Reference Library

Glossary of Carbon & Sustainability Terms

Plain-English definitions for the terminology used across GHG accounting, Climate Active certification, AASB S2 reporting, Life Cycle Assessment, Environmental Product Declarations and net zero target setting.

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2026

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Australian Standards & Regulatory Context

Mandatory Climate Reporting & GHG Inventories

AASB S2 Reporting, Climate Active Certification (Organisation) & GHG Emissions Inventories

Terms covering the mandatory AASB S2 climate-related financial disclosure standard, Australia’s Climate Active carbon neutral certification for organisations, and corporate greenhouse gas inventories.

AASB S2 Reporting

AASB S2: Australia’s mandatory climate-related financial disclosure standard, made by the Australian Accounting Standards Board and based on the international IFRS S2 standard, requiring disclosure of governance, strategy, risk management, and metrics and targets.
Australian Sustainability Reporting Standards (ASRS): The suite of standards, including AASB S1 and AASB S2, developed by the AASB to give effect to Australia’s sustainability and climate-related reporting requirements.
Capital Deployment: A cross-industry metric requiring disclosure of the amount of capital expenditure, financing or investment an entity has directed towards climate-related risks and opportunities.
Climate Resilience: An entity’s capacity to adjust to climate-related changes and uncertainties, assessed under AASB S2 using scenario analysis.
Climate-related Physical Risk: Risk arising from the physical effects of climate change, either sudden events like storms and floods (acute) or longer-term shifts like changing rainfall patterns (chronic).
Climate-related Risks and Opportunities: The potential negative and positive effects of climate change on an entity, covering both physical risks and transition risks.
Climate-related Transition Plan: An aspect of an entity’s overall strategy setting out its targets, actions, and resource allocation for transitioning toward a lower-carbon economy.
Climate-related Transition Risk: Risk arising from the shift to a lower-carbon economy, including policy, legal, technology, market, and reputational risks.
Corporations Act 2001: The Australian legislation that sets out which entities must comply with AASB S2 and specifies the staggered application dates for different classes of entity.
Cross-industry Metric Categories: The set of standard metrics AASB S2 requires beyond greenhouse gas emissions, including transition risk exposure, physical risk exposure, capital deployment, internal carbon pricing, and climate-linked remuneration.
Financed Emissions: The portion of a borrower’s or investee’s emissions attributed to an entity’s loans and investments, disclosed separately by entities in asset management, banking, or insurance.
General Purpose Financial Report (GPFR): The report to which AASB S2 climate-related disclosures attach, providing information useful to investors, lenders, and creditors for resource allocation decisions.
Governance: The AASB S2 disclosure area covering how an entity’s board and management oversee climate-related risks and opportunities.
Group 1, Group 2, Group 3 Entities: The three phased categories of entities captured by Australia’s mandatory climate reporting regime, based on size or emissions profile, with staggered start dates from 2025 through 2027.
IFRS S2: The international climate-related disclosure standard issued by the International Sustainability Standards Board (ISSB), which forms the baseline that AASB S2 is built on, modified for the Australian legal and regulatory environment.
Impracticable: A requirement is impracticable when an entity cannot apply it after making every reasonable effort to do so, providing limited relief from certain AASB S2 requirements.
Interim Reporting: Climate-related disclosures provided at a reporting date other than an entity’s annual reporting date, typically more condensed and focused on new developments.
Internal Carbon Price: A price an entity applies internally to assess the financial implications of its emissions, used in decision-making such as investment appraisal, transfer pricing or scenario analysis.
International Sustainability Standards Board (ISSB): The international standard-setting body responsible for developing IFRS S1 and IFRS S2, on which the Australian Sustainability Reporting Standards are based.
Latest International Agreement on Climate Change: A defined reference in AASB S2 to the Paris Agreement of December 2015, used as a benchmark for climate-related targets and scenario analysis.
Metrics and Targets: The AASB S2 disclosure area covering an entity’s greenhouse gas emissions, other climate-related metrics, and progress against any climate-related targets.
Not-for-Profit Entity Considerations: Modifications within AASB S2 recognising that the users and objectives of a not-for-profit entity’s general purpose financial report differ from those of a for-profit entity.
Primary Users: The existing and potential investors, lenders and other creditors that AASB S2 disclosures are prepared for, whose resource allocation decisions the information is intended to support.
Remuneration Metric: A cross-industry metric requiring disclosure of whether and how climate-related considerations are factored into executive remuneration, including the percentage linked to climate performance.
Risk Management: The AASB S2 disclosure area covering the processes an entity uses to identify, assess, and manage climate-related risks, and how these integrate with its overall risk management.
Scenario Analysis: A structured method for testing how an entity’s strategy would perform under different possible climate futures; Australian legislation requires testing against both a high-warming and a 1.5 degree-aligned scenario.
Sector-Neutral Standard: An approach to standard-setting, adopted by the AASB where practicable, ensuring similar transactions and events are treated consistently across entities regardless of their sector.
Statement of Compliance: A formal, unreserved declaration that an entity’s disclosures meet every requirement of AASB S2; the standard does not allow partial or qualified compliance claims.
Strategy: The AASB S2 disclosure area covering an entity’s identified climate risks and opportunities and their effect on its business model, financial position, and resilience.
Timeliness: An enhancing qualitative characteristic requiring that climate-related information be available to decision-makers in time to influence their decisions.
Transition Relief: Temporary reliefs available to an entity in the first year it applies AASB S2, such as not needing to disclose Scope 3 emissions or being able to continue an existing emissions measurement method.
Understandability: An enhancing qualitative characteristic requiring climate-related disclosures to be clear, concise and free of unnecessary boilerplate or duplication.
Verifiability: An enhancing qualitative characteristic meaning that independent, knowledgeable observers could reach consensus that a disclosure is a faithful representation.

