Environmental finance is a field within finance that employs market-based environmental policy instruments to improve the ecological impact of investment strategies. The primary objective of environmental finance is to regress the negative impacts of climate change through pricing and trading schemes. The field of environmental finance was established in response to the poor management of economic crises by government bodies globally. Environmental finance aims to reallocate a businesses resources to improve the sustainability of investments whilst also retaining profit margins.
An emission intensity is the emission rate of a given pollutant relative to the intensity of a specific activity, or an industrial production process; for example grams of carbon dioxide released per megajoule of energy produced, or the ratio of greenhouse gas emissions produced to gross domestic product (GDP). Emission intensities are used to derive estimates of air pollutant or greenhouse gas emissions based on the amount of fuel combusted, the number of animals in animal husbandry, on industrial production levels, distances traveled or similar activity data. Emission intensities may also be used to compare the environmental impact of different fuels or activities. In some case the related terms emission factor and carbon intensity are used interchangeably. The jargon used can be different, for different fields/industrial sectors; normally the term "carbon" excludes other pollutants, such as particulate emissions. One commonly used figure is carbon intensity per kilowatt-hour (CIPK), which is used to compare emissions from different sources of electrical power.
A carbon footprint (or greenhouse gas footprint) is a calculated value or index that makes it possible to compare the total amount of greenhouse gases that an activity, product, company or country adds to the atmosphere. Carbon footprints are usually reported in tonnes of emissions (CO2-equivalent) per unit of comparison. Such units can be for example tonnes CO2-eq per year, per kilogram of protein for consumption, per kilometer travelled, per piece of clothing and so forth. A product's carbon footprint includes the emissions for the entire life cycle. These run from the production along the supply chain to its final consumption and disposal.
Carbon offsetting is a trading mechanism that allows entities such as governments, individuals, or businesses to compensate for (i.e. “offset”) their greenhouse gas emissions by supporting projects that reduce, avoid, or remove emissions elsewhere. In other words, carbon offsets focus on offsetting emissions through investments in emission reduction projects. When an entity invests in a carbon offsetting program, it receives carbon credits, i.e "tokens" used to account for net climate benefits from one entity to another. A carbon credit or offset credit can be bought or sold after certification by a government or independent certification body. One carbon offset or credit represents a reduction, avoidance or removal of one tonne of carbon dioxide or its carbon dioxide-equivalent (CO2e).
Business action on climate change includes a range of activities relating to climate change, and to influencing political decisions on climate change-related regulation, such as the Kyoto Protocol. Major multinationals have played and to some extent continue to play a significant role in the politics of climate change, especially in the United States, through lobbying of government and funding of climate change deniers. Business also plays a key role in the mitigation of climate change, through decisions to invest in researching and implementing new energy technologies and energy efficiency measures.
Flexible mechanisms, also sometimes known as Flexibility Mechanisms or Kyoto Mechanisms, refers to emissions trading, the Clean Development Mechanism and Joint Implementation. These are mechanisms defined under the Kyoto Protocol intended to lower the overall costs of achieving its emissions targets. These mechanisms enable Parties to achieve emission reductions or to remove carbon from the atmosphere cost-effectively in other countries. While the cost of limiting emissions varies considerably from region to region, the benefit for the atmosphere is in principle the same, wherever the action is taken.
Carbon accounting is a framework of methods to measure and track how much greenhouse gas (GHG) an organization emits. It can also be used to track projects or actions to reduce emissions in sectors such as forestry or renewable energy. Corporations, cities and other groups use these techniques to help limit climate change. Organizations will often set an emissions baseline, create targets for reducing emissions, and track progress towards them. The accounting methods enable them to do this in a more consistent and transparent manner.
Greenhouse gas inventories are emission inventories of greenhouse gas emissions that are developed for a variety of reasons. Scientists use inventories of natural and anthropogenic (human-caused) emissions as tools when developing atmospheric models. Policy makers use inventories to develop strategies and policies for emissions reductions and to track the progress of those policies.
The Global Warming Solutions Act of 2006, or Assembly Bill (AB) 32, is a California State Law that fights global warming by establishing a comprehensive program to reduce greenhouse gas emissions from all sources throughout the state. AB32 was co-authored by then-Assemblymember Fran Pavley and then-Speaker of the California Assembly Fabian Nunez and signed into law by Governor Arnold Schwarzenegger on September 27, 2006.
The CDP is an international non-profit organisation based in the United Kingdom, Japan, India, China, Germany, Brazil and the United States that helps companies, cities, states, regions and public authorities disclose their environmental impact. It aims to make environmental reporting and risk management a business norm, driving disclosure, insight, and action towards a sustainable economy. In 2022, nearly 18,700 organizations disclosed their environmental information through CDP.
