Many a company has jumped on the Corporate Social Responsibility (CSR) and Environmental, Social and Governance (ESG) bandwagon to legitimise their social responsibility. But in doing so, have they delivered meaningful social impact, or merely marketed their social credentials to enhance employee engagement and brand?

CSR and ESG defined

CSR is a broad concept that helps a company be socially accountable to itself, its stakeholders, and the public. As an inward looking, self-regulating business model CSR prompts companies to be conscious of the kind of impact they are having on all aspects of society through their business operations and processes.

Traditionally it has focused on four main pillars of responsibility relative to its business activity:

  • Environmental responsibility – are operations optimised and related causes supported to ensure natural resources are left better than before its operations?
  • Ethical responsibility – are we operating in a fair, honest and ethical manner above what is legally required?
  • Philanthropic responsibility – how does the company spend its resources to make the world a better place?
  • Financial responsibility – do we invest in programs, donate to related causes, or conduct product research to enable the three pillars of Environmental, Ethical and Philanthropic responsibility?

ESG on the other hand is an outward looking framework taking a more holistic view that sustainability extends beyond just operational issues. ESG is the lens through which an organisation manages its social impact expectations outside the walls of the company and ultimately its social impact on the communities in which it operates.

Globally, we face several challenges: climate change, transitioning from a linear to a circular economy, increasing inequality, balancing economic needs with societal needs.

Investors, and regulators, as well as consumers and employees are now increasingly demanding that companies should not only be good stewards of capital but also of natural and social capital and have the necessary governance framework in place to support this.[i]

That’s where corporate philanthropy comes in.

Corporate Philanthropy

Corporate philanthropy refers to the activities that companies voluntarily initiate to manage their impact on society and make the world a better place.

Such activities include monetary investments, donations of products or services, in-kind donations, employee volunteer programs and other business arrangements aiming to support a social cause.

But not all businesses are the same.

The Giving Australia 2016 report differentiates between SMEs and large businesses in their approach to giving.

SME giving is typically ad hoc, reactive and unstructured. By contrast large businesses and corporations focus their giving in areas that align with the nature of their business or industry, and in areas of activity most likely to have some impact on their stakeholders.

The key differentiation is that as a business grows, strategy drives the mode and mechanism of philanthropy.

In Australia, corporate philanthropy has migrated from in-kind support and allowing employees time off to volunteer, to funding big world issues.

Today, corporate philanthropy focuses on problems that are considered socially important or neglected such as affordable housing, First Nations wellbeing, gender equality, and diversity and inclusion, mental health and human rights. And in doing so, has effectively moved from feel-good transactional giving to high impact giving.

In both CSR and ESG, the ‘S’ for ‘Social’ refers to an organisation’s relationships with stakeholders, – including customers, suppliers and employees – and the resulting interdependencies.

Targeted corporate philanthropy, aligned to an organisation’s purpose is the best way to enact the ‘S’ social element, and demonstrate social impact. It’s where the rubber hits the road and the most effective means for turning purpose into action.

If you’d like to find out how Global Philanthropic can assist in aligning your corporate philanthropy with your organisation’s social purpose, contact us on +61 2 8324 7585 or