ESG Glossary

The American Society of Heating, Refrigerating and Air-Conditioning Engineers is an American professional association seeking to advance heating, ventilation, air conditioning and refrigeration systems design and construction. ASHRAE has more than 57,000 members in more than 132 countries worldwide.

The practice of measuring how much of a utility a building consumes (energy, water, etc.) or produces (waste, etc.) and comparing that against other, similar buildings.

Biofuel is a fuel produced from organic matter or waste through contemporary processes that is used as an alternative to fossil fuels.

Biomimicry is the practice of emulating models or systems that occur in nature to solve complex human problems.

The Building Owners and Managers Association is a professional organization for commercial real estate professionals based in the United States and Canada.

A measure of the total greenhouse gas emissions produced by an individual, group, or company.

Carbon offsets are reductions in CO₂ or other GHG made to compensate for emissions made elsewhere; they're measured in tonnes of carbon dioxide-equivalent (CO₂e).

Carbon sequestration is a proposed way to slow the accumulation of greenhouse gases, mitigate global warming, and avoid climate change through long-term storage of CO₂ and other forms of carbon.

CDP, formerly known as the Carbon Disclosure Project, is an organization which supports companies and cities to disclose the environmental impact of major corporations. It aims to make environmental reporting and risk management a business norm, and drive disclosure, insight and action towards a sustainable economy.

A circular economy is a systematic approach to economic development with the goal of eliminating waste by focusing on a regenerative design and attempting to promote growth while reducing consumption of finite resources.

A shift in weather patterns due to a heating of the Earth's atmosphere, highly attributed to the burning of fossil fuels and other polluting activities that cause a release of greenhouse gasses.

The Carbon Risk Real Estate Monitor is a research and innovation project that defines science-based decarbonization pathways for the commercial and residential real estate sectors in order to manage transition risks and align with Paris targets.

Corporate social responsibility is a type of international private business self-regulation that aims to contribute to societal goals of a philanthropic, activist, or charitable nature by engaging in or supporting volunteering or ethically-oriented practices.

A CSR report is a periodic (usually annual) report published by companies with the goal of sharing their corporate social responsibility actions and results.

The act of dissociating or selling assets and securities due to behavior not aligned with ESG values, or as a way to display strong commitment to ESG and responsible investing practices.

An environmental management system is a tool that focuses on training personnel and monitoring and reporting environmental performance and impact to internal and external stakeholders with the goal of improving compliance and reducing waste.

ENERGY STAR is a program run by the U.S. Environmental Protection Agency and U.S. Department of Energy that promotes energy efficiency. The program provides information on the energy consumption of products and devices using different standardized methods.

To be eligible for ENERGY STAR certification, a building must earn an ENERGY STAR score of 75 or higher, indicating that it performs better than at least 75% of similar buildings nationwide.

This award recognizes ENERGY STAR partner businesses and organizations in good standing that demonstrate superior leadership, innovation, and commitment to environmental protection through energy efficiency and ENERGY STAR.

The "E" in ESG, environmental factors include things like climate impact and environmental challenges and opportunities, such as energy use, waste production & management, climate change, pollution, etc.

Environmental, Social, and Governance refers to the three central factors in measuring the sustainability and societal impact of an investment in a company or business. These criteria help to better determine the future financial performance of companies.

Portfolios that explicitly apply environmental, social, and governance criteria in the decision-making process when selecting investments.

Explicitly including environmental, social, and governance factors during the investment process, specifically with the goal of long-term performance growth and risk mitigation.

Energy use intensity is a way of expressing a building's energy usage in relation to its size or other characteristics. One calculation for EUI is to divide a building's annual energy usage by its gross square footage.

Fair trade is a methodology with the goal of helping ensure that producers in developing countries are provided sustainable and equitable trade relationships.

Fitwel is a leading green building certification for new and existing properties of all sizes. Fitwel provides a rank of one to three stars based on a property's performance in 55+ design & operational strategies divided into seven health impact categories.

The "G" in ESG, governance factors relate to how a company is run, which includes things like management structure, compensation, internal controls and accountability policies, shareholder rights, and more.

Promoting a product, service, or company as more environmentally-friendly than it truly is by falsely advertising environmental benefits.

GRESB is an investor-led and mission-driven initiative to provide ESG data on real asset investments to investors, managers and the wider industry. GRESB Assessments provide a consistent framework to measure ESG performance based on self-reported data that is validated, scored and peer benchmarked. Their approach allows investors to analyze their portfolios for ESG risks, opportunities and impacts and engage with managers on their performance.

The Global Reporting Initiative is an independent organization that lays out a set of international standards to help business and government entities understand and communicate their impact on issues like climate change and human rights.

Investment stewardship involves engaging public companies as a way to advocate for corporate governance policies and practices that promote long-term stakeholder value creation.

The International Panel on Climate Change is a body created by the United Nations with the intention of providing scientific assessments on climate change, its impact, and future risks, as well as suggestions for mitigating impact and disruptions.

Leadership in Energy and Environmental Design is a worldwide green building certification program. It is applicable to all building types and phases.

Materiality is a measure of the importance of specific topics and information during the investment process. The more significant a topic is, the more material it is, and vice versa.

Net zero refers to buildings with zero net energy consumption, meaning the amount of energy used at the property is equal to the amount of renewable energy created on-site.

