Arabic Sustainability Dictionary

Attribution factor

In PCAF, the share of a borrower's or investee's emissions allocated to a financial institution: the outstanding amount divided by EVIC for listed companies, or by equity plus debt for unlisted ones.

Climate finance

Local, national or transnational financing from public, private and alternative sources that supports climate change mitigation and adaptation.

Climate risk assessment

An evaluation of an entity's or borrower's exposure to physical and transition climate risks.

Climate stress testing

An analysis of how a financial institution's balance sheet would perform under severe but plausible climate scenarios.

Covenant

A condition in a loan agreement that the borrower must meet, such as maintaining a financial ratio or an environmental standard, tested at set intervals.

Credit portfolio

The total set of loans and credit facilities held by a bank.

Do no significant harm (DNSH)

The EU Taxonomy condition that an activity contributing to one environmental objective must not significantly harm any of the other five.

Enterprise value including cash (EVIC)

The sum of a listed company's market capitalisation of ordinary and preferred shares and the book value of its total debt and minority interests, without deducting cash; PCAF uses it as the denominator of the attribution factor for listed companies.

Environmental and social risk management (ESRM)

A bank's framework for identifying, assessing, categorising and monitoring the environmental and social risks of its clients and transactions.

Environmental objectives

The six objectives of the EU Taxonomy: climate change mitigation, climate change adaptation, water and marine resources, circular economy, pollution prevention and biodiversity and ecosystems.

Equator Principles (EP)

A risk management framework adopted by financial institutions for determining, assessing and managing environmental and social risk in project finance.

ESG integration

The explicit and systematic inclusion of ESG factors in investment analysis and decisions.

EU Taxonomy

An EU classification system (Regulation (EU) 2020/852) that defines which economic activities count as environmentally sustainable.

Financed emissions

The greenhouse gas emissions of borrowers and investees attributed to a financial institution in proportion to its financing; Scope 3 category 15.

Green bond

A bond whose proceeds are used exclusively to finance or refinance eligible projects with clear environmental benefits.

Green Bond Principles (GBP)

Voluntary guidelines published by ICMA covering use of proceeds, project evaluation and selection, management of proceeds and reporting for green bonds.

Green debt

Debt instruments, such as bonds, sukuk and loans, whose proceeds finance eligible projects with environmental benefits.

Green loan

A loan made available exclusively to finance or refinance eligible green projects.

Green sukuk

Shariah-compliant certificates whose proceeds finance eligible environmental projects, such as renewable energy or green buildings.

Impact investing

Investments made with the intention to generate positive, measurable social and environmental impact alongside a financial return.

Minimum safeguards

The EU Taxonomy requirement that a company follows procedures aligned with the OECD Guidelines and the UN Guiding Principles on Business and Human Rights.

Negative screening

Excluding companies, sectors or countries from a portfolio based on ESG criteria, such as involvement in controversial weapons or thermal coal.

Network for Greening the Financial System (NGFS)

A network of central banks and supervisors that develops climate risk management practices and climate scenarios for the financial sector.

Non-bank financial company

A financial institution that offers services such as leasing, insurance, microfinance or brokerage without holding a banking licence.

Partnership for Carbon Accounting Financials (PCAF)

A global industry-led initiative that provides a standard for financial institutions to measure and disclose the greenhouse gas emissions associated with their loans and investments.

PCAF data quality score

A score from 1 (best) to 5 (worst) that PCAF assigns to financed-emission estimates according to the type of data used, from verified reported emissions to sector averages.

Principles for Responsible Investment (PRI)

A UN-supported network of investors that commit to six principles for incorporating ESG issues into investment practice.

Project finance

Long-term financing of a specific project in which repayment relies mainly on the project's own cash flows.

Responsible investment

An investment approach that incorporates ESG factors into decisions and active ownership to manage risks and generate sustainable long-term returns.

Social bond

A bond whose proceeds finance projects with positive social outcomes for target populations, such as affordable housing or access to healthcare.