麻豆淫院

ESG and CSR are evolving to guide sustainable and ethical practices that benefit more stakeholders.

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From CSR to ESG, and any future mix of letters to come, the real question isn鈥檛 about the acronym but, instead, what these initiatives aim to achieve.

Despite some overlapping areas of focus, an organization鈥檚 environmental, social and governance (ESG) and corporate social responsibility (CSR) initiatives traditionally evolved as separate endeavors, each with a different scope. Increasingly, ESG has stolen the spotlight as climate change pressures, regulatory requirements and stakeholder demands have intensified the scrutiny over corporate sustainability.

Then and now

鈥淲hen we initially discussed ESG topics, it was for an audience of investors and related to assessing risks that may not be disclosed within corporate financial statements,鈥� explained , an adjunct instructor for the Leeds Executive Education Certificate in ESG Strategy.

鈥淭hese risks had the potential to affect investments, even if they weren鈥檛 showing up in the company鈥檚 10-K or other mandatory disclosures,鈥� she said. For example, these could be human rights risks within a company鈥檚 supply chain or climate-related risks for sites located in areas prone to flooding as temperatures rise, she explained.

Meanwhile, CSR efforts were most often associated with voluntary activities related to corporate philanthropy, ethical labor practices, community development projects and other employee and community relations efforts.

Having served in several ESG-related roles, most recently at the global technology company Splunk, Forman has witnessed the rapid changes in CSR and ESG firsthand.

鈥淥ver the past few years, the terms have been conflated, and ESG expanded to include traditional CSR activities, especially as companies got better at measuring and disclosing social and environmental metrics,鈥� she said.

Kathryn Wendell, the executive director of the Center for Ethics and Social Responsibility at Leeds, agrees. 鈥淭he major difference is that ESG entails consistency and accountability in reporting data that didn鈥檛 exist under the CSR framework.鈥� As investors became increasingly aware that climate risk is financial risk, they wanted more accurate information.

鈥淲all Street investors are paying close attention to the so-called 鈥楪reat Wealth Migration,鈥� when baby boomers will transfer trillions of dollars of wealth to younger generations who want to invest in more environmentally and socially responsible funds and companies.鈥�

Kathryn Wendell, executive director of the Center for Ethics and Social Responsibility

As a result, we have seen the emergence of global ESG frameworks (including SASB, GRI and TCFD), stringent ESG reporting laws in the EU, and the Securities and Exchange Commission rules for disclosing and managing climate-related risks, Wendell noted.

鈥淲all Street investors are paying close attention to the so-called 鈥楪reat Wealth Migration,鈥欌�� said Wendell, 鈥渨hen baby boomers will transfer trillions of dollars of wealth to younger generations who want to invest in more environmentally and socially responsible funds and companies.鈥�

ESG backlash

As recently as 2022, we saw the term 鈥淓SG鈥� flail amid negative press that became politically charged in the United States, said Forman. At the same time, regulators started cracking down on unsubstantiated corporate 鈥渆nvironmentally friendly鈥� claims (known as greenwashing). The upside, Forman believes, is that companies have a heightened focus on transparency and accountability, and they are transitioning to clearer terminology such as 鈥渞esponsible business.鈥�

鈥淭he acronym was being tossed around haphazardly and slapped on investment funds to signify adherence to ethical, social and environmentally conscious business practices, but without due diligence,鈥� she said. The pushback has allowed those in the field to refine their goals and priorities and make a clearer case as to how these strategies accelerate long-term growth, providing a strong business case unrelated to politics.

鈥淎 key point is that CSR, like ESG, is just good business if it鈥檚 planned and implemented strategically,鈥� said Wendell. 鈥淏y aligning social and environmental initiatives with a business objective, a company can aim to boost profits while contributing to prosperity.鈥�

What comes next

CSR tended to be siloed in a separate department or combined with public policy, legal, or marketing and communications, Wendell noted. 鈥淓SG, or sustainability, has become much more integrated into the business.鈥�

鈥淚t鈥檚 really important to understand how CSR and ESG roll up to the overall business and how CSR/ESG layers into strategy across multiple teams,鈥� said Lauren Roadman, global community relations specialist at Ball Corporation.

鈥淚f a company succeeds as a responsible business, ultimately every job will, in some way, be tied to progressing the company鈥檚 purpose.鈥�

Jennifer Forman, adjunct instructor for the Leeds Executive Education Certificate in ESG Strategy

The ESG learning landscape

At Leeds, ESG topics are being integrated across the curriculum. For example, Assistant Professor of Accounting Nikki Skinner developed three new ESG reporting classes that 鈥渁re quite different from traditional accounting classes,鈥� she said. 鈥淏ecause the ESG reporting environment is rapidly evolving, textbooks on the topic would quickly become outdated. So, we spend a lot of time in class discussing current events and the latest research into corporate sustainability.鈥�

Leeds鈥� Executive Education replaced the CSR in its original program name to its current title of Certificate in ESG Strategy. The program is updated each semester and recently added topics including responsible supply chains, human rights and ethical AI.

鈥淭his certificate covers a broader range of topics than the more singularly focused credentials,鈥� Forman said. 鈥淲e have a comprehensive curriculum that goes beyond environmental sustainability and social impact. It also looks at human rights, policy influence, impact finance, AI ethics and ESG reporting.鈥�

鈥淪ustainability and ESG are such important cross-functional themes that I think we will see more relevant courses and degrees moving forward,鈥� said Wendell.

The future of ESG

鈥淲e know now that people want to work for and buy from ethical companies鈥攐r at least companies that do as little harm as possible in their pursuit of profit,鈥� said Forman. She noted that according to Forbes, by 2030, 58% of the global workforce will be millennials and Gen Z. 鈥淭hese generations have high expectations. Embedding purpose into a business model becomes a strong competitive advantage as companies compete for talent.鈥�

鈥淪ustainability is now a compliance requirement, whether that鈥檚 at the state, federal or international level,鈥� said Rachel Bigby, the senior sustainability manager of U.S. operations at Frutura Produce and former co-lead, with Lauren Roadman, of a Certificate in ESG Strategy alumni group.

鈥淲e鈥檙e seeing a monumental global shift. Integration with financial reporting and added assurance requirements, coupled with the consolidation of ESG standards happening simultaneously, make for both a disruptive and hugely impactful moment for our field,鈥� she added.

As regulatory oversight increases, Forman cautions there is a downside鈥斺�済reenhushing鈥濃�攖he reverse of greenwashing. Fines and potential reputational damage are prompting some businesses to avoid publicly releasing sustainability initiatives. 鈥淭here are certainly more lawyers involved when deciding how companies will share their ESG goals and progress,鈥� Forman said. No matter what, she believes, transparency is crucial.

Kyle Copp, the operations and sustainability manager for the nonprofit Project Angel Heart, completed the ESG Strategy program to gain insights into creating a materiality assessment.

While Copp believes large corporations must lead the way in environmental efforts, he said nonprofits often demonstrate innovation and creativity in getting funding for ESG. 鈥淲e don鈥檛 allow lack of funding to stop us from trying to find grants and making changes to the organization to make us as sustainable as possible. There is always something more you can be doing. Showing that commitment to sustainability shows your commitment to the community.鈥