ESG vs CSR: Understanding Two Complementary Systems

Published on 2025 November 16, 11:02:46

ESG & CSR Mining → Conceptual Foundation

The terms are used interchangeably. They should not be. ESG and CSR represent different operational functions within sustainability strategy. One measures, the other acts. One responds to capital markets, the other addresses communities.

The Brundtland Commission (1987) defined Sustainable Development as "development that meets the needs of the present without compromising the ability of future generations to meet their own needs." From this foundation, two distinct frameworks emerged.

Corporate Social Responsibility (CSR)

CSR originated as business ethics applied to stakeholder relations. CSR encompasses corporate responsible behaviors including economic, social, environmental, ethical and legal obligations that impact both internal and external stakeholders.

The EU Commission defines CSR as

"the responsibility of enterprises for their impact on society”

In mining operations, CSR manifests as: community development programs (schools, clinics, infrastructure), livelihood restoration for displaced populations, environmental remediation beyond regulatory minimums, stakeholder consultation processes, and local procurement initiatives.

However, CSR as a tool is inherently weak in practice as it lacks definable measures of performance and is not subject to external regulation. This limitation drove the emergence of ESG frameworks.

Environmental, Social, Governance (ESG)

ESG functions as measurement and disclosure architecture. ESG frameworks provide structured approaches to reporting and compliance while enhancing transparency, stakeholder trust, and long-term value creation.

ESG translates sustainability into quantifiable metrics, tons of CO2 equivalent emissions, cubic meters of water consumed and treated, percentage of local workforce, board independence ratios, corruption incident rates. These metrics enable comparison, benchmarking, and investment screening.

Functional Distinctions

• Audience: CSR addresses communities, employees, and regulators directly impacted by operations. ESG responds to investors, rating agencies, and capital markets evaluating risk and performance.

• Measurement: CSR reports outputs (programs implemented, budgets allocated). ESG reports outcomes (emissions reduced, incidents per million hours worked, governance scores from independent raters).

• Regulation: CSR often operates within voluntary guidelines and social license to operate considerations. ESG increasingly falls under mandatory disclosure regimes, EU Corporate Sustainability Reporting Directive, SEC climate disclosure rules, stock exchange listing requirements.

• Timeframe: CSR focuses on immediate stakeholder impacts and ongoing community relations. ESG addresses long-term material risks that affect enterprise value and investment returns.

Integration in Practice

Mining companies cannot choose one framework over the other. Effective sustainability strategy requires both.

CSR programs generate the social performance data that populates ESG disclosures. ESG materiality assessments identify which CSR interventions matter most to stakeholders and financial performance.

Poor CSR execution (community conflicts, environmental incidents) manifests as deteriorating ESG ratings, which increases cost of capital and constrains growth options.

Frameworks like ICMM principles guide companies in implementing ethical business practices, environmental stewardship, and social responsibility, with benefits including improved operational sustainability, enhanced stakeholder engagement transparency, and alignment with international sustainability standards.

These principles sit at the intersection of CSR action and ESG measurement.

The distinction is operational: CSR is what you do, ESG is how you prove and measure what you do. Mining companies need competence in both to secure capital and maintain license to operate.

Additionally