factors, source records, calculations, and approvals. Required for assurance under ISAE 3000/3410.

B

Base year

The historical reference period against which performance (commonly GHG emissions) is measured over time. Base year emissions must be recalculated when significant structural changes (mergers, acquisitions, divestitures) or methodology changes occur. (Source: GHG Protocol Corporate Standard, Appendix E)

Base year recalculation

Adjustment of base year emissions to reflect what they would have been under a new structure, methodology, or after correcting significant errors. The GHG Protocol expects companies to set a quantitative threshold (commonly 5–10% of base year emissions) for triggering recalculation, plus qualitative triggers.

Biodiversity

The variety and variability of life forms on Earth. In sustainability reporting, the focus is on impacts on and dependencies upon ecosystems. Disclosed under GRI 304 and ESRS E4. The TNFD provides additional guidance via the LEAP approach.

Biogenic emissions

Emissions arising from biological sources (e.g., the combustion of biomass, fermentation, decomposition). Reported separately from fossil emissions under most frameworks. The GHG Protocol's Land Sector and Removals Guidance (under development) provides more recent guidance.

Boundary (organizational)

The set of entities and operations included in a company's GHG inventory or sustainability report. Under the GHG Protocol, set using one of three approaches: equity share, financial control, or operational control.

Boundary (operational)

The set of emission sources, scopes, and activities included within the chosen organisational boundary. Defines whether Scope 1, Scope 2, and which Scope 3 categories are reported.

BRSR (Business Responsibility and Sustainability Report)

SEBI's mandatory sustainability reporting regime for the top listed entities in India, in force from FY 2022–23. Maps officially to GRI Standards. BRSR Core is the assured subset of indicators.

C

California SB 253 (Climate Corporate Data Accountability Act)

California law requiring large companies (over USD 1 billion in annual revenue) "doing business in California" to disclose Scope 1 and Scope 2 GHG emissions starting in 2026, and Scope 3 starting in 2027, using GHG Protocol-aligned methodology. (Source: California Air Resources Board)

California SB 261 (Climate-Related Financial Risk Act)

California law requiring large companies (over USD 500 million in annual revenue) doing business in California to disclose climate-related financial risks under TCFD-aligned reporting (effectively IFRS S2-aligned).

Carbon credit

A tradable instrument representing one tonne of CO₂-equivalent reduced or removed from the atmosphere. See also offset.

Carbon dioxide equivalent (CO₂e)

A common unit converting non-CO₂ greenhouse gases to their CO₂ equivalent using global warming potentials (GWPs) from the IPCC.

Carbon footprint

A company's, product's, or activity's total greenhouse gas emissions, expressed in CO₂e. The GHG Protocol Product Life Cycle Standard covers product-level footprints; the Corporate Standard covers organisational footprints.

Carbon-neutral / Climate-neutral

Claims that emissions associated with an entity, product, or activity have been balanced by reductions or removals. Increasingly scrutinised under the EU Green Claims Directive and FTC Green Guides; the EU has proposed restrictions on company-level carbon-neutral claims based primarily on offsets.

CBAM (Carbon Border Adjustment Mechanism)

EU mechanism (in force in transitional form from 2023, fully operational from 1 January 2026) requiring importers of certain goods (iron, steel, aluminium, cement, fertilisers, hydrogen) into the EU to pay for embedded carbon emissions.

CDP (formerly Carbon Disclosure Project)

A voluntary, questionnaire-based disclosure platform for climate, water, forests, and supply chain. CDP scoring is widely used by investors and procurement teams. CDP questionnaires align with GHG Protocol, TCFD, ISSB, and ESRS.

Circular economy

An economic system in which materials and products are kept in use longer through reuse, repair, and recycling. Disclosed under ESRS E5 (Resource use and circular economy) and GRI 306 (Waste).

Climate-neutral

See carbon-neutral.

Climate-related risks and opportunities

Risks and opportunities arising from physical and transition impacts of climate change, structured under the four TCFD pillars (governance, strategy, risk management, metrics and targets) and required under IFRS S2 and ESRS E1.

