Glossary of Climate-Related Financial Disclosures

Business Model – an entity’s system of transforming inputs through its activities into outputs and outcomes that aims to fulfill the entity’s strategic purposes and create value for the entity and hence generate cash flows over the short, medium, and long term.

Carbon Dioxide Equivalent – the universal unit of measurement to indicate the global warming potential of each greenhouse gas, expressed in terms of the global warming potential of one unit of carbon dioxide. This unit is used to evaluate releasing (or avoiding releasing) different greenhouse gases against a common basis.

Climate-Related Opportunities – the potential positive effects arising from climate change for an entity.

Climate-Related Risks – the potential negative effects of climate change on an entity. These risks are categorized as physical risks and transition risks.

Greenhouse Gases – the seven greenhouse gases listed in the Kyoto Protocol (carbon dioxide, methane, nitrous oxide, hydrofluorocarbons, nitrogen trifluoride, perfluorocarbons, and sulfur hexafluoride).

Physical Risks – the financial risks from the increasing severity and frequency of climate-related extremes and events (i.e., acute physical risks); longer-term gradual shifts of the climate (i.e., chronic physical risks); and indirect effects of climate change such as public health implications (e.g., morbidity and mortality impacts).

Scope 1 Greenhouse Gas Emissions – direct GHG emissions that occur from sources owned or controlled by an entity (e.g., combustion of fuels in stationary equipment, such as boilers, furnaces, burners, turbines, heaters, incinerators, engines, flares, etc.).

Scope 2 Greenhouse Gas Emissions – indirect GHG emissions from the generation of purchased or acquired electricity, steam, heating, or cooling consumed by an entity.

Transition Risks – the financial risks related to the process of adjustments towards a low-greenhouse gas (“GHG”) economy. These risks can emerge from current or future government policies, legislation, and regulations to limit GHG emissions, as well as technological advancements, and change in market and customer sentiment towards a low-GHG economy.

Value Chain – the interactions, resources, and relationships an entity uses and depends on to create its products or services from conception to delivery, consumption and end-of-life, including interactions, resources and relationships in the entity’s operations, such as human resources; those along its supply, marketing and distribution channels, such as materials and service sourcing, and product and service sale and delivery; and the financing, geographical, geopolitical and regulatory environments in which the entity operates.

Glossary

Climate-related financial disclosures