Unpacking Corporate Social Responsibility Policies

In a paradox of popular environmental discourse, global corporations are notoriously cast in two diametrically opposed lights: as morally-bankrupt perpetrators of the climate crisis or as primary agents of a revolution in energy infrastructure and consumption habits. Against this backdrop, ‘sustainability’ has become an increasingly marketable value for corporations to feed a growing consumer appetite for social responsibility. As such, corporations are increasingly integrating environmental statements into their value propositions, making it difficult to disentangle companies with marketable façades from those with substantive environmental impacts.

Out of this muddle rises the question: are sustainability and profit inherently at odds, or is there some truth to the business motto, “do well by doing good?” The answer lies somewhere in the middle, but the black-and-white rhetoric found in a great deal of environmental discourse reifies the view that corporations are either evil-doers or do-gooders. It eliminates the more realistic possibility that they occupy the liminal space between ‘good’ and ‘evil’––and more importantly, that the task of evaluating the efficacy of corporate social responsibility necessitates judgment on a case-by-case basis, rather than a final and holistic categorization.

At its heart, the debate surrounding corporate social efficacy revolves around an ambiguous question of motive. For many environmentalists, this rationale hinges on the notion that motive is an indicator of altruism, and––by that logic––efficacy. This begs the question: Is there an exclusive relationship between genuine environmental concern and sustainable outcomes? And more importantly, by this definition, is self-interested, profit-driven sustainability automatically disqualified from this narrative of successful corporate social responsibility? Put simply, does altruism matter in the pursuit of sustainability? From a practical perspective, this line of reasoning is not only irrelevant, but also counterproductive. It shifts focus away from what is truly important––outcomes––to matters of secondary concern: sticky, and often unanswerable questions of corporate motive. This is not to say that the means justify the ends in a Machiavellian sense––only that sustainable outcomes should matter more than the question of why: namely, whether a company is driven by profit or altruism in its pursuit of this end. Nevertheless, it is worthwhile to examine the implications of corporate motives as a means of framing the larger narrative at play.  

The prevailing literature on environmental activism speaks of three broad categories of motives. First, there are corporations that adopt sustainability policies for purposes of branding and image. Household names like Nike and Coca-Cola are particularly conscientious about projecting a stewardly image, because their sales hinge on delivering socially-palatable products to consumers. In these cases, the value of the label is of utmost importance. Other corporations adopt sustainability policies because it makes business-sense to do so. By engaging in cost-saving, sustainable measures like investing in renewable energy or transitioning to ‘green’ packaging, these entities find themselves in a fortuitous position: they receive public approval for ‘environmental initiative’ despite the fact that they would have undertaken these measures anyways. Third, there exist a handful of corporations that genuinely care about the environment, and accordingly, sustainability is part and parcel of their mission. But even for companies like Patagonia, which are built on sustainability, the institutional goal of a corporation is to generate profit. Thus, we must consider how much companies of this nature leverage this claim of authenticity to differentiate themselves for purposes of profit, rather than upholding it for the inherent value of sustainability.

"Should self-interested, profit-driven sustainability be disqualified from the narrative of successful corporate social responsibility? Put simply: does altruism matter in the pursuit of sustainability?"

In addressing the first of these three motives––corporate image––we must consider a much broader theme: the function of consumer labels. In an article on the ethics of labeling, I analyzed how the Fair Trade labels associated with a variety of consumer goods project the image that products under this label are ethically sourced––that, indeed, the process by which they are brought to market is ‘fair.’ At its most basic level, the label detaches consumers from the fundamental unfairness of the plantation labor employed in the production of Fair Trade goods like Darjeeling tea. We must ask: to what extent do labels reinforce or perpetuate the very conditions they stand against? Apply this to environmental sustainability, and it becomes abundantly clear that labels can be exploited to construct false consumer images that feed our appetite for the idea of sustainability, rather than producing sustainability itself.

This certainly seems to be the case for companies like Coca-Cola, which tout extensive corporate sustainability policies––largely for the purpose of consumer satisfaction. For example, Coca-Cola frames itself as a ‘water neutral’ company by replenishing aquifers––though usually not in the same communities from which they extract their water to begin with––which is itself an issue since the environmental and social impacts of water extraction are localized. Moreover, Coca-Cola does not factor into its ‘water footprint’ the estimated 442 liters of water needed to make enough cane sugar for a single beverage. Thus, labeling itself ‘water neutral’ is utterly misleading. This element of greenwashing was reflected in Fortune’s 50 Best Global Green Brands, where Coca-Cola ranked twentieth, but received an index of -12.2 for “being given more credit than its actions merited.” This gap between its public perception and its actual environmental performance highlights a fundamental disconnect: for some companies, it is more important for consumers to believe that what they are purchasing is eco-friendly than to conduct truly sustainable business.

More intriguingly, why does a company like Exxon––which has so egregiously hampered progress in national climate policy––have a statement that reads, “ExxonMobil is committed to operating in an environmentally responsible manner everywhere we do business. ExxonMobil’s Corporate Environment Policy and Protect Tomorrow. Today. expectations serve as the foundation of our efforts, which are guided by a scientific understanding of the environmental impact of our operations?” This is particularly ironic considering Exxon’s board was presented with evidence of climate change from company-hired scientists in 1977, yet engaged in deliberate attempts at climate denial and disinformation in spite of this knowledge. In 1989, it formed the Global Climate Coalition––an interest group that played a crucial role in preventing the United States from signing the Kyoto Protocol––as an extension of these climate denial efforts. Though the Global Climate Coalition disbanded in 2002, Exxon’s current leadership continues to hamper legislative efforts that mitigate anthropogenic impacts on the environment. In particular, former CEO Rex Tillerson casted doubt (rather than outright denial) on the science of climate change whilst simultaneously projecting an ‘environmentally friendly’ mission statement to enhance Exxon’s credibility.