Climate Active Certification (Organisation)

Approved Certifier: An entity approved by the Department to certify organisations, products and services, buildings, precincts or events as carbon neutral against the Climate Active standards, based on their sector expertise.
Australian Carbon Credit Unit (ACCU): A tradeable unit issued by the Clean Energy Regulator representing one tonne of CO2 equivalent stored or avoided; Climate Active requires a minimum proportion of offsets to be ACCUs.
Cancellation: The retirement of a carbon credit or offset unit within a registry so it can no longer be sold or used again, attributed to the specific carbon neutral claim it supports.
Carbon Account: A measure of the carbon dioxide equivalent emissions attributable to an organisation, also known as a carbon footprint or emissions inventory, calculated according to the Organisation Standard’s principles.
Carbon Neutral: A state where an organisation’s measured emissions for a reporting period have been balanced by an equivalent quantity of eligible carbon offsets, generally after genuine reduction effort.
Carbon Neutral Standard for Organisations: The specific Climate Active standard setting out the boundary-setting, measurement, reduction, and offsetting requirements an organisation must meet to be certified carbon neutral at the entity level.
Certification Trade Mark: The Climate Active Carbon Neutral Certification Trade Mark, available under licence to organisations certified by the Australian Government to showcase their carbon neutrality.
Climate Active: Australia’s government-backed voluntary carbon neutral certification program, administered by the Department of Climate Change, Energy, the Environment and Water.
Conservative Approach: An approach to estimation that reduces the risk of understating emissions in a carbon account, favoured wherever uncertainty is high.
Control Approach (Climate Active): The method used to determine which emissions are under an organisation’s direct control for certification purposes, based on financial control, operational control, or equity share.
Eligible Offset Unit: A carbon credit that meets Climate Active’s minimum quality requirements, including ACCUs and approved international units such as Gold Standard or Verra credits.
Emissions Boundary: The coverage and extent of an organisation’s carbon account, established by identifying which emissions sources are included or excluded and why.
Emissions Reduction Activity: Genuine efforts to reduce emissions, such as energy efficiency upgrades or renewable energy procurement, that Climate Active expects an organisation to demonstrate before offsetting residual emissions.
Emissions Reduction Strategy: An organisation’s documented plan identifying the emissions reduction measures it will undertake over a specified timeframe, required to maintain a Climate Active carbon neutral claim.
Forward Offsetting: An offsetting approach where an organisation estimates its emissions for the coming reporting year and cancels that number of eligible offset units at the start of the year, followed by an annual true-up.
Licence Agreement: The formal agreement an organisation signs with Climate Active governing use of the carbon neutral trade mark and ongoing compliance with the standard.
National Greenhouse Accounts Factors (NGA Factors): The Australian Government’s annual publication of emission factors, covering Scope 1 and 2 sources and Scope 3 factors for waste, fuels and electricity, used as the default reference for Climate Active carbon accounts.
Non-Quantified Emissions: Relevant emissions sources that remain within the emissions boundary but are not measured in the carbon account, because doing so would not be technically feasible, practicable or cost effective.
Notice of Certification: The formal letter from the Department confirming that an organisation’s application for Climate Active certification has been successful.
Notice of Continuing Certification: The formal letter from the Department confirming that an organisation’s annual obligations for maintaining Climate Active certification have been met.
Offsetting in Arrears: An offsetting approach where an organisation cancels eligible offset units for a claim period only after that period has finished.
Organisational Boundary (Climate Active): The defined scope of entities and operations included in a Climate Active certification, set using an operational control, financial control, or equity share basis.
Public Disclosure Statement: The published document accompanying a Climate Active certification that discloses an organisation’s emissions inventory, boundary, and the offset units used, giving the claim public transparency.
Recertification: The annual process of updating an organisation’s emissions inventory and offset position to maintain carbon neutral certification for a new reporting period.
Relevance: The principle ensuring an organisation’s carbon account appropriately reflects its emissions and meets the decision-making needs of internal and external users.
Relevance Test: The qualitative test used to determine whether an emissions source should be included in an organisation’s emissions boundary, based on criteria such as materiality, risk exposure and stakeholder expectations.
Residual Emissions: The emissions remaining after an organisation has applied genuine reduction measures, which are then compensated for through offsetting to achieve carbon neutral status.
Responsible Entity: The organisation or authorised individual that takes responsibility for making a carbon neutral claim or seeking carbon neutral certification, including meeting all reporting and offsetting obligations.
Technical Assessment: An independent review of the methodology behind an organisation’s carbon neutral claim, required at initial certification and periodically thereafter.
True-Up: The annual reconciliation process confirming that the number of offset units cancelled is at least equal to an organisation’s actual emissions, used under the forward offsetting approach.
Uplift Factor: A factor applied to increase an estimated emissions figure, used to mitigate the risk of underestimating emissions where data is incomplete.
Vintage: The year in which an offset unit’s underlying emissions reduction or removal occurred, used to assess the currency and eligibility of the unit.

