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What is the difference between Sustainability and CSR?

By 20 July 2021 No Comments
What is the difference between Sustainability and CSR?

What is the difference between Sustainability & CSR?

Globalization has brought much progress and better standards of living to many people and countries. Our societies and economies are much more interconnected than any previous time in history. These networks are much harder to control than in the past; the unrestricted operation of a globalised industry has created a series of ecological and social crises. How should we tackle this web of interdependent complex crises and address some of the fundamental challenges humanity faces? The sustainability challenges we are witnessing are rooted in a misaligned incentive system that does not take into account the ecological and human capital which the economic system depends upon and needs for its very existence. We propose to modify the economic system itself by systematically including externalities and making them tradable on markets. However it is a set of mindset and behaviour within the public and private sector that needs evolving. Hence enter the confusion as terms such as CSR and Sustainability are used in order ot give credit to the positive impact organizations have. Indeed, in Van Marrewijk’s “Concepts and Definitions of CSR and Corporate Sustainability: Between Agency and Communion” [J. Bus. Ethics 2003], Corporate Social Responsibility “CSR” and “Sustainability” have become buzzwords in the private sector, Van Marrewijk observes “many consider (corporate) sustainability and CSR as synonyms”. These terms are not synonyms yet they are often used within public and private sector as having the same meaning; which has an averse effect when mindsets and behaviour needs progress.

According to practitioners alike, there is no clear definition of CSR; however to the European Commission (https://ec.europa.eu/growth/industry/sustainability/corporate-social-responsibility_en), CSR refers to an organisation's responsibility for its impact on our Society. The term “impact” encompass social, environmental and economic aspects, as foutlined in the internationally recognised reference documents on CSR like the fundamental ILO declaration on multinational enterprises and social policy, the OECD (Organisation for Economic Co-operation and Development) Guidelines for Multinational Enterprises, the UN (United Nations) Guiding Principles on Business and Human Rights, the UN (United Nations) Global Compact and ISO (International Organisation for Standardisation) 26000. Notions of the term “CSR” by academics can be traced back to the 1960s, however it is the 1991 A.B. Carroll’s; “The Pyramid of Corporate Social Responsibility: Toward the Moral Management of Organizational Stakeholders”, that proposed a pyramid of the CSR depicting a multi-layered concept consisting of four interrelated aspects: economic, legal, ethical and philanthropic responsibilities; that put CSR into the academic spheres. However, it is only twenty years ago that international organisations began being subject to scrutiny when various multinationals had to face public scandals and boycott campaigns regarding issues ranging from environmental waste, racial discrimination, to child labour. These serious issues prompted the consumers and consumers organisations to be better informed and the increase of media outlets online whether it be news channels or social media channels made the scrutiny bigger and “pushes” organisations to take crucial steps into showing how positively responsible they are.

The importance and impact of CSR in Europe can be split into 3 categories: The private sector and its share/stakeholders: CSR provides important benefits whether it be funding, risk management, cost savings, Human Resources management, customer relationships, sustainability and circularity of process(es), innovation capabilities, powerful marketing tool positionning in a favorable place and new profit opportunities.

The European Union as a whole: CSR helps organisations whether public or private to become more sustainable and circular thus boosting new market and financial opportunities and a resilient market that creates a sustainable and circular economy. Society: CSR is aligned with the Green Deal 2030 and the 17 Sustainable Development Goals (SDGs) offering the perspective of a cohesive society where no one is left behind in the transition to a sustainable and circular economic system.

Corporate Social Responsibility is more and more mebraced by all type of organisaitons, due to moral convictions, knowing that doing so will bring benefits and create new opportunites. So what is “Sustranability”?

Sustainability compared to CSR has a variety of meanings like according to many academics such as Paul Johnston, Mark Everard, […] with their 2007 article “Reclaiming the Definition of Sustainability”,+300 definitions of sustainability and sustainable development exist in academic literature having different approaches as sustainability means different things to different entitites: broad discipline, complex concept, a holistic approach, a business approach, a lifestyle, etc. None of these approaches are wrong. This often brings organisations to confuse or use ecological sustainability to mean economic sustainability. Dictionaries by many sources describe the term “sustainability” as a capability of a system to endure and maintain itself.

Source adapted from Freyman M., 2012, “An Exploration of Sustainability and Its Application to Corporate Reporting”

The European Commission (https://ec.europa.eu/growth/industry/sustainability_en) defines sustainability for the E.U. as “ensure coherence between industrial, environmental, climate and energy policy to create an optimal business environment for sustainable growth, job creation and innovation […] where the value of products and materials is maintained for as long as possible, bringing major economic benefits”. This definition and use of the sustainability term is in line with the Green Deal 2030 objectives of keeping resource consumption and environmental impact(s) from product production and use of resources within planetary boundaries.

Hence, the concept of sustainability rests on 3 pillars: environmental, economical and social aspects; indeed for a process to be sustainable it means the process and end product/service does not have irreversible negative impact on the environment, benefitiing society and be be economically viable.

So what are the main differences between CSR and Sustainability? Well it essentially boils down to how you look at the organisation or matter at end. CSR is used in order to assess what an organisation as down in the past and what their contribution to society has been whereas Sustainability looks at the organisation from a future viewpoint assessing and planning the changes needed to secure its future impact and make the organisation more resilient this includes matters such as: reducing waste, sustainable supply chains, developing new sustainable business strategies in order to grow, etc.).

Moreover, CSR is used for often different target that sustainability, in fact CSR reporting is not as regulated and lays mostly on voluntarily compliance mostly with a target audience ranging from media to politicians as well pressure groups such as environmental groups, which often raises the question of whether reputation damage is a main motivation behind the adoption of CSR policies by a multinational. Sustainability on the other hand targets the entire value chain represented by suppliers, business partners, shareholders up to the end use consumers. This brings us to another difference between CSR and Sustainability and that is that CSR is becoming about compliance and Sustainability is about the business itself. Another difference is the fact that Sustainability applies to not just an entire organisation from operations, to manufacturers up to the marketing department but as well as its global impact, however CSR is often managed by either communications teams or top management consulting within the known organisation landscape.

Sustainability investment is meant for society in general showing that high Sustainability companies significantly outperform their counterparts in the long run and are more resilient during crisis such as the Covid-19 world pandemic, even creating new market opportunities. CSR on the other hand is usually used in a more marketing strategy area in order to boost branding of an organisation or reassure stake and shareholders and is always evolving sometimes even annually, it thus does not have the long term benefits notion contrary to sustainability. Also the scope differs as CSR is often done at the cost of the organisation (for example: charities it donates to). Sustainability is often seen as more valid or credible as it can be measured by well know sustainability key indicators instrument to assess the level of sustainability and identify the areas of improvement and thus can be measured externally through various certification programmes such as B Corp.

Both CSR and Sustainability focus on helping organisations to run in order to be ethically profitable and helping them make a positive impact on those around them. Fact is, in everyday practice, many organisations often use the terms CSR and sustainability synonymously; consulting firms even interchangeably use sustainability strategies and a sustainability report, while others use CSR strategies and a CSR report while not making distinctions between the terms and their true meaning and function. This creates unnecessary issues for public and private organisations and needs to be addressed more often.

However, the concept remains true for CSR and Sustainability that by doing the right thing which may ask for more investment than feeding the bottom line linear economy, commitment to social responsibility can build a resilient organisation with brand equity and balancing ethical guidelines for environmental impact(s), economies, public health and society with profits can lead to win-win situation even opening up new market opportunities all while making positive contributions.

Team Greenable.

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