FSA Credential Level I key terms

The ISSB standard setting the core rules for sustainability reporting: materiality, scope, reporting entity, comparative information, timing and location of disclosure, and use of judgement, scenarios and industry metrics. It requires sustainability disclosures to be issued alongside the financial statements.

The ISSB standard requiring disclosure of governance, strategy, risk management and metrics and targets for climate-related risks and opportunities, including Scope 1, 2 and 3 greenhouse gas emissions and climate resilience assessment.

The total value of an entity's equity plus debt and other claims, driven by expected future cash flows, their timing and uncertainty. ISSB standards focus on information material to assessments of enterprise value rather than on the entity's wider impacts on society or the environment.

The threshold under ISSB standards: information is material if omitting, misstating or obscuring it could reasonably be expected to influence decisions of primary users of general purpose financial reports when assessing enterprise value.

Existing and potential investors, lenders and other creditors who rely on general purpose financial reports to make resource allocation decisions. ISSB and TCFD disclosure are designed around their information needs.

Presentation where sustainability disclosures are linked to each other and to the financial statements, so users can see relationships and dependencies, for example how a carbon price assumption affects both emissions disclosures and asset impairment.

The information an entity can obtain without undue cost or effort when identifying risks and opportunities or preparing estimates under ISSB standards. It allows proportionate use of all facts reasonably available at the reporting date.

The full range of activities, resources and relationships related to an entity's business model and the external environment in which it operates, including upstream suppliers, downstream customers and the entity's own operations.

Sector-specific disclosure topics and metrics that accompany ISSB standards, derived from SASB Standards, indicating which sustainability matters are likely material for entities in a given industry and what to measure.

Reliefs in ISSB standards that reduce reporting burden, such as allowing use of reasonable and supportable information, permitting scenario analysis proportionate to circumstances, and transitional relief on Scope 3 emissions and climate resilience disclosures.

An entity's evaluation of its strategy and business model under different climate-related scenarios, including at least one scenario consistent with limiting warming to 1.5 degrees Celsius, to identify vulnerabilities and adaptation options.

Indirect emissions that occur in an entity's value chain, both upstream and downstream, other than purchased energy. They often dominate a company's footprint and are reported by category under the Greenhouse Gas Protocol.

Scope 1 covers direct emissions from sources owned or controlled by the entity; Scope 2 covers indirect emissions from purchased electricity, heat, steam or cooling. Both are core metrics under IFRS S2.

Scope 3, category 15 emissions: greenhouse gas emissions associated with loans and investments made by financial institutions. IFRS S2 requires disclosure for entities with significant exposure to these activities.

An aspect of an entity's overall strategy describing how it will adapt its business model and operations toward a lower-carbon economy, including targets, actions, capital expenditure and assumptions about dependencies.

Climate-related risk arising from acute events such as floods and wildfires or chronic shifts such as rising temperatures and sea levels, which can damage assets, disrupt operations and affect supply chains and revenues.

Climate-related risk from the move to a lower-carbon economy, including policy and legal changes, technology shifts, market and price changes, and reputational effects that can strand assets or raise costs.

The voluntary framework published by the Task Force on Climate-related Financial Disclosures, structured around four pillars: governance, strategy, risk management, and metrics and targets. Its architecture was largely adopted by IFRS S2.

The potential negative effects on an entity from climate change, comprising physical risks and transition risks, together with the opportunities arising from adaptation and from the shift to a lower-carbon economy.

A method of exploring plausible future states, such as different warming pathways, to test how resilient a strategy is. TCFD recommends it and IFRS S2 requires at least one 1.5 degrees Celsius-aligned scenario.

The assumed or actual cost per tonne of carbon dioxide equivalent used internally or imposed by regulation. Entities disclose internal carbon prices and the price assumptions used in strategy and financial planning.

A hypothetical or shadow price an entity applies to its own emissions when making investment and planning decisions, used to test strategy against future regulation and to steer capital toward lower-carbon options.

The TCFD and IFRS S2 pillar requiring disclosure of the measures used to assess climate-related risks and opportunities, the targets set, and performance against those targets over time.

Industry-specific standards from the former Sustainability Accounting Standards Board, now maintained by the ISSB, setting disclosure topics and accounting metrics for financially material sustainability matters in each of 77 industries.

The taxonomy grouping entities into 11 sectors and 77 industries based on business model, resource intensity and sustainability exposure, used to select the applicable SASB Standards and industry-based guidance.

A sustainability issue identified in SASB Standards as likely material for a given industry, such as product safety, labour practices or energy management, each supported by accounting metrics and technical protocols.

A quantitative or qualitative measure specified in SASB Standards for a disclosure topic, with defined scope, units and calculation guidance, intended to be comparable across entities in the same industry.

SASB guidance explaining how to prepare an accounting metric, covering definitions, boundaries, calculation methods and limitations, so that reported figures are consistent and comparable.

A concise communication about how an organisation's strategy, governance, performance and prospects create value over the short, medium and long term, prepared under the International Framework from the IIRC.

The resources and relationships an organisation uses and affects: financial, manufactured, intellectual, human, social and relationship, and natural capital. Reporting on them shows dependencies and impacts on value creation.

The process by which an organisation transforms inputs through its business model into outputs and outcomes that increase, decrease or preserve the capitals over time, for itself and for others.

The system through which an organisation converts inputs into outputs and outcomes to create value, described in an integrated report to explain how strategy and capitals interact over time.

Framework and guidance from the Climate Disclosure Standards Board on reporting environmental information, including climate change, with principles such as relevance, comparability and connectivity to financial information.

Reporting of governance, strategy, risk management and metrics relating to climate change, intended to inform investors about exposure to physical and transition risks and about opportunities.

A concept requiring disclosure both of how sustainability matters affect the entity's financial performance and of how the entity's activities affect people and the environment, used in some jurisdictions but not the ISSB baseline.

The approach that limits sustainability disclosure to matters that could affect enterprise value for investors and creditors, contrasting with broader stakeholder or impact-focused materiality.

The stock of natural resources and ecosystem services, such as water, land, minerals and climate regulation, that an organisation depends on and affects, reported as one of the six capitals.