Content index

A required index in a GRI report listing all GRI Standards and disclosures reported, with location references and any reasons for omission.

Core content areas

The four content areas required by IFRS S1 and S2 (and inherited from TCFD): governance, strategy, risk management, and metrics and targets.

CSDDD (Corporate Sustainability Due Diligence Directive)

EU directive requiring large companies to conduct human rights and environmental due diligence across their own operations and value chains. Member-state transposition deadline: July 2027; first-phase compliance: July 2028.

CSRD (Corporate Sustainability Reporting Directive)

The EU's mandatory sustainability reporting regime, replacing NFRD. Requires reporting under ESRS, expanded scope to a broader set of companies, and includes mandatory assurance. Phased adoption from FY 2024 to FY 2028. (Source: European Commission)

D

Datapoint

A specific, defined item of information disclosed under a framework (e.g., total energy consumption in MWh; gender pay gap as a percentage). ESRS Set 1 contains over 1,000 datapoints across the 12 standards.

Defra

The UK Department for Environment, Food and Rural Affairs. Publishes annual conversion factors widely used for GHG emissions calculations under UK and international reporting.

Disclosure

A required item of information published in a sustainability report under a specific framework standard (e.g., GRI 305-1 covers direct (Scope 1) emissions).

Double materiality

The materiality concept in ESRS combining impact materiality (the entity's impact on the economy, environment, and people, à la GRI) and financial materiality (the impact of sustainability matters on enterprise value, à la IFRS). A topic is material under ESRS if it is material under either lens.

Due diligence

Ongoing processes to identify, prevent, mitigate, and account for actual and potential adverse impacts on people and the environment. Central to GRI 2021, ESRS, and CSDDD.

E

EFRAG (European Financial Reporting Advisory Group)

The technical advisor to the European Commission on sustainability reporting standards. Develops and maintains ESRS.

Emission factor

A coefficient that converts activity data into emissions (e.g., kg CO₂e per kWh of electricity, kg CO₂e per litre of diesel). Sources include IPCC, national inventories (DEFRA, EPA), and supplier-specific Environmental Product Declarations (EPDs).

Energy intensity

Energy consumption normalised by an activity denominator (e.g., kWh per square metre, GJ per tonne of product). Disclosed under GRI 302-3 and ESRS E1.

Enterprise value

The total value of the business to debt and equity providers, central to IFRS S1/S2's financial materiality concept.

Equity share approach

A GHG Protocol consolidation approach including emissions in proportion to the company's equity ownership in each entity. (Source: GHG Protocol Corporate Standard)

ESRS (European Sustainability Reporting Standards)

The mandatory disclosure standards under CSRD. Set 1 contains 12 standards: ESRS 1 (General requirements), ESRS 2 (General disclosures), and 10 topical standards covering environmental (E1–E5), social (S1–S4), and governance (G1) topics.

Equator Principles

A risk management framework adopted by financial institutions for determining, assessing, and managing environmental and social risks in project finance.

EU Green Claims Directive

Proposed EU regulation requiring substantiation, third-party verification, and standardised categories for environmental claims by businesses operating in the EU.

EU Taxonomy

A classification system for environmentally sustainable economic activities under EU regulation. In-scope companies must report taxonomy-eligible and taxonomy-aligned turnover, capex, and opex.

EUDR (EU Deforestation Regulation)

EU regulation requiring importers of seven commodities (coffee, cocoa, cattle, soy, timber, palm oil, rubber) to demonstrate deforestation-free origin and provide GPS geolocation data for production plots.

F

Financial control approach

A GHG Protocol consolidation approach including 100% of emissions from operations the company has financial control over (typically aligned with consolidated financial statements). (Source: GHG Protocol Corporate Standard)

Financial materiality

The materiality concept in IFRS S1/S2: information that could reasonably be expected to influence decisions of investors and lenders by affecting enterprise value, cash flows, access to finance, or cost of capital.

