Sustainability reporting glossary

Sustainability reporting has built up its own vocabulary in a few years, full of acronyms from different standard setters, and the same idea often has two names. This glossary puts the common terms in one place, in plain English, with a link to the guide that explains each one, and sets out which terms mean the same thing and which are often confused.

By Awais Jameel, Chartered Accountant. Reviewed by Muhammad Bilal, Chartered Accountant. 8 minute read.

Short answer

This sustainability reporting glossary explains the 44 terms used most often in ESG and sustainability reporting. The core is three sets of standards: the ISSB's IFRS S1 and IFRS S2, written for investors and adopted country by country; the European Sustainability Reporting Standards (ESRS), required by the EU's CSRD; and the GRI Standards, used worldwide to report impacts. Around them sit the GHG Protocol, which defines scope 1, 2 and 3 emissions; the materiality concepts that decide what is reported, such as double materiality and impacts, risks and opportunities; the US state laws, such as California's SB 253 and SB 261; and the assurance standards, such as ISSA 5000, that check the results. Each term links to a guide that explains it in depth.

At a glance

Standards
ISSB, ESRS, GRI
Emissions
Scopes 1, 2 and 3
Materiality
Impact and financial
Assurance
Limited or reasonable
US rules
SB 253, SB 261, AB 1305
Terms
44
Sustainability reporting glossaryStandards: ISSB, ESRS, GRI; Emissions: Scopes 1, 2 and 3; Materiality: Impact and financial; Assurance: Limited or reasonable; US rules: SB 253, SB 261, AB 1305; Terms: 44.KEY FACTS AT A GLANCESustainability reporting glossaryStandardsISSB, ESRS, GRIEmissionsScopes 1, 2 and 3MaterialityImpact and financialAssuranceLimited or reasonableUS rulesSB 253, SB 261, AB 1305Terms44Tax BakersSustainability reporting glossaryStandards: ISSB, ESRS, GRI; Emissions: Scopes 1, 2 and 3; Materiality: Impact and financial; Assurance: Limited or reasonable; US rules: SB 253, SB 261, AB 1305; Terms: 44.KEY FACTS AT A GLANCESustainability reporting glossaryStandardsISSB, ESRS, GRIEmissionsScopes 1, 2 and 3MaterialityImpact and financialAssuranceLimited or reasonableUS rulesSB 253, SB 261, AB 1305Terms44Tax Bakers
Key facts at a glance, as set out in this guide.

Sustainability reporting glossary: the core acronyms

The core sustainability reporting acronymsThe core sustainability reporting acronymsStands forWhat it isISSBInternational SustainabilityStandards BoardIssues IFRS S1and IFRS S2ESRSEuropean SustainabilityReporting StandardsEU standards usedunder the CSRDCSRDCorporate SustainabilityReporting DirectiveEU law on whomust reportGRIGlobal ReportingInitiativeStandards forreporting impactsGHGGreenhousegasProtocol definesscopes 1, 2, 3
Three standard setters, one EU law and one emissions protocol carry most of the vocabulary.

Most sustainability reports use at least two of these frameworks, so the same figures are often reported several ways. See sustainability reporting explained.

