Even though in the past many entrepreneurs naturally tried to combine business success with a positive impact on society (Tomáš Baťa is a good example), the first definitions of the concept of corporate social responsibility date back to the 1950s. Even at the time, the term “society” already had a wide meaning. In 1960, for instance, Keith Davis and Robert Blomstrom wrote: “Entrepreneurs exercise social responsibility when they consider the needs and interests of other people that may be affected by their business activities. If they do, they can even see things that are outside the narrowly defined economic and technical interests of their company.“
Even other well-known definitions of the term CSR go beyond community support (philanthropy) and emphasize responsibility towards all stakeholders. In its 2001 Green Paper, even the European Union defined CSR as “the voluntary integration of social and environmental concerns into day-to-day business activities and interactions with corporate stakeholders.“
Thus, CSR has always been a complex category based on three pillars where responsible entrepreneurship is manifested (the so-called triple bottom line) – environmental, social, and economic (corporate governance).
In any case, in corporate practice, the use of the term CSR has deviated from its original definition. Nowadays, many companies (mistakenly) only use it to refer to activities that support the community, i.e. philanthropy and volunteering. Moreover, part of the public now sees CSR activities as just a marketing tool with symbolic gestures that do not bring real positive impact.
The concept of ESG, which is often used nowadays, addresses these concerns. It emphasizes a deeper connection with the day-to-day operations of the company and a strategic connection with business goals. It is based on measurable and quantifiable goals. Some experts argue that ESG is “a more effective and strategic younger sibling of CSR“.
There is currently no clear consensus over which concept is better at describing the nature of responsible entrepreneurship. Some companies continue to use the term CSR because they have always considered it to have a wide scope, while others prefer the terms “sustainability” or ESG.
At Business Leaders Forum, we believe that the term your company decides to adopt is not what is important at the end of the day. What matters is how you fill it with content.