Learn about Sustainability.
Act with Purpose.
Act with Purpose.
Through distilling complex sustainability issues into clear and engaging reads, we strive to broaden perspectives, inform and invite more people into the sustainability conversation — one idea at a time.
Learn about Sustainability.
Act with Purpose.
Act with Purpose.
Through distilling complex sustainability issues into clear and engaging reads, we strive to broaden perspectives, inform and invite more people into the sustainability conversation — one idea at a time.
ESG vs. Sustainability: Understanding the nuances
"ESG" and "sustainability" embody subtly different concepts.
The terms “ESG” and “sustainability” are frequently mentioned together and often used interchangeably, yet they embody subtly different concepts.
Sustainability
The United Nations defines sustainable development as “development that meets the needs of the present without compromising the ability of future generations to meet their own needs.” In other words, sustainability focuses on the impact of individuals and businesses on the world, aiming to preserve the viability of environmental, social, and economic systems. It raises questions like: How do business and investment decisions affect our society and environment’s sustainable development? Do these decisions lead to greenhouse gas emissions that exceed planetary boundaries, and do they contribute to a just society? Sustainability hinges on creating systemic value, flourishing within a market that supports robust economic and financial stability.
The United Nations defines sustainable development as “development that meets the needs of the present without compromising the ability of future generations to meet their own needs.” In other words, sustainability focuses on the impact of individuals and businesses on the world, aiming to preserve the viability of environmental, social, and economic systems. It raises questions like: How do business and investment decisions affect our society and environment’s sustainable development? Do these decisions lead to greenhouse gas emissions that exceed planetary boundaries, and do they contribute to a just society? Sustainability hinges on creating systemic value, flourishing within a market that supports robust economic and financial stability.
ESG
In contrast, ESG (Environmental, Social, and Governance) zeroes in on the risks and opportunities presented by environmental, social, and governance factors to businesses and investors, particularly in terms of their financial implications. It ensures that businesses and investments yield sustainable long-term financial returns. Companies and investors may evaluate the risks, reputation impacts and new opportunities that issues like climate change, community engagement and the treatment of employees could pose to a business or investment portfolio. While system sustainability may result as a secondary benefit, but not the primary focus.
In contrast, ESG (Environmental, Social, and Governance) zeroes in on the risks and opportunities presented by environmental, social, and governance factors to businesses and investors, particularly in terms of their financial implications. It ensures that businesses and investments yield sustainable long-term financial returns. Companies and investors may evaluate the risks, reputation impacts and new opportunities that issues like climate change, community engagement and the treatment of employees could pose to a business or investment portfolio. While system sustainability may result as a secondary benefit, but not the primary focus.
1 December 2023
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