Glossary of Sustainable Finance

From Open Risk Manual

Glossary of Sustainable Finance

A collection of definitions of conceptual frameworks, standards, tools and/or policy initiatives from public or private sectors that touch on the subject of Sustainable Finance.

NB: The focus is strictly on terms and concepts that relate to sustainable financial activities and not the quite more general concept of sustainability

High Level Concepts

High level concepts around sustainable finance. There is substantial overlap between concepts (and some intrinsic vagueness).

Name Definition Link
Circular Economy A circular economy is an economic system aimed at eliminating waste and the continual use of resources wikipedia:Circular economy
Adaptation Any efforts to adjust economies to the physical impacts of climate change
Green Finance Incorporating in the financial system the financial risks and opportunities presented by climate change and other environmental challenges UK Green Finance
Blended Finance Blended finance is the strategic use of development finance for the mobilisation of additional finance towards sustainable development in developing countries OECD
Sustainable Finance The provision of finance to investments taking into account environmental, social and governance considerations EU Sustainable Finance
Sustainable Investment An approach to investment where environmental, social and governance factors, in combination with financial considerations, guide the selection and management of investments. The term overlaps strongly with Sustainable Finance GSI Alliance
Impact Investment Investment made with the intention to generate positive, measurable social and environmental impact alongside a financial return GIIN
Triple Bottom Line A phrase first coined by John Elkington in 1994, it describes the separate financial, social and environmental ‘bottom lines’ of companies. In principle it is designed for companies to value their social and environmental profits and losses, as well as the financial ones. It consists of three Ps: profit, people and planet. Measures financial, social and environmental performance of a corporation over a period of time. wikipedia:Triple bottom line

Named Initiatives and Principles

  • The scope column indicates the primary domain where an entry is applicable. The order is not important
  • The year column indicates when the initiative was formally launched. Many principles have evolved organically without a clearcut date.
  • The link provided aims to be to a definitive resource for each concept (if such exists), otherwise to the wikipedia entry. Usual disclaimers apply

Acronym Name Year Definition Scope Link
COP21 Paris Agreement 2015 The first-ever universal, legally binding global climate change agreement, adopted at the Paris climate conference in December 2015 General EU Site
CSR Corporate Social Responsibility N/A International private business self-regulation that aims to contribute to societal goals of a philanthropic, activist, or charitable nature or by engage in or support volunteering or ethically-oriented practices Corporate Supply Chains wikipedia:Corporate social responsibility
ESG Environmental, Social and Governance A set of factors (criteria) measuring the sustainability and ethical impact of an investment in a company or business Investments wikipedia:Environmental, social and corporate governance
SDG Sustainable Development Goals 2015 A collection of 17 global goals set by the United Nations General Assembly in 2015 for the year 2030 General Sustainable Development
SRI Socially Responsible Investing N/A Investments strategies that avoid certain sectors and favor certain other sectors or practices Investments (esp Funds) wikipedia:Socially responsible investing
PRI Principles for Responsible Investment 2005 An international network of investors working together to put the six principles into practice General Investments UNEPFI Site
PSI Principles for Sustainable Insurance 2012 A global framework for the insurance industry toaddress environmental, social and governance (ESG) risks and opportunities and a global initiative to strengthen the insurance industry’s contribution as risk managers, insurers and investors to building resilient, inclusive and sustainable communities and economies Insurance UNEPFI Site
PRB Principles for Responsible Banking 2019 Six Principles for Responsible Banking (Signed by an international network of banks) General Banking UNPRI Site
PCAF Partnership for Carbon Accounting Financials 2015 An industry-led partnership to facilitate transparency and Accountability of the financial sector to the Paris Agreement A range of bank held assets (focus on GHG accounting) PCAF Site
GABV Global Alliance for Banking on Values 2009 A network of banking CEO's from around the world committed to advancing positive change in the banking sector Promotion of ESG themes GABV Site
IPCC Intergovernmental Panel on Climate Change 1988 An intergovernmental body of the United Nations, dedicated to providing the world with an objective, scientific view of climate change, its natural, political and economic impacts and risks, and possible response options General IPCC Site
NGFS Network for Greening the Financial System 2017 Group of Central Banks and Financial Supervisors Micro/Macro prudential policy development Banque de France Website
GCF Green Climate Fund 2010 A global fund created to support the efforts of developing countries to respond to the challenge of climate change The Fund’s investments can be in the form of grants, loans, equity or guarantees GCF Website
CCFLA Cities Climate Finance Leadership Alliance 2014 A multi-level and multi-stakeholder coalition aimed at closing the investment gap for urban subnational climate projects and infrastructure Knowledge exchange around urban development, climate action, and/or financing CCFLA Website
C40 Cities Climate Leadership Group 2005 A group of 96 cities around the world focused on tackling climate change and driving urban action that reduces greenhouse gas emissions and climate risks Rechnical assistance; facilitation of peer-to-peer exchange; and research, knowledge management & communications C40 Website
CFLI Climate Finance Leadership Initiative 2018 Senior executives of seven major private-sector institutions from across the investment chain. Supporting global mobilization of private finance in response to the challenge of climate change General Investments Bloomberg CFLI Page
GBI Green Bonds Initiative 2010 The Climate Bonds Initiative is an international organisation working to mobilize bond market, for climate change solutions Bond Markets Green Bonds Initiative Website
GISD Global Investors for Sustainable Development Alliance 2019 Group of 30 CEOs of major financial institutions and corporations spanning all the regions of the world Mobilization UN Website
EU Taxonomy EU Sustainable Finance Taxonomy 2019 A list of economic activities which can make a substantial contribution to climate change mitigation and criteria to do no significant harm to other environmental objectives Asset Manager Disclosures EC Website
TCDF Task Force on Climate-related Financial Disclosures 2015 Voluntary climate-related financial risk disclosures for use by companies Financial Reports FSB-TCFD
NFRD Non-Financial Reporting Directive 2014 The directive lays down the rules on disclosure of non-financial and diversity information by large companies operating in the European Union Disclosures EC Website
EP4 Equator Principles 2003 A risk management framework for determining, assessing and managing environmental and social risk in project finance (2019 Update) Project Finance Equator Principles Site
NCP Natural Capital Protocol 2016 A standardised framework for organisations to identify, measure and value their direct and indirect impacts and dependencies on natural capital General NCP Site
PP Poseidon Principles 2019 A framework for assessing and disclosing the climate alignment of ship finance portfolios Shipping Finance Poseidon Principles Site
SOE Sustainable Ocean Economy N/A An economy where humanity effectively safeguards marine and coastal ecosystems, uses ocean resources such as seafood in a sustainable way, and ensures that benefits from the ocean and ocean industries are shared fairly and can last into the future
ARISE Association for Responsible Investment Services N/A A voluntary quality standard for sustainability research providers Sustainability Research ARISE Website
GRI Global Reporting Initiative 1997 An independent international organization promoting standards around sustainability reporting Sustainability Reporting GRI Website
SFDR Sustainable Finance Disclosure Regulation 2019 Regulation (EU) 2019/2088 of the European Parliament and of the Council of 27 November 2019 on sustainability‐related disclosures in the financial services sector Sustainability Disclosures EUR-Lex
SBTi Science Based Targets initiative 2018 The initiative’s overall aim is that by 2020, science-based target setting will become standard business practice and corporations will play a major role in driving down global greenhouse gas emissions. Sustainability Targets by Corporations Website


