What Businesses Need to Know About Sustainability vs CSR

Sustainability has been gaining prominence globally as institutional investors and regulators call for stronger sustainability commitments from corporations.

Many companies that are just starting on their sustainability journey often confuse “Sustainability” with “Corporate Social Responsibility”, or CSR for short.

While the two does go hand in hand, they are not the same. CSR is just one of the mechanisms for sustainability, and it is by no means the only one.

Companies that equate sustainability solely with CSR risk sinking their financial capital into initiatives and programmes that will only create short term impacts with no long term value for the sustainability of the company or the planet. To avoid this pitfall, it is important to understand the distinction between sustainability and CSR.

What is Corporate Sustainability?

These days, the discussion on sustainability often centres around ESG, where investors and regulators use environmental, social and governance (“ESG”) factors to evaluate the practices of a company and determine its sustainability.

Corporate sustainability takes a comprehensive view of a company’s impacts on all fronts, be it the financial contribution to its various stakeholders, its procurement practices, its stance and steps taken to prevent corruption, its human rights and labour practices, health and safety track record, as well as its climate action, biodiversity impact, energy and water usage, and other factors.

Non-performance on any of these fronts will ultimately impact a company’s financial bottom line, through loss of talent and institutional knowledge that erodes a company’s competitive edge, and disruption of work processes, loss of licenses and contracts, and the associated costs incurred.

Hence, a balance of the three fundamental pillars of ESG is crucial to ensure the sustainability of a company.

What is CSR?

Corporate Social Responsibility, on the other hand, refers to a company’s efforts to contribute positively to the community and the environment.

It began as a way for businesses to give back to the community that it profits from to show its sense of responsibility as a corporate citizen – hence its name.

This is most often seen in the form of donations to charitable causes in cash or kind. Food drives and blood donation campaigns are also quick wins that we see companies initiate for inclusion in their annual report card.

These kinds of one and done initiatives, or even a long-term and sustained CSR contribution, while doing a lot of good to the beneficiaries, is not sustainability itself. It might provide some reputational and tax benefits to the company, but its reach is limited, and its impact is short term.

The Distinction between CSR and Sustainability

The difference between CSR and Sustainability can best be summed up by the old adage: “Give a man a fish, and you feed him for a day. Teach a man to fish, and you feed him for a lifetime.” The former is CSR, the latter is sustainability.

CSR is usually altruistic in nature. It can be thought of as public relations with a moral or humanitarian twist, whereas sustainability is a long-term approach to bettering the human condition.

And when done right, corporate sustainability creates a win-win situation for the benefactor and the beneficiaries. Impacts are tangible and measurable, and often leads to greater sustainability for the company with a proportionate return on investment.

Example of CSR vs Sustainability Initiatives

To help illustrate the difference, let’s look at the global waste problem. Humans generate over 2 billion tonnes of garbage a year, and that figure is projected to reach 3.4 billion tonnes by 2050. This remarkable amount of garbage ends up in landfills and our oceans, creating greenhouse gasses, contaminating groundwater and killing the planet’s flora and fauna.

While organising beach clean up is a great CSR initiative, the trash will accumulate again.

Comparatively, implementing 3R (Reduce, Reuse and Recycle) awareness and collection programmes will have a greater impact on the planet’s sustainability in the long run.

By inculcating awareness on the importance of waste reduction and reducing the barriers to recycling, this will reduce the amount of waste generated – eliminating waste from the system rather than moving it from point A to point B. Companies that implement this in their organisation sees reduction in resources consumed in the process of their business operations, such as paper and printing toners for administrative needs, translating to lower operating cost and reduced spending on contracted waste removal.

Turning Sustainability into Profit

There is also the opportunity to innovate new ways to incorporate waste generated from the companies’ business processes as inputs back into the business process, and even for new revenue streams.

A furniture maker used the sawdust and woodchip from its manufacturing process to cultivate edible mushrooms, adding a new business to the organisation that boosted their earnings.

Athletic apparel company Lululemon asked customers to trade-in pre-used Lululemon items (that are still in good condition) for gift cards, which are resold at a discount as part of their ‘Like New‘ programme.

Countless other new businesses have cropped up dedicated to using 100% recycled waste in the creation of their products, which reduces their raw materials cost and can potentially offset any increase in manufacturing cost from the use of recycled materials. These have proved popular to the younger generation of consumers, who understand the existential threat to humanity posed by climate change, and are committed to do what it takes to stop it.

Moving Forward with a Sustainability Mindset

Sustainability, in essence, is about “meeting the needs of the present without compromising the ability of future generations to meet their needs”, as nicely summed up by Gro Harlem Brundtland, the former prime minister of Norway.

From the corporate perspective, it’s about responsible consumption and responsible business practices that ensure harmony between the considerations for people, planet and profit, and creates a net positive impact.

That includes continued investment in CSR programmes alongside business sustainability initiatives, because CSR is still an important part of the overall sustainability effort.

A man still needs to eat while he learns to fish. And while we wait for 3R awareness and adoption to grow, we still need to clean up the trash from the beach.

CSR serves as an important stop gap measure while longer-term sustainability initiatives are put in place and given time to take effect. They must work hand-in-hand, but ultimately, a sustainability mindset will deliver the bigger win for your business.