BUSM4692 – Global Corporate Responsibility – A3

I/ Introduction

Corporations of all sizes and different sectors have created many significant environmental consequences as a result of their operations, ranging from the emission of harmful chemicals to the use of massive quantities of environmental assets, with the most noteworthy issue being contributing to climate change. Therefore, the necessity for businesses to continually develop with ecologically friendly policies is critical, and companies are being pressured to do so on a daily basis by community and governmental agencies. As a result, many corporate firms nowadays are focusing not just on financial gain and expanding wealth of shareholders, but also on ensuring that they have a beneficial influence on society by establishing strong and unified relationships with their stakeholders (Chen and Wang, 2011). To put it another way, in recent years, corporate social responsibility (CSR) strategies have become more integrated into company strategic planning.

This research focuses on one particular aspect of CSR, the environmental factor, in relation to the critically pressing topic of climate change. The effects of this disaster on many segments of society are interconnected, and the problem is considered the most dangerous to humanity. Businesses have been running numerous green initiatives and adopting different ecologically sustainable tactics in their value chain to help solve this challenge; however, the results are still debatable in terms of their efficacy or usefulness as outcomes are still limited and many controversies have been uncovered. The primary argument of this paper is to explore and identify whether the role of CSR in the fight against the global challenge of climate change is guaranteed of effectiveness. The research direction is to examine the current practices of businesses, identify the efficiency through published reports and elaborate on specific success or failure cases of firms that undertaken CSR in their business strategy in an effort to tackle the climate change problem. The study also utilized the three fundamental theories of CSR including Carroll’s theory, Triple Bottom line Theory and Stakeholder theory.

This paper is structured into five main parts. Following introduction is the literature research on relevant concepts to the topic. Next section represents the popular theoretical framework of CSR to apply in further discussion in the next segment, which is to explain, analyze the current practices of CSR by corporations. An overall conclusion for what has been elaborated will be the last section in this paper.


II/ Critical concepts definitions

  1. Corporate Social Responsibility (CSR) Definitions

Corporate Social Responsibility is a term used to describe a company’s responsibilities to the ecosystem, its stakeholders, and wider community (Blowfield, 2005). CSR is a collection of business operations that concentrate on the well-being of stakeholders, such as society and the environment (Sprinkle and Maines, 2010). CSR was seen as an attempt to bridge the gap across corporate strategy and long-term sustainability (Steurer et al. 2005). To be socially accountable, a firm must first be responsively responsible to its own shareholders. Organizations that implement CSR initiatives frequently expand their operations to the extent from which they can contribute to society. As a result, CSR is often a technique used by major firms. Small and medium sized enterprises also develop programs and practices, however they are hardly ever as well-publicized as bigger organizations.

In terms of ecological aspect of CSR, it is regarded as a prerequisite to address the environmental ramifications of a company’s activities, commodities, and infrastructure; alleviate pollution and waste; achieve maximum the performance and effectiveness of its resource base; and lessen procedures that may negatively impact future generations’ appreciation of the nation’s resources. Environmental CSR strives to minimize negative environmental consequences in various business activities. Energy consumption, freshwater use, wastewater treatment, reprocessing, pollutants, environmentally friendly workplace and corporate travel policies are some of the topics that may be covered during activities.

  1. Climate Change Definitions

Climate change is among the most important concerns confronting industry, governments, and civilized society in the twenty-first centuries (Okereke et al. 2012). Climate change is an environmental issue that affects all nations throughout the world to variable degrees (Raimi L., 2016). Climate change has caused numerous changes in environments throughout the globe, with negative consequences such as depletion of the ozone layer, regional global warming, ocean acidification, prolonged wildfires, vanishing glaciers, rising oceans, and other catastrophic occurrences necessitating immediate regional and international response.

Climate change is projected to raise healthcare spending and expenses, interrupt direct exposure to resources and result in considerable increase in costs for distribution network components, and transform tax systems since the governmental states strives to come to terms with intensification of climate and weather constraints that impact their ability supply system and facilities support (Allen 2016). 

