Comparison of ESG and CSR. How do these concepts differ?

By BluExperience | June 17, 2024 | ESG

Comparison of ESG and CSR. How do these concepts differ?

In today’s dynamic business world, with increasing importance placed on balancing profit making with social and environmental responsibility, the terms CSR and ESG are often used interchangeably. However, the approach is uneven. Although both concepts move in the direction of promoting sustainability and minimizing the negative impact of companies’ activities on the environment, there are obvious differences between them. In this post we will try to briefly discuss them.

Corporate social responsibility (CSR) – what is it?

CSR stands for Corporate Social Responsibility, which when translated into Polish means corporate social responsibility. It is a management strategy according to which a company voluntarily takes into account social interests, environmental aspects and relations with various stakeholder groups, especially employees, in its operations. The main premise of CSR is to conduct business in a way that ensures the transparency of decisions and their compliance with ethical standards.

The purpose of a CSR strategy is to show that a company or organization is socially responsible to itself, its stakeholders and society. Although the origins of this concept in the world date back to the 1950s. While it was developed in the 1970s, it is relatively new in Poland. The idea of CSR is steadily gaining in popularity, reflecting growing social awareness and the increasing importance of companies’ responsibility for the impact of their actions on their surroundings. In recent years, the search for ways to analyze and evaluate “soft” Corporate Social Responsibility activities has begun. Thus was born the concept of ESG.

ESG concept – importance and impact on business

ESG is a kind of continuation of CSR. The acronym ESG can be deciphered as Environmental, Social and Governance. This concept emphasizes the importance of a sustainable approach to doing business, taking into account both environmental and social aspects, as well as governance and management issues. Simply put, ESG seeks to transform a corporation’s CSR efforts from the realm of pure philanthropy into something tangible and measurable. This view of management seeks to express these efforts through numerical data, allowing investors and consumers to more easily evaluate and compare companies’ actions. The task of ESG is therefore to provide measurable indicators to monitor the effectiveness of the steps taken by companies and organizations in the environmental, social and business areas.

CSR versus ESG – differences and similarities

As you can see, the concepts of CSR and ESG have many elements in common. The purpose of these strategies is to strive to introduce practices aimed at positively impacting the company on its environment. Both CSR and ESG show how socially and environmentally conscious a company is. Both concepts place a strong emphasis on sustainability, encouraging companies to make decisions and take actions that consider both social and environmental aspects. In addition, both CSR and ESG emphasize the role of transparency and ethics in business operations, promoting honest practices and responsible approaches to management.

Despite the similarities, there are noticeable differences between the concepts of CSR and ESG. CSR strategy focuses on demonstrating that a business can act responsibly toward its environment, while ESG seeks to measure and evaluate these efforts. Traditional CSR often includes a company’s involvement in charitable initiatives, philanthropy, social investment and maintaining business ethics. ESG, on the other hand, covers a broader scope, combining these issues with aspects of governance. All this reflects a change in the approach to business, which should not be concerned only with its economic interest.