As often as we see the term sustainability, references to ESG seem to be ever-present. What gives? Are they the same? ESG is often used in similar contexts, and leans towards the same meaning. They’re related, but not identical.
As often as we see the term sustainability, references to ESG seem to be ever-present. What gives? Are they the same? ESG is often used in similar contexts, and leans towards the same meaning. They’re related, but not identical.
ESG is an acronym that means (literally) Environment, Social and Governance – explains the acronym, but doesn’t clarify what ESG is, does it? ESG are a wide range of metrics used to measure a company’s (or an organization’s) performance, or impact, in the areas of the environment, social and governance. Environment can cover many different areas including water use, various direct effects on the natural environment, greenhouse gases and other emissions. Social can be directed internally (diversity, equity and inclusion efforts) or externally (supporting local communities, verifying a forced labour-free supply chain). Governance typically refers to metrics that provide an internal understanding of the company and its structure (board and executive make up, tax strategy, transparency, etc.).
Ultimately, ESG are simply various metrics and their frameworks and standards. These frameworks and standards are used across a number of industries. They include the Global Reporting Initiative (GRI), the Sustainable Accounting Standards Board (SASB), the Task Force on Climate-related Financial Disclosures (TCFD) just to name a (very) few. These metrics are collected and used for various purposes, most often for publication in corporate ESG or sustainability reports.
ESG can have more than one objective. Often, ESG is used to give stakeholders (internal and external) a better understanding of the efforts being made by the company in those areas. Internally, this supports efforts to improve sustainability performance and refine strategies and commitments. Externally ESG is used by specialized agencies to rate companies’ performance in those areas. Those ratings are often used as a means to attract more investment.
Sustainability and ESG are very closely tied, but that doesn’t make them synonymous - not quite. The use of ESG has definitely gained more ground. The best way to explain it is that sustainability is about the overarching vision and commitment, while ESG are the tools that are used to achieve and refine that vision and communicate it. It’s an important distinction because the differences between sustainability and ESG are important in starting on a sustainability journey. Understanding the nature of each framework is important to your business for starting and progressing in this area. ESG can help shape and strengthen your initial sustainability vision by showing operational gaps, finding more areas to shift into (e.g., going from emissions reductions to water reduction) and even finding ways that your company can protect and regenerate the environment (stopping deforestation and supporting biodiversity projects).
No matter where you are in your journey, Muuvment is here to support your company and make you an ESG leader in your sector. From sustainability guidance and advisory services to impact-based employee engagement and training, we are here to you design an ESG strategy that will grow with your company. Ready to get started? Get in touch with us and we’ll create an ESG programme that suits your company’s needs for the short, medium and long term.