Glossary

Scenario in which global average temperatures is limited to 1.5°C above pre-industrial levels with no or limited overshoot.

A science-based target derived from a 1.5°C aligned scenario via an approved target-setting method.

The term “abatement” includes non-CO2 mitigation, while “decarbonization” refers only to CO2 mitigation. Abatement includes:

Measures that companies take to prevent, reduce, or eliminate sources of GHG emissions within their value chain

• Phasing out activities that produce emissions
• Taking measures to reduce the intensity and/or extent of impacts that cannot be completely avoided (e.g., increase fuel or resource efficiency)
• Biogenic value chain removals in FLAG (forest, land and agriculture) SBTs.

Method used to calculate absolute emissions reduction targets that requires organizations to reduce annual absolute emissions by an amount consistent with underlying mitigation pathways. Also known as “Absolute reduction approach” (ARA), and “Cross-sector absolute reduction”.

Expression of a quantity of greenhouse gas (GHG) emissions in terms of mass of GHG or tonnes of carbon dioxide equivalent (CO2e). In contrast with emissions intensity.

The state of having met the required emission reductions and other actions stated in a company’s science-based target in the target year or earlier.

An acquisition is a transaction wherein one company purchases most or all of another company's shares to gain control of that company.

Adjustments in ecological, social or economic systems in response to actual or expected climatic stimuli and their effects or impacts. Adaptation refers to changes in processes, practices and structures to moderate potential damages or to benefit from opportunities associated with climate change (International Organization for Standardization, 2022).

Additionality is the extent to which something happens as a result of an intervention that would not have occurred in the absence of that intervention. Additionality is a defining concept of interventions quantified with consequential accounting, including carbon credit projects and programs.

Common terminology in the scientific community for what is also called the land sector and Forest, land and agriculture (FLAG) in the case of the SBTi. The AFOLU category combines the LULUCF (land use, land use change and forestry) and agriculture sectors.

Indicators that measure the extent to which an organization's strategies, operations, and business model are in line with global climate goals. Examples may include metrics relating to renewable energy usage, and the ambition of suppliers and other value chain counterparties.

The emissions that remain in a given year as a company progresses towards the delivery of its near- and long-term science-based target.

An item of property, such as land, buildings, equipment, owned by a company and used to produce income for the company (Cambridge Dictionary, 2021). The term "assets" also includes financial assets such as ownership of businesses, real estate or infrastructure assets, or financial products, such as loans and bonds.

A group of financial instruments that have similar financial characteristics (PCAF, 2022).

The share of total GHG emissions of the borrower or investee that are allocated to the loan or investment (PCAF, 2022).

Measures taken by companies to avoid creating value chain emissions from the outset (WWF, 2020) (e.g., manufacture of electric vehicles instead of internal combustion engines).

Product-related avoided emissions are emission reductions that occur outside of the life cycle or value chain of a product or service, but as a result of the use of that product (Greenhouse Gas Protocol, 2017). Avoided emissions account for the favorable differences in the GHG emissions impact of a product (good or service) relative to the situation where that product does not exist (WRI, 2019).

A historic datum (a specific year or, in the case of a base period, an average over multiple years) against which a company’s emissions are tracked over time.

Retroactive recalculation of a target base year GHG inventory to reflect changes that have occurred since it was originally calculated, for example, a change in company structure or accounting methodology used, to ensure the consistency and relevance of the reported GHG emissions information (adapted from (WRI & WBCSD, 2004).

A reference point against which an organization's performance can be compared. In the context of science-based target setting, benchmarks are informed by methods and reference pathways such as the 1.5°C pathways, which outline the necessary performance levels to limit global temperature increase to 1.5°C above pre-industrial levels.

Benefit sharing is the allocation of the proceeds from carbon credits to local stakeholders involved in a carbon credit project or program (VCM Primer, 2023).

Mitigation action or investments that fall outside a company’s value chain, including activities that avoid or reduce GHG emissions, or remove and store GHGs from the atmosphere.

Carbon-rich material produced from the thermochemical conversion of biomass in an oxygen-limited environment. Biochar may be added to soils to improve soil functions and to reduce GHG emissions from biomass and soils, and for carbon sequestration. This definition builds from the International Biochar Initiative (IBI, 2018) (adapted from (IPCC, 2018).

