The Book of Jargon® – Environmental, Social & Governance

An interactive glossary of environmental, social, and governance (ESG) acronyms, slang, and terminology.

 

The Book of Jargon® – Environmental, Social & Governance is one in a series of practice area and industry-specific glossaries published by Latham & Watkins. 

The definitions provided introduce each term and may raise complex legal issues on which specific legal advice is required. The terms are also subject to change as applicable laws and customary practice evolve. As a general matter, this glossary was drafted from a US practice perspective.

Download the Apps 

The Book of Jargon® is available in the App Store and on Google Play.

Download the E-Book

The Book of Jargon® is available as a PDF.

  •  
  •  
  • Access and Affordability:
    the ability of a company to ensure broad access to its products and services, specifically in the context of underserved markets and/or population groups. Access and Affordability includes the management of issues related to universal needs, such as the accessibility and affordability of healthcare, financial services, utilities, education, and telecommunications. The SASB has identified Access and Affordability as an issue likely to affect the financial condition or operating performance of a company, and investors may now request metrics that measure whether the services a company provides can be purchased by people across income levels.
    Acclimate / Acclimation:
    the adaptation to changes in the natural environment. Acclimation often relates to the adjustments society makes in response to the long-term effects of Climate Change.
    Acid Rain:
    precipitation that contains oxides of nitrogen (NOx) and sulfur dioxide (SO2). When these molecules are emitted into the Atmosphere, they can form nitric and sulfuric acids. These acids then return to the earth when it rains, often disturbing the natural environment. Common sources of NOx and SO2 are power plants that run on Fossil Fuels. Technological advances have limited the emission of SO2 from many industrial facilities and the associated formation of Acid Rain.
    Acidification Potential:
    a quantifiable number that provides a measure of the decrease in the pH value of a medium. For example, NOx is a molecule that alters the pH of organic and inorganic materials, making them more acidic.
    Active Ownership:
    the use of shareholder rights to influence a company’s business operations. For example, an environmentally conscious shareholder may intentionally purchase a significant amount of stock within a Fossil Fuel company to reduce the company’s negative Environmental Impact.
    Activity Metrics:
    data points that measure a company’s ability to use its resources efficiently. Analysts view Activity Metrics to gauge management effectiveness. For SASB purposes, Activity Metrics may include high-level business data such as total number of employees, facilities, and customers as well as quantity of products or services provided. Activity Metrics may also include industry-specific data such as plant capacity utilization, number of transactions, and proven and probable reserves.
    Activity-Based Costing / ABC:
    a method used to determine the entire cost of all activities needed to create a product. Investors who believe that many commodities are underpriced often prefer ABC. Currently, prices for goods do not always account for the external costs incurred on the natural environment to create those goods.
    Acute Risks:
    the TCFD categorizes climate-related physical risks as acute or chronic. Acute Risks include increased severity of typhoons and floods.
    Afforest / Afforestation:
    the act of planting trees in barren land to grow a forest. Afforestation differs from Reforestation, which is the act of planting native trees in areas with a dwindling tree population.
    Afghanistan National Renewable Energy Policy (2015):
    a policy to increase the amount of Renewable Energy usage in Afghanistan. The country aims to reach 350 to 450 MW of Renewable Energy capacity by 2032.
    Air Pollution:
    a mixture of particles, chemicals, and gases in the air that typically results in deleterious effects, including on human health.
    Air Quality:
    the condition of the air as it relates to Air Pollution. Relevant airborne particles include, but are not limited to, oxides of nitrogen (NOx), oxides of sulfur (SOx), Volatile Organic Compounds, heavy metals, Particulate Matter, and CFCs. Analysts look at a company’s management of Air Quality impacts resulting from stationary and mobile sources as well as industrial Emissions. The SASB has identified Air Quality as an issue likely to affect the financial condition or operating performance of a company.
    Albedo Effect:
