We live in an ever-more globalised world. Not only have national economies become highly intermingled and interdependent, but humanity’s most pressing problems are increasingly cross-border issues. The capacities of individual governments to address these issues alone are limited, and there has been a growing attention paid towards the role businesses have to play.
A Short History of CSR
Although definitions of Corporate Social Responsibility (CSR) vary, it is generally understood to be a mechanism whereby companies take responsibility for the impacts of their decisions and practices by holding themselves to a set of ethical, social and ecological standards - with the aim of contributing towards the health, welfare and sustainable development of society. The term was coined in the 1950s, although the real impetus came later on after a number of industrial disasters, such as the 1969 Santa Barbara oil spill, which led to low public confidence in businesses and translated into massive public protests. These culminated in the first Earth Day in 1970, and spurred a host of new environmental regulations in the USA, as well as the founding of a number of businesses grounded in CSR norms.
In the 1990s, CSR began to gather steam on an international level. This decade saw high profile international events such as the UN Summit on the Environment and Development and the signing of the Kyoto Protocol on climate change, which, among other things, raised expectations on corporate behaviour. Moreover it was a period of rapid economic globalisation, and as companies expanded internationally they faced uneven regulatory frameworks and increased global visibility and reputational risk.
Responsible Companies in the Age of Globalisation
Over the past few decades, expectations on corporate behaviour have continued to rise alongside greater public awareness around human rights, environmental protection and other issues. The institutionalisation of CSR is stronger than ever, as many companies have sought to adapt to this more socially-conscious customer base. There is strong evidence to suggest that highlighting responsible business practices endows a company with clear competitive advantages. A study looking into the coffee industry, for example, found that Fair Trade certified growers enjoyed higher sales, despite higher prices. Indeed, recent studies have shown that a majority of consumers will choose to spend more money on a product from a ‘sustainable’ brand. Businesses seen as responsible also benefit from greater employee productivity and retention. So savvy companies have sought to protect their corporate image, seeing the direct impact it can have on relationships with investors, employees, and customers.
rogiro Fairtrade coffee growers enjoy higher sales, even though their prices are higher.
How "Socially Responsible" are Companies in Reality?
While it may be true that companies are increasingly sensitive to reputational damage, this does not necessarily imply they will actually improve their business practices. In some cases companies have instead engaged in elaborate PR campaigns designed to manipulate the public’s perceptions of those practices. As environmental concerns have taken centre-stage in public discourse in recent years, “greenwashing” has become a particular problem, as many corporations have sought to market themselves as ecologically responsible whilst continuing to behave in fundamentally damaging ways.
Types of Greenwashing
Companies have developed a number of techniques to ‘green’ their image. Some examples include:
1. Outright false claims
Volkswagen was widely seen as a pioneer of CSR, even topping the Dow Jones Sustainability Index as the most sustainable car manufacturer. This all changed in 2015 when it was discovered to have rigged 11 million of its “clean diesels” with software designed to cheat nitrous oxide emissions tests, and to have reported its CO2 emissions incorrectly. Similarly Mercedes-Benz faces legal action, because it’s “Earth Friendly” cars have been said to release up to 65 times more nitrous oxide than EPA regulations allow.
Dirk Vorderstraße VW ‘clean diesel’ cars were discovered to have been fitted with emissions-cheating software.
2. Emphasising specific positive characteristics whilst ignoring the overall negative context.
The fossil fuel industry has attempted to rebrand itself in light of the global climate crisis. Exxon-Mobil for example ran a campaign trumpeting its intended goal of producing 10,000 barrels a day of algae biofuels by 2025. What it failed to mention however is that this would account for just 0.2 percent of its current refinery capacity. At the same time it plans on expanding oil production by 35 percent by 2030. Similarly, BP is being sued for misleading claims about its investment in renewable energy, while other firms such as Total are also under scrutiny. These rebranding attempts distract not only from the problems posed by oil companies’ core operations, but also from their continued behind-the-scenes attempts to disrupt climate legislation.
3. Unsubstantiated claims
Companies sometimes make unsubstantiated claims about their products. For example AJM Packaging Corporation claimed its boldly named “Nature’s Own Green Label paper plates” were 100% recyclable as well as biodegradable. However when they were investigated by the FTC they could not provide any reliable scientific data to prove it.
