What are the differences between Corporate Social Responsibility (CSR) and Environmental Social Governance (ESG)?

CSR stands for Corporate Social Responsibility.

However, while CSR and ESG have some key differences (see table below), it is important to note that the two concepts are not in conflict: both seek to set goals for and report out on positive societal impact.

CSR ideology and approaches have shifted dramatically over the past few decades.

The idea of CSR began in the mid-20th century, with the landmark book Social Responsibilities of the Businessman by Howard Bowen widely considered as the beginning of CSR ideology.

In the decades between 1950-70, attitudes towards CSR were shifting as the concept became more widely accepted–aided by the Committee for Economic Development’s introduction of a ‘social contract’ between businesses and society–and practical applications were developed.

The 1980s also saw an increase in CSR operationalization and its role as a decision-making process. However, during this time period, CSR was primarily focused on philanthropy and little else.

CSR ideology in the late 20th to early 21st century became more globalized, as multinational corporations began to face increased reputational risk and increased pressure for social responsibility from both their home and host countries. This environment and need for greater awareness of social impact helped institutionalize CSR and bring the discussion of CSR compliance into the mainstream.

Governmental organizations such as the European Commission (EC) also encouraged the implementation of CSR through actions like passing the European Business Declaration against Social Exclusion and launching the European Business Network for Social Cohesion one year later.

CSR grew in influence in the 2000-2010s, when it began being incorporated into policy.

In 2001, the European Commission (EC) introduced a Green Paper called Promoting a European framework for Corporate Social Responsibility that constituted the first step towards the 2002 European Strategy on CSR adopted.

The EC also sponsored a number of CSR conferences and launched a “European Roadmap for Business” discussing CSR objectives for the next few years. This time period also saw the development of standards and frameworks: the idea of the ISO 26000 was first proposed in 2002.

The 2010s introduced the concept of creating shared value (CSV), developed by Heslin & Ochoa and Porter & Kramer.

CSV–which Porter & Kramer explained as practices that simultaneously enhance a company’s competitiveness and advance economic and social conditions in its surrounding communities–has a lot of overlap with CSR and added to the case for increased attention on corporations’ impact.

Moreover, key events such as the Rana Plaza tragedy in 2013 led to more widespread awareness of issues like human rights and ethical manufacturing that fall under the purview of CSR.

The 2015 United Nations Climate Change Conference (COP21) was another key moment pushing the development of CSR, as COP21 produced a new commitment to the environment and net zero emissions.

More recently (since 2020), sustainability and the idea of regeneration of resources are becoming more prevalent in the field of CSR.

Moreover, one important distinction with modern CSR is the focus on accountability and creating positive impact for the whole value chain; CSR does not stop at simply limiting negative impacts–the goal is to create positive outcomes as well.

As consumers align their investments with their values and become increasingly vocal in demanding that corporations adhere to a moral standard of social and environmental responsibility, the field of CSR and ESG will likely continue to grow and expand.

No company can prosper nowadays if it is not involved in the community and the people around.

Companies need to take an active role in the community, beyond just making a profit. The positive benefits of this attempt include the company’s expansion and durability of its success.

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CSR is thought of as a qualitative approach that is driven by internal values and commitments, while ESG is considered quantitative and driven by external requirements (i.e., international frameworks and standards). While the two concepts have some key differences (see table above), it is important to note that both seek to set goals for and report out on social and environmental impacts (mitigating negative ones and enhancing positive ones).

The concept of corporate governance is actually a sub-topic of CSR. It refers to the system of rules, practices, and processes by which a company is directed and controlled.

Corporate social responsibility is the idea that businesses have a responsibility to benefit the society that they exist within. It is viewed as a form of social responsibility but is used specifically in the corporate business world.