The Difference Between ESG and Sustainability, and Why it Matters
Many people use ESG and Sustainability interchangeably. The meanings are similar, but distinct. Ensuring common understanding within your organization will help align people and resources to common goals, and make communications easier.
What is Sustainability?
Sustainability is a complex idea that encompasses all of a company’s efforts to minimize its negative impact on the world. The concept is often associated with the “triple bottom line” (people, planet, profit), and governance is not necessarily included. But because the definition is broad and often used generally, some find it is tough to get alignment on measurable goals and accountabilities. For many organizations, defining sustainability for internal and external audiences helps to position priorities, align on appropriate reporting frameworks and guides their overall journey toward sustainable practices. This clear understanding supports telling a consistent, aligned sustainability story in stakeholder communications.
What is ESG?
ESG—Environment, Social, Governance—is a data-driven and investor focused framework. The three dimensions are distinct and have measurable aspects tied to independent raters and rankers. There is a heavy emphasis on managing risk, reputation, operations and capital across these dimensions. Reporting is a central feature, since the financial impacts to the business are front and center. ‘ESG investing’ has experienced a meteoric rise, and companies everywhere are embracing these concepts as value creators. (McKinsey) For public companies, telling a credible ESG story is a must have, and at a minimum, issuing an annual report on progress is expected.
Whether you embrace Sustainability or ESG as the organizing principle, it’s important to establish shared understanding within your organization and with external audiences. This clarity has positive implications; helping to establish what is important to the company and to your external stakeholders, so you know what to measure, support and communicate. Consistency in your communications reinforces all the efforts the company is making, and increases understanding.
How Ideas On Purpose Can Help
For over 20 years IOP has been helping companies of all sizes with purpose-driven communications, including corporate reporting, and ESG and Sustainability storytelling. Our strategy, content, digital and creative teams are ready to help you define and tell your ESG/Sustainability story and meet your reporting goals. Feel free to email us, we’re happy to discuss the possibilities.