Introduction
In recent years, when environmental and social issues are in the news, we often hear the words SDGs and ESG. What are the differences between these two approaches to environmental and social issues? In this issue, we will introduce an overview of both and the differences between them.
What is “ESG”?
ESG stands for environmental, social, and governance. The environmental aspect examines the company’s efforts to address various environmental issues such as global warming and climate change; the social aspect examines the company’s internal and external relationships; and the governance aspect examines the company itself.
Here are some examples of how we evaluate environmental, social, and governance:
Environment
- Using of renewable energy
- Limiting harmful pollution or chemicals
- Reduction of waste, greenhouse gases, and carbon dioxide emissions
Social
- Workplace safety
- Fair pay
- Does the company address the prevention of sexual misconduct?
- Does the company encourage diversity, including LBGTQ+?
Governance
- Transparency of the board of directors and the company
- Is the board of directors chaired by someone other than the CEO?
In recent years, ESG investments have been on the rise, with a wide range of options available, from securities companies and mutual funds to public pension funds. ESG is often referred to as sustainable investment, socially responsible investment, and other such terms.
What are SDGs?
In 2015, the United Nations adopted the 2030 Agenda for Sustainable Development, which included 17 goals and 169 targets for all countries. These broad and far-reaching objectives cover a wide range of topics. Many of the goals are related to health, with the hope that people of all ages can live healthier lives and achieve greater happiness.
These SDGs must be implemented in all countries, with no exceptions for developing countries. They must be accompanied by values of equity and respect for human rights.
Activities in the multi-stakeholder sector include adequate health systems and staffing, as well as protection and assistance for the economically disadvantaged.
Conclusion
Both ESG and SDGs aim to address and solve social and environmental problems while also achieving a sustainable society. Where they differ is in their approach and target audience: ESGs are concerned with companies and the business community, whereas SDGs are concerned with countries and the general public. Overall, both have the same goal but take different approaches to getting there.
References
The Investopedia Team (2022). Environmental, social and governance (ESG) criteria. [online] Investopedia. Available at: https://www.investopedia.com/terms/e/environmental-social-and-governance-esg-criteria.asp [Accessed 3 February 2023].
World Health Organization (2022). Sustainable Development Goals. [online] www.who.int. Available at: https://www.who.int/europe/about-us/our-work/sustainable-development-goals [Accessed 3 February 2023].
Tokyo Century NEWS. (2021). Increasing Awareness of How SDGs and ESG Are Different, and Related Tokyo Century Initiatives. [online] Available at: https://tokyocentury-news.com/sustainability/differences-sdgs-and-esg [Accessed 4 February 2023].
