Some people may confuse the phrases ESG and CSR. But since both are necessary for creating a solid business strategy, they work best together.
In general, CSR (corporate social responsibility) refers to an organization’s responsibility toward its stakeholders (employees, clients, suppliers, and the general public). The company is a loyal citizen of the community in which it conducts business.
The acronym “ESG,” which stands for “Environment, Social, and Governance,” is an umbrella term that refers to three important elements. It gives investors the tools they need to assess organizations, assess risks, and make investment decisions by measuring the influence these factors have on various organizational areas.
How Does it Affect Us? (CSR Managers)
The position of CSR has been elevated by ESG. CSR is no longer a “nice to have” feature. In recent years, the emphasis on environmental, social, and governance (or “ESG”) issues has firmly shifted from the periphery to the center of the capital markets. Along with a higher awareness of the necessity and urgency to expand efforts to solve environmental issues and climate change, the focus is reflected in the amount of capital invested in ESG-oriented investment funds. The risk managers and CFOs are two additional internal partners who are actively involved in ESG reporting.
It is obvious that ESG and CSR are both crucial to businesses and that both can have a significant impact on the firm, regardless of what you choose to term this subject. Building an integrated, pertinent, and effective corporate strategy requires taking into account both “inside-out” and “outside-in” perspectives.