How should you label your report? “Sustainability” or “ESG” Report?

While the terms “sustainability” and “ESG” are often times used somewhat
interchangeably, there are some distinct differences according to the Corporate Finance

Before we dive in, it is helpful to look at the history of the two concepts to gain the proper perspective.

Sustainability Report vs. ESG Report: A Brief History of Terminology

The 1980s

A common term, EHS, which stood for Environment, Health, and Safety, was prevalent. EHS was based on the development of environmental and employee regulations.

The 1990s

The term “Sustainability” was used to describe an organization’s focus on reducing environmental impacts beyond legal requirements.

2000 – 2010

CSR, or Corporate Social Responsibility took hold, describing a corporation’s philanthropy and employee volunteer efforts to align to social issues.

2020 and beyond

The term ESG is emerging as a holistic concept. It is related to achieving a competitive advantage and improving a company’s risk and reward management efforts.

Yet many organizations still utilize “Sustainability” in the modern era.

What is the difference between ESG reporting and sustainability reporting?

The main difference between ESG and sustainability is that “ESG” is about company
stakeholders, identity, and decision-making including the board, CEO, employees,
shareholders, and other stakeholders, while “sustainability” is about the relationship
between a company and the environment.

ESG is typically a concept used by investors, giving them a framework to assess a
company’s performance and risk. As an investment framework, standards have been
set by lawmakers, investors, and ESG reporting organizations.

Sustainability, on the other hand, has a broader stakeholder focus, accounting for
employees, customers, and shareholders.

One way many view the difference is this:

  • ESG looks at how the world impacts a company or investment.
  • Sustainability focuses on how a company (or investment) impacts the world.

What are the similarities between sustainability and ESG reporting?

Yet, while we are discussing the differences, it is also important to understand the
similarities between ESG and sustainability. Both are strategic frameworks used to
boost business resilience and help improve overall company performance.

Should you call your report a “Sustainability Report” or an “ESG Report”?

Are you new to ESG and sustainability reporting?

Learn more about the 7-step reporting process. Or, as we call it, the Science and Art of Developing Your ESG Report or Sustainability Report.