Chapter 3 - Regulation relating to sustainability

Policy

A plan or statement of intent guiding decisions and actions

Guidelines

Non-legally binding instructions that explain how to follow a policy.

Regulation

Legally enforceable rules imposed by governments on market behaviour.

Tragedy of the commons

Shared resources are overused until they become depleted, harming everyone, e.g oceans, clean air

Tragedy of the horizon

Long-term environmental risks are ignored because short-term economic priorities dominate decision-making, e.g deforestation, fossil fuel investing

United Nations Framework Convention on Climate Change (UNFCCC) and Conference of the Parties (COP)

The UNFCCC coordinates global climate action, and COP meetings are where member states negotiate and agree climate decisions.

International Organization for Standardization (ISO)

Develops international environmental and management standards used by organisations worldwide.

International Sustainability Standards Board (ISSB) and Task Force on Climate-related Financial Disclosures (TCFD)

• ISSB sets global sustainability disclosure standards for investors

• TCFD provides a framework for reporting climate-related financial risks (used in mandatory UK reporting for large companies)

Paris Agreement

A legally binding global treaty under the UNFCCC aiming to limit global warming to well below 2°C, ideally 1.5°C.

Nationally Determined Contributions (NDCs)

Each country’s climate action plan for reducing emissions, updated every five years.

Net zero

Balancing greenhouse gas emissions produced with emissions removed from the atmosphere.

What is the global stocktake under the Paris Agreement?

A five-year review of global progress towards achieving climate goals.

What is the United Nations Convention on Biological Diversity (UN CBD)?

A global treaty focused on conserving biodiversity, sustainable use of resources, and fair sharing of genetic benefits.

What is the Kunming-Montreal Global Biodiversity Framework?

A global plan under the UN CBD with targets for 2030 including protecting 30% of land and sea and restoring ecosystems.

What is the European Green Deal (EGD)?

EU strategy to cut emissions by 55% by 2030 and reach net zero by 2050.

What is the Corporate Sustainability Reporting Directive (CSRD)?

EU law requiring companies to report detailed environmental and social sustainability information.

What is the European Union Taxonomy?

A classification system defining which economic activities are environmentally sustainable.

What is the Carbon Border Adjustment Mechanism (CBAM)?

EU policy that applies a carbon price to imports to prevent carbon leakage.

What is the European Union Emissions Trading System (EU ETS)?

A cap-and-trade system where companies buy and sell carbon emission allowances.

What is Streamlined Energy and Carbon Reporting (SECR) in the United Kingdom?

UK requirement for large companies to report Scope 1, Scope 2, and Scope 3 greenhouse gas emissions.

What is the United Kingdom Green Finance Strategy?

UK plan to mobilise private investment into net zero and sustainable finance markets.

What is the difference in sustainability reporting between the United States of America and Australia?

• United States of America: no mandatory national sustainability reporting; voluntary frameworks like Sustainability Accounting Standards Board (SASB) are used

• Australia: introducing mandatory climate reporting based on International Financial Reporting Standards (IFRS) Sustainability Disclosure Standards

What is a Non-Governmental Organisation (NGO) and what do they do in sustainability?

Independent organisations that raise awareness, conduct research, influence policy, and hold governments and businesses accountable.

What is Environmental, Social and Governance (ESG) and what is the role of business in sustainability?

ESG is a framework for measuring sustainability performance, and businesses must reduce emissions, manage supply chains responsibly, engage stakeholders, and improve governance.