Differences between CSR, Sustainability & Sustainable Development. Impact on goals, decisions & stakeholders.
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Fig 1: Sustainability and Business (Source: ‘Sustainability’, by B. Sheehy & F. Farneti, 2021)
These three different but related terms give rise to two important questions: first, do the terms mean essentially the same thing? Second, if they have different meanings, is that difference significant for setting goals, making decisions and contributing towards different stakeholders?
There’s an evident overlap between all these concepts—and even though the convergence of both is highly desirable—a lack of clarity prevents parties from challenging, advocating or aligning themselves and their resources in support of environmental protection and social policy.
On the contrary, accurate use of these terms helps us distinguish between and contribute to three distinct agendas: (1) saving the planet, (2) implementing organization-based programs and (3) improving societal interactions with businesses. Moreover, this knowledge will transform the way we prioritize objectives, identify responsible parties and key action items and map out a coherent strategy.
Corporate Social Responsibility (CSR) has been a topic of discussion for decades, originating from debates during the Great Depression. The argument was centered on who’s in charge of sustainability. Should corporate powers serve shareholders, or managers use their powers for societal betterment?
In the 1950s the debate revolved around the question of economics management considering societal broader impact. Was there an "Iron Law of Responsibility" for businesses to surrender to social power?
Over time, CSR's meaning became vague, with various interpretations including legal responsibility, ethical behavior, charitable contributions, and legitimacy.
During the 1980s, there was an expansion on Milton Friedman's view of corporate responsibility, creating a framework that categorized CSR into economic, legal, ethical, and discretionary responsibilities, helping managers and scholars analyze business-society relations. The discussion was about up to what extent businesses were obliged to be socially and environmentally responsible. Most economists agreed on the fact that a firm had to be financially viable as a first responsibility, or it could not exist at all and make further contributions.
So, AB Carroll developed a version of the ‘Maslow Pyramid’ to prioritize businesses’ social and environmental endeavors. The four-tier model approach went from economic responsibilities at the bottom to ‘philanthropic’ ones at the apex.
In other words, much like a human individual’s needs grow from sustenance and belonging to esteem and self-actualization, a business could have a mirroring set of priorities or responsibilities.
Fig 2: Carroll’s Pyramid (Source: Carrolls, A.B., The Pyramid of Social Corporate Responsibility, 1991)
Since Friedman’s time, society has changed. Neoclassical economics has taken hold of the public imagination, resulting in a shift in government and regulatory conception.
This has pushed a greater differentiation between public government and private business. The role of business is conceived as a private effort tasked with wealth creation. Government withdraws from the delivery of goods and services, settling instead on the making of the rules for society.
To some extent, these changes drove other parts of civil society to organize and put pressure on businesses to regulate their own behavior in a more responsible way.
In the 2000′s, the global policy agenda had caught up with these national and regional political changes. International bodies were in a position to begin organizing a global response to the reconfigured business-society relationship.
The key body formed for this task was the United Nations’ Global Compact. The UNGC was created as a set of principles drawing from a wide range of international law instruments and applied specifically to the business-society interface. This review of the history of CSR provides a critical differentiator between CSR and Corporate Sustainability:
CSR is a bottom-up, organization-driven idea whereas Corporate Sustainability is a top-down, global policy agenda. CSR has developed slowly, incrementally at a thousand different sites for many decades, along the entire 20th century, creating a plurality of definitions.
Sustainability is a broad topic and hosts a wide group of views and agendas. Beyond the basic term are a set of related words including environmentalism, sustainable development, corporate sustainability and CSR. This set of concepts may be best understood as occupying one point on the canvas of ideas along the objectives axis which moves from environmentalism through to broad global development goals in Figure 1 above.
‘Sustainable’ was initially identified with ‘Ecological’ due to the fact that the debate was originally framed in terms of famine and overpopulation. So it quickly turned to the function of ecosystems and the consumption of natural resources. The two core areas of focus in sustainability may be summarized as the capacity of the natural environment to sustain human life and the impacts of human industrial activity on the natural environment most of which are detrimental.
Then, there was the ethical question again. Should ethics be factored in the equation or not? As of today, we are already well aware of the fact that ‘ethics' is about matters too diverse and contested.
Whereas sustainability, focused on the relationship between the ecology and the human species, is sufficiently complex and compelling in its own right. Ethics is a normative, values-based concern whereas sustainability is a matter of empirical sciences.
The fundamental problem is making organizations the unit of analysis—because they are only part of larger systems that make up the global ecology. Thus, sustainability is systems-focused and the actors are international public organizations, nation-states and also private businesses. The unit of analysis is represented by the global ecosystem and is primarily focused on environmental and social matters.
Building on the foundation of social concern and the environmental movement, the effort to raise global awareness of the problems subsequently developed into a global policy agenda. This agenda was captured and consolidated in the UN’s report ‘Our Common Future’.
The best definition of sustainable development is drawn directly from this report: ‘Sustainable development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs.’
The UN’s Sustainable Development Goals (SDG’s) were formally launched in 2015. They have a global goal of changing the way societies organize and operate, including businesses, to save the planet from human destruction and allow the human species to survive. Economic development is an important component of this initiative. These contemporary initiatives aim to help improve governance across the globe in a way that sustains both the ecological systems of nature and the social systems of humanity.
The SDGs are considered the ‘most salient point of departure for understanding and achieving environmental and human development ambitions up to (and no doubt beyond) the year 2030’. The core message in all of the sustainable development policy documents and literature is that while sustainability is environmentally focused, sustainable development contains the concept of economic sustainability. And maybe that’s why a survey conducted by PwC in 2015 indicated that 71% of businesses were already planning how they would engage with the SDG’s.
To summarize, sustainable development is international in scope and comprehensive in terms of objective. It is a globally driven, top-down, public policy initiative and markedly different from CSR’s bottom-up, private, organizationally driven origins. Its actors are primarily public international bodies and nation-states, with multinational enterprises involved through initiatives such as the United Nations Global Compact. It is focused on public international development policy encompassing, initially environmental goals, but expanding to include social and economic goals, too.
CSR is the best term for focusing on individual business organizations’ social and environmental policies. Sustainable Development is a public policy, and Sustainability is the broadest term of all, encompassing global, local and organizational levels.
All in all, the preservation of our planet must be an objective policy for everyone, regardless of their role in society and how they choose to name it. Both the United Nations Sustainable Development Goals (UN SDG) and the Science-Based Target Initiative (SBTi) align with the paramount importance of reducing GHG emissions and investing in nature-based solutions to achieve a future for life on Earth.
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