Greenhouse gas (GHG) emissions from human activities intensify the greenhouse effect. This contributes to climate change. Carbon dioxide, from burning fossil fuels such as coal, oil, and natural gas, is one of the most important factors in causing climate change. The largest emitters are China followed by the United States. The United States has higher emissions per capita. The main producers fueling the emissions globally are large oil and gas companies. Emissions from human activities have increased atmospheric carbon dioxide by about 50% over pre-industrial levels. The growing levels of emissions have varied, but have been consistent among all greenhouse gases. Emissions in the 2010s averaged 56 billion tons a year, higher than any decade before. Total cumulative emissions from 1870 to 2017 were 425±20 GtC from fossil fuels and industry, and 180±60 GtC from land use change. Land-use change, such as deforestation, caused about 31% of cumulative emissions over 1870–2017, coal 32%, oil 25%, and gas 10%.
Energy Saving Trust is a British organization devoted to promoting energy efficiency, energy conservation, and the sustainable use of energy, thereby reducing carbon dioxide emissions and helping to prevent man-made climate change. It was founded in the United Kingdom as a government-sponsored initiative in 1992, following the global Earth Summit.
Carbon leakage a concept to quantify an increase in greenhouse gas emissions in one country as a result of an emissions reduction by a second country with stricter climate change mitigation policies. Carbon leakage is one type of spill-over effect. Spill-over effects can be positive or negative; for example, emission reductions policy might lead to technological developments that aid reductions outside of the policy area. Carbon leakage is defined as "the increase in CO2 emissions outside the countries taking domestic mitigation action divided by the reduction in the emissions of these countries." It is expressed as a percentage, and can be greater or less than 100%. There is no consensus over the magnitude of long-term leakage effects.
Carbon emission trading (also called carbon market, emission trading scheme (ETS) or cap and trade) is a type of emission trading scheme designed for carbon dioxide (CO2) and other greenhouse gases (GHG). It is a form of carbon pricing. Its purpose is to limit climate change by creating a market with limited allowances for emissions. This can lower competitiveness of fossil fuels and accelerate investments into low carbon sources of energy such as wind power and photovoltaics. Fossil fuels are the main driver for climate change. They account for 89% of all CO2 emissions and 68% of all GHG emissions.
The ISO 14064 standard is the core part of the ISO 14060 family of standards that are part of the ISO 14000 series of international standards by the International Organization for Standardization (ISO) for environmental management. The ISO 14064 standards provides governments, businesses, regions and other organisations with a complementary set of tools for programs to quantify, monitor, report and verify greenhouse gas emissions. The ISO 14064 standards supports organisations to participate in both regulated and voluntary programs such as emissions trading schemes and public reporting using a globally recognised standard.
The Grantham Institute – Climate Change and Environment is one of five global institutes at Imperial College London and one of three Grantham-sponsored centres in the UK. The institute was founded in 2007 with a £12m donation from the Grantham Foundation for the Protection of the Environment, an organisation set up by Hannelore and Jeremy Grantham.
The Climate Disclosure Standards Board (CDSB) is a non-profit organization working to provide material information for investors and financial markets through the integration of climate change-related information into mainstream financial reporting. CDSB operates on the premise that investors and financial institutions can make better and informed decisions if companies are open, transparent and analyse the risks and opportunities associated with climate change-related information. To this end, CDSB acts as a forum for collaboration on how existing standards and practices can be used to link financial and climate change-related information using its Framework for reporting environmental information, natural capital and associated business impacts.
Sustainable finance is the set of financial regulations, standards, norms and products that pursue an environmental objective. It allows the financial system to connect with the economy and its populations by financing its agents while maintaining a growth objective. The long-standing concept was promoted with the adoption of the Paris Climate Agreement, which stipulates that parties must make "finance flows consistent with a pathway towards low greenhouse gas emissions and climate-resilient development." In addition, sustainable finance had already a key role to play in the European Green Deal and in other EU International agreements, but since the COVID-19 pandemic its role is even more important.
The environmental policy of the Joe Biden administration includes a series of laws, regulations, and programs introduced by United States President Joe Biden since he took office in January 2021. Many of the actions taken by the Biden administration reversed the policies of his predecessor, Donald Trump. Biden's climate change policy focuses on reducing greenhouse gas emissions, as under the Obama administration. The main climate target of the Biden administration is to reduce greenhouse gas emissions by the United States to net zero by 2050. John Kerry leads the effort as Special Envoy for Climate. Biden promised to end and reverse deforestation and land degradation by 2030.