Read as sustainability
The company’s contribution to climate change, and what it is doing to reduce it.
GRI asks this question.ESG vs sustainability · two terms, two authors
ESG vs sustainability: what is the difference?
Sustainability is the broad goal: the UN defined sustainable development in 1987 as development that meets the needs of the present without compromising future generations.
ESG is narrower: a way for investors to measure how environmental, social and governance factors bear on a company, set out in 2004.
Sustainability looks outward at the company’s impact; ESG usually looks inward at the company’s risk.
Definitions at source
Who defined each term?
The UN defined sustainable development; investors set out ESG seventeen years later.
The UN’s World Commission on Environment and Development, chaired by Gro Harlem Brundtland, defined sustainable development in Our Common Future (1987).
ESG has no regulator’s definition; it was set out in Who Cares Wins (2004) by financial institutions as a way of bringing environmental, social and governance issues into investment.
The UK’s own standards chose the word sustainability: UK SRS asks for sustainability-related financial information, which is ESG’s investor view under sustainability’s name.
The ESG side in full is on what is ESG.
Two termsExplore
Two terms
Sustainable development, 1987
“Development that meets the needs of the present without compromising the ability of future generations to meet their own needs.”
Two terms
ESG, 2004
Recommendations to integrate environmental, social and governance issues into investment analysis.
Two terms
Sustainability-related financial information, 2026
Risks and opportunities that could affect cash flows, access to finance or cost of capital.
Side by side
How do ESG and sustainability differ?
By author, reader, direction and output.
| Sustainability | ESG | |
|---|---|---|
| First defined | UN, 1987, as sustainable development | Investors, 2004, in Who Cares Wins |
| Scope | The long-term effects on the environment, society and the economy | Environmental, social and governance factors that bear on a company |
| Main reader | Everyone affected: communities, employees, customers, civil society | Investors, lenders and rating agencies |
| Direction of the question | Outward: the company’s impact | Usually inward: the risk to the company |
| Typical framework | GRI (impact) | UK SRS and ISSB (financial), SASB, ratings |
| In UK law | The s.414CB “sustainability information statement”; UK SRS’s name | Not defined or used as a legal term |
One fact, two readings
How does one figure read as ESG and as sustainability?
A company’s emissions are an impact on the climate and, at the same time, a cost and risk to the company.
The figure is an illustration, not a real company’s.
The number is the same; the question asked of it differs.
Under SECR it is simply a statutory disclosure in the directors’ report (SI 2008/410 Sch 7), whatever label the company gives it.
Reporting both ways at once is what the EU calls double materiality.
The reports
Is an ESG report the same as a sustainability report?
Similar content, different reader: a sustainability report usually follows GRI; an ESG report usually feeds investors and raters.
Neither is required by UK law by name.
The statutory disclosures sit in the annual report: SECR in the directors’ report and the climate disclosures in the strategic report (s.414CB).
From 2027, listed companies in five categories report against UK SRS or explain, under PS26/19.
A standalone ESG or sustainability report is voluntary; what goes into one is on ESG reporting and sustainability reporting.
Check the claims
Which claims about ESG and sustainability are true?
Five statements, checked against the documents that define the terms.
The false ones give the two terms one author, or turn a label into a legal duty.
CSR, the third term in the set, is compared on ESG vs CSR.
ESG vs sustainability: true or false?
Sustainability and ESG were defined by the same body.
UK SRS asks about sustainability matters that could affect a company’s prospects.
UK law requires large companies to publish an ESG report.
GRI reporting focuses on a company’s impacts on the economy, environment and people.
The Companies Act contains a statutory “sustainability information statement”.
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Sustainability is the goal, ESG is one way of measuring the risk, and UK law asks for neither by name.
- 1987
The UN defined sustainable development
Meeting present needs without compromising future generations. - 2004
Investors set out ESG in Who Cares Wins
A way to bring the issues into investment. - 2026
The UK named its standards for sustainability
UK SRS asks for sustainability-related financial information. - No instrument
No UK law defines ESG
It requires specific disclosures instead.
Frequently asked
ESG vs sustainability, answered
What is the difference between ESG and sustainability?
Sustainability is the broad goal: development that meets present needs without compromising future generations, as the UN’s Brundtland Commission defined sustainable development in 1987.
ESG is a way of measuring how environmental, social and governance factors bear on a company, set out by investors in the 2004 report Who Cares Wins.
Sustainability asks what a company does to the world; ESG usually asks what the world could do to the company.
Is ESG and sustainability the same thing?
No, though they overlap heavily and are often used interchangeably.
Sustainability is the wider idea and the outcome; ESG is a framework for assessing risk and performance, mostly used by investors, lenders and raters.
Is an ESG report and a sustainability report the same?
Often in content, not in purpose.
A sustainability report usually covers the company’s impacts on the environment and society, often under GRI.
An ESG report usually presents metrics investors and raters use.
UK law requires neither by name; the statutory disclosures, such as SECR and the climate disclosures, sit in the annual report whichever label the company uses.
Which came first, ESG or sustainability?
Sustainability.
The UN’s definition of sustainable development dates from 1987 (A/42/427).
ESG was set out in December 2004 in Who Cares Wins, by financial institutions convened by the UN Global Compact.
Does UK law use “ESG” or “sustainability”?
It mostly uses neither as a label.
The Companies Act 2006 has a “non-financial and sustainability information statement” (section 414CB), and UK SRS uses “sustainability-related financial information”.
No UK instrument defines ESG.
Is ESG replacing sustainability?
No. In investor and regulatory reporting the trend runs the other way: the UK’s standards are called Sustainability Reporting Standards, and CFA Institute renamed its Certificate in ESG Investing the Sustainable Investing Certificate in April 2025.
Sources
Primary sources
Every figure, date and status on this page traces to the instrument’s owner.
Secondary commentary is never the source for a number.
Checked against 8 sources fromUnited NationsUN Global Compact (World Bank repository copy)Department for Business and TradeGRIlegislation.gov.ukFinancial Conduct Authority
- United NationsA/42/427 — Our Common Future (World Commission on Environment and Development, 1987)
The definition of sustainable development, Chapter 2 ¶1.
- UN Global Compact (World Bank repository copy)Who Cares Wins (December 2004)
The investor report that set out environmental, social and governance issues.
- Department for Business and TradeUK Sustainability Reporting Standards
UK SRS S1 and S2.
- Department for Business and TradeUK SRS S1 (PDF)
“Sustainability-related financial information” for investors.
- GRIGRI 1: Foundation 2021
Reporting on impacts on the economy, environment and people.
- legislation.gov.ukSI 2008/410, Schedule 7 (SECR)
A statutory disclosure both labels claim.
- legislation.gov.ukCompanies Act 2006, section 414CB
The statutory “non-financial and sustainability information statement”.
- Financial Conduct AuthorityPS26/19
UK SRS on comply or explain for five listing categories from 2027.
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