Sustainability & ESG Glossary
Corporate Governance
Consists of the set of processes, customs, policies, laws and institutions affecting the way people direct, administer or control a corporation. Corporate governance also includes the relationships among the many players involved (the stakeholders) and the corporate goals.
Source: The World Bank ‘Managing Development: The Governance Dimension’, 1991.
Hence, governance, is all about the top-level management of a company and how executives act and behave towards their employees, and their attitudes towards other major concerns, such as those from the Environment and Social pillars. Simply put, Governance has to do with the rules, roles, and processes through which a company, and its board, is run.
Examples would be: board composition, executive compensation, corporate disclosure.
Governance determines who sits at the board table, how these directors gather information and make decisions, and how they communicate with stakeholders and each other.
Corporate (Social) Responsibility
The European Union defines Corporate (Social) Responsibility as the responsibility of enterprises for their impacts on society. In other words, Corporate (Social) Responsibility is the commitment of companies to operate in ways that create value not only for shareholders but also for employees, communities, and the environment. It goes beyond compliance by embedding ethical principles, sustainability, and social impact into everyday decision-making and long-term strategy. Corporate responsibility is important because it strengthens trust, enhances reputation, and ensures that business success is aligned with broader societal needs. Companies that embrace this approach are better positioned to manage risks, attract talent, and contribute to a resilient and sustainable economy.
Stakeholder
A person, group, or entity who may, positively or negatively: affect the company; be affected by the company’s activities; have an interest that is affected by the company’s activities. Relevant stakeholders may include, for example: business partners; civil society organizations; consumers; customers; employees and other workers; governments; local communities; non-governmental organizations; shareholders and other investors; suppliers. (Adapted from GRI 3: Material Topics, 2021.)
Value Chain Due Diligence
Value chain due diligence is the process of identifying, preventing, and addressing environmental and human rights risks across supply chains. It requires companies to assess impacts, engage with suppliers, and implement corrective measures where necessary. This is critical for compliance with emerging EU and Swiss regulations and for building resilience and trust in increasingly complex global supply networks.
Swiss Code of Obligations (Art. 964 CO)
This Ordinance regulates the due diligence and reporting obligations to be complied with by companies under Articles 964j–964l CO in relation to minerals and metals from conflict-affected and high-risk areas and in relation to child labor.
Source: The Swiss Federal Council, based on Articles 964j1 paragraphs 2–4 and 964k paragraph 4 of the Code of Obligations (CO).
Good to know: This Swiss law requiring large public-interest companies (listed firms, banks, insurers) with over 500 employees and either CHF 20 million in assets or CHF 40 million in sales to report on non-financial topics, including environment, human rights, and anti-corruption. It details how companies must implement due diligence on conflict minerals and child labor in supply chains. It requires clear reporting on risk assessments, policies, and mitigation measures.
Carbon Footprint
ESG stands for Environmental, Social, and Governance. It is shorthand for an investing principle that prioritizes environmental issues, social issues, and corporate governance. Refers to a set of criteria that investors and other stakeholders use to evaluate a company’s performance and practices in these three areas:
Environmental (E): Environmental factors within ESG criteria in the context of investing include but are not limited to the environmental footprint of a company or country (e.g. energy consumption, water consumption), environmental governance (e.g. environmental management system based on ISO 14 001) and environmental product stewardship (e.g. cars with low fuel consumption).
Social (S): Social factors within ESG criteria in the context of investing include, but are not limited to, worker rights, safety, diversity, education, labor relations, supply chain standards, community relations, and human rights.
Governance (G): Governance factors within ESG criteria in the context of investing refer to the system of policies and practices by which an organization is directed and controlled (also referred to as Corporate Governance).
They include but are not limited to transparency on Board compensation, independence of Boards and shareholder rights.
Source: Swiss Sustainable Finance
ESG Narrative
An ESG narrative describes a cohesive storyline that connects a company’s sustainability initiatives directly to its core purpose, values, and business performance. A strong ESG narrative goes beyond listing projects; it explains why the company acts, how it creates value, and what impact it delivers. It builds trust by showing consistency between strategy, actions, and outcomes, giving investors, employees, and customers clarity on where the company is heading and why it matters.
Circularity (Definition)
According to the European Commission the EU Taxonomy is a classification system that defines criteria for economic activities that are aligned with a net zero trajectory by 2050 and the broader environmental goals other than climate. […]
The EU taxonomy allows financial and non-financial companies to share a common definition of economic activities that can be considered environmentally sustainable
Greenhouse Gases (GHGs)
The OECD defines ESG investing as the consideration of environmental, social and governance (ESG) factors alongside financial factors in the investment decision-making process. In other words: ESG investing is the allocation of capital to companies or funds based on their environmental, social, and governance performance alongside traditional financial metrics. By integrating ESG criteria into investment decisions, investors can better manage risks, identify opportunities, and support companies that demonstrate responsible business practices. This approach is increasingly important as stakeholders expect financial returns to go hand in hand with sustainable value creation.
