Five Best Practices

Moving From
CSR to ESG
Traditionally, corporate social responsibility (CSR) has been
about doing good for good’s sake. It has focused on social
accountability and community engagement offering qualitative
evidence of the positive impact a company can have on
the world.

Investors, regulators, industry-leading manufacturers,

non-governmental organizations (NGOs), and the public are
now pressuring companies for quantifiable evidence of this
positive impact. Enter environmental, social, and governance
(ESG), which examines the hard numbers and material effects
of a company’s activities on the ecosystem, people, and on the
business itself. For complex manufacturers specifically, it has
become imperative to move from CSR to ESG.

Five Best Practices: Moving From CSR to ESG 1

CSR Vs. ESG
To understand the shift from CSR to ESG, let’s examine the differences
between the two concepts.

Corporate social responsibility has its roots in corporate philanthropy. 1

Entrepreneur Andrew Carnegie in 1889 challenged other wealthy

people to support social causes. As the years went by, society compelled
businesses, not just individuals, to do more than just make a profit. In
1953, U.S. economist Howard Bowen published Social Responsibilities
of a Businessman, in which he advocated for business ethics. As such,
CSR has always been a “conscience” behavior for companies.

The concept of ESG also has a long history. Quakers in 17th century
England would invest in companies that turned a profit while minimizing
harm to society. However, the term ESG did not come into use until 2005.
2

1 Association of Corporate Citizenship Professionals. (n.d.) Corporate Social Responsibility: A Brief History.
https://accp.org/resources/csr-resources/accp-insights-blog/corporate-social-responsibility-brief-history/

2 Zinn, D. (2021, October 26). Here Is Everything You Need to Know about ESG: A Socially Responsible Way of Invest-
ing. Time. https://time.com/nextadvisor/investing/investing-in-esg/

Five Best Practices: Moving From CSR to ESG 2

Yet, ESG has always included business objectives
while striving to make the world a better place.

Since that time, companies have often used the

terms ESG, CSR, and sustainability interchangeably.
ESG has become mainstream, and it is used almost
exclusively by those who evaluate a company’s
efforts to improve its impact on society, the envi-
ronment, and its employees (institutional investors
and regulators). Companies title external reports on
these matters “ESG reporting.”

In contrast, CSR refers to organizational efforts to

make the world a better place. Corporate philan-
thropic work, community involvement, environmental
programs, and employee well-being programs all
fall under the CSR umbrella.

Another difference between ESG and CSR has to

do with accountability. ESG goes beyond CSR to
demonstrate positive impact with data.

Five Best Practices: Moving From CSR to ESG 3

Why ESG Matters
Now More Than Ever
The two main reasons for companies to adopt ESG practices today are
transparency and accountability. Transparency demonstrates a company’s
openness and honesty. Even when a business is not meeting its ESG goals
as its leaders had intended, transparency means it must still reveal that data
to build trust. Accountability follows transparency. This value ensures that
companies take responsibility for what transparency has uncovered.

There are four groups holding companies accountable on their transparency

and accountability efforts:

X Investors
X Regulations
X Industry peers
X NGO/public scrutiny

Investors Make ESG a Priority

Numerous studies show that investors are focusing on ESG. Research from
Gartner points to the growing value of ESG to investors. Eighty-five percent
of investors considered ESG when investing in 2020. Morningstar, an 3

investment research firm, noted that 72 ESG-related shareholder resolutions

3 Gartner. (2021, June 10). The ESG Imperative: 7 Factors for Finance Leaders to Consider. https://www.gartner.com/smarterwith-
gartner/the-esg-imperative-7-factors-for-finance-leaders-to-consider

Five Best Practices: Moving From CSR to ESG 4

appeared on proxy ballots, and half of them passed with majority
support. Moreover, investors are choosing investments that prioritize
4

ESG. A 2021 report from Bloomberg estimates global ESG assets will
exceed $53 trillion USD by 2025. 5

Industry Leaders Are Putting

Pressure on the Market
In addition to investors and regulators, many global brands have put
pressure on their suppliers to adopt ESG best practices. The Carbon
Disclosure Project, a non-profit devoted to reducing carbon emissions,
reported a 24 percent increase in companies asking their suppliers to
report on environmental data. 6

Leading companies recognize the risk that complex supply chains pose
when they do not have ESG programs of their own. They cannot afford
the damage to their reputation if their suppliers have poor practices.
Major impacts on a company’s overall health and longevity are no longer
just about fraud; emissions falsification, social welfare, and general
market perception all affect a business’s performance. When a supplier
does not have high ESG performance, a business will be accountable for
those actions, no matter how far down the supply chain it is.

