Part 2: Fiduciary Duties to Shareholders, Partners, and Members

13 What do “ESG” and “CSR” mean?

ESG stands for “Environment, Social, and Governance.” CSR stands for “Corporate Social Responsibility.” Each term connotes the idea that a business should engage in social responsibility, such as being concerned for the environment, employee welfare, diverse governance, community welfare, and so on.

ESG stands for “Environment, Social, and Governance.” CSR stands for “Corporate Social Responsibility.” Each stands for the general proposition that businesses should care about more than just maximizing profits, or at least short-term profits. In contrast, those who advocate for ESG / CSR work believe that companies should care about a wide range of constituents, from local communities, to the families of their employees, and so on. This is best captured in the idea of “stakeholder theory”, which we will study later. You will also see the term “ESG” return when we study “ESG reporting”, the practice of publishing statements about how companies treat these issues.

Exercises

  1. For the company you have been considering in these exercises, see if you can find a “CSR” or “ESG” report created by the company in recent years. What does it contain?

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Business Ethics: 100 Questions Copyright © by Jeff Lingwall is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License, except where otherwise noted.