The Difference Between DEI, CSR, and ESG

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Diversity, Equity, and Inclusion

Businesses have a variety of tools at their disposal to signal that they’re being intentional and ethical when it comes to making business decisions – whether that’s how they treat their employees, what processes they have in place to be good stewards of the planet, or how they engage with local communities.

When it comes to how companies take ethical steps to run a company that cares about more than just profit, three distinct philosophies typically guide how they operate and hold themselves accountable. These philosophies—Diversity, Equity, and Inclusion (DEI), Corporate Social Responsibility (CSR), and Environmental, Social, and Governance (ESG)—are often used interchangeably. However, while they share some common elements, each term has its own definition and practices.

Diversity, Equity, and Inclusion (DEI) is a set of ideologies that prioritize workplace diversity, equity, and inclusion and strive for equitable representation in all areas of the company. DEI focuses on understanding the unique perspectives of employees from different backgrounds, cultivating an inclusive atmosphere where everyone can thrive regardless of race, gender, or other identity markers, and ensuring that employees have access to opportunities and resources they need in order to succeed. What this looks like in practice includes: being intentional about hiring practices, examining how people are promoted within an organization, accommodating different needs, and providing learning opportunities for those in positions of power to mitigate biases that inevitably occur. We would argue that DEI also encompasses what steps a company can take to create a more equitable world beyond its walls, as no company is a silo. This might include: supporting the local communities that a company is based in, donations to organizations supporting a more just and equitable world, being mindful of toxic waste byproducts that could impact lower-income and predominantly BIPOC communities, advocating for policies that create a more equitable place for everyone to live, and disavowing those that cause harm. Unfortunately, while many companies are actively working on supporting DEI at work– and some even publish metrics to provide some indication of success in these efforts– there aren’t any global standards by which a company can say that they have been successful at creating an equitable workplace. Our equity analysis tool gets at this, and there are undoubtedly other metrics companies can use to guide them on their journey, but without consistent standards, it may be hard for people outside the company to get an accurate picture of how DEI operates within any given company.

Corporate Social Responsibility (CSR) is a broad philosophy that emphasizes creating positive impacts in society at large. It more intentionally encompasses environmental sustainability efforts as well as charitable giving initiatives aimed at promoting human rights or alleviating poverty. There are several main types of CSR, including environmental, ethical, philanthropic, and economic corporate responsibility. Companies with strong CSR values strive to address their grievances responsibly without ignoring stakeholders’ interests or exploiting resources for personal gain. CSR prioritizes corporate responsibility and accountability to customers, employees, suppliers, shareholders, communities, and the environment. Unfortunately, there aren’t any guardrails for companies to consider when saying that they abide by CSR ideals, which can make it difficult for consumers or potential employees to know if a company is truly aligned with their values.

You may have heard of Environmental Social Governance (ESG) when thinking about how to invest in your 401k, and it’s recently made the news as the Labor Department has begun allowing investment managers to invest in ESGs. More ESG funds have recently been created to provide an opportunity to invest in companies more aligned with one’s values. But what is ESG? It’s an approach that companies adopt to advance their work according to global standards of sustainability and ethical conduct; however, no consistent ESG standards exist. There are frameworks, but companies can say they focus on ESG principles and then not do much of anything in practice (also known as “greenwashing”). ESG criteria evaluate organizations based on their impact on the environment, society, human rights policies, and corporate governance processes— which together form a  holistic assessment system for measuring corporate performance against internationally accepted sustainability norms. Companies must ensure they abide by best practices in areas like emissions control or fair labor practices to protect their reputation among consumers as responsible stewards of resources and cultures worldwide. 

The issue with these terms is that there isn’t any consistent regulation, so companies can claim that they’re promoting a more just, sustainable, and equitable workplace and world, but the reality may look very different. For some companies, touting their efforts in any of these three areas might be a simple marketing exercise. For others, they have undertaken significant efforts to be a better company that genuinely cares about more than profit. Ideally, one gold standard would promote a better workforce and world.

We look forward to the day when we can lessen the alphabet soup and create actual change, where companies can join individuals in devoting their efforts to create a more equitable world.