| APS - Announced policy scenario |
A scenario that assumes that all climate commitments made by governments around the world, including Nationally Determined Contributions (NDCs) and longer-term net zero targets, will be met in full and on time. |
| ASFI |
Australian Sustainable Finance Initiative (ASFI) are developing sustainable finance taxonomy—to make it easier to identify opportunities to create sustainable assets and activities and guide capital to support the achievement of Australia’s climate, environmental and social objectives. Provide investors with confidence and assurance of sustainability claims—enabling comparability between products and portfolios. https://www.asfi.org.au/our-work |
| ASIC |
Australian Securities Investment Commission (ASIC). Greenwashing is front of mind for regulators. Guidance issued re ‘How to avoid greenwashing when offering or promoting sustainability-related products’ https://asic.gov.au/regulatory-resources/financial-services/how-to-avoid-greenwashing-when-offering-or-promoting-sustainability-related-products/ |
| CBI |
Climate Bond Initiative |
| Corporate engagement and shareholder action |
Corporate engagement and shareholder action refer to the use of shareholder power to influence a company’s behaviour. This can be implemented through corporate engagement, including communications with senior management or boards, filing and voting on shareholder proposals and proxy voting in alignment with ESG guidelines. |
| CSIRO megatrends |
Recent mega trends report - adapting to climate change as one of the key megatrends. Statistics include: Impact of natural disasters on Australian economy = $13.2b in 2017, projected $39.3b per year by 2050; FY20 Black Summer bushfires killed/displaced 3b animals, burnt 12.6-19 million hectares; heat-related deaths across Australian major cities predicted to grow by 60.5% from 2020-50; etc |
| ESG |
Environmental, Social and Governance |
| ESG integration |
Integration is the systematic inclusion of ESG factors into traditional investment decision-making and financial analysis. Rather than being driven by ethical considerations, these factors are viewed as the primary drivers of investment risk and opportunity. |
| EU taxonomy |
Is a green classification system that translates the EU’s climate and environmental objectives into criteria for specific economic activities for investment purposes. |
| Greenb |
Are any type of bond instrument where the proceeds or an equivalent amount will be exclusively applied to finance or re-finance, in part or in full, new and/or existing eligible Green Projects (see Use of Proceeds section below) and which are aligned with the four core components of the green bond principles. |
| ICMA |
The ICMA Green (The Green Bond Principles (GBP)GBP) and Social (The Social Bond Principles (SBF ) Bond principles are voluntary guidelines that are used to improve market transparency, disclosure and promote the integrity of the green, social and sustainable bond market. There are four core components that define a green, sustainable or social bond. |
| IEA |
International Energy Agency (IEA), committed to shaping a secure and sustainable energy future by providing a variety of programs and initiatives, helping ensure energy security, tracking clean energy transitions, collecting data, and providing training around the world. |
| Impact investing |
Impact investing targets investments made into organisations, projects or funds with the intention of generating positive, measurable social and environmental outcomes, alongside financial returns. |
| IPCC |
Intergovernmental Panel on Climate Change (IPCC), the United Nations body for assessing the science related to climate change. |
| ISSB |
International Sustainability Standards Board (ISSB) – intend to deliver a comprehensive baseline of sustainability-related disclosure standards https://www.ifrs.org/groups/international-sustainability-standards-board/ |
| Negative or exclusionary screening |
Negative screening excludes funds that do not align with ESG objectives. This is achieved by excluding specific industries, sectors, companies, practices, countries or jurisdictions. Diversification and value-based screening can also be used to describe this approach. Negative screening criteria include gaming, alcohol, tobacco, fossil fuels, weapons, pornography, and animal testing. |
| Net zero |
Refers to a state when anthropogenic emissions of greenhouse gasses to the atmosphere are balanced by anthropogenic removals. Organizations are considered to have reached a state of net zero when they reduce their GHG emissions following science-based pathways, with any remaining GHG emissions attributable to that organization being fully neutralized, either within the value chain or through the purchase of valid offset credits. |
