ESG Terminology

“ESG” describes a set of environmental, social and governance factors used to measure sustainability and long-term value beyond traditional financial measures. ESG topics increasingly are the focus of asset managers, asset owners such as pension funds and insurance companies, and other investors, as well as proxy advisory firms, index providers, regulators and rating agencies. ESG themes now routinely figure on agendas of corporate boards of directors and corporate management teams.

There is no single definition of ESG and no single set of ESG standards or metrics. We highlight below the topics commonly covered within the three categories of ESG and provide definitions of some of the key terms used in ESG disclosures, reports and regulations.

Topics Commonly Covered within E‑S‑G

General Investment Considerations

Active ownership: An investment process that entails engaging with portfolio companies on ESG issues (e.g., by voting) to prompt changes in corporate action and/or policies. Also known as stewardship.

Corporate social responsibility (CSR)/corporate responsibility: A company’s commitment to ESG over and above that which is mandated by law. CSR is generally thought to flow from a “duty of care,” as a responsible corporate citizen to the full range of stakeholders.

ESG integration: The addition of ESG factors to traditional financial analysis on a systematic basis.

ESG investing: The consideration of ESG factors (typically predetermined) alongside financial factors in investment decisions, which often includes screening (typically exclusionary screening). Also known as sustainable investing, responsible investing or socially responsible investing. The integration of ESG metrics in investment decision-making is increasingly seen as leading to a more efficient allocation of capital, with enhanced returns for investors, as well as positive outcomes for the environment, for society and for economies. The ability to effectively integrate ESG themes into investment processes, in turn, depends on the development of a set of comprehensive reporting standards that are broadly accepted, which provide sufficient information about the key drivers of long-term risk and long-term value creation.  

Ethical investing: Investment that is motivated not by broader ESG considerations (and the expectation that active management of ESG risks and opportunities will improve the long-term return of an investment in a company), but rather by alignment with a set of ethical values. Ethical investing is often considered a type of sustainable investing.

Exclusion: The intentional avoidance of investment in a company or business interest. Also known as negative screening.

Externality: A consequence (positive or negative) of an economic activity, which is experienced by an uninvolved third party.

Impact investing: Investments in companies, funds or organizations, the purpose of which is to solve social or environmental problems (by having a positive impact in ESG terms that is measurable).

Intangible assets: Intangible assets, also known as intellectual capital, can include intellectual property, brand value, customer satisfaction and reputation. Since the 1970s, and driven in part by the shift to service economies and later by the rise of the digital economy, the proportion of long-term value of businesses represented by real estate and other fixed assets relative to intangible assets has shifted from a range of 75%-80% to 20%-25%.  

Negative screening: Affirmatively excluding entire sectors, companies or countries from a portfolio based on moral considerations of a defined set of investors or standards relating to human rights, labor practices and the environment. Also known as exclusionary screening.

Positive screening: Investment in companies that demonstrate positive ESG performance relative to peers.

Product life cycle management: The all-encompassing process of managing a product as it moves through each stage of its product life from inception, through engineering design and manufacture, to service and disposal of manufactured products.

Public Benefits Corporation (PBC): A corporation organized to produce a public benefit(s) and to operate in a responsible and sustainable manner, balancing among maximizing profit for shareholders, operating in the best interests of stakeholders and the public benefit or public benefits identified in its charter. Under the Delaware General Corporation Law, for example, public benefits corporations are those “intended to produce a public benefit or public benefits and to operate in a responsible and sustainable manner.”

Resource efficiency: The efficient and sustainable use of resources, particularly natural resources.

Shareholder primacy: A theory in corporate governance holding that the primary focus of a for-profit corporation should be to maximize shareholder value (e.g., shareholder profits).

Stakeholder: A stakeholder is any person, organization, social group or society at large that is impacted by a business, a project or a particular business decision. Stakeholders can include shareholders, employees, surrounding communities, creditors, investors, customers, governments, suppliers, labor unions and trade groups.

Stakeholder capitalism: A governance concept that represents a shift from shareholder primacy to stakeholder primacy — in effect, a shift from enhancing and protecting value solely for shareholders to a holistic view of long-term shareholder value that encompasses the needs of employees, customers and the communities in which businesses operate.

Sustainable investing: See ESG investing.

