CSR, ESG, sustainability – what’s the difference?

In this article, we compare apples with pears, which at first glance all look like apples – because we are talking about the very similar terms “CSR”, “ESG” and “sustainability”.
Read on to find out what lies behind these words and how they differ.

What does CSR mean?

You can think of “CSR” as a kind of moral, ethical basis for a company’s sustainability strategy. CSR stands for “Corporate Social Responsibility”. And although the word “social” is included here, it does not only refer to the social aspect of sustainability. CSR also refers to the environment and corporate management. You may have come across the abbreviation “CR” before – it stands for “Corporate Responsibility” and deliberately excludes “Social” to avoid confusion. CSR or CR is the precursor to ESG, so to speak. Or, to use an English expression: CSR walked so that ESG could run. The EU Commission defined CSR as follows back in 2011:

“[A] concept that serves as a basis for companies to integrate social and environmental concerns into their business activities and their interactions with stakeholders on a voluntary basis.”

To be precise, CSR primarily refers to a company’s awareness of the impact it has – actively or passively – on society and the environment. Companies meet their responsibility in terms of CSR by taking qualitative measures that go beyond the legal minimum (e.g. CSRD, LkSG).

What does ESG mean?

“ESG” is the abbreviation for “Environmental, Social, Governance”. In contrast to CSR, ESG is more of a pragmatic, detail-oriented approach to sustainability efforts. The term encompasses the impact of corporate strategy and practices on these three areas:

• Environmental: Environmental criteria such as energy consumption, climate strategy or resource management
• Social: Criteria relating to stakeholders (beyond investors) such as working conditions along the value chain, diversity or gender pay gap
• Governance: Criteria for ethical corporate governance, such as corruption prevention, whistleblower protection or supplier selection

ESG is quantitatively oriented. For example, the ESRS, the framework for sustainability reports in accordance with the CSRD, predominantly requires clear key figures.

ESG is based on the so-called “triple bottom line”. You may be familiar with this as the “3-pillar model of sustainability” – an approach according to which sustainable development is only possible if environmental, social and economic sustainability goals are pursued on an equal footing.

So what is sustainability?

This brings us to the last point in our differentiation between ESG, CSR and sustainability.
Sustainability is an umbrella term, so to speak, for ESG and CSR.
Sustainability cannot exist without CSR and ESG.
Let’s take a little trip back to the ore mountains of the early
18th century.
In the mining region, wood was such an important resource as a fuel and building material as well as for smelting ore that it was slowly becoming scarce.
Hans Carl von Carlowitz, who was head of the Freiberg Mining Authority at the time and was responsible for the supply of wood, was the first to formulate the definition of sustainability, namely that only as many trees could be taken from the forest as would grow back.
Already in the
In the 19th century, this definition also became established in other areas.
If we look at the bigger picture, sustainability means that systems – regardless of their type – may only be stressed to the extent that they can withstand without damage.
Resources may only be used to this extent.
Today, in 2024, we are all more than aware that most of our systems have already reached their limits or are already being used far beyond their limits.
Be it overfishing or deforestation, the mining of rare earths or oil production, air pollution or the exploitation of people: We need to promote the idea of sustainability more strongly again and act now in order to create a future worth living for future generations.
When it comes to sustainability, companies have a key role to play as the implementers of consumer needs and the enablers of familiar conveniences and standards of living.
By becoming aware of their responsibility (CSR) and changing their business strategies and supply chains (ESG), they have the sustainable transformation in their hands.

Conclusion: Is ESG or CSR more important?

And finally, to answer the frequently asked question of whether ESG or CSR is more important: the two go hand in hand. However, ESG has now established itself as a common term for a comprehensive sustainability strategy. CSR represents the basic idea that is needed for the sustainable transformation of the economy: The awareness that companies bear responsibility and must act accordingly. ESG, in turn, provides opportunities for targeted action. This turns a sense of responsibility into measurable, effective actions.

* This information is summarized editorial content and should not be construed as legal advice. VERSO accepts no liability.