  1. CSR and Climate Change

CSR initiatives are expected to make a significant contribution to nature conservation. As a result of the impending disaster caused by climate change, businesses are required to be accountable towards the communities it serves. Companies would make an effort to incorporate environmental aspects into business operational processes. These practices would include advertising the benefits of environmentally friendly materials, marketing eco-tourism (Stronza & Gordillo, 2008), generating environmentally friendly behavior through organizational climate (Nik et al., 2014), and many others. Tate et al. (2011) argue that corporations adopt voluntarily green policies for 2 purposes: first, to achieve a competitive edge through improving accessibility to and conservation of natural resources, and secondly, to preserve a positive public image among interested parties. According to Mijatovic et al. (2019), ecological behaviors are linked to competitiveness and reputational advantages.

III/ Popular theoretical frameworks of CSR

Same as there are various  definitions for Corporate  Social Responsibilities  (CSR), there are many different theoretical basis for CSR. This paper will represent three common theories, including The Carroll Theory, The Triple Bottom Line Theory, and The Stakeholder Theories and discuss their implications for business. Strengths and limitations of these approaches are also indicated.

  • Carroll’s theory

Carroll’s model is organized into four responsibilities that serve as a framework or backbone for a company’s social obligations. Carroll Pyramid’s basic concept is to incorporate CSR practices within the ordering process. Businesses could practice responsibility to society first by attaining financial objectives, such as ensuring long-term profitability and financial position. The very first part of developing CSR is to get involved in corporate operations and make profit. Only then should it proceed to the next higher segment, which is the willingness to acknowledge locally and globally recognized rules and duties, as it believes that ethical business practices benefit the entire economic and social system (Carroll, 2016). The approach to ethical standards through adopting equitable actions performed by a firm and anticipated by society comes just after the third stage. Finally, firms can achieve the highest tier, where they participate towards the philanthropic duties imposed by social and environmental issues by engaging in non-mandated activities that might enhance the company’s civic reputation and credibility, such as sponsorship and donations. This notion demonstrates that firms must organize the four tasks in the hierarchy’s sequence, which may be difficult for small and medium sized businesses to implement because they have fewer resources to begin with.

  • The Triple Bottom line Theory

The Triple Bottom line (TBL) theory, which is comparable to the Carroll Pyramid theory, considers three key concerns for CSR: economic, social, and environmental. However, according to TBL theory, environmental considerations are one of the most important variables in establishing corporate sustainability. The difficulty in putting TBL CSR theory into reality is striking a balance between the three roles (Maria, 2019). A corporation’s sole purpose is to make money; it also has an ethical obligation to fulfill social and environmental goals. To comply with this structure, firms must strike a balance between the three CSR duties in order to accomplish long-term social and environmental goals, which is a challenging task.

  • Stakeholder theory

The stakeholders thesis is the expansion of purposes beyond maximizing profits to incorporate non-shareholders’ entitlements and demands (Mitchell et al, 1997). This concept examines the interaction between a corporate organization and any specific individual, collection of individuals, or organizational body involved in activities of accomplishing organizational goals. Stakeholders are any party or people who may influence or be influenced by the process of accomplishing corporate goals (Freeman, 1984). Despite criticisms such as representing as a justification for opportunistic behavior and destroying corporate transparency in a way to appease all interested parties, which is inconceivable, the stakeholders principle is validated with the experimental studies that show that many organizations engage in CSR to meet stakeholders’ demands (Maignan & Ferrell, 2000). When adopting this concept, the issue is that every firm must reconcile the needs of different stakeholders and implement a fair policy with everyone, which is not a simple task.

IV/ Discussion of effectiveness of CSR in addressing global challenge of climate change

CSR activities are frequently implemented differently for each firm, or even industry, based on a variety of criteria such as size and culture. Manufacturing businesses encounter a broad variety of environmental difficulties, whereas service and retail businesses experience them to a lower scale. The following are some instances of large business CSR initiatives:

Google operates one of the world’s largest distributed systems, and they understand the responsibilities associated with it. They have used a variety of approaches to fight this problem, including: Systems were built from the bottom up to last; Recycle outdated server components into newer models; On the secondary market, and resell old servers. As a result of these measures, Google has boosted the amount of refurbished devices and distributed over 2 million devices to wholesale or secondary markets (Prowly, 2022). Another example is the toymaker LEGO, which intends to employ ecologically friendly substances in the manufacture of all of its main products and packaging, and has so far undertaken significant strides within this direction. Lego cut the proportion of its boxes by 14% between 2013 and 2014, conserving nearly 7,000 tonnes of material. Among other steps, the company recently committed to eliminating all single-use plastic wrapping from its goods by 2025 (Harvard Business Review, 2019).

