In this article, titled “Let’s be clear: ESG is not ‘woke’ and it’s different than sustainability, Julia Binder, PhD, Director of IMD’s Center for Sustainable and Inclusive Business, gives a beautiful definitional difference between sustainability and ESG, and why this matters for business.
Per Dr. Binder
- ESG is primarily a risk management and investment framework that seeks to evaluate the financial risks that environmental, social, and governance factors pose for a company’s value. It adopts an “outside-in” perspective that is best described as an investor- and company-centric framework which seeks to de-risk portfolios and increase the economic resilience of a company. ESG is not about being “woke” or even doing good. It is a risk and investment management framework.
- Conversely, corporate sustainability adopts an “inside-out” perspective as it focuses on the impact a company has on the planet and society. The people- and planet-centric approach seeks to not only minimize harm, but to positively impact society and the environment.