IFRS.Report
ESG & IFRS Glossary
Definitions of the terms ESG reporters, analysts, and auditors need to understand IFRS sustainability disclosure.
Financial materiality
Information is material if omitting, misstating, or obscuring it could reasonably influence investor decisions.
Connected information
The linkage between sustainability disclosures, financial statements, strategy, risk, and performance.
Scope 1 emissions
Direct greenhouse gas emissions from sources owned or controlled by the reporting entity.
Scope 2 emissions
Indirect greenhouse gas emissions from purchased electricity, steam, heating, or cooling.
Scenario analysis
A method for testing strategy resilience under plausible climate-related futures.
GHG Protocol
The Greenhouse Gas Protocol — the global standard for measuring and reporting greenhouse gas emissions (Corporate Standard, Scope 2 Guidance, and Corporate Value Chain Standard).
Double materiality
A reporting approach assessing both financial materiality (impact on enterprise value) and impact materiality (the entity's impact on people and the environment), as required by ESRS.
Impact materiality
The assessment of how a company affects people and the environment — the "inside-out" perspective required by ESRS in addition to financial materiality.
Physical risk
Climate-related risks arising from the physical effects of climate change, including acute risks (extreme weather events) and chronic risks (sea-level rise, temperature shifts).
Transition risk
Climate-related risks arising from the transition to a lower-carbon economy, including policy, legal, technology, market, and reputation changes.
Value chain
The full range of activities, resources, and relationships related to a reporting entity's business model — IFRS S1 requires disclosure of sustainability risks across the entire value chain.
Stranded assets
Assets that have become uneconomic or obsolete before the end of their expected useful life due to climate transition — a key disclosure requirement under IFRS S2 §8–24.
Financed emissions
Greenhouse gas emissions associated with a financial institution's lending and investment portfolios, calculated using the PCAF methodology, disclosed under IFRS S2 §27–36.
Embodied carbon
The total greenhouse gas emissions associated with the production of a material or product — from raw material extraction through manufacturing, before the product is used.
Climate transition plan
A company's plan for transitioning its business model to align with a low-carbon economy — IFRS S2 §13–15 requires disclosure of transition planning.
Carbon pricing
A cost applied to greenhouse gas emissions — either through direct carbon taxes or emissions trading schemes — that companies must factor into their IFRS S2 disclosures.
Emission factor
A coefficient that quantifies the emissions per unit of activity (e.g., kg CO₂ per kWh of electricity) — used in GHG Protocol-based carbon accounting.
Enterprise risk management
The integrated process for identifying, assessing, and managing risks across an organisation — IFRS S1 §43–44 requires sustainability risks to be integrated into ERM.
ISSB
International Sustainability Standards Board — the IFRS Foundation board that issued IFRS S1 and IFRS S2 in June 2023.
TCFD
Task Force on Climate-related Financial Disclosures — its four-pillar framework (governance, strategy, risk, metrics) was absorbed into IFRS S2 in 2024.
SASB
Sustainability Accounting Standards Board — issued 77 industry-specific disclosure standards now codified into IFRS S2's industry-based guidance.
TNFD
Taskforce on Nature-related Financial Disclosures — extends the TCFD four-pillar framework to nature and biodiversity risks.
GRI
Global Reporting Initiative — the most widely used multi-stakeholder sustainability reporting framework, interoperable with IFRS per May 2024 joint guidance.
ESRS
European Sustainability Reporting Standards — the EU's mandatory sustainability reporting standards under the CSRD, interoperable with IFRS S2 for climate disclosures.
CSRD
Corporate Sustainability Reporting Directive — the EU regulation requiring large companies to report under ESRS from FY2024 onward.
PCAF
Partnership for Carbon Accounting Financials — the global standard for measuring and disclosing financed emissions by financial institutions.
ISAE 3000
International Standard on Assurance Engagements 3000 — the global standard for assurance on non-financial information.
ISSA 5000
International Standard on Sustainability Assurance 5000 — the IAASB standard for assurance on sustainability reporting, effective for periods beginning December 2026.
PUE
Power Usage Effectiveness — the ratio of total data center energy consumption to IT equipment energy consumption; a key metric for technology sector climate disclosure.
RAG
Retrieval-Augmented Generation — an AI technique that grounds language model outputs in retrieved source documents, used to prevent hallucination in ESG report drafting.
Limited assurance
A level of assurance where the practitioner performs fewer procedures than reasonable assurance and expresses a negative conclusion (no material misstatements identified).
Reasonable assurance
The higher level of assurance where the practitioner performs extensive procedures and expresses a positive opinion on the subject matter.
Lifecycle assessment
A methodology for evaluating the environmental impacts of a product across its entire lifecycle — from raw material extraction through production, use, and end-of-life disposal.
Interoperability
The ability of different reporting frameworks (IFRS, ESRS, GRI) to work together — confirmed by ISSB guidance that overlapping disclosures can satisfy multiple standards.
Greenhouse gas
Gases that trap heat in the atmosphere — carbon dioxide (CO₂), methane (CH₄), nitrous oxide (N₂O), and fluorinated gases — measured and reported under the GHG Protocol.
Carbon accounting
The process of measuring and reporting greenhouse gas emissions — using the GHG Protocol methodology to quantify Scope 1, 2, and 3 emissions for disclosure under IFRS S2.
Supply chain
The network of organisations, people, activities, and resources involved in producing and delivering a product or service — IFRS S2 requires disclosure of climate risks across the full value chain.
Climate resilience
The ability of an organisation to anticipate, prepare for, respond to, and recover from climate-related disruptions — assessed through scenario analysis under IFRS S2 §22.
Materiality assessment
The process of determining which sustainability information is material — IFRS S1 §17–19 defines materiality as information that could reasonably influence investor decisions.
Fugitive emissions
Unintended greenhouse gas releases from industrial processes — including methane leaks from wellheads, pipelines, and processing facilities, disclosed under IFRS S2 Scope 1 requirements.
Credit risk
The risk that a borrower or counterparty will fail to meet its obligations — IFRS S2 requires financial institutions to disclose how climate risk affects credit risk models and loan portfolio exposure.
Underwriting
The process by which insurers evaluate risk and determine policy terms — IFRS S2 requires insurers to disclose how climate change affects underwriting assumptions and insured exposure.
Electrification
The transition from fossil fuel-powered systems to electric alternatives — a key climate transition strategy disclosed under IFRS S2 §8–24 for transportation, manufacturing, and building sectors.
Decommissioning
The process of safely retiring an asset at the end of its useful life — including site restoration, waste disposal, and recycling — disclosed as provisions and contingent liabilities under IFRS S1.