ESG glossary

The Federal Ministry for the Environment, Nature Conservation, Nuclear Safety and Consumer Protection — Germany’s federal ministry responsible for environmental policy, climate protection and sustainability.

Capital Expenditures (investment outlays) refer to spending on long-term assets. In the ESG context, the share of CapEx going to sustainable economic activities is a mandatory indicator under the EU Taxonomy.

Carbon accounting is the process of measuring, recording and reporting an organisation’s greenhouse-gas emissions. It is the basis for any climate strategy and a precondition for reporting under GHGP, CSRD and other standards.

The Carbon Border Adjustment Mechanism (CBAM) is the EU’s carbon border levy. It evens out the CO₂ cost of imported goods to prevent carbon leakage — the relocation of emission-intensive production to countries without carbon pricing. In its transition phase since October 2023.

A Corporate Carbon Footprint (CCF) captures a company’s total greenhouse-gas emissions across Scope 1, 2 and 3. It is the basis for reduction targets, ESG reporting and stakeholder communication. today.green produces CCFs in line with the GHGP.

Carbon Capture and Storage refers to technologies that capture CO₂ from industrial processes or the atmosphere and store it underground. CCS is seen as an important complement to emission reduction, especially in hard-to-abate sectors.

CDP (formerly the Carbon Disclosure Project) is an international organisation that helps companies, cities and governments disclose their environmental impact. CDP scores (A to D-) are a key ESG indicator for investors and rating agencies.

The Clean Development Mechanism (CDM) is a Kyoto Protocol mechanism that lets industrialised countries run emission-reduction projects in developing countries and earn emission credits (CERs) for them.

CO₂e is a standardised unit that converts the climate impact of different greenhouse gases into a single comparable figure. Example: one tonne of methane (CH₄) is roughly 28 tonnes of CO₂e over 100 years. This makes the climate impact of different gases comparable.

A sustainable design concept where products and materials circulate in closed loops — technical materials are recycled, biological materials composted. Goal: zero waste, maximum resource use.

An accounting boundary for product carbon footprints (PCFs) that captures greenhouse-gas emissions from raw-material extraction up to the factory gate — the production process only, not the use or disposal phase.

The most comprehensive PCF accounting boundary: it captures CO₂ emissions across the full life cycle of a product — from raw-material extraction through production, transport and use to disposal or recycling.

The Corporate Sustainability Due Diligence Directive (the EU supply-chain directive) requires large companies to apply human-rights and environmental due diligence across their global supply chains.

Corporate Social Responsibility refers to a company’s voluntary social and environmental responsibility — beyond legal obligations. CSR covers topics like working conditions, environmental protection, community engagement and ethical management.

The Corporate Sustainability Reporting Directive is the EU directive on sustainability reporting. From 2024 onwards it phases in mandatory reporting under the European Sustainability Reporting Standards (ESRS). The CSRD replaces the NFRD and expands the reporting perimeter to roughly 50,000 companies in the EU.

The UK Department for Environment, Food and Rural Affairs publishes annually updated emission factors for greenhouse-gas accounting that are used as a reference worldwide.

Decarbonisation is the systematic reduction of CO₂ emissions — through energy efficiency, renewables, process optimisation and, where needed, offsetting. The goal is to reach Net Zero in line with the Paris Agreement.

The German Sustainability Code (Deutscher Nachhaltigkeitskodex) is a reporting standard for sustainable corporate management. It covers 20 criteria across strategy, process management, environment and society and offers SMEs in particular an entry point into sustainability reporting.

The Do No Significant Harm principle is a central element of the EU Taxonomy. It ensures that an economic activity classified as sustainable does not significantly harm any of the six environmental objectives of the Taxonomy.

Double materiality analysis is a central element of CSRD/ESRS. It assesses two perspectives: (1) impact materiality — what impact does the company have on the environment and society? (2) financial materiality — which sustainability risks and opportunities affect the company?

