In the 21st century, there is an expectation that corporations, once aloof from societal issues, take a stand on matters that are relevant to their purpose and values. Regardless of whether they are known for being socially or environmentally progressive, boardrooms are embracing environment, social, and governance (ESG), corporate social responsibility (CSR), and diversity, equity, and inclusion (DEI) programs.
Last summer, I read a front-page article in the Wall Street Journal titled, Exxon Weighs ‘Net-Zero’ Carbon by 2050. (Source: Christopher Matthews, Emily Glazer, Exxon Weighs ‘Net-Zero’ Carbon by 2050, Wall Street Journal, Aug. 6, 2021.) Exxon Mobil Corp. pledged to reduce its net carbon emissions to zero by 2050. Most of these harmful emissions are caused by carbon dioxide from burning fossil fuels, including coal, oil, and natural gas. ExxonMobil is an oil and gas company. The article mentioned pressure from an activist hedge fund that had recently added three members to ExxonMobil’s board of directors. This is proof that ESG strategies are working.
As prevalent as corporate social justice, sustainability, and inclusion initiatives are today, it’s important not to conflate them with organizational purpose. By blending these priorities, their clarity and impact diminish. When stakeholders can’t distinguish between your organization’s purpose and its stance on environmental issues or inclusion efforts, confusion ensues. It’s more effective to clarify these distinctions and, in alignment with corporate purpose and ideals, capitalize on the unique contributions that ESG, CSR, and DEI programs make to the organization’s culture and success.
To clarify the difference between them, let’s start with some definitions and examples:
Organizational purpose is an organization’s existential question, its reason for being.
- Kroger’s purpose is to feed the human spirit.
- Target’s purpose is to help families discover the joy of everyday life.
- General Mills’ purpose is to make food the world loves.
Environment, social, and governance (ESG) is the quantifiable measure of a company’s sustainability and societal impact, using metrics that matter to investors.
Examples: Greenhouse gas (GHG) emissions and climate risk, pay equity, diversity, and inclusion, ethical behavior and anti-corruption.
Corporate social responsibility (CSR) is defined as a form of business self-regulation which aims to contribute to societal goals of a philanthropic, activist, or charitable nature by engaging in or supporting volunteering or ethically-oriented practices.
Examples: Volunteering, helping employees advance careers, donating products or services.
Diversity, equity, and inclusion (DEI) is a term used to describe policies and programs that promote the representation and participation of different groups of individuals, including people of different ages, races and ethnicities, abilities and disabilities, genders, religions, cultures and sexual orientations.
Examples: Develop sponsorship programs to provide opportunity and growth to minorities and marginalized groups, establish concrete, actionable, and quantifiable DEI goals that will advance the workforce representation of historically under-represented groups, and devise a means for measuring and reporting on performance.
For decades, corporations have articulated their purpose and corporate ideals in the form of mission, vision, and purpose statements and core values or principles. And, in truth, whether or not they define it, communicate it, or deliberately connect it to employees’ job roles, every organization has a purpose. There is a reason that it exists. Not so with ESG, CSR, and DEI strategies. These relatively new programs only exist if they’re developed, staffed, and funded.
As the landscape continues to evolve toward more organizations becoming increasingly involved in issues that tug at their purpose and core values and matter to employees, customers, and investors, we will see more evidence of their impact, as with Exxon’s pledge. While ESG, CSR, and DEI programs are vital and inextricably linked to corporate standards and direction, there is difference between these strategies and organizational purpose. To conflate them is to add confusion and dilute their impact on your organization and its stakeholders.
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