What is the difference between ESG and CSR?
ESG as well as CSR have become important terms or even trend words in the topic of "sustainability". Often the difference is not always clear. What is the difference between CSR and ESG?
Corporate Social Responsibility (CSR) is based more on corporate action towards the environment and society and has a moral connotation - social responsibility. Environmental, Social and Governance (ESG) originates from the financial world and serves as a steering tool for sustainable investments - with a compliance perspective.
What is CSR?
Corporate Social Responsibility (CSR) is the social responsibility of companies in relation to their sustainable economic performance. Such activities can include: reducing the carbon footprint, volunteering, improving working conditions and engaging in charity work. Promoting CSR is now part of brand management. CSR practices are often self-regulated and therefore more qualitative measures.
What is ESG?
Environmental, Social, and Governance - ESG assesses the "sustainability" of a company based on these core factors. The resulting metrics help weigh the opportunities and risks of an investment when making an investment decision. ESG is more quantifiable.
Roughly, the terms can be divided as follows:
- Focus on voluntary work of the company, reduction of CO2 footprint, commitment to charitable organizations
- Information Values, corporate culture, and goals of the company
- More qualitative measurement
- Inclusion of environmental, social, and corporate governance factors
- Focus on company valuation
- Quantitative measurement of sustainability
ESG and CSR can be used simultaneously by companies. CSR helps raise awareness of initiatives and ESG provides solid numbers.
About the author
CMO / Head of Communication & Partnerships der Global Green Xchange AG