Corporate Social Responsibility (CSR) and Environmental, Social and Governance (ESG) are often confused with each other.
However, they are not the same. While CSR is a company’s business-level strategy focusing on a number of social factors, ESG accounts for a set of data measuring impact and performance on the whole spectrum of issues ESG covers.
Corporate Social Responsibility (CSR) is a self-regulated strategy, a management concept of integrating social and environmental factors into company's goals. The main aim behind this approach was to improve brand reputation through creating a positive impact on society. It enabled companies to build reputation, increase customer and brand loyalty and attract better talent.
Corporate Social Responsibility was the initial keyword for sustainable investment and business practices. In short ESG metrics helped develop Corporate Social Responsibility into a measurable strategy – introducing transparency and accountability for a company’s environmental and social impacts.
It relays on sustainability metrics to conduct assessment based on Environmental, Social, and Governance factors. It measures how resilient and sustainable a company is, identifies its risks and opportunities and verifies its sustainability claims.
Additionally, it helps the companies to identify measurable targets and goals to illustrate their progress and meet regulations and stakeholders’ demands for transparency.
ESG metrics are being embedded into the local legislations and corporate laws. An increasing number of ESG regulations being introduced worldwide leaves investors and businesses no other option but to incorporate the ESG concepts into their corporate strategy.
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