Financed emissions

Scope 3 Category 15 (Investments) emissions for financial institutions, calculated using the PCAF Global GHG Accounting and Reporting Standard for the Financial Industry.

FLAG (Forest, Land, and Agriculture)

SBTi's sector-specific guidance for companies in land-using sectors. Land-using companies must set FLAG-specific science-based targets in addition to standard near-term targets.

FTC Green Guides

US Federal Trade Commission guidance on environmental marketing claims, covering specific claim types ("biodegradable," "compostable," "recyclable," "renewable energy," etc.). Non-binding but enforced through the FTC's authority over deceptive trade practices.

G

GHG inventory

An organisation-wide accounting of GHG emissions by scope and category, prepared under the GHG Protocol or equivalent methodology (e.g., ISO 14064-1).

GHG Protocol

The Greenhouse Gas Protocol, developed by WRI and WBCSD. The global de facto standard for measuring and reporting corporate, value-chain, and product-level GHG emissions. Suite includes the Corporate Standard, the Corporate Value Chain (Scope 3) Standard, the Scope 2 Guidance, the Product Life Cycle Standard, and sector tools.

Global Warming Potential (GWP)

A measure used to convert non-CO₂ greenhouse gases to CO₂ equivalent, based on radiative forcing relative to CO₂ over a 100-year horizon. Updated periodically by the IPCC; AR5 GWP values are in widespread use, with AR6 values increasingly applied.

GRI (Global Reporting Initiative)

The independent multi-stakeholder non-profit issuing the GRI Standards. The GRI 2021 Universal Standards (GRI 1, 2, 3) became effective for reports published on or after 1 January 2023.

GRI 1: Foundation 2021

Defines key concepts (impact, materiality, due diligence) and the requirements for reporting "in accordance" or "with reference to" GRI.

GRI 2: General Disclosures 2021

Disclosures about the organisation's profile, activities, workers, governance, strategy, policies, practices, and stakeholder engagement.

GRI 3: Material Topics 2021

Process for identifying material topics and the disclosures on the materiality process, list of material topics, and how each topic is managed.

Greenwashing

Sustainability claims that are misleading, unsubstantiated, or so vague they cannot be evaluated. Increasingly enforced under the EU Green Claims Directive, Unfair Commercial Practices Directive, FTC Green Guides, the UK CMA Green Claims Code, and ASA rulings.

Guarantees of Origin (GOs)

European equivalent of RECs — instruments certifying that a unit of electricity was generated from renewable sources.

I

IAASB (International Auditing and Assurance Standards Board)

The body that issues international assurance standards, including ISAE 3000, ISAE 3410, and ISSA 5000.

IEQT (Integrated Emission Quantification Tool)

The UAE's national MRV transparency platform, launched in December 2023 by MOCCAE.

IFC Performance Standards

Eight standards from the International Finance Corporation governing environmental and social risk management for IFC-financed projects and the financial intermediaries IFC funds.

IFRS Foundation

The foundation that oversees IFRS Accounting Standards and IFRS Sustainability Disclosure Standards (issued by the ISSB). From 2024, also responsible for monitoring TCFD disclosures.

IFRS S1

General Requirements for Disclosure of Sustainability-Related Financial Information. Issued 26 June 2023; effective for annual reporting periods beginning on or after 1 January 2024.

IFRS S2

Climate-Related Disclosures. Issued 26 June 2023; effective alongside IFRS S1. Incorporates TCFD's four pillars and references GHG Protocol for emissions methodology.

Impact materiality

The materiality lens used in GRI: significance of the organisation's impacts on the economy, environment, and people, regardless of financial impact on the company.

In accordance / With reference to (GRI)

Two levels of GRI application. "In accordance" requires meeting all Universal Standards requirements and reporting Topic Standards for all material topics. "With reference to" is more flexible, using selected GRI Standards without meeting all in-accordance criteria.

Intensity (target / metric)

A metric or target normalised by activity (e.g., tCO₂e per unit produced; kWh per square metre).