GHG Emissions Inventories

Activity Data: The raw quantitative data an emission factor is applied to, such as fuel consumed, distance travelled, or electricity used.
Additionality: A requirement that an emissions reduction or removal used as an offset would not have happened anyway in the ordinary course of events, and has not been claimed elsewhere.
Assurance: The level of confidence provided by a verifier or auditor about the accuracy and completeness of reported emissions data, ranging from limited to reasonable assurance.
Average-Data Method: A Scope 3 calculation approach that estimates emissions using industry-average emission factors applied to activity data.
Base Year: A specific historical year (or average of years) against which an organisation’s emissions are tracked over time, used to measure progress on reduction targets.
Base Year Recalculation: Adjusting the base year emissions figure to reflect a significant structural change (such as an acquisition or divestment) or a change in calculation methodology, so that year-on-year comparisons remain meaningful.
Biogenic Emissions: Carbon dioxide emissions from the combustion or decomposition of biologically based materials, such as biofuels, which are typically reported separately from other CO2 emissions.
Carbon Credit: A tradeable unit representing a verified reduction or removal of one tonne of CO2 equivalent, issued by a recognised crediting program.
Carbon Footprint: A commonly used term for the total greenhouse gas emissions associated with an organisation, product, service or activity, usually expressed in CO2 equivalent.
CO₂ Equivalent (CO₂e): The standard unit for comparing the warming effect of different greenhouse gases, expressed relative to the warming effect of one unit of carbon dioxide.
Contractual Instrument: An agreement, such as a power purchase agreement or a renewable energy certificate, that conveys specific claims about the source or attributes of purchased energy, used to support market-based Scope 2 reporting.
Direct Emissions: Emissions from sources owned or controlled by the reporting organisation (equivalent to Scope 1).
Double Counting: When the same emissions or emissions reduction is claimed by more than one organisation or counted more than once within an inventory.
Downstream Emissions: Scope 3 emissions associated with sold goods and services, occurring after they leave the organisation’s control.
Emission Factor: A figure used to convert a unit of activity, such as litres of fuel or kilowatt-hours of electricity, into a quantity of greenhouse gas emissions.
Emissions Intensity: A metric expressing greenhouse gas emissions relative to a business measure, such as revenue, floor area or units produced, allowing comparison of performance over time or between organisations.
Emissions Reduction Target: A quantified commitment to reduce greenhouse gas emissions by a defined amount over a defined timeframe, which may be absolute or intensity-based.
Equity Share Approach: A consolidation method where an organisation accounts for emissions in proportion to its percentage economic ownership of an operation.
Financial Control Approach: A consolidation method where an organisation accounts for 100% of emissions from operations it has the ability to direct financially and operationally for economic benefit.
GHG Inventory: A quantified list of an organisation’s greenhouse gas emissions and the sources they come from, covering a defined reporting period and boundary.
GHG Offset: A discrete emissions reduction achieved elsewhere and used to compensate for an organisation’s own emissions, typically measured against a baseline of what would have happened without the reduction activity.
GHG Program: An external scheme, whether voluntary or mandatory, that sets rules for how organisations measure, report or manage their greenhouse gas emissions, such as Australia’s National Greenhouse and Energy Reporting Scheme.
GHG Protocol: The most widely used international accounting framework for measuring and managing greenhouse gas emissions, made up of a family of standards covering corporate inventories, project accounting, value chain (Scope 3) emissions and product life cycles.
GHG Sink: A process, activity or mechanism that removes a greenhouse gas from the atmosphere, such as a forest or geological storage site.
GHG Source: A physical unit or process that releases a greenhouse gas into the atmosphere, such as a boiler, vehicle or industrial process.
Global Warming Potential (GWP): A factor describing how much warming impact one unit of a given greenhouse gas has relative to one unit of CO2, used to convert other gases into CO2 equivalent, typically drawn from the latest IPCC assessment.
Greenhouse Gases (GHGs): The atmospheric gases responsible for trapping heat and driving climate change. The Kyoto Protocol lists seven gases: carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), hydrofluorocarbons (HFCs), perfluorocarbons (PFCs), sulphur hexafluoride (SF6) and nitrogen trifluoride (NF3).
Hybrid Method: A Scope 3 calculation approach that combines primary supplier data with secondary or estimated data where primary data is unavailable.
Indirect Emissions: Emissions that result from an organisation’s activities but occur at sources owned or controlled by another entity (equivalent to Scope 2 and Scope 3).
Leakage: An unintended increase in emissions outside the boundary of an offset project that offsets some or all of the reduction the project claims to achieve.
Location-Based Method: A way of calculating Scope 2 emissions using the average emissions intensity of the grid an organisation is physically connected to, regardless of any renewable energy contracts held.
Market-Based Method: A way of calculating Scope 2 emissions based on the specific electricity products an organisation has contractually chosen, such as a power purchase agreement or renewable energy certificates.
Materiality: A concept used to judge whether an error, omission, or estimate is significant enough that it could reasonably affect a user’s understanding of, or decisions based on, the inventory.
Net Zero: A state in which any remaining greenhouse gas emissions are balanced by an equivalent amount of removals from the atmosphere, typically after deep reductions have been achieved.
Operational Boundary: The scope of direct and indirect emissions associated with operations once the organisational boundary has been set, defined by classifying emissions into Scope 1, 2 and 3.
Operational Control Approach: A consolidation method where an organisation accounts for 100% of emissions from operations it has the full authority to direct, regardless of ownership share.
Organisational Boundary: The line that determines which operations, entities, or facilities are included in an organisation’s emissions inventory, set using either an equity share or a control approach.
Permanence: A requirement that an emissions reduction represented by an offset is durable and will not be reversed, particularly relevant to carbon stored in vegetation or soil.
Power Purchase Agreement (PPA): A contract between an energy buyer and generator, often for renewable electricity, that can be used as evidence for market-based Scope 2 emissions accounting.
Primary Data: Data collected directly from a specific activity within an organisation’s own operations or value chain, such as a supplier’s actual production figures.
Proxy Data: Data from a similar activity or process used as a stand-in when primary data isn’t available, without being adjusted to better represent the actual activity.
Recalculation Policy: An organisation’s documented rules for when and how it will restate historical emissions data, ensuring recalculations are applied consistently over time.
Removal: The act of taking a greenhouse gas out of the atmosphere and storing it, through biological or technological means.
Renewable Energy Certificate (REC): A tradeable certificate representing the environmental attributes of one unit of renewable electricity generation, used to substantiate market-based emissions claims.
Reporting Period: The defined span of time, usually 12 months, over which an organisation’s emissions are measured and reported.
Science Based Target: An emissions reduction target that is independently assessed as consistent with the level of decarbonisation needed to limit global warming in line with the Paris Agreement.
Scope 1 Emissions: Direct emissions from sources an organisation owns or controls, such as fuel burned in company vehicles, on-site boilers, or industrial processes.
Scope 2 Emissions: Indirect emissions from the generation of purchased electricity, steam, heating or cooling that an organisation consumes. The emissions physically occur at the power station, not on site.
Scope 3 Categories: The 15 standard categories used to organise Scope 3 emissions, spanning purchased goods and services, capital goods, fuel- and energy-related activities, upstream transportation and distribution, waste generated in operations, business travel, employee commuting, upstream leased assets, downstream transportation and distribution, processing of sold products, use of sold products, end-of-life treatment of sold products, downstream leased assets, franchises, and investments.
Scope 3 Emissions: All other indirect emissions that occur in an organisation’s value chain, both upstream (suppliers, purchased goods, business travel) and downstream (product use, end-of-life disposal), across 15 defined categories.
Secondary Data: Data not obtained directly from an organisation’s own value chain activities, often sourced from industry averages, government statistics or published databases.
Sequestration: The capture and long-term storage of atmospheric carbon dioxide, whether through biological processes such as tree growth or geological processes such as underground storage.
Spend-Based Method: A Scope 3 calculation approach that estimates emissions by applying economic input-output emission factors to the amount spent on goods or services.
Supplier-Specific Method: A Scope 3 calculation approach that uses emissions data provided directly by a supplier for the specific goods or services purchased.
Uncertainty: The lack of precision in an emissions figure arising from data quality, estimation methods or measurement limitations, which should be disclosed and managed conservatively.
Upstream Emissions: Scope 3 emissions associated with purchased or acquired goods and services, occurring before they enter the organisation’s own operations.
Value Chain: The full range of an organisation’s activities, resources and relationships, from raw material sourcing through to the use and end-of-life of its products or services.
Verification: An independent assessment, typically by a third party, of whether a GHG inventory has been prepared accurately and in accordance with the relevant standard.

Life Cycle Assessment & Product Declarations

Life Cycle Assessment, Environmental Product Declarations & Climate Active (Products & Services)

Terms covering Life Cycle Assessment methodology, Environmental Product Declarations under ISO 14025, and Climate Active carbon neutral certification for products and services, including construction product EPDs under ISO 21930.

