CSR vs ESG

Corporate Social Responsibility (CSR) and Environmental, Social, and Governance (ESG) are both frameworks that guide businesses in addressing their societal and ethical responsibilities, but they differ in scope, purpose, and implementation.

CSR

1. Scope: CSR focuses primarily on a company's voluntary actions to address social and environmental concerns. It often includes philanthropic activities, community engagement, and sustainability initiatives. CSR is typically seen as a broader concept that encompasses a company's moral obligations to society.

2. Purpose: CSR is driven by the idea of giving back to the community and minimizing the negative impact of business operations. It aims to create a positive public image and build trust among stakeholders by demonstrating a commitment to ethical practices and responsible business behavior.

3. Implementation: CSR initiatives are often discretionary and may vary significantly between companies. They can include charitable donations, volunteer programs, environmental conservation efforts, and ethical sourcing practices. The focus is on "doing good" beyond the core business activities.

ESG

1. Scope: ESG, on the other hand, is a more comprehensive framework that evaluates a company's performance and risk management across three specific categories:

• Environmental

• Social,

• Governance

It encompasses a broader range of factors that can affect a company's long-term financial performance.

2. Purpose: ESG is primarily concerned with evaluating a company's sustainability and ethical performance to assess its potential for long-term financial stability and value creation. It is driven by the idea that companies that perform well in these areas are more likely to be successful and resilient in the face of changing market conditions.

3. Implementation: ESG assessment involves the systematic evaluation of a company's practices in areas such as carbon emissions, labour practices, board diversity, and transparency. Investors and analysts use ESG data to make informed investment decisions and assess the overall sustainability and ethical performance of a company.

In summary, CSR is a broader concept focused on voluntary initiatives to support social and environmental causes and enhance a company's reputation, while ESG is a more structured and data-driven approach that evaluates a company's performance in specific ESG factors to assess its long-term financial sustainability. Both concepts share the goal of promoting responsible business practices, but they differ in their scope, purpose, and the way they are implemented and assessed.