Integrated Reporting

A reporting framework promoting integrated thinking across six capitals (financial, manufactured, intellectual, human, social and relationship, natural). Now under the IFRS Foundation.

IPCC (Intergovernmental Panel on Climate Change)

The UN body assessing climate science. Publishes Assessment Reports (AR5, AR6) that include the GWP values used in GHG inventory calculations.

ISAE 3000 (Revised)

The IAASB standard for assurance engagements other than audits or reviews of historical financial information. Used for most ESG assurance engagements.

ISAE 3410

The IAASB standard specifically for assurance engagements on greenhouse gas statements, with detailed guidance on GHG inventories, boundaries, and controls.

ISO 14064-1

ISO standard specifying requirements at the organisation level for quantification and reporting of GHG emissions and removals. Often used as an alternative or complement to GHG Protocol.

ISO 14064-3

ISO standard setting requirements for validation and verification of GHG statements.

ISSA 5000

The IAASB's new comprehensive sustainability assurance standard. National adoption is in progress.

ISSB (International Sustainability Standards Board)

The body within the IFRS Foundation that issues IFRS Sustainability Disclosure Standards (S1 and S2). Has taken over TCFD monitoring responsibilities from 2024.

J

Just transition

The principle that the shift to a low-carbon economy should be fair and inclusive, particularly for workers and communities currently dependent on high-emission industries.

K

KPI (Key Performance Indicator)

A specific metric used to track progress against a goal or target.

L

LEAP approach

The TNFD's recommended process for assessing nature-related issues: Locate interfaces with nature, Evaluate dependencies and impacts, Assess risks and opportunities, Prepare responses and disclosures.

Limited assurance

An assurance engagement at a moderate level of confidence. The auditor's conclusion is expressed in negative form: "nothing has come to our attention to indicate that the information is materially misstated." Procedures are primarily inquiries and analytical procedures. (Source: ISAE 3000, ISAE 3410)

Location-based Scope 2

The Scope 2 method using grid-average emission factors for the location where electricity is consumed. (Source: GHG Protocol Scope 2 Guidance)

M

Market-based Scope 2

The Scope 2 method using emission factors derived from contractual instruments (PPAs, RECs, GOs, green tariffs) that meet the GHG Protocol's Scope 2 Quality Criteria. (Source: GHG Protocol Scope 2 Guidance)

Material topic

A topic representing significant impacts (under GRI's impact materiality) or significant effects on enterprise value (under IFRS) that should be reported.

Materiality assessment

The structured process for determining which topics are material for a company's sustainability reporting. Different lenses apply: impact materiality (GRI), financial materiality (IFRS), or double materiality (CSRD/ESRS).

MRV (Monitoring, Reporting, and Verification)

A system by which an entity monitors emissions or other ESG data, reports them to a defined body or audience, and has them verified by an independent party. The UAE Climate Law requires entities to operate MRV systems.

N

NDC (Nationally Determined Contribution)

A country's climate target submitted under the Paris Agreement. The UAE's NDC 3.0 (November 2024) commits to a 47% reduction in national emissions by 2035 vs a 2019 baseline.

Net-zero

A state in which residual emissions are balanced by removals. SBTi's Corporate Net-Zero Standard requires 90%+ absolute reductions by 2050, with high-quality offsets only for residual emissions.

NFRD (Non-Financial Reporting Directive)

The EU's predecessor regime to CSRD. Replaced by CSRD with a much broader scope and more rigorous requirements.

O

Offset

A tradable instrument representing one tonne of CO₂-equivalent reduced or removed from the atmosphere, used to compensate for emissions elsewhere. Treated cautiously in reporting; the GHG Protocol expects offsets to be reported separately from emissions reductions.

Operational control approach

A GHG Protocol consolidation approach including 100% of emissions from operations the company controls operationally — i.e., where the company has authority to introduce and implement operating policies. The most common approach for SMEs. (Source: GHG Protocol Corporate Standard)

P

PCAF (Partnership for Carbon Accounting Financials)

The body issuing the Global GHG Accounting and Reporting Standard for the Financial Industry. Provides methods for financed emissions across asset classes.