The ESG Data Convergence Initiative is a private-equity standard for comparable ESG data submissions from portfolio companies. More than 400 GPs and LPs use EDCI. today.green supports EDCI export inside the Fund ESG Module.

The EU Eco-Management and Audit Scheme is a voluntary environmental-management system that goes beyond ISO 14001. EMAS-registered organisations commit to continuous improvement of their environmental performance and to publishing an environmental statement.

An emission factor is a conversion value that translates an activity (e.g. 1 kWh of electricity, 1 litre of diesel, one flight) into the corresponding amount of CO₂e. today.green draws on more than 60,000 emission factors from databases such as ecoinvent, DEFRA and GEMIS.

An Environmental Product Declaration is a standardised document that makes the environmental impact of a product transparent across its full life cycle — based on a Life Cycle Assessment (LCA).

Environmental, Social, Governance — the three dimensions of sustainability in companies. ESG criteria are increasingly required by investors, regulators, banks and business partners. ESG ratings shape financing terms and business relationships.

The European Sustainability Reporting Standards are the reporting standards developed by EFRAG under the CSRD. They cover 12 standards on environment (E1-E5), social (S1-S4) and governance (G1) and define exactly which data points must be reported.

ESRS E1 (Climate Change) is the standard for climate-related reporting under ESRS. It covers greenhouse-gas emissions (Scope 1-3), reduction targets, decarbonisation plans and climate-related risks and opportunities.

The European Green Deal is the overarching agreement among EU member states to make the EU climate-neutral by 2050. It is the umbrella for CSRD, the EU Taxonomy, CBAM, the Green Claims Directive and many other regulations.

The EU Taxonomy is a classification system that defines which economic activities count as environmentally sustainable. It covers six environmental objectives: climate-change mitigation, adaptation, water, circular economy, pollution prevention and biodiversity.

The EU Deforestation Regulation requires companies to make sure that certain commodities (soy, palm oil, beef, coffee, cocoa, wood, rubber) are not linked to deforestation.

Forest, Land and Agriculture — an SBTi sector for companies with significant emissions from land use, forestry and agriculture. FLAG companies must set specific targets for land-use-related emissions.

The Green Claims Directive is an EU directive that regulates environmental advertising claims. It is meant to prevent greenwashing by requiring companies to back their environmental claims with scientific evidence and have them verified independently.

The Greenhouse Gas Protocol is the world’s most widely used standard for accounting and reporting greenhouse-gas emissions. It defines the split into Scope 1 (direct), Scope 2 (energy) and Scope 3 (value chain) and is the basis for almost every ESG framework.

The deliberate withholding or downplaying of sustainability efforts to avoid criticism, regulatory scrutiny or greenwashing accusations. The opposite of greenwashing — but equally problematic, because it blocks transparency.

Companies selectively spotlight one sustainable initiative (e.g. a tree-planting campaign) while staying quiet about other environmentally damaging activities. A subtle form of greenwashing.

Misleadingly portraying a company as more environmentally friendly than it actually is. The CSRD and the EU Green Claims Directive aim to curb greenwashing through binding reporting and substantiation duties. Examples: unsubstantiated CO₂-neutral claims, selective data picking.

The Global Reporting Initiative is the world’s most widely used standard for sustainability reporting. GRI reports are modular (Universal, Sector, Topic Standards) and cover all ESG dimensions. today.green supports GRI reporting.

Global Warming Potential describes the climate impact of a greenhouse gas relative to CO₂. Methane (CH₄), for example, has a GWP of 28-36 over 100 years — meaning one tonne of methane warms the climate 28-36× more than one tonne of CO₂.

Impacts, Risks and Opportunities — the three dimensions of materiality analysis under ESRS. For every ESRS topic, companies must assess which impacts, risks and opportunities apply. today.green supports IRO development with AI.

The internationally recognised standard for environmental-management systems. ISO 14001-certified companies have implemented a systematic approach to capture, manage and continuously improve their environmental impact.

