Top ESG Glossary Terms in 2025 -
A Guide for Businesses and Investors

As businesses and investors navigate the rapidly evolving sustainability landscape, understanding key ESG (Environmental, Social, and Governance) terms is more critical than ever. This glossary provides clarity on the concepts driving compliance, strategy, and innovation in 2025.

Understanding key ESG terms

Whether you're new to ESG or looking to stay updated, these terms will guide your journey toward sustainability excellence.

ESG (Environmental, Social, and Governance)

A framework used to evaluate a company's environmental impact, social responsibility, and governance practices. ESG metrics are vital for assessing sustainability performance and attracting responsible investors.

CSRD (Corporate Sustainability Reporting Directive)

An EU regulation requiring businesses to disclose detailed sustainability performance data. CSRD expands on the Non-Financial Reporting Directive (NFRD) and aligns with the EU Green Deal. It applies to large companies and, eventually, small and medium enterprises (SMEs).

Scope 1, 2, and 3 Emissions

• Scope 1: Direct greenhouse gas (GHG) emissions from owned or controlled sources (e.g., company vehicles, factories).
  
  
• Scope 2: Indirect emissions from purchased electricity, steam, heating, and cooling.
  
  
• Scope 3: All other indirect emissions in a company’s value chain, including raw material production, transportation, and product use.

Double Materiality

A principle central to CSRD that requires businesses to assess:

• Impact Materiality: How a company's activities affect the environment and society.
  
  
• Financial Materiality: How sustainability issues impact the company’s financial performance.

S3D (Corporate Sustainability Due Diligence Directive)

An EU proposal requiring companies to identify, prevent, and address human rights and environmental risks in their operations and supply chains. It complements CSRD by emphasizing accountability.

Decarbonisation

The process of reducing carbon dioxide emissions across operations and supply chains. Decarbonisation is a key component of achieving net-zero and carbon-neutral goals.

Carbon Neutral

Achieved when a company balances the carbon dioxide it emits with the amount it removes or offsets through initiatives like reforestation or purchasing carbon credits.

Net-Zero Emissions

A state where a company eliminates as many emissions as it produces across its entire value chain, including Scope 1, 2, and 3 emissions. Unlike carbon neutrality, net-zero focuses on reducing emissions to an absolute minimum.

European Green Deal

The EU’s roadmap for sustainability, aiming to make Europe the first climate-neutral continent by 2050. Initiatives include renewable energy expansion, circular economy policies, and biodiversity preservation.

Sustainable Finance Disclosure Regulation (SFDR)

An EU regulation requiring financial market participants to disclose how they consider ESG factors in their investment processes. SFDR promotes transparency and prevents greenwashing.

Materiality Assessment

A process of identifying and prioritizing the most significant ESG issues for a business and its stakeholders. Materiality assessments are foundational for meeting CSRD and other reporting requirements.

Sustainable Development Goals (SDGs)

Seventeen global goals established by the UN to address urgent environmental, social, and economic challenges, such as poverty, climate change, and inequality. Companies use the SDGs as benchmarks for sustainability efforts.

Carbon Footprint

The total greenhouse gas emissions caused by a company, individual, or product, measured in CO2 equivalents. Carbon footprint calculations inform sustainability strategies and reporting.

Circular Economy

An economic model focused on eliminating waste and maximizing resource efficiency by reusing, repairing, and recycling materials.

How can Future Planet help?

Future Planet is the platform that accelerates your ESG performance. From Double Materiality Assessments to CSRD, to carbon accounting and transition planning, Future Planet accelerates impact and compliance. 

Streamline ESG Data Management

Future Planet centralises data collection and ensures accuracy for Scope 1, 2, and 3 emissions reporting.

Conduct Materiality Assessments

Dynamic tools pinpoint critical ESG issues, ensuring compliance with double materiality requirements.

Generate compliance-ready reports

Future Planet’s software creates reports aligned with CSRD, SFDR, and other global standards, saving time and reducing complexity.

Conclusion

Mastering these ESG terms equips businesses and investors to lead in sustainability. With compliance frameworks like CSRD driving accountability, staying informed is essential.

Future Planet simplifies your ESG journey with cutting-edge tools for reporting and strategy. For more information on how to prepare for CSRD, contact our team at Future Planet today.