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What is SDG and ESG?

These two acronyms are at the forefront of the sustainable development debate right now. But many people have never heard them before. So what are they? Put simply, SDG stands for Sustainable Development Goals and ESG refers to factors that are defined by the 3 pillars of sustainability.

Decent work is a key part of any successful society according to the UN. “Decent work” is a term that the UN uses to refer to work that does not infringe on human dignity. This can be employment in dangerous or exploitative conditions, for example. The challenge of achieving decent work is compounded by the fact that 7 out of 10 jobs in developing countries are in vulnerable forms of employment and in emerging economies, 2 out of 10 jobs are in vulnerable forms of employment.

Firstly, SDGs are part of the United Nation’s 2030 Agenda for Sustainable Development-a series of 17 goals that will be completed by 2030. These include things like eradicating poverty and hunger; providing universal education; promoting inclusive societies; protecting biodiversity; reducing natural disasters; creating sustainable cities, communities and economies; fighting climate change etc.

Secondly, ESG is a way of investing or assessing companies on their environmental, social and governance performance while also considering financial returns. It has become increasingly popular with investors who want to invest responsibly while still making a profit.

Why are they important?

As it is, human progress has come with an environmental price tag for the past 10,000 years of civilization. The Intergovernmental Panel on Climate Change (IPCC) stated that carbon dioxide levels in our atmosphere are at unprecedented levels and that they need to be reduced by 45% before 2050 if we are to prevent dangerous climate change.

The importance of these two ideas lies in the fact that both SDG and ESG focus on long-term solutions. In an increasingly uncertain world, with fear for the future of the planet due to climate change, people are looking for greener pastures. Staying resilient is no longer good enough, now it’s time for true sustainability – which encompasses both social and environmental factors. SDG and ESG strive to provide that.

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SDG ESG and COP26

The recent COP26 meeting in Glasgow has helped push SDG and ESG even further into the limelight. The global community has reaffirmed their commitment to the Sustainable Development Goals and they will need to keep working together in order to achieve them.

That’s not to say there isn’t still a problem – without SDG and ESG, it would be virtually impossible. With a failing global economy, such as with supply chain issues, food insecurity or trade tariffs, we’re going to have a tough time achieving sustainable development. It will take continued cooperation between nations or even further economic crisis before we can get anywhere near these goals.

What are the UN SDGs?

The UN Sustainable Development Goals (SDGs) are a comprehensive guide to what needs to be done by 2030 to improve the world for all people. They include 17 goals with 169 associated targets designed to end poverty, fight inequality and stop climate change. And achieving these requires more efficient labour markets, greater financial stability and a more capable state.

What are the 17 Unsdgs?

The 17 UN SDGs are:

1. No Poverty

2. Zero Hunger

3. Good Health and Well-Being

4. Quality Education

5. Gender Equality

6. Clean Water and Sanitation

7. Affordable and Clean Energy

8. Decent Work and Economic Growth

9. Industry, Innovation and Infrastructure

10. Reduced Inequalities

11. Sustainable Cities and Communities

12. Responsible Consumption and Production

13. Climate Action

14. Life Below Water

15 Life on Land

16. Peace, Justice and Strong Institutions

17. Partnerships for the Goals

What is the difference between ESG and SDGs?

The main differences are as follows:

  • SDGs are global goals set out by the United Nations, whereas ESG is a rating system used by companies to measure their environmental and social credentials.
  • ESG measures how well a company is performing in terms of its social and environmental responsibilities throughout its supply chain and operations – as opposed to looking at the wider context of human rights.
  • SDGs are time bound i.e. they have to be achieved by 2030, whereas ESG focuses on long-term solutions and is more high level than the Sustainable Development Goals, which focus on specific targets around the world.

Why aren’t SDGs enough?

SDGs are not sufficient in themselves to achieve sustainable development. There are many problems that we will need to solve, including:

  • Working conditions in the supply chain – working hours, wages etc.
  • Corruption and bribery issues – workers’ rights can be suppressed by corrupt governments or other organisations.
  • Child labour issues.

