ESG terms

Question 1

Affected community

Answer 1

a group living or working in the same area that has been or may be affected by a reporting undertaking’s operations or through its value chain.
The local community can range from those living adjacent to the
organization’s operations to those living at a distance.

– European Sustainability Reporting Standards ESRS S1 Own Workforce

Question 2

Annual total compensation

Answer 2

salary, bonus, stock awards, option awards, non-equity incentive plan compensation, change in pension value, and nonqualified deferred compensation earnings provided over the course of a year

– European Sustainability Reporting Standards ESRS S1 Own Workforce

Question 3

Annual total compensation ratio

Answer 3

ratio between the compensation of [an organization’s] highest-paid individual and the median compensation for its employees

– European Sustainability Reporting Standards ESRS S1 Own Workforce

Question 4

Biodiversity or Biological diversity

Answer 4

the variability among living organisms from all sources including, inter alia, terrestrial, marine and other aquatic ecosystems and the ecological complexes of which they are part: this includes diversity within species, between species and of ecosystems

– the Convention on Biological Diversity (CBD)

Question 5

Business relationships

Answer 5

relationships with business partners, entities in its value chain, and any other non-State or State entity directly linked to its business operations, products or services

– UN and OCED

Question 6

Child labor

Answer 6

any work that is likely to be hazardous or to interfere with the child’s education, or to be harmful to the child’s health or physical, mental, spiritual, moral or social development

– UN Convention on the Rights of Child

Question 7

Climate change

Answer 7

a change in the state of the climate that can be identified (e.g., by using statistical tests) by changes in the mean and/or the variability of its properties and that persists for an extended period, typically decades or longer. Climate change may be due to natural internal processes or external forcings such as modulations of the solar cycles, volcanic eruptions and persistent anthropogenic changes in the composition of the atmosphere or in land use.

– Intergovernmental Panel on Climate Change (IPCC)

Question 8

Collective bargaining

Answer 8

all negotiations which take place between an employer, a group of employers or one or more employers’ organisations, on the one hand, and one or more workers’ organisations, on the other, for (a) determining working conditions and terms of employment; and/or (b) regulating relations between employers and workers; and/or (c) regulating relations between employers or their organisations and a workers’ organisation or workers’ organisations.

– International Labour Organization in the Collective Bargaining Convention (C154)

Question 9

COP XX

Answer 9

The Conference of the Parties (COP) is the supreme decision-making body of the Convention (United Nations Framework Convention on Climate Change (UNFCCC)).

All States that are Parties to the Convention are represented at the annual COP, at which they review the implementation of the Convention and any other legal instruments that the COP adopts and take decisions necessary to promote the effective implementation of the Convention, including institutional and administrative arrangements.

Most recent (COP 28) is in Dubai in November of 2024.

learn more: https://bit.ly/3sOs8xI

Question 10

Corporate culture

Answer 10

an expression of a company’s “goals through values and beliefs. It guides the undertaking’s activities through shared assumptions and group norms such as values or mission statements or a code of conduct.”

– European Sustainability Reporting Standards

Question 11

Corruption

Answer 11

“use of public office for private gain”
– World Bank

“the abuse of entrusted power for private gain”
– Transparency International

Question 12

CSRD

Answer 12

Corporate Sustainability Reporting Directive

On 5 January 2023, the Corporate Sustainability Reporting Directive (CSRD) entered into force. This new directive modernises and strengthens the rules concerning the social and environmental information that companies have to report. A broader set of large companies, as well as listed SMEs, will now be required to report on sustainability.

More info: https://bit.ly/3T4qkLw

Question 13

Discrimination

Answer 13

“any distinction, exclusion or preference made on the basis of race, colour, sex, religion, political opinion, national extraction or social origin, which has the effect of nullifying or impairing equality of opportunity or treatment in employment or occupation.

– the International Labour Organization

Question 14

Diversity

Answer 14

a commitment to recognizing and appreciating the variety of characteristics that make individuals unique in an atmosphere that embraces and celebrates individual and collective achievement. Identity is dependent on much more than one dimension of a person’s background. In recognizing and appreciating the many characteristics that make individuals unique in the world, diversity provides solutions to eliminate racial discrimination in the workplace.

– the International Labour Organization

Question 15

Double materiality

Answer 15

having both impact materiality and financial materiality, meaning “a sustainability matter meets the criterion of double materiality if it is material from the impact perspective or the financial perspective or both.”

– European Sustainability Reporting Standards ESRS

Question 16

Due diligence

Answer 16

a process through which enterprises identify, prevent, and mitigate actual and potential adverse impacts and account for how they address such impacts

– Organisation for Economic Co-operation and Development (OECD)

Question 18

Employee Health and Safety

Answer 18

the discipline dealing with the prevention of work-related injuries and diseases as well as the protection and promotion of the health of workers. It aims at the improvement of working conditions and environment. Members of many different professions (e.g., engineers, physicians, hygienists, nurses) contribute to “occupational safety, occupational health, occupational hygiene and improvement of the working environment.

