📌Key concept: ESG looks inwards and its action reduces an organization’s footprint, whilst CSR looks outwards, giving back to the society but does not improve a company’s own footprint.
About ESG
ESG stands for environment, social and governance. As a standalone concept, it normally refers to a set of data and disclosures that companies share with their stakeholders. These data points represent the impact a company’s operations has on these three key areas. ESG provides transparency of a company, but it does not inherently require action.
⚠️There is no such thing as “doing ESG“. However, companies can set improvement targets based ESG metrics to reduce their operational footprint. These targets normally aim to reduce a company’s negative impact to the environment or society that take place as a direct result of their business activities.
For example, a company may take the initiative to reduce their carbon emissions, or increase the gender diversity in their workforce. Both of these activities aim to reduce the harm and risk the company poses to the environment and society.
About CSR
CSR, on the other hand, stands for Corporate and social responsibility. Normally, companies that are working on CSR projects mean that they have a set of initiatives that give back to a community in need.
⚠️If a company carries out CSR projects, they are creating a positive impact to the environment or society. But that does not mean that they are directly reducing their negative impact from their own business operations.
For example, employee volunteer work is a common CSR initiative, which brings positive value to the community but may not reduce the environmental footprint of the company’s operations.