Extract from Jim Gill’s article “The Upside of ESG: Why Strong Sustainability Programs Matter to Modern Enterprises”
ESG and sustainability are two concepts that have gained significant prominence recently. The World Bank Group’s International Finance Corporation defines ESG as a set of factors that companies and investors consider regarding environmental, social, and governance issues. On the other hand, sustainability refers to organizations’ actions to achieve their environmental, social, and corporate governance goals. This article delves into the relationship between ESG and sustainability and why they have become such critical considerations for enterprises today.
What Is ESG and How Is It Related to Sustainability?
Let’s start with ESG. The World Bank Group’s International Finance Corporation defines ESG as a set of factors that companies and investors consider regarding the “risks, impacts, and opportunities” of environmental, social, and governance issues. Those include:
- Environmental concerns such as climate change, carbon emissions, natural resource depletion, and pollution;
- Social considerations such as diversity, equity, and inclusion as well as other community- and employee-based concerns; and
- Governance issues related to how an organization is structured and how it operates as well as how it handles questions concerning ethics and risk management.
What about sustainability? Is it the same as ESG, or are there distinctions?