Sustainability: There is no single definition of the term, and many may use it interchangeably with ESG. According to the UN World Commission on Environment and Development as set forth in its 1987 report (also known as the Brundtland Commission), sustainable development is “development that meets the needs of the present without compromising the ability of future generations to meet their own needs.” The SASB, in its 2017 Conceptual Framework, starts with this definition and then notes that for purposes of its standards, “sustainability refers to corporate activities that maintain or enhance the ability of the company to create value over the long term.” SASB sustainability accounting “reflects the management of a corporation’s environmental and social impacts arising from production of goods and services, as well as its management of the environmental and social capitals necessary to create long-term value. It also includes the impacts that sustainability challenges have on innovation, business models, and corporate governance and vice versa.”

Environmental Terms

Carbon dioxide: A byproduct of burning fossil fuels, of burning biomass, of land-use change and industrial processes.

Carbon finance: Finance and resources provided to projects that are generating or are expected to generate GHG emission reductions in the form of the purchase of such emission reductions, which are tradable on the carbon market.

Carbon footprint: A measure of GHG emissions.

Carbon intensity: The amount of emissions of carbon dioxide released per unit of another variable such as gross domestic product.

Carbon neutral: The state of making no net release of carbon dioxide to the atmosphere, especially through offsetting emissions by planting trees.

Carbon offset: An action intended to compensate for the emission of carbon dioxide into the atmosphere as a result of industrial or other human activity, especially when quantified and traded as part of a commercial program.

Carbon pricing: Costs associated with the emission of carbon dioxide, measured as a fee per ton of carbon dioxide emitted or an incentive for reducing emissions.

Carbon sequestration: The capture and long-term storage of atmospheric carbon dioxide, both naturally and as a result of anthropogenic (human) activities.

Carbon sinks: Natural environments that can absorb more carbon dioxide than they release, including oceans (namely algae, vegetation and coral under the sea), plants, forests and soil.

Cleantech/greentech: Environmentally friendly technologies and practices. The term co-exists with terms such as “green energy” and “eco-technology.”

Conference of the Parties (COP): An annual conference of countries (and in the case of the European Union, a bloc) that joined the UN Framework Convention on Climate Change (UNFCCC), which was adopted in 1992 and entered into force in 1994. These are UN Climate Change Conferences. COP26 (initially scheduled for 2020) will be held in Glasgow in November 2021.

Decarbonization: The reduction of greenhouse gas emissions (particularly emissions of carbon dioxide).

Emissions: Emissions of GHGs can be direct or indirect. Direct emissions are within the control of a facility or installation, such as the burning of fossil fuels or emissions from industrial processes, while indirect emissions are collateral consequences of activities at an installation or facility, such as the consumption of purchased energy or emissions from owned vehicles, air travel or waste disposal.

Financial risks: Financial risks depend on the extent to which the transition/migration to a lower carbon future occurs. The principal financial risk arises from stranded assets; financial risks can also capture a range of risks flowing from changing expectations not only of consumers and customers, but also of shareholders. Financial (or liability) risks also can arise as a result of liability claims seeking compensation for damages due to climate change-driven events.

GHG: Acronym for greenhouse gas, which encompasses any gas that absorbs infrared radiation in the atmosphere, trapping heat and contributing to the so-called “greenhouse effect.” These gases include water vapor, carbon dioxide, methane, nitrous oxide, ozone, chlorofluorocarbons, ozone, hydrofluorocarbons, sulfur hexafluoride and perfluorocarbons. While carbon dioxide is the most common GHG emitted by human activity, it is not the only GHG, and accordingly, GHGs may also be referred to as carbon dioxide equivalents. Carbon may also be used as a shorthand reference for carbon dioxide or GHGs.

Green investing: Investments in businesses that contribute to sustainable solutions, such as renewable energy, energy efficiency, clean technology, water treatment and resource efficiency, or low-carbon infrastructure.

Greenwashing: Overstating the extent to which an investment, enterprise, business practice or product or service is sustainable for competitive or other reasons.

Intangibles: Costs of natural hazards which are not, or at least not easily, quantifiable or measurable in monetary terms. Often expressed as “intangible costs” or “intangible assets.”

Low-carbon economy: Economy based on low-carbon power sources with lower output of GHG emissions. See “Paris Agreement.”

