Glossary of Key Terms and Concepts

Photo: Sarah Farhat / World Bank

Annual total remuneration — Basic salary plus additional amounts paid, including bonuses, stock and option awards, benefit payments, overtime, time owed, and any additional allowances, such as transportation, living and childcare allowances. 

Business model — An entity’s system of transforming inputs through its business activities into outputs and outcomes that aims to fulfil the entity’s strategic purposes and create value over the short, medium and long term. In addition, Gartner broadly defines a business model as a description of how an organization creates, delivers and captures value.

Child (for purposes of child  labour) — Person under the age of 15 years, or under the age of completion of compulsory schooling, whichever is higher.  Exceptions regarding child labour can occur in certain countries where economies and educational facilities are insufficiently developed, and a minimum age of 14 years applies. These countries of exception are specified by the International Labour Organization (ILO) in response to a special application by the country concerned and in consultation with representative organizations of employers and workers.

Climate (Corporate) Governance Practices, policies, and structures within a company to effectively address climate-related risks and opportunities and align the organization’s activities with climate mitigation and adaptation goals, and regulatory requirements.

Collective bargaining All negotiations that take place between one or more employers or employers' organizations, on the one hand, and one or more workers' organizations (e.g., trade unions), on the other, for determining working conditions and terms of employment or for regulating relations between employers and workers.

Corruption — Abuse of entrusted power for private gain, which can be instigated by individuals or organizations. Corruption includes practices such as bribery, facilitation payments, fraud, extortion, collusion, and money laundering. It also includes an offer or receipt of any gift, loan, fee, reward, or other advantage to or from any person as an inducement to do something that is dishonest, illegal, or a breach of trust in the conduct of the enterprise’s business. This can include cash or in-kind benefits, such as free goods, gifts, and holidays, or special personal services provided for the purpose of an improper advantage, or that can result in moral pressure to receive such an advantage. (Source: Transparency International, Business Principles for Countering Bribery, 2011)

CSRD — Corporate Sustainability Reporting Directive: The European Commission adopted this directive in January 2023, amending the existing reporting requirements of the NFRD.

Discrimination — Act and result of treating persons unequally by imposing unequal burdens or denying benefits instead of treating each person fairly on the basis of individual merit. Discrimination can also include harassment, defined as a course of comments or actions that are unwelcome, or should reasonably be known to be unwelcome, to the person towards whom they are addressed.

Diversity indicator — Indicator of diversity for which the organization gathers data; examples include: age, race, citizenship, creed, disability, and gender.

Double Materiality — The [Draft] European Sustainability Reporting Guidelines 1 Double materiality conceptual guidelines for standard-setting para 13 sets that “Double materiality is a concept which provides criteria for determination of whether a sustainability topic or information has to be included in the undertaking’s sustainability report. Double materiality is the union (in mathematical terms, i.e. union of two sets, not intersection) of impact materiality and financial materiality. A sustainability topic or information meets therefore the criteria of double materiality if it is material from the impact perspective or from the financial perspective or from both of these two perspectives.”

Due diligence — Process to identify, prevent, mitigate, and account for how the organization addresses its actual and potential negative impacts.

Dynamic Materiality — A concept acknowledging that materiality is a moving target and what is financially immaterial to a company today can become material in the short, medium, or long run.

EFRAG — European Financial Reporting Advisory Group: A private association that the European Commission has assigned to develop the EU ESRS. These standards will form part of the CSRD.

Employee — Individual who is in an employment relationship with the organization according to national law or practice.

Employee category — Breakdown of employees by level (such as senior management, middle management) and function (such as technical, administrative, production). Note: This information is derived from the organization’s own human resources system, and in accordance with any relevant local labour law requirements.

Enterprise value — The total value of an organization. It is the sum of the value of the organization’s equity (market capitalisation) and the value of the organization’s net debt. 

Entry level wage — Full-time wage in the lowest employment category.  Intern or apprentice wages are not considered entry level wages.

Environmental Social and Governance (ESG) — A set of environmental, social, and governance factors considered by companies when managing their operations and investors when making investments, in respect of the risks, impacts, and opportunities relating to but not limited to:

  • Environmental issues: potential or actual changes to the physical or natural environment (e.g. pollution, biodiversity impacts, carbon emissions, climate change, natural resource use);
  • Social issues: potential or actual changes in surrounding community and workers (e.g. land acquisition and involuntary resettlement, health and safety, supply chain, diversity and inclusion); and
  • Governance: corporate governance structures and processes by which companies are directed and controlled (e.g., board structure and diversity, ethical conduct, risk management, disclosure, and transparency), including the oversight of material environmental, climate, and social issues.

