Corporate Social Responsibility, or CSR, was created with the intention of holding businesses accountable. But the world’s most prosperous companies have increasingly shifted their emphasis to ESG. With this change has come a greater inclination for companies to prove their sincerity and values through more material pipelines.
What is ESG?
How does ESG differ from CSR and what does it really mean for organizations? These two questions are crucial to understand in order for a company to tackle its respective responsibilities.
ESG stands for environmental, social, and governance, and focuses on policy, action, and practices a company can take to ensure genuine accountability. CSR stems from a company’s values and sets guidelines in place from within the organization, while ESG relates to standards that are set externally and oftentimes require data, reporting, and practice of a CSR philosophy.
All Brands Need ESG
Not all companies think they need to commit to ESG practices; some believe they can produce a product, serve their clients, meet their bottom lines, and clock out. In today’s day and age, there is simply more that is required from organizations than just meeting the bottom line.
83% of consumers and 86% of employees think that companies should actively use ESG best practices according to PwC. CSR is not just a mission statement on a company site. ESG helps bring greater authenticity to CSR values by driving plans and initiatives to physically embody their principles.
Consumers, employees, and investors are increasingly taking note of how brands are living up to the ideals they preach. Brand loyalty drives sales. Employee outreach drives talent acquisition. Investors drive funds. All of these assets combined are vital for creating company success.
Authenticity is Everything
One of the most significant elements of having a successful ESG strategy is maintaining sincerity. Studies have highlighted the fact that a vast majority of consumers don’t trust brand sustainability claims. Companies that stay true to their business models and values are able to deliver purpose-driven initiatives in a more authentic manner.
Whether you are a business leader with a passion project in mind, an urge to better your industry or community, or a mission near and dear to your heart, the chances are some of your users, partners, clients, and employees share some of those values. With a platform to voice support and make an actionable difference, consumers don’t just want companies to use their positions of strength and influence, they expect them to.