In the model of Corporate Social Responsibility (CSR), the triad of Environmental, Social, and Governance (ESG) factors has surged to prominence. Herein, internal auditors emerge as pivotal characters, assisting organizations toward a comprehensive and effective ESG landscape.
- What’s the difference between corporate sustainability and ESG?
- Why do we audit CSR?
- What are the key features of a CSR audit?
- What are some examples of a CSR audit?
What’s the difference between corporate sustainability and ESG?
Corporate sustainability embodies a broader philosophy that encompasses a company's commitment to environmental, social, and economic responsibility. It emphasizes long-term value creation through ethical practices that align with the interests of all stakeholders.
ESG (Environmental, Social, and Governance), on the other hand, represents a specific framework for evaluating and measuring a company's sustainability performance. It assesses a company's ESG-related risks and opportunities, providing a standardized approach for investors, regulators, and stakeholders to assess corporate sustainability.
In essence, sustainability serves as the overarching principle, while ESG provides a practical tool for evaluating and reporting on sustainability performance. To further reinforce this understanding, the following is an excerpt from KPMG’s survey on sustainability reporting:
"Sustainability reporting is the communication of an organization's non-financial performance to its stakeholders. It is a process of disclosing relevant information about an organization's environmental, social, and economic impacts, as well as its governance practices. Sustainability reporting is a key tool for organizations to demonstrate their commitment to sustainability and to manage their sustainability risks and opportunities."
This aligns with the broader definition of corporate sustainability, highlighting the integration of environmental, social, and economic factors into a company's overall strategy and operations.
Another resource that reinforces this distinction is "Sustainability Risk Management: Powering performance for responsible growth", wherein it states the following:
"While sustainability is a broad concept that encompasses a company's overall long-term strategy, ESG is a more focused framework for measuring and managing sustainability risks and opportunities."
This statement clearly differentiates between the overarching concept of sustainability and the specific ESG framework for evaluating and managing sustainability performance.
By understanding these key distinctions, organizations can effectively integrate sustainability principles into their ESG initiatives and demonstrate their commitment to long-term value creation while addressing societal and environmental concerns.