Life Cycle Assessment (LCA) Terms

Allocation: The method used to partition the environmental burdens of a shared process between the product under study and its co-products or between a product and the waste/recycled material it generates, when a process yields more than one output.
Attributable Processes: Service, material and energy flows that become the product, make the product, and carry the product through its life cycle; these must be included within the system/emissions boundary unless they meet exclusion conditions.
Attributional LCA: An LCA modelling approach that uses average or specific data (not marginal data) to describe the environmentally relevant flows of a product system as they occur, resolving multi-output processes through allocation rather than system expansion.
Biobased: Derived from biomass.
Biogenic Carbon: Carbon derived from biomass.
Biomass: Material of biological origin, excluding material embedded in geological formations or transformed to fossilised material, and excluding peat.
By-Product: A co-product from a process that is incidental or not intentionally produced and cannot be avoided.
Carbonation: The reaction of atmospheric carbon dioxide with calcium oxide or calcium hydroxide containing products, such as concrete, mortar and lime, to form calcium carbonate.
Chairperson (of a Critical Review Panel): The panel member responsible for setting up the review panel, coordinating the review process, resolving conflicting comments, and ensuring the critical review report and statement are produced.
Characterisation Factor: A factor derived from a characterisation model used to convert a life cycle inventory result into the common unit of an impact category indicator.
Co-Product: Any of one or more products from the same unit process that is not the object of the assessment; co-products and the studied product share the same status within the process.
Co-Product Allocation: Allocation applied when an output is a marketable co-product of a process; performed first by subdividing the process, then by physical relationship (e.g. mass), then by economic value, in that order of preference.
CO2 Equivalent (CO2e): A unit for comparing the radiative forcing of a greenhouse gas to that of carbon dioxide, calculated by converting the mass of a greenhouse gas using its global warming potential.
Commissioner of the Critical Review: The organisation (or group of organisations) that finances the critical review of an LCA study.
Commissioner of the LCA Study: The organisation (or group of organisations) that finances the LCA study.
Concurrent Critical Review: A critical review carried out alongside the LCA study rather than solely at its conclusion, with the reviewer(s) submitting comments at defined milestones (goal and scope definition, inventory analysis, impact assessment, interpretation, draft report); the critical review statement is still issued only for the final version of the LCA report.
Consequential LCA: An LCA modelling approach that models the environmental consequences of a decision or change, typically using marginal data and system expansion (e.g. avoided-burden credits); distinguished from the attributional approach used for EPDs.
Consumption of Freshwater: The net freshwater entering a product system that is not returned to the same drainage basin from which it originated.
Cradle-to-Gate: A partial life cycle assessment boundary covering all emissions and removals from material acquisition through to when the product leaves the factory gate, excluding product use and end-of-life. Where a cradle-to-gate boundary is used instead of cradle-to-grave, this choice must be transparently disclosed in the public report, as it affects the scope of emissions represented by a carbon neutral claim.
Cradle-to-Grave: A life cycle assessment boundary that considers the entire life cycle of a product, from raw material extraction through production, use, and end-of-life treatment and disposal.
Critical Review: An independent process intended to ensure consistency between an LCA and the principles and requirements of the ISO 14040/14044 standards, verifying the scientific and technical validity, data appropriateness, and transparency of the study.
Critical Review at the End of the LCA Study: A critical review in which all review tasks are carried out after the draft LCA report has been submitted to the reviewer(s), involving at least one round of comments and corresponding revisions to the study before the critical review statement is finalised.
Critical Review Report: Documentation of the critical review process and findings, including detailed reviewer comments and the corresponding responses from the practitioner of the LCA study.
Critical Review Statement: A conclusive document aggregating the reviewer(s)’ conclusions on an LCA study, stating unambiguously whether the study conforms with ISO 14040 and ISO 14044.
Cut-Off Rules / Cut-Off Criteria: Criteria used to decide which inputs or outputs may be excluded from an LCA because their contribution is below a materiality threshold (commonly 5% per module or life-cycle stage), provided completeness is still achieved.
Declared Unit: A quantity of a product used as the reference unit for an LCA when the product’s function, or its use stage, is not known or cannot be clearly defined (e.g. 1 kg of cement).
Downstream Process: A process carried out after the designated process in the stream of relevant processes.
Drainage Basin: The area from which direct surface run-off from precipitation drains by gravity into a stream or other water body.
Elementary Flow: A material or energy flow entering or leaving a product system that has been drawn from, or is released to, the environment without further human transformation.
Expert Review: A form of critical review carried out by one or more independent internal or independent external experts selected directly by the commissioner or practitioner of the LCA study, as distinct from a panel review.
Freshwater: Water having a low concentration of dissolved solids, typically less than 1 000 mg/l, generally suitable for withdrawal and conventional treatment to produce potable water.
Functional Unit: A quantified performance of a product system, used as the reference unit to which all inputs, outputs and environmental impacts in an LCA are related (e.g. 1 m² of surface covered for 10 years).
Gate: The point at which a construction product or material leaves the factory, before it becomes an input into a subsequent manufacturing process or is transported to a distributor, another factory or a construction site.
Global Warming Potential (GWP): A characterisation factor expressing the relative capacity of a greenhouse gas to trap heat in the atmosphere over a given time horizon, relative to carbon dioxide, used to calculate CO₂-equivalent impacts.
Goal and Scope Definition: The initial phase of an LCA in which the purpose of the study, the functional/declared unit, the system boundary and other methodological choices are defined.
Impact Category: A class representing environmental issues of concern (e.g. climate change, acidification, resource depletion) to which life cycle inventory results are assigned.
Land Use Change: A change in human use or management of land at the location of production, use or disposal of raw materials, intermediate products, final products or wastes within the product system being assessed.
Life Cycle: The consecutive and interlinked stages of a product system, from raw material acquisition or generation from natural resources to final disposal.
Life Cycle Assessment (LCA): The potential environmental impacts of a product system throughout its life cycle, from raw material extraction through production, use, and end-of-life.
Life Cycle Impact Assessment (LCIA): The phase of an LCA aimed at understanding and evaluating the magnitude and significance of the potential environmental impacts identified in the life cycle inventory.
Life Cycle Inventory (LCI): The phase of an LCA involving the compilation and quantification of inputs and outputs (materials, energy, emissions, waste) for a product throughout its life cycle.
Materiality (LCA context): The status of an emissions or inventory source that constitutes a meaningful share (e.g. 1% or more) of the total carbon or environmental account, requiring inclusion in the assessment.
Minority Statement: A statement added to the critical review statement by a dissenting reviewer or panel member when their disagreement with other reviewers cannot be resolved; the chairperson is responsible for including it alongside the panel’s overall conclusion.
Non-Attributable Processes: Services, materials and energy flows that are not directly connected to the studied product because they do not become the product, make the product, or carry it through its life cycle.
Non-Renewable Resource: A resource that exists in a fixed amount and cannot be naturally replenished or cleansed on a human timescale.
Panel Member: A reviewer taking part in a critical review panel, as opposed to a single expert review.
Panel Review: A form of critical review carried out by a panel of independent reviewers, chaired by an external independent expert, rather than by a single expert.
Practitioner of the LCA Study: The organisation (or group of organisations) that performs the LCA study.
Process Map: An illustration showing the services, materials and energy flows brought together to move a product through its life cycle, including non-attributable and excluded processes.
Recovered Energy: Energy recovered from a process, including waste treatment processes, such as electricity or heat exported from waste incineration or landfill gas combustion.
Reference Flow: The amount of product needed to fulfil the declared or functional unit; can be one product, several products, or a fraction of a product.
Renewable Resource: A resource that is grown, naturally replenished or cleansed on a human timescale, such as trees, grasses or wind.
Secondary Fuel: Fuel recovered from previous use or from waste, derived from a previous product system and used as an input, or energy source, in another product system.
Secondary Material: Material recovered from previous use or from waste, derived from another product system and used as an input in another product system, such as recycled scrap metal, crushed concrete, glass cullet or recycled wood chips.
Sensitivity Analysis: A systematic procedure for estimating the effects of choices made in methods and data on the outcome of an LCA study.
System Boundary: The set of criteria specifying which processes are included as part of a product system in an LCA, determining what is included or excluded from the study.
Technosphere: The sphere or realm of human technological activity that results in a technologically modified environment, into which primary resources are drawn and from which emissions to air, water or land are released to the environment.
Third-Party Report: The publicly available version of an LCA study report, which may exclude confidential information contained in the full LCA (study) report, consistent with ISO 14044:2006, 5.2.
Uncertainty Analysis: A systematic procedure to quantify the uncertainty introduced in the results of an LCA due to the cumulative effects of data variability and methodological choices.
Unit Process: The smallest element considered in a life cycle inventory for which input and output data are quantified.
Upstream Process: A process carried out before the designated process in the stream of relevant processes.
Waste: Substances or objects which the holder intends, or is required, to dispose of.
Waste Allocation (Cut-Off Method): The allocation approach applied to material or energy flows classed as waste, whereby environmental burdens are cut off at the point the material reaches an end-of-waste state and enters a subsequent product system.
Water Body: An entity of water with definite hydrological, hydrogeomorphological, physical, chemical and biological characteristics in a given geographical area, such as a lake, river, groundwater, sea, iceberg, glacier or reservoir.

