HKIB ECF-GSF Professional key terms

The practice of overstating or misrepresenting the environmental credentials of a product, firm, or fund so that investors and customers form a more favourable impression than the underlying evidence supports.

A fixed-income instrument whose proceeds are earmarked exclusively to finance or refinance eligible green projects such as renewable energy, clean transport, or biodiversity protection, and which is reported on through post-issuance allocation reporting.

The issuer document that sets out how a bond programme identifies eligible projects, manages and allocates proceeds, and reports on environmental impact, typically mapped to the four core components of the voluntary Green Bond Principles.

A debt structure in which the money raised is ring-fenced for specified project categories, with eligibility defined in advance and allocation tracked, as distinct from general corporate purpose borrowing.

A bond whose proceeds fund a mix of both green projects and social projects, such as renewable energy alongside affordable housing or healthcare access, with the split disclosed to investors.

A debt instrument that raises funds for projects addressing specific social problems or seeking positive social outcomes for target populations, for example essential infrastructure, food security, or access to education.

A bond whose financial characteristics, such as the coupon, can change if the issuer fails to meet pre-defined sustainability performance targets measured by a key performance indicator within a set timeline.

A loan arrangement that incentivises the borrower to achieve ambitious, predetermined sustainability performance objectives, usually through a margin adjustment tied to externally verifiable indicators.

A measurable commitment, defined at the outset of a sustainability-linked instrument, that the borrower or issuer must reach by a stated date to avoid a pricing penalty or other financial consequence.

A debt instrument that finances activities on a credible, time-bound pathway to lower emissions in high-emitting sectors, with the issuer expected to disclose how the funded activity fits a net-zero trajectory.

Funding directed at carbon-intensive companies or activities to support measurable decarbonisation over time, rather than at already-green assets, and typically conditioned on credible targets and governance.

An independent assessment, usually from a specialist reviewer, of whether a bond framework or loan structure aligns with recognised market principles and of the environmental credibility of the stated objectives.

Any independent evaluation of a sustainable finance instrument or framework, including second-party opinions, verification, certification, and scoring, intended to give investors assurance about claims made by the issuer.

An independent check, often against an agreed standard or methodology, that reported data, allocation of proceeds, or impact figures are accurate and complete, usually performed by an auditor or technical expert.

A professional engagement in which a practitioner obtains evidence and expresses a conclusion on the reliability of sustainability information, which may be limited or reasonable in scope.

A classification system that defines which economic activities count as environmentally sustainable by setting technical screening criteria, so that investors and regulators share a common reference point.

Reporting by a firm on what share of its revenue, capital expenditure, or operating expenditure relates to activities that meet the technical criteria of an applicable green taxonomy.

A principle requiring that an activity counted as sustainable must not cause material damage to any other environmental objective, such as climate mitigation, water, biodiversity, or pollution prevention.

A score assigned by a data provider that summarises a company's exposure to and management of environmental, social, and governance risks, built from proprietary methodologies that differ across providers.

A firm that collects, normalises, and sells sustainability information and scores on issuers, often relying on public disclosure, estimates, and models where reported data are missing.

Direct greenhouse gas emissions from sources owned or controlled by a reporting entity, such as fuel burned in its own boilers, furnaces, or vehicles.

Indirect greenhouse gas emissions from purchased electricity, steam, heating, or cooling consumed by a reporting entity, reported using either location-based or market-based methods.

All other indirect emissions in a company's value chain, including purchased goods, business travel, use of sold products, and downstream logistics, which usually dominate a firm's total footprint.

The greenhouse gas emissions associated with a financial institution's lending and investment portfolio, attributed to the institution through a share of the borrower's or investee's emissions.

The Partnership for Carbon Accounting Financials, an industry-led initiative that publishes a common methodology for measuring and disclosing financed emissions across asset classes.

A commitment by a financial institution to bring the emissions attributable to its lending and investment book to net zero by a stated year, supported by interim milestones and sector pathways.

An emissions reduction goal that is consistent with the level of decarbonisation scientists consider necessary to limit global warming to an agreed threshold, and that is validated against a recognised methodology.

The principle that the shift to a low-carbon economy should be managed fairly, addressing the employment and social consequences for workers and communities that depend on high-emitting industries.

In sustainable finance, the specific metric selected to measure progress toward a sustainability performance target, which must be verifiable, comparable over time, and clearly defined in the instrument documentation.

A structured review by an investor or lender of whether a product's sustainability claims are supported by evidence, including checks on taxonomy alignment, targets, and independent review.

Reporting by an entity on how climate-related physical hazards and transition pressures affect its strategy, governance, risk management, and financial position, usually following a recognised framework.

The potential for financial loss or operational disruption from climate-related hazards such as floods, heatwaves, storms, or sea-level rise, which may be acute events or chronic shifts.

The risk of loss arising from the move to a lower-carbon economy, including policy changes, carbon pricing, technology shifts, and changing consumer or investor preferences.

A technique in which an institution explores how its business or portfolio performs under several plausible future pathways, such as different warming levels or policy trajectories, to inform strategy.

An asset that loses value before the end of its expected economic life because of changes such as new climate policy, cheaper alternatives, or shifting demand, often applied to fossil fuel reserves.

The European Union's policy programme aiming to make the bloc climate neutral by mid-century, which underpins its sustainable finance rulebook, including the taxonomy and disclosure rules.

A deposit product whose balance is earmarked to fund eligible green lending or projects, with the bank committing to allocation reporting so depositors can see how funds are used.