Sustainability reporting terms from A to Z

TermMeaning
AB 1305California's Voluntary Carbon Market Disclosures Act, requiring website disclosures about voluntary carbon offsets and net zero or carbon neutral claims. See California AB 1305.
Anticipated financial effectsThe effects that sustainability-related risks and opportunities are expected to have on a company's financial position, performance and cash flows in future periods. See anticipated financial effects.
Assurance, limited and reasonableAn independent check of sustainability information: limited assurance gives a negative conclusion based mainly on inquiry and analysis; reasonable assurance gives a positive opinion, close to an audit. See limited and reasonable assurance.
Base yearThe year against which a company tracks its emissions, recalculated when structural or method changes are significant. See base year recalculation.
Carbon credit (carbon offset)A tradable certificate representing one tonne of carbon dioxide equivalent reduced, avoided or removed, used voluntarily to compensate for emissions; reported separately from gross emissions. See carbon credits and offsets.
CO2e (carbon dioxide equivalent)The common unit for greenhouse gases, converting each gas into the amount of carbon dioxide with the same warming effect using its global warming potential. See emission factors.
CSRDThe EU's Corporate Sustainability Reporting Directive, which sets who must publish a sustainability statement under the ESRS, with limited assurance; the 2026 Omnibus narrowed it to the largest companies. See the CSRD after the Omnibus.
Double materialityThe ESRS test under which a matter is reported if it is material for its impacts on people and the environment, for its financial effects on the company, or both. See double materiality explained.
EFRAGThe European body that develops the ESRS as technical advice to the European Commission, which adopts them as delegated regulations. See the revised ESRS.
Emission factorA figure that converts activity data, such as litres of fuel or kWh of electricity, into greenhouse gas emissions. See emission factors.
ESRSThe European Sustainability Reporting Standards, the standards companies in scope of the CSRD use, revised in 2026 and mandatory in their revised form from financial years starting in 2027. See the revised ESRS.
EU TaxonomyThe EU's classification of environmentally sustainable economic activities, with company KPIs for the share of turnover, capital expenditure and operating expenditure that is aligned. See EU Taxonomy reporting.
Financed emissionsThe emissions linked to a bank's or investor's loans and investments, usually measured with the PCAF standard; part of scope 3 category 15. See financed emissions and PCAF.
Financial materialityThe test of whether a sustainability matter could affect a company's cash flows, performance, financial position, access to finance or cost of capital. See financial materiality.
GHG ProtocolThe most widely used set of standards for measuring and reporting greenhouse gas emissions, which defines scopes 1, 2 and 3. See the GHG Protocol explained.
Green bondA bond whose proceeds are used for eligible environmental projects, under market principles or the EU Green Bond Standard. See green bonds.
GreenwashingMisleading claims about a company's or product's environmental credentials, now targeted by consumer, financial and advertising rules. See greenwashing risk.
GRI content indexThe table in a GRI report showing where each disclosure can be found and the reasons for any omissions. See the GRI content index.
GRI StandardsThe Global Reporting Initiative's standards for reporting a company's impacts on the economy, environment and people, made up of universal, sector and topic standards. See the GRI Standards explained.
IFRS S1The ISSB's general requirements standard for disclosing sustainability-related risks and opportunities that could affect a company's prospects. See IFRS S1.
IFRS S2The ISSB's climate standard, covering governance, strategy, risk management, metrics and targets, including scope 1, 2 and 3 emissions. See IFRS S2.
Impact materialityThe test of whether a company's actual or potential impacts on people or the environment are material, judged by severity and likelihood. See impact materiality.
Impacts, risks and opportunities (IROs)The items a company identifies and assesses in its ESRS materiality assessment, which decide what it reports. See impacts, risks and opportunities.
Industry-based metricsMetrics for each industry, drawn from the SASB Standards, that companies consider when applying the ISSB standards. See SASB standards and industry-based metrics.
ISSA 5000The IAASB's global standard for sustainability assurance engagements, effective for periods beginning on or after 15 December 2026. See ISSA 5000.
ISSBThe International Sustainability Standards Board, set up by the IFRS Foundation in 2021, which issues IFRS S1 and IFRS S2. See ISSB adoption by country.
Location-based and market-basedThe two methods for scope 2 emissions: location-based uses average grid factors; market-based uses the company's contracts and certificates. See scope 2 methods.
Net zeroA state in which a company's remaining emissions are balanced by permanent removals after deep cuts, usually by 2050, as defined by standards such as the SBTi's. See ESG targets and net zero.
OmnibusThe EU's 2026 simplification package, including the Omnibus I Directive that narrowed the CSRD's scope and dropped reasonable assurance. See the CSRD after the Omnibus.
Organisational boundaryThe entities whose emissions a company includes, using the GHG Protocol's operational control, financial control or equity share approach. See organisational boundaries.
SB 253California's Climate Corporate Data Accountability Act, requiring large companies doing business in California to report scope 1, 2 and 3 emissions, with assurance. See California SB 253.
SB 261California's law requiring companies doing business in California above a revenue threshold to publish climate-related financial risk reports; a court paused enforcement in November 2025 pending an appeal. See California SB 261.
Scenario analysisAssessing how a company's strategy and finances would fare under different climate futures, such as rapid transition or severe warming. See climate scenario analysis.
Scope 1 and scope 2Scope 1: direct emissions from sources a company owns or controls. Scope 2: indirect emissions from the electricity, heat, steam and cooling it buys. See scope 1 and 2 emissions.
Scope 3All other indirect emissions in a company's value chain, in 15 categories, from purchased goods to the use of sold products. See the 15 scope 3 categories.
Sustainability-linked loanA loan whose margin changes depending on whether the borrower meets agreed sustainability targets. See sustainability-linked loans.
Sustainability statementThe section of the management report that contains a company's ESRS disclosures. See ESRS 2 general disclosures.
TCFDThe Task Force on Climate-related Financial Disclosures, whose 2017 recommendations shaped IFRS S2; it disbanded in 2023, passing its monitoring role to the IFRS Foundation. See IFRS S2.
TNFDThe Taskforce on Nature-related Financial Disclosures, whose 2023 recommendations and LEAP approach underpin the ISSB's nature proposals. See nature and biodiversity.
Transition planA company's plan for moving to a low-carbon economy, with targets, actions, resources and how they fit its strategy. See climate transition plans.
UK SRSThe UK Sustainability Reporting Standards, the UK's endorsed versions of IFRS S1 and IFRS S2, published in February 2026. See UK SRS.
Value chainThe upstream and downstream activities, relationships and resources linked to a company's business, from suppliers to customers. See the value chain cap.
Voluntary standard for SMEsThe EU's sustainability reporting standard for voluntary use by companies outside the CSRD's scope, based on EFRAG's VSME, which also limits what CSRD reporters can ask of smaller partners. See the value chain cap.
XBRL taggingMarking up reported figures and text with machine-readable tags from a taxonomy, so they can be extracted and compared. See digital tagging.