Environmental Product Declaration (EPD) Terms

Accreditation Body: An organisation responsible for accrediting certification bodies to carry out EPD verification, EPD process certification, and verification of pre-verified tools.
Accredited Certification Body: A conformity assessment body accredited to independently verify EPDs, certify EPD processes, or verify pre-verified EPD/LCA tools.
Approved Individual Verifier: A person approved by an EPD programme’s Technical Committee to independently verify EPDs against the GPI and applicable PCR.
Australasian EPD Programme: The regional arm of the International EPD System operating in Australia and New Zealand, registering and publishing independently verified EPDs under an Australasian Regional Annex to the General Programme Instructions.
Business-to-Business (B2B) EPD: An EPD intended primarily for communication between businesses in a supply chain, which may have restricted public access due to confidentiality (e.g. in procurement).
Business-to-Consumer (B2C) EPD: An EPD intended for communication to end consumers, subject to additional requirements (e.g. inclusion of the use and end-of-life stages).
Complementary PCR (c-PCR): A PCR that provides additional or differing rules and guidance for a subcategory of products within the scope of a main PCR, such as declaring results per functional unit.
Data Quality Assessment: The evaluation and declaration of the quality of data used in an LCA, typically covering technological, geographical and time-related representativeness, completeness, and precision.
Depublication: The removal of an EPD from public availability, which may be initiated by the EPD owner or the programme secretariat (e.g. for non-payment of fees or uncorrected errors); a depublished EPD is not considered valid even if within its stated validity period.
Deregistration: The permanent removal of an EPD from an EPD programme’s registry, after which the EPD cannot be republished and is treated as expired regardless of its stated validity period.
Environmental Performance Indicators: The set of LCA-based impact, resource use, and waste/output flow indicators declared in an EPD per declared/functional unit and per life-cycle stage.
Environmental Product Declaration (EPD): A Type III environmental declaration that transparently communicates quantified, independently verified life cycle environmental information about a product, prepared according to ISO 14025.
EPD Owner: The manufacturer, service provider, trader, or trade/industry association that owns, and is solely responsible and liable for, an EPD.
EPD Process: The chain of activities within an organisation, from initial start-up to launch of an EPD, that follows a certified, systemised pattern.
EPD Process Assurance: An internal activity within an organisation that assures the reliability, relevance and independence of its EPD process, giving EPDs the same credibility as individually third-party-verified EPDs.
EPD Process Certification: Certification, issued by an accreditation body, confirming that an organisation’s internal EPD process and assurance activities comply with the GPI, allowing that organisation to publish EPDs without individual third-party verification of each one.
EPD Verification Report: A document containing a checklist used by the verifier to confirm the conformity of an EPD to the applicable rules and standards.
General Programme Instructions (GPI): The overarching document governing the administration and operation of an EPD programme (such as the International EPD System), setting out roles, processes and requirements for PCR and EPD development.
Individual EPD Verification: A path to EPD verification in which a specific EPD is independently verified by an accredited certification body or approved individual verifier.
International Advisory Board (IAB): A body providing strategic, market- and policy-related advice to an EPD programme secretariat, without governance authority or financial decision-making power.
International EPD System: A global EPD programme, operated by EPD International AB, providing General Programme Instructions, Product Category Rules and verification arrangements for the development and publication of EPDs according to ISO 14025.
ISO 14025: The international standard setting out the principles and procedures for developing Type III environmental declarations (EPDs), including the use of Product Category Rules.
LCA Report: A report describing the underlying LCA of an EPD, subject to verification alongside the EPD itself; normally non-public, and termed a ‘project report’ in EN 15804.
Licensee (EPD programme): An organisation authorised by an EPD programme operator to carry out delegated tasks, such as customer support or EPD publication, for a specified regional market.
Life-Cycle Stages and Information Modules (A-D): The standardised division of a product’s life cycle used in EPDs: Product stage (A1-A3), Distribution/installation stage (A4-A5), Use stage (B1-B7), End-of-life stage (C1-C4), and benefits/loads beyond the system boundary (Module D).
Main PCR: A Product Category Rule covering a broad product category (e.g. construction products) that may be complemented by complementary PCRs (c-PCRs) providing further rules for subcategories.
Module A1-A3 (Product Stage): Raw material extraction and processing, transport to the manufacturer, and manufacturing of the product.
Module A4-A5 (Distribution/Installation Stage): Transport of the product to the site of use and its installation, including associated waste processing.
Module B1-B7 (Use Stage): Use, maintenance, repair, replacement, refurbishment, and operational energy and water use associated with the product during its service life.
Module C1-C4 (End-of-Life Stage): Deconstruction/demolition, transport to waste processing, waste processing for reuse/recovery/recycling, and final disposal of the product.
Module D: The declaration of environmental benefits and loads arising from reuse, recycling or energy recovery of materials beyond the product’s system boundary; not considered a life-cycle stage and never aggregated with the product’s life-cycle results.
Mutual Recognition Agreement (MRA): An agreement between EPD programme operators allowing EPDs (or elements of them) developed under one programme to be recognised or published under another.
Open Consultation: The public review period during which a draft PCR (or GPI update) is made available for comment by interested parties before finalisation.
PCR Committee: The group of experts and stakeholders convened to develop or update a Product Category Rule under the guidance of the PCR Moderator.
PCR Moderator: The individual responsible for chairing the PCR Committee and leading the development of a Product Category Rule.
PCR Review: The process whereby an independent third-party panel verifies a Product Category Rule before it is published.
PCR Stakeholder Consultation Group: Interested parties invited to comment on a draft PCR during its open consultation period before publication.
Pre-Verified EPD Tool: A verified tool that generates a complete EPD, including indicator results and all mandatory EPD information, in accordance with the GPI and applicable PCR.
Primary Data: Life cycle inventory data collected directly from the specific processes in a product’s supply chain (e.g. from a manufacturing plant or a contracted supplier), including certain generic data combined with product-specific activity data.
Product Category Rules (PCR): A set of specific rules, requirements and guidelines for developing EPDs for one or more product categories, ensuring consistent and comparable results across similar products.
Product Environmental Footprint (PEF): A European Commission methodology for measuring and communicating the life cycle environmental performance of products, referenced as an alternative or complementary methodology in EPD development.
Programme Operator: The organisation with overall responsibility for administering and operating an EPD programme, including maintaining the GPI, publishing EPDs and PCRs, and managing verification arrangements.
Proxy Data: Secondary LCI data used to fill a data gap that does not fully meet the data quality requirements for representative secondary data, limited in its overall contribution to declared results.
Publication (EPD): The act of making a registered, verified EPD publicly available (e.g. on an EPD programme’s website), following completion of all required documentation and agreements.
Reference Service Life (RSL): The reference period, defined for a product category, over which the performance of all products in that category is related as part of the functional unit definition.
Registration (EPD): The formal process, following EPD documentation completion and verifier approval, by which an EPD owner requests inclusion of the EPD in the EPD programme’s public registry.
Registration Number: The unique identifying number issued to an EPD (or PCR) upon registration and publication within an EPD programme.
Representative Secondary Data: Secondary LCI data that meets defined data quality requirements for representativeness of the process being modelled.
Secondary Data: Life cycle inventory data sourced from databases or literature rather than collected directly, divided into representative secondary data and proxy data.
Secretariat: The body, staffed by the programme operator, responsible for day-to-day administration of an EPD programme, including preparing the GPI, guiding PCR development, and administering EPD publication.
Sector EPD: An EPD representing the average environmental performance of a product category across multiple companies or manufacturing sites within a sector, rather than a single company’s product.
Single-Footprint Report: A document derived from a published EPD that extracts and reports results for a single environmental issue (e.g. a climate declaration), rather than the full range of EPD indicators.
Technical Committee (TC): The body that assists an EPD programme secretariat with technical and LCA-related matters, including acting as the PCR Review Panel and approving individual verifiers.
Type III Environmental Declaration: A standardised, independently verified declaration of quantified environmental information about the life cycle of a product, based on Product Category Rules, as defined in ISO 14025.
Validity Period (EPD): The period, typically up to five years from its version date, during which a published EPD may be used and referenced, subject to the applicable PCR remaining valid.
Verification (EPD): The independent review of an LCA report and EPD to confirm compliance with the GPI, applicable PCR and reference standards, carried out by an accredited certification body or approved individual verifier.

