CSR vs Sustainability vs ESG

Sustainability and Corporate Social Responsibility (CSR) are as similar as a bun is to a burger. They belong together, yet are they not the same.

  • CSR:
  • CSR, at least in its early forms, tended to focus on meeting—or balancing—the needs of stakeholders today. Additionally, the term is often confused with philanthropy
  • CSR tends to target opinion formers – politicians, pressure groups, media
  • CSR aims to build brand trust by looking good and addressing current issues
  • CSR is defined as an effective way to maintain brand image. This is usually done through reporting on a selection of company efforts to show social responsibility to the wider community, such as donations to community grants and activities
  • CSR usually looks at the past, reporting on what a business has done, typically in the last 12 months, to make a contribution to society
  • CSR usually gets managed by communications teams, and focuses predominantly on compliance

Sustainability:

  • Sustainability and corporate social responsibility (CSR) cover the same three major areas of environment, society and economy, with sustainability focused on actions, like sustainable practice driving efficiency gains
  • A transformation from economically-oriented entities to organizations that consciously build their value through active management of the economic, social and environmental impact
  • Sustainability looks forward, planning the changes a business might make to secure its future (reducing waste, assuring supply chains, developing new markets, building its brand)
  • Sustainability targets the whole value chain – from suppliers to operations to partners to end-consumers
  • Sustainability is usually managed by operations, strategy and marketing functions

In the analogy of the bun and burger, ESG could be seen as the entire meal, serving as the comprehensive framework within which sustainability and CSR initiatives are evaluated and integrated

  • ESG:
  • Companies have frequently used the terms ESG (Environmental, Social, and Governance), CSR, and sustainability interchangeably. However, ESG has gained prominence predominantly with institutional investors and regulators to assess a company’s performance and impact. 
  • ESG is a means to measure performance through examining the material impacts of a company’s activities on its business, society, and the environment
  • ESG goes beyond to demonstrate positive impact with structured and comparable data which increases transparency and accountability
  • Stakeholders including investors, regulators and clients are pressuring major organizations to adopt ESG best practices.
  • The trickle down effect drives major organizations to push their supply chains to embrace ESG standards as a requirement for operation

Example:

Charitable donations that relieve social problems are responsible, but they are not sustainable if they do not resolve underlying issues. On the other hand, 3D printing isn’t typically included in CSR reports. And yet it is both sustainable and responsible. Relative to large-scale industrial production, 3D printing uses fewer materials, generates less waste, adjusts quickly to new designs and caters to local needs. The sustainable nature of its business model therefore would be highlighted and expanded in an ESG report.  

Conclusion:

There is a need to shift the narrative from CSR towards Sustainability and even ESG, as this will enable a fundamental transformation geared toward action. This will shift the focus and bring ESG principles at the core of each organization’s forward looking strategy, thus enabling our economy to reach equilibrium with society, and more importantly, with its finite environment.

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