Key terms

ESG (Environment, Social, Governance)

ESG is a set of criteria to identify, assess and manage the environmental, social, and governance impacts of a company’s organisational operations. 1

Such impacts include:

  • external impacts – e.g. an organisation’s impact on the environment, local communities, and customers
  • internal impacts – e.g. an organisation’s impact on its employees and workplace. 2

Environmental ESG criteria

These criteria include the energy and resources an organisation takes in and needs for its operation, the waste it discharges, and its overall consequences on the environment. 3 Examples of environmental criteria include:

  • Carbon emissions and emission reduction plans
  • Biodiversity
  • Energy consumption and cost savings
  • Water use
  • Waste management

Environmental criteria are the most reported criteria by Australian organisations. This is because environmental criteria have more government mandates and benchmarks. For example, internationally, a taskforce with organisations including World Trade Organisation (WTO), World Bank, Organisation for Economic Co-operation and Development (OECD), and International Monetary Fund (IMF) has established a global carbon pricing framework which consolidates global standards around carbon footprint 4 (see Compliance section in ESG Hub).

Social ESG criteria (also known as social sustainability)

These criteria ensure organisations promote fairness and equity in an organisation’s relationships with people, communities and society. It also addresses an organisation’s reputation with people and the various institutions in the communities where it operates. 5 Examples of social criteria include:

  • Diversity and inclusion (D&I)
  • Labour standards and working conditions
  • Compliance
  • Human rights policies and practices (e.g. in the business context, human rights can relate to decent and safe workplace standards, privacy rights, anti-corruption, etc. 6)
  • Community engagement
  • Health and safety
  • Supply chain social standards
  • Customer and product responsibility
  • Training and development

Governance ESG criteria

Governance refers to the internal systems of procedures, practices, and controls for an organisation to govern itself, make effective decisions and meet stakeholder needs. 7 Governance criteria consider how an organisation is run and ensures shareholders’ rights. Examples of governance criteria include:

  • Structure of the Board
  • Board diversity and inclusivity (D&I)
  • Policies
  • Risk management
  • Ethics

ESG components

ESG practices

ESG practices include an organisation’s strategy, business model, risks and opportunities, systems, and compliance. 8

ESG strategy

ESG strategy defines the organisation’s ESG values and goals (including targets), the initiatives, actions and activities to achieve these goals, and how those targets will be measured. 9 The ESG strategy links the business operations with the organisation’s ESG values and goals.

ESG measures

ESG measures refer to the performance measures, indicators, and KPIs set to measure an organisation’s ESG impact. Diversity and inclusion (D&I) can provide tools, metrics, and ways to measure social sustainability of both social and governance criteria. This helps decision makers track performance, back up claims, and comply with regulation on equity and discrimination. 10

ESG reporting

ESG reporting requires both qualitative (non-numerical) and quantitative (numerical) data,11 metrics, and attainable targets.12 ESG reporting enhances transparency, trust, accountability, and innovation. It also enables leadership, investors, consumers, and stakeholders to make informed business decisions towards sustainability goals. 13 ESG reporting components include:

  • regulatory compliance
  • transparency
  • stakeholder engagement
  • risk management
  • long-term value creation. 14

Sustainability reporting

From 1 January 2025 onwards in Australia, annual sustainability reports are legislatively required under the Corporations Act 2001, under the National Greenhouse and Energy Reporting (NGER) scheme. Prior to 2025, sustainability reports were initially seen as broad reporting that encompassed responsible and ethical business practices and operations that do not compromise economic, social, and environmental needs of the future.15 Many organisations put ESG-related information under various labels that are used interchangeably. These include:

  • Sustainability report (Note: From 2025, Australian Securities and Investments Commission (ASIC) draft regulatory guidance states the label “sustainability report”, should be exclusively for statutory sustainability reports under the Corporations Act. 16)
  • ESG
  • People, planet, profit (PPP)
  • CSR (Corporate Social Responsibility)
  • Non-financial narrative reporting
  • Social Impact
  • Triple bottom line 

Watch and learn more

Centre for Social Impact, Webinar: How to make your sustainability (or ESG) practices and reporting count by Dr. Lyndie Bayne

Back to ESG Hub
Go to D&I and ESG Connection
  1. Standards Australia, “Standards: The Building Blocks of Trust for Australia’s ESG Investing Landscape,” May 2022; HSBC Australia, “Sustainability vs ESG: What’s the Difference and Why They Matter,” November 8, 2024, ; HSBC Australia, “What Is ESG?,” November 9, 2023, .
  2. Standards Australia, “Standards: The Building Blocks of Trust for Australia’s ESG Investing Landscape.”
  3. Grant Thornton, “Unpacking Australian Sustainability Reporting: What’s Really Required,” Grant Thornton; Grant Thornton, “ESG, Sustainability and Climate Reporting,” accessed February 14, 2025, .
  4. Melissa Edwards, “Corporate Social Impact and ESG: Navigating the New Wave of Sustainability Reporting,” Centre for Social Impact, July 31, 2024
  5. Witold Henisz, Tim Koller, and Robin Nutall, “Five Ways That ESG Creates Value: Getting Your Environmental, Social, and Governance (ESG) Proposition Right Links to Higher Value Creation. Here’s Why.,” McKinsey Quarterly, November 2019; HSBC Australia, “Sustainability vs ESG: What’s the Difference and Why They Matter.”
  6. Rosalie Wilkie, Amber Roberts, and Louise Halliwell, “Spotlight on the ‘S’ in ESG” (PwC, 2022).
  7. Henisz, Koller, and Nutall, “Five Ways That ESG Creates Value: Getting Your Environmental, Social, and Governance (ESG) Proposition Right Links to Higher Value Creation. Here’s Why.”
  8. Lyndie Bayne, “Webinar: How to Make Your Sustainability (or ESG) Practices and Reporting Count”
  9. Australian Government: Business, “Use Environmental, Social and Governance (ESG) Practices in Your Business,”
  10. KPMG, “30 Voices on 2030: The ESG Revolution,” 19.
  11. PwC, “ESG: An Opportunity for Companies to Build Greater Trust,” 2024.
  12. Bayne, “Webinar: How to Make Your Sustainability (or ESG) Practices and Reporting Count.”
  13. Ahmed Elidrisy, “Comparative Review of ESG Reporting Standards: ESRS European Sustainability Reporting Standards versus ISSB International Sustainability Standards Board,” International Multilingual Journal of Science and Technology 9, no. 3 (March 2024): 7191–98; HSBC Australia, “Sustainability vs ESG: What’s the Difference and Why They Matter.”
  14. Elidrisy, “Comparative Review of ESG Reporting Standards: ESRS European Sustainability Reporting Standards versus ISSB International Sustainability Standards Board.”
  15. HSBC Australia, “Sustainability vs ESG: What’s the Difference and Why They Matter.”
  16. John Askham and Samantha Sing Key, “ASIC Draft Regulatory Guidance for Sustainability Reporting,” Grant Thornton, November 25, 2024, .