Given that gift-giving practice and charity is a philanthropic act being supported by most governments through tax incentives and tax breaks, most institutions take this practice as a way of fulfilling public’s desired expectations or a business tradition, as many believe it is a kind of the social contract between a business and its local community. Some even regard it as a way to partially offset some of the social harm or social problems that business has engendered. However, CSR is not only limited to philanthropic efforts— to demonstrate fondness or concern for humankind through the form of money and gifts, which is only a small part of company’s social responsibility or citizenship initiatives, being a socially responsible business itself is much required in this time of crisis with global warming and Covid-19 as pressing concerns.
CSR alone is no longer sufficient for a business to excel in this new era; from a corporate policy nutshell, CSR represents a company’s efforts to have a positive impact on its employees, consumers, the environment and community, which is only a form of self-regulation that most companies report on annually. To arrive at a more precise assessment of a company’s actions instead of producing impressive-sounding rhetoric, Environmental, Social and Corporate Governance (ESG) which demands metrics plays as an important tool to measure company activities such as:
- Climate change responsive actions
- Workers Welfare
- Supply chain Management
- Innovation Fostering
In this sense, a “sustainable CSR program” would be with clear target setting, execution, monitoring and action to take to ensure things like environmental programs which are to demonstrate kilowatts of energy saved, tones of carbon emissions avoided, or gallons of water preserved could be achieved with progression year on year. In fact, the report of ESG data becomes a key assessment marker for respective company’s stakeholders especially for investors as it shows the corporate purpose, strategy and management quality, that’s the reason why a quarter of the global professionally-managed investment funds only invest in companies with solid ESG credentials demonstrated. Although some companies would still regard the making of ESG report solely for compliance reasons or an add-on to business activity, the integration of ESG at the very heart of a company including the financial decision and long term planning would help to eliminate operational risk as well as the environment and social risk, which is a clear pointer to investors. The financial data on the annual report would only be an earning and loss of a company’s “health-check” without sufficiently demonstrating its actual operation, which could cause risk to the business in the long run. Given that today institutional investors and pension funds have grown too large to diversify away from systemic risks, so they must consider the environmental and social impact of their portfolio.