2-degree objective

Limiting the increase in global average temperature to less than 2°C above pre-industrial levels in line with the objectives defined in the Paris Agreement.


Carbon Bubble

Assumed overvaluation of companies in the fossil fuel industries and the resulting investment or speculation bubble. To achieve the 2°C climate target agreed in the Paris Agreement, a significant amount of the fossil fuel reserves we are currently aware of would have to remain unused. This would mean a loss in value for countless companies in the energy sector, which have already acquired rights to a large share of these reserves and have entered them in their balance sheets as assets.

Carbon Footprint

An approach to balancing absolute carbon dioxide emissions, which are caused directly or indirectly by an activity or the life cycle of a product. The aim is better comparability in terms of climate effects and reducing emissions as a consequence. While the corporate carbon footprint refers to balancing the entire business operations of a company, the focus of the product carbon footprint is a product’s value creation chain. A critical aspect is that the scope 3 emissions, meaning the indirect emissions of the upstream and downstream value creation chain, are usually not taken into account as it lacks reliable data to date.

Carbon Intensity

A key figure in which the absolute greenhouse gas emissions are considered in relationship to a reference variable, such as sales, the number of employees or market capitalisation. This means that emissions can be better compared than with a carbon footprint.

2050 Climate Action Plan

This is the action plan for national climate protection goals adopted by the German federal government in November 2016. This makes Germany one of the first nations in the world to deliver a long-term climate protection strategy and present this strategy to the UN, as required by the Paris Agreement. In line with the objectives set out in the Paris Climate Agreement, Germany is aiming to achieve almost complete greenhouse gas neutrality by the year 2050. Germany has set itself the sub-goal of reducing its greenhouse gas emissions by at least 55% by 2030, compared with 1990 levels. To achieve complete greenhouse gas neutrality by 2050, the key sectors of energy, industry, construction, transport, agriculture, land utilisation and forestry have been set specific initial emission reduction objectives to be achieved by 2030.

Climate Risks

These are risks that result from changes in the climate, e.g. rising sea levels and the increase in extreme weather events, and the (political) measures taken to combat them. According to a systematisation by the Task Force on Climate-Related Financial Disclosures (TCFD), this includes physical risks, transformation risks and liability risks.

Corporate Social Responsibility (CSR)

Corporate social responsibility for a sustainable business means taking into account social, environmental and economic aspects in business operations.

Council for Sustainable Development (Rat für nachhaltige Entwicklung – RNE)

A council established by the German federal government in 2001, with 15 members from public life. Its tasks include:

  • the development of articles for implementation of the German Sustainability Strategy,
  • the designation of specific fields of action and projects, as well as
  • making sustainability an important public concern.

The council is independent in its choice of subjects and campaign styles. The results of current work include, for example, the German Sustainability Code or the foundation of the Hub for Sustainable Finance.

CSR Directive Implementation Act (CSR-Richtlinie-Umsetzungsgesetz – CSR-RUG)

A law to strengthen non-financial corporate reporting in their management reports and corporate management reports. This is why Germany implemented the EU directive adopted in 2014 in national law to extend the reporting of large capital market-oriented companies, credit institutions, financial services institutions and insurance firms. The objective is to increase transparency with regard to the ESG standards in companies in the EU. It concerns information on environmental, social and employee interests as well as the observation of human rights and the fight against corruption and bribery.


Dark calm

Low or no energy production through wind and solar energy sources due to lack of wind and simultaneous darkness. Sometimes, the share of renewables in the energy mix in Germany falls from an average of 35% to below 10%. This is typically the case in the winter months and guarantees concerns of whether an excessively reduced power plant park of conventional and nuclear power plants can produce sufficient balancing energy.


Process of the gradual reduction of greenhouse gas emissions to achieve the most emission-free economy possible. The background to this is the goal of greenhouse gas neutrality set out in the Paris Agreement, which is to be achieved in the second half of the century.


Energy Trilemma

A challenge to the energy supply pursuing three goals at the same time as far as possible:

  • Supply security through needs-based generation of energy;
  • Social justice through comprehensive coverage for people at affordable prices and
  • Environmental sustainability by reducing CO2 emissions and air pollutants and promoting renewable energies

Equator Principles

Voluntary guidelines adopted by banks for compliance with environment and social standards in the field of project financing. Based on the environment standards of the World Bank and the social standards of the International Finance Corporation (IFC), a subsidiary of the World Bank, and applicable to projects with a financing volume of more than USD 10 million. The name symbolises the global reach of the guidelines.


