GARP-SCR Vocabulary

Attention Deflection

When organizations or companies conceal unsustainable practices with incomplete disclosures or misleading statements

Avoid

Refers to renewable energy projects, or similar initiatives that do not add greenhouse gases to the atmosphere

Bid-Ask Spreads

The difference between what a buyer is willing to pay and the selling price of an asset

Biomass Energy

A form of renewable energy created by combusting plant-based material

Cap-And-Trade Schemes

A form of carbon pricing in which a government caps emissions, but emissions permits can be traded between participants

Carbon Capture, Utilization, and Storage (CCUS)

A process by which fossil fuels are burned and carbon dioxide is captured and used in a range of applications, such as being incorporated in cement or plastic, or stored underground

Carbon Intensity

The level of GHG emissions normalized by the market value of the portfolio

Carbon Leakage

When carbon-intensive companies relocate to areas with weaker climate portfolio

Carbon Pricing

Refers principally to two types of policies--carbon taxes and emissions-trading schemes (often known as cap-and-trade schemes)

Carbon Taxes

A form of carbon pricing in which a government sets a price per ton of CO2

Changes in Insurance Premiums

A metric to determine the amount of money an individual or business must pay for an insurance policy

Climate

The long-term patterns of statistics of the weather

Climate Action

A set of actions and policies to address climate change risk. Necessary to address sustainable development, climate action and risks are broader than ESG, impacting all aspects of society

Climate Change

The long-term differences in statistics of weather patterns measured over multi-decadal periods

Climate Finance

Financial flows related to adaptation and/or mitigation climate change projects

Climate Risk

The financial risks linked to climate change

Climate Risk Management

A form of risk management that can help identify, analyze, mitigate, and manage the impacts of climate change

Climate Scenario Analysis

A planning tool that firms use to develop narratives to sketch out potential future states of the world as climate change advances

Climate Stress Tests

Simulations that are used to assess how a firm responds to climate-induced physical and transitional risk

Climate Tipping Point

A low probability, high impact event in which the climate system undergoes a large and rapid shift to an entirely new climate state

CO2 emissions standards

A set of European Union regulations to reduce the quantity of CO2 emissions from cars and vans

Commercial (Climate) Data Providers

Entities that provide detailed climate-related data for transition and physical risk scenario analysis

Company-Level Scores

A measurement of a company's physical climate risk exposure

Company-Level Risks

Microeconomic risks that impact the function of an individual firm, including operational, credit, liquidity, and underwriting risks

Consumption-Based

A GHG accounting method which measures the cumulative emissions which arise from the production of all goods and services consumed in that country, regardless of where production took place

Corporate Alignment

A process in which companies develop approaches to reach a common goal

Corporate Carbon Footprints

Carbon emissions data of a firm's Scope 1, 2, and 3 emissions, as defined by the GHG Protocol

Corporate Greenhouse Gas Emissions

The combination of a firm's Scope 1, 2, and 3 emissions, as defined by GHG Protocol

Corporate Social Responsibility (CSR)

When companies under-take social or environmental activities in an attempt to benefit wider society

Corporate Strategy

High-level decisions on an organization's priorities and mission

Credit Risk

A measure of credit-worthiness, or ability a borrower has to pay back a loan

Culture

Defined by COSO as the "attitudes, behaviors and understanding about risk [...] that influence the decisions of management and personnel and reflect the mission, vision and core values of that organization"

Decoupling

When organizations or companies do not fulfill stakeholder expectations of sustainability claims

Development Financial Institutions (DFIs)

Institutions that finance projects in developing countries

Direct Emissions

Emissions from sources that are owned or controlled by the reporting company

Disorderly Transition

A delayed and less organized economic transition to net zero CO2

Double Materiality

A concept that encourages companies to disclose all activities, opportunities, and risks that may be material to the company, society, and the environment

Economic Sustainability

An aspect of sustainability that promotes accessibility of economic prosperity around the world

Ecosystem Services

Benefits that humans derive from ecosystems, including provisioning, supporting, regulating, and cultural services

Emission Trajectories

A projection of the level of GHG that an entity emits, based on current and proposed practices and policies

Enterprise Risk Management (ERM)

Comprehensive approaches to managing risk across and within an organization

Environmental Criteria

Criteria that assess how a company impacts environmental factors such as water use and GHG emissions

Environmental Sustainability

An aspect of sustainability that involves maintaining and balancing ecological biological systems

ESG

A set of criteria investors use to gauge companies and sometimes other entities such as governments on environmental, social, and governance performance

ESG Criteria

The standards investors use to assess ESG performance of companies and governments

ESG Integration

Involves using and collecting data on material ESG issues, integrating it into investing or lending decisions, and engaging investee companies

EU Taxonomy

A European Union framework that sets performance thresholds for economic activities, by sector and subsector, to determine which investments are environmentally sustainable

European Economic Area

European countries that participate in the European Union's single market

EV Purchase Subsidies

Government-funded subsidies that promote purchasing electric vehicles

Exposure

A measure of whether assets or firms in a vulnerable place or setting could be adversely affected by climate hazards or drivers

