Is ESG the Same as Corporate Social Responsibility?
Corporate social responsibility (CSR) is somewhat related to ESG — but it does not cover the same things. CSR is a business framework that helps organizations develop and implement programs that positively impact both the organization and its communities. ESG, on the other hand, is how an organization’s efforts and initiatives are measured with regard to being “socially responsible”.
In short, companies in the Philippines use ESG to measure the results of their social commitments, while CSR is used to create their sustainability and corporate responsibility plan.
In other words, CSR is a company’s framework of sustainability plans and responsible cultural influence, whereas ESG is the assessable outcome concerning a company’s overall sustainability performance.
What are the ESG Criteria?
Investors are becoming increasingly concerned with putting their money where their values are. As such, investors and stakeholders in the Philippines use ESG criteria to screen organizations and ascertain whether they act responsibly in the following ways:
Governance criteria for ESG in the Philippines are concerned with how the organization is run. It shows whether it uses accurate and transparent accounting methods, pursues integrity, competence, and diversity when selecting its leaders, and holds itself accountable to its shareholders for any missteps.
Depending on the industry, some ESG practices may require an organization to avoid conflicts of interest when selecting its board members and executives. Likewise, it may require them to avoid political contributions and relationships to obtain preferential treatment.
What are ESG Risks?
To meet these criteria, organizations in the Philippines look at their ESG risks. This includes assessing their current sustainability initiatives, shareholders’ interests, and their operations as a whole. After identifying any significant sustainability risks and challenges, they can use it as a guide when implementing and monitoring their ESG strategies.
Governance risks for ESG in the Philippines concern how the organization is run. These risks include corporate risk management, excessive compensation, accountability of board members and executives, transparency of financial reports and activities, and any other operation that could affect the shareholders, their rights, and their investment in the organization. These risks, if left unchecked, could lead to unpleasant legal and financial setbacks.