The CSV versus ESG Myth
Creating Shared Value (CSV) and Environmental, Social, Governance (ESG) strategies are intertwined, driving business accountability and value creation. A successful ESG strategy goes beyond reporting, incorporating action-oriented goals and policies rooted in CSV principles to tackle global challenges responsibly.
Creating Shared Value (CSV) and Environmental, Social, Governance (ESG) are mutually inclusive. To practice CSV, businesses need to be accountable and transparent. Therefore, in my humble opinion, CVS and ESG complement each other, with ESG providing a broad framework for managing non-financial risks and opportunities, and CSV offering a strategic approach to creating business value by addressing societal and environmental issues. CSV is about integrating social and environmental issues into a company’s core strategic thinking and value proposition and ESG provides a holistic view of the company’s practices and performance in these key non-financial areas.
Both ESG and CSV reflect an evolution in thinking about the role of business in society and represent related, approaches to integrate social and environmental concerns into business practices. CSV can enhance ESG strategies and show businesses how to leverage societal issues as opportunities for mutual benefit.
ESG strategy is not about reporting only. While reporting is an important component of ESG —providing transparency, accountability, and a means of measuring progress — it is the implementation of the ESG strategy that drives actual change and value creation. The reporting aspect should ideally reflect the company’s strategic shared value approach to ESG and its execution.
In the long term, ESG reporting can influence strategy as in the process of compiling the report an organisation can uncover areas for improvement or new issues that need to be incorporated into the ESG strategy.
An ESG strategy, no matter how strong, without transparent reporting can lead to scepticism and mistrust, while comprehensive reporting without a robust underlying strategy can lead to accusations of greenwashing (i.e., misleading or exaggerated claims of sustainability). While it is true that there are challenges and complexities associated with ESG, including the lack of standardised reporting frameworks and the potential for greenwashing, the underlying principles of ESG remain important for addressing global challenges and promoting responsible business practices.
The first step in developing an ESG strategy that focus on CSV is understanding which environmental, social, and governance issues are most material, or relevant, to your business. This could involve conducting a materiality assessment, which helps identify the ESG issues that matter most to your stakeholders and could have a significant impact on your business. CSV advocates for business to address the UN Sustainable Development Goals that clearly define social and environmental issues that organisation can use as guidelines, when trying to identify material issues.
Once you’ve identified your material ESG issues, the next step is setting clear, measurable goals related to these issues. These could range from reducing your carbon emissions to improving your diversity and inclusion practices again aligning to CSV.
To achieve your ESG goals, you’ll need to develop and implement appropriate policies and procedures. These could involve anything from creating a more sustainable supply chain to implementing a comprehensive code of ethics which are all part of the principles and disciplines of CSV.
In summary, while reporting is an important part of an ESG strategy, it’s just one aspect. An effective ESG strategy involves a comprehensive approach to create Shared Value while managing your company’s environmental, social, and governance impacts.
Founder & CEO