ConstructionWorX DIGITAL
Powering sustainability: the role of CSR and ESG in Commercial Powertrains Navigating the intricate realm of sustainability, CSR and ESG in the Commercial Vehicle and NRMM sectors. Alex Woodrow, managing director, KGP Powertrain Intelligence reports for Construction Worx… An Overview of Sustainability: Driving Powertrain Innovation (Part 1) KGP's consulting services primarily revolve around Commercial Powertrains, with a focus on Commercial Vehicle (Truck and Bus) and Non-Road Mobile Machinery (NRMM) – mainly Ag, Construction and Material Handling. The global commercial vehicle sector is currently undergoing a significant shift towards achieving zero tailpipe noxious and GHG emissions, with numerous markets worldwide enacting legislation to enforce this transition. However, when it comes to NRMM, there is no unified legislative framework driving this change. To drive innovation requires companies to monitor their strategies and outcomes, but without legislative drivers this is more challenging. Over the last decade of researching the future of NRMM powertrains and considering the various factors influencing their evolution, we identified Corporate Social Responsibility (CSR) and Environmental, Social and Governance (ESG) as the most pivotal catalysts and drivers of powertrain innovation. While these terms are sometimes used interchangeably, they have distinct meanings, both connected to the broader concept of sustainability.
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AUTUMN 2023
CSR vs ESG vs Sustainability CSR primarily concerns a company's behaviour and its sustainability practices. It is a self-regulated approach where organizations proactively adopt sustainable practices in their operations and decision-making. Conversely, ESG revolves around the measurement and evaluation of these sustainability practices. It focuses on how companies assess and quantify their impact in relation to stakeholders (the social aspect) and ethical considerations (governance). Unlike CSR, ESG is externally regulated, emphasizing transparency and accountability in reporting these metrics. In essence, while CSR guides a company's internal sustainability efforts and ethical conduct, ESG serves as the external framework for measuring and ensuring that these efforts align with broader social and governance expectations. Both CSR and ESG play critical roles in advancing sustainability and are essential factors in shaping the future of NRMM powertrains. ESG and CSR have undergone remarkable transformations over the past three years, notably since the onset of the global COVID-19 pandemic. Presently, it has become common practice for major corporations to release annual Sustainability reports, encompassing both CSR and ESG aspects. However, the content and scope of
