Differences Between a Sustainability Report and an ESG Report

Both sustainability reports and ESG reports are tools used by organizations to communicate their efforts regarding environmental, social, and governance aspects. However, they differ in scope, purpose, and target audience.

1. Purpose

• Sustainability Report

  Focuses on a company’s overall impact on sustainability and its contribution to environmental, social, and economic development. It is broader and emphasizes how the organization aligns its operations with sustainable practices and societal well-being.

• ESG Report

  Targets specific metrics and key performance indicators (KPIs) related to Environmental, Social, and Governance (ESG) criteria. It is data-driven and aims to meet the needs of investors and stakeholders seeking measurable insights into the company’s ESG performance.

2. Audience

• Sustainability Report

  Primarily intended for a wide range of stakeholders, including customers, employees, communities, NGOs, and regulators, who are interested in the company’s sustainability journey and social impact.

• ESG Report

  Designed for investors, analysts, and other financially-oriented stakeholders. It provides detailed metrics and performance indicators that influence investment decisions.

3. Content Focus

• Sustainability Report

  • Broader narratives about sustainability initiatives, goals, and progress.

  • Holistic view of the organization’s contribution to sustainable development.

  • Includes qualitative aspects, such as storytelling and case studies, alongside quantitative data.

• ESG Report

  • Focuses on ESG-specific metrics and frameworks (e.g., GRI, SASB, TCFD, CDP).

  • Includes quantifiable data like carbon emissions, diversity metrics, and governance practices.

  • Often tied to financial risks and opportunities related to ESG factors.

4. Frameworks Used

• Sustainability Report

  • Uses frameworks like Global Reporting Initiative (GRI) or UN Sustainable Development Goals (SDGs).

  • May not follow a strict structure and can be more narrative-driven.

• ESG Report

  • Follows stricter, investor-focused frameworks such as SASB (Sustainability Accounting Standards Board), TCFD (Task Force on Climate-related Financial Disclosures), or CDP (Carbon Disclosure Project).

  • Prioritizes consistency and comparability for financial markets.

5. Compliance and Regulation

• Sustainability Report

  • Often voluntary and less regulated.

  • Focuses on non-financial disclosures aimed at showcasing the company’s commitment to sustainability.

• ESG Report

  • Increasingly regulated in many regions (e.g., the EU’s Corporate Sustainability Reporting Directive - CSRD).

  • Directly linked to compliance with ESG-related disclosure requirements for investors and regulatory bodies.

6. Strategic Integration

• Sustainability Report

  • Highlights the company’s long-term vision for sustainability.

  • More qualitative and may include aspirational goals or initiatives without specific time frames.

• ESG Report

  • Directly tied to the company’s risk management, performance evaluation, and decision-making processes.

  • Includes time-bound, measurable goals aligned with financial performance.

7. Examples of Use

• Sustainability Report

  • Example: Highlighting a community outreach program, showcasing renewable energy initiatives, or discussing company values and vision around sustainability.

• ESG Report

  • Example: Reporting detailed metrics such as Scope 1 and Scope 2 emissions, board diversity ratios, or employee turnover rates with year-over-year comparisons.

Summary

Aspect	Sustainability Report	ESG Report
Purpose	Broad focus on sustainability impact	Specific focus on ESG metrics and KPIs
Audience	Wide range of stakeholders	Investors and financial stakeholders
Content Focus	Holistic narrative and impact	Quantitative, data-driven, and performance-based
Frameworks	GRI, SDGs	SASB, TCFD, CDP
Regulation	Often voluntary	Increasingly regulated
Strategic Integration	Long-term vision	Linked to financial and risk management

Conclusion

While both reports are vital tools for corporate transparency, sustainability reports focus on a broader narrative of the company’s contributions to global and societal sustainability, whereas ESG reports provide specific, measurable insights tailored to the financial and investment community.

Best practice is for companies combine both approaches to meet diverse stakeholder expectations effectively.