ESG vs Sustainability

6 minutes02/24/2025

Although often used interchangeably, ESG and sustainability refer to distinct concepts with important differences. 

While businesses have long been concerned with going green or being more environmentally conscious, today's focus extends far beyond just the reduce, reuse, recycle adage we’ve unconsciously memorized.

Companies are now aiming for a broader positive impact on society and the environment, with many adopting formalized Environmental, Social, and Governance (ESG) strategies to guide their efforts and track progress.

This article explores the differences between ESG and sustainability, and why the move to ESG is so significant. 

What is Sustainability?

Sustainability is a term widely recognized in the business world, often appearing in company mission statements and websites. Many companies even have sustainability committees or engage in voluntary sustainability reporting that’s shared with the public. 

Sustainability activities can vary greatly depending on the company and its operations, and may include initiatives such as: 

• Carbon emissions accounting 
• Waste audits 
• Investing in energy-efficient office equipment 
• Going paperless 
• Offering paid volunteer days 
• Hiring a diversity, equity, and inclusion (DEI) consultant to evaluate company practices 
• Hosting community cleanup events 

These sustainability programs allow businesses to tailor initiatives to their needs. Some companies focus on setting measurable goals, while others implement new projects every year without formalized targets.

What is ESG?

Environmental, Social, and Governance (ESG) is a more structured approach that helps organizations assess and report their impacts through three distinct lenses: 

Environmental: This includes factors such as energy use, waste management, air quality, water stewardship, and climate change initiatives. 

Social: Focuses on areas like gender inclusivity, diversity, labor standards, customer satisfaction, and human rights. 

Governance: Covers aspects like board composition, executive compensation, audit procedures, ethics, and political contributions. 

Companies that engage in ESG reporting often follow internationally recognized standards like the CDP (Carbon Disclosure Project), which allows stakeholders, including communities, customers, and investors, to compare data and track progress across various organizations.

ESG vs Sustainability: What’s the Difference?

At first glance, sustainability and ESG may seem similar, and there is some overlap. Both concepts aim to improve a company’s impact on society and the environment.

However, sustainability typically involves voluntary actions that may or may not yield measurable outcomes, while ESG represents a formalized, standardized approach to tracking progress.

When implemented effectively, ESG programs can help reduce environmental impact, foster innovation, uncover new market opportunities, and minimize business risks.

While sustainability programs can be flexible and qualitative, ESG programs provide a structured framework that allows for better comparison across companies. It ensures that organizations aren’t just focusing on easy-to-achieve actions but addressing a broader set of metrics that can be scrutinized by investors, regulatory bodies, and other stakeholders.

How ESG Supports Socially Responsible Investing

Investors today seek more than just financial returns. They also want to ensure that companies align with their values, especially concerning areas like employee treatment, environmental responsibility, and ethical governance. ESG plays a crucial role in Socially Responsible Investing (SRI) by providing detailed, transparent data on these factors.

ESG data helps investors make informed decisions by showing how companies address issues such as labor conditions, pollution, and environmental stewardship. For companies, having a documented ESG strategy is essential to attract socially responsible investors, who are increasingly looking for clear, verifiable information before making investment choices.

How ESG Supports UN Sustainable Development Goals

While the United Nations' Sustainable Development Goals (SDGs) are voluntary, many companies align their ESG strategies with these global objectives. The SDGs include targets like eradicating poverty, ensuring quality education, promoting gender equality, and fighting climate change, all with a 2030 deadline.

Companies working toward these goals can use ESG frameworks to measure their progress and communicate their contributions to investors, employees, and the public. By tracking their impact and showcasing results, businesses can demonstrate their role in achieving the SDGs.

The Shift from Sustainability to ESG

For many companies, simply claiming to be sustainable is no longer sufficient. While sustainability initiatives can be valuable, they often lack the quantifiable, structured approach needed for deeper accountability. This is where ESG comes in: it formalizes sustainability efforts, providing a comprehensive set of metrics that investors and stakeholders can evaluate.

By shifting from a broad sustainability claim to a concrete ESG strategy, companies are better able to present verifiable data and demonstrate transparency.

How Sustainability Software Can Help

Many companies already use sustainability software for tasks like carbon accounting. But as the demand for formal ESG reporting grows, businesses need solutions that go beyond basic sustainability tracking. 

ESG frameworks require detailed data on environmental, social, and governance factors, and compiling that data can be complex. Companies must collect information from multiple departments, systems, and locations to create accurate reports. These reports also need to be easily updated each year and accessible in different formats for various audiences. 

The AMCS ESG Solution (formerly Quentic) offers a centralized platform to manage both ESG and sustainability data. This solution integrates with existing systems, helps track progress against established ESG standards like GRI and CDP, and provides custom reporting features, such as dashboards and scorecards. It allows companies to track a wide range of metrics and present the data in a clear, actionable manner for investors and stakeholders. 

If you’re looking to formalize your ESG strategy and streamline your reporting, we can guide you through the process and keep your business aligned with the latest standards and best practices.

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Quentic is now part of the AMCS Group. Learn more here.