CSR, ESG and Sustainability: Key Differences Explained 

Understand the difference between CSR, ESG and Sustainability. Learn how they compare, overlap, and apply to business and reporting strategies. 

Introduction: Has the Term CSR Gone out of Fashion? 

In recent articles we have explained the differences between the Environmental, Social and Governance (ESG) model for measuring a company’s impact on the broader economy, society and environment, and various sustainability-focused models, such as the Three Pillars of Sustainability. In this piece we will briefly review these models in relation to a further approach, known as Corporate Social Responsibility (CSR), which we examine in more detail. 

Essentially, CSR as a term emerged decades ago, although the concept of individual entrepreneurs or corporate entities doing philanthropic work beyond the core business of turning a profit goes back much further. CSR is in the tradition of independent and self-regulating philanthropic efforts. The underlying principles of CSR remain vital, but the term itself is being superseded by more specific, integrated, and authentic approaches such as ESG to meet heightened consumer and stakeholder expectations for tangible action and impact, typically within a regulatory framework that imposes minimum standards. 

What Is Corporate Social Responsibility?    

The term “Corporate Social Responsibility” (CSR) was first used by American economist Howard Bowen 1953 in his book, Social Responsibilities of the Businessman. While philanthropic efforts by businesses can be traced back to the late 1800s, Bowen’s work is credited with formally coining the term and shaping early discussions about businesses’ obligations to society beyond profit. 

Bowen argued that businessmen had responsibilities that extended well beyond the pursuit of profit and shareholder return. He maintained that because corporations wielded immense economic power, their decisions had far-reaching effects on employees, consumers, and communities. For that reason, entrepreneurs and senior managers should actively consider the social consequences of their actions and align corporate behavior with broader societal values and expectations. He defined social responsibility as the obligation “to pursue policies, to make decisions, or to follow lines of action which are desirable in terms of the objectives and values of our society.” 

His ideas were innovative at the time because they challenged the prevailing economic orthodoxy, rooted in classical profit maximization, by suggesting that ethical and social considerations should guide corporate strategy. In doing so, Bowen shifted attention from philanthropy as an optional add-on to the notion that social responsibility is an integral part of business practice. He emphasized that this was not only about charitable giving but also about the conduct of business itself. This kind of thinking underpins some of the essential elements of ESG such as fair employment practices, honest dealings with customers, and stewardship of resources. 

Bowen’s emphasis on aligning corporate policies with societal values thus foreshadowed the later codification of CSR frameworks, stakeholder theory, and ultimately the development of ESG (environmental, social, governance) standards. His work encouraged scholars and practitioners to treat corporate behavior as a legitimate field of ethical inquiry and public accountability. 

A Focus on Individual Efforts 

Howard Bowen deliberately framed his 1953 book around the “businessman” rather than the corporation as an impersonal entity. His focus was on the decision-makers: the entrepreneurs, executives, and senior managers whose choices shaped corporate conduct. At the time, the language reflected both the gender norms of the 1950s and the managerial realities: responsibility was personalized, not institutionalized. 

He was not writing about legal entities or boards in the abstract, but about the moral obligations of those in positions of power within companies. Bowen argued that because these individuals exercised discretion over resource allocation, employment practices, and market behavior, they bore a duty to consider the wider social consequences of their decisions. 

Notable early examples of wealthy businessmen who put CSR principles into practice include David Packard (Hewlett-Packard, US), who stressed respect for employees and the community, and J. Irwin Miller (Cummins Engine, US), who supported civil rights and inclusive hiring practices. Later, Anita Roddick (The Body Shop, UK, from the 1970s) became the first high-profile female practitioner of CSR, a proponent of the “activist enterprise,” promoting fair trade with suppliers, animal welfare, and environmental sustainability. 

More recently, The Gates Foundation channels vast resources into vaccination, disease eradication, and poverty alleviation. This is more of a global philanthropic model than CSR in the strict sense, but it illustrates how the wealth generated by corporations is redeployed under the logic of social responsibility. Dietmar Hopp, the co-founder of SAP, has poured billions into philanthropic projects in his corner of Germany. 

And herein lies the criticism of CSR: its reliance on the personal values, interests, and reputations of individual business leaders. Because responsibility was framed in terms of what a “good businessman” chose to support, CSR often reflected selective priorities. It risked becoming a form of corporate self-promotion rather than a systematic approach to accountability. 

The case of Dietmar Hopp illustrates this point well. Through his foundation, Hopp has funded medical research and community projects, but he also channeled substantial resources into transforming his local football club, TSG Hoffenheim, from a village side into a Bundesliga team. While this benefited the region and brought visibility, it also raised questions about whether CSR served broader social needs or personal ambitions. 

The Evolution of CSR into ESG 

Later developments in CSR have therefore shifted the emphasis from the individual businessperson to the corporation as a whole, treating responsibility as an organizational obligation embedded in governance structures, regulatory and reporting frameworks, and stakeholder engagement. That transition paved the way for ESG, where responsibility is no longer seen as resting on the conscience of executives alone, but as a set of measurable, systemic obligations of the company. 

The continuity between CSR and ESG lies in the idea that business success cannot be judged solely by financial outcomes; it must also account for environmental stewardship, social equity, and governance integrity. 