– the International Labour Organization

Question 19

Equal remuneration

Answer 19

rates of remuneration for work of equal value established without discrimination based on sex

– the International Labour Organization

Question 20

ESG frameworks

Answer 20

Top frameworks:
1. ISSB Sustainability Disclosure Standards NEW
2. B Corp Impact Assessment
3. CDP Framework
4. CDSB Framework
5. GRI Framework
6. IIRC Integrated Reporting Framework
7. SASB Framework
8. S&P Global Corporate Sustainability Assessment (CSA)
9. TCFD Framework
10. UN SDG Framework
11. WEF Stakeholder Capitalism Metrics

For more info: https://www.armanino.com/articles/esg-frameworks/

Question 21

ESG rating and ranking agencies

Answer 21

– Bloomberg ESG Ratings
– CDP Scores
– FTSE Russell’s ESG Ratings
– ISS ESG Ratings & Rankings
– MSCI ESG Ratings
– Refinitiv ESG Scores (formerly “Reuters ESG Scores”)
– RepRisk ESG Risk Scores
– S&P Global ESG Scores (CSA/DJSI)
– Sustainalytics ESG Risk Ratings (Morningstar owns)

For more info: https://www.armanino.com/articles/esg-scores/#top-esg-rating-ranking-agencies

Question 23

Ethnic group

Answer 23

“a group of people whose members identify with each other through such factors as common heritage, culture, ancestry, language, dialect, history, identity and geographic origin. It includes people from a range of backgrounds including indigenous and tribal peoples, people of African and Asian descent, Roma people and migrant workers.”

– the International Labour Organization

Question 24

Ethnic minority

Answer 24

any ethnic group that is not dominant socially, economically or politically

– the International Labour Organization

Question 25

Financial materiality

Answer 25

“A sustainability matter is material from a financial perspective if it triggers or may trigger material financial effects on the undertaking. This is the case when it generates or may generate risks or opportunities that have a material influence (or are likely to have a material influence) on the undertaking’s cash flows, development, performance, position, cost of capital or access to finance in the short-, medium- and long-term time horizons.”

– European Sustainability Reporting Standards ESRS

Question 26

Forced labor

Answer 26

“all work or service which is exacted from any person under the menace of any penalty and for which the said person has not offered himself voluntarily.”

– the International Labour Organization

Question 27

Freedom of association

Answer 27

“the right of workers and employers to form and join organizations of their own choosing.”

– the International Labour Organization

Question 28

Greenhouse gases (GHGs)

Answer 28

“those gaseous constituents of the atmosphere, both natural and anthropogenic, that absorb and re-emit infrared radiation”

– United Nations Framework Convention on Climate Change (UNFCCC)

Question 29

Grievance mechanism

Answer 29

“any routinized, State-based or non-State- based, judicial or non-judicial process through which grievances concerning business-related human rights abuse can be raised and remedy can be sought.”

– the United Nations Guiding Principles (UNGPs)

Question 30

Harassment

Answer 30

“a range of unacceptable behaviours and practices, or threats thereof, whether a single occurrence or repeated, that aim at, result in, or are likely to result in physical, psychological, sexual or economic harm, and includes gender-based violence and harassment.”

– the International Labour Organization

Question 31

Health

Answer 31

“not merely the absence of disease or infirmity; it also includes the physical and mental elements affecting health which are directly related to safety and hygiene at work.”

– the International Labour Organization

Question 32

Human rights due diligence

Answer 32

“a way for enterprises to proactively manage potential and actual adverse human rights impacts with which they are involved.” The definition includes four core components: “

1. Identifying and assessing actual or potential adverse human rights impacts
2. Integrating findings from impact assessments
3. Tracking the effectiveness of measures and processes to address adverse human rights impacts
4. Communicating on how impacts are being addressed

– Office of the United Nations High Commissioner for Human Rights (OHCHR)

Question 33

Impact materiality

Answer 33

“a sustainability matter is material from an impact perspective when it pertains to the undertaking’s material actual or potential, positive or negative impacts on people or the environment over the short-, medium- and long- term time horizons. A material sustainability matter from an impact perspective includes impacts caused or contributed to by the undertaking and impacts which are directly linked to the undertaking’s operations, products, and services through its business relationships.”

– European Sustainability Reporting Standards (ESRS)

Question 34

International Labour Organization (ILO)

Answer 34

is the only tripartite agency of the United Nations bringing together governments, employers and workers of 187 Member States. Since 1919 the ILO is in charge of setting labor standards, developing policies and devising programs promoting decent work for all women and men. The main aims of the ILO are to promote rights at work, encourage decent employment opportunities, enhance social protection and strengthen dialogue on work-related issues.

Question 35

NFRD

Answer 35

The Non-Financial Reporting Directive (NFRD) is the predecessor of the CSRD and has a more limited scope. For example, the NFRD currently imposes an obligation on some one hundred companies in the Netherlands to report on ESG factors. In the future, the CSRD is expected to impose this obligation on some thousands of companies.

Question 36

SASB

Answer 36

Sustainable Accounting Standards Board

SASB Standards help companies disclose relevant sustainability information to their investors. Available for 77 industries, the SASB Standards identify the sustainability-related risks and opportunities most likely to affect an entity’s cash flows, access to finance and cost of capital over the short, medium or long term and the disclosure topics and metrics that are most likely to be useful to investors.

As of August 2022, the International Sustainability Standards Board (ISSB) of the IFRS Foundation assumed responsibility for the SASB Standards. The ISSB has committed to maintain, enhance and evolve the SASB Standards and encourages preparers and investors to continue to use the SASB Standards.

more info: https://sasb.org/

Question 37

Sustainability

Answer 37

Defined by the United Nations (UN) Brundtland Report, published in 1987, as “development that meets the needs of the present without compromising the ability of future generations to meet their own needs.” This approach is the basis of the UN Global Sustainable Development Goals (SDG) one of the broadly accepted ESG frameworks used to align business strategy with solutions to key environmental and social issues.