Without solving these problems it is impossible for any company to achieve Sustainable Development Goals.

How does ESG work with SDGs?

ESG is a rating system used by companies to measure their environmental and social credentials. This means that businesses can rate themselves on criteria such as:

  • Environmental footprint: e.g. greenhouse gas emissions, waste and energy usage etc.
  • Social impact: e.g. labour standards, pay equality and diversity in the workforce etc.
  • Financial performance: e.g. financial stability, shareholder returns etc.
  • Community contribution: e.g. charity work, local employment and environmental projects undertaken by the company etc.

ESG searches out companies which have strong social and environmental policies in place so they can be rewarded for their efforts to date, while also providing a yardstick by which they can measure progress. This will help to identify companies that are not adhering to sustainability principles and bring change.

What is the next step in responsible investment?

The Sustainable Development Goals are part of a long process to create lasting change. They will only be achieved with the help of other global compacts, such as the Paris Climate Agreement and COP26 in 2021, which was recently ratified by scores of countries around the world. However it’s clear that without the Sustainable Development Goals, the other compacts will be fruitless.

What are the SDGs ESG trying to achieve?

The Sustainable Development goals are not just an idealistic idea, they were established by the UN as a way of re-framing our view on development. The 17 goals cover such issues as poverty, equality and climate change – all considered key threats to humanity in the 21st century. These goals also encompass such issues as promoting peaceful and inclusive societies, building sustainable infrastructure and creating sustainable cities – ensuring that they can be free of poverty. Sustainable Development Goals are an integrated approach to combating the complex nature of these problems.

How do ESG and SDGs work together?

ESG and SDGs work together to determine how a company or any business for that matter can achieve sustainable development. There are currently 17 SDGs which have been established by the United Nations to help guide companies and organizations through achieving sustainable development practices.

The ESG factors are guidelines in helping determine whether a product is contributing positively to the environment, society, and governance of an organization. These factors are also used to measure general results in the organization.

SDGs work together with ESG factors by providing guidelines on how an organization can achieve sustainable development goals within their company, products, and services.

Is ESG part of SDG?

Yes and no. ESG is a subset of SDGs. ESG is used to measure environmental, social and governance practices within an organization. By incorporating sustainable development practices into daily business operations and products and services, organizations can achieve success through the use of ESG factors which will eventually integrate with SDGs.

What is ESG UN?

ESG in relation to the UN is a subset of goals developed by the UN to help guide companies and organizations through achieving sustainable development practices. There are currently 17 goals which have been established, but as time goes on there may be more added or removed to form a better path for companies and stakeholders to follow in terms of sustainability. The UN has no power over enforcing these goals; however they do have a large platform to promote these goals and encourage companies to follow them along with different countries around the world.

What is the difference between CSR and ESG?

The difference between CSR and ESG is that CSR stands for Corporate Social Responsibility and ESG stands for Environmental, Social, Governance. These two words are sometimes confused with each other but both stand for a company’s commitment to social responsibility which is a key factor in sustainable development.

CSR sets a guideline for companies on how they can achieve social responsibility within their products and services while ESG sets a guideline for companies on how they can achieve environmental and social goals within their products and services.

Does ESG make a company look good?

Yes, but this is not the sole purpose of having an ESG plan in place at a company or organization. When it comes to sustainable development there are many factors that go into measuring how well an organization is doing. ESG factors are just another factor that adds to the overall success of sustainable development practices at a company or organization.

How can you measure ESG?

ESG can be measured in many ways, but one main way is through using social responsibility indicators which provide information on how an organization can improve their ESG factors. These indicators provide information on things such as labour practices, waste management, and environmental management which are all important factors within an organization to measure.

In conclusion on sustainable development goals

To summarize this article, we looked at what SDG and ESG stand for as well as the difference between them. We also discussed how they work together as a whole to achieve sustainable development goals and how organizations can incorporate these factors into their daily business operations. ESG is not part of SDGs, but it is a subset of goals developed by the UN to help guide companies and organizations. You will hearing a lot more about these two as we move into becoming a carbon free society.

Caveats, disclaimers & economic growth

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