The capability of a computer or robotic system to use advanced analysis and logic-based techniques, such as machine learning, to interpret events, support and automate decisions, and take actions.

For more, see AI & The Future of Work: What Every MBA Needs to Know.

Cars, trucks, or other vehicles with self-driving capabilities. Autonomous vehicles (AVs) need not be electric vehicles (EVs), but many are.

A company that has been certified by the nonprofit organization B Lab as meeting high standards for social and environmental benefits against a set of criteria laid out in the B Impact Assessment.

Carbon stored in coastal and marine ecosystems like saltmarshes, seagrass meadows, and mangrove forests.

See more in Markets to Watch: Blue Carbon.

Broad term referring to sustainable use of ocean resources for economic output.

See more in The Blue Economy: What Every MBA Needs to Know.

Measurement of an organization’s greenhouse gas (GHG) emissions, including carbon dioxide and typically aggregated as “carbon dioxide equivalents”. Often used interchangeably with the term “GHG accounting.”

For more, see MBA Skillset: Greenhouse Gas Inventory.

An emissions trading system (ETS) for buying and selling carbon credits in order to meet emissions targets. There are currently two types of carbon markets: voluntary markets (in which companies voluntarily purchase carbon credits) and compliance markets (regional emissions trading systems mandated by a “cap-and-trade” policy). The most active compliance market is the European Union Emissions Trading Scheme.

For current carbon prices, see Carboncredits.com.

For more on carbon markets, see Carbon Markets 101 from Carbon Markets Watch.

Capturing carbon dioxide (CO2) at the point of emission before it is released into the atmosphere (for instance, at a refinery smokestack) and using and/or sequestering the carbon. This is an important strategy for mitigation (e.g., putting less CO2 into the atmosphere), but is distinct from carbon removal, which aims to remove existing CO2 from the atmosphere.

Carbon credits are tradable commodities that represent the measurable, verifiable avoidance or removal of CO2 emissions (or CO2 equivalent of other greenhouse gases). Credits can be traded in voluntary or compliance carbon markets. A project developer, for instance, might sell credits realized by developing a renewable energy project or restoring a forest, and then a polluter could purchase these carbon credits to offset their CO2 emissions. For more on carbon markets, see Carbon Markets 101 from Carbon Markets Watch.

Similar to carbon credits, carbon offsets are tradable commodities that represent the measurable, verifiable avoidance or removal of CO2 emissions (or CO2 equivalent of other greenhouse gases). In terms of terminology, “carbon credit” represents the “right to pollute” (and is especially used in compliance carbon markets) whereas “carbon offset,” represents the purchase of carbon removal or avoidance. In practice, the terms are frequently used interchangeably.

Removing already-emitted carbon dioxide (CO2) from the atmosphere using biological or mechanical systems and sequestering it. Most carbon removal technologies are still early-stage.

For more, see Markets to Watch: Carbon Removal Technologies.

The process of capturing CO2 and storing it such that it cannot be released into the atmosphere. Currently sequestration methods are either biological (stored in trees, grasses, soils, or oceans) or geological (stored in underground rock formations).

A non-profit organization supporting a widely used disclosure framework for companies and governments to report environmental impacts. CDP disclosures are voluntary, self-reported, and available to the public, and include methodologies for reporting emissions, water, and deforestation metrics.

For more, you can visit the CDP website or read MBA Skillset: Sustainability Reporting.

A closed-loop system in which materials are reused or upcycled as raw materials, minimizing waste and improving resource productivity.

See more in The Circular Economy: What Every MBA Needs to Know.

Overall rising global temperatures and associated disruptive effects in weather, storm severity, sea level, ocean acidity, and other effects caused by the trapping of greenhouse gases (GHGs) in the atmosphere due to human activity.

For more, see Climate Change & Business: What Every MBA Needs to Know.

Umbrella term used to refer to a broad range of solutions aimed at decarbonizing the global economy. “Climate tech” investments may range the gamut from clean energy, energy storage, alternative fuels, transportation, and energy efficiency innovations to alternative proteins, circular economy systems, and carbon removal technologies, among many others. Climate Tech VC offers a great view of this landscape.

