ENVIRONMENTAL, SOCIAL, AND GOVERNANCE (ESG) AND CORPORATE SOCIAL RESPONSIBILITY (CSR)

The concept of environmental, social, and governance (ESG) was initially created for investment analysis, and its significance in the global corporate world quickly became apparent during the COVID-19 pandemic. As a metric utilized to measure a firm's effort in friendly and socially responsible activities and its governance structure, it somehow is differently interpreted in today's world of corporate business, with firms engaging in it being accused of being affiliated with a certain political party's agenda. However, there are many other terms associated with ESG regarding corporate sustainability, such as Corporate Social Responsibility (CSR). Despite these terms often being interchangeably used in the academic literature, their interpretations in the corporate business world differ, and some clarifications are required. This chapter addresses three key objectives: first, to explore the history of sustainability practices in the business world, primarily focusing on the evolution and concept development of CSR and ESG; second, to clarify the general meaning and use of the two terms in the contemporary business world; lastly, to compare and analyze how the contemporary corporate world perceives the differences between CSR and ESG.