GLOSSARY — 35 ACRONYMS & CONCEPTS
SPEAK THE LANGUAGE.
SUSTAINABLE FINANCE HAS A WORKING VOCABULARY. THESE ARE THE TERMS THE BOOK USES, WITH CONCISE DEFINITIONS AND CHAPTER CROSS-REFERENCES.
35 OF 35 TERMS SHOWN
- ESGCH 1, 2, 3, 4, 5, 9
- Environmental, Social, and Governance
- Corporate reporting framework capturing non-financial risks and opportunities. Environmental: emissions, energy, water, biodiversity, waste. Social: labor rights, diversity, community impact, supply chain practices. Governance: board independence, executive compensation, shareholder rights, ethics/compliance.
- GRICH 5
- Global Reporting Initiative
- Global Reporting Initiative — multi-stakeholder ESG reporting framework, the longest-running and most-used voluntary sustainability reporting standard.
- ISSBCH 5
- International Sustainability Standards Board
- International Sustainability Standards Board, established 2021 under the IFRS Foundation. Issues global baseline standards (IFRS S1 general; IFRS S2 climate) consolidating TCFD and SASB.
- NGFSCH 4
- Network for Greening the Financial System
- Network for Greening the Financial System — central-bank coalition issuing climate scenarios used by financial regulators for stress testing and by corporates for transition planning.
- PBCH 3
- Planetary Boundaries
- Stockholm Resilience Centre framework (2009 origin, 2015 and 2023 updates) defining nine Earth-system processes with quantified safe limits. Six boundaries are currently transgressed (climate, biosphere, biogeochemical flows, land-system change, freshwater, novel entities).
- PRICH 1, 2
- Principles for Responsible Investment
- 2006 investor initiative with 5,500+ signatories and $120–130T AUM by end-2023. Six principles institutionalize ESG integration from voluntary fringe to mainstream practice.
- SASBCH 5
- Sustainability Accounting Standards Board
- Sustainability Accounting Standards Board — industry-specific reporting standards focused on financially material ESG metrics. Now consolidated into the IFRS Foundation's ISSB.
- SDGCH 1, 2, 3, 5, 10
- Sustainable Development Goals
- United Nations 2015 adoption of 17 global goals (poverty reduction, education, health, gender equality, clean energy, climate action, etc.) with a 2030 target. Investors align portfolios with SDGs; impact investors measure SDG contribution.
- TCFDCH 4, 5
- Task Force on Climate-related Financial Disclosures
- Task Force on Climate-related Financial Disclosures, established 2015 by FSB. Recommends climate risk disclosure across four pillars. Now superseded in IFRS via ISSB but remains influential.
- CSRDCH 5
- Corporate Sustainability Reporting Directive
- EU Regulation 2022/2464 requiring large companies to disclose sustainability information per the European Sustainability Reporting Standards (ESRS). Phased 2024–2028. Affects ~3,000 US multinationals — making it a de facto global standard.
- ESRSCH 5
- European Sustainability Reporting Standards
- European Sustainability Reporting Standards — the disclosure standards companies must follow under CSRD. Cover both financial and impact materiality.
- IRACH 1, 10
- Inflation Reduction Act (US, 2023)
- Inflation Reduction Act of 2023 — US legislation allocating $369B over 10 years for climate, clean energy, and emissions reduction. Catalyzed climate-tech VC investment, EV incentives, heat pump deployment, green hydrogen, and sustainable manufacturing.
- SECCH 1, 4, 5, 9
- Securities and Exchange Commission
- US Securities and Exchange Commission — adopted final climate disclosure rule in March 2024 requiring registrants to disclose material climate-related risks, GHG emissions (Scope 1, 2), and governance. Subsequently stayed pending litigation.
- SFDRCH 2, 5
- Sustainable Finance Disclosure Regulation
- EU Sustainable Finance Disclosure Regulation. Articles 6 (non-ESG), 8 (ESG-conscious), 9 (impact/sustainability-focused) define fund classification and disclosure depth.
- DRMRVCH 8
- Digital, Robust MRV
- Digital, Robust MRV — Coorest's term for blockchain-anchored carbon-credit verification grounded in satellite primary data. Without robust MRV, blockchain alone is insufficient.
- EOCH 7
- Earth Observation
- Earth Observation — satellite-based monitoring of Earth's land, ocean, and atmosphere. Major open programs: NASA Landsat (since 1972, 30m), ESA Sentinel (10m), MODIS, NOAA GOES.
