Corporate Social Responsibility Leads to Valuable Business Outcomes
Corporate Social Responsibility (CSR) is an important aspect to ethical business operations. There are multiple areas of CSR that a business may focus on depending on their industry, but generally – environmental conservation, philanthropy, social impact, and sound diversity and labor practices shape a CSR strategy.
CSR differs from Environmental, Social, Governance (ESG). When it comes to CSR, there is a stronger focus on philanthropy, volunteerism, and positive brand perception developed through socially responsible practices. ESG has emerged as an investor view that measures the impact that non-financial environmental, social, and governance factors have on enterprise value creation.
However, there are certain areas where the two overlap. A company with a strong CSR strategy likely takes a proactive approach to environmental sustainability initiatives – like carbon foot-printing and reducing waste, social impact programs – such as ethical sourcing, as well as diversity, equity, and inclusion. These aspects are also considered by many ESG standards setters such as The Value Reporting Foundation (formerly SASB), GRI, and more.
Ultimately, CSR and ESG differ – but each are founded on the idea that considering business impact on non-financial stakeholders can lead to positive business outcomes.