ESG (Environmental, Social and Governance) and CSR (Corporate Social Responsibility) are differing frameworks that companies use to assess sustainability.
Broadly speaking, CSR may be used as an internal framework, while ESG may be used by investors to assess a company’s sustainability credentials.
Which is better, or do you need both?
Looking inwardly, a company may adopt CSR to self-regulate their business model regarding the impact they are having upon wider society. This may include the environment, the economy, and people within society. CSR empowers staff and allows them to influence and therefore focus more on the company ethos.
Your external image, if you like, will reflect your ESG framework and stand up to the scrutiny of potential investors in the areas of Environmental impact, Social, in terms of relationships with employees, suppliers, customers, and the wider community and Governance which incorporates areas such as leadership, audits and internal controls.
Cementing the values of CSR into your company and developing that culture gives you the perfect platform to be more confident of the outcome of ESG scrutiny. If you set measurable goals and conduct audits, the more quantitative measures of sustainability associated with the ESG criteria will ensure that investors will see your company as a sound place to put their capital in the years ahead.