4 Morningstar. (2022, January 31). Sustainable Funds U.S. Landscape Report: 2021: Another Year of Broken Records.
https://www.morningstar.com/lp/sustainable-funds-landscape-report

5 Bloomberg. (2021, February 23). ESG Assets May Hit $53 Trillion by 2025, a Third of Global AUM. https://www.
bloomberg.com/professional/blog/esg-assets-may-hit-53-trillion-by-2025-a-third-of-global-aum

6 Vitello, C. (2020, May 21). Major Increase in Companies Asking Suppliers for Environmental Transparency. Environmental
Journal. https://environmentjournal.ca/major-increase-in-companies-asking-suppliers-for-environmental-transparency/

Five Best Practices: Moving From CSR to ESG 5

The Public & NGOs Are
Scrutinizing Companies
Some ESG experts would say that NGOs lead the charge when it comes to ESG. Non- 7

government organizations are uniquely positioned to demand greater transparency into

ESG efforts from corporationsbecause they have a reputation for being ethical, unbiased,
and fervent in their desire for positive societal and environmental change.

When NGOs shine a light on sustainability issues, the public pays attention. Research
from PricewaterhouseCoopers in 2021 showed that 80 percent of the public are more
likely to buy from a company that has a strong reputation for environmental protection
and governance, while another 76 percent said they are more likely to buy from a
company with a strong reputation for social issues. 8

Today’s consumers are more informed than ever before about ESG issues and their impact
on the environment and society. Many consumers do not want to be party to environmental
damage or human rights issues. When NGOs reveal evidence of poor ESG performance,
the public takes notice, and in many cases, action.

7 Blood, R. (2019, September 19). How NGOs Are Driving ESG. International Investment. https://www.internationalinvestment.net/opinion/4005142/
ngos-driving-esg

8 Price Waterhouse Cooper. (2021). Beyond Compliance: Consumers and Employees Want Business to Do More on ESG. https://www.pwc.com/us/en/
services/consulting/library/consumer-intelligence-series/consumer-and-employee-esg-expectations.html

Five Best Practices: Moving From CSR to ESG 6

Five Steps to Launching
an ESG Program
Facing pressure from investors and regulators, many complex manufacturers are now
considering creating an ESG program. A successful ESG program is built on the
following five steps:

X Review your pressures X Develop a workflow and timeline

X Create your prioritization matrix X Review and correct
X Ensure you have the right tools in place

1 Review Your Pressures

The first best practice in launching an ESG program is to analyze the
pressures driving this initiative. For some complex manufacturers,
pressure from institutional investors will be the impetus to move
forward. Other businesses will be convinced by market demand,
be that from regulators or customers.

There is great value in developing an ESG program. Abiding by an

industry code of conduct or belonging to an industry coalition dedicated
to responsible behavior does not offer regulators, investors, or
customers the data they seek. In contrast, ESG programs rely upon
international standards set by intergovernmental organizations.

Five Best Practices: Moving From CSR to ESG 7

2 Create Your Prioritization Matrix
There are two components to establishing your program’s requirements:

X Topics of importance
X Prioritization

Topics of Importance
Which aspects of ESG make sense for your organization? For example, a smartphone
manufacturer would be concerned with, at the very least, child labor in its supply chain
as well as greenhouse gas emissions from its factory.

Prioritization
Once you understand what materials apply to your
ESG program, the next step is to prioritize materials
or issues. There may be several materials or issues
that you need to address to collect ESG data,
although some may be more urgent than others.

The urgency of a given material or issue comes

from market forces, which can include customers
or regulators. For example, legislation with a short
compliance timeframe puts pressure on companies
to tackle a particular issue or material or else face
fines and brand damage.
3 Ensure You Have the
Right Tools in Place
Your ESG program needs the right technology in place to succeed.

ESG programs rely on data. That data comes from direct and indirect suppliers.
Technology allows these suppliers to transmit data electronically, making it fast
and simple to receive the information you need about ESG topics and materials.

Moreover, technology allows you to analyze data quickly and accurately. If you do
not have technology in place for analysis, people will have to perform this labor-
intensive and time-consuming task, which greatly increases human error and puts
the success of your ESG program at risk.

4 Develop a Workflow & Timeline

Drafting the policies and framework for an ESG program (known as an ESG
playbook) actually requires working backward. Consider what you want to achieve
from your ESG program, and create a plan that will get you there.

Producing an ESG playbook is a journey. It will look different in every company.

However, there are some steps that will be similar.

For a start, you need to figure out which stakeholders you will engage. Complex
supply chains could consist of a wide range of suppliers. Furthermore, you must
determine which data you need from your suppliers and how they will transmit it.

During the process of creating an ESG playbook, you will discover that suppliers
will have varying levels of awareness of ESG risks. Some of them may be highly
aware of their impact on the environment and society, and they may be taking

Five Best Practices: Moving From CSR to ESG 9

 steps to mitigate negative effects due to business activities. Other suppliers may not be familiar
with ESG issues or how their activities affect the environment.

