Glossary
ESG terms, explained in plain English
Every acronym you are likely to bump into, with a one-line answer and a bit more detail if you want it.
- Carbon baseline
- A carbon baseline is your organisation's total greenhouse gas emissions for a chosen 12-month period, called the base year, which you use as the fixed starting point for targets and for measuring progress.
- Carbon footprint
- A business carbon footprint is the total greenhouse gas emissions your organisation causes over a year, from energy, vehicles, travel, waste and more, expressed in tonnes of CO2 equivalent (tCO2e).
- Carbon neutral
- Carbon neutral means a business, product or event has measured its emissions over a period and balanced them, usually by buying carbon credits, so that its net contribution is claimed to be zero.
- Carbon reduction plan
- A carbon reduction plan (CRP) is a short public document setting out a business's current emissions, its commitment to reach net zero and the measures it will take to cut emissions. UK central government requires one from suppliers bidding for major contracts.
- DEFRA conversion factors
- DEFRA conversion factors are the UK government's official numbers for turning business activity, such as kWh of electricity or litres of diesel, into greenhouse gas emissions in kg CO2e. They are now published each year by DESNZ.
- ESG
- ESG stands for environmental, social and governance. It is a way of describing how a business affects the planet, how it treats people, and how well it is run.
- GHG Protocol
- The GHG Protocol is the most widely used international standard for measuring and reporting a company's greenhouse gas emissions. It is where Scope 1, 2 and 3 come from.
- Greenwashing
- Greenwashing is making a business, product or service sound more environmentally friendly than it really is, through claims that are vague, exaggerated, selective or not backed by evidence.
- Location-based vs market-based emissions
- Location-based and market-based are two ways of calculating Scope 2 electricity emissions. Location-based uses the average carbon intensity of the national grid. Market-based reflects the electricity you have chosen to buy, such as a certified renewable tariff.
- Materiality
- In ESG, materiality means working out which environmental, social and governance issues matter most for your business, either because they affect its finances, because the business has a significant impact on them, or both.
- Modern slavery statement
- A modern slavery statement is an annual public statement setting out the steps an organisation has taken to make sure slavery and human trafficking are not happening in its business or supply chains. UK organisations with turnover of £36 million or more must publish one.
- Net zero
- Net zero means reducing your greenhouse gas emissions as close to zero as possible, then balancing any small, hard-to-avoid remainder by permanently removing the same amount of carbon from the atmosphere.
- PPN 006
- PPN 006 is a Cabinet Office Procurement Policy Note that requires suppliers bidding for in-scope central government contracts worth over £5 million a year to provide a Carbon Reduction Plan as a pass or fail condition.
- REGO
- A REGO (Renewable Energy Guarantee of Origin) is a certificate issued by Ofgem for each megawatt hour of electricity generated from a renewable source. Suppliers use REGOs to back the renewable tariffs they sell.
- Science-based targets
- Science-based targets are greenhouse gas reduction targets in line with the Paris Agreement goal of limiting global warming, usually set and validated through the Science Based Targets initiative (SBTi).
- Scope 1 emissions
- Scope 1 emissions are the greenhouse gases your business releases directly from sources it owns or controls, such as burning gas in your boiler or fuel in your company vehicles.
- Scope 2 emissions
- Scope 2 emissions are the indirect greenhouse gas emissions from generating the electricity (and any heat, steam or cooling) your business buys and uses.
- Scope 3 emissions
- Scope 3 emissions are all the other indirect emissions linked to your business that happen outside your own premises and vehicles, such as business travel, waste, the goods you buy and how staff commute.
- SECR
- SECR (Streamlined Energy and Carbon Reporting) is a UK legal requirement for quoted companies and large unquoted companies and LLPs to report their energy use, greenhouse gas emissions and efficiency actions in their annual reports.
- Social value
- Social value is the extra economic, social and environmental benefit a supplier delivers through a contract, beyond the goods or services themselves, such as local jobs, apprenticeships, volunteering or cutting emissions.
- tCO2e
- tCO2e stands for tonnes of carbon dioxide equivalent. It is the standard unit for a carbon footprint, combining all greenhouse gases into one figure based on how much warming each causes compared with CO2.
- UK SRS
- UK SRS are the UK Sustainability Reporting Standards, S1 (general sustainability) and S2 (climate), published by the government in February 2026. They are based on the ISSB's IFRS S1 and S2 and are expected to become mandatory for listed companies.
- VSME
- VSME is the Voluntary Sustainability Reporting Standard for non-listed SMEs, published by EFRAG in December 2024. It gives small businesses a simple, standard way to answer ESG data requests from customers, banks and investors.
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