ESRS — EU Sustainability Reporting Standards: The reporting standards that form part of the CSRD. EFRAG are tasked by the European Commission to act as technical advisor and develop the draft ESRS that will enter into force as of January 1, 2024.

Exposure — Quantity of time spent at or the nature of contact with certain environments that possess various degrees and kinds of hazard, or proximity to a condition that might cause injury or ill health (e.g., chemicals, radiation, high pressure, noise, fire, explosives).

Financial assistance — Direct or indirect financial benefits that do not represent a transaction of goods and services, but which are an incentive or compensation for actions taken, the cost of an asset, or expenses incurred. Note: The provider of financial assistance does not expect a direct financial return from the assistance offered.

Financial materiality“Sustainability-related financial information is material if omitting, misstating or obscuring that information could reasonably be expected to influence decisions that the primary users of general purpose financial reporting make on the basis of that reporting, which provides information about a specific reporting entity.” IFRS Draft Standard S1 on General Requirement for Disclosure of Sustainability-Related Financial Information.

Forced or compulsory labour — All work and service that is exacted from any person under the menace of any penalty and for which this person has not offered herself or himself voluntarily. The most extreme examples of forced or compulsory labour are slave labour and bonded labour, but debts can also be used as a means of maintaining workers in a state of forced labour.

Freedom of association — Right of employers and workers to form, to join and to run their own organizations without prior authorization or interference by the state or any other entity.

Greenhouse gases — The Global Reporting Initiative is an international independent standards organization that helps businesses, governments and other organizations understand and communicate their impacts on issues such as climate change, human rights and corruption (focus on impact materiality).

GRI — The Global Reporting Initiative is an international independent standards organization that helps businesses, governments and other organizations understand and communicate their impacts on issues such as climate change, human rights and corruption (focus on impact materiality).

Hazardous waste — Waste that possesses any of the characteristics contained in Annex III of the Basel Convention, or that is considered hazardous by national legislation.

Human rights — Rights inherent to all human beings, which include, at a minimum, the rights set out in the UN International Bill of Human Rights and the principles concerning fundamental rights set out in the International Labour Organization (ILO) Declaration on Fundamental Principles and Rights at Work (Source: GRI Standards, citing UN Guiding Principles on Business and Human Right.  

Human rights due diligence — An ongoing risk management process that a reasonable and prudent undertaking needs to follow in order to identify, prevent, mitigate and account for how it addresses its adverse human rights impacts. It includes four key steps: assessing actual and potential human rights impacts; integrating and acting on the findings; tracking responses; and communicating about how impacts are addressed. 

IFRS — International Financial Reporting Standards Foundation: “established to develop a single set of high-quality, understandable, enforceable and globally accepted accounting and sustainability disclosure standards—IFRS Standards—and to promote and facilitate adoption of the standards”.  

Impact — The effect an organization has or could have on the economy, environment and people, including effects on their human rights, as a result of the organization’s activities or business relationships. The impacts can be actual or potential, negative or positive, short-term or long-term, intended or unintended, and reversible or irreversible. Impacts indicate the undertaking's contribution, negative or positive, to sustainable development. 

Impact materiality — Defining why and how certain issues are important for an organization by whether they have actual or potential significant impacts on people, the environment and the economy over the short-, medium-, or long-term. 

Infrastructure — Facilities built primarily to provide a public service or good rather than a commercial purpose, and from which the organization does not seek to gain direct economic benefit. Examples include: hospitals, roads, schools, and water supply facilities.

Intensity target — A target defined by a change in the ratio of emissions to a business metric over time, for example, reduce CO2 per tonne of cement by 12% by 2025.

ISSB — International Sustainability Standards Board: Established by the IFRS Foundation, with the aim of developing and maintaining a global set of sustainability-related reporting standards.

Key biodiversity areas (KBAs) — Key biodiversity areas (KBAs) as defined in South African by SANBI include Critical Biodiversity Areas and Ecological Support Areas. Most provinces have developed, or are in the process of developing, maps of these areas in the form of provincial spatial biodiversity plans. The TNFD uses the term ‘high importance ecosystems’.