Because of varying ESG awareness among your suppliers, you must set reasonable timelines to
accomplish your goals. If your suppliers do not realize their greenhouse gas emissions present
an obstacle to your ESG program, it will take longer for you to reduce your emissions. Without
engaging suppliers, you will not know what realistic timelines look like.

Re-evaluating your supplier selection criteria also reveals which opportunities exist. Once you
learn what your suppliers’ dependencies are, you can make better-informed purchasing
decisions and support suppliers with stronger ESG track records.

For example, one manufacturing plant might rely on the coal-powered municipal power grid, while
another factory utilizes renewable energy sources. Awarding business to electric fleet vehicles
represents an opportunity to select a supplier with a strong commitment to ESG principles.

5 Review & Correct

The final best practice of moving to an ESG program is reviewing and correcting any areas in
which ESG performance could improve. Much like the creation of a playbook, implementation
presents an opportunity to learn more about your suppliers, their impact, and their capabilities.

After you put your ESG playbook into place, you may discover some suppliers are less mature than
others. Low maturity and non-compliance does not mean you should stop engaging with them.
Instead, you have a chance to educate them about the importance of ESG and their role in it.

Even after implementation, new regulations, market expectations, and the results of supplier
engagement can affect your ESG goals. These goals may need to change in light of that
information, which is why flexibility, adaptability, and the ability to see new sustainability
opportunities are crucial.

Five Best Practices: Moving From CSR to ESG 10

How Assent Can Help
The Assent Supply Chain Sustainability Platform is purpose-built to help complex
manufacturers map the ever-expanding network of parts and suppliers. Here’s how
Assent can help you:

X See deeper into your supply chain to reduce your risk and grow your business
X Work smarter to manage data efficiently and cost-effectively
X Grow better to take advantage of new opportunities

See Deeper Into Your Supply Chain

Assent goes beyond checkbox compliance to perform deep due diligence.

With Assent, you gain supply chain transparency into the complexities of your supplier
network. Detailed dashboards show compliance statuses, risk supplier scores, and other
metrics. That makes it easy to respond to requests for data – at the touch of a button, you
can generate reports in internationally-standardized formats and access historical data.

The platform boosts the efficiency of your ESG program, too. Users from across your
company can access all submitted data at any stage of the manufacturing process to
discover risks and opportunities.

Work Smarter
The Assent platform offers a sustainable foundation for your ESG program to build on.
Its core features enable you to acquire and manage data from all of your business units
efficiently and cost-effectively.

Five Best Practices: Moving From CSR to ESG 11

Assent streamlines and automates data processes, saving time, effort, and money. In
addition, customers can access the Assent Sustainability Network, a database of over
162,000 regulated substances, to assess risks to their ESG programs.

During the implementation phase, you will receive dedicated support through every phase
of your ESG journey. Our experienced professional services team provides deeper insight
into your data. Thanks to Assent’s support, you can reduce your reliance on internal teams
as well as your spend, which decreases cost and risk.

Once in place, Assent’s platform increases supplier engagement through a streamlined

data submission process, allowing you to rapidly collect and manage large volumes
of data and adds value to ESG programs through support, training, and insight from
ESG experts. These experts serve on the committees of standards and frameworks to
address global sustainability and provide advice on how emerging trends will impact
your company.

Grow Better
The goal of ESG programs is sustainable growth. To grow sustainably, you need to
understand your risks and opportunities, and take action.

Assent’s platform acquires data by using internationally-recognized reporting templates

such as the Conflict Minerals Reporting Template (CMRT), Extended Minerals Reporting
Template (EMRT), and the Slavery and Trafficking Risk Template (STRT). It identifies
high-risk suppliers and other areas of concern so you can focus your efforts where
they’re needed most.

If data is invalid, you receive expert support and analysis. Assent’s platform automates
follow ups with suppliers to increase compliance. In addition, you will receive alerts about
regulatory changes before they impact your ESG program. Once you have the data,
you can act.

Five Best Practices: Moving From CSR to ESG 12

 Key ESG Solutions
Responsible Minerals — Conflict Minerals
Engage suppliers with the Conflict Minerals
Reporting Template (CMRT) to improve response
rates and data quality.
Human Trafficking & Slavery
Perform standardized, efficient data acquisition
with the STRT, and evaluate suppliers from a
risk-based dashboard.
For more information on how Assent can take
your ESG program to the next level, contact us
at info@assent.com.
Other Solutions
X Anti-Bribery Anti-Corruption
X Responsible Minerals — Extended Minerals
X EU Responsible Minerals
X Human Trafficking & Slavery
X Labour Standards Assurance System
X Sustainability
X Code of Conduct
X Supplier Diversity
X General Data Protection Regulation (GDPR)
X Information Security
X NIST 800-171
 525 Coventry Road
Ottawa, ON K1K 2C5
Canada

1 866 964 6931

info@assent.com
assent.com
ESG-GD-220603