CSR vs ESG – from innovation to standard practice

Corporate Social Responsibility (CSR) is something that has been receiving attention in many organizations for years. Initially, it was just good practices without strict guidelines – actions often served marketing purposes, and comprehensive reports were not widely available. Today, we have clear, measurable goals, and it is easy to find information about what companies have done to achieve them (and to what extent they have succeeded).

What is CSR?

CSR (Corporate Social Responsibility) is defined by the European Commission as the “concept where companies voluntarily consider social and environmental issues in their business activities and relationships with stakeholders.”

In 2010, the International Organization for Standardization (ISO) published the ISO 26000 standard. Presented as a guide to help organizations (regardless of their size, type of activity, or location) understand the principles of responsible business and translate theory into practice. The standard identifies seven areas of corporate social responsibility:

  1. Organizational governance
  2. Human rights
  3. Labor practices
  4. Environment
  5. Fair operating practices
  6. Consumer issues
  7. Community involvement and development

Organizations can choose the areas that are relevant to them and tailor their actions accordingly. They have various tools at their disposal, including programs for employees, the implementation of transparent management systems, and activities for the local community.

It has become clear that CSR is not just a marketing slogan to draw attention to an organization. It also brings numerous benefits, such as economic advantages and benefits for employees. CSR should be the foundation of business activities, not just an add-on, and should not be confused with philanthropy.

What is ESG?

The more organizations that operate according to a CSR strategy, the greater the need for their comparison, clear guidelines that will allow for measuring the set goals. ESG is the non-financial factors that are taken into account in a company’s actions. ESG (Environmental, Social, and Governance) factors are considered in addition to financial aspects in a company’s operations. ESG represents:

  1. Environmental impact (E)
  2. Social relations with stakeholders (S)
  3. Corporate governance (G)

In simpler terms, ESG is a more specific form of CSR. It enables the measurement and reporting of organizational actions, leading to non-financial assessments and ratings. Companies that pay attention to ESG gain recognition from investors, business partners, customers, and employees. ESG enhances market position, and the significance of non-financial factors will continue to grow, not only due to legal requirements but also due to employee expectations.

CSR laid the foundation for ESG. CSR strategies focused on specific areas, but reports were often generic without defined goals and indicators of achievement. The actions taken by organizations were primarily used for marketing purposes. In contrast, ESG sets specific and measurable goals. It not only defines what organizations want to achieve but also measures the extent to which those goals have been realized.

While CSR strategies also included elements beyond the social sphere, they mainly focused on business responsibility. ESG covers a wider range of areas. Previously, corporate governance and employee issues were internal information that organizations did not want to share. Currently, transparency attracts not only investors but also employees. Actions related to diversity, equity, and inclusion (DEI) are something that companies want to showcase. Reports are published not only as “dry” PDF files but also as interactive web services that engage recipients and make them want to learn more about a company’s activities and take advantage of its offerings.

CSR is a voluntary action, whereas ESG is becoming an obligation for an increasing number of companies. The Corporate Sustainability Reporting Directive (CSRD), published in December 2022, imposes non-financial reporting obligations on a greater number of organizations. In Poland, it currently applies to 150 companies, which will increase to approximately 3,500 by 2026.

Managing human capital is a crucial element of corporate social responsibility. It is something that many rating agencies pay attention to. The social aspect influences all elements of CSR and is related to environmental impact, corporate governance, and how the organization is perceived by its surroundings. While various areas can be addressed, focusing on people will ultimately help achieve a competitive advantage.

At Helping Hand, we understand the importance of people. Social responsibility is our domain. We can help you take care of the “S” in your organization. At Helping Hand, we:

  • Develop the soft skills of leaders and other employees.
  • Provide training on diversity and inclusivity.
  • Help build organizational safety.
  • Address employee well-being needs.
  • Offer psychoeducation.

Corporate social responsibility affects how a company is perceived both externally and internally. We understand that it is not easy to define all the factors that may be involved, but we are more than happy to help with that.

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