Climate Active Product Certification Terms

Average EPD (Construction Products): An EPD based on average data, derived from similar products from one or more sites of one company or from multiple companies.
Base Year (Product/Service): The full calendar or financial year of data used as the starting point for a product or service’s carbon account, against which future emissions and reductions are compared; must be independently validated.
Base Year Recalculation: A recalculation of the base year carbon account, required where significant changes occur that affect comparability with the original base year, such as redefining attributable processes, collecting higher-quality data, or changing allocation or recycling methods.
Cancellation (of Offset Units): The transfer of an offset unit to a cancellation account (also called retirement) so it can no longer be used for any other purpose, attributed to a specific carbon neutral claim.
Carbon Account (Product/Service): A measure of the carbon dioxide equivalent emissions attributable to a specific product or service across its defined life cycle, also known as a carbon footprint.
Carbon Neutral Supply Chain: A supply chain input or activity (e.g. certified electricity, accommodation) that is independently certified as carbon neutral under a Climate Active category, and can therefore be recorded with a zero emission factor in a carbon account.
Certification Trade Mark: The Climate Active Carbon Neutral Certification Trade Mark, usable under licence by entities certified by the Australian Government to show that a product or service complies with the Product & Service Standard.
Climate Active Carbon Neutral Standard for Products & Services: A voluntary Australian Government standard providing best-practice guidance on how to measure, reduce, offset, validate and report the greenhouse gas emissions of a product or service to achieve and certify carbon neutrality.
Core PCR: The overarching Product Category Rules document, such as ISO 21930, that sets out the rules applicable to the development of an EPD for any construction product.
Cradle to Gate with Options: A type of EPD covering the mandatory production stage plus optional information modules from the construction, use and/or end-of-life stages, such as cradle to construction site, cradle to installation, cradle to gate and maintenance, or cradle to gate and end-of-life.
Eligible Offset Unit: An offset unit that has been assessed against, and deemed to meet, the offsets integrity principles of the Climate Active Carbon Neutral Standard, making it usable in a carbon neutral claim.
Emissions Boundary: The coverage and extent of a product or service’s carbon account, established by identifying attributable processes and deciding which are included or excluded.
Emissions Reduction Strategy: A documented strategy identifying the measures a responsible entity will undertake, and the quantity of emissions expected to be reduced, before compensating for remaining emissions through offsetting.
Estimated Service Life (ESL): The service life that a part of construction works would be expected to have in a set of specific in-use conditions, determined from reference service life data after accounting for differences from the reference in-use conditions.
Exclusion Conditions: The set of criteria (data gap, no proxy data available, and immateriality) that must all be met before an attributable process can be excluded from a product or service’s carbon account.
Forward Offsetting: An offsetting approach that involves estimating emissions for the coming reporting year and cancelling that number of eligible offset units in advance, followed by an annual true-up.
Functional Equivalent: The quantified functional and/or technical requirements for construction works, or a part of construction works, used as a basis for comparison.
Independent Validation (Climate Active): Third-party audit or verification of a product or service’s carbon account, emissions over time, and offsets, required at least once every three years to support a credible carbon neutral claim.
ISO 21930: The international standard, Sustainability in buildings and civil engineering works, Core rules for environmental product declarations of construction products and services, setting out the core Product Category Rules for EPDs of construction products.
Landfill: A waste disposal site for the deposit of waste onto or into land under controlled or regulated conditions.
Landfill Gas: A mixture of permanent gases, dominated by methane and carbon dioxide, formed by the decomposition of degradable wastes within a landfill.
Licence Agreement (Climate Active): The agreement between a responsible entity and the Department that sets the terms and conditions for carbon neutral certification and use of the certification trade mark.
Materiality Threshold (Product/Service): The 1% (of total carbon account) threshold used to determine whether an emissions source must be quantified and included, subject to a 5% aggregate cap on excluded sources.
Modularity Principle: The principle that processes influencing a construction product’s environmental performance during its life cycle are assigned to the information module of the life cycle stage in which they occur.
National Greenhouse Accounts Factors (NGA Factors): An annual Australian Government publication providing emission factors for scope 1 and 2 emissions sources and scope 3 emission factors for waste, solid/liquid/gaseous fuels, and electricity. Must be used where an applicable factor is available, unless more accurate factors or methodologies exist.
Offsetting in Arrears: An offsetting approach that involves cancelling eligible offset units for a claim period only after that period has finished.
Optional Base Year Certification: An arrangement allowing a responsible entity to backdate certification to cover its base year, requiring eligible offset units equivalent to base year emissions to be cancelled before certification is granted.
Polluter Pays Principle: The principle that processes relevant to waste processing are assigned to the product system that generates the waste, until the system boundary between product systems is reached.
Public Disclosure Statement: The annual public report required under the Product & Service Standard, communicating a product or service’s carbon account, emissions reduction activities, and offsetting to support a transparent carbon neutral claim.
Required Service Life: The service life required by the client or through regulations.
Responsible Entity: The organisation or person that has taken responsibility for making a carbon neutral claim, or seeking carbon neutral certification, for a product or service.
Service Life: The period of time after installation during which construction works, or their parts, meet or exceed the performance requirements.
Spend-Based Calculation Method: An emissions estimation approach, based on conservative and transparent assumptions, used for material attributable processes where data and proxy data gaps exist.
Streamlined Certification (via EPD): A faster carbon neutral certification pathway available to responsible entities who have registered an Environmental Product Declaration with the Australasian EPD Programme, recognising the EPD’s LCA calculations and validation as consistent with the Product & Service Standard’s requirements.
Sub-Category PCR: A set of specific rules, requirements and guidelines that provide additional, consistent requirements to the core PCR for developing EPDs for a sub-category of construction products.
System Boundary Between Product Systems: The boundary that determines when a secondary material, secondary fuel or recovered energy flow has left one product system and reached the point where it can be assigned, without allocated burdens, to a subsequent product system.
System Boundary with Nature: The boundary defined at the point where material flows move from natural systems into the technosphere, and where emissions are released from the technosphere to the environment.
True-Up: The annual reconciliation process, under forward offsetting, to confirm that the number of eligible offset units already cancelled is at least equal to a product or service’s actual emissions.
Volatile Organic Compound (VOC): Any organic liquid and/or solid that evaporates spontaneously at the prevailing temperature and pressure of the atmosphere with which it is in contact.

