Sustainability in 2022: CSR vs. ESG
The responsibility of business to play not only a supporting, but an active role, in sustainability practices is a reality of 2022. It is now expected that organisations contribute to their communities and practice their business behaviour sustainably.
In 2022 96% of Certified Top Employers consider themselves to be sustainable employers. Their commitment to sustainability is shown in their decision-making that is informed by their social and environmental obligations that 90% of Top Employers are consistently doing this. As they work to integrate sustainability into more of their HR process, whether that is through creating an organisational culture of sustainability (as 89% of Top Employers do) or integrating it into their employer brand (83%) or their shared values as an organisation (85%).
The way that HR is involved in sustainable efforts is evolving in 2022, we covered this briefly in an earlier article, and this article looks at how organisations use programmes like CSR and ESG to assist in these efforts with a focus on how the two projects differ from each other and how businesses can make the most effective use of them in 2022.
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What is Corporate Social Responsibility
CSR stands for corporate social responsibility, and it is a business model that helps organisations to be socially accountable to itself, employees, stakeholders, and the public. It is a broad concept that can take very different form depending on the organisation, the country they operate in and the industry, among other factors.
The goal of most CSR programmes is to allow organisations to make a concerted effort to operate in ways that help the environment, whether that is through sustainable projects (as we are focused on today) or other societal improvement projects. CSR is also seen as a way for businesses to increase morale in the workplace for employees.
These projects are commonly self-regulated, and reporting of these projects varies from organisation to organisation. While there is an assumed accountability around CSR the qualitative nature of many of the projects means that it can be difficult to measure the impact of these efforts.
Examples of CSR:
- Participating in volunteer work.
- Investing in environmentally conscious businesses or projects.
- Engaging with employees in supporting charitable projects.
What is Environmental Social Governance
ESG uses environmental, social and governance factors in a framework to evaluate the effectiveness of sustainability practices within an organisation. It can be compared to CSR if you understand that while CSR tries to make a business accountable, ESG guarantees that their efforts are measurable. Financial performance takes a significant role in ESG valuations.
ESG focuses on the quantitative results that can guide stakeholders and investors to make decisions about the ethics of companies. The ESG reporting that is open to the public also assists consumers to make informed decisions about the businesses that they support.
In a nutshell ESG has the view that sustainability goes beyond just sustainability concerns. It is becoming a performance marker for businesses as a kind of report card on their sustainable practices.
There are a few questions that help companies to address their performance across the ESG areas that many organisations, despite their differences in approaching ESG, will help to address their concerns.
- How does leadership structure in the organisation govern the business, and what effect does that have on decision-making around sustainability practices?
- What impact does the business and its policies have on the environment?
- Within the organisation what are the ongoing sustainable behaviours that the business is undertaking.
The Difference Between CSR and ESG
In reading the definitions of CSR and ESG it is clear that while they are quite closely related, they are not the same thing. CSR is driven by ideas, and it gives context to sustainability agendas while incorporating a culture of corporate responsibility. On the other hand, ESG is the measurable outcome of these practices.
In simple terms CSR can be thought of as the quantitative side of sustainability actions while ESG is the qualitative side.
Three Ways HR Can Help to Incorporate CSR
- Integrate CSR into the company culture within the organisation, this could be done by implementing a code of core values and code of ethics that go across the organisation.
- Educate and listen to employees across the organisation. While leadership can be useful in distributing information it is not the only opinion guiding how HR helps to guide the CSR projects. Employees want to be involved in their organisation beyond the limits of their job role and educating employees on what they can do to contribute can help to guide employees in taking these active roles.
- Be aware of the impact that the organisation has on the environment and create goals that improve resource management and help to reduce their carbon imprint.
Three Ways HR Can Help to Integrate ESG
- Help to set objectives and goals that can help your organisation to determine what your organisation is currently doing. In doing this HR can also examine how the organisation can work to improve underperforming areas to reach the goals they have set.
- Work with an established ESG team to develop a strategic ESG roadmap and framework that includes measurable and progressive goals. HR assisting in creating this framework helps to guide stakeholders within and outside of the organisation.
- Report progress externally and internally in the organisation around how the ESG strategy is going. This reporting looks at what is going well, what is not going to plan and what the plan to progress the strategy.