Energy derived from any form of biomass or its metabolic by-products (IPCC, 2018). This may include but is not limited to energy generated from the combustion of biomass and energy derived from recently living organisms.

Bioenergy with carbon capture and storage (BECCS) involves any energy pathway where CO2  is captured from a biogenic source and permanently stored (International Energy Agency, 2023).

CO2 emissions resulting from the combustion or biodegradation of, or other losses from, biogenic carbon pools to the atmosphere (Greenhouse Gas Protocol, 2022).

CO2 removals resulting from atmospheric CO2 transferred via biological sinks to storage in biogenic carbon pools, primarily photosynthesis (Greenhouse Gas Protocol, 2022).

Living or recently dead organic material (IPCC, 2018). Biomass includes organic material both aboveground and belowground, both living and dead, e.g., trees, crops, grasses, tree litter, roots etc.

Blue carbon is the carbon captured by living organisms in coastal (e.g., mangroves, salt marshes, seagrasses) and marine ecosystems, and stored in biomass and sediments (IPCC, 2018).

The company or individual to whom capital is loaned.

A bulk carrier is a type of maritime vessel. It includes:

• Aggregates carrier
• Bulk carrier
• Bulk carrier (with vehicle decks)
• Bulk carrier, laker only
• Bulk carrier, self-discharging
• Bulk carrier, self-discharging, laker
• Bulk/Caustic soda carrier (CABU)
• Bulk/Oil carrier (OBO)
• Cement carrier
• Limestone carrier
• Ore carrier
• Ore/Oil carrier
• Powder carrier
• Refined sugar carrier
• Stone carrier
• Urea carrier
• Wood chips carrier

In a buyout investment, the investor often has complete or majority ownership and control of the company. Unlike leveraged buyouts (LBO), buyouts can also have a minority stake of the company being purchased (adapted from (Preqin, 2021).

Capital markets describe any exchange marketplace where financial securities and assets are bought and sold.

This term refers to three concepts in the literature:

• An assessment of carbon cycle sources and sinks on a global level, through the synthesis of evidence for fossil fuel and cement emissions, land-use change emissions, ocean and land CO2 sinks, and the resulting atmospheric CO2 growth rate. This is referred to as the global carbon budget.
• The estimated cumulative amount of global CO2 emissions that is estimated to limit global surface temperature to a given level above a reference period, taking into account global surface temperature contributions of other GHGs and climate forcers.
• The distribution of the carbon budget defined under (2) to the regional, national, or sub-national level based on considerations of equity, costs or efficiency (IPCC, 2018).

A carbon credit is a tradable unit that represents one metric tonne of GHG emission reductions or removals. When a carbon credit is purchased and retired for offsetting purposes, it is sometimes referred to as a carbon offset credit.

A process in which a relatively pure stream of CO2 from industrial and energy-related sources is separated (captured), conditioned, compressed and transported to a storage location for long-term isolation from the atmosphere. Sometimes referred to as carbon capture and storage (IPCC, 2018). Usually the CO2 is captured from large point sources, such as power generation or industrial facilities, and then stored permanently in an underground geological formation.

A process in which CO2 is captured and then used to produce a new product. CCU is sometimes referred to as carbon dioxide capture and use (adapted from IPCC, 2018). CCU differs from carbon dioxide capture and storage (CCS) in that CCU does not aim nor result in permanent geological storage of carbon dioxide. Instead, CCU aims to convert the captured CO2 into more valuable substances or products, where CO2 could be sequestered short-term (such as in fuels) or long-term (for example in building materials).

CCUS involves the capture of CO2, generally from large point sources such as power generation or industrial facilities that use either fossil fuels or biomass as fuel. If not being used on-site, the captured CO2 is compressed and transported by pipeline, ship, rail or truck to be used in a range of applications, or injected into deep geological formations such as depleted oil and gas reservoirs or saline aquifers (International Energy Agency, 2023). In other words CCUS is a broad term that covers both CCU and CCS, where CO2 can be either used or stored.