PIE (Public Interest Entity)

A category typically including listed companies, banks, insurance companies, and pension funds. Used as a scope criterion in many regulations (e.g., ICPAK's IFRS S1/S2 roadmap in Kenya makes the standards mandatory for PIEs from 1 January 2027).

POPIA (Protection of Personal Information Act)

South Africa's data protection law. Increasingly referenced in supplier ESG questionnaires.

PPA (Power Purchase Agreement)

A direct contract with a renewable electricity generator. Generally the strongest form of market-based Scope 2 claim.

Primary data

Data measured directly at source (meter readings, invoices, internal records). Contrast with secondary data (industry averages, modelled estimates).

R

REC (Renewable Energy Certificate)

A tradable instrument representing the environmental attributes of one MWh of renewable electricity generation. Bundled RECs are sold with the underlying electricity; unbundled RECs are sold separately.

Reasonable assurance

An assurance engagement at a high level of confidence. The auditor's conclusion is expressed in positive form. Procedures are similar in rigour to a financial audit. (Source: ISAE 3000, ISAE 3410)

Reporting principles (GHG Protocol)

Five principles companies must follow under the GHG Protocol: relevance, completeness, consistency, transparency, and accuracy.

Residual mix factor

The Scope 2 emission factor used in the market-based method, representing the grid average minus what's been claimed by other purchasers via contracts. Used when contractual instruments don't cover the full electricity load.

Restatement

Adjustment of previously reported emissions or other ESG figures, typically following structural changes, methodology improvements, or correction of errors. Requires disclosure of what was changed and why.

S

SASB Standards

Industry-specific disclosure standards now consolidated under the ISSB. Industry-based metrics from SASB are explicitly referenced as sources of guidance within IFRS S1 and S2.

SBTi (Science Based Targets initiative)

A partnership between CDP, UN Global Compact, WRI, and WWF that validates corporate climate targets against pathways aligned with the Paris Agreement. Requires GHG Protocol Corporate, Scope 2, and Scope 3 Standards.

Scope 1

Direct GHG emissions from sources owned or controlled by the company (combustion in boilers and vehicles, process emissions, refrigerant leaks). (Source: GHG Protocol Corporate Standard)

Scope 2

Indirect GHG emissions from purchased electricity, steam, heat, and cooling. (Source: GHG Protocol Corporate Standard)

Scope 3

All other indirect GHG emissions in the value chain, organised into 15 categories under the GHG Protocol Corporate Value Chain (Scope 3) Standard.

Scope 3 categories

The 15 categories defined by the GHG Protocol: (1) Purchased goods and services, (2) Capital goods, (3) Fuel- and energy-related activities, (4) Upstream transportation and distribution, (5) Waste generated in operations, (6) Business travel, (7) Employee commuting, (8) Upstream leased assets, (9) Downstream transportation and distribution, (10) Processing of sold products, (11) Use of sold products, (12) End-of-life treatment of sold products, (13) Downstream leased assets, (14) Franchises, (15) Investments.

Scope 2 Quality Criteria

Five criteria from the GHG Protocol Scope 2 Guidance for credible market-based instruments: (1) conveys all GHG emissions attributes, (2) has not been double-counted, (3) has been retired (cancelled), (4) is generated as close to consumption as possible (vintage), (5) is sourced from generators with eligible commissioning dates.

Scenario analysis

Assessment of an entity's resilience under different climate futures (e.g., 1.5°C, 2°C, >3°C scenarios). Required under IFRS S2 and ESRS E1.

SEBI (Securities and Exchange Board of India)

The Indian regulator that mandated BRSR for top listed entities.

Secondary data

Data not measured directly but derived from industry averages, modelled estimates, or external databases. Contrast with primary data.

SEC climate rule

The US Securities and Exchange Commission's climate-related disclosure rule, adopted March 2024 and currently subject to legal and policy uncertainty. Aligned with TCFD and references GHG Protocol categorisation.

