Glossary

ESG research providers, including liAS, MSCI, CP, and Bloomberg, offer ESG ratings to investors. Each provider may employ a distinct methodology to assign company-specific ratings. However, there is currently no standardized approach across the industry. Institutional investors are progressively integrating the ratings provided by ESG rating companies into their investment decision-making processes, as they seek to identify new investment prospects aligned with their ESG goals.

Forestry entails the administration of forested areas, encompassing water bodies and unused land. The key activities in forestry involve clearing forests and reforesting them. The primary goal of forestry is to ensure a sustained and consistent supply of wood by employing well-planned practices for harvesting and subsequent replanting.

Coal, crude oil, and natural gas are prime illustrations of fossil fuels. Fossil fuels are the preserved and fossilized remnants of plants and animals from millions of years ago. They possess a significant carbon content and emit substantial amounts of carbon dioxide when combusted.

In contrast to standards, frameworks serve as a collection of concepts and principles that guide the structuring and preparation of information, as well as the inclusion of broad topics. Sustainability frameworks, such as the TCFD recommendations, the CDSB Framework, and the <IR> Framework, establish valuable conceptual frameworks for effectively communicating the sustainability-related risks and opportunities faced by businesses. Generally, frameworks play a crucial role in promoting consistency of information, both across reporting entities and over time. By providing detailed guidance on governance, risk, and strategy, frameworks enable companies to disclose sustainability information with the same level of rigor as they do financial information, facilitating high-quality reporting.

These ratings are provided by external entities that assess a company's level of ESG compliance and strategy. The grading approach used by these entities is not standardized and may vary based on the specific elements chosen by the external evaluator when evaluating the company.

A green bond refers to a specific type of fixed-income investment designed to generate funds for projects focused on climate and environmental initiatives. These bonds are often tied to specific assets or projects. The European Investment Bank pioneered the issuance of green bonds in 2007 with the Climate Awareness Bond, a structured bond where proceeds were dedicated to financing renewable energy and energy efficiency projects. In 2019, India emerged as the second-largest developing market for green bonds, following China.

GRI (Global Reporting Initiative) is an internationally recognized independent standards organization that supports businesses, governments, and other organizations in comprehending and conveying their impacts on various topics, including climate change, human rights, and corruption. GRI is known for providing the most widely utilized standards for sustainability reporting worldwide, known as the GRI standards. These standards enable organizations to effectively report on their sustainability performance and promote transparency and accountability in their operations.

Coal, crude oil, and natural gas are examples of fossil fuels. Fossil fuels are the buried, petrified remains of plants and animals that existed millions of years ago. They have a high carbon content and produce a lot of carbon dioxide when burned.

Green building, also referred to as green construction or sustainable building, encompasses both the physical structure and the implementation of environmentally conscious and resource-efficient practices across all stages of a building's life cycle. This includes planning, design, construction, operation, maintenance, renovation, and even demolition. LEED (Leadership in Energy and Environmental Design) is a collection of rating systems established by the US Green Building Council to guide and evaluate the sustainable design, construction, operation, and maintenance of green buildings.

Greenwashing transpires when a company or organization invests significant resources into portraying itself as environmentally friendly, rather than genuinely reducing its environmental impact. It involves making unsupported or deceptive claims about the environmental benefits of their products or services.

The greenhouse effect pertains to the phenomenon wherein the Earth's surface and lower atmospheric layer, known as the troposphere, experience warming due to the presence of gases such as water vapor, carbon dioxide, methane, and other greenhouse gases in the atmosphere. These gases trap heat and contribute to the overall increase in temperature.

The Greenhouse Gas Protocol (GHGP) offers accounting and reporting standards, sector-specific guidance, calculation tools, and training resources for businesses, local governments, and national governments. It has established a comprehensive and globally recognized framework for measuring and managing emissions across various sectors, including private and public sector operations, value chains, products, cities, and policies. The GHGP plays a pivotal role in facilitating greenhouse gas reductions on a broad scale.

