The Harvard Law School Forum on Corporate Governance https://corpgov.law.harvard.edu The leading online blog in the fields of corporate governance and financial regulation. Wed, 27 May 2026 15:57:01 +0000 en-US hourly 1 https://wordpress.org/?v=6.5.8 https://corpgov.law.harvard.edu/wp-content/uploads/2024/02/cropped-photography-4-e1706898544564-1-32x32.png The Difference Between Purpose and Sustainability (aka ESG) – The Harvard Law School Forum on Corporate Governance https://corpgov.law.harvard.edu 32 32 The Difference Between Purpose and Sustainability (aka ESG) https://corpgov.law.harvard.edu/2021/08/20/the-difference-between-purpose-and-sustainability-aka-esg/?utm_source=rss&utm_medium=rss&utm_campaign=the-difference-between-purpose-and-sustainability-aka-esg https://corpgov.law.harvard.edu/2021/08/20/the-difference-between-purpose-and-sustainability-aka-esg/#comments Fri, 20 Aug 2021 12:55:03 +0000 https://corpgov.law.harvard.edu/?p=139858?d=20210820085503EDT Posted by Robert Eccles, Colin Mayer, and Judith Stroehle (Oxford University), on Friday, August 20, 2021
Editor's Note:

Robert G. Eccles is Visiting Professor of Management Practice; Colin Mayer is the Peter Moores Professor of Management Studies; and Judith Stroehle is Senior Research Fellow at University of Oxford Saïd Business School. Related research from the Program on Corporate Governance includes The Illusory Promise of Stakeholder Governance and Will Corporations Deliver Value to All Stakeholders?, both by Lucian A. Bebchuk and Roberto Tallarita (discussed on the Forum here); For Whom Corporate Leaders Bargain by Lucian A. Bebchuk, Kobi Kastiel, and Roberto Tallarita (discussed on the Forum here); and Restoration: The Role Stakeholder Governance Must Play in Recreating a Fair and Sustainable American Economy—A Reply to Professor Rock by Leo E. Strine, Jr. (discussed on the Forum here).

Corporate purpose and sustainability (often referred to by the acronym of ESG for environmental, social, and governance) are now part of the mainstream lexicon in the corporate and investment communities. The two terms are often used interchangeably as synonyms. This is wrong. Purpose and sustainability are related but different ideas. Purpose comes first. Sustainability can either contribute to it or can detract from it.

As one of us (Mayer) has written, the purpose of a company “is to produce profitable solutions to problems of people and planet,” while at the same time “not profiting from producing problems for people or planet”—a failure in sustainability. Companies that are making investments in sustainability while failing to produce profitable solutions to people and planet are also failing in purpose. Companies that are profitable while degrading the environment and society are focused on profits, not purpose. Danone is an example of the former and ExxonMobil is an example of the latter.

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