SFDR (Sustainable Finance Disclosure Regulation)

EU regulation on sustainability disclosures by financial market participants, including Principal Adverse Impact (PAI) indicators.

SME Standard (under SBTi)

A simplified target-setting route for small and medium enterprises under specific size thresholds, designed by SBTi.

Stakeholder

Individual or group whose interests are or could be affected by the organisation's activities (employees, communities, investors, suppliers, regulators, NGOs).

Statement of compliance

An explicit statement required under IFRS S1 or S2 when an entity claims to comply with the standards.

Sustainability-linked loan / sustainability-linked bond

Debt instruments where the interest rate or other terms adjust based on the borrower's performance against pre-agreed ESG KPIs. Documented under the LMA Sustainability Linked Loan Principles or ICMA Sustainability-Linked Bond Principles.

T

Target

A measurable commitment to a specific level of performance by a defined date (e.g., reduce Scope 1+2 emissions 50% by 2030 vs 2020). Required under IFRS S2 and ESRS E1.

TCFD (Task Force on Climate-related Financial Disclosures)

The Financial Stability Board's task force whose four-pillar recommendations (governance, strategy, risk management, metrics and targets) are now embedded in IFRS S2. The IFRS Foundation has taken over TCFD's monitoring role from 2024.

TNFD (Taskforce on Nature-related Financial Disclosures)

A market-led initiative whose final recommendations were issued in September 2023, with the LEAP approach for assessing nature-related issues. Parallels TCFD for nature.

Topic Standards (GRI)

GRI standards covering individual topics such as Energy (GRI 302), Water (GRI 303), Emissions (GRI 305), Employment (GRI 401), Diversity (GRI 405), and others. The number of Topic Standards is around 30+ following recent restructuring.

Transition plan

A company's plan to adjust its business model and operations to a low-carbon economy, including targets, capex, technology assumptions, and policy assumptions. Required under IFRS S2 and ESRS E1.

U

UN Global Compact

A voluntary initiative based on Ten Principles covering human rights, labour, environment, and anti-corruption. Participants submit an annual Communication on Progress (CoP).

Unbundled RECs

Renewable Energy Certificates sold separately from the underlying electricity. Increasingly challenged under SBTi and other frameworks for weak additionality unless paired with credible additionality criteria.

UK SRS S1 / UK SRS S2

UK Sustainability Reporting Standards, ISSB-aligned, for voluntary use from 2026, with regulatory adoption expected for certain listed and large entities.

V

Value chain

Full upstream and downstream activities related to a company's operations, central to Scope 3 accounting and to ESRS S2 (workers in the value chain).

Vintage (REC / GO)

The year a renewable energy certificate was generated. The GHG Protocol Scope 2 Guidance expects vintages to be close to the period of consumption.

Virtual PPA (vPPA)

A financial contract that doesn't change physical electricity delivery but provides REC attributes. A credible market-based instrument when vintage and additionality criteria are met.

VSME (Voluntary Sustainability Reporting Standard for non-listed SMEs)

A voluntary, simplified ESG reporting standard developed by EFRAG for non-listed EU SMEs. Two modules: Basic and Comprehensive.

W

WBCSD (World Business Council for Sustainable Development)

Co-publisher of the GHG Protocol with WRI.

WRI (World Resources Institute)

Co-publisher of the GHG Protocol with WBCSD.

X

XBRL (eXtensible Business Reporting Language)

A structured digital reporting format. ESRS and EU Taxonomy require digital tagging of key datapoints; UK SRS and other ISSB-aligned regimes are likely to follow.

Where to go from here

• Choosing your first framework: GRI, IFRS, or GHG Protocol?
• Building a materiality assessment from scratch
• Calculating Scope 3 emissions: the 15 categories explained
• Reporting under CSRD: what mid-sized companies need to know
• The GRI, IFRS S1/S2, and GHG Protocol framework deep pages

This glossary is updated as frameworks evolve. If you spot a term that should be added or refined, let us know.