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Glossary of Climate terms – definitions from the Chairperson’s guides

This glossary defines the climate terms referred to in the three Chairperson’s guides on shaping the board’s strategic direction on climate 

Climate Terms Description Relevance
Greenhouse Gas (GHG) GHGs absorb and emit infrared radiation in the wavelength range emitted by Earth. They include water vapor, carbon dioxide, methane, nitrous oxide, ozone, CFCs and HCFCs. This is the starting point for any organisation—what is your contribution to the problem?
Scope 1 Emissions Emissions released on site from combustion of fossil fuels, through processing or from leakage of GHGs. These emissions are within your control and the direct result of your operations.
Scope 2 Emissions Emissions released in the generation of any energy sources imported to your site—usually from electricity production. These emissions are effectively bought so can be managed through contractual arrangements.
Operational Emissions Scope 1 and Scope 2 Emissions combined. The focus of many current emissions reduction targets.
Scope 3 Emissions Value chain emissions emitted in the making or transport of products you buy and the transport and use of products you sell. Emissions from others in your value chain. Requires working with others and likely to be the focus of future targets.
Paris Climate Agreement The Paris Climate Agreement under the UNFCCC was negotiated by representatives of 196 state parties at the 21st Conference of the Parties in Paris in 2015. The standard against which your organisation will be judged. Are you doing your fair share?
Taskforce on Climate-related Financial Disclosures Industry-led Task Force to develop climate-related disclosures that “promote more informed investment, credit [or lending], and insurance underwriting decisions. This provides you with generally accepted global financial framework for reporting climate risks.
Transition Risk Risk of indirect impacts from issues such as policy constraints on emissions, imposition of carbon tax, water restrictions, land use restrictions or incentives, and market demand and supply shifts. The risks from changes driven from governments and markets.
Physical Risk Risk of direct impacts from issues such as the disruption of operations or destruction of property. The risks from the physical changes in the climate.
Liability Risk Potential financial or other liability to shareholders or stakeholders external to the business—in this context is tied to risk associated with climate change-related litigation—acts as a driver of mitigation or adaptation to physical risks. The risks to your business from legal prosecution related to climate and environmental claims.
Mitigation Activities to minimise impact of entity on changing climate by tackling causes of climate change, namely greenhouse gas emissions reduction. What activities will your business need to undertake to mitigate the extent of climate change?
Adaptation Activities to minimise impact of changing climate on entities and economies, by adjusting infrastructure, supply chains and key resources to become more resilient. What activities will your business need to undertake to adapt to the changing climate?
Climate-related Opportunities Financial opportunities such as access to new markets and new technologies. Opportunities to build strategic competitive advantages.
Tipping Point A tipping point is a critical threshold beyond which a system reorganizes, often abruptly and/or irreversibly. Identifies the critical point in time beyond which certain consequences are irreversible.
9Rs of circularity A hierarchy for sustainable behaviour: Rethink, Refuse, Reduce, Reuse, Re-gift, Repair, Rent, Recycle Rot. Provides a strategy for improving resource sustainability, thus reducing emissions.