While the terms “sustainability” and “ESG” are often times used somewhat interchangeably, there are some distinct differences according to the Corporate Finance Institute.
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
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 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?
Here are the main differences between ESG and sustainability reporting. ESG is about company stakeholders, identity, and decision-making. This includes the board, CEO, employees, shareholders, and other stakeholders. 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.
Snapshot View of the Differences
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”?
Contact us. We can help you figure it out. Learn more about our corporate reporting services.