ESG Has a Language Problem, But There is a Fix

In most companies, ESG (Environmental, Social, and Governance) breaks down in the first 20 minutes of a meeting. And that is not so surprising. The sustainability lead walks in talking about “material issues.” Risk talks about “ESG factors.” Legal pushes back on “assurance” and “due diligence.” Finance wants to know what is “financially relevant.” Everyone uses familiar words. And everyone believes they agree. By the end of the meeting, five people walk out with three different interpretations and one shared slide deck.

So, while the gap looks small on paper, inside a real organization, it derails targets, slows disclosure projects, and turns ESG from a management tool into an internal culture war. One core reason for all this: ESG has a language problem.

The 151-page long document “The Book of Jargon, Environmental, Social & Governance” published by Latham & Watkins is designed to treat that problem directly.

I’ll highlight the key points from the document, but I strongly recommend reading it in full.

About ‘The Book of Jargon, Environmental, Social & Governance’

Latham & Watkins, working with the World Business Council for Sustainable Development (WBCSD), wrote “The Book of Jargon, Environmental, Social & Governance” as a digital glossary of around 1,000 ESG-related terms for business, academic and legal audiences.

Crucially, it is not:

• An ESG strategy
• A reporting framework
• A set of endorsed standards

The editors state explicitly that the definitions introduce terms, that some references point to laws or standards that have already been updated, and that the firm does not endorse any specific standards or frameworks in the book.

That restraint is exactly what makes the tool extremely useful. It can sit in the background for companies that follow different frameworks, operate under different regulatory regimes, or disagree on how far and how fast they should move on climate or social issues. And most importantly, it clarifies what the words mean before those fights start.

The WBCSD’s Managing Director for Redefining Value, Prof. Dr. Rodney Irwin, captures the intention in one sentence: “This ESG Book of Jargon lays the foundation for clearer, more precise, and transparent use of language around ESG and sustainable development.”

That line does two things.

First, it positions language as infrastructure. Clarity sits under decision-making, disclosure, and stakeholder dialogue.

Second, it connects vocabulary to system change. WBCSD’s program aims to improve decision-making and external reporting so that the financial system rewards more sustainable companies, which requires “understandable, comparable, and relevant ESG information.” You cannot get comparable data if key terms shift inside every department.

ESG as a new corporate Babel

Environmental, social and governance issues are not new. What really is new is the speed at which legal, financial, policy and activist vocabularies have been pushed into the same conversation.

In the space of a decade, ESG has accumulated:

• Regulatory terms from climate and human rights law
• Technical phrases from climate science, finance and accounting
• Campaign language from NGOs and civil society
• Internal jargon from consultants, ratings agencies and frameworks

Those words are now sitting together in policies, roadmaps, investor decks and board minutes. They look stable, but they aren’t.

A few examples show how fragile the shared language can be:

• “Material” means something different in securities law, in double-materiality debates, and in sustainability reports.
• “ESG integration” is used interchangeably for basic screening, detailed factor modelling, or rebranding of existing funds.
• “Governance” can mean ethics, board structure, risk controls, or political lobbying, depending on who is speaking.

None of this is malicious. It is what happens when multiple disciplines collide at speed without a common glossary.

Because the glossary runs A–Z across 151 pages, it reveals the full spread of what falls under ESG in practice. A few snapshots:

• Market instruments and indices – entries on Green Bonds, Sustainability Bonds, Blue Bonds, STOXX Global ESG Leaders Index, Dow Jones Sustainability Index and more. These show how ESG factors are embedded in products, benchmarks and capital allocation.
• Regulation and public policy – EU climate and energy packages, non-financial reporting directives, national climate laws, adaptation plans, and energy efficiency legislation from dozens of countries. ESG is clearly not just voluntary reporting, but lives inside legal obligations and public policy frameworks.
• Frameworks and institutions – GRI, SASB, SDGs, WBCSD, stock exchange initiatives, Good Life Goals, risk management guidance for ESG-related risks.

