What’s the Difference Between CSR and ESG? A Strategic Guide for Indian Corporates

Is CSR sufficient in the current business environment—or must companies embrace ESG as well?

 This question has never been more important. With companies transitioning from profit-driven to purpose-driven, buzzwords like CSR (Corporate Social Responsibility) and ESG (Environmental, Social, and Governance) are moving to the forefront of boardroom discussions. Yet most professionals continue to use them interchangeably resulting in confusion, lost opportunities, and diminished impact.

So, what really distinguishes CSR from ESG? How are Indian businesses making the switch from the former to the latter? And where should your business be putting its time, energy, and resources? Let’s break it down strategically.

Grasping the Fundamentals: CSR vs ESG

Basically, CSR and ESG are both about making business more responsible. But their method, responsibility, and effect vary in significant ways.

CSR: India’s Global First-Mover Advantage

 India became the first country in the world to have its CSR by way of a law in 2014. Companies that qualify under financial parameters are required under Section 135 of the Companies Act to invest 2% of their 3-year average net profit in social problems. CSR has spent more than ₹1.2 lakh crore on social development in the period 2014-2023. It has constructed school infrastructure, supported skill development, facilitated access to healthcare, and catalyzed tens of thousands of community-driven projects.

But CSR also faces challenges:

• Geographic disparity: More than 70% of CSR funds are found in a handful of states
• Short-termism: Most projects have no long-term vision or scalability
• Business disconnection: CSR is usually executed as a separate silo, disengaged from overall strategy
• ESG: The World Investor Perception of Responsibility. While CSR is concerned with what you provide, ESG is concerned with how you do it. Environmental, Social, and Governance (ESG) metrics are meant to capture the company’s ethical conduct and sustainability exposures from the investor’s side. Consider carbon emissions, labor practices, board structure, data privacy, etc.

Worldwide, ESG is picking up tremendous pace:

• $41 trillion of worldwide ESG assets under management as of 2022
• Nine out of ten institutional investors globally consider ESG while making investment decisions
• In India, SEBI has introduced BRSR (Business Responsibility and Sustainability Reporting) as compulsory for the 1,000 largest listed companies from FY 2022–23
• This has made ESG an urgent boardroom issue in India—especially since access to capital and investor trust are increasingly tied to sustainability performance.

 CSR vs ESG: What Matters Most to Businesses

1. Embedded vs. Voluntary

 CSR is usually perceived as a voluntary gesture of return. ESG, however, is integrated into risk management, regulatory compliance, and long-term business sustainability.

2. Community vs. Capital

CSR is about social value—education, health, livelihoods. ESG speaks to the capital markets—ESG scores now influence stock prices, investor flows, and reputation.

3. Tactics vs. Strategy

CSR is project-based and outward-facing. ESG is embedded within the company’s DNA—shaping how it recruits, sources, produces, consumes, and reports.

The Convergence: How CSR and ESG Can Work Together

They are not mutually exclusive. In all actuality, the best companies leverage CSR to fuel their ESG narrative. A clean water access CSR initiative can be a component of ESG’s E (environmental sustainability) A CSR project for women empowerment can strengthen ESG’s S (social impact) Transparency of CSR disclosure can enhance ESG’s G (governance maturity)

• How can businesses integrate their CSR activities into ESG frameworks for greater impact?

By adopting a shared language, shared data, and linked reporting, companies can render their CSR more measurable and their ESG more relevant.

 India’s Evolving CSR Scene: Trends You Should Know

1. People from Philanthropy to Strategy Firms are concentrating CSR projects on 3–5 overarching themes—usually ones that align with the SDGs. This facilitates projects to be more scalable and outcomes easier to measure.
2. Emergence of CSR–ESG Integration Leading companies are including ESG metrics in CSR project design, such as monitoring carbon offset in rural electrification initiatives.
3. Call for Transparency SEBI’s BRSR framework forces corporations to measure and report on sustainability programs, such as CSR-related statistics like diversity, contribution to society, etc.
4. Focus on the Underserved Areas With an added regulatory and media push, CSR spending is slowly moving towards aspirational pockets and the North-East from metropolitan cities.

FAQs CSR and ESG Teams Receive

 Is CSR obligatory for every Indian company?

 No. Only those companies with net worth exceeding ₹500 crore, turnover exceeding ₹1,000 crore, or net profit exceeding ₹5 crore are required to invest 2% of profits in CSR.

Is ESG reporting mandatory?

Yes—India’s largest 1,000 listed companies are involved in ESG reporting. Others can use BRSR Lite or international frameworks on a voluntary basis.

Can ESG substitute CSR?

Not precisely. CSR is mandatory by law in India; ESG is a wider operating model. Both can coexist and complement each other.

 Are ESG ratings relevant to access to capital?

Yes. Several global and local investment funds exclude firms on ESG ratings.

 Are CSR teams supposed to be involved in ESG reporting?

Indeed. Cross-functional alignment is essential to bridging values to operation and impact.

 What Must India’s Corporates Do Now?

• Map Your CSR to ESG Begin mapping your CSR topics (e.g., education, climate change, inclusion) onto the ESG disclosure themes.
• Implement Integrated Reporting Don’t keep CSR and ESG as discrete exercises.
• Utilize shared KPIs, dashboards, and reporting frameworks.
• Upskill Your Teams Educate CSR and sustainability teams on ESG norms such as BRSR, GRI, SASB, and SDG mapping. Connect with Investors and Stakeholders.
• Know what matters to your stakeholders—and let your reporting speak to that.
• Partner Strategically Collaborate with consultancies such as Chrysalis Services to develop frameworks that combine compliance and strategy, and philanthropy and performance.

 How Chrysalis Services Can Assist

At Chrysalis, we assist businesses to navigate the changing CSR–ESG landscape:

• Align the CSR initiatives with ESG objectives and SDG targets
• Develop long-term, measurable CSR strategies that incorporate ESG thinking
• Include CSR stories in your yearly ESG/BRSR reports
• Create governance tools for enhanced decision-making on sustainability
• Create communications that present a credible, compliant, and compelling narrative

 CSR is the soul of your brand. ESG is its mind. We make them coexist.

Look up Chrysalis Services to future-proof your social impact and sustainability strategy.

Final Reflection

Do others see your business as a responsible brand—or a sustainable business?

The distinction is in whether you’re performing CSR out of compliance or adopting ESG for transformation. With increasing expectations from regulators, investors, and consumers, closing the gap between CSR and ESG is not an option—it’s a necessity.

Sources:

Ministry of Corporate Affairs – Companies Act Section 135 and CSR rules

SEBI – BRSR framework documentation and ESG reporting standards

UN Principles for Responsible Investment (UNPRI) ESG definitions

Statista and PwC India – Data on global ESG AUM

FICCI-UNGC India – Business alignment with SDGs and ESG

Bain India Philanthropy Report 2024

Economic Times & Times of India – CSR and ESG industry updates

GRI and SASB frameworks – ESG reporting structures