ESG terminology explained

ESG & Sustainability Glossary

Clear, authoritative definitions of 50+ ESG and sustainability terms – from CSRD and double materiality to net zero and scope 3 emissions.

The Citable ESG Orgs. glossary provides concise, expert definitions of the most important terms in environmental, social, and governance (ESG) practice. Whether you are navigating CSRD compliance requirements, understanding the difference between carbon neutrality and net zero, or learning about emerging frameworks like TNFD and ISSB – this glossary is your reference. Each term includes context on why it matters, related concepts, and links to relevant organisations in our directory. For deeper learning, explore our ESG guides.

A

Anti-Corruption

Anti-corruption refers to the policies, procedures, and practices designed to prevent, detect, and address bribery, fraud, and other corrupt activities within an organisation and its business relationships. It encompasses compliance with laws like the UK Bribery Act and US Foreign Corrupt Practices Act, as well as ethical culture and whistleblower protection. Strong anti-corruption programmes are a core governance expectation.

Governance

B

Board Diversity

Board diversity refers to the composition of a company's board of directors in terms of gender, ethnicity, age, professional background, and other dimensions of difference. Diverse boards bring varied perspectives that improve decision-making, risk oversight, and innovation. Many jurisdictions now mandate or recommend minimum levels of board diversity.

GovernanceSocial

C

Corporate Governance

Corporate governance is the system of rules, practices, and processes by which a company is directed and controlled. It defines the distribution of rights and responsibilities among the board of directors, management, shareholders, and other stakeholders. Good governance ensures accountability, fairness, transparency, and responsible decision-making.

Governance

CSRD (Corporate Sustainability Reporting Directive)

The Corporate Sustainability Reporting Directive (CSRD) is EU legislation that significantly expands mandatory sustainability reporting requirements for companies operating in Europe. It introduces the European Sustainability Reporting Standards (ESRS) and requires double materiality assessments, third-party assurance, and digital tagging of reports. The CSRD applies to approximately 50,000 companies, including non-EU companies with significant EU operations.

Frameworks & StandardsGovernance

D

Double Materiality

Double materiality is the principle that companies should report on sustainability matters from two perspectives: how ESG issues affect the company's financial performance (financial materiality) and how the company's activities impact people and the environment (impact materiality). This concept is central to the EU's CSRD and European Sustainability Reporting Standards. It represents a broader view than the single financial materiality approach used by ISSB.

Frameworks & StandardsGovernance

E

Ethical Supply Chain

An ethical supply chain is one in which all participants – from raw material suppliers to final distributors – operate in compliance with environmental, social, and governance standards. This includes fair labour practices, safe working conditions, environmental responsibility, and anti-corruption measures. Managing ethical supply chains requires ongoing due diligence, auditing, and supplier engagement.

GovernanceSocial

F

Fiduciary Duty

Fiduciary duty is the legal obligation of one party to act in the best interest of another, particularly in financial and investment contexts. For corporate directors and investment managers, this includes the duty of care, loyalty, and prudence. The modern interpretation of fiduciary duty increasingly incorporates consideration of ESG factors as material to long-term value.

GovernanceFinance

G

Greenwashing

Greenwashing is the practice of making misleading or unsubstantiated claims about the environmental benefits of a product, service, or company practice. It can range from vague or irrelevant green claims to outright fabrication of environmental credentials. Greenwashing undermines consumer trust and diverts resources from genuinely sustainable alternatives.

EnvironmentalGovernance

H

Human Rights Due Diligence

Human rights due diligence (HRDD) is a process by which organisations identify, prevent, mitigate, and account for how they address their adverse human rights impacts. It involves assessing actual and potential human rights risks across operations and supply chains, taking appropriate action, and tracking effectiveness. The concept is rooted in the UN Guiding Principles on Business and Human Rights.

SocialGovernance

M

Machine-Readable Data

Machine-readable data is information structured in a standardised format (such as JSON-LD, XML, or CSV) that software systems can parse, process, and interpret automatically without human intervention. In the ESG context, machine-readable data enables AI systems, procurement platforms, and regulatory tools to extract, verify, and cite sustainability credentials directly from a data source.

GovernanceFrameworks & Standards

Materiality Assessment

A materiality assessment is a structured process for identifying and prioritising the ESG topics that are most significant to an organisation and its stakeholders. It typically involves stakeholder engagement, peer benchmarking, and analysis of business impact to determine which issues warrant strategic focus and disclosure. The output is usually a materiality matrix ranking topics by importance.

Frameworks & StandardsGovernance

S

Scope 3 Supplier Readiness

Scope 3 Supplier Readiness measures how prepared an organisation is to provide structured, verifiable ESG data for supply chain emissions reporting. It assesses whether the organisation has disclosed emissions data, obtained third-party assurance, set science-based targets, holds verified certifications, and maintains a machine-readable profile that procurement systems can ingest automatically.

EnvironmentalGovernance

Social Licence to Operate

Social licence to operate (SLO) refers to the ongoing acceptance and approval of an organisation's activities by its stakeholders and the broader community. Unlike formal regulatory permits, an SLO is earned through trust, transparency, and demonstrated benefit to society. Losing social licence can result in protests, boycotts, regulatory intervention, and reputational damage.

SocialGovernance

Stakeholder Engagement

Stakeholder engagement is the systematic process of identifying, consulting, and involving individuals or groups that affect or are affected by an organisation's decisions and activities. It includes employees, customers, investors, communities, regulators, and civil society. Effective engagement is two-way, transparent, and ongoing rather than a one-off consultation.

SocialGovernance

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Common questions

Frequently Asked Questions

How are glossary terms selected?

Terms are selected based on relevance to ESG professionals, investors, and compliance teams. We cover regulatory frameworks, sustainability concepts, reporting standards, and emerging terminology.

How often is the glossary updated?

The glossary is regularly expanded with new terms as the ESG landscape evolves. We aim to cover 100+ terms across environmental, social, governance, frameworks, and finance categories.

Can I suggest a term?

Yes. Contact us with term suggestions and we will consider adding them to the glossary.

Are glossary definitions verified?

Definitions are written by ESG domain experts and cross-referenced with established standards bodies, regulatory frameworks, and industry publications.