Net Zero Target Setting & SBTi

Net Zero Strategy & Science Based Target Setting

Terms covering the Science Based Targets initiative (SBTi), the Corporate Net-Zero Standard, emissions scopes and accounting, target-setting methods, and climate-related reporting and disclosure.

Organisation and standard

Corporate Net-Zero Standard: SBTi’s standard (also called the ‘Net-Zero Standard’) that sets out the guidance, criteria and recommendations companies must follow to set net-zero targets validated by the SBTi. It defines corporate net-zero as reducing scopes 1, 2 and 3 emissions to zero or a residual level consistent with 1.5°C pathways, plus permanent neutralisation of any residual emissions.
Net-Zero Expert Advisory Group (EAG): The consensus-building body convened by the SBTi to help develop and refine the Corporate Net-Zero Standard through stakeholder consultation.
SBTi (Science Based Targets initiative): A corporate climate action organisation, incorporated as a UK charity with subsidiary SBTi Services Limited, that develops standards, tools and guidance enabling companies and financial institutions to set GHG emissions reduction targets aligned with keeping global heating below catastrophic levels and reaching net-zero by 2050 at the latest.

Core net-zero framework elements

Beyond Value Chain Mitigation (BVCM): Voluntary mitigation action or investment outside a company’s own value chain — avoiding, reducing, or removing GHG emissions — undertaken in addition to (not instead of) a company’s science-based targets, to accelerate progress toward global net-zero.
Long-term science-based target: A target showing how much a company must reduce value chain emissions to align with net-zero at the global or sector level in eligible 1.5°C pathways, by 2050 at the latest (2040 for power and maritime transport). Long-term target ambition is target-year independent.
Near-term science-based target: A 5–10 year GHG mitigation target aligned with 1.5°C pathways (scopes 1 and 2) and well-below 2°C pathways (scope 3). Near-term targets are target-year dependent and must be renewed with new near-term targets once achieved, serving as milestones toward the long-term target.
Neutralisation: The permanent removal and storage of carbon from the atmosphere to counterbalance the impact of any residual (unabated) emissions remaining once a company has achieved its long-term science-based target, and for every year thereafter. Applies to both the target boundary and to emissions excluded from the GHG inventory.
Residual emissions: The level of emissions remaining after a company has achieved the deep reductions required by its long-term science-based target (generally at least ~90% reduction), which must then be neutralised rather than further abated.

Emissions scopes and accounting

Base year: The reference year against which a company tracks emissions performance and target progress. Must be no earlier than 2015, must be consistent between near- and long-term targets, and scope 1 and 2 targets must share the same base year.
Biogenic accounting (C11): Requirements for companies using bioenergy or with biogenic emissions to report net CO₂ emissions and removals from biogenic sources within scope 1, 2 and 3 target boundaries, including land-use change, land management and processing/distribution emissions.
GHG inventory: A company’s comprehensive accounting of scope 1, 2 and 3 emissions, which must cover at least 95% of scope 1 and 2 emissions and a complete scope 3 inventory, prepared in line with the GHG Protocol Corporate Standard.
Land use change (LUC): Emissions or removals resulting from converting land from one use to another (e.g., forest to cropland); direct LUC accounting is mandatory for companies with significant FLAG or bioenergy emissions, while indirect LUC reporting is optional.
Location-based vs. market-based (scope 2): The two GHG Protocol accounting approaches for scope 2 emissions; companies must disclose which they use and apply it consistently for both target setting and progress tracking.
Organisational boundary: The consolidation approach (operational control, financial control, or equity share) a company uses to define which entities’ emissions are included in its GHG inventory and target boundary, ideally aligned with its financial reporting boundary.
Scope 1 emissions: Direct GHG emissions from sources owned or controlled by the company (e.g., company facilities and vehicles), as defined by the GHG Protocol Corporate Standard.
Scope 2 emissions: Indirect GHG emissions from the generation of purchased electricity, heat, or steam consumed by the company.
Scope 3 emissions: All other indirect emissions occurring in a company’s value chain (upstream and downstream), such as purchased goods and services, transportation, use of sold products, and end-of-life treatment, as defined by the GHG Protocol Corporate Value Chain (Scope 3) Standard.
Target boundary: The defined scope of emissions (by scope and activity) that a company’s target covers; near-term targets must cover ≥95% of scope 1+2 and, where material, ≥67% of scope 3, while long-term targets must cover ≥95% of scope 1+2 and ≥90% of scope 3.
Well-to-wheel (WTW) / well-to-wake: The accounting basis required for all transport-related fuel emissions, covering both direct combustion (tank-to-wheel) and upstream fuel production/distribution emissions (well-to-tank); “well-to-wake” is the equivalent term used for aviation and maritime transport.

