Sustainability & ESG
Sustainability & ESG
ESG (Environmental, Social, and Governance) and sustainability are interconnected, but distinct, frameworks for measuring a company’s long-term impact and viability.
Sustainability is the broader, holistic goal of operating without harming the planet or society, while ESG provides the specific, measurable metrics and data used by investors to evaluate that performance
Key Components of ESG
Environmental (E)
Focuses on a company’s ecological impact, including carbon emissions, energy efficiency, waste management, and biodiversity.
Social (S):
Evaluates how a company manages relationships with employees, suppliers, customers, and communities, covering labour practices, diversity, equity, and inclusion (DEI), and human rights.
Governance (G)
Concerns a company’s leadership, auditing, internal controls, and shareholder rights, including board composition and executive pay.
Key Differences: ESG vs. Sustainability
Scope
Sustainability is a long-term, high-level philosophy focused on future generations. ESG is a tangible, data-driven framework used to measure that progress.
Purpose
Sustainability often aims for positive impact, whereas ESG is often utilized to manage risk and, for investors, to enhance long-term financial returns.
Application
ESG metrics (e.g., carbon footprint) allow stakeholders to compare company performance, making them critical for investment decisions.