Another term for a circular economy system. In a closed-loop manufacturing process, there is no waste because at the end of a product’s life, it is taken apart and returned to raw materials which are then reused as inputs.

Actions taken by a company to address its social, ethical, and environmental responsibilities. CSR may include corporate philanthropy, volunteerism, stakeholder engagement, policy engagement, corporate or leadership activism, and other activities. Often used interchangeably with the term “corporate citizenship.”

Carbon removal technologies that use mechanical systems to pull air in (typically using giant fans) and capture CO2 as it comes into contact with a chemical sorbent or solvent.

Workplace practices that promote representation and equitable treatment of employees of all genders, races, ethnicities, gender identities, ages, and cultural backgrounds.

See more in Workplace Diversity & Inclusion: What Every MBA Needs to Know.

Cars, trucks, or other vehicles designed that use an electric drivetrain and battery for power instead of, or in addition to, an internal combustion engine. May include hybrid electric-gasoline electric vehicles, plug-in hybrid electric vehicles (PHEV), and fully electric vehicles (also called battery electric vehicles or BEVs).

For more, see Markets to Watch: Electric Vehicles.

Social justice approach that seeks to achieve equity in the energy system—particularly around energy affordability, access, and environmental impact.

See also “environmental justice.”

The storage of electricity for short-term or long-term use, employing technologies like batteries, hydrogen fuel cells, thermal energy systems, pumped hydro, or other technologies. Adding energy storage capacity is necessary to accommodate more renewables on the power grid, because solar and wind are intermittent sources of power; batteries and other energy storage solutions can help match power demand and supply.

For more, see Markets to Watch: Energy Storage.

Social justice movement that addresses the unfair exposure of marginalized communities to the harms associated with environmental degradation, pollution, land use, and inequitable resource allocation. Topics in environmental justice can include pollution reduction, access to affordable clean energy, access to healthy food, transportation, and inclusive engagement in policy-making.

Interconnected system that transports electricity from producers to consumers. The grid is complex, and is actively managed in order to distribute supply to meet demand. It is expected that the grid will grow in complexity as novel sources of energy are brought online (including decentralized solar energy and offshore wind) and new technologies demand more electricity (EVs, electrified buildings). The United States is powered by three grids: the Eastern Grid, the Western Grid, and the ERCOT grid (Texas).

Investing strategy that purposefully integrates environmental, social, and governance (ESG) considerations into company and portfolio valuation. Often used synonymously with “sustainable investing.”

For more, see ESG Investing: What Every MBA Needs to Know.

Greenhouse gas (GHG) emissions associated with the projects that banks and other financial institutions finance through debt or equity investments. In the language of climate reporting, financed emissions fall under Scope 3, and are often a significant portion of a financial institution’s emissions inventory.

For more, see MBA Skillset: Measuring Financed Emissions.

Investment strategy that factors specific gender-related criteria into investment decisions, with the ultimate goal of advancing gender equity in society. Different lenses include promoting Women as Investors, Women in Supply Chain, Women’s Access to Capital, Women in Leadership, Products and Services, and Workplace Equity.

For more, see Markets to Watch: Gender Lens Investing.

Organization supporting a widely used international standard (the GRI Standard) for measuring and reporting social and environmental sustainability impacts. Many ESG investors use GRI data as a tool for comparing companies’ sustainability performance on one or more metrics. Further detail at: www.globalreporting.org.

Measurement of an organization’s greenhouse gas (GHG) emissions. Often used interchangeably with “GHG inventory.”

For more, see: MBA Skillset: Greenhouse Gas Inventory.

Emissions of carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), perfluorocarbons (PFCs), hydrofluorocarbons (HFCs), and sulfur hexafluoride (SF6), which trap heat in the atmosphere, causing climate change. CO2 emissions are by far the largest contributor to climate change by volume and are therefore most frequently discussed.

Measurement of an organization’s greenhouse gas (GHG) emissions. Often used interchangeably with “GHG accounting.”

For more, see: MBA Skillset: Greenhouse Gas Inventory.

Investing done “with the intention to generate positive, measurable social and environmental impact alongside a financial return” (Global Impact Investing Network, GIIN). For a primer, see GIIN’s “What You Need to Know about Impact Investing”.