Net zero emissions: The point at which a country produces no GHG emissions, either because it has phased out all GHG emissions or has removed a sufficient level of carbon from the atmosphere to offset the GHG emissions it releases. It is recognized that a gross zero target would mean reducing all emissions to zero, which is not deemed realistic, hence the net zero concept. Also referred to as net zero carbon, carbon neutrality or simply net zero.  Net zero targets are also announced by regional governments, city governments, businesses, universities, insurance companies and large investors. The UN Race to Zero campaign aims to rally leadership and support from business, cities, regions, investors and others to achieve a shift to a decarbonized economy and ultimately net zero carbon emissions by 2050 at the latest. These efforts support the efforts of governments under, among others, the Climate Ambition Alliance launched as part of COP25 (in 2019).  

Paris Agreement: The agreement reached at COP21 (in 2015) in which parties agreed to limit warming to well below 2°C above pre-industrial levels and ideally 1.5°C. A plan by a party to take climate action (emission reduction targets and plans, adaptation plans or other climate action goals) is known as a nationally determined contribution (or NDC); initially these NDCs were known as intended nationally determined contributions (or INDCs), but the “intended” was dropped as part of the Paris Agreement.

Physical risks: Physical risks encompass the consequences of an increase in both the frequency and the severity of extreme weather conditions that can damage assets, both physical as well as natural. Physical risks also affect humans through loss of life or injury. Physical risks can be triggered, for example, by specific weather events, such as hurricanes, tornadoes, wildfires, droughts and flooding. Physical risks can also be triggered by longer-term shifts in climate, such as changes in precipitation, extreme weather variability and sustained higher temperatures, leading to retreat of glaciers, rise in sea levels and chronic heatwaves.

Renewables: A source of energy that is not depleted by use, such as water, wind or solar power.

Scope 1-3 GHG Emissions: The three types of GHG emissions categorized by the GHG Protocol. Scope 1 emissions are direct emissions from sources that are owned or controlled by the reporting company, which includes on-site fossil fuel combustion and fleet fuel consumption. Scope 2 emissions are indirect emissions from the generation of electricity, heat, steam or cooling purchased by the reporting company. Scope 3 emissions cover all other indirect emissions that arise in a reporting company’s value chain, such as business travel, purchased goods and services, employee commuting, transportation and distribution of products, solid waste disposal and wastewater treatment.

Stranded assets: Assets that have suffered from unanticipated or premature write-downs, devaluations or conversion to liabilities and can also refer to assets that have become obsolete or non-performing.

Transition: A shift in policy, legal requirements, technology, business models, societal preferences or market forces targeted at a lower-carbon and more resilient economy. Often used in connection when assessing the risks and costs (transition risks and costs) associated with any such shift.

True cost: The concept of capturing the full cost of a good or service by factoring in the difference between the market price of such good or service and its comprehensive societal cost (e.g., factoring the cost of negative (and theoretically positive) externalities into the pricing of such good or service).

Social Terms

Circular economy: An economy based on principles of keeping products, resources and other materials in use as long as possible, extracting the greatest value from them while in use, and then regenerating products, resources and other materials at the end of serviceable life. The ultimate goal is to eliminate waste and break the traditional (linear) cycle of make, use and dispose.

Civil society: Encompasses a spectrum of non-governmental actors (individuals and organizations) focused on social action. These actors can include, among others, non-governmental organizations (NGOs), online groups, social movements, women’s groups, indigenous groups, faith-based groups, labor unions, social entrepreneurs, research organizations and community-based and other grassroots groups. Civil society organizations are also referred to as “CSOs.”

Conflict minerals: Minerals that are mined where armed conflict and human rights abuses are rife. Tin, tantalum and tungsten (derivatives of cassiterite, columbite-tantalite (coltan) and wolframite) as well as gold (also known as “3TG”) sourced from the Democratic Republic of Congo and surrounding countries, which are not deemed “DRC conflict-free.” To be DRC conflict-free, the extraction of the minerals cannot directly or indirectly have benefitted armed groups in the covered countries.

D&I or DEI: Diversity and inclusion or diversity, equity and inclusion broadly outline the efforts—programs and policies—that companies and organizations adopt to create a more welcoming environment and encourage representation and participation from a diverse group of people. Diversity and inclusion efforts generally focus on increasing the representation of women, people of color and members of the LGBTQ community, among others.

Fair trade: Arrangements designed to promote concerns for social, economic and environmental well-being of marginalized small producers, while not profiting at the expense of these producers. The World Fair Trade Organization (one of various international labeling organizations) lists 10 principles of fair trade: opportunities for disadvantaged producers; transparency and accountability; fair trade practices; fair payment; no child labor/forced labor; no discrimination/gender equality/freedom of association; good working conditions; capacity building; promote fair trade; and respect for the environment.