King IV — The King IV Report on Corporate Governance for South Africa, 2016, set out the “philosophy, principles, practices and outcomes which serve as the benchmark for corporate governance in South Africa”.

Living wage — Remuneration received for a standard work week by a worker in a particular place sufficient to afford a decent standard of living for the worker and her/his family, including food, water, housing, education, health care, transport, clothing, and other essential needs, including provision for unexpected events. Methods to define living wages for countries, regions, or cities include living wage methodologies and benchmarks, social dialogue and collective bargaining processes, and employee consultations and surveys.

Living wage methodologies and benchmarks — Key living wage methodologies and benchmarks include: the Anker Methodology (a methodology for calculating living wage levels through engaging local people and local organizations); Anker Reference Values (a set of estimates of living wage or income for rural and urban areas in countries not yet covered by a full Anker Methodology benchmark study); Fair Wage Network’s Living Wage Database (Paid-for wage benchmarks for 200 countries and more than 1500 regions and cities); the Global Living Wage Coalition Database (information on living wages in 37 regions or countries); IDH Benchmark Finder (database of IDH-recognised living wage benchmarks for over 140 countries); and IDH Benchmark Series (a list of living wage methodologies recognised by IDH as having met nine quality criteria).

Local suppliers — Organization or person that provides a product or service to the reporting organization, and that (as a minimum) is based in the same geographic market as the reporting organization (ie no transnational payments are made). Note: the organization’s definition of ‘local’ can specifically include the community surrounding operations, a region within a country, or a country.

Minimum wage — Minimum remuneration that an employer is legally required to pay wage earners, and which cannot be reduced by collective agreement or individual contract.

NFRD — Non-Financial Reporting Directive: EU law requiring certain large companies to disclose information on the way they operate and manage social and environmental challenges, replaced in January 2023 by the EU Corporate Sustainability Reporting Directive.

Political contributions — Financial or in-kind support given directly or indirectly to political parties, their elected representatives, or persons seeking political office. Financial contributions can include donations, loans, sponsorships, retainers, or the purchase of tickets for fundraising events. In-kind contributions can include advertising, use of facilities, design and printing, donation of equipment, or the provision of board membership, employment or consultancy work for elected politicians or candidates for office. 

Recordable work-related injury or ill healthWork-related injury or ill health that results in any of the following: death, days away from work, restricted work or transfer to another job, medical treatment beyond first aid, or loss of consciousness; or significant injury or ill health diagnosed by a physician or other licensed healthcare professional, even if it does not result in death, days away from work, restricted work or job transfer, medical treatment beyond first aid, or loss of consciousness.

SASB — SASB Standards enable organisations to provide industry-based sustainability disclosures about risks and opportunities that affect enterprise value. In August 2022, the IFRS Foundation assumed responsibility for SASB Standards when it merged with the Value Reporting Foundation (VRF), the global nonprofit that previously maintained these Standards. SASB Standards identify the subset of environmental, social and governance issues most relevant to financial performance and enterprise value for 77 industries.

Salient human rights issues — Those human rights that stand out because they are at risk of the most severe negative impact through the company’s activities or business relationships. This concept uses the lens of risk to people, not the business, as the starting point, while recognizing that where risks to people’s human rights are greatest, there is strong convergence with risk to the business.

Science-based target — Science-based targets are aligned with the latest climate science in terms of what is required to meet the Paris Agreement’s goal of limiting global warming to well-below 2°C above pre-industrial levels and pursuing efforts to limit warming to 1.5°C.   

Scope 1 emissions — Direct greenhouse gas emissions that occur from sources that are owned or controlled by an entity, for example, emissions from combustion in owned or controlled boilers, furnaces, vehicles or emissions from chemical production in owned or controlled process equipment.

Scope 2 emissions — Indirect greenhouse gas emissions that occur from the generation of purchased electricity, heat or steam consumed by an entity. Purchased electricity is defined as electricity that is purchased or otherwise brought into an entity’s boundary. Scope 2 emissions physically occur at the facility where electricity is generated.

