ESG and sustainability are gaining traction and are now essential topics of discussion in investment discussions for corporates: large, mid-size and small.
Sustainability is a crucial aspect that must be integrated into the lives of corporations, nations, states, communities, and individuals to achieve the desired outcome. ESG compliance is crucial as policies and regulations are created by nations and then passed down to state and corporate levels. This necessitates a comprehensive understanding of the ESG glossary.
As pioneers in ESG AI, we aim to raise awareness of sustainability and key investment terms. Today, we are focusing on ten key terms that define the ESG domain with the correct goal in mind.
Business Responsibility and Sustainability/ Corporate Accountability and Sustainability
Ethical business practices and environmental protection are expected to significantly mitigate the potential dangers arising from rising temperatures. The sustainable consumption of natural resources requires careful and wise utilization. You will often find the terms Business responsibility/ Sustainability/ Corporate accountability and sustainability used concerning corporate entities that mist implement responsible personnel, financial, and resource management.
Carbon Footprint/ Carbon Measurement
Assessing the carbon emissions is critical as limiting emissions only will solve the crisis we are heading to. Measuring carbon emissions at various levels – individual, corporate, state or national levels will enable the policymakers and regulators to formulate further action. These are the chief concerns stakeholders have to address while measuring carbon footprint.
Carbon Credit or Carbon Offset
This system was developed a carbon offset program to support people and organisations that are unable to reduce their emissions. Tokens or certificates that can be traded or transferred are offered to businesses or organisations. These certificates allow organisations to emit greenhouse gases as long as they mitigate those emissions elsewhere.
Carbon Neutral
In simple words, carbon neutrality is defined as the atmosphere’s or the environment’s ability to absorb carbon emissions. Currently, the emissions are way higher than what the atmosphere can absorb. The first step in mitigating climate change is to become carbon neutral.
Circularity
In today’s industrialized, modern, profit-driven society, the use of raw materials has spiked uncontrollably. The rapid depletion of natural resources is accelerated due to the imbalanced extraction process. This must be curtailed. To encourage circularity, the corporates are promoting the usage of recycled materials as raw materials to reduce the need for new materials and preserve natural resources from depletion.
Clean Tech
This term refers to the segment in which technology aids in controlling/ reducing emissions, green power (wind/solar), energy efficiency (smart appliances and applications), and waste management (recycling, reducing landfills). It is also referred to as clan tech, green tech or eco tech.
Green Initiatives
Green initiatives are any corporate actions that address carbon emissions, encourage increased efficiency, encourage circularity, and result in carbon neutrality. This also involves the digitisation and automation tools like ESG AI. Interestingly, this is part of the corporate business plan now.
Green Finance/ Green Funds
Green finance is an entire financial ecosystem that includes loans, investments, and insurance products designed to fund green projects. Green funds comprises of investment vehicles such as mutual funds, pool money from investors which can be utilised to fund projects that are considered environmentally and socially responsible.
Green Washing
In the recent past, green washing (falsely claim to have implemented it initiated green credits) drew a lot of attention as regulators raised concerns. Theses kinds of tactics are frequenctly used to mislead stakeholders and customers about company’s green initiatives.
Materiality Assessment
Materiality assessment is a practical way of measuring a company’ and its stakeholders’ ESG commitment. This is the first step toward assessing a company’s ESG score. The ESG score indicates a company’s level of commitment to identifying, evaluating, and rectifying the actions that resulted in a decline in their environmental score.
Contact us to learn more and see the demo: hello@greenfi.ai
