In this article, we’re comparing apples to pears that, at first glance, all seem like apples – because it’s about the very similar terms “CSR,” “ESG,” and “Sustainability.” You’ll read what these terms actually mean and how they differ.  

What does CSR mean?

You can think of “CSR” as a kind of moral and ethical foundation for a company’s sustainability strategy. CSR stands for “Corporate Social Responsibility.” And although the word “Social” is included, it doesn’t only refer to the social aspect of sustainability. CSR also encompasses environmental and governance issues. You may have come across the abbreviation “CR” – which stands for “Corporate Responsibility” and intentionally excludes “Social” to avoid confusion. CSR or CR is essentially the predecessor to ESG. Or, to put it with an English saying: 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.”

If we look at it closely, CSR primarily refers to a company’s awareness of the impact it has – whether actively or passively – on society or the environment. In terms of CSR, companies address their responsibility by taking qualitative actions that go beyond the legal minimum (e.g. CSRD, LkSG).

What does ESG mean?

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

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

ESG is quantitatively oriented. For example, the ESRS, the framework for sustainability reporting under the CSRD, predominantly requires clear key figures.

At the core of ESG is the so-called “triple bottom line,” also known as the “3-pillar model of sustainability.” This approach posits that sustainable development is only possible when environmental, social, and economic sustainability goals are pursued equally.

And what is sustainability?

Let’s now address the final point in our distinction between ESG, CSR, and sustainability.

Sustainability, or “Sustainability” in English, is essentially an umbrella term for ESG and CSR. Without CSR and ESG, sustainability cannot exist.

Let’s take a brief journey to the Ore Mountains in the early 18th century. In the mining region, wood was such an important resource for fuel, construction, and ore smelting that it became increasingly scarce. Hans Carl von Carlowitz, who was, among other things, the head of the Upper Mining Office in Freiberg and responsible for timber supply, first formulated the definition of sustainability, stating that only as many trees should be cut from the forest as could grow back. By the 19th century, this definition became established in other areas as well.

Zooming out to the big picture, sustainability means that systems—regardless of their type—can only be stressed to the extent that they can withstand without damage. Resource usage should only occur within these limits.

Today, in 2024, we are all more aware than ever: Most of our systems have already reached their limits or are being used far beyond their capacities. Whether it’s overfishing or deforestation, mining rare earths or oil extraction, air pollution or human exploitation, we need to strengthen the concept of sustainability and act now to create a livable future for future generations.

Companies play the key role in sustainability, as enablers of consumer needs, facilitators of familiar conveniences and living standards. By becoming aware of their responsibility (CSR) and adjusting their business strategies and supply chains (ESG), they hold the key to sustainable transformation.

Conclusion: Is ESG or CSR more important?

To answer the often-asked question of whether ESG or CSR is more important: Both complement each other. However, ESG has today become the more common term for a comprehensive sustainability strategy.

CSR represents the fundamental idea necessary for the sustainable transformation of the economy: the awareness that companies bear responsibility and must act accordingly. ESG, on the other hand, provides the framework for targeted action. Thus, measurable and effective actions are derived from a sense of responsibility.

* This information is summarized editorial content and should not be considered legal advice. VERSO assumes no liability.