Extreme Event Attribution

A branch of climate change science that quantifies the contribution of climate change to extreme events

Feed-in Tariffs

A form of carbon pricing which sets a guaranteed price per unit of electricity generated at which producers can sell their electricity for a fixed period of time

Financial Performance

A traditional metric to gauge company performance

Financial Stability

A set of conditions in which economic processes operate as expected

Financial Supervision

A toolkit of strategies and regulations to ensure the stability of financial institutions

Fuel Efficiency Standards

Regulations that set a target average consumption of fuel in motor vehicles (often indicated as mpg, l/km, g CO2/km)

Geothermal Energy

A form of renewable energy generated by heat in the Earth's crust

(Global) Reference Scenarios

A set of agreed-upon and widely used projections of future emissions with accompanying socioeconomic narratives and estimates, which are crucial input for climate scenario analysis

Global Reporting Initiative

An organization that provides widely accepted sustainability reporting standards

Global Warming

Though often used interchangeably with climate change, specifically refers to the increase in temperature caused by increased greenhouse gases

Global Warming Potential (GWP)

A measure of a gas's ability to trap heat relative to carbon dioxide. For example, methane's GWP of 28 means that it can trap 28 times more heat than carbon dioxide

Governance

Issues that pertain to company leadership, compensation, and risk management strategy

Green Bonds

Bonds whose proceeds are earmarked for environmental projects that can, but are not required to, include climate-related goals

Green Car Loans

Loans that are dedicated to financing environmentally friendly cars, such as electric vehicles

Green of ESG Indices

Stock market indices that include companies according to various sustainability performance standards

Green Finance

Sustainable finance focused on environment-related risks and opportunities--often, but not necessarily, climate change

Green Labels

A standardized recognition/confirmation/certificate that a financial product, project, or organization has a measurable positive contribution to the environment, climate change, renewable energy, or other types of recognized green/sustainable activities

Green Loans

Loans whose proceeds are used for environmental and climate-related projects

Green Mortgages

Mortgages for energy-efficient homes

(Green) Taxonomies

Frameworks that are used to define what products are considered sustainable

Greencrowding

A form of greenwashing in which an organization depends on the sheer volume of other companies in its sector to obscure its sustainability record

Greenhouse Gases

Gases, such as carbon dioxide and methane, that trap heat energy emitted by the Sun and Earth

Greenhushing

A form of greenwashing in which an organization underreports sustainability successes to avoid investor or public scrutiny

Greenlabelling

A form of greenwashing in which an organization misleads on sustainability claims

Greenlighting

A form of greenwashing in which an organization focuses on only one small or specific sustainability success

Greenrinsing

A form of greenwashing in which an organization regularly changes its ESG targets before completion

Greenshifting

A form of greenwashing in which an organization shifts blame for unsustainable practices to consumers

Greenwashing

Practices that include companies not fulfilling green claims made to consumers or deflecting attention away from unsustainable practices

Greenwishing

Well-intended efforts that may not make a significant difference toward sustainable outcomes

Growth

An increase in utilization

Hazards

Events with the potential to cause harm and enhance risk

Hothouse World

A lack of action in pursuing net CO2, leading to enhanced physical risks

Hydroelectric Energy

A form of renewable energy generated when water running through a damn spins turbines

Impact and Dependency Mapping

A tool that describes impacts and dependencies in terms of stock and flow in relation to various types of capital

Indirect Emissions

Emissions that are a consequence of the activities of the reporting company, but occur at sources owned or controlled by another company

Integrated Assessment Models (IAMs)

Broad-spectrum models designed to allow analysis of how societal and economic choices affect each other and the natural world, including the causes of climate change

Intergovernmental Panel on Climate Change (IPCC)

The UN entity that is responsible for assessing and reporting on climate change and its impacts

International Climate Policy

Binding and non-binding multinational agreements that primarily focus on reducing greenhouse gas emissions

International Energy Auditor (IEA)

An international organization that collects data, conducts analyses, and produces reports on energy use across the global energy system

International Financial Institutions (IFIs)

Banks that are established and managed by two or more countries

Key Performance Indicators (KPIs)

A quantified measure of advancement toward a predetermined goal

Kyoto Protocol

Established in 1997, a legally binding treaty in which high-income countries agreed to reduce emissions by 5% from 1990 levels by 2008-2012

Leakage

Refers to displacing rather than avoiding emissions

Liability Risk

When firms suffer financial consequences after being held legally responsible

Life Cycle Assessment

An assessment of the environmental impacts of a product through its entire life cycle, from production, to use, to disposal

Liquidity Risk

Potential loss due to an institution's inability to meet its obligations or losing access to liquidity

Loan-to-Deposit Ratios

A ratio to compare a bank's total loans to the bank's total deposits

Loss Given Defaults

The amount a lender loses when a borrower is unable to pay back a loan

Macroprudential supervision

The oversight of the broader financial system for financial soundness

Materiality/Material

The relative significance of an issue to an organization's finances and business operations