    a measure of how much light that hits a surface is reflected without being absorbed. Lighter surfaces are reflective and therefore absorb less light and have higher albedo, while darker surfaces absorb more light, indicating a lower albedo. The more light that is absorbed, the warmer a surface is. For example, asphalt typically holds more heat than grass. Because of the Albedo Effect, urban areas with less vegetation, more infrastructure, and darker surfaces can experience higher average temperatures than surrounding suburban or rural areas, a phenomenon known as the “Urban Heat Island effect.”
    Alternative Energy Target:
    a goal often announced by a national or state government to increase the share of Renewable Energy within a country’s or state’s power generation portfolio.
    Alternative Fuels:
    transportation fuels that are derived from sources other than petroleum. Often they produce less pollution than gasoline or diesel. Examples include: ethanol, methanol, butanol, vegetable oils, waste-derived oils, and electricity.
    Alto Orinoco-Casiquiare Biosphere Reserve:
    an area of 8,266,230 hectares that comprises approximately 20% of the Venezuelan Amazon region and is inhabited predominately by the Yanomami and Ye’kwana indigenous peoples. This area was given protected status in 1992.
    American Recovery and Reinvestment Act of 2009 / ARRA:
    a US stimulus package that introduced supplemental appropriations aimed at job preservation and creation, infrastructure investment, Energy Efficiency and science, assistance to the unemployed, and state and local fiscal stabilization.
    Anaerobic Digestion:
    the natural process in which microorganisms break down organic materials. Anaerobic Digestion occurs in closed spaces where there is no oxygen. Organic materials that can be processed via Anaerobic Digestion include animal manure; food scraps; fats, oil, and grease; industrial organic residuals; and Sewage sludge (or biosolids).
    Anaerobic Respiration:
    the process of transferring energy from glucose (a form of sugar) to cells without the use of oxygen. Anaerobic Respiration transfers large amounts of energy quickly.
    Anode:
    the electrode (or electric conductor) from which electrons leave a system. In a rechargeable battery, the Anode is negatively charged when the device is being powered (galvanic mode) and positively charged when the battery is being recharged (electrolytic mode). In contrast, see Cathode.
    Anthropocene:
    the earth’s current geologic time period, which began with the end of the last glacial period, around 8000 BC. In the Anthropocene era, human activity has dramatically altered numerous earth systems.
    Anthropocentric:
    the belief that humans are the central or most significant entities in the world. Anthropocentrism considers humans to be “separate from and superior to nature and holds that human life has intrinsic value, while other entities … are resources that may justifiably be exploited.” Source: Encyclopedia Britannica.
    Anthropogenic CO2:
    carbon dioxide that is emitted into the air due to human activity. This activity includes, among other things, the burning of Fossil Fuels, Deforestation, and land-use changes.
    Anti-Bribery:
    the act of issuing policies, regulations, or procedures to inhibit bribery as defined as the offer or request of an item of value to induce the decisions and/or actions of persons subject to public, legal, or ethical responsibilities.
    Anti-Corruption:
    the act of issuing policies, regulations, or procedures to inhibit corruption as defined as the use of power for individual benefit.
    Antigua and Barbuda Environmental Protection and Management Act (2015):
    a law that describes a collaborative approach between the government, civil society, and other relevant stakeholders to control and regulate environmental pollution. This law also outlines duties of the state, local municipalities, and courts with respect to promoting an understanding of the natural environment.
    Antigua and Barbuda Renewable Energy Act (2015):
    a law that aims to increase the use of Renewable Energy in Antigua and Barbuda.
    Aquaculture:
    the cultivation of marine or freshwater organisms in a controlled environment. Aquaculture is a method of food production that is often used to provide year-round sources of nutrition, maintain year-round employment, and recover fish stocks.
    Aqueduct Water Risk Atlas Tool:
    a mapping tool created by the  World Resources Institute that helps companies, investors, governments, and other users understand where and how water risks and opportunities are emerging worldwide. Source: World Resources Institute
    Aquifer:
    a body of permeable rock that can contain or transmit groundwater. Overuse of groundwater supplies can cause Aquifer depletion and impact water wells.
    Ardour Global Alternative Energy Index:
    an index of companies in the alternative energy space, with a special focus on Renewable Energy. The index includes companies of a certain size around the world and contains relevant information about their business operations.