The amount of CO2 emissions that would cause the same integrated radiative forcing or temperature change, over a given time horizon, as an emitted amount of a GHG or a mixture of GHGs. There are a number of ways to compute such equivalent emissions and choose appropriate time horizons.  Most typically, the CO2e emission is obtained by multiplying the emission of a GHG by its global warming potential (GWP) for a 100-year time horizon. 

For a mix of GHGs, it is obtained by summing the CO2e emissions of each gas. CO2e emission is a common scale for comparing emissions of different GHGs but does not imply equivalence of the corresponding climate change responses. There is generally no connection between CO2e emissions and resulting CO2e concentrations (IPCC, 2018). In other words, CO2e is a metric used to place emissions of various radiative forcing agents on a common footing by accounting for their effect on climate. It describes, for a given mixture and amount of GHGs, the amount of CO2 that would have the same global warming ability when measured over a 100 year time horizon. Conversion factors vary based on the underlying assumptions and as the science advances.

Anthropogenic activities removing CO2 from the atmosphere and durably storing it in geological, terrestrial, or ocean reservoirs, or in products (IPCC, 2018).

Carbon pricing is an instrument that captures the external costs of GHG emissions—the costs of emissions that the public pays for, such as damage to crops, health care costs from heat waves and droughts, and loss of property from flooding and sea level rise—and ties them to their sources through a price, usually in the form of a price on the CO2 emitted (The World Bank, 2017).

The process of storing carbon in a carbon pool (IPCC, 2018).Carbon sequestration differs from carbon dioxide removals (CDR) in that in the latter the CO2 must be captured (either directly or indirectly) from the atmosphere, while carbon sequestration also includes processes that capture CO2 from fossil fuels (i.e. CCS).

The quantity of carbon in a “pool,” meaning a reservoir or system, which has the capacity to accumulate or release carbon.

A chemical tanker is a type of maritime vessel. It includes:

• Bulk/sulphuric acid carrier
• Chemical tanker
• Chemical tanker, inland waterways
• Chemical/Products tanker
• Chemical/Products tanker, inland waterways
• Compressed natural gas (CNG) tanker
• Edible oil tanker
• Glue tanker
• Latex tanker
• Molten sulphur tanker
• Vegetable oil tanker
• Wine tanker
• Beer tanker

A human intervention to reduce emissions or enhance the sinks of GHGs (IPCC, 2018).

Claims which convey to audiences that the organization has delivered BVCM proportional to a stated percentage of unabated value chain emissions and that the BVCM outcomes counterbalance or “net out” that stated percentage of unabated value chain emissions. The draft GHG Protocol Land Sector and Removals Guidance describes “compensation targets” related to the use of carbon credits as “a target for achieving mitigation external to the target boundary through purchasing and retiring GHG credits (also called offsets or carbon credits) to compensate for annual or cumulative unabated emissions in the target boundary, if allowed under the relevant target setting program or target setting policy.” (Greenhouse Gas Protocol, 2022) An example of a compensation claim is the carbon neutrality claim.

Claims which convey to audiences that the organization has provided support or finance to actions beyond the company’s value chain (including through collective action) with an expected climate mitigation outcome (where the actions are relevant to the expected performance outcome). Unlike compensation claims, the contribution claim does not imply that the BVCM outcomes are "netting out" or counterbalancing the claimants’ remaining value chain emissions, but instead are communicated as a contribution to global climate mitigation efforts or even the efforts of a country.

In the context of the Financial Sector Guidance framework, climate impact refers to the GHG emissions that occur as a result of mitigation actions by the financial institution, including financing of loans and investments.

Justice that links development and human rights to achieve a human-centered approach to addressing climate change, safeguarding the rights of the most vulnerable people and sharing the burdens and benefits of climate change and its impacts equitably and fairly (IPCC, 2018).

The IPCC defines climate neutrality as the concept of a state in which human activities result in no net effect on the climate system. Achieving such a state would require balancing of residual emissions with emission (carbon dioxide) removal as well as accounting for regional or local biogeophysical effects of human activities that, for example, affect surface albedo or local climate (IPCC, 2018). Typically, companies use the term "climate neutral" to describe the practice of purchasing and retiring carbon credits equivalent to the volume of unabated emissions – either at the organizational or product level - in a given period.