Zero Waste Hierarchy
According to Swiss Sustainable Finance, impact investing intends to generate a measurable, beneficial social and environmental impact alongside a financial return. Impact investing can be made in both emerging and developed markets, and target a range of returns from below-market to above-market rates, depending upon the circumstances. SSF considers impact investments as those having three main characteristics: intentionality, management and measurability. In other words: Impact investing means directing capital toward projects and companies that aim to generate measurable social and environmental benefits alongside financial returns. Unlike traditional investing, it prioritizes demonstrable impact such as access to renewable energy, education, or biodiversity protection, while remaining financially viable.
ESG Risk
The Corporate Governance Institute defines ESG risks as anything connected to the three pillars of ESG that could impact the finances or performance of your business.
Sustainable Development
Sustainable Development is development that meets the needs (*) of the present without compromising the ability of future generations to meet their own needs
Scope 1, 2 and 3 emissions
Scope 1= According to Science Based Targets, Scope 1 emissions are direct emissions from owned or controlled sources.
Scope 2= Science Based Targets establishes Scope 2 emissions as the indirect emissions from the generation of purchased energy.
Scope 3= Science Based Targets defines Scope 3 emissions as all indirect emissions (not included in scope 2) that occur in the value chain of the reporting company, including both upstream and downstream emissions.
Carbon Footprint
The carbon footprint is the annual amount of greenhouse gas emissions, mainly carbon dioxide, that result from the activities of an individual or a group of people, especially from their use of energy and transport and consumption of food, goods and services. Measurement unit: Metric tons CO2e.
Source: The Open University
Greenhouse Gases (GHGs)
According to Science Based Targets, a greenhouse gas is any gas in the atmosphere which absorbs and reemits heat and thereby keeps the planet’s atmosphere warmer than it otherwise would be.
They include carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), hydrofluorocarbons (HFCs), perfluorocarbons (PFCs), sulfur hexafluoride (SF6), Ozone (O3) and nitrogen trifluoride (NF3). GHGs occur naturally in the Earth’s atmosphere, but human activities, such as the burning of fossil fuels, are increasing the levels of GHGs in the atmosphere, causing global warming and climate change.
Net-Zero Carbon Emissions
According to Science Based Targets, net zero carbon emissions is a state in which a company has reduced its greenhouse gas emissions to the residual levels defined by net-zero pathways and neutralizes those remaining emissions, achieving and maintaining this balance at its net-zero target year and beyond.
Carbon Neutral
The European Parliament defines carbon neutral as having a balance between emitting carbon and absorbing carbon from the atmosphere in carbon sinks. For a company this means: any CO2 released into the atmosphere from a company’s activities is balanced by an equivalent amount being removed.
Circularity
Circularity is met when the lifetime of products and materials is extended, delaying their dismantling for as long as possible and avoiding the use of new resources.
There are 5 criteria to define the circularity of a product:
Recycled content (waste as input, secondary raw materials)
Made to last / longevity (quality, design, planning)
Designed for disassembly and refurbishment, repair or recycling
A take-back service is guaranteed for centrally-managed refurbishment, repair, and reuse or resell, or recycling
“Stay in loop” the product can naturally transform into biochemical feedstock, energy, or degrade in the biosphere without polluting.
Life Cycle Assessment (LCA)
LCA is defined by the ISO 14040 as the compilation and evaluation of the inputs, outputs and the potential environmental impacts of a product system throughout its life cycle
In other words: A life Cycle Assessment is a sustainability tool that evaluates the environmental impacts of a product or service across its entire life cycle, from raw material extraction to the end of life.
It supports informed decision-making by identifying where the most significant impacts occur and where improvements are possible. This enables companies to manage and reduce their environmental footprint and to communicate more transparently about the sustainability of their products or operations.
Biodiversity
The Convention of Biological Diversity states that biodiversity means the variability among living organisms from all sources including, inter alia, terrestrial, marine and other aquatic ecosystems and the ecological complexes of which they are part; this includes diversity within species, between species and of ecosystems.