- GEECH 7
- Google Earth Engine
- Google Earth Engine — cloud-based platform providing petabytes of satellite imagery (Landsat, Sentinel, MODIS) and geospatial computation. Democratizes large-scale environmental analysis.
- MAUPCH 6
- Modifiable Areal Unit Problem
- Modifiable Areal Unit Problem — statistical bias when aggregating spatial data at different scales or zoning schemes. Critical issue for any spatial finance model.
- MRVCH 2, 7, 8
- Measurement, Reporting, Verification
- Measurement, Reporting, Verification — digital technologies (satellite imagery, IoT sensors, blockchain) enabling automated, transparent measurement of environmental outcomes. Critical for carbon credit markets and ESG compliance.
- CNNCH 7, 9
- Convolutional Neural Network
- Convolutional Neural Network — deep-learning architecture using learned spatial filters. Workhorse for image classification and the standard tool for automated satellite imagery analysis (e.g., Indonesian mangrove case study).
- GenAICH 9
- Generative Artificial Intelligence
- Generative Artificial Intelligence — AI systems trained to produce new content (text, images, audio, code) rather than only classify or predict. Major LLMs: OpenAI GPT, Anthropic Claude, Google Gemini, Meta LLaMA.
- GISCH 6
- Geographic Information System
- Geographic Information System — software for storing, analyzing, and visualizing spatially referenced data. Examples: QGIS, ArcGIS, PostGIS, GeoPandas.
- LLMCH 9
- Large Language Model
- Large Language Model — transformer-based neural network with billions of parameters trained on large text corpora to produce coherent natural language and reason over data.
- NFTCH 8
- Non-Fungible Token
- Non-Fungible Token — uniquely identified, blockchain-tracked digital asset. In sustainable finance, used as wrapper for tokenized carbon credits, tree certificates, and provenance records (e.g., Coorest's CoorestTree).
- RAGCH 9
- Retrieval-Augmented Generation
- Retrieval-Augmented Generation — pattern that combines LLMs with retrieval over external knowledge bases. Reduces hallucination, allows up-to-date data, and provides citation trails.
- AUMCH 1, 2
- Assets Under Management
- Assets Under Management — the total market value of investments managed by a fund, asset manager, or institution. Used to size institutions in finance and to scale ESG commitments (e.g., PRI's $120–130T AUM).
- CVaRCH 4
- Climate Value at Risk
- Climate Value at Risk — extension of traditional VaR to climate scenarios. Quantifies probability and magnitude of financial loss from physical hazards (floods, droughts, hurricanes) and transition risks (carbon pricing, stranded assets).
- ETSCH 8
- Emissions Trading System
- Emissions Trading System — cap-and-trade carbon market. Government sets a cap on total emissions and allocates or auctions permits; firms trade them. EU ETS is the largest. Other examples: California, RGGI (US Northeast), South Korea, China national.
- EUACH 3, 8
- European Union Allowances
- European Union Allowances — tradable emissions permits in the EU Emissions Trading System. One EUA grants the right to emit one ton of CO₂eq. Prices in 2023–2024 ranged ~€80–100/ton.
- PESCH 3
- Payments for Ecosystem Services
- Payments for Ecosystem Services — financial mechanism paying landowners or communities to manage land for environmental services (watershed protection, carbon sequestration, biodiversity).
- VaRCH 4
- Value at Risk
- Value at Risk — statistical estimate of the maximum expected loss on a portfolio over a defined period at a given confidence interval. Foundational to bank capital regulation.
- GHGCH 1, 3, 5, 8
- Greenhouse Gas
- Greenhouse Gas — atmospheric gases that absorb infrared radiation and warm the planet. Major: carbon dioxide (CO₂), methane (CH₄, ~28× CO₂ over 100 years), nitrous oxide (N₂O, ~298×), fluorinated gases.
- IPCCCH 1, 3, 4
- Intergovernmental Panel on Climate Change
- Intergovernmental Panel on Climate Change — UN body assessing scientific, technical, and socioeconomic information on climate change. The Sixth Assessment Report (AR6) was completed in 2023.
- RCPCH 4
- Representative Concentration Pathway
- Representative Concentration Pathways — IPCC AR5 climate scenarios indexed by radiative forcing in 2100 (W/m²). RCP 2.6 = strong mitigation; RCP 8.5 = high-emissions baseline.
- SSPCH 4
- Shared Socioeconomic Pathway
- Shared Socioeconomic Pathways — IPCC AR6 framework of five socioeconomic scenarios paired with RCPs. SSP1 = sustainability; SSP5 = fossil-fuel-driven development.