ESG vs. Business and Human Rights; Is There Really a Difference?

In recent years, terms like Environmental, Social and Governance (ESG) and Business and Human Rights (BHR) are often used interchangeably in corporate and policy conversations. But while they overlap, they are not the same. Understanding the distinction matters especially as governments move from voluntary sustainability reporting toward binding human rights due diligence laws.

What is ESG?

ESG is a framework used to evaluate how companies manage sustainability and ethical risks beyond financial performance. As businesses and companies are in the business of making profit, it is widely used by investors and rating agencies to assess corporate resilience and long-term value.

Even though the “S” in ESG may include issues such as labour standards, diversity, community impact, and supply chain practices, companies typically disclose ESG performance through sustainability or integrated reports, often guided by voluntary standards. Making ESG primarily a risk-management and reporting tool. It helps investors understand exposure to environmental and social risks but it does not automatically create enforceable duties toward affected communities.

What is Business and Human Rights (BHR)?

BHR on the other hand is rooted in international human rights law. Its foundational framework is the United Nations Guiding Principles on Business and Human Rights (UNGPs), endorsed by the UN Human Rights Council in 2011.

The UNGPs establish that;

• States have a duty to protect human rights.
• Businesses have a responsibility to respect human rights.
• Victims must have access to remedy.

Unlike ESG, BHR is not about broad sustainability scoring. It is about protecting , respecting human rights  and remedying actual harm to people. It requires companies to conduct human rights duediligence (HRDD) a process of identifying and addressing adverse human rights impacts in their operations and value chains.

What’s the difference?

The distinction between ESG and BHR becomes especially visible in emerging legislation i.e., the Corporate Sustainability Due Diligence Directive (CSDDD) adopted by the European Union which requires large companies to;

• Identify and assess adverse human rights and environmental impacts
• Take measures to prevent and mitigate harm
• Provide remediation where harm occurs
• Face potential civil liability for failure to comply

This goes far beyond ESG disclosure. It creates binding legal obligations grounded in human rights standards  not just investor transparency. Similarly, companies such as Carlsberg Group publish dedicated human rights reports outlining how they conduct due diligence across supply chains, separate from broader ESG sustainability reports. The difference lies in the depth of analysis, focus on rights-holders, and mechanisms for remedy.

So, Is There Really a Difference?

Yes.

• ESG is a broad sustainability and governance reporting framework, largely investor-driven and performance-oriented.
• BHR is a rights-based accountability framework focused on preventing harm to people and ensuring access to remedy.

While ESG may include human rights indicators, it does not automatically guarantee that companies are identifying or addressing real human rights risks. BHR shifts the focus from reputational or financial risk to risk to people.

As regulatory frameworks increasingly embed human rights due diligence into law, the gap between ESG reporting and BHR accountability becomes clearer. For policymakers, civil society, and responsible businesses especially in jurisdictions developing National Action Plans on Business and Human Rights understanding this distinction is critical.

_{The author is currently undertaking an LLM module on Corporate Governance & implementing a project on responsible business conduct in Agribusiness Sector in Kenya}