Such blatantly misleading claims demonstrate the fundamental danger of image-driven sustainability. Greenwashing––so defined as deliberate “disinformation disseminated by an organization so as to present an environmentally responsible public image”––reinforces the notion that labels can be as lucrative as they are deceptive. Several cases were recently litigated over this concept. One particularly prominent suit, Kamala D. Harris v. Enso Plastics, LLC, Aquamantra, Inc., Balance Water Company LLC, was litigated over a “violation of the California Business and Professions Code that prohibits untruthful, deceptive or misleading environmental marketing claims and of the Federal Trade Commission’s ‘Guides for the Use of Environmental Marketing Claims.’” First developed in 1992, the FTC’s Green Guides are evidence that the public must be critical consumers of image-sensitive brands. Yet not all companies are driven by image.

The second of these motives––cost-savings––aligns corporate incentives with environmental responsibility. For companies like Adobe, reducing waste by disseminating its products through the Cloud was a natural extension of its innovations in technology. Though it made business-sense to implement this cost-saving measure, Adobe was able to capitalize upon this decision and market it as a tenet of its corporate responsibility policy. While some find this disingenuous, policies in this vein are truly eco-friendly. Moreover, corporations are uniquely situated to produce efficient outcomes through their vast marketing resources: they can easily address the lavish consumption habits of the American public through campaigns that affect public behavior. Success in this capacity can only occur when companies are able to strike the appropriate balance between profit and sustainability. This prompts the question: if sustainability is achieved, does it matter if companies are motivated by profit as opposed to genuine concern for the environment?

This leads us to examine our third and final motive: sustainability as a value that is worthwhile in and of itself. In an article on Unilever’s social impacts, I analyzed the implications of C.K. Prahalad’s acclaimed book, The Fortune at the Bottom of the Pyramid. In it, “he flips the idea of ‘social work’ on its head, arguing that solutions to poverty can and should be viewed through the pragmatic lens of corporate profit. In a business-minded sense of the word, then, ‘social work’ comes to signify concrete economic opportunity in a promising (and expanding) market that is still largely untapped.” This sentiment is echoed in the oft-repeated phrase, “do well by doing good.” This capitalist approach to environmental sustainability generates a win-win situation in which corporate profit drives global adaptation and mitigation.

But is socially responsible capitalism losing? Sheelah Kolhatkar of The New Yorker seems to think so. Perhaps it’s not so much the answer to this question, as it is the perception, that truly matters. The nature of American capitalist society has preconditioned us to believe the words of multi-billionaires like Kevin O’Leary. This business mogul and Shark Tank investor––famous for his ruthless pragmatism––characteristically says: “The only reason to do business is to make money…Business is war.” And in that war, the environment is just another casualty. But while O’Leary says this glibly, in keeping with his Shark Tank persona, this business strategy is grounded in academic theory. Indeed, Michael Jensen’s “agency theory” purports that the means justify the ends. A prominent professor at the Harvard Business School, his business strategy gained traction in the 1980s. It advised: align managers’ interests with stockholders to increase the company’s stock price at all costs, which by extension, often produced environmental externalities.

This perspective seems to confirm the age-old axiom that money does, indeed, talk. In this light, the 1972 report Limits to Growth appears to ring true: sustainability and development are inherently at odds––antipodal and irreconcilable objectives. Ironically, Patagonia weighed into this discussion with its somewhat hypocritical position on “anti-consumerism.” As J.B. MacKinnon of The New Yorker writes, “Anti-consumerism is clearly helping to build the Patagonia brand… Its anti-materialistic stance ramped up on Black Friday, 2011, with a memorable full-page advertisement in the Times that read, ‘Don’t Buy This Jacket.’ The ad’s text … asked consumers to think twice before buying it or any other product. The attention the ad received helped to bump Patagonia’s 2012 sales significantly.” Even for a company built on the logic of sustainability, it seems that growth is the unequivocal priority.

So perhaps the business strategy, “do well by doing good,” holds little truth at all. Lynda Gratton of the London Business School writes, “Corporate altruism doesn’t always have to be a question of simply giving––it can be a corporate exercise, too.” But is it naive to think that corporations can do well by doing good? Gratton’s statement seems to go against the very definition of altruism: “the belief in or practice of disinterested and selfless concern for the well-being of others.” At the end of the day, companies are profit-driven––but surprisingly, this doesn’t have to be a bad thing. If leveraged properly, a corporation’s self-interest can be wielded to drive monumental changes in sustainability policy. Though there is no straightforward conclusion to the efficacy of corporate social responsibility efforts––indeed, it would be impossible to create one––what we must keep in mind is this: corporate social responsibility policies are symptomatic of the reality that all solutions have flaws. Rather than engaging in unproductive debates about a whether a company’s sustainability stems from altruism or self-interest, we should be aiming to infuse greater transparency into corporate social policies––investing more in gauging outcomes in our journey towards a sustainable future.

Photo: “Yosemite Valley” – Danny Skahill

About the Author

Emily Skahill '21 is a Senior Staff Writer for the US Section of the Brown Political Review. Emily can be reached at emily_skahill@brown.edu

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