Top 10 Sustainability Buzzwords

Climate change is everywhere at the moment, from David Attenborough documentaries, to protests across the nation, what Greta Thunberg is up to and the rise in B Corp companies, it is easy to get perplexed by the number of phrases and buzzwords flying around.

Additionally, the field of responsible investing continues to gather pace and one of the biggest challenges is the growing list of interpretations and definitions being used in the market.

Below are 10 sustainability buzzwords we thought might boost your phrasebook.

B CORP

A B Corp Certification is a way that businesses can demonstrate their commitment to sustainability, ethical business practices, and making a positive impact on society and the environment.  These companies are transparent on factors from employee benefits and wellbeing to charitable giving. It shows the business cares about creating a sustainable future. Balancing both profit with sustainability. Certified B Corp companies are beginning to lead the way with regards to sustainability.

CARBON NEUTRAL

A person, company or country is carbon neutral if they balance the carbon dioxide they release into the atmosphere through their everyday activities with the amount they absorb or remove from the atmosphere. This is also called net zero carbon emissions or net zero carbon, because overall no carbon dioxide is added to the atmosphere.

CARBON OFFSET

A carbon offset broadly refers to a reduction in GHG emissions – or an increase in carbon storage (e.g., through land restoration or the planting of trees) – that is used to compensate for emissions that occur elsewhere. A common method of carbon offsetting is planting trees, but there isn’t always guarantee that the forest will be permanent or properly looked after. It’s advised to do extra research if you are considering getting involved with offsetting companies or projects.

CORPORATE RESPONSIBILITY

A company’s responsibility to operate its business in a way that does not harm the environment or society. It might include reducing carbon emissions, promoting diversity and inclusion and supporting local communities. Corporate responsibility is starting to underpin many business strategies as it can demonstrate commitment to ESG (Environmental, Social, Governance) factors.

COP

Conference of the Parties the main decision-making body of the United Nations Framework Convention on Climate Change (UNFCCC). The UNFCCC is an agreement between 197 countries of the United Nations. The aim of the UNFCCC is to prevent “dangerous” human interference with the climate system. The COP ensures progress is made upon this agreement. The next meeting is COP 28 held in Dubai at the end of 2023.

GREENWASHING

With many businesses committing to corporate responsibility and ESG principles, there are many who are misleading consumers into thinking they are making more of an environmentally friendly choice than they actually are. Being aware of greenwashing and doing your own research can ensure you are choosing companies, be it to shop at or invest in, that align with your values.

ESG

Environmental, social, and governance (ESG) investing refers to standards set for a company’s behaviour used by investors to screen companies and also encourage them to act responsibly. Utilising ESG can help investors avoid holding companies that may engage in unethical practices and includes all the non-financial risks within the companies day to day activities.

ENVIRONMENTAL FACTORS

This “E” in ESG, concerns issues related to resource use, pollution, climate change, energy use, waste management and other physical environmental challenges and opportunities.

SOCIAL FACTORS

The ‘S’ relates to how a company interacts with the communities it operates in, its suppliers, employees and customers. These include, for example, labour standards, health and safety, supply chain management and nutrition and obesity.

GOVERNANCE FACTORS

The ‘G’ is about assessing how well a company is run. See the definition of “corporate governance” above for further information.

PARIS AGREEMENT

The Paris Agreement is a global commitment, agreed at COP 21 in Paris in 2015, to limit global warming to below 2°C.The agreement brings all nations into a common cause to ambitiously battle climate change. It is the start of a new course in the global climate change effort.  Each country must determine, plan, and regularly report on the contribution that it undertakes to mitigate global warming.

SOCIALLY RESPONSIBLE INVESTING (SRI)

An investment approach that considers financial returns alongside ESG principles as part of its investment process. Rather than looking at short term financial gains a sustainable investing also looks at the bigger picture and considerations of how companies contribute to society. For example, companies making a positive impact, such as a solar energy company.

SUSTAINABLE INVESTING

An investment approach in which a company’s sustainability practices are paramount to the investment decision. ESG analysis helps form the key foundations of the investment process.

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Sources: Schroders and United Nations Framework Convention on Climate Change, 31 March 2021.