Scope 3 emissions — Indirect emissions outside of Scope 2 emissions that occur in the value chain of the reporting organization, including both upstream and downstream emissions, as a consequence of the activities of the organization. Scope 3 emissions include  purchased goods and services; capital goods; fuel- and energy-related activities not included in Scope 1 emissions or Scope 2 emissions; upstream transportation and distribution; waste generated in operations; business travel; employee commuting; upstream leased assets; downstream transportation and distribution; processing of sold products; use of sold products; end-of-life treatment of sold products; downstream leased assets; franchises; and investments. 

Supply chain — Range of activities carried out by entities upstream from the organization that provide products or services that are used in the development of the organization’s own products or services. This includes upstream entities with which the undertaking has a direct (often referred to as a first-tier supplier) or indirect business relationship.

Sustainable development / sustainability — Development that meets the needs of the present without compromising the ability of future generations to meet their own needs.  (Note: The terms ‘sustainability’ and ‘sustainable development’ are used interchangeably in this Disclosure Guidance). 

TCFD — Task Force on Climate-related Financial Disclosures: established by the Financial Stability Board in 2015 to develop recommendations for more effective climate-related disclosures to support informed capital allocation.

TNFD — Task Force on Nature-related Financial Disclosures: announced in July 2020 to develop and deliver a risk management and disclosure framework for organizations to report and act on evolving nature-related risks, with the ultimate aim of supporting a shift in global financial flows away from nature-negative outcomes and toward nature-positive outcomes.

Under-represented social groups — Group of individuals who are less represented within a subset (e.g., a body or committee, employees of an organization) relative to their numbers in the general population, and who therefore have less opportunity to express their economic, social, or political needs and views. Under-represented social groups may include minority groups. The groups included under this definition depend on the organization’s operating context and are not uniform for every organization or region.

Value chain — The full range of activities or processes needed to create a product or service. This includes entities with which the undertaking has a direct or indirect business relationship, both upstream and downstream of its own activities, which either (a) supply products or services that contribute to the organization’s own products or services, or (b) receive products or services from the organization. 

Value Reporting Foundation — The Value Reporting Foundation is a global nonprofit organization, consolidated under the IFRS Foundation, that offers a comprehensive suite of resources designed to help businesses and investors develop a shared understanding of enterprise value—how it is created, preserved or eroded over time. It consolidates IIRC and SASB.

Voluntary Principles on Security and Human Rights — A set of principles that guides companies on how to conduct their security operations while respecting human rights.

Waste — Anything that the holder discards, intends to discard, or is required to discard.

Water consumption — Sum of all water that has been withdrawn and incorporated into products, used in the production of crops or generated as waste, has evaporated, transpired, or been consumed by humans or livestock, or is polluted to the point of being unusable by other users, and is therefore not released back to surface water, groundwater, seawater, or a third party over the course of the reporting period.

Water discharge — Sum of effluents, used water, and unused water released to surface water, groundwater, seawater, or a third party, for which the organization has no further use, over the course of the reporting period. Water can be released into the receiving waterbody either at a defined discharge point (point-source discharge) or dispersed over land in an undefined manner (non-point-source discharge). Water discharge can be authorized (in accordance with discharge consent) or unauthorized (if discharge consent is exceeded).

Water stress — Ability, or lack thereof, to meet the human and ecological demand for water; Water stress is based on subjective elements and is assessed differently depending on societal values, such as the suitability of water for drinking or the requirements to be afforded to ecosystems. Publicly available and credible tools for assessing areas with water stress include the World Resources Institute ‘Aqueduct Water Risk Atlas,' and the WWF 'Water Risk Filter'.

Water withdrawal — Sum of all water drawn from surface water, groundwater, seawater, or a third party for any use over the course of the reporting period.

Work-related hazard — Source or situation with the potential to cause injury or ill health. Hazards can be physical, ergonomic, chemical, biological, psychosocial, or related to work organization.

Work-related injury or ill-health — Negative impacts on health arising from exposure to hazards at work.  ‘Ill health’ indicates damage to health and includes diseases, illnesses, and disorders (conditions with specific symptoms and diagnoses). 

Worker — An individual performing work for a company, regardless of the existence or nature of any contractual relationship with that company. Examples include employees, agency workers, apprentices, contractors, home workers, interns, self- employed persons, sub-contractors, volunteers, and persons working for organizations other than the reporting organization, such as for suppliers. For the purposes of the health and safety metrics, worker relates to those who are not employees, but whose work and/or workplace is controlled by the reporting organization.