A greenhouse gas refers to any gas in the Earth's atmosphere that has the capability to absorb and re-emit infrared radiation, which is released from the Earth's surface as heat energy. This process contributes to the greenhouse effect. The primary greenhouse gases found in the Earth's atmosphere include carbon dioxide, water vapor, methane, nitrous oxide, and ozone.

Green investing is an investment strategy focused on environmental sustainability, which entails directing investments towards activities that have direct or indirect positive impacts on the environment.

Hydropower refers to the generation of energy by harnessing the movement of water. It is one of the earliest sources of electricity production. Hydropower relies on the water cycle, where solar energy heats water on the Earth's surface, causing it to evaporate, condense, and fall as precipitation. The accumulated precipitation in rivers and streams determines the availability of water for hydropower. The electricity generation capacity of hydropower plants depends on the volume flow and the gradient of the water. Typically, water flows through pipes or pressure conduits, driving turbines that activate generators. Pumped storage power plants can store excess energy by pumping water to higher storage basins and releasing it to generate electricity when needed.

Human rights are inherent rights that are universally granted to all individuals, irrespective of their race, gender, nationality, ethnicity, language, religion, or any other status. International human rights law outlines the obligations of governments to act in specific ways or refrain from certain actions to safeguard and promote the fundamental rights and freedoms of individuals and groups.

As a member of the World Bank Group, the IFC promotes economic development and enhances people's lives by fostering the growth of the private sector in developing countries. The IFC provides financial investments, advisory services, and partnerships to support private enterprises and stimulate sustainable and inclusive development.

IICA is a subordinate office under the Ministry of Corporate Affairs in India. It handles various subjects, matters, and affairs related to corporate affairs regulation, governance, and policy.

Impact investment is an approach to investing that aims to generate both financial returns and measurable social or environmental impact. It involves directing capital towards companies, organizations, or funds with a clear intention to achieve specific and identifiable positive social or environmental outcomes alongside financial gains.

Impact refers to the outcomes or effects that result from a project or program. It often refers to broader and longer-term effects that may be intended or unintended, positive or negative. Impact can encompass various dimensions, such as social, economic, and environmental consequences.

Internal carbon pricing is a mechanism adopted by businesses to address climate change by assigning a monetary value to greenhouse gas emissions. It enables companies to consider the cost of emissions when making investment decisions and managing their operations. Internal carbon pricing is particularly utilized by industries such as oil and gas, minerals and mining, and electric power as part of their risk mitigation strategy to prepare for potential future carbon reduction regulations.

Integrated Reporting involves consolidating material information about an organization's strategy, governance, financial performance, and prospects to provide a comprehensive view of its commercial, social, and environmental context. The International Integrated Reporting Council (IIRC) is widely recognized as a leading authority in this field.

IIRC is a global coalition comprising regulators, investors, companies, standard setters, academia, and non-governmental organizations. The council advocates for integrated reporting, which involves communicating about value creation as an integral part of corporate reporting. IIRC's mission is to establish integrated reporting and thinking as a mainstream business practice in both the public and private sectors.

Established in 1995, ICGN is an organization led by investors with a mission to promote effective standards of corporate governance and investor stewardship worldwide. Its aim is to advance efficient markets and sustainable economies globally.

IOSCO is an international body that brings together securities regulators from around the world. Its primary objective is to promote cooperation and harmonization of securities regulation to protect investors, ensure fair and efficient markets, and facilitate capital formation. IOSCO plays a crucial role in developing international standards and best practices for securities regulation.

Created by the IFRS Foundation Trustees on 3 November 2021, the ISSB is a standard-setting board focused on sustainability. Its objective is to develop internationally recognized sustainability standards to enhance transparency and comparability in reporting environmental, social, and governance (ESG) information.

IIAS is an independent advisory firm that provides research, data, and opinions on corporate governance and ESG (Environmental, Social, and Governance) issues. They also offer voting recommendations on shareholder resolutions for approximately 800 Indian companies, representing over 95% of market capitalization.

