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Key definitions
Jason Arraj avatar
Written by Jason Arraj
Updated over a week ago

Carbon Accounting

The process of measuring amounts of carbon dioxide equivalents emitted by an entity. It is used to calculate a carbon footprint and generally forms the basis for carbon-related financial transactions.

Carbon Credits

Permits that allow the holder to emit a certain amount of carbon dioxide or other greenhouse gases; one credit permits the emission of a mass equal to one ton of carbon dioxide.

Carbon Disclosure Project (CDP)

The Carbon Disclosure Project (CDP) is a global platform that enables organizations to measure, disclose, and manage their environmental impact, with a primary focus on carbon emissions. By participating in CDP, companies provide detailed information about their climate-related initiatives, risks, and opportunities. This data is then used to assess and benchmark environmental performance, fostering transparency and encouraging sustainable practices across various industries.

Carbon Footprint

The total greenhouse gas emissions caused directly and indirectly by an individual, organization, event, or product.

Carbon Intensity

The amount of carbon by weight emitted per unit of energy consumed or activity performed.

Carbon Neutral

The state of net-zero carbon dioxide emissions, often achieved by balancing emissions with carbon removal or simply eliminating emissions altogether.

Carbon Offsetting

Compensation for emissions made elsewhere, typically by funding an equivalent carbon dioxide saving project.

Carbon Pricing

The cost applied to carbon pollution to encourage polluters to reduce the amount of greenhouse gas they emit into the atmosphere.

Climate Action Plan

A strategic plan that outlines specific activities an organization will undertake to reduce greenhouse gas emissions and manage its climate change risks.


The process of reducing carbon intensity, i.e., lowering the amount of greenhouse gases produced from burning fossil fuels, typically in energy and transportation sectors.

Downstream Activities

Including emissions from the transportation and distribution (in vehicles not owned or operated by the reporting entity) of products in the supply chain, end-of-life treatment of sold products, and investments.

Environmental, Social and Governance (ESG)

Environmental, Social, and Governance (ESG) is a framework used to evaluate a company's performance in key non-financial areas. The "E" focuses on environmental factors, such as a company's impact on the planet. The "S" considers social factors, including how a company treats its employees and engages with communities. The "G" relates to governance, examining the company's leadership, ethics, and internal controls. ESG criteria are increasingly important for investors and stakeholders interested in sustainable and responsible business practices. By considering ESG factors, companies aim to enhance long-term value creation while minimizing negative impacts.

Global Warming Potential (GWP)

A measure that compares the amount of heat trapped by a certain mass of a greenhouse gas to the amount of heat trapped by a similar mass of carbon dioxide over a specified period.

Importance of GWP: Helps in comparing the impacts of emissions from various gases on global warming. This is essential for developing strategies to reduce emissions and mitigate climate change.

Different types of greenhouse gases with respective GWPs:

  1. Carbon Dioxide (CO2): Has a GWP of 1 and serves as the baseline against which other greenhouse gases are measured.

  2. Methane (CH4): Possesses a GWP approximately 28–36 times greater than CO2 over 100 years.

  3. Nitrous Oxide (N2O): Has a GWP 265–298 times that of CO2 for a 100-year timescale.

  4. Fluorinated Gases: A group of synthetic gases used in various industrial applications. These include hydrofluorocarbons (HFCs), perfluorocarbons (PFCs), sulfur hexafluoride (SF6), and nitrogen trifluoride (NF3). The GWPs for these gases can be in the thousands or even tens of thousands times that of CO2.

Greenhouse Gas (GHG)

GHG stands for Greenhouse Gas, referring to gases like carbon dioxide and methane that trap heat in the Earth's atmosphere. Measuring GHG emissions is crucial for understanding and addressing climate change. Organizations often track their GHG emissions to assess their environmental impact and develop strategies to reduce their carbon footprint, contributing to global efforts to mitigate climate change.

Greenhouse Gas Inventory

An accounting of the amount of greenhouse gases emitted to or removed from the atmosphere over a period of time.

Greenhouse Gas Protocol (GHG Protocol)

The Greenhouse Gas Protocol (GHG Protocol) is a widely recognized standard for accounting and reporting greenhouse gas emissions. It provides a systematic framework for organizations to measure and manage their carbon footprint. The GHG Protocol helps businesses identify, quantify, and track emissions from various sources, allowing them to make informed decisions and set targets for reducing their environmental impact. By following this protocol, organizations contribute to global efforts in addressing climate change and promoting sustainability.

Lifecycle Assessment (LCA)

Lifecycle Assessment (LCA) is a method for evaluating the environmental impacts of a product, process, or service from raw material extraction to disposal or recycling. It aims to provide a comprehensive understanding of environmental footprints, considering factors like resource use, energy consumption, and emissions. LCA supports informed decision-making, identifies improvement opportunities, and encourages sustainable practices by assessing the entire life cycle of a system.

Materiality Assessment

The process to identify, refine, and assess potential environmental, social, and governance issues that could affect a business and its stakeholders.

Net Zero Carbon

A balance between the amount of greenhouse gas emissions produced and the amount removed from the atmosphere.

Offset Projects

Projects that reduce, avoid, or sequester emissions to compensate for emissions occurring elsewhere, such as reforestation or renewable energy projects.

Renewal Energy

Energy from sources that are naturally replenishing but flow-limited; renewable resources are virtually inexhaustible in duration but limited in the amount of energy that is available per unit of time.

Science-Based Targets initiative (SBTi)

The Science-Based Targets initiative (SBTi) is a framework that assists companies in setting environmentally responsible goals for reducing greenhouse gas emissions. It ensures that these goals align with scientific evidence, promoting sustainability and contributing to the global effort to combat climate change. By following SBTi guidelines, businesses can effectively contribute to a more environmentally friendly future.

Scope 1 emissions

Scope 1 emissions refer to direct greenhouse gas (GHG) emissions from sources that are owned or controlled by an organization. This includes emissions from on-site combustion of fossil fuels, such as those produced by company-owned vehicles or machinery.

Scope 2 emissions

Scope 2 emissions pertain to indirect greenhouse gas (GHG) emissions associated with the generation of purchased or acquired electricity, heat, or steam. While not produced directly by the organization, these emissions result from the energy consumed to support its operations.

Scope 3 emissions

Scope 3 emissions encompass all indirect greenhouse gas (GHG) emissions that occur throughout a company's value chain, including both upstream and downstream activities. This includes emissions from sources like purchased goods and services, employee commuting, business travel, and product end-of-life disposal.

Sustainability Reporting

The practice of organizations reporting on their environmental impact and sustainability practices, often in annual sustainability reports that may be integrated with or separate from their financial reports.

Supply Chain

The supply chain refers to the network of all the individuals, organizations, resources, activities, and technology involved in the creation and sale of a product, from the delivery of source materials from the supplier to the manufacturer, through to its eventual delivery to the end-user. It encompasses the entire lifecycle of a product, including disposal or recycling.

Sustainable Supply Chain Management

The integration of environmentally and financially viable practices into the complete supply chain lifecycle, from product design and development, to material selection, to manufacturing, packaging, and transportation, to warehousing, distribution, consumption, return, and disposal of all products involved.

Upstream Activities

Including emissions associated with the production of purchased goods and services, transportation of purchased fuels, and use of sold products and services.

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