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ESG Glossary

Key terms defined in plain English

Reference

Educational content only. The information on this page is provided for general awareness and does not constitute legal, financial, or professional advice. Regulatory requirements vary by jurisdiction, company structure, and sector. Always consult a qualified adviser before making compliance decisions.

About this glossary

ESG is full of acronyms and technical terms that can make the subject feel inaccessible. This glossary defines the most important terms in plain language, with context for why they matter to SMEs.

CBAM
Carbon Border Adjustment Mechanism. An EU policy that applies a carbon price to imports of certain goods from countries with weaker climate policies.
CCDAA (SB 253)
California Climate Corporate Data Accountability Act. Requires companies with >$1B revenue doing business in California to report Scope 1, 2, and 3 emissions.
CDP
Carbon Disclosure Project. A non-profit that runs a global disclosure system for companies to report environmental data. Many large companies require their suppliers to complete a CDP questionnaire.
CSDDD
Corporate Sustainability Due Diligence Directive. EU law requiring large companies to identify and address human rights and environmental risks in their supply chains.
CSRD
Corporate Sustainability Reporting Directive. EU law requiring large companies to report detailed sustainability information under the European Sustainability Reporting Standards (ESRS).
Double materiality
The CSRD concept that companies must report both on how sustainability issues affect the business (financial materiality) and how the business affects people and the environment (impact materiality).
EcoVadis
A third-party ESG rating platform widely used in supply chain management. Suppliers complete a questionnaire and receive a score used by buyers to assess ESG performance.
ESRS
European Sustainability Reporting Standards. The detailed reporting standards that define what large EU companies must disclose under CSRD.
GHG Protocol
Greenhouse Gas Protocol. The most widely used international standard for measuring and managing greenhouse gas emissions. Defines Scope 1, 2, and 3 emissions.
GRI
Global Reporting Initiative. An independent international organisation that provides the world's most widely used standards for sustainability reporting.
ISSB
International Sustainability Standards Board. Sets global baseline sustainability disclosure standards (IFRS S1 and S2), aligned with TCFD.
Materiality assessment
The process of identifying which ESG topics are most significant for a business — both in terms of the business's impact on the world and the world's impact on the business.
Modern Slavery Act
UK legislation requiring companies with >£36m turnover to publish an annual statement on steps taken to prevent modern slavery in their operations and supply chains.
SA8000
Social Accountability 8000. An international certification standard for decent workplace conditions, covering child labour, forced labour, health and safety, and workers' rights.
Scope 1 emissions
Direct greenhouse gas emissions from sources owned or controlled by the company — e.g. fuel burned in company vehicles or on-site boilers.
Scope 2 emissions
Indirect emissions from the generation of purchased electricity, heat, or steam consumed by the company.
Scope 3 emissions
All other indirect emissions in a company's value chain — including purchased goods and services (from suppliers), business travel, employee commuting, and use of sold products. Typically the largest component of a company's total carbon footprint.
SECR
Streamlined Energy and Carbon Reporting. UK mandatory reporting framework for large companies covering energy use and Scope 1 and 2 emissions.
TCFD
Task Force on Climate-related Financial Disclosures. A framework for disclosing climate-related risks and opportunities. Now mandatory for large UK companies and the basis for ISSB standards.
UK SDS
UK Sustainability Disclosure Standards. The UK's planned ISSB-aligned reporting standards, expected to apply to large UK companies from 2026–2027.
Value chain
All upstream activities (suppliers, raw materials) and downstream activities (distribution, use, disposal) associated with a company's products and services. CSRD requires reporting across the full value chain.