How is ESG different from CSR? This is a question that many businesses are beginning to ask as ESG becomes increasingly important in discussions with international clients, banks, and investors. Over the years, CSR has become a familiar concept within the business community. Many Vietnamese businesses have implemented activities such as community support, scholarship programs, sponsoring social programs, or participating in charitable activities with the goal of contributing to society and building a positive corporate image.
However, in recent years, ESG has increasingly appeared in discussions with international clients, banks, and investors. This has led many businesses to question whether ESG is simply a new term for CSR.
Although both aim for sustainable development, ESG and CSR are essentially two concepts with many differences in objectives, implementation methods, and evaluation approaches.
1. What is CSR?
CSR stands for Corporate Social Responsibility, which refers to the social responsibility of businesses. This concept emerged quite early and has been adopted by many businesses worldwide for decades.
The goal of CSR is to encourage businesses to engage in activities that create value for the community and society, in addition to their business objectives.
1.1. Objectives of CSR
CSR aims to create a positive impact on society through voluntary activities by businesses.
Through CSR, businesses can demonstrate social responsibility, enhance their brand image, and build positive relationships with stakeholders.
For many businesses, CSR is also part of their strategy for building corporate culture and brand values.
1.2. Some common CSR activities
In practice, CSR is often demonstrated through activities such as:
- Awarding scholarships to students.
- Providing assistance to people affected by natural disasters.
- Funding social or health programs.
- Constructing bridges, roads, or other public works.
- Participate in local environmental protection programs.
These are all activities that have a positive meaning and contribute to the development of society.
2. What is ESG?
ESG stands for Environmental, Social, and Governance.
While CSR focuses on activities that demonstrate a company’s social responsibility, ESG focuses on how a business is operated and managed.
ESG not only considers what a business has done for the community but also assesses how it manages environmental issues, labor practices, risk management, and long-term sustainability.
Therefore, ESG is often used as a tool to assess the governance capabilities and sustainability of a business.
3. Similarities between ESG and CSR
Despite their many differences, ESG and CSR share certain common goals.
3.1. Both aim for sustainable development.
Both ESG and CSR encourage businesses to pay more attention to impacts beyond short-term profits.
The ultimate goal is to help businesses grow sustainably, responsibly, and create long-term value.
3.2. Both create value for society.
Although implemented in different ways, both ESG and CSR contribute to creating positive impacts for employees, customers, communities, and the environment.
3.3. Both help to enhance the company’s image.
A socially responsible business with a sustainable development strategy typically receives more positive feedback from customers, partners, and investors.
4. How does ESG differ from CSR?
This is the most important point that many businesses need to understand when they begin to learn about ESG.
4.1. CSR focuses on operations, ESG focuses on systems.
CSR is often demonstrated through specific programs or activities.
For example, a business could organize a charity program or provide scholarships for underprivileged students.
Meanwhile, ESG focuses on the internal governance systems of a business. Instead of just performing a single activity, ESG requires businesses to build policies, processes, and management mechanisms that can operate in the long term.
In other words, CSR is typically what a business does, while ESG reflects how the business is managed.
4.2. CSR focuses on responsibility, ESG focuses on governance.
CSR is often viewed as a company’s responsibility to society.
Conversely, ESG is considered part of the corporate governance system. ESG content is often linked to strategy, risk management, operational efficiency, and long-term growth potential.
This is why many investors and financial institutions are more interested in ESG than in individual CSR activities.
4.3. CSR is often voluntary, while ESG is increasingly becoming a market requirement.
In many cases, businesses can proactively choose whether or not to carry out CSR activities.
However, pressure from the market is increasing for ESG. Many international clients, banks, and investment funds are now beginning to require businesses to provide ESG data or other information related to sustainability.
This has led to ESG gradually becoming a competitive factor rather than just a voluntary activity.
4.4. CSR is difficult to measure, ESG is measured by data.
A business may undertake many meaningful CSR activities, but it is difficult to accurately assess their effectiveness using specific metrics.
Meanwhile, ESG is typically measured through clear data and metrics.
For example:
- Amount of electricity consumed.
- Amount of water used.
- Workplace accident rate.
- Employee training rate.
- Corporate governance indicators.
It is this measurability that makes ESG a useful tool for investors and stakeholders.
4.5. CSR is outward-looking, ESG starts from within the business.
Many CSR activities are often directed towards communities outside the company.
Meanwhile, ESG begins with internal organizational changes such as corporate governance, resource management, labor policies, or risk control.
In other words, ESG is not just about what a business presents externally, but also reflects how it operates internally.
5. How Is ESG Different from CSR in Implementation?
Many Vietnamese businesses have been implementing CSR for years, and this provides a very positive foundation when beginning to approach ESG.
5.1. A socially responsible mindset has emerged.
Businesses that implement CSR typically have already developed an awareness of their responsibility towards the community, their employees, and the environment.
This is an important foundation for developing future ESG programs.
5.2. There have been many activities related to ESG.
In fact, many businesses are already engaging in ESG-related activities but haven’t yet named them that way.
For example, employee training programs, workplace safety activities, or energy saving measures can all become part of an ESG system.
5.3. Simply switch from operation to system.
The biggest challenge is often not that the business hasn’t done anything, but that the activities being carried out are fragmented.
When implementing ESG, businesses need to gradually standardize data, develop policies, and integrate those activities into a common management system.
6. Should businesses focus on CSR or ESG?
This is not a question of choosing between CSR or ESG.
In fact, these two concepts can complement each other.
CSR helps businesses demonstrate their responsibility to society and the community. Meanwhile, ESG helps businesses build governance systems and achieve long-term sustainability.
If CSR refers to the specific actions that a business takes, then ESG is the governance framework that helps manage, measure, and improve those actions over time.
Therefore, instead of replacing CSR, ESG can be seen as a higher level of development in modern corporate governance.
7. Conclusion
CSR and ESG both aim for sustainable development, but their nature and approaches differ significantly.
CSR focuses on social responsibility and activities that create value for the community. ESG, on the other hand, focuses on governance systems, risk control capabilities, and the long-term growth potential of the business.
In a global market increasingly focused on transparency and sustainable development, ESG is becoming one of the key criteria for businesses to enhance their competitiveness and build trust with stakeholders.
During our consultations and work with businesses , CCV has observed that the majority of Vietnamese businesses have implemented CSR very early on through community support activities, employee welfare programs, or charitable initiatives. This is a very positive foundation and demonstrates the responsibility of businesses towards society.
However, the current challenge is no longer whether businesses fulfill their social responsibilities, but rather their ability to translate those activities into measurable data, metrics, and governance systems, including environmental data generated through processes such as greenhouse gas inventory. This is the gap between traditional CSR and modern ESG, a gap that many businesses are gradually bridging.
CCV believes that businesses that have built a strong CSR culture will have a greater advantage when embarking on their ESG journey and achieving sustainable development in the future.