Photo by Kindel Media
You’ve probably heard the term ESG (environment social governance). You may have heard it be interchanged with CSR (corporate social responsibility). Are they the same thing?
The answer is no. CSR and ESG, although promoting the same general concept, are distinct. CSR is everything a company does to positively contribute to societal issues that it’s not required to do by law or regulation. ESG is CSR that has been formalized into measurable criteria that are disclosed to investors and the public. As Lexology puts it: “While CSR aims to make a business accountable, ESG criteria make such business’ efforts measurable.” ESG criteria focus on quantitative data used to help investors, employees and consumers make decisions regarding a company. In essence, a company's ESG reporting shows if it’s “walking the talk” in terms of their CSR goals across:
There are several frameworks to help companies structure their ESG work, the most common of which are listed below.
Why should your company care about ESG? If your company executes ESG right, it’s likely to be more profitable. Also, investors increasingly expect companies to disclose ESG data. For example, the newly incorporated International Sustainability Standards Board (ISSB) is developing international ESG reporting standards and the US Securities and Exchange Commission (SEC) is incorporating ESG into its work. In summary, ESG is quickly becoming a standard part of managing a business.
Spark the Change Colorado, Community Shares of Colorado, B:CIVIC