Insights
Clear definitions of the sustainability, climate, and ESG terms that matter most — from CBAM and CSRD to SBTi and PCAF. Written by Semtrio's advisory team.
A green bond is a fixed-income financial instrument used to raise capital exclusively for projects with defined environmental benefits — issued in accordance with the ICMA Green Bond Principles and subject to external review — with post-issuance allocation and impact reporting confirming that proceeds were used as intended.
The Greenhouse Gas Protocol is the world's most widely used accounting framework for measuring and managing greenhouse gas emissions — developed by WRI and WBCSD — providing the standards, methodologies, and guidance for corporate GHG inventories across Scope 1, 2, and 3 emissions, and referenced by virtually every major sustainability framework and reporting standard.
IFRS S2 is a global sustainability disclosure standard issued by the International Sustainability Standards Board (ISSB) that requires companies to identify, measure, and disclose material climate-related risks and opportunities — including their financial impacts on strategy, business model, and cash flows.
A Life Cycle Assessment (LCA) is a systematic, ISO-standardized method for quantifying the environmental impacts of a product, service, or process across its entire life cycle — from raw material extraction through production, use, and end of life — providing the methodological foundation for Product Carbon Footprints, Environmental Product Declarations, and CBAM embedded emissions calculations.
Net zero refers to a state in which an organization's greenhouse gas emissions are reduced as far as possible along a science-consistent 1.5°C pathway, with any remaining residual emissions balanced by an equivalent volume of permanent, verified carbon removal — such that the organization makes no net addition of greenhouse gases to the atmosphere.
PCAF (Partnership for Carbon Accounting Financials) is a global industry-led initiative that provides a standardized methodology for financial institutions to measure and disclose the greenhouse gas emissions associated with their loans and investments — enabling banks, asset managers, and insurers to quantify their financed emissions as Scope 3 Category 15 and set credible decarbonization targets.
The Science Based Targets initiative (SBTi) is an independent body that validates corporate greenhouse gas reduction targets as consistent with the level of decarbonization required to limit global warming to 1.5°C — providing criteria, tools, and public validation for near-term emissions reduction targets and long-term net zero commitments.
Scope 3 emissions are the indirect greenhouse gas emissions that occur across an organization's entire value chain — both upstream in the supply chain and downstream through product use and end of life — and typically represent the largest share of a company's total carbon footprint, often exceeding 70% for manufacturing, retail, and financial sector organizations.
If you're working through a regulatory framework or sustainability challenge and need clarity on a specific term or concept — our team is here to help directly.