For an ESG team, that breadth underlines a simple reality: internal conversations sit at the intersection of multiple regimes, not a single neat framework. A tool that standardises the vocabulary across these regimes reduces the chance of people dragging in terms from one context and applying them casually in another.

How the book treats ESG language like a control system

Reading the glossary cover to cover is not the point. The value emerges in how it frames some of the most contested areas of ESG.

1. Pinning down “ESG” and its variants

The book starts by separating a cluster of terms that are constantly blurred in public debate:

• ESG itself: environmental, social, and governance factors considered by businesses, investors and other stakeholders in decision-making, such as policies on greenhouse gas emissions, supply chains, labor practices, and governance structures.
• ESG analysis: evaluation of a company or investment based on those factors.
• ESG integration: inclusion of ESG factors in traditional investment analysis to manage opportunities and risks.
• ESG investing: investment decisions that explicitly use ESG considerations and are often marketed as such.

Those distinctions mark where marketing claims end and process claims begin. They also give legal and compliance teams a clearer boundary when reviewing how products and strategies are described to clients and regulators.

2. Grounding governance in actual corporate machinery

The glossary’s definition of governance treats governance as the structure that directs how a company is controlled, documented in bylaws, ownership guidelines, articles of incorporation and committee charters, and implemented through rules and systems that guide day-to-day management and disclosure to investors.

This anchors Governance (G) topics firmly in corporate law and organizational design. It helps boards and executives translate “G” from soft commentary in ESG ratings into questions about real documents, committees and escalation paths.

3. Linking “S” language to financial relevance

The entry on Access and Affordability describes the ability of a company to ensure broad access to its products and services, especially in underserved markets, and notes that the Sustainability Accounting Standards Board (SASB) identifies it as an issue that affects financial condition or operating performance. Investors may ask for metrics on whether services are affordable across income levels.

That single definition reframes a social (S) issue as a financial one. It gives finance and risk teams a direct hook into questions that might otherwise be dismissed as purely ethical or reputational.

4. Clarifying climate language beyond slogans

Take 1.5°. The book defines it as a Paris Agreement goal to limit warming to 1.5°C above pre-industrial levels and references an IPCC report that ties this to a sharp cut in net emissions by 2030 and net-zero emissions by 2050.

This squeezes the gap between “we are aligned with 1.5°” as an aspiration and the actual pathway implied by the claim. Internal teams can use this as a baseline check: if the timeline in a target or transition plan does not match that trajectory, the language needs to change.

Where ESG actually fails: three communication breakdowns

Picture this ESG meeting:

Sustainability Manager: “By 2030, we’ll be aligned with a 1.5°C pathway.”

CFO (thinking): “Great, that sounds cheap. Probably just a few efficiency tweaks.”

Legal Counsel (thinking): “Wait, did we just make a binding climate claim? In public?”

HR (thinking): “Is this about turning down the office heating again?”

Operations (thinking): “1.5°C… so we only need small changes in the production process, right?”

Everyone nods. But three months later we see this happening:

• Sustainability is planning a full Scope 1–3 decarbonisation roadmap.
• Finance has budgeted for LED bulbs and a nice infographic.
• Legal is quietly rewriting disclaimers.
• HR is drafting a “wear a sweater to work” campaign.
• Operations has ordered a more efficient coffee machine and considers the job done.

Same sentence. Same meeting. Five completely different ESG realities.

While most companies describe their ESG problems as “data gaps,” “limited resources,” or “uncertain regulation”; many failures start earlier. I will continu to explain it with clear examples.

Breakdown 1: Targets without shared definitions

A company announces a “net-zero” goal. Sustainability bases it on full scope coverage, including suppliers and use of products. Finance assumes it covers only direct carbon emissions. Legal focuses on whether the phrasing could be misleading under advertising or securities rules.

The goal launches. Teams work at cross-purposes for a year before they realize they actually never agreed on what “net-zero” means in this context.

A minimal shared glossary would have forced a definition before the announcement, plus a conversation about scope, timelines, and interim metrics.

