CSR vs ESG - Whats the difference?
CSR (Corporate Social Responsibility) and ESG (Environmental, Social, and Governance) are two acronyms that are thrown around pretty candidly these days.
You may have heard one (or both) crop up in conversations around the workplace as organisations think about how they can incorporate sustainability into their practices.
The question remains, though: what on earth is the difference between CSR and ESG? And why should you care about them?
Let’s start simple
CSR is a business model that helps an organisation be socially accountable to itself and to its stakeholders. It involves taking a look at the big picture of Corporate Social Responsibility and figuring out how to make sure the business is doing good, both socially and environmentally.
ESG is a framework embedded in an organisation’s strategy. It considers the needs and values of stakeholders, and can have an impact on a company’s success and market returns. It’s divided into the three pillars of ‘environmental’, ‘social’, and ‘governance’. ESG can be measured with a number between 0 and 100 – anything above 70 counts as a ‘good’ ESG metric for an organisation to have.
The difference between them is that, where CSR mostly looks at the big picture, ESG is more detail-oriented and practical. Integrating CSR values holds your business accountable when it comes to sustainability; integrating ESG frameworks makes that accountability measurable.
CSR and ESG influence each other a lot. For example, many ESG strategies couldn’t exist without first laying down values through a CSR program. Likewise, CSR values may never be more than idealistic hopes without the discipline of an ESG framework to make them quantifiable.
Now that we’ve figured that out…
Why should you care about CSR?
We’re no strangers to talking about CSR – just check out our white paper, if you want a really in-depth look at the effectiveness of CSR programs. But if you want a crash course, we’re happy to provide.
Corporate social responsibility is all about integrating social, ethical, and environmental concerns into your organisation’s framework, so that you’re clear on your values and what you’re working towards.
With 64% of millennials saying that they wouldn’t take a job if the company doesn’t have a strong CSR policy, ensuring that you have strong organisational values is going to both help you attract the talent you want and also retain the employees you can’t afford to lose.
CSR helps you have a clear idea of what direction you want your company’s values to take, and also make those first steps into doing it. CSR values can manifest in a program that ensures your organisation is following those ideas; for example, if you want your organisation to be more socially conscious or environmentally responsible, volunteering is an increasingly popular answer to these values.
And why should you care about ESG?
ESG takes the ideas of CSR and puts them into action. For example, if one of your CSR values is to be a greener organisation, your ESG strategy would put that into action (such as taking steps to reduce your organisation’s emissions, or switching to a more sustainable supplier for products or services).
ESG is super important for reputation. It’s the thing that people outside of your organisation see when they look at you. Investing in ESG and an ESG strategy is investing in stakeholder value; if your organisation can deliver on environmental, social, and governance claims, this is going to put you head and shoulders above the rest.
58% of organisations see a positive relationship between ESG and financial performance. Investors trust in organisations that are dedicated to putting their money where their mouth is; and that’s what ESG is all about. If you can prove your commitment to workplace sustainability, you should.
Likewise, the ‘S’ in ESG (the Social aspect) is crucial to increased HR focus on employee wellbeing and DE&I. Currently, only 28% of companies have sustainability initiatives that support under-represented groups, but 56% plan to introduce benefits that support under-represented groups in the next 2 years. Workforces are starting to look more towards this social aspect, and what it can do for workers – and for good reason. Everything boils down to workplace sustainability, of which both CSR and ESG are huge influencing factors.
Why are we shouting about workplace sustainability?
In this context, ‘sustainability’ refers to both making good decisions for the environment and also putting employee health and wellbeing first. A sustainable workplace prioritises not having a negative impact on health or environment.
Put simply, workplace sustainability is the future. More and more employees are looking to work for organisations whose views align with their own, and whether it’s attention to the climate crisis or an increased focus on personal wellbeing and mental health, putting in the effort will absolutely pay off in the long run.
The stats prove it; 1 in 3 young people have turned down a job offer because of a company’s ESG credentials, choosing instead to take a more environmentally friendly role. KPMG refer to this as “climate quitting”. The growing generation of newer workers are more environmentally conscious than ever, and to keep up, organisations have to both care about social and environmental aspects of their work and also prove that they do.
Employee wellbeing isn’t something that can be ignored. The climate crisis definitely can’t be ignored. With 70% of employees claiming that they get their main sense of purpose from work, it’s necessary to take steps to ensure they’re getting exactly the purpose they need. By making changes now, you can ensure a sustainable future for your organisation and workplace.
So, just as a reminder…
CSR and ESG are pretty closely intertwined, so a one-size-fits-all definition is a bit ambitious. If we want to give it a go, though…
CSR is the value and ESG is the measurement. Both can manifest as initiatives or programs; in general, the difference is that ESG strategies can be measured more effectively and concretely than CSR initiatives.
Both are increasingly important for reputation when it comes to employees and to stakeholders. As millennials and Gen Z start to integrate into the workforce, bringing with them a huge focus on workplace sustainability, caring about this stuff is the best way forward.
If you want to find out more about how we can help you with your CSR and ESG initiatives, reach out today: https://beonhand.co.uk/book-a-demo