A business management tool that seeks to incorporate environmental impact into business decisions at the department or business unit level. An internal carbon pricing can take various forms. One form is through an “internal carbon fee”, where each business unit is “taxed” in proportion to their emissions, and the revenue collected is used to fund company-wide investments in clean energy. Another form is through a “shadow price”, where the carbon impact of future projects is quantified and incorporated into financial forecasting.

Widely used certification system supported by the U.S. Green Building Council to verify and recognize environmentally friendly “green building” practices in architectural design and construction. New buildings, building retrofit projects, neighborhood developments, and homes can be certified on a rating scale ranging from “LEED Certified” to “LEE Platinum.” For more, see USGBC LEED Rating System.

A measure of the average net present cost of electricity generation, typically including fuel costs, operating costs, and capital costs amortized over the production lifetime of the asset. LCOE allows different generation methods to be compared side-by-side, and is a helpful tool in evaluating projects. LCOE commonly uses the units $ / kWh or $ / mWh. One of the most frequently used references is the annual LCOE Analysis from Lazard Asset Management.

Methodology for measuring the cumulative environmental impacts of a product throughout
its entire life—from the impacts associated with the
product’s production (raw materials, inputs, processing,
manufacturing) to distribution, consumer use, and finally,
disposal or recycling.

For more, see MBA Skillset: Life Cycle Assessment.

Long-duration energy storage (LDES) refers to an energy storage technology that is able to discharge electricity for 10 or more hours (vs. short-duration energy storage solutions like lithium or nickel batteries that have a storage duration of 4-6 hours).

For more, see Markets to Watch: Energy Storage.

Management tool that helps firms determine how to prioritize environmental, social, and governance (ESG) issues by identifying which issues matter most to: a) the firm’s business success and b) the firm’s stakeholders.

For more, see MBA Skillset: Materiality Assessment.

Essential tools necessary for confirming reductions in greenhouse gas (GHG) emissions and mitigation actions. In accordance with the Paris Agreement, climate actions must be “measurable, reportable, and
verifiable,” and when it comes to climate interventions, this is sometimes complex and difficult. MRV is essential for the credibility of carbon markets, and is giving rise to an industry of MRV consulting services.

For more, see the MRV 101 from the World Resources Institute.

A local energy grid that can receive power from the main grid, or disconnect from the grid and operate using local energy sources. Microgrids improve resiliency by providing backup power in case of a failure on the main grid, and allow flexibility of energy source usage by incorporating local energy production (particularly distributed energy sources such as solar or wind).

Metric signifying a balance between greenhouse gas (GHG) emissions produced and GHG emissions taken out of the atmosphere. A company might achieve Net Zero, for instance, by reducing its emissions as much as possible and then purchasing carbon offsets to offset the remainder. The Science-Based Targets Initiative (SBTi) has established a Net-Zero Standard to standardize Net Zero pledges and reporting by organizations.

Projects that incorporate natural processes to mitigate climate impact. May include a broad range of solutions, from forest conservation and restoration to coastal reef restoration. NBS projects are often cheaper and more effective than competing human-engineered solutions, and have cascading environmental and social benefits.

For more, see Markets to Watch: Carbon Removal Technologies and Markets to Watch: Blue Carbon.

Power generated through splitting atoms in a reactor (nuclear fission) to power a steam turbine and generate electricity.

Wind energy generated by turbines (typically massive) built at sea and anchored or tethered to the ocean floor.

For more, see Markets to Watch: Offshore Wind.

A legally binding international treaty on climate change that was signed by 196 Parties at the Council of Parties (“COP 21”) climate negotiation in Paris in 2015. Countries signing the Paris Agreement agreed, among other things, to set “nationally determined contributions (NDCs)” in support of limiting climate impacts to global temperature rise of less than 1.5 degrees Celsius.

For more, see UNFCC’s Paris Agreement Overview.

A power-generating system that captures solar power using an array of photovoltaic cells and converts it to electricity. For more on how solar photovoltaic systems work, see the U.S. Dept. of Energy’s Solar Photovoltaic Technology Basics.

An agreement (typically a long-term contract) between a party that generates electricity and an end user. A PPA can be physical, where the buyer receives the purchased electricity directly, or a virtual PPA, where the electricity is delivered to the grid and the two parties settle the price difference per the contract terms.

