Have you ever wondered what the differences between ESG, CSR, sustainability and net zero are? In this blog post, we explain the nuances of these terms.
We have delivered a number of board presentations recently, and one of the questions that is often raised is ‘what is the difference between ESG, sustainability, CSR and net zero?’
ESG, sustainability, CSR, and net zero are all related concepts that reflect an organisation’s commitment to environmental, social, and governance issues, in conjunction with achieving economic goals. ESG, sustainability and CSR are often used interchangeably. However, each of these concepts has its own distinct focus and meaning.
We have also created a video of the content in this article.
ESG (Environmental, Social, and Governance)
ESG refers to the three main areas of concern for investors and stakeholders when evaluating the sustainability and ethical impact of an investment. ESG criteria cover a range of factors, including your company’s impact on the environment, social and labour practices, and governance structures. ESG focuses on integrating sustainability into investment decision-making, rather than as a standalone initiative.
ESG is seen as the next iteration of CSR, with a focus on a more quantitative approach to sustainability. ESG management often relies on standardised metrics, such as those provided by organisations like the Sustainability Accounting Standards Board (SASB) or the Global Reporting Initiative (GRI). These metrics allow your company to measure and compare your performance on specific ESG factors, such as greenhouse gas emissions, employee turnover rates, or board diversity.
CSR (Corporate Social Responsibility)
CSR refers to your organisation’s voluntary actions to improve your social, environmental, and economic impact. These actions may include charitable donations, community outreach programs, environmental initiatives, and ethical business practices. CSR is often seen as a way for your business to give back to society beyond your financial obligations.
CSR is seen as more qualitative as opposed to ESG, as it focuses on the voluntary actions that your company takes to improve your social and environmental impact. CSR initiatives do not necessarily have to be measured or tracked.
Sustainability refers to your organisation’s ability to operate in a way that meets the needs of the present without compromising the ability of future generations to meet their own needs. Sustainability is often described as having three dimensions: environmental, social, and economic, which is also referred to as the “triple bottom line”.
Sustainability recognises the interconnectedness of our economic, social, and environmental systems. This means that sustainable practices must take a holistic approach and consider the complex relationships between these systems and seek to optimise outcomes for all three dimensions.
Net zero refers to a state where your organisation’s residual greenhouse gas emissions are balanced by GHG removals. This can be achieved through a combination of emissions reduction initiatives and, eventually, through carbon offsetting projects that draw down carbon from the atmosphere to balance out emissions that cannot be abated. Net zero is a key long-term goal for organisations that want to address climate change.
100% Renewables are experts in helping organisations develop their climate action strategies and plans, and supporting the implementation and achievement of ambitious targets. If you need help to create your Climate Change Strategy, please contact Barbara or Patrick.
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