Has ESG replaced CSR?

ESG (Environment, Social & Governance) is the current buzzword globally, but before 2005 CSR (Corporate Social Responsibility) was on everyone’s lips…. What has changed?

Traditionally, CSR has been about doing good for good’s sake. It has focused on social accountability and community engagement offering qualitative evidence of the positive impact a company can have on the world.

CSR has been around since Andrew Carnegie in 1889 challenged other wealthy people to support social causes.

ESG on the other hand can be traced back to the Quakers in 17th century England, who would invest in companies that turned a profit whilst minimising harm to society.

So arguably ESG is older than CSR. But here is the catchall….no regulatory body makes CSR a “reportable mandate”, according to LexisNexis.

ESG reporting, on the other hand, is mandatory in at least 25 countries as of 2019, according to the Harvard Law School Forum on Corporate Governance, including China and Hong Kong.

So, what is the difference? For the last half-century companies have often used the terms ESG, CSR, and sustainability interchangeably.

ESG goes beyond CSR to demonstrate a positive impact with data. ESG examines the hard numbers and material effects of a company’s activities on the ecosystem, people, and on the business itself.

Now, the public, investors, regulators and non-governmental organizations (NGOs) are pressuring companies for quantifiable evidence of this positive impact.

This is why your ESG report is mandatory across most of the developed world.

A 2021 report from Bloomberg estimates global ESG assets will exceed $53 trillion USD by 2025.

That is just 20 months away from now!

Currently Hong Kong has mandatory requirements for listed companies only. Investors are driving the ESG train in many respects.

CSR is not. CSR has become encompassed in ESG as it is a requirement. So, think of CSR as the precursor to ESG…… and now it is part of a regulatory requirement in much of the world.

And that is a good thing!

Contact Ascent Partners for any ESG questions or requirements.

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