The Occupational Safety and Health Administration was created to ensure safe and healthful working conditions for working men and women by setting and enforcing standards and by providing training, outreach, education and assistance.

Physical risks are outcomes from disruptive events like extreme weather that have a direct impact on society and the economy.

Principles for Responsible Investment is a United Nations-supported international network of investors working together to implement its six aspirational principles, often referenced as "the Principles".

Renewable Energy Certificates (also known as green tags, renewable energy credits, renewable electricity certificates, or tradable renewable certificates) are non-tangible energy commodities in the U.S. that represent proof of 1 megawatt-hour of electricity being generated from an eligible renewable energy source and used in a shared system of power lines.

Energy attained from perpetual, unending sources, such as collection of energy with solar panels or wind turbines.

Resilience is a measure of how well a building is prepared for potentially disruptive events and changing conditions, such as earthquake-proofing or features designed to combat negative effects from long-term risks like climate change.

A philosophy that includes ESG factors during the investment selection, portfolio construction, and monitoring processes, with the goal of maximizing opportunities, ensuring high performance, and mitigating risks.

RobecoSAM is an investment specialist focused exclusively on Sustainable Investing. Serving institutional asset owners and financial intermediaries, the company’s asset management capabilities feature a strong track record in sustainability-themed strategies.

Return on investment is a ratio between the net profit gained and the cost of an investment. Used to evaluate the efficiency of an investment or compare the efficiency of a group of investments.

SASB is a non-profit organization founded to develop sustainability accounting standards.

Science-based targets provide a roadmap for companies to future-proof growth by creating a roadmap of how much to reduce carbon emissions and how quickly the reduction needs to happen.

Scope I emissions are greenhouse gas emissions that your company is directly responsible for, such as emissions from on-site burning of fossil fuels or emissions from fleet vehicles.

Scope II emissions are greenhouse gas emissions from sources that your company owns or controls, such as the generation of electricity, heat, or steam purchased from a utility provider.

Scope III emissions are greenhouse gas emissions from sources your company doesn't own or control but are related to your operations, such as employee commuting or contracted solid waste and wastewater disposal.

The U.S. Securities and Exchange Commission (SEC) recently announced the formation of a Climate and ESG Task Force within their Division of Enforcement. This new task force will work to develop initiatives that will proactively identify ESG-related misconduct.

Aligning business strategies and operations with the 17 Sustainable Development Goals created by the United Nations Global Compact.

The Sustainable Finance Disclosure Regulations introduced various disclosure-related requirements for financial market participants and financial advisors at entity, service, and product level.

The "S" in ESG, social factors relate to how a company treats employees and the community, and includes things like employee engagement programs, human rights policies, health and wellbeing initiatives, and employee and consumer protection.

Social risks are related to actions a business takes that affect the surrounding community, such as labor and human rights issues or violations and corruption.

Social return on investment is a method for measuring non-financial value, particularly focusing around ESG factors. It measures how effectively an organization uses resources to create sustainable value.

Socially responsible investing involves investments considered socially responsible through the nature of the business conducted, which includes factors like socially conscious investing, human rights policies, and emphasis on positive social impacts.

A group with an interest in a company that can affect or be affected by business performance. Historically defined as groups like investors, employees, and customers, but the definition has also expanded to include local and global communities, governments, and more.

An asset that once produced value or profit, but no longer does due to changes such as technological advancements, market shifts, societal habits, and more.

The Task Force on Climate-related Financial Disclosures was developed to provide recommendations for more effective climate-related disclosures that promote more informed investment, credit, and insurance underwriting decisions, which in turn would enable stakeholders to understand better the concentrations of carbon-related assets in the financial sector and the financial system’s exposures to climate-related risks.”

Transition risks relate to major societal and economic shifts, such as moving towards a less polluting, green economy. These paradigm shifts can have major impacts on various industries and sectors of the economy.

Triple bottom line is an accounting framework with three main components: social, environmental, and financial. Companies incorporating this framework believe that, instead of a single bottom line, there are three: people, planet, profit.

The Urban Land Institute is a nonprofit research and education organization whose mission is to provide leadership in the responsible use of land and in creating and sustaining thriving communities worldwide.

Urban Land Institute's Greenprint Center for Building Performance is a worldwide alliance of the foremost real estate owners, investors and financial institutions committed to improving the environmental performance of the global real estate industry, with a particular emphasis on reducing energy consumption and carbon emissions. Their goal is to reduce greenhouse gas emissions by 50% by 2030 through measurement, benchmarking, knowledge sharing, and best practice implementation.

The United Nations Global Compact is a non-binding United Nations pact to encourage businesses worldwide to adopt sustainable and socially responsible policies, and to report on their implementation.

The United Nations Principles for Responsible Investment is an international network of investors working together to implement its six aspirational principles, often referenced as "the Principles".

The U.S. Green Building Council is a community of real estate leaders, governments, developers, contractors, architects, and engineers that are committed to creating a sustainable, prosperous future through LEED, an ESG program for green buildings and communities worldwide.

Applying an organization's core values as a main driver during the investment selection process.

The International WELL Building Institute is a leading tool for advancing health and well-being in buildings globally.

A set of principles that focus on preventing the generation of waste by redesigning products, rethinking how products are used, and reusing products with the goal that no waste is sent to landfills.