Kimberly process: A commitment to reduce the flow of “conflict diamonds” in the global supply chain. Conflict diamonds are rough diamonds used to finance wars against governments.

Modern slavery: Exploitation of people who are coerced into service or other form of servitude, often with the threat of violence. Examples include bonded labor, forced marriage, human trafficking and organ trafficking.

Responsible supply chains: A term that broadly covers supply chain management, responsible procurement and supply chain engagement.

Social equity: Issues relating to the provisions of equal opportunities for minorities, LGBTQ, women, individuals with disabilities and potentially other identifiable groups such as veterans.

Social washing: Statements or policies that make a company appear more socially responsible than it actually is.

Supply chain diversity: Broadening the sources of supply and manufacturing to reduce the dependence on a single supplier or manufacturer, or dependence on suppliers or manufacturers in a particular country.

Trafficking: Recruitment, transportation, transfer, harboring or receipt of individuals by means of force, threat of force, coercion, or abuse of power or position of vulnerability, for the purpose of exploitation. Exploitation can include prostitution or other forms of sexual exploitation, forced labor or services, slavery or practices similar to slavery, servitude or the removal of human organs.

Reporting on ESG Metrics

B Corporation: A global, non-profit organization that provides private certification to for-profit companies that meet certain social and environmental performance standards. The certification assessment examines, for example, how a company’s operations and business model impacts its workers, community, environment and customers by looking at a range of issues, such as the company’s supply chain, input materials, charitable giving and employee benefits.

CDP: Formerly the Carbon Disclosure Project, an NGO that supports companies and cities in disclosure of environmental impacts.

Coalition for Environmentally Responsible Economies/CERES: A non-profit organization based in the United States that comprises investors and environmental, religious and public interest groups. The coalition’s purpose is to promote investment policies that are environmentally, socially and financially sound.

Climate disclosures: There has in recent years been a growing awareness of the critical need for comprehensive, consistent and comparable climate-related disclosures by businesses. These disclosures must cater to the needs of investors and other sources of capital, regulators, governments, civil society and those providing third-party ratings based on ESG metrics, as well as the businesses providing the disclosures.  The driver behind those providing disclosure frameworks is that markets would be better able to address the risks and the opportunities presented by climate change if decision-useful quantitative information were available and comparable.  To address the absence of unified standards, efforts are underway to consolidate the available frameworks.  For example, in September 2020, SASB, GRI, CDP, CDSB and IIRC (the so-called five major players in sustainability disclosures) announced a collaborative effort to create a comprehensive reporting system covering financial accounting and sustainability disclosures, and, in November 2020, SASB and IIRC announced their intention to merge to form the Value Reporting Foundation to advance the efforts of SASB, GRI, CDP, CDSB and IIRC.  A key objective is to position sustainability standards and frameworks to complement GAAP/IFRS so as to serve as a basis for comprehensive corporate disclosures that can meet the diverse needs of the consumers of such information. 

Equator Principles: A risk management framework, adopted by financial institutions, for determining, assessing and managing environmental and social risk in projects. The framework is primarily intended to provide a minimum standard for due diligence and monitoring to support responsible risk decision-making.

GIIN: Global Impact Investing Network, an NGO that works with impact investors to accelerate the scale and effectiveness of their investments.

Greenhouse Gas Protocol Initiative: An initiative undertaken by a multi-stakeholder group convened by the World Resources Institute and the World Business Counsel for Sustainable Development to develop internationally accepted GHG accounting and reporting standards. The initiative produced the GHG Protocol Corporate Accounting and Reporting Standard (the GHG Protocol) and the GHG Protocol Project Qualification Standard. The GHG Protocol introduced the concept of “scope” (Scopes 1, 2 and 3).

GRI: Global Reporting Initiative, an NGO focused on sustainability reporting. GRI publishes the GRI Standards.

IFRS Foundation: A not-for-profit organization responsible for developing a single set of global accounting standards (known as IFRS). The Trustees of the IFRS Foundation issued a consultation paper on sustainability reporting based on global sustainability standards. 

IIGCC: Institutional Investors Group on Climate Change, which launched the investor-led Paris-Aligned Investment Initiative, has over 270 members, principally pension funds and asset managers based in Europe. It seeks to mobilize capital to low carbon transition and ensure resilience to the impact of climate change through collaboration with business, policy makers and investors. In March 2021, the IIGCC launched the Net Zero Investment Framework, which is designed to enable investors to align their investment portfolios with net zero emissions.