An energy storage solution that uses power at low-demand times to pump water uphill to a reservoir where it can be stored until needed; the water can then be released later to create hydroelectric power at peak demand times.

For more, see Markets to Watch: Energy Storage.

The process of selling previously owned items to buyers who can reuse or recycle them, thus extending the item’s lifecycle and reducing its relative environmental impact.

For more, see The Circular Economy: What Every MBA Needs to Know.

Energy generated from sources that are not depleted, such as wind energy, solar energy, wave/tidal energy, and hydropower. For basics on renewable energy, see this U.S. Dept. of Energy overview.

A market-based instrument that certifies that represents the non-power attributes of one megawatt-hour (MWh) of electricity generated from a renewable energy resource like wind or solar. RECs can be bought and sold. So, for instance, a renewable project developer can sell the electricity generated by its project to one buyer and can sell the REC separately to another (for instance, to a company that would like to certify that the power used in its operations is coming from renewable sources).

Set of standardized sustainability reporting frameworks created by the Sustainability Accounting Standards Board (SASB), which is now part of the Value Reporting Foundation.

Referring to carbon accounting / GHG inventory. Scope 1 emissions are direct GHG emissions that are produced by a company’s owned or controlled operations. Examples include emissions from owned facilities, vehicle fleets, or manufacturing processes. Companies are typically required to report Scopes 1 and 2.

Referring to carbon accounting / GHG inventory. Scope 2 emissions consist of indirect GHG emissions from the generation of purchased energy. Companies are typically required to report Scopes 1 and 2.

Referring to carbon accounting / GHG inventory. Scope 3 emissions include all other indirect GHG emissions in the value chain, outside of a company’s direct influence. Types of Scope 3 emissions include GHG emissions from a company’s suppliers, emissions from employee travel, and emissions from consumer use of a company’s products. Companies are typically required to report Scopes 1 and 2, while Scope 3 emissions are optional, as they are notoriously more difficult to calculate and regulate.

An organization that employs commercial strategies to support a specific social mission. May be either a mission-driven for-profit organization or a nonprofit venture—for instance, a charity that sells goods or services to support its social impact work.

The application of entrepreneurial thinking and methodologies to address social impact challenges. Social entrepreneurs may lead ventures that are for-profit or non-profit.

Energy generated by the sun, typically captured for electricity using photovoltaic (PVs) cells or concentrating solar-thermal power (CSP) systems.

A business framework developed in contrast to shareholder capitalism, in which a company seeks to maximize long-term value to the company’s various stakeholders in addition to providing financial returns. A stakeholder-oriented model will incorporate the interests of customers, suppliers, employees, local communities, and the environment in decision-making.

A process by which companies develop and maintain relationships with key groups that are affected by their business activities. Stakeholders can include customers, suppliers, employees, local communities, governments, and environmental groups.

Investments that suffer a premature write-down or devaluation. Frequently discussed in the context of energy transition to describe infrastructure investments made obsolete by changing regulatory or market conditions.

A management approach that focuses creating long-term business value by maximizing the “triple bottom line” of social, environmental, and economic value. A “sustainable” business one that does not negatively affect people or the environment.

For more, see Sustainability & Business: What Every MBA Needs to Know.

See “ESG investing.”

A committee created by the Financial Stability Board and chaired by Michael Bloomberg to develop recommendations for companies to disclose climate-related financial risks to investors. The task force released a set of recommendations and principles for climate risk disclosures. Companies that report through TCFD will follow a scenario analysis process to plan for future physical and transition risks as they have an impact on financial assets.

For more, see TCFD website.

A collection of 17 interlinked global goals designed to be a "shared blueprint for peace and prosperity for people and the planet, now and into the future". The SDGs cover a range of ESG topics, focusing on creating healthy environments, building equitable prosperity, and elevating conditions for the poorest members of society. The SDGs were established in 2015 and are intended to be reached by 2030.

For more on the SDGs, see the UN SDG website.

The use of wind to generate electricity, typically by spinning turbines. Turbines can be placed either onshore or offshore, and naturally work best in geographies with strong, reliable wind.

For more on wind energy basics, see the U.S. Dept. of Energy’s Wind Energy Technologies Office.