Envy about Granny's engagement (8)
I believe the answer is:
covenant
'engagement' is the definition.
(thesaurus)
'envy about granny's' is the wordplay.
'envy' becomes 'covet' (coveting is a kind of envying).
'about' means one lot of letters goes inside another.
'granny' becomes 'nan'.
'covet' going around 'nan' is 'COVENANT'.
(Other definitions for covenant that I've seen before include "Promise" , "Formal binding agreement" , "Pact" , "Binding contract" , "Formal agreement of contract" .)