The Muamalat Newsletter Vol. 2 2024

FEM eNewsletter | December 2024 65 Beyond the Metrics: Understanding the Complex Interplay of ESG and CSR in Corporate Accountability Richard Seow Business Consultant and Independent Researcher beyond mere compliance with legal obligations. Over time, CSR has broadened to encompass a wide spectrum of responsibilities—social, environmental, and economic—with corporations leveragingCSReffortstoshowcasetheirdedication to sustainable development (Seow, 2024b). In contrast, ESG is a more recent development, emerging in the early 2000s in response to growing investor demands for greater corporate transparency, particularly regarding non- financial risks and opportunities (Seow, 2024c). ESG gained significant attention following the 2004 “WhoCaresWins” report, which consolidated the environmental, social, and governance pillars into a unified framework, emphasizing their importance for informed investment decisions. ESG focuses on these three specific pillars, aiming primarily to address investors’ needs to evaluate a firm’s long-term sustainability and financial risk management. While both frameworks address similar sustainability concerns, their evolution and motivations are distinct: CSR is generally viewed as a voluntary commitment to societal welfare, shaped by corporate values and stakeholder influence, whereas ESG largely responds to financial market expectations and regulatory pressures, driven by the goal of attracting socially responsible investors while managing risks. The primary source of confusion between ESG In recent years, both the private sector and the academic community have increasingly prioritized the concept of sustainability. Stakeholders are now more attuned to the critical need to integrate sustainability alongside economic pursuits (Seow & Loo, 2023). Within this broad framework, corporate social responsibility (CSR) and environmental, social, and governance (ESG) have emerged as central to discussions on corporate accountability. Despite their shared focus on enhancing transparency, particularly in non-financial performance, these two frameworks often overlap in ways that create significant confusion, especially in scholarly research (Seow, 2024e). This confusion is not merely a matter of terminology; it also poses methodological challenges, as researchers find it difficult to delineate the distinctions when studying the drivers and impacts of sustainability initiatives. In this article, we seek to clarify the differences and similarities between CSR and ESG, while examining how this ambiguity affects academic research. The concept of CSR has been embedded in corporate discourse for decades, with roots traceable to the early 20th century. It gained notable traction in the 1950s following Bowen’s (1953) influential work, which advocated for businesses to engage in societal welfare