The international standard for energy-management systems. It helps companies systematically reduce their energy use, cut costs and lower their greenhouse-gas emissions.

The International Sustainability Standards Board develops global sustainability-reporting standards (IFRS S1 and S2). The standards focus on financially relevant sustainability information and are compatible with CSRD/ESRS. today.green supports ISSB reporting.

Small and medium-sized enterprises — defined in the EU as companies with fewer than 250 employees and either up to €50 million in revenue or up to €43 million in total assets. SMEs benefit from simplified reporting requirements under VSME.

An economic system based on closed material loops — as opposed to the linear "take-make-dispose" model. Products and materials are kept in use as long as possible, repaired, reused and recycled.

Life Cycle Assessment is a method for evaluating the environmental impact of a product or service across its entire life cycle — from raw-material extraction to disposal. It is the basis for EPDs and product carbon footprints.

The Non-Financial Reporting Directive was the predecessor of the CSRD for sustainability reporting in the EU. It applied to roughly 11,700 companies and was replaced by the much broader CSRD.

Net Zero means that a company has reduced its greenhouse-gas emissions to a minimum (at least 90% reduction per SBTi) and balances any residual emissions through offsetting or carbon removal from the atmosphere.

A sustainability indicator that links consumption and lifestyle to the availability of natural resources. It measures the area required to provide the resources used and to absorb the waste produced.

The 2025 EU Omnibus Regulation bundles changes to several sustainability directives, especially the CSRD. It reduces reporting duties for smaller companies but keeps the core requirements. The indirect pressure from investors and customers stays.

Operational Expenditures refer to a company’s ongoing operating costs. Under the EU Taxonomy, companies must disclose the share of OpEx that goes to taxonomy-aligned activities.

Principal Adverse Impact indicators are the sustainability indicators defined by the SFDR that financial-market participants must collect for their portfolio companies — including greenhouse-gas emissions, energy use, biodiversity and water use. today.green automates PAI data collection.

A Product Carbon Footprint captures the greenhouse-gas emissions of a single product across its life cycle. It can be drawn Cradle-to-Gate (up to the factory gate) or Cradle-to-Grave (through to disposal).

Resource efficiency means improving the ratio between resource input and economic output. Goal: less material, energy and water per unit produced. A core topic of the EU circular-economy strategy.

The Science Based Targets initiative helps companies set science-based emission-reduction targets aligned with the Paris Agreement (1.5°C pathway). More than 7,000 companies worldwide have set SBTi targets. today.green supports target-setting and tracking.

Scope 1 covers all direct greenhouse-gas emissions from sources owned or controlled by the company — e.g. on-site heating, company vehicles, production processes or refrigerant leaks.

Scope 2 covers indirect emissions from the generation of purchased energy — electricity, district heat, steam or cooling. Accounting can follow the location-based or market-based method.

Scope 3 covers all other indirect emissions across the value chain — both upstream (purchased goods, business travel, commuting, upstream transport) and downstream (use of sold products, disposal, downstream transport). For most companies, Scope 3 emissions account for more than 80% of the total footprint.

The Sustainable Development Goals are 17 global sustainability goals adopted by the United Nations in 2015. They range from poverty reduction through climate protection to responsible consumption and form the framework for the global sustainability agenda through 2030.

The Sustainable Finance Disclosure Regulation is an EU regulation that requires financial-market participants to disclose sustainability information. Funds are classified as Article 6 (no ESG integration), Article 8 (ESG characteristics) or Article 9 (sustainable investment objective).

The Verified Carbon Standard (now Verra) is the world’s most widely used standard for voluntary carbon-offset projects. VCS-certified projects must demonstrate additional emission reductions.

The Voluntary Sustainability Reporting Standard for Non-Listed SMEs is a voluntary ESG reporting standard developed by EFRAG for SMEs. It is more modular and less complex than the ESRS standards and is increasingly required as a data format by customers and investors. today.green supports VSME reporting.