Indirect emissions encompass Scope 2 and Scope 3 emissions. These emissions result from the activities of a reporting company but occur elsewhere and are owned or controlled by another entity. The reporting organization lacks direct influence over these emissions.

Joint Implementation is a project-based mechanism established under Article 6 of the Kyoto Protocol. It applies to projects carried out collaboratively by two developed countries that have committed to emission mitigation targets. Joint Implementation projects contribute to overall emission reduction efforts.

The Kyoto Protocol, adopted on 11 December 1997, is an additional protocol to the United Nations Framework Convention on Climate Change (UNFCCC). It was the first international agreement to impose binding emission reduction commitments on developed countries. Kyoto Implementation refers to the fulfillment of these commitments.

Low-carbon funds invest in companies focused on combating climate change by reducing deforestation and the reliance on fossil fuel reserves. These funds support environmentally friendly initiatives and sustainable practices.

The Ministry of Corporate Affairs (MCA) is an Indian government ministry primarily responsible for regulating enterprises in the industrial and services sectors in India. It focuses on administering acts such as the Companies Act 2013, Companies Act 1956, Limited Liability Partnership Act 2008, and other allied acts and regulations. Its main role is to oversee and regulate the functioning of the corporate sector in accordance with the law.

Modern slavery, also known as contemporary slavery, refers to the persistent existence of institutional slavery in today's society. It involves the ruthless exploitation of individuals for personal or commercial gain. Forms of modern slavery include human trafficking, debt bondage, bonded labor, and child slavery.

The Ministry of Corporate Affairs (MCA) is a government ministry in India responsible for regulating Indian enterprises in the industrial and services sectors. Its primary focus is the administration of the Companies Act 2013, Companies Act 1956, Limited Liability Partnership Act 2008, and other related acts, rules, and regulations. The MCA aims to ensure the proper functioning of the corporate sector in accordance with the law.

Modern slavery, also known as contemporary slavery, refers to the existence of institutionalized slavery in today's society. It involves the ruthless exploitation of individuals for personal or commercial gain. Various forms of modern slavery include human trafficking, debt bondage, bonded labor, child slavery, and other similar practices .

Mission-related investment is an approach to environmental, social, and governance (ESG) investing where foundations and organizations make investments to fulfill their philanthropic goals. It involves investing in projects or companies that align with their mission and contribute to positive social or environmental impact, alongside seeking financial returns.

The MSCI World ESG Indexes aim to represent the performance of popular ESG investment methodologies. These indexes include, re-weight, or eliminate businesses based on environmental, social, and governance (ESG) criteria. They provide investors with a way to track the performance of investment strategies that prioritize ESG factors.

In 2018, the Ministry of Corporate Affairs introduced an updated version of the National Voluntary Guidelines on Social, Environmental, and Economic Responsibilities of Business and developed the National Guidelines on Responsible Business Conduct (NGRBC) Principles. The NGRBC Principles revolve around nine key thematic pillars, known as "the Principles," which serve as a framework for promoting responsible business behavior. These principles aim to guide businesses in operating with integrity, emphasizing transparency, sustainability, and responsiveness throughout their value chain. Additionally, the NGRBC Principles encourage businesses to actively contribute to environmental preservation and safeguard human rights. It is important to note that the NGRBC Principles are specific to India and outline disclosure requirements tailored to the Indian context.

Negative screening involves the exclusion of companies or industries from investment portfolios based on predetermined social and/or environmental criteria. This approach is utilized by investors to align their investment decisions with their values and principles. By excluding entities that do not meet specified criteria, investors aim to support companies that adhere to desired social and environmental standards, thereby promoting sustainability and responsible practices.

Natural Gas for Vehicles (NGV) is an alternative fuel for transportation that utilizes compressed natural gas (CNG) to provide cleaner and more environmentally friendly transportation options. It can be used in various types of vehicles, including automobiles, buses, trucks, cranes, and others. NGV offers reduced emissions compared to traditional fossil fuel-powered vehicles, contributing to cleaner air quality.