Planetary Boundaries
The planetary boundaries concept presents a set of nine quantitative planetary boundaries within which humanity can continue to develop and thrive for generations to come. Crossing these boundaries increases the risk of generating large-scale abrupt or irreversible environmental changes. The boundaries are based on solid scientific and peer-reviewed scientific insights. Adapted from Stockholm Resilience Centre
The concept of planetary boundaries has 9 linear, delicately interconnected specific conditions (in clock-wise order):
1.Climate change
2.Global fresh water change [Green water | Blue water]
3.Stratospheric ozone depletion
4.Atmospheric aerosol loading
5.Ocean acidification
6.Biochemical Flows [N=Nitrogen | P = Phosphorus]
7.Novel Entities [aka: ‘Chemical Pollution’]
8.Land-System Change
9.Biosphere Integrity
[Biodiversity Intactness Index (BII) | Extinctions per million species per year = Extinctions per maximum sustainability yield = E/MSY]
Regenerative
Regenerative development emphasizes actively restoring and co-evolving with living systems to support the long-term health of ecosystems and communities.
In other words:
Regenerative refers to a holistic approach that aims to restore, renew, and revitalize systems, processes, and resources, promoting their long-term health and sustainability. It goes beyond simply sustaining or preserving existing conditions and seeks to actively improve and regenerate them.
Zero Waste Hierarchy
[also often simply called ‘7Rs’; physical resources focused]
Progression of policies and strategies to support the Zero (Material) Waste system, from highest and best to lowest use of materials. These are, from least to most desirable: Unacceptable (=incineration and ‘waste-to-energy’); Residuals Management (= biological treatment and stabilized landfills); Material Recovery; Recycle / Compost; Reuse; Reduce; Rethink/Redesign. Adapted from: Zero Waste International Alliance
Greenwashing
Greenwashing presents a significant obstacle to tackling climate change. By misleading the public to believe that a company or other entity is doing more to protect the environment than it is, greenwashing promotes false solutions to the climate crisis that distract from and delay concrete and credible action.
Source: United Nations
Green Hushing
According to Corporate Governance Institute, greenhushing is when companies take steps to stay quiet about their climate strategies. They do this through avoidance or refusal. If somebody asks about their climate goals, they decline to answer. If nobody asks, they don’t do anything.
Double Materiality
A double materiality is a concept which provides criteria for determination of whether a sustainability topic or information has to be included in the undertaking’s sustainability report. Double materiality is the union (in mathematical terms, i.e. union of two sets, not intersection) of impact materiality and financial materiality. A sustainability topic or information meets therefore the criteria of double materiality if it is material from the impact perspective or from the financial perspective or from both of these two perspectives.
Source: Science Based Targets Network (SBTN)
Materiality Assessment
A process using stakeholder engagement to understand the specific issues that are most relevant to an organization in order to inform decision making and reporting.
Source: 2013 ACCA, Flora & Fauna International and KPMG LLP, a UK member firm.
In other words: A materiality assessment is a structured process used to identify and prioritize sustainability topics that are most relevant to the company’s long-term success and most significant to stakeholders. It considers regulatory developments, stakeholder expectations, risk exposure, and strategic business priorities. The outcome defines the key sustainability topics that guide reporting, target setting, and management focus.
Brand Identity
According to Harvard Business School, brand identity expresses what a brand stands for through distinct, recognizable elements that set it apart from competitors. Brand identity shapes how customers perceive a company, creating emotional connections that influence their buying decision.
Corporate Reputation
Corporate reputation is defined as a multifaceted concept that encompasses various attributes of a company, including the quality of products and services, social responsibility, management quality, and honesty. It is closely related to the perceptions of key stakeholders and can significantly impact a company’s risk management strategy.
Source: Science Direct
Marketing Compliance
According to Sustainable Business Magazine, marketing compliance refers to the structured alignment of all marketing communications with applicable legal, regulatory, and brand guidelines. This includes adhering to advertising laws, disclosure requirements, industry codes, intellectual property rules, and internal brand policies. It establishes a framework for how companies communicate publicly in a manner that minimizes legal exposure while maintaining brand integrity.
Purpose Driven Busieness
A purpose-driven business integrates a social or environmental mission into its core strategy, ensuring that financial success is aligned with positive impact. This approach strengthens employer branding, builds customer loyalty, and drives long-term value creation. It is increasingly relevant as stakeholders expect companies to act not only responsibly but also with a clear and authentic sense of purpose.
Mental Health
A state of well-being in which every individual realizes his or her own potential can cope with the normal stresses of life can work productively and fruitfully and is able to make a contribution to her or his community.
Source: The World Health Organisation
Psychological Safety
Psychological safety is one component of a psychologically healthy workplace. It is a specific, targeted concept critical for innovation and success.
Diversity, Equity & Inclusion (DEI)
According to University of St. Gallen, Diversity, Equity and Inclusion (DE&I) Management is concerned with dealing with diversity and heterogeneity among employees. This important task aims to optimally utilize the positive aspects of diversity and avoid discrimination and the formation of subgroups.
Effective DE&I management distinguishes between different dimensions of diversity. It is important to bear in mind that dimensions such as gender, age, disability, nationality, and ethnic origin on the one hand and experience-related dimensions such as functional expertise, training and international experience on the other each have different influences on the performance of teams and the company as a whole.