Target-setting methods and pathways

Absolute reduction method: A target-setting method (cross-sector or sector-specific) in which companies commit to reducing total (absolute) emissions by a defined percentage from the base year, regardless of changes in output.
Cross-sector pathway (absolute contraction): A target-setting pathway applicable to all sectors in which companies reduce absolute emissions at a linear rate (minimum 4.2%/year for scope 1 and 2, 2.5%/year for scope 3 near-term), reaching at least a 90% reduction long-term.
Economic intensity reduction (scope 3): A scope 3 method reducing emissions per unit of economic output (e.g., value added), with the same minimum reduction rates as physical intensity but based on financial rather than physical metrics.
Forward-Looking Ambition (FLA) adjustment: A calculation adjustment applied to near-term scope 1/2 targets when a company’s base year is earlier than its most recent reporting year, ensuring the target still reflects sufficient ambition toward net-zero by 2050 despite counting past reductions.
Physical intensity reduction (scope 3): A scope 3 method reducing emissions per unit of a physical activity metric (e.g., per tonne of product, per employee), with a minimum 7% year-on-year reduction near-term and 97% reduction long-term.
Renewable electricity (RE) target: An alternative to a scope 2 emissions-reduction target in which a company commits to procuring renewable electricity at rates consistent with 1.5°C pathways (80% by 2025, 100% by 2030, maintained thereafter).
Sector-specific pathway: A pathway tailored to a particular heavy-emitting sector (e.g., power, cement, steel, buildings, aviation, maritime, FLAG) reflecting that sector’s specific decarbonisation trajectory; required for some sectors (e.g., power, FLAG) and optional for others.
Sectoral Decarbonisation Approach (SDA) / intensity convergence: A target-setting method in which all companies within a heavy-emitting sector converge toward a common sector-specific emissions intensity (e.g., tCO₂/tonne of product) by 2050 (2040 for power and maritime).
Supplier/customer engagement target: A near-term scope 3 target requiring a defined share of a company’s suppliers or customers (by emissions or spend) to have their own science-based targets within 5 years.
Target classification / temperature alignment: SBTi’s public disclosure of a company’s scope 1 and 2 near-term target ambition, expressed as one of: 1.5°C, well-below 2°C, or 2°C, based on the target-setting method and reduction rate used.

Sector-specific and boundary concepts

AFOLU: Agriculture, Forestry and Other Land Use — the scientific/IPCC term for the broader land-use sector that FLAG guidance addresses, representing roughly 22% of global anthropogenic GHG emissions.
Expansive boundary approach: The SBTi’s phased approach to scope 3 target boundaries: near-term targets need cover only 67% of scope 3 emissions, expanding to 90% coverage for long-term targets, allowing companies time to build scope 3 data and reduction capability.
FLAG (Forest, Land and Agriculture): The sector category covering companies with significant land-intensive activities (e.g., forestry, agriculture, food production). Companies meeting FLAG thresholds must set a separate FLAG target covering both emissions reductions and removals, distinct from their energy/industry targets.
Fossil fuel sale/transmission/distribution requirements: Special criteria requiring companies that sell, transmit or distribute fossil fuels to set a separate, mandatory scope 3 category 11 (“use of sold products”) target covering combustion emissions, regardless of that activity’s share of total company emissions.
Oil & gas sector restriction: SBTi’s current policy of not validating targets for companies directly involved in fossil fuel exploration, extraction, mining or production, or that derive 50%+ of revenue from fossil fuel sale/transmission/distribution, pending a dedicated Oil & Gas Standard.

Carbon credits, exclusions and validation

Avoided emissions: Emissions reductions that occur outside a product’s life cycle as a result of using that product (e.g., a more efficient product displacing a less efficient one). These fall under a separate accounting system and do not count toward a company’s science-based targets.
Carbon credits: Credits representing emissions reductions or removals sourced from outside a company’s value chain. They cannot be counted as progress toward science-based targets; they may only be used to neutralise residual emissions at net-zero or to finance additional BVCM.
Insetting: Climate mitigation projects or programs undertaken within a company’s own supply chain (as opposed to “offsetting” outside the value chain); SBTi takes a conservative, case-by-case approach and may not approve its use toward targets.
Target recalculation: The mandatory recalibration and revalidation of a target triggered by significant structural changes (e.g., M&A, methodology changes, scope 3 emissions crossing 40% of total emissions) or required at minimum every 5 years to ensure ongoing conformance with the latest SBTi criteria.
Target validation: The formal SBTi process (per the Standard Operating Procedure for Validation of SBTi Targets) by which submitted targets are reviewed for conformance with SBTi criteria before being approved and published on the SBTi target dashboard.

Reporting and disclosure

CDP (climate change questionnaire): A widely used public disclosure platform through which companies can report GHG emissions, targets and progress to investors, purchasers and governments; recommended by SBTi as a primary disclosure channel.
Climate transition plan: A time-bound action plan (per CDP’s definition) describing how a company will pivot its assets, operations and business model onto a 1.5°C-aligned trajectory, covering governance, incentives, financial indicators, value-chain actions, just transition and public advocacy.
GHG Protocol: The suite of corporate accounting and reporting standards (Corporate Standard, Scope 2 Guidance, Corporate Value Chain (Scope 3) Standard) that underpins all SBTi GHG accounting and target-setting requirements.
Just transition: The principle that climate mitigation actions should account for and mitigate social consequences and impacts on workers, communities, and equity (including race, gender and intergenerational equity), incorporated into climate transition plan disclosure.
RE100: An initiative whose technical criteria and guidance underpin SBTi’s renewable electricity procurement thresholds (80% by 2025, 100% by 2030) and quality criteria for renewable energy certificates (RECs) and power purchase agreements (PPAs).