ESG Corporate Guide - ESG, CSR & SGDs Concepts and Connections Explained

What is Corporate Social Responsibility ("CSR")?  

“CSR” broadly refers to Corporate Social Responsbility². The concept of CSR is believed to have evolved from the philanthropic activities of the wealthy in the 1800s when society had yet to develop a concrete idea of sustainable development³. It was not until the 1950s that the CSR discussions gradually focused on the ethical aspects of corporate  operations³. The “Father of CSR” at the time, an American economist named Howard Bowen, advocated for corporations to abide by business ethics and balance the interests of social stakeholders'. It was only in the 1970s that American corporations gradually developed an awareness of CSR³.   

As time evolves, the contemporary CSR concept widely pertains to whether a corporation can balance social interests while making profits². The definition and guidelines of CSR differ based on locations, industries or individual organisations. Take the Hong Kong Consumer Council as an example; its CSR guidelines cover six major areas, including business ethics, community involvement, environmental protection, good corporate governance, fair business practices and unbiased employee relations4. As the concept of CSR becomes more defined, the connection between ESG, CSR and SDGs becomes more intertwined, with some sustainable development goals potentially overlapping.  

What is an ESG Corporate Strategy?  

“ESG” stands for Environment, Social and Governance, representing 3 corporate operational indicators⁵. The concept of ESG first emerged in the United Nations report “Who Cares Wins: Connecting Financial Markets to a Changing World” in 2004, urging investors to consider a company’s social responsibility and risk management, in addition to its financial statements and profitability indicators, when making investment decisions, thereby evaluating a company’s potential for long-term development6. The difference between ESG and CSR is that ESG encompasses a broader scope of factors, including environment, energy, carbon emissions, and more, which are common categories in ESG corporate strategies.  

What are “SDGs” Goals?  

"SDGs" stand for Sustainable Development Goals⁷, which are the 17 sustainable development areas proposed by the United Nations in 2015 as specific targets for governments and corporations worldwide to achieve sustainable development by 2030⁷.  SGDs encompass 169 targets, covering various issues such as labour rights, human rights, gender equality, and female empowerment, etc⁷.  

ESG Corporation Action Guidelines

How much effort should SMEs invest in ESG corporate strategies while actively expanding their profits? Is ESG merely a supplementary investment for SMEs? Some overseas studies suggest that startups have advantages over big corporations regarding a comprehensive implementation of sustainable development policies⁸.  Some of the ESG corporate action guidelines include:  

• Identify key risks in ESG corporate strategy8 

George Serafeim, Professor of Business Administration at Harvard Business School, proposed in his pioneering study in 2015 that executing ESG corporate strategy is helpful to a startup's awareness of key risks. For instance, many large corporations or public institutions nowadays require their partners to handle customers' personal information in compliance with personal data regulations. If a company fails to deal with this and is rated as non-compliant with ESG requirements or at risk of data breaches, it may lose contracts with large businesses or public institutions. This is considered a corporate risk.  

• Offer comprehensive support to employees⁸ 

Loss of talent is viewed as a significant challenge for a company's sustainable development. Being considerate in various aspects, such as salary compensation, mental health and work culture, can strengthen team cohesion and is one of the ESG goals for SMEs.  

• Minimise carbon footprints and emissions⁸ 

More and more investors start paying attention to carbon footprints and emissions, especially large enterprises that need to meet annual carbon footprint and emission targets. This may also be a consideration when choosing partners. Having carbon reduction targets may make your company more attractive to big corporations and investors.  

• ESG goes beyond brand PR⁸ 

Embrace the passion and sense of mission of a startup. When implementing ESG, you could bring a stronger sense of achievement and satisfaction to your staff. If you keep up with the world-changing enthusiasm you possessed at the start of your entrepreneurial journey, you will discover that ESG is more than just a PR stunt and harness the power of ESG to help you fulfil your dreams.

The earlier your company starts planning ESG corporate strategies and sustainable development goals like CSR and SDGs, the sooner you can capture green business opportunities.  

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The above information is only for your reference. For detailed information, please refer to the sources and seek professional advice if necessary.  

To borrow or not to borrow? Borrow only if you can repay! 

Article published on: 2 Oct, 2024

¹Source: United Nations - Department of Economic and Social Affairs Sustainable Development - Green economy (https://www.dbs.com.hk/sme/disclaimer.page?url=https://sdgs.un.org/topics/green-economy)  

2Source: Greenpeace 綠色和平 - ESG、CSR和SDGs有什麼差異？對環境很重要？企業如何實行？

(https://www.dbs.com.hk/sme/disclaimer.page?url=https://www.greenpeace.org/taiwan/update/32963/esg%E3%80%81csr%E5%92%8Csdgs%E6

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³Source: Association of Corporate Citizenship Professionals - CORPORATE SOCIAL RESPONSIBILITY: A BRIEF HISTORY (https://www.dbs.com.hk/sme/disclaimer.page?url=https://accp.org/resources/csr-resources/accp-insights-blog/corporate-social-responsibility-brief-history/)  

⁴Source: Consumer Council - THE MEANING OF CORPORATE CITIZENSHIP (https://www.dbs.com.hk/sme/disclaimer.page?url=https://www.consumer.org.hk/en/advocacy/study-report/2005031501)  

⁵Source: Forbes - ESG: The Popular Corporate Buzzword And Why Leaders Should Care (https://www.dbs.com.hk/sme/disclaimer.page?url=https://www.forbes.com/sites/forbesbusinesscouncil/2023/03/15/esg-the-popular-corporate-buzzword-and-why-leaders-should-care/?sh=77ad49481557)  

⁶Source: Forbes - From “Who Cares Wins” To Pernicious Progressivism: 18 Years Of ESG (https://www.dbs.com.hk/sme/disclaimer.page?url=https://www.forbes.com/sites/bobeccles/2022/11/05/from-who-cares-wins-to-pernicious-progressivism-18-years-of-esg/?sh=4dd934c779fe) 

⁷Source: United Nations - Department of Economic and Social Affairs - Sustainable Development (https://www.dbs.com.hk/sme/disclaimer.page?url=https://sdgs.un.org/goals)  

⁸Source: Harvard Business Review - Startups Need an ESG Strategy (https://www.dbs.com.hk/sme/disclaimer.page?url=https://hbr.org/2022/11/startups-need-an-esg-strategy)