CSR and ESG – key differences and similarities

CSR

CSR – Corporate Social Responsibility – is an approach to business management that seeks to balance various environmental, social and employee interests. CSR can take various forms, depending on the specific nature of the company and its sector. Examples of CSR activities include employee volunteering schemes, charitable initiatives, educational campaigns, sustainability initiatives and many others.

CSR covers areas such as:

• Environment: minimising the negative impact of a company’s operations on the environment by reducing greenhouse gas emissions, conserving natural resources, recycling and other environmentally friendly measures.
• Local community: involvement in the development of the local communities in which they operate, e.g. by supporting education, culture, health and sport.
• Employees: ensuring good working conditions, equality, professional development, and the health and safety of its employees.
• Business ethics: adhering to high ethical standards, combating corruption and ensuring transparency in their operations.
• Customers and suppliers: building fair relationships with customers and suppliers by offering high-quality products and services and adhering to the principles of fair competition.

ESG

ESG – Environmental, Social, and Governance – are criteria used to assess the social responsibility and sustainability of businesses and other organisations. ESG is a set of criteria used to evaluate companies’ activities and performance in terms of their impact on the environment, society and internal governance.

ESG covers areas such as:

• Environment: covers a company’s activities and policies related to environmental protection, such as reducing greenhouse gas emissions, waste management, energy efficiency, natural resource management and impact on climate change.
• Society: covers aspects related to a company’s impact on society, such as human rights, working conditions, employee safety, gender equality, relations with local communities, and philanthropic activities.
• Governance: covers aspects related to corporate governance, such as board structure, transparency, business ethics, anti-corruption policies, risk management, board accountability and shareholder relations.

Similarities between CSR and ESG

As can be seen from the above, CSR and ESG share many common objectives focusing on corporate responsibility for their impact on society and the environment – both concepts aim to promote sustainable development, i.e. actions to protect the environment, improve social living conditions and ensure good corporate governance. ESG and CSR place great emphasis on the involvement of various stakeholders, such as employees, customers, local communities, investors and suppliers. The aim is to maintain open communication and build positive relationships with these groups.

Both ESG and CSR promote long-term thinking. Although ESG is more integrated with financial and investment analysis, and CSR focuses more on philanthropic and social activities, both approaches recognise that sustainable practices yield benefits in the long term. These concepts therefore aim to improve quality of life and protect the planet. The actions taken by companies can contribute to achieving global goals.

Differences between CSR and ESG

ESG refers to the criteria that investors and financial analysts use to assess a company’s performance across three main areas: environmental, social and governance. These criteria are used to analyse the risks and opportunities associated with a company’s operations, which has a direct impact on investment decisions.

CSR, on the other hand, often focuses on voluntary initiatives, such as charitable activities, programmes for local communities, improving working conditions, reducing the carbon footprint, or involvement in various pro-environmental projects.

Whilst CSR is often seen as a company’s strategic approach to sustainability and social responsibility, ESG is more investor-focused and serves as a tool for assessing and reporting on specific aspects of a company’s operations that may affect its long-term value. ESG has more measurable and standardised indicators that allow for the comparison of different companies in terms of their sustainability, whilst CSR is more flexible and can encompass a wide range of initiatives and activities.

ESG is a set of criteria used by investors to analyse and assess companies, whereas CSR is a broader concept of corporate social responsibility, often implemented through a variety of voluntary actions and initiatives.

Author

Agata Bączkowska

Adwokat, Senior Associate

She specializes in commercial and civil law. She has gained experience in Warsaw law firms providing comprehensive services to companies and a law firm specializing in labor law. She has extensive experience in corporate consulting. She has participated in mergers and acquisitions at every stage of the process, from pre-transaction legal examination to fulfillment of regulatory requirements related to the transformation process. She prepares and reviews contracts entered into by clients and advises in cases of…

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