For small and medium-sized enterprises, the concepts of ‘sustainability’ and ‘ESG’ (Environmental, Social, and Governance) and their respective initiatives are becoming increasingly more relevant to their business’s operations; however this does not mean that there is clarity about what they entail.
On the surface, it may seem that the terms are interchangeable – however, while closely related, the two concepts are distinct and are focused on different avenues.
What is sustainability?
In 1987, the United Nations Brundtland Commission defined sustainability as “meeting the needs of the present without compromising the ability of future generations to meet their own needs.” This was a broad term that covers humankind and considered our species, however, is today applied to business given the recognition of businesses’ role in shaping society.
Applying the term specifically in a business context we can therefore see that the consideration should be twofold.
Firstly, we must consider the business role in a wider global context and how the business contributes to the sustainability of the planet.
Secondly, we can consider the sustainability of the business itself, and how it can meet the expectations of its interested parties but continue to do so in the future.
Thinking of sustainability in this way brings us to reflect on a broad spectrum of business undertakings which can include environmental factors, such as sustainable procurement and use of energy; social factors which include creating a gender equality, decent work and positive employee wellbeing, as well as economic factors such as investment in innovation and infrastructure to ensure the business is managed sustainably.
A good resource used internationally to track and goal set your businesses sustainability is to utilise the UN Sustainability Development Goals. These objectives are set on a broad spectrum of 17 goals adopted at state and international/regional business levels to improve the overall sustainability of the world.
What is ESG?
ESG is short for Environmental, Social and Governance and is a group of standards which measure how a business performs when it comes to the environment, society, transparency and accountable it is.
ESG has primarily been used for investing but can be increasingly used for tendering and supplier assessment purposes; the standards are utilised as a metric to assess business performance and can be completed by assessments and audits which are often developed into reports.
Each factor has its own criteria that assess a number of areas:
- Environmental: energy use, pollution created, waste management, use of natural resources and any exploitation of biodiversity.
- Social: health and safety practices, treatment of employees, modern slavery, gender equality.
- Governance: accurate and transparent accounting, treatment of shareholders, does the company engage in illegal practices?
The items listed above are not exhaustive and ESG assessment can be of varying levels of detail depending on your undertakings.
What is the difference between sustainability and ESG?
As we can see from above there are key distinctions between sustainability and ESG.
While sustainability is a broad term that requires us to consider in what context we exist and how we can mitigate risk, ESG is an objective measure of our performance on specific aspects that would also be considered within the framework of sustainability.
Both co-exist and are becoming ever more important in an unstable world which is ever more aware of the environmental, social and political challenges that we face.
How can WA Management help?
WA Management can help your business sustainability by implementing an approved international management system, such as ISO 14001 or ISO 9001. We also offer Environmental Awareness and Resource Efficiency online training courses to help your organisation reduce its environmental impact.
We also provide a range of services to help companies reach their net zero goals – learn more here.
Environmental Awareness and Resource Efficiency courses can help your workforce gain an understanding of how they can reduce their environmental impact. Make sure you don’t miss out on our 10% off deal on these courses, available until the end of June. Simply enter the code ‘enviro10’ at checkout to save!
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