What is the difference between CSR, ESG, and SDG?
Corporate Social Responsibility (CSR) has become an integral part of operating a business in today’s fiercely competitive landscape. Companies must now consider their impact on society, the environment, and their stakeholders, establishing a robust CSR strategy to ensure long-term competitiveness.
CSR, ESG (Environmental, Social and Corporate Governance) and SDG (Sustainable Development Goals) are interconnected concepts that businesses should understand to develop effective socially responsible strategies. Let’s take a closer look into these concepts and how DHL's environmental logistics solution, GoGreen Plus, helps businesses implement CSR by utilizing renewable aviation fuels to reduce carbon emissions, enhance brand image, and demonstrate a commitment to sustainability.
What is Corporate Social Responsibility (CSR)?
Corporate Social Responsibility (CSR) refers to a company’s responsibility to act ethically and contribute positively to society, the environment, and stakeholders while pursuing economic interests. Simply put, companies should not only generate profits but also consider their impact on employees, consumers, communities, and the environment.
There are various ways in which companies can implement CSR, such as reducing carbon emissions in operations, supporting community projects, and providing a quality working environment. Increasingly, companies see CSR as a key factor in their long-term success, as it not only strengthens their brand image, but also fosters positive interactions with various sectors of society.
The Relationship Between CSR, ESG and SDG
Corporate Social Responsibility (CSR)
CSR emphasizes the voluntary social responsibilities of corporations and how they can minimize negative impacts on the environment and society by improving their day-to-day operations. This covers a broad range of aspects, including ethical business operations, environmental sustainability, and employee rights.
Environmental, Social and Corporate Governance (ESG)
ESG highlights the quantifiable performance of corporations in environmental, social, and corporate governance aspects. It is a set of indicators designed for investors to understand the sustainability performance of corporations through specific evaluations, helping them assess long-term risks and potential returns. Unlike CSR, which leans more towards voluntary ethical standards, ESG focuses more on the concrete actions and quantifiable social impact of a company.
Sustainable Development Goals (SDG)
SDG are global development goals proposed by the United Nations, covering 17 specific areas of sustainable development, such as poverty eradication, climate action, responsible consumption, and production1. The SDGs provide businesses and governments with concrete targets for sustainable development, guiding CSR and ESG implementation.
In simple terms, CSR serves as a framework for companies to manage their social responsibilities, ESG acts as a performance assessment standard, and SDG outlines global sustainability goals.
Benefits of CSR for Companies
Implementing CSR provides a range of benefits that go beyond the ethical aspect. This includes advantages such as:
- Enhanced brand image: CSR can elevate a company’s brand image and reputation, positively influencing public perception. Many consumers are increasingly concerned about how environmentally conscious companies are, making those that actively practice CSR better positioned to attract eco-friendly consumers.
- Talent attraction and retention: Nowadays, employees not only care about salary and benefits, but also prioritize companies that are socially and environmentally responsible. By implementing CSR, companies can attract and retain more talent by creating a better working environment which enhances employee satisfaction and loyalty, thereby reducing turnover rates.
- Lower business risks: Implementing CSR can also effectively mitigate risks. Whether it's reducing negative impacts on the environment or improving relations with the community, CSR can effectively reduce potential business risks and legal disputes.
What is SROI?
SROI (Social Return on Investment) is a measure of CSR that helps companies quantify their social and environmental impact. Unlike traditional financial returns, SROI emphasizes a company's contribution to society, including employees, communities, and the environment. By using SROI, businesses can clearly demonstrate the actual impact of their CSR programs. This gives the public a better understanding of their social responsibility commitments, shows how these programs create value for society, and allows them to optimize their CSR strategies based on data and insights.