While CSR itself is still relevant, there’s a growing expectation for companies to integrate its principles more deeply into their core operations rather than treating them as separate initiatives. The shift reflects a demand for more authentic, integrated, and impactful actions from businesses, moving beyond superficial gestures like “greenwashing” to address complex issues effectively 

What Is ESG? 

ESG frameworks emerged to address the weaknesses inherent in reliance on individual business leaders and the perception that CSR was an optional adjunct to core business operations. ESG not only shifts responsibility from the discretion of the executive to the formal obligations of the corporation but also makes this responsibility central to business strategy. Reporting and accountability, whether guided by internal directives or strict regulatory frameworks, are key. ESG is defined by measurable standards (e.g., carbon emissions, board diversity, anti-corruption practices) within an expanding regulatory enforcement. This makes responsibility less about self-promotion and more about systematic governance. In this way, ESG can be seen as the institutionalization of CSR: moving from voluntary acts and personal choices towards consistent, auditable, and comparable obligations that hold companies accountable across industries and markets. 

What Is Sustainability? 

Sustainability represents a further evolution beyond ESG. Where CSR emphasized voluntary responsibility and ESG introduced measurable standards of accountability, sustainability frameworks aim to integrate environmental, social, and economic considerations into a holistic model for long-term resilience. The widely cited “Three Pillars of Sustainability” or the three “Es” of Environmental protection, social Equity, and Economic viability underline that responsible business is not only about compliance or risk management, but about ensuring that corporate growth is compatible with the long-term well-being of people and the planet. In this sense, sustainability broadens the scope: it is not just about what companies should report or avoid, but how they can actively create enduring value for both society and shareholders in a resource-constrained world. 

The table below summarizes the evolution from early business philanthropy through CSR and ESG to the broader concept of Sustainability, highlighting the key features, drivers, and limitations of each stage. 

Stage	Core Feature	Typical Driver	Limitation / Weakness	Evolution To…
Philanthropy (late 19th–early 20th c.)	Voluntary donations, charity, community giving	Personal wealth, prestige, religious duty	Separate from core business, discretionary	CSR
CSR (1950s–1990s)	Ethical business conduct, responsibility of leaders	Managerial conscience, reputational risk	Optional, uneven, subject to self-promotion	ESG
ESG (2000s–present)	Measurable standards, reporting, governance	Investor demands, regulation, compliance	Can be compliance-driven, focused on metrics	Sustainability
Sustainability (present–future)	Integrated ‘triple bottom line’ (environmental, social equity, economic)	Long-term resilience, systemic risk, stakeholder value	Still evolving; fragmentation of regional standards	—

Where Next for Sustainability?  

As noted in the table above, the limitation of sustainability models is that there are competing approaches at the global level. How is this likely to pan out? Let’s consider best case and worst case scenarios. 

An optimistic scenario sees international alignment around a common set of sustainability standards. In this vision, frameworks such as the EU’s ESRS, the ISSB, and US SEC disclosure rules gradually converge, establishing at least a baseline of shared expectations on carbon reporting, human rights due diligence, and governance practices. This would simplify compliance for multinational companies, create a level playing field for global competition, and ensure that sustainability reporting genuinely reflects systemic risks and long-term resilience. Investors, regulators, and civil society would all benefit from consistent, comparable, and transparent metrics. 

A pessimistic scenario, however, points to increasing fragmentation. If regions continue to prioritize their own regulatory interests, companies may face conflicting demands, leading to complexity, duplication, and strategic arbitrage. In such an environment, competitive pressures could encourage a “race to the bottom,” with firms exploiting weaker jurisdictions to reduce compliance costs. This risks undermining public trust and would limit the ability of sustainability standards to address global challenges such as climate change, biodiversity loss, or labor rights. 

Choosing the Right Approach 

It’s worth underlining that CSR, ESG and Sustainability are overlapping and complementary, rather than competing concepts. Organizations and their supply chain and procurement functions should integrate these concepts into their operations. There is no need to produce three separate reports! 

That said, there is some tension between the more voluntary and regulatory approaches. 

For procurement and supply chain leaders, the current divergence between regulatory regimes makes a proactive strategy essential. In the United States, where policy under the Trump administration leans back towards voluntary CSR and philanthropy, companies may face fewer strict rules but still encounter reputational scrutiny from stakeholders. By contrast, the European Union is embedding sustainability into law, requiring firms to conduct supply chain due diligence, track Scope 3 emissions, and report on human rights and governance standards. For globally active enterprises this creates both compliance complexity and operational risk. The most resilient approach is to build procurement processes around the highest common denominator: integrating sustainability criteria into supplier selection, contracting, and performance monitoring, rather than treating them as optional extras. Doing so enables companies not only to satisfy the strictest jurisdictions but also to safeguard continuity, attract investment, and strengthen supplier partnerships across regions. In this way, procurement becomes the operational backbone of sustainability, with finance leaders supporting but not driving the agenda. 

JAGGAER offers the flexibility to allow you to follow this “highest common denominator” approach, drawing on reliable data generated by internal source-to-pay systems, supplemented by third-party data from our partner ecosystem.