IIRC: International Integrated Reporting Council, which established the International Integrated Reporting Framework.

IPCC: Intergovernmental Panel on Climate Change, established by the United Nations Environment Programme and the World Meteorological Organization.

IOSCO: International Organization of Securities Commissions. In April 2020 and again in October 2020, the Chair of the Sustainable Finance Task Force of IOSCO confirmed its desire to play a part in improving the completeness, consistency and comparability of sustainability reporting.

Net Zero Asset Owners Alliance: A UN-convened group formed in 2019 whose 34 institutional investors with assets under management of $5.5 trillion seek to deliver on a commitment to transition their respective investment portfolios to net zero emissions by 2050.

SASB: Sustainability Accounting Standards Board, whose mission is to help companies report on the sustainability topics that matter most to their investors. SASB states that it identifies financially material issues, which are the issues that are reasonably likely to impact the financial condition or operating performance of a company and therefore are most important to investors.

SDGs: Sustainable Development Goals, which describe a set of 17 goals (together with 169 targets) adopted in 2015 by the UN General Assembly as part of the 2030 Agenda for Sustainable Development, which build on the Millennium Development Goals. As noted in the Agenda, the SDGs “seek to realize the human rights of all and to achieve gender equality and the empowerment of all women and girls. They are integrated and indivisible and balance the three dimensions of sustainable development: the economic, social and environmental.”

Stakeholder Capitalism Metrics: Metrics released by the International Business Council of the World Economic Forum covering disclosures focused on people, planet, prosperity and principles of governance. The initiative includes 21 core and 34 expanded metrics. They are intended to “strengthen the ability of companies and investors to benchmark progress on sustainability matters, thereby improving decision-making and enhancing transparency and accountability regarding the shared and sustainable value companies create.”  The release of the metrics is intended to signal that ESG factors are increasingly seen as critical to long-term viability of businesses and to encourage integration of sustainability into core strategy, operations and disclosure.  

TCFD: Task Force on Climate-related Financial Disclosures, created by the Financial Stability Board (FSB) to establish uniformity to climate-related risk disclosures by companies. In 2017, the TCFD published a set of recommendations for global companies on how to disclose climate-related financial risks aimed at promoting more informed investment, credit and insurance underwriting decisions by companies and their investors. In February 2020, the TCFD announced that it had signed up more than 1,000 supporters of its recommendations, in its words, “signifying a major shift among market participants in acknowledging that climate change presents a financial risk.”

UNEP Finance Initiative: A global partnership established between the United Nations Environment Program and the financial sector to draw up a global sustainability framework.

UNGC: United Nations Global Compact, which encourages businesses to adopt socially responsible and sustainable policies based on 10 principles, and to report on them.

UN PRI: United Nations Principles for Responsible Investment, consisting of six investment principles for integrating ESG principles into investment decisions. The PRI is also an independent NGO that is a leading proponent of responsible investing, based on the principles; it currently has over 3,000 signatories.

Financing

Green bonds: Debt instruments created to fund existing or new projects with environmental and/or climate benefits. Proceeds are ring-fenced to finance or refinance new or existing projects that promote achievement of sustainable activities.

Green Bond Principles: A set of voluntary guidelines issued by the International Capital Markets Association (ICMA) setting forth recommended transparency, reporting and disclosures for green bonds.

Sustainability-linked bonds: Debt instruments linked to meeting specific sustainability/ESG objectives within a defined period of time. In contrast to green bonds, which fund specific projects, sustainability-linked bonds (SLBs) are forward-looking performance-based instruments, the achievement of which can be measured through predefined key performance indicators and assessed against predefined sustainability performance targets (SPTs). There are consequences if the selected key performance indicators fail to reflect achievement of the SPT, such as a change in the interest rate. Proceeds need not be tied to sustainability goals, and instead can be used for general corporate purposes. A key element of these instruments is reporting in respect of the key performance indicators and SPT. Sustainability-linked bonds would be eligible as central bank collateral provided they meet conditions set by the European Central Bank announced in September 2020 that became effective January 1, 2021.

Sustainability-linked Bond Principles: A set of voluntary guidelines issued by ICMA setting forth recommended structures, reporting and disclosures for sustainability-linked bonds.