4. Dodgy certifications
One way companies have tried to shore up their green credentials is by having their products certified by independent environmental organisations. Unfortunately, not all of these organisations are as independent, or as environment-friendly, as it may seem. The Sustainable Forestry Initiative (SFI) for instance was accused by a number of environmental NGOs of allowing irresponsible practices such as clear-cutting, logging endangered forests, and human rights abuses. They were also accused of conflicts of interest because the SFI receives its funding from the timber industry. This problem seems to be a fairly pervasive one. The Forestry Stewardship Council, which was established as a more rigorous alternative to the SFI, has also had its share of controversy. Its decision to outsource its logo to other certifying bodies has made it unable to ensure compliance standards. Meanwhile, FSC-certified timber sells for a higher price, meaning that socially irresponsible loggers are profiting from its logo.
naql Doubt has been cast over the trustworthiness of certain sustainable forestry certifications.
5. Emphasising correct, yet irrelevant, properties of a product
This is the case when, for example, cosmetic products profess to be “free from animal testing” when being sold in places like the EU or UK, where testing cosmetics on animals is actually illegal anyway.
Unfortunately greenwashing is rife. The above examples are just some of the many ways companies have been known to do so. A survey conducted in the USA and Canada of 4744 products found 95% of them guilty of greenwashing practices.
Is there hope for CSR?
Considering all this, it is easy to feel hopeless. If greenwashing is so pervasive, can any businesses be trusted?
One study looking in-depth into three companies found encouragingly that the business managers in question were indeed motivated by CSR. However, it also found that they had a poor grasp of the social costs of their operations, and of the CSR concept itself. It concluded that better education and training around CSR may be the key to encouraging compliance through the power of intrinsic motivation, and by providing a framework for ethical decision-making. These would also be more effective when combined with opportunities for personal recognition, and when connected to external standards and scrutiny.
In recent years, a number of internationally-recognised standards and benchmarks have been created - such as the Global Reporting Initiative, the Dow Jones Sustainability Index, the World Benchmarking Alliance, and the B Corp certification - which have the potential to change corporate practice for the better. Ultimately though, it is consumer decisions that will enforce CSR standards. The good news is that the pressures on companies to comply is likely to continue to grow, as the percentage of consumers globally who make purchasing decisions based on sustainable values is increasing rapidly, particularly among the younger generation.
Moreover, the digital revolution is increasing the transparency of business activities, meaning it is easier to hold companies to account with more obtainable evidence. At the same time digital analytics support new insights which make it easier for businesses to measure the impacts of their decision-making, and to account for potentially unforeseen social and environmental considerations. This has led some to argue that the era of greenwashing is coming to an end.
Whether this prediction is valid, only time will tell. One thing is certain however: some companies will be less able to adapt to changing circumstances than others. Indeed, for some industries, a clean transition may be impossible. Fossil fuels will always release greenhouse gases, and plastic packaging will never not create waste. This is perhaps why these companies are some of the worst offenders when it comes to both environmentally irresponsible behaviour and greenwashing. In such cases, governments must step up with stronger transnational regulations, and proactive efforts to wean us off our reliance on these inherently polluting industries. Often governments are slow to act, but when people make a loud enough noise, they catch up quickly. The campaign which resulted in the EU voting to ban single-use plastics is a good recent example.
Governments also have a role to play in laying the groundwork for minimum standards, and in informing the public. A government-certified carbon label on products, for example, would likely be a very effective way of marrying regulation with consumer-driven change.
How to stay informed
Until such a universal label is rolled out, keeping yourself informed about all the products on the market can be difficult. But there are a number of resources available to help you make wiser consumer decisions:
The Global Ecolabelling Network is a non-profit association of independent, third-party environmental certification organisations with stringent membership requirements. Familiarise yourself with existing eco-labels with proven track-records by visiting their website.
Good Guide rates household and baby products based on ecological and health considerations, while Cosmetics Database does the same for cosmetics.
For German speakers, the climate lie-detector evaluates the truth of ‘green’ claims made by companies and politicians alike.
If in doubt, have a quick online search before you buy something, bearing in mind the common greenwashing techniques listed above. If a product claims to be “organic”, where is the proof of certification? If it is certified, you could even go one step further and do a search to find out if it is a reliable one - asking who it is funded by, and if it has been surrounded by any controversy. Additionally, it would also be wise to follow the recommendations of reliable environmental NGOs such as Greenpeace and others.
All in all, CSR has had a checkered history. Relying on companies to privately self-regulate has created opportunities for deception, and they have sometimes used CSR more as a marketing ploy than as a genuine commitment. However, the future shows signs of hope. Not only is consumer consciousness increasing, but there have been promising attempts to create universal standards and benchmarks, as well as discussions of greater government intervention in providing clearer regulatory frameworks. Let’s not give up hope for CSR just yet.
Author: Leander Jones (RESET Editorial)