| Norms-based screening |
International norms and conventions, such as those defined by the United Nations (UN). In norm-based screening, companies that violate the UN Convention on Cluster Munitions may be excluded, while positive screening may use ESG criteria developed by international bodies like the ILO (International Labour Organisation) and UNICEF (UN Children’s Fund). |
| PCAF |
Partnership for Carbon Accounting Financials (PCAF), the Global GHG Accounting and Reporting Standard for the Financial Industry. |
| Positive screening |
Positive screening includes funds that align with ESG objectives. This includes sectors, companies or projects selected for positive ESG or sustainability performance relative to industry peers. It is also known as best-in-class screening. It involves identifying companies from a variety of industries with superior ESG performances. |
| RCP |
Representative Concentration Pathway (RCP) were used to develop greenhouse gas concentration trajectories. The word representative signifies that each RCP provides only one of many possible scenarios. |
| Science-based targets |
Provide clearly defined pathway for companies to reduce greenhouse gas emissions, helping prevent worst impacts of climate change and to future-proof business growth targets. Only considered ‘science-based’ if in line with what latest climate science deems necessary to meet goals of Paris Agreement— by limiting global warming to well below 2°C and pursuing efforts to limit it to 1.5°C https://sciencebasedtargets.org/about-us#who-we-are |
| Scope 1 |
Covers direct emissions from owned or controlled sources |
| Scope 2 |
Covers indirect emissions from the generation of purchased electricity, steam, heating and cooling consumed by the reporting company. |
| Scope 3 |
Includes all other indirect emissions that occur in a company’s value chain. |
| SDA |
Sector Decarbonisation Approach (SDA) is a method for setting CO2 emissions intensity reduction targets in line with climate science. |
| SDG |
Sustainable Development Goals (SDG) are a collection of 17 interlinked global goals designed to be a ‘blueprint to achieve a better and more sustainable future for all’. The SDGs were set up in 2015 by the United Nations General Assembly and are intended to be achieved by 2030. |
| SDS |
Sustainable Development Scenario (SDS), is an integrated scenario specifying a pathway aiming at ensuring universal access to affordable, reliable, sustainable and modern energy services by 2030 aligning to Sustainable Development Goal 7 (SDG 7 ), substantially reducing air pollution (SDG 3.9); and taking effective action to combat climate change (SDG 13). |
| SEC rulings |
US Securities and Exchange Commission (SEC) rulings aimed to prevent greenwashing by enhancing disclosure and standards for funds making ESG claims. |
| Social Bonds |
Are use of proceeds bonds that raise funds for new and existing projects with positive social outcomes. |
| STEPS - Stated policy scenario |
A scenario which reflects current policy settings based on a sector-by-sector assessment of the specific policies that are in place, as well as those that have been announced by governments around the world. |
| Sustainability bonds |
Are bonds where the proceeds will be exclusively applied to finance or re-finance a combination of both green and social projects. |
| Sustainability-linked bonds (“SLBs”) |
Are any type of bond instrument for which the financial and/or structural characteristics can vary depending on whether the issuer achieves predefined Sustainability/ ESG objectives. |
| Sustainability-themed investing |
Sustainability-themed investing involves investing in assets that specifically relate to sustainability. This commonly involves funds that invest in clean energy, green technology, sustainable agriculture and forestry, green property or water technology, where the fund has the explicit objective of driving improved sustainability outcomes alongside financial returns. |
| SFDR |
Sustainable Finance Disclosure Regulation (SFDR) is a European regulation introduced to improve transparency in the market for sustainable investment products, prevent greenwashing and increase transparency around sustainability claims made by financial market participants. |
| TNFD |
Taskforce for Nature-related Financial Risk Disclosure (TNFD) – will develop and deliver a risk management and disclosure framework for organisations to report/act on evolving nature-related risks https://tnfd.global/about/ |