Dr.Heba Mohamed Emam: Sustainability Report or ESG Report: Understanding the Differences, Integration

Non-financial disclosure has become a core element of an organization’s identity and trustworthiness. With the growing focus on climate issues, resource use, human rights, and governance, the terms Sustainability Report and Environmental, Social, and Governance (ESG) Report are often confused. Both cover environmental, social, and governance aspects, but each has its own perspective, audience, and standards.

This article presents a simple and clear explanation for non-specialists, highlighting the international frameworks and standards, clarifying the purpose and importance of each report, and answering a key practical question:

Is a Sustainability Report enough, or should separate ESG and sustainability reports be prepared?

What Is a Sustainability Report?

A Sustainability Report is a comprehensive document that explains how an organization manages its economic, social, and environmental impacts in the short, medium, and long term. Its main perspective is “outside-in,” meaning how the organization’s operations affect the wider environment, including employees, customers, local communities, supply chains, and the natural environment.

Such reports usually include sustainability governance details board and executive responsibilities methods for identifying material topics, assessments of non-financial risks and opportunities, and both quantitative and qualitative targets for emissions reduction, energy and water efficiency, employee welfare, safety, equality, diversity, and community initiatives.

The value of a sustainability report lies in building social legitimacy and demonstrating commitment to all stakeholders, not just investors.

What Is an ESG Report?

An ESG Report is mainly targeted at investors, analysts, capital markets, and regulators. Its view is “inside-out,” focusing on how sustainability issues translate into financial risks and opportunities that affect revenue, costs, assets, valuation, financing, compliance, and reputation.

Therefore, it emphasizes comparable metrics, quantitative data, and clear links to financial statements. It outlines board and management roles in risk oversight and demonstrates how ESG considerations are integrated into strategy and planning.

Where They Meet and Where They Differ

Both reports share the same three pillars—environment, social, and governance—and use the “materiality” approach to identify priority topics. However, their difference lies in audience, purpose, and perspective:

• The Sustainability Report expands the narrative on external impacts, even if they do not directly affect the organization financially.

• The ESG Report narrows the focus to financial materiality, emphasizing metrics that can be compared across companies and sectors, especially those that reflect financial performance.

Does a Sustainability Report Cover ESG Content?

Not necessarily. A Sustainability Report may cover most ESG requirements if it includes financial analysis of risks and opportunities and shows clear links between non-financial and financial performance.

However, traditional sustainability reports may lack the robust financial disclosure investors require—such as climate scenarios, regulatory and technical transition risks, and sector-specific disclosures.

Conversely, a pure ESG Report might not adequately address the long-term environmental and social impacts relevant to non-financial stakeholders.

For this reason, best practice is moving towards one unified report that integrates both perspectives clearly.

Standards and Frameworks for Sustainability Reporting

The Global Reporting Initiative (GRI) standards are the most widely used reference for sustainability reports targeting all stakeholders. GRI focuses on the organization’s impact on the external environment and provides general and topic-specific standards for areas like energy, emissions, water, waste, human rights, supply chain, health, and safety.

It also promotes the concept of “double materiality”, recognizing both external impact and financial relevance.

Many organizations align their reports with the United Nations Sustainable Development Goals (SDGs) to demonstrate contributions to objectives like climate action, responsible consumption, and decent work, and may also refer to the UN Global Compact principles on human rights, labor, environment, and anti-corruption as an ethical framework.

Standards and Frameworks for ESG Reporting

Investor-oriented ESG Reports are typically based on international standards such as:

• ISSB, via IFRS S1 (general sustainability disclosure) and IFRS S2 (climate-related disclosures), providing a global baseline for investors.

• SASB standards, which define relevant metrics for each sector.

• ESRS (European Sustainability Reporting Standards), mandatory in the EU.

• GRI remains important for showing a company’s broader social and environmental impact.

If you use GRI alone, you will have a broad Sustainability Report, but it may not meet investor needs for financially material, comparable data (like climate risks and opportunities as required by IFRS S2).

If your main audience is investors, it’s recommended to adopt ISSB (S1 + S2) with SASB metrics, while maintaining GRI for a richer narrative on social and environmental impacts.

This combined approach provides both clarity for investors and comprehensive sustainability coverage.

Can a GRI-Based Report Be Called ESG or Sustainability?

• If prepared according to GRI only, the correct term is Sustainability Report, as it focuses on the organization’s impact on environment, society, and governance for all stakeholders.

• You may refer to it as an “ESG Report” in terms of topics, but it will not fully meet investors’ expectations for comparable financial disclosures.

• If investors are the target audience, add a dedicated section aligned with ISSB/IFRS S1-S2 and SASB sector metrics then it accurately becomes an ESG Report for investors.

Why Are These Reports Important?

A Sustainability Report helps build trust and social legitimacy, explains environmental and social compliance, embeds sustainability into strategy and governance, and provides a framework to measure non-financial performance, detect gaps, and launch improvement initiatives.

An ESG Report, on the other hand, gives investors a quantitative view of credit, market, and reputation risks related to climate, resources, and governance. It improves access to capital, reduces uncertainty, strengthens compliance with regulators, and enhances data reliability through external assurance.

One Report or Two?

The global trend favors integrated reporting a unified report addressing both audiences, supported by appendices that cross-reference compliance with GRI and ISSB/SASB or ESRS where relevant.

However, some organizations may opt for two separate reports when facing different regulatory requirements across markets, or when they need a short investor-focused version and a longer community report.

In all cases, methodological consistency, clear disclosure policies, and reference maps are essential to maintain credibility.

