GLOSSARY
Key definitions
Carbon footprint: total carbon emissions for a portfolio normalised by the market value of the portfolio, expressed in tons CO2e/£M invested. This allows portfolios to be compared to one another/a benchmark. The metric answers the question: how carbon efficient is my portfolio per million pounds invested?
Source: TCFD (Task Force on Climate-related Financial Disclosures)
Climate-related opportunity: the potential positive impacts related to climate change on an organisation. Efforts to mitigate and adapt to climate change can produce opportunities for organisations, such as through resource efficiency and cost savings, the adoption and utilisation of low-emission energy sources, the development of new products and services and building resilience along the supply chain.
Climate-related risk: the potential negative impacts of climate change on an organisation. Physical risks emanating from climate change can be event-driven (acute) such as increased severity of extreme weather events (e.g. cyclones, droughts, floods and fires). They can also relate to longer-term shifts (chronic) in precipitation and temperature and increased variability in weather patterns (e.g. sea-level rise). Climate-related risks can also be associated with the transition to a lower-carbon global economy, the most common of which relates to policy and legal actions, technology changes, market responses and reputational considerations.
Environmental, social and governance (ESG): factors that are identified or assessed in responsible investment processes.
Environmental factors are issues relating to the quality and functioning of the natural environment and natural systems.
Social factors are issues relating to the rights, well-being and interests of people and communities.
Governance factors are issues relating to the governance of companies and other investee entities.
Source: PRI (Principles for Responsible Investment)