The movement to save the planet has created a language all of its own. Like many specialist areas, sustainability uses a lot of confusing jargon. Some of these terms have entered everyday conversation. Most of us know that our carbon footprint means how much CO2 our activities such as car trips and plane journeys have created, helping us see our contribution to global warming.
But beyond that, it can be a struggle to tell the difference between CSR and ESG or distinguish the sharing economy from the circular economy. So we have created this simplified glossary of sustainability terms to help.
Corporate Social Responsibility (CSR)
CSR is about recognising the social, and often environmental effects of an organisation’s operations and trying to reduce the negative impacts. CSR helps an organisation identify ways it can improve its social and environmental impact and often helps implement, manage and measure activities.
The circular economy
This is an environmentally-friendly alternative to a linear economy, the model which has persisted since the industrial revolution. In a linear economy, goods are made, consumed then thrown away. A circular economy puts emphasis on recycling, re-using, designing out waste and sharing goods and services, and is restorative in nature.
Cleantech
Technology, products and services which are significantly less harmful to the environment than mainstream technology. Cleantech products create fewer carbon emissions and less pollution. Cleantech includes renewable energy sources such as wind power and hydro-electric power and other sustainable technologies including electric cars and low-energy lighting.
Divestment
Literally selling off assets or investments. In sustainability terms, this means selling investments in companies perceived to be damaging the environment through their activities - companies such as oil, coal and gas producers. But it can also include selling investments in companies that have poor social and environmental policies.
Environmental and social governance (ESG)
Environmental and social governance is a set of measures used by socially-responsible investors to evaluate a company’s performance and prospects. Environmental and social criteria look at how the business interacts with the natural environment and its relationships with employees, the supply chain, customers and the communities where it operates.
Externalities
The positive or negative effect of an activity on a third party who is not directly involved. A company polluting the local environment would create a negative externality for the community. Private health treatment for an infectious disease would be a positive externality for the rest of the community.
The greenhouse effect
Naturally occurring greenhouse gases (GHGs) such as carbon dioxide and methane trap heat from the sun’s rays in the earth’s atmosphere, keeping the planet at a constant temperature. Huge quantities of these gases are emitted from human activities - especially carbon dioxide - trapping ever more heat in the atmosphere, causing the planet to heat up and leading to global warming and climate change. Other greenhouse gases include nitrous oxide, chlorofluorocarbons (CFCs) and ozone.
Materiality
The measure of the significance of an issue to a company and its different stakeholders. The issues that are material to an organisation are identified by gauging their impact on the organisation’s goals and commitments.
Natural capital
The stock of physical and biological resources available on earth. Capital usually refers to financial investment. Measuring other forms of capital - whether natural, human, intellectual or social - forces companies to think more broadly about the effects of their activities rather than just the monetary payback.
Net positive
An ambition to move beyond doing less harm or having a zero-balance impact, to providing a net benefit to the environment and society (pdf).
Shared value
Creating economic value at the same time as creating value for a business, its stakeholders and the local areas where it operates - doing good and making money at the same time.
Sharing economy
Where people rent, borrow or share goods rather than owning them. This ensures the goods are used more often rather than gathering dust in a store room. Examples include apps such as room rental site Airbnb and car sharing services Zipcar and BlaBlaCar. These use up spare resources - such as empty rooms in a house or unused cars - to reduce consumption of resources and save consumers money.
Social return on investment (SROI)
An approach to understanding and managing the value of the social, economic and environmental outcomes created by an activity (pdf). SROI shows a monetary value for outcomes that traditionally have not been financially valued, and shows how to understand and prove the value created and better manage the activity.
Sustainable business
Organisations can improve the social and environmental impact of their activities by making sure that their products, services and processes are developed and delivered in ways that consider people and planet alongside profit.
Sustainable Development Goals (SDGs)
These are a new universal set of goals, targets and indicators which will replace the Millennium Development Goals in September 2015. UN member states will be expected to attempt to meet the 17 new goals over the next 15 years. They will include environmental and economic goals as well as fighting poverty.
Triple bottom line
This is an accounting method that measures a company’s environmental and social behaviour as well as its financial performance. The phrase was first coined by CSR campaigner John Elkington in the mid-90s and can be summed up as accounting for the three Ps - people, planet and profit.
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