Although corporate innovations and business alternatives are emphasized as critical components of the climate response, achievement has remained slow so far, and business operations frequently revert to standard operating procedure as normal (Wright & Nyberg, 2017). Furthermore, while an increasing number of firms and their stakeholders are interested in CSR activities, they are frequently unsure of what actions to take to build an appropriate environment in which to implement the notion. Several flaws in corporate CSR practices have been discovered.

A notable example is, for numerous years, Volkswagen stated that their diesel vehicles produced lower pollutants than normal gasoline engines. However, the Federal Trade Commission filed a lawsuit against Volkswagen in 2015 after discovering that these “clean cars” generate up to 4,000 percent more Nitrogen than the allowable limits. As a result, firms like Volkswagen are unable to operate in “socially responsible ways” due to rising income and shareholder wealth (Campbell, 2007). Volkswagen established a misleading impression and deceived the public in order to serve the interests of all stakeholders, including the community and its investors, which is impossible in many cases. This practice highlights the common restriction of stakeholder theory application for companies.

Walmart is an outstanding example of the benefits and drawbacks of a corporate social responsibility (CSR) response to climate change. By diminishing packing and enhancing the effectiveness of its distribution networks and facilities, it is eliminating pollution by enormous amounts and conserving millions of dollars. However, due to expected revenue growth, which includes higher business growth and environmental consequences, it has only committed to keep absolute energy consumption level this century (David L., 2015). According to Carroll’s thesis and the Triple Bottom Line Theory, companies must balance economic, social, and hierarchical levels while or before moving on to the next stage, which limits corporations’ acceptance of ongoing CSR operations owing to predicted economic growth. This applies for Walmart as management is uncertain about the next decade’s business growth, which makes the commitment statement restricted in this decade.

As per previous case studies, the primary argument against CSR is that corporations prioritize short-term goals and outcomes. Even while the managers were found to be emotionally committed and ethically worried about the environmental and economic effects of climate change, they also were fully aware of their restricted room for maneuvering and knowing they could be overtaken if they did not meet market requirements (Wright & Nyberg, 2017). CSR measures, on the other extreme, might jeopardize expansion and current commercial operations, as Walmart’s instance illustrates. Even for bigger corporations, the expense of CSR can be a barrier. 

Aside from that, there is a criticism that executives are focused on economics and procedures and lack the essential experience (social skills) to make socially responsible judgments (Davis, 1973). This means that, while firms wish to commit resources to social issues, lack of employee skills and perspectives are proven to be difficult to overcome in order for the CSR implementation process to succeed. Furthermore, because businesses of all sizes and types contribute to the global environmental crisis, it is vital to assess CSR adoption in each setting. Notably when small and medium companies (SMEs) have received less exposure than bigger organizations’ sustainability impact (Reyes-Rodrguez et al., 2016), although accounting for 64 percent of all environmental impact in various regions of the world, such as the EU. However, the breadth of CSR application for SMEs is still restricted, and it has not been a key topic of debate for integrated climate change collaboration.

Friedman (1962) also claimed that if the market economy fails to resolve socioeconomic issues, it is up to laws and governments to do so. Companies cannot tackle the environmental issue on their own; to combat climate change, state authorities and international corporations must work together in a methodical manner. Governments, with the help of international institutions and/or international/local NGOs, are expected to develop a framework for CSR through a controlled, goal-oriented approach (Mazurkiewicz, 2015).


V/ Conclusion

Climate change creates serious threats to the ecosystem and people’s health, as well as the global financial system (UNEP FI, 2005a). The environmental component of CSR is becoming and more and more essential as the consequences of climate change become more apparent. Businesses are essential to climate change action, but corporate social responsibility does not extend much sufficiently or quickly enough. CSR activities should be an element of an organization’s response to