Breakdown 2: Supply chain expectations wrapped in vague “due diligence”

Suppliers receive questionnaires referencing “ESG due diligence,” “human rights expectations,” and “climate risk management.” Some read it as a tick-box exercise. Others treat it as legally binding. Procurement staff interpret answers in different ways. Sustainability wants to report “X% of suppliers covered by due diligence” without a clear threshold for what that actually involves.

Definitions that separate legal due diligence, ESG risk screening and remediation expectations give everyone a cleaner structure: what is legally required, what is requested, how it will be assessed, and how it feeds into contracting decisions.

Breakdown 3: Sustainable finance products designed on marketing language

Asset managers launch “ESG funds” or “sustainable credit lines” using language lifted from public narratives. Without precise internal definitions, product teams craft terms that sound aligned with current debate but embed ambiguous criteria and weak escalation for controversy.

Clear definitions of ESG analysis, integration, screening, impact investing, and sustainability-linked instruments, of the kind the glossary sets out, help firms match labels to underlying processes and metrics.

How to turning this ESG reference tool into daily infrastructure

Used well, a glossary becomes part of governance. But let’s be honest, that requires more than just bookmarking a PDF. Here’s how to implement ESG the best in your company using the document.

1. Build an internal ESG lexicon

Select the 30–50 terms from the document that appear most often in your policies, disclosures and product sheets: ESG, materiality, net zero, just transition, transition risk, human rights due diligence, assurance, sustainable finance, and so on.

For each term:

• Start from the Book of Jargon definition where available.
• Add your organization’s specific interpretation (scope, metrics, governance owner).
• Have legal and risk sign off on the result.

Publish this internally, and when a new policy or report is drafted, authors must use these definitions or document why they diverge.

2. Use definitions as a gate before public claims go out

Set a simple rule: no major ESG claim goes external without a language check.

When a report says “aligned with 1.5°,” “consistent with SDGs,” or “integrating ESG into investment decisions,” teams must point to:

• The definition they are applying; and
• The evidence and process that supports that wording.

This does not only reduce greenwashing risk. It also cuts down on internal disputes after publication about what was “really meant.”

3. Turn cross-functional workshops into “translation sessions”

Many ESG meetings are already happening. Use a few of them explicitly as translation sessions.

Pick a handful of high-friction terms. Ask each function – sustainability, legal, finance, HR, procurement, operations – to write a one-sentence definition. Put them side by side. Compare with the glossary entry.

Then decide:

• What the shared corporate definition will be;
• Where functional nuances still apply;
• How those nuances will be documented for future reference.

You will very quickly surface hidden misalignments.

4. Onboard leaders and board members into the language

Board packs and executive summaries compress complex ESG issues into a few pages. Compression increases the risk of language drift.

Using the glossary as a base, create a short internal “ESG language primer” for leadership: key terms, in plain English, with links to the document where they can dig deeper. That primer becomes part of onboarding for new directors and senior managers.

Progress starts with agreeing on the ESG words

The temptation in ESG is always to rush ahead: new targets, new commitments, new ratings, new frameworks. The pressure from regulators, investors, employees and customers reinforces that pace.

Yet many of the most visible failures – over-promising on climate pathways, mislabelling financial products, underestimating social risks in supply chains – start with something quieter: teams never agreed on what their own words meant.

“The Book of Jargon, Environmental, Social & Governance” offers a shared dictionary for a field that has grown faster than its vocabulary. ESG rarely fails first in models or spreadsheets. It does fail in conversations, when people nod along to terms that each person defines differently in their head.

Fix the language, and you give strategy, risk, and disclosure a fair chance to work. Sometimes, real ESG progress begins with the least glamorous move in the playbook: open the glossary, and decide—together—what you are actually talking about.

“The Book of Jargon” is also honest about what it cannot do.

• It states that definitions “may raise complex legal issues” and that detailed legal advice is still required.
• It notes that some terms refer to laws, regulations or standards that have been replaced or updated, kept in the book for historical context.
• It emphasises that terms will change over time as law and practice evolve.

This matters because it treats ESG language as dynamic, not settled. The glossary gives organizations a point of reference today, but it also clearly reminds them that vocabulary must be reviewed as frameworks, laws and norms shift.

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