What Is GRC and ESG

“GRC vs ESG” is often misunderstood as the same, but both actually focus on different aspects. Governance, Risk, and Compliance (GRC) emphasizes internal governance, risk management, and compliance. In contrast, Environmental, Social, and Governance (ESG) evaluates how businesses impact the environment, society, and governance practices.

Environmental, Social, and Governance (ESG) refers to a set of sustainability criteria. Investors, regulators, and the public use these criteria to assess the impact of a company’s operations on society, governance, and the environment.

For a deeper dive, read 6clicks on the differences between ESG and GRC.

Main Differences Between GRC and ESG

1. Scope and Objectives
   • GRC focuses inward: companies manage governance, monitor risks, and maintain compliance.
   • ESG, on the other hand, looks outward: businesses influence the environment, society, and their reputation with investors and the public.
2. Measurement and Standards
   • GRC uses compliance frameworks like ISO, SOX, and GDPR to measure effectiveness.
   • ESG relies on sustainability standards such as GRI, SASB, carbon emission reports, and social indicators.
3. Stakeholder Orientation
   • GRC primarily serves regulators, auditors, and internal management teams.
   • ESG serves investors, customers, and the public who evaluate corporate responsibility.

Benefits of GRC and ESG

Governance, Risk and Compliance

• Boosts operational efficiency.
• Reduces legal risks and prevents fines.
• Ensures consistent governance across the organization.

Environmental, Social and Governance

• Builds stronger public reputation.
• Attracts investors who prioritize sustainability.
• Prepares businesses to face environmental and social challenges.

Additionally, CRMS Indonesia highlights the importance of integrating ESG and GRC for business resilience.

GRC and ESG: Complementary Approaches

Although different, GRC and ESG complement each other. When integrated effectively, they can:

• Enable businesses to identify environmental and social risks within their risk management frameworks.
• Increase transparency and accountability across stakeholders.
• Ensure compliance not only with regulations but also with sustainability standards.
• Provide a competitive advantage in an era demanding greater social and environmental responsibility.

Practical Solutions for Integrating GRC & ESG

For Indonesian businesses starting their integration journey, local solutions such as Adaptist Privee support governance, risk management, and compliance reporting more efficiently. Moreover, they simplify the process and align corporate goals with long-term sustainability efforts.