Acronym Name Definition Scope Link
ISO 26000 Guidance on social responsibility A voluntary guidance standard on how businesses and organizations can operate in a socially responsible way Social Responsibility ISO 26000
ISO 14001 Environmental management systems A standard intended for use by an organization seeking to manage its environmental responsibilities in a systematic manner that contributes to the environmental pillar of sustainability Environmental Standards Certification ISO 14001
ISO 14090 Adaptation to climate change Principles, requirements and guidelines Environmental Standards Certification ISO 14090


Concrete Metrics, Financial Products or other Tools that are implemented / available in some form ('NB: VERY INCOMPLETE'. WIP.)

Name Description Link
Green Bond Principles Green Bonds enable capital-raising and investment for new and existing projects with environmental benefits International Capital Market Association
Green Loan Principles The green loan market aims to facilitate and support environmentally sustainable economic activity Loan Market Association
Positive Screening Investment in sectors, companies or projects selected from a defined universe for positive ESG performance relative to industry peers GSI Alliance
Negative Screening The exclusion from a fund or portfolio of certain sectors, companies or practices based on specific ESG criteria. GSI Alliance
Norms-Based Screening Screening of investments based on compliance with international norms and standards such as those issued by the OECD, ILO, UN and UNICEF; may include exclusions of investments that are not in compliance with norms or standards or over and underweighting. GSI Alliance
Green Mortgage Initiatives that link real estate financing terms to its Ecological Footprint
Stakeholder Capitalism Metrics A set of disclosed metrics that can be used by businesses to align their reporting on performance against ESG indicators and track their contributions towards the SDGs on a consistent basis. WEF


Risks associated with (un)-Sustainable Finance.

Name Definition Link
Climate-Related Risk The potential negative impacts of Climate Change on a financial institution FSB-TCFD
Stranded Assets The premature writeoff of assets incompatible with a sustainable economy
ESG Risks Risk derived from noncompliance with environmental, social, or governance criteria GIIN
Impact Risk The possibility that the investment does not achieve the desired social or environmental benefits GIIN
Greenwashing Green themed public relations or marketing that ideceptively used to promote the perception an organization's products, aims or policies are environmentally friendly. wikipedia:Greenwashing Wikipedia

Other Glossaries