Which terms mean the same thing?

  • Carbon credit and carbon offset are usually used for the same certificate, although some use offset only for credits used to compensate emissions.
  • Sustainability statement (ESRS) and sustainability-related financial disclosures (ISSB) both describe the report itself.
  • GHG emissions and carbon emissions are used interchangeably, although greenhouse gases include methane, nitrous oxide and fluorinated gases as well as carbon dioxide.
  • ESG and sustainability are often used interchangeably for the same environmental, social and governance topics.

Which terms are often confused?

Impact and financial materiality. Impact materiality asks how the company affects people and the environment; financial materiality asks how sustainability matters affect the company. The ESRS use both; the ISSB uses only the financial view. See materiality under the ISSB and ESRS.

Carbon credits and emissions allowances. Carbon credits are voluntary certificates from reduction or removal projects; emissions allowances are permits to emit under compliance schemes such as the EU Emissions Trading System, and are accounted for differently. See accounting for carbon credits.

Net zero and carbon neutral. Net zero requires deep cuts and permanent removals for the rest; carbon neutral claims have often relied on offsets, and the EU has banned product claims based on offsetting from September 2026.

Location-based and market-based scope 2. The same electricity use can give two different emissions figures, and many standards ask for both.

Where to go next

See sustainability reporting explained, the ISSB standards and ESRS compared and ESG KPIs explained.

Need help applying the standards?

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Questions people ask

What is the difference between the ISSB and the ESRS?

The ISSB's standards give investors information on sustainability risks and opportunities; the ESRS, required by the CSRD, also cover a company's impacts on people and the environment through double materiality.

What are scope 1, 2 and 3 emissions?

Scope 1 is direct emissions from sources a company controls, scope 2 is from the energy it buys, and scope 3 is all other emissions in its value chain.

What is double materiality?

The ESRS test under which a matter is reported if it is material for its impacts on people and the environment, for its financial effects on the company, or both.

What is the difference between limited and reasonable assurance?

Limited assurance gives a negative conclusion based mainly on inquiry and analysis; reasonable assurance gives a positive opinion and needs much more evidence.

Sources

Every fee, date and rule on this page was taken from these official and primary sources.

  1. IFRS Foundation: IFRS Sustainability Disclosure Standards (IFRS S1 and IFRS S2)
  2. Commission Delegated Regulation (EU) 2026/1563 revising the ESRS, published 21 September 2026
  3. EFRAG: Commission publishes delegated act on revised ESRS and voluntary standard
  4. Global Reporting Initiative: the GRI Standards
  5. GHG Protocol Corporate Accounting and Reporting Standard

Rules and fees change. If you are reading this long after October 14, 2026, confirm the figures with the source before you rely on them.

SustainabilitySustainability reporting explained: ISSB, ESRS, GRI and US rulesSustainabilityISSB standards and ESRS comparedSustainabilityESG KPIs explained

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