    Argentina Joint Resolution 1/2018 Creating the Environmental Sustainability and Insurance Program (2018):
    a statute that promotes Argentina’s Reforestation initiative, which aims to stimulate the extension of current forests so that Argentina can be a competitive force in the sustainable forestry market.
    Argentina Law No. 27191 on Renewable Energy (2015):
    a law that outlines Argentina’s Renewable Energy targets through 2025, establishes a fund for financing Renewable Energy projects, and defines minimum Renewable Energy requirements for large consumers. The law aims to achieve a minimum of 20% of total electricity consumed from renewable sources by 2025. Source: Climate Change Laws of the World.
    Argentina Law No. 27424 Creating the Promotion Regime for Distributed Generation of Renewable Energy Integrated in the Public Electricity Grid (2017):
    a law that includes incentives, legal considerations, and contractual conditions so that Argentine citizens can generate Renewable Energy for their homes and sell surplus energy back to the national energy grid.
    Argentina National Climate Change Cabinet (2016):
    a Cabinet that was formed to develop Climate Change policies across national departments, including the Ministries of Energy, Economic Development, Agriculture, Transport, Environment, Social Development, Education, Science, Interior, Culture, and Foreign Affairs.
    Arista Standard:
    a set of voluntary guidelines, principles, and norms that aim to ensure that the research conducted by responsible investment research groups is of high-quality, transparent, and accountable.
    Asset-Based Community Development / ABCD:
    an approach to sustainable, community-driven development based on the premise that communities can drive the development process themselves by identifying and mobilizing existing but often unrecognized assets, thereby responding to challenges and creating local social improvement and economic development.
    Asymptomatic:
    when an individual demonstrates no apparent signs of having an illness or disease. In the context of COVID-19, individuals who are Asymptomatic could still be carrying the virus. This increases the social and public health consequences of the Pandemic as individuals carrying the virus might unknowingly transmit it to others. In contrast, see Symptomatic.
    Atmosphere:
    a group of gases surrounding the earth. The Atmosphere is 300 miles thick and made up of several layers, including the troposphere, stratosphere, mesosphere, and thermosphere. It is 78% nitrogen and 21% oxygen, with the rest composed of carbon dioxide, argon, and other gases. The Atmosphere is important for maintaining the global temperature of the earth and shields organisms from dangerous radiation.
    Australia Carbon Farming Initiative (2014):
    a crediting system that rewards farmers and land managers, among other entities, for avoiding carbon dioxide Emissions, reducing Emissions, or removing carbon dioxide directly from the Atmosphere and storing it. This policy applies to both land-based and non-land-based sectors of the economy.
    Australia National Climate Resilience and Adaptation Strategy (2015):
    a strategy to manage extreme weather linked to Climate Change. Aspects of this strategy include thorough and accurate information related to weather events and long-term climate projections, investment in emergency management, investment in safeguarding infrastructure, and funding for leadership training.
    Australia National Energy Productivity Plan 2015-2030 (2015):
    a plan to increase energy productivity in Australia by 40% between 2015 and 2030. The plan seeks to foster competition between various sources of energy so that consumers can exercise choice and experience lower energy costs. The plan also seeks to increase efficiency in buildings, equipment, and vehicles.
    Australian Water Accounting Standards Board:
    a board of experts that institutes a procedure for identifying, quantifying, and reporting information about Australia’s water.
    Available Energy:
    a term in thermodynamics that refers to the greatest amount of work exerted by a system that is fueled by a substance that has not had any external energy added to it.
 
 
 
Notice: We appreciate your interest in Latham & Watkins. If your inquiry relates to a legal matter and you are not already a current client of the firm, please do not transmit any confidential information to us. Before taking on a representation, we must determine whether we are in a position to assist you and agree on the terms and conditions of engagement with you. Until we have completed such steps, we will not be deemed to have a lawyer-client relationship with you, and will have no duty to keep confidential the information we receive from you. Thank you for your understanding.