DE&I management aims to understand this unique dynamic better, as inclusion can only take place based on a better understanding. This requires a corresponding learning process to avoid discrimination and break stereotypes down. Diversity is a great opportunity for both the company and its employees. However, it is only by recognising individual differences and promoting an inclusive corporate culture that this potential can be exploited.
Human Rights & Due Diligence
In response to the demands for responsible business conduct, the United Nations adopted the UN Guiding Principles on Business and Human Rights in 2011. They describe companies’ fundamental responsibility to respect human rights and avoid negative impacts on human rights through their own activities and business relationships.
Source: Global Compact Network Switzerland & Liechtenstein
European Sustainability Reporting Standards (ESRS)
The ESRS are the mandatory sustainability reporting standards adopted by the European Commission under the Corporate Sustainability Reporting Directive (CSRD). They define what companies must disclose regarding environmental, social and governance matters, including their impacts on society and the environment, as well as the sustainability-related risks and opportunities that affect their financial performance.
Source: European Commission
Non-financial Reporting
Non Financial Reporting is a comprehensive term that includes several forms of reporting, such as CSR reporting, integrated reporting (IR), SDG reporting, GRI reporting, and GHG reporting, among others.
Source: 10.1016/j.jclepro.2022.131154
Global Reporting Initiative (GRI)
The Global Reporting Initiative (GRI) is an independent not-for-profit organization that leads a global multi-stakeholder process to develop and refine rigorous yet practical sustainability reporting.
International Sustainability Standards Board (ISSB)
The International Sustainability Standards Board (ISSB) is a global standard-setting body created by the IFRS Foundation in 2021 to develop a consistent baseline for sustainability disclosures. Its goal is to integrate environmental, social, and governance (ESG) information into mainstream financial reporting, making it comparable across countries and industries.
Good to know:
Unlike the Corporate Sustainability Reporting Directive (CSRD), which is an EU regulation requiring detailed, double-materiality reporting across environmental, social, and governance topics, the ISSB focuses on financial materiality, i.e. how sustainability risks and opportunities affect enterprise value from an investor perspective.
In practice, CSRD/ESRS is mandatory for companies in the EU, while ISSB provides a voluntary global baseline that jurisdictions outside the EU can adopt. Many companies will need to pay attention to both: CSRD for compliance in Europe and ISSB to meet investor expectations in global capital markets.
Sustainable Finance Disclosure Regulation (SFDR)
The EU Sustainable Finance Disclosure Regulation (SFDR) standardizes metrics for assessing environmental, social, and governance (ESG) impacts of investments, ensuring funds’ sustainability profiles are comparable. It mandates detailed disclosures, including identifying harmful impacts caused by investee companies.
Source: Robeco, The Investment Engineers
In other words:
The Sustainable Finance Disclosure Regulation (SFDR) is an EU law, effective since 2021, requiring asset managers, financial advisers, and other financial market participants to disclose how they integrate sustainability risks into investment decisions and advice. It categorizes financial products into three levels: Article 6 (no sustainability focus), Article 8 (promotes environmental or social characteristics), and Article 9 (has sustainability as its objective).
SFDR improves transparency by giving investors a clear view of how sustainable a fund or product really is, reducing the risk of greenwashing and enabling comparability across the EU financial market. For companies seeking investment, alignment with SFDR criteria can be a key differentiator in attracting sustainable finance.
Voluntary Sustainability Reporting Standard for non-listed SMEs (VSME)
The Voluntary Sustainability Reporting Standard for non-listed SMEs (VSME) is designed to provide a simplified and proportionate sustainability reporting framework for micro, small and medium-sized undertakings that are not listed on regulated markets. It aims to support these undertakings in responding to sustainability information requests from business partners, financial institutions and other stakeholders, while reducing the reporting burden.
Source: (EFRAG) Voluntary Sustainability Reporting Standard for non-listed SMEs (VSME)
Swiss Ordinance (Art. 964 CO)
Swiss regulation detailing how companies must implement due diligence on conflict minerals and child labour in supply chains. It requires clear reporting on risk assessments, policies, and mitigation measures.
Sustainable Finance
Sustainable finance describes the integration of environmental, social, and governance factors into financial services such as banking, insurance, and asset management. It aims to align the financial system with climate goals and resilience, directing capital toward businesses and projects that are prepared for a sustainable future.
Value Chain Due Diligence
Value chain due diligence is the process of identifying, preventing, and addressing environmental and human rights risks across supply chains. It requires companies to assess impacts, engage with suppliers, and implement corrective measures where necessary. This is critical for compliance with emerging EU and Swiss regulations and for building resilience and trust in increasingly complex global supply networks.