Sustainable finance: Any form of financial service that embeds ESG criteria into investment decision-making to benefit both the investor and society more broadly. The term can cover green bonds, impact investing, active ownership and microfinance, among other initiatives and activities. Although ICMA has issued voluntary guidelines, there currently is no formal regulation of any sustainable finance instrument, and no body currently endorses a particular instrument as being “green,” “sustainable” or “social.” See “EU Green Bond Standard.”

Legislative Initiatives

EU Action Plan for Financing Sustainable Growth: In 2018, the European Commission released an action plan for financing sustainable growth, which was a response to recommendations of the High-Level Expert Group on Sustainable Finance issued in early 2018. The EU Action Plan sets out 10 actions in three key areas that would set in motion legislative action on taxonomy, disclosure and duties for institutional investors and asset managers, benchmarks and corporate disclosure.

EU Emissions Trading System (ETS): The EU ETS was set up in 2005 and was the first international GHG emissions trading system. It was designed to allow the European Union to reach its climate targets under the Kyoto Protocol. The EU ETS is a “cap and trade” system, whereby a limit (a “cap”) is set on the total amount of certain GHG emissions from installations covered by the system, and within the cap, companies buy or receive emission allowances (permits), which they can trade with one another. Those emitting less GHGs than authorized can sell their permits within the system to those emitting more than authorized. After each year, a company must surrender sufficient allowances to cover its emissions, failing which it is subject to fines. Spare allowances can be held to cover future emissions or can be sold. The EU ETS is now in its fourth phase (2021-2030), and covers approximately 40% of the EU GHG emissions and more than 11,000 energy-using installations (power stations and industrial plans) and airlines operating within the European Union. The system applies, since the third phase (2013-2020) a single, EU-wide cap, rather than national caps. The European Commission estimates that emissions from installations covered by the EU ETS declined by approximately 35% between 2005 and 2019. Under the European Green Deal, the European Commission has proposed to increase the EU GHG emission reduction target to at least 55% by 2030, and as part of a new target, the EU ETS may be revised and expanded. A Market Stability Reserve was launched in 2019 to address the surplus of emission allowances that had built up under the EU ETS, which had the effect of reducing prices for carbon and the associated incentive to reduce emissions.

EU Green Bond Standard: The European Green Deal sets forth an action plan to boost the efficient use of resources by moving to a clean, circular economy and restore biodiversity and cut pollution. The action plan recognizes the need for long-term signals to direct financial and capital flows to green investments. As part of that effort, the European Commission intends to establish an EU Green Bond Standard (EU-GBS) by June 2021. The EU-GBS was first addressed in the June 2019 Report of the Technical Expert Group on Sustainable Finance (TEG).  The TEG was established as part of the 2018 EU Action Plan on Sustainable Finance (EU Action Plan).  This effort is also tied to the EU Taxonomy Regulation.

European Green Deal: In late 2019, the European Commission announced the European Green Deal, a strategy targeting climate neutrality across the European continent by 2050, and a direct response to the EU Action Plan. This call to arms followed appeals for accelerated action to reduce greenhouse gas emissions and create a low-carbon and climate resilient economy embedded in the Paris Agreement, the SDGs and the Special Report of the IIPC.

EU Taxonomy Regulation: The EU Taxonomy Regulation, which was proposed as part of the EU Action Plan, amended the EU Regulation on sustainability-related disclosures in the financial services sector (SFDR) and entered into force in July 2020, sets up a formal, unified and harmonized classification system for environmentally sustainable economic activities, which will be phased in over time. In sum, for an economic activity to be considered environmentally sustainable, it has to: (i) substantially contribute to one of the six environmental objectives determined under the EU Taxonomy Regulation (climate change mitigation; climate change adaptation; sustainable use and protection of water and marine resources; transition to a circular economy; pollution prevention and control; and protection and restoration of biodiversity and ecosystems), (ii) do no “significant harm” to any of the other environmental objectives, (iii) be carried out in compliance with minimum social safeguards and (iv) comply with technical screening criteria (adopted as “delegated acts”). This classification system will only enter into effect after the adoption by the European Commission of the relevant delegated acts, which will determine under what conditions (a) an activity makes a substantial contribution to a given economic objective and (b) the activity does not significantly harm the other objectives. The climate objectives (the first two of the six) are intended to be in place by the end of 2021, with disclosure requirements applicable beginning January 1, 2022, and the other environmental objectives by the end of 2022, with disclosure obligations applicable beginning January 1, 2023.

UK Green Finance Strategy: A strategy to align private sector capital flows with sustainability goals, set out by the UK Department of Business, Energy and Industrial Strategy in July 2019.