GPM has been working with global organizations for 13 years to help them achieve and implement sustainability goals and practices.
In the past few years, we have seen Environment, Social, and Governance, or ESG, enter the lexicon and transform the narrative around an organization’s risk profile and relationship with the environment. Make no mistake, ESG has been, and will continue to be, a welcome and positive force that has added a significant spotlight to the existential issue of climate change and the global movement toward Net Zero. What we at GPM see as a common mistake is conflating ESG with Sustainability.
To be blunt, they are not the same. Much like chocolate and peanut butter, ESG and Sustainability are two separate and individually powerful ingredients that, when combined, make a perfectly blended approach to improving an organization’s environmental performance and stakeholder value.
It is essential to establish the main principles of ESG and Sustainability to understand how they differ.
Environmental Social Governance
ESG is an investment framework that assists external investors to assess an organization’s performance and risk. Capital investment companies, most notably BlacKRock, are now using this framework to inform every potential investment decision they make.
Sustainability
Sustainability is based on a simple principle: Everything that we need for our survival and well-being depends, either directly or indirectly, on our natural environment. To pursue Sustainability is to create and maintain the conditions under which humans and nature can exist in productive harmony to support present and future generations.
Investments, such as a municipality electrifying their public transportation bus fleet or a property management company installing energy-efficient LED light bulbs.
It is in understanding the more nuanced differences between ESG and Sustainability where we see how they dovetail together in order to accelerate organizational environmental imperatives and combat Climate Change. Where ESG is about identifying risks and issues, Sustainability is about results.
ESG manages the issues for how they affect organizational performance, while Sustainability manages the organization for how it affects the issues. While ESG measures outputs, Sustainability measures outcomes and impacts. ESG takes an outside-in focus on financial materiality, i.e., the impact of environmental and social issues on the organization, whereas Sustainability takes an inside-out focus on impact materiality, i.e., the impact of the organization on the environment and society. By combining ESG’s outside-in and Sustainability’s inside-out approach, you get a full 360° view of how an organization both accounts for and mitigates risks through meaningful operational improvements and sustainable performance.
With ESG reporting increasingly becoming an imperative, it is the financial and impact, or dual materiality, that will differentiate organizations who are making true environmental and social impact versus those who are merely greenwashing.
As projects are projected to comprise of more than 57% of Global GDP by 2030, Project communications will become increasingly more important to ESG Reporting.
Fortunately, GPM and our partners have a full suite of services developed to help produce this dual materiality. Tools such as PSM3, The P5 Impact Analysis, and GPM360° Project Certification measure organizational impacts through lenses of People, Plant and Prosperity to measure the product and its development process against up to 230 different sustainability criteria.
By standardizing on and utilizing these tools, and getting your staff Trained in Sustainable Project Management and certified with the GPM-b, organizations can track the environmental impact of their projects quantitively and input those metrics directly into the double materiality for their enhanced ESG reporting.
Organizations that capture this materiality in their standard processes and project documentation save time and create efficiencies in their reporting. Most importantly, dual materiality acts as a shield against potential claims of greenwashing, as all the KPIs are tracked and captured throughout the project and asset lifecycle. Or, more simply put, it accurately and explicitly tracks and measures an organization’s ESG and Sustainability commitments, outputs, and contributions to Net Zero!
This was very insightful. Even in my own country I have seen the trend of ESG taking over the sustainability conversation, and in some instances, is being labeled as the tool for companies to achieve sustainability and the SDGs are for countries to achieve sustainability. This narrative can detrimental to the essence of what sustainability is.