The abbreviation ESG stands for environmental, social and governance and describes the three key areas of responsibility for sustainable management.

EU Action Plan for Financing a Sustainable European Economy

The action plan by the EU Commission, published in March 2018, that sets out the sustainability criteria on the financial and capital market. The extensive package of measures pursues three overarching goals:

1. Restructuring capital flows towards a more sustainable economy

2. Embedding sustainability within risk management

3. Promoting transparency and long-term planning

EU Emissions Trading Scheme (EU-ETS)

The central climate protection instrument of the EU since 2005, which works according to the so-called “Cap & Trade” principle. It covers 45% of the EU’s greenhouse gas emissions from 11,000 plants in the energy sector across Europe, the energy-intensive industry and aircraft operators and defines an upper limit (“cap”) for emissions. This will be reduced over time so that total emissions fall. The emissions allowances output by the 28 Member States plus Iceland, Liechtenstein and Norway can be traded freely on the market (“trade”). This creates incentives for the companies concerned to reduce their greenhouse gas emissions.


Global Reporting Initiative (GRI)

Guidelines on the creation of sustainability reports by companies, associations and organisations.

Green Bond Principles (GBP)

Non-binding guidelines for the process of issuing green bonds, developed in 2017 by the International Capital Market Association (ICMA), a voluntary association of banks and financial service providers. The objective is to promote standardisation, integrity and transparency in the market. The GBP includes four principles: use of funds (green projects), procedure for project evaluation and selection, management of proceeds and reporting.

Green Bonds

These are fixed-rate securities with the special feature that their issue proceeds flow into environmentally and climate friendly projects, such as the construction of wind power plants or the energy-oriented refurbishment of buildings.

Case study: The BayernLB subsidiary DKB AG has been issuing green bonds in the field of renewable energies since 2016. The funds raised were used to refinance loans from the wind and solar area in Germany. In the meantime, issuers of green bonds can be found in all areas, from business development banks to commercial banks, companies or states.

Green Finance

Green finance means the environment and climate-compatible design of the financial sector. On the one hand, this includes financing environmentally and climate friendly investments, e.g. through innovative instruments such as green bonds and, on the other hand, the comprehensive management of climate risks within financial institutions.

Greenhouse gas neutrality

In accordance with the Paris Agreement, the zero emissions goal is defined as creating a balance between unavoidable CO2 emissions and the use of carbon sinks. The aim is to reduce the net emissions of greenhouse gases to zero. Reducers absorb and store CO2 from the atmosphere, thereby counteracting global warming. For example, natural carbon sinks are forests and oceans and technical sinks such as carbon capture and storage (CCS) are also identified as negative emission technologies.

Greenhouse Gas Protocol (GHG Protocol)

The GHG Protocol is an international standardised framework to manage greenhouse gases. The development of the GHG Protocol is coordinated by the World Resources Institute (WRI) and the World Business Council for Sustainable Development (WBCSD). One of the purposes of the GHG is to define the scopes.

Greenhouse Gases (GHG)

Gases in the earth's atmosphere that contribute to global warming by emitting heat both into the atmosphere and at the earth's surface ("Greenhouse Effect"). The greenhouse gases stipulated in the Kyoto Protocol, the predecessor to the Paris Agreement, are: carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), halogenated hydrofluorocarbons (HFCs), perfluorocarbons (PFCs) and sulphur hexafluoride (SF6).

Gross final energy consumption

The gross final energy consumption is a special reference for the share of renewable energies. According to EU Directive 2009/28/EC, the final energy consumption can be used to calculate the energy sector’s own consumption when generating heat and electricity, as well as transport and line losses when transmitting and distributing.


High-Level Expert Group on Sustainable Finance (HLEG)

An expert group set up at the end of 2016 and utilized by the EU Commission. Its focuses include ways of steering private and public finance flows towards sustainable developments, as well as the measures required to protect the financial system against environmental risks. In January 2018, a final report with eight action recommendations was presented and included a European standard for green bonds or an EU-wide label for green investment funds.

Hub for Sustainable Finance (H4SF)

A network of financial market players and other stakeholders, who actively want to contribute to a sustainable financial system in Germany. The network was set up by Deutsche Börse and the Council for Sustainable Development in 2017.


Intergovernmental Panel on Climate Change (IPCC)

The IPCC is an institution of the United Nations, which brings together the current state of climate research globally and evaluates it based on recognised publications. It offers a basis for knowledge-based policy decisions without providing specific solution approaches or political recommendations for action.


Negative Emission Technologies

Technologies for extracting and storing CO2 from the atmosphere. Negative emissions technologies are intended to pick up unavoidable CO2 emissions to achieve the goal of greenhouse gas neutrality as agreed in the Paris Agreement.


Paris Agreement

A general, legally binding and global climate change agreement signed by 195 countries at the World Climate Conference in 2015. The aim of the agreement is to limit the increase in the global average temperature to significantly less than 2 degrees Celsius above the pre-industrial level and to aim for a reduction to 1.5 degrees Celsius. Other important objectives are to achieve greenhouse gas neutrality in the second half of the century, to improve adaptability to the consequences of climate change that can no longer be avoided and to steer financial flows towards sustainable development with low greenhouse gas emissions and resistance to climate changes.


Science Based Targets

The Science Based Targets (SBT) Initiative champions setting science-based targets to boost companies’ competitive advantage in the transition to an environmentally friendly economic structure. The Initiative is a collaboration between CDP, the World Resources Institute (WRI), the WWF and United Nations Global Compact (UNGC).


Greenhouse gas emissions are often measured using the methodology defined in the Greenhouse Gas Protocol. There are three different levels or types of emissions, referred to as scopes:

  • Scope 1 comprises all direct GHG emissions generated directly at the company site. This includes, for example, emissions from on-site heating boilers or chemical processes.
  • Scope 2 covers all indirect GHG emissions linked to energy generation by energy suppliers, particularly electricity.
  • Scope 3 covers all other GHG emissions produced through the operations, products and services of a business.

Second Party Opinion (SPO)

An independent report on the sustainability quality of green or social bonds. The focus is on the use of the funds raised through the bond for suitable environment and climate-related or social projects.

Social Bonds

These are fixed-rate securities with the special feature that their issue proceeds flow into social projects, such as the building housing.

Case study: BayernLabo issued a social bond in 2017. The Bavarian development institute used the proceeds of the bond exclusively to finance or refinance as support loans from the Bavarian interest rate reduction programme, the Bavarian modernisation programme and the municipal housing support programme.

Stranded Assets

These are plants or assets that, due to (unforeseen) changes in regulations, the environment or technologies, have had an unexpected devaluation prior to the end of their forecast service life or can no longer generate the planned yields. Examples of stranded assets would be coal power plants that may no longer operate because of higher energy and emission-efficiency criteria. This category also includes properties that are in newly established flood areas.


Sustainable development describes development that ensures that future generations are not in a worse position to meet their own needs than we are currently. “Intergeneration equity” can also be referred to in this context. In business, the sustainability concept is often interpreted as a three-pillar model. According to this, the social, environmental and economic impacts should regularly be taken into account when making business decisions.

Sustainability rating

This is when a company’s sustainability performance is evaluated by specialist ratings agencies, e.g. ISS-oekom, MSCI ESG and VigeoEiris.

Sustainable Development Goals (SDGs)

The UN SDGs are 17 goals with 169 sub-goals for sustainable development. They are core elements of the 2030 agenda, through which sustainable development is be ensured globally, meaning global economic progress in accordance with social justice within the earth's ecological limits. Climate protection is also among the 17 goals (goal 13).


Task Force on Climate-Related Financial Disclosures (TCFD)

Task force established by the Financial Stability Board of the G20 nations, chaired by Michael R. Bloomberg and Mark Carney, with a special focus on climate-related financial risks. The group’s opening question was how companies can inform their various stakeholders, particularly shareholders and creditors, of the risks that are connected with climate change. According to TCFD recommendations, companies should include information on the four areas of Governance, Strategy, Risk Management, Measured Values and Goals in their communication.

Transition path

Transition path, or transformation path, refers to a development that leads to the company achieving the goals agreed in the Paris Agreement.