ESG

Sustainability has gone from being a peripheral communication issue to becoming a central part of strategy, risk management, and long-term value creation. For executives and chief of staff, this means a growing responsibility to understand how environmental, social, and governance-related issues impact business – and how ambitions are translated into measurable results. This article clarifies the differences between sustainability, ESG, sustainability reporting, and CSRD, and shows how the concepts are intertwined in practice. You will gain an overview of the three dimensions of the ESG framework, the evolution from voluntary initiatives to stricter regulatory requirements, and the opportunities that arise when sustainability efforts are integrated into operational management. The focus is not only on reporting and regulatory compliance, but also on better decision-making, stronger trust, and increased resilience. For a Chief of Staff, ESG primarily involves creating structure, coordinating stakeholders, and ensuring that sustainability goals become part of the organization's priorities, follow-up, and daily implementation in a credible and business-oriented manner over time.

Summary of the knowledge area:

Brief

ESG has evolved from a voluntary sustainability and communication issue to an integrated part of corporate governance, risk management, and long-term value creation. Sustainability describes the organization’s ambition to reconcile profitability with responsibility for the environment, people, and society, while ESG creates the structure for measuring, monitoring, and evaluating work based on environmental, social, and corporate governance issues. Sustainability reporting makes visible the impact, goals, risks, opportunities, and results. Through the EU’s CSRD and associated ESRS standards, the requirements for comparable, reliable, and detailed information are tightened, which means that ESG needs to be managed as a management issue rather than as an isolated reporting project. For management, the priority is to link essential sustainability issues to strategy, business model, risk landscape, investments, and operational goals. This requires clear accountability, quality-assured data, relevant key performance indicators, and regular follow-up. When properly implemented, ESG strengthens decision-making, financing opportunities, customer and investor confidence, and the organization’s resilience. The Chief of Staff can act as a cohesive force between the board, management, and operations by coordinating stakeholders, establishing governance, integrating sustainability goals into priorities, and monitoring implementation. The central recommendation is therefore to treat ESG as a cross-functional change initiative: start with materiality and the current state, establish responsibilities and goals, build robust data collection, and use reporting as an active tool for governance, learning, and business development.

The concepts ESG, sustainability, Sustainability work, Sustainability reporting and CSRD They are often used together, but they do not mean exactly the same thing. To understand the field, it is helpful to see them as different parts of the same whole.

What is sustainability?

In the business world, sustainability is about conducting business in a way that creates long-term value without compromising the future generations' ability to meet their needs. The concept often focuses on three dimensions:

Environmental sustainability
Social sustainability
Economic sustainability

The goal is for companies to create profitability while taking responsibility for people, society, and the environment.

What is ESG?

ESG stands for:

E = Environmental (Environment)
S = Social (Social issues)
G = Governance (Corporate Governance)

ESG is basically a framework for measuring, monitoring, and evaluating a company's sustainability efforts. You could say that:

Sustainability describes the ambition and activities.
ESG describes how the sustainability work is structured, measured and evaluated.

Examples:

Reducing emissions is a sustainability initiative.
Reporting carbon dioxide emissions according to defined key figures is ESG.

ESG is used especially by:

Investors
Banks
Credit institutions
Customers
Suppliers
Authorities

to assess risks and the long-term value creation potential.

What is sustainability reporting?

Sustainability reporting is the process in which organizations report:

its impact on the environment and society
their sustainability goals
its risks and opportunities
their results and key figures

The reporting corresponds roughly to the sustainability area's version of the financial annual report.

What is CSRD?

CSRD (Corporate Sustainability Reporting Directive) is the EU's new legislation for sustainability reporting.

The purpose is to:

make sustainability information comparable
improve the quality of reporting
reduce greenwashing
provide investors and other stakeholders with better decision-making tools

CSRD means that many companies have to report in much more detail than before and in accordance with common European standards (ESRS).

History

From environmental issues to corporate governance

During the 1970s and 1980s, the focus was primarily on environmental issues:

Emissions
waste
energy consumption

In the 1990s, companies also began working more systematically on:

working environment
human rights
business ethics

In the 2000s, sustainability reporting grew through standards such as:

GRI (Global Reporting Initiative)
UN Global Compact

Around 2010, investors began using ESG as a tool to assess corporate risks. Since then, sustainability has gone from being a voluntary communication issue to becoming a strategic management and risk management issue.

ESG's three main areas

E – Environmental (Environment)

Includes the company's impact on nature and the climate. Typical questions:

Climate change
Greenhouse gas emissions
Energy consumption
Renewable energy
Water use
Waste management
Circular economy
Biological diversity
Pollution

Example: A manufacturing company can measure:

ton of CO₂ emissions
energy consumption per produced unit
recycling rate

S – Social (Social conditions)

It covers how the company affects people. Typical questions:

Work environment
Health and safety
Competence development
Diversity and inclusion
Gender equality
Human rights
Supplier responsibility
Customer security
Social impact

Example: A company can follow up:

accident frequency
sick leave
share of women in leadership positions
working conditions of suppliers

G – Governance (Corporate Governance)

Refers to how the company is governed and controlled. Typical questions:

Composition of the Board of Directors
Ethics and compliance with regulations
Anti-corruption
Internal control
Risk management
Data protection
Information security
Transparency
Replacement system

Example: A company reports:

corruption training
incidents related to business ethics
The board's independence

The most important sustainability areas today

Below are the areas that are usually included in modern sustainability programs and ESG reporting.

1. Climate

Focus on:

CO₂ emissions
energy transition
climate risks
net zero emissions

Why important? Climate change involves both financial and operational risks.

2. Energy

Focus on:

energy consumption
energy efficiency
renewable energy

Why important? Energy often accounts for a large part of a business's carbon footprint.

3. Resource efficiency and the circular economy

Focus on:

Recycling
re-use
waste minimization
Product life cycles

Why important?

Reduces costs and environmental impact.

4. Biological diversity

Focus on:

ecosystem
land use
natural resources

Why important? The loss of biodiversity is today seen as one of the world's greatest sustainability risks.

5. Occupational health and safety

Focus on:

accidents
Health
safety culture

Why important? It affects both people and the productivity of the business.

6. Human rights

Focus on:

child labor
forced labor
discrimination
supply chains

Why important? Large organizations are increasingly responsible for the entire value chain.

7. Diversity, equality and inclusion

Focus on:

equality
equal opportunities
inclusive workplace

Why important? Increased innovation, better decisions, and reduced social risks.

8. Competence and employee development

Focus on:

education
competence provision
future workforce

Why important? The competitiveness of organizations is becoming increasingly knowledge-based.

9. Business ethics and compliance with regulations

Focus on:

corruption
robbers
Conflicts of interest
whistle blowing

Why important? Reduces legal and reputational risks.

10. Information security and data protection

Focus on:

Cybersecurity
GDPR
personal data

Why important? Digital sustainability is becoming increasingly important for the resilience of businesses.

CSRD and ESRS

What does the CSRD mean in practice?

CSRD requires companies to report in accordance with standards called:

ESRS (European Sustainability Reporting Standards).

A central principle is:

Double materiality (Double Materiality)

The company must analyze:

Financial materiality

How sustainability issues affect the company.

and

Significance of influence

How the company affects people and the environment.

This is one of the biggest changes compared to previous reporting models.

Some important ESRS areas

Environment

ESRS E1 Climate
ESRS E2 Contaminants
ESRS E3 Water
ESRS E4 Biological diversity
ESRS E5 Resource use and circular economy

Socially

ESRS S1 In-house employees
ESRS S2 Employees in the value chain
ESRS S3 Impacted communities
ESRS S4 Consumers and end users

Governance

ESRS G1 Business Ethics and Corporate Governance

Practical examples

Example 1: Industrial companies

Identifies that the climate impact is significant.

The company:

maps out emissions
invests in renewable energy
Sets emission targets
reported according to ESRS E1

Example 2: IT companies

Has relatively low direct climate impact but high exposure to:

Information security
Data protection
competence provision

The company's most important ESG issues therefore become:

Cybersecurity
working environment
business ethics
competence development

Summary

ESG is not the same thing as sustainability, but they are closely related.

Sustainability is the overall goal: to create long-term economic, social and environmental value.
ESG is the structure for measuring and evaluating the sustainability work.
Sustainability reporting is the process of reporting results and impacts.
CSRD is the EU regulatory framework that standardizes and sharpens sustainability reporting.

The focus is now shifting from voluntary efforts to business-critical governance, where sustainability becomes an integrated part of strategy, risk management, and business development.

Advantages

Better risk management
Increased transparency
Higher confidence among customers and investors
Stronger brand
Lower financing costs
More efficient use of resources
Improved regulatory compliance

Disadvantages, risks and limitations

High administrative burden
Complex data collection
Interpretation of new regulations
Costs for systems and processes
Risk of greenwashing if reporting does not reflect reality
Lack of competence within the organization

Five readiness questions

Have we identified which ESG issues are most essential to our business?
Do we have access to reliable data to measure our sustainability results?
Is there a clear responsibility for sustainability issues in management and the board?
Do we understand how CSRD and ESRS affect our organization and value chain?
Do we have a plan for translating reporting into concrete improvement measures?

Recommended next step

For organizations that want to work in a structured way with sustainability, it is often wise to follow this order:

Criticality analysis
ESG structure and governance model
Key figures and data collection
CSRD-/ESRS-adaptation
Integration into business strategy and operational management

In this way, sustainability becomes not just a reporting issue but part of the company’s long-term value creation.

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