Key Common Elements in Any Framework

Every reliable report regardless of its framework should include:

• Sustainability Governance: Roles of the board, committees, and executive management, and reporting mechanisms.

• Materiality: Explanation of how key issues were identified, who was involved, system boundaries, and value chain scope.

• Strategy and Goals: Time-bound quantitative targets for greenhouse gas emissions, water and waste management, safety, diversity, inclusion, product safety—plus implementation plans and KPIs.

• Metrics and Data: Emissions (Scopes 1, 2, and 3), energy use, water efficiency, injury rates, employee turnover, compliance, anti-corruption, cybersecurity, and data privacy breaches.

• Risk Management: Policies and processes for identifying, assessing, and responding to risks, including climate stress testing and transition risks.

• External Assurance: Independent verification (limited or reasonable) of key indicators, with transparent methodologies and scope.

Toward an Integrated Disclosure Approach

The smarter evolution is to move from “Which report should we choose?” to “How can we build an integrated disclosure system?”

This starts with data mapping across key functions EHS, HR, supply chain, legal, finance, and risk management then establishing a central data platform with internal controls similar to financial reporting.

Next, select the relevant standards: GRI for comprehensive impact coverage, ISSB S1/S2 with SASB for investor needs, or ESRS for EU compliance.

Then, structure the report with a clear format, add a cross-reference index linking disclosures to each standard, and ensure a plan for continual improvement and external assurance.

Is a Sustainability Report Alone Sufficient?

It may suffice if the organization operates in a market that does not require extensive financial ESG disclosures and its main audience is the community, customers, and employees—provided that it follows GRI rigorously.

However, as global regulations and investor expectations grow, the optimal model is a single, unified report that meets both GRI and ISSB/SASB requirements—or full ESRS alignment in Europe.

This approach minimizes duplication, prevents inconsistencies, and raises data quality and credibility.

Examples of Successful Unified Reporting

• Microsoft (Technology): Combines environmental and social impact reporting with climate disclosures aligned with TCFD and ISSB S2, using SASB sector metrics and linking indicators to financial outcomes and climate scenarios.

• Unilever (Consumer Goods): Adopts double materiality with a clear mapping to GRI, TCFD, and SASB, integrating human rights across the value chain with auditable metrics.

• Saudi Aramco (Energy): Merges TCFD climate disclosures within its sustainability report, aligns with GRI, and connects carbon intensity with transition and regulatory risks.

The Precast Industry as a Practical Example

Many precast concrete manufacturers worldwide use a single Sustainability Report that also functions as their ESG disclosure.

Their reports typically cover:

• Environment: Emissions, electricity and water use, reduction of high-carbon cement, and waste recycling.

• Social: Occupational safety, training, local employment, women’s representation, and community projects.

• Governance: Management structure, anti-corruption and compliance policies, and climate risk planning.

Examples:

• Consolis (Europe): Annual report includes emissions, energy use, and low-carbon concrete plans.

• Forterra plc (UK): Integrates sustainability and climate disclosures in its annual report to meet regulatory requirements.

• Wells (USA): Unified report focusing on safety, production efficiency, and water reuse.

• Holcim Precast/Precast Solutions (Global): Tracks carbon reduction, energy, and water efficiency within group sustainability reports.

Common features among these examples:

• A single report addressing both investor and stakeholder audiences.

• Clear alignment with GRI, SASB, TCFD, ISSB S1/S2, or ESRS.

• Transparent financial linkage between non-financial metrics and expected results, with climate and compliance scenarios.

• Auditable, time-series data supported by independent assurance.

• Sector-specific metrics enhancing comparability through SASB.

Practical Advice to Get Started

Begin by designing a unified report structure that includes:

sustainability governance, double materiality analysis, strategy and objectives, risk management, and measurable goals for climate, resources, and social topics.

Then prepare an alignment appendix covering GRI, ISSB/SASB, TCFD, or ESRS, depending on your market.

Ensure financial linkage and external assurance to strengthen reliability and investor usability.

With this approach, one integrated report can effectively build trust, support better decision-making, and meet both regulatory and market expectations.

Final Thoughts

Both the Sustainability Report and the ESG Report address the same themes environment, society, and governance but from two complementary angles:

• The Sustainability Report focuses on the organization’s external impact and stakeholder engagement, guided by frameworks like GRI and double materiality.

• The ESG Report translates sustainability issues into measurable financial risks and opportunities, aligned with ISSB/IFRS S1-S2, SASB, and/or ESRS.

Thus, a report based solely on GRI is properly a Sustainability Report — comprehensive yet insufficient for investor expectations. Conversely, a purely ESG Report may overlook broader social legitimacy.

The best option is an integrated, unified report that:

• Explains double materiality methodology.

• Sets time-bound quantitative targets (for emissions scopes 1–3, energy, water, safety, diversity, etc.).

• Links non-financial metrics to financial outcomes, transition risks, and climate scenarios.

• Includes an alignment appendix with GRI, ISSB/SASB, and/or ESRS cross-references.

• Provides external assurance for higher reliability.

You can name this unified report a “Sustainability Report”, provided that it is clearly explained from the start that it also serves investors’ needs—aligned with GRI, ISSB/IFRS S1-S2, SASB, and/or ESRS, containing financial linkage, climate scenarios, assurance, and a detailed mapping appendix.

Through this approach, most organizations can rely on one high-quality, integrated report that meets both regulatory and market requirements, turning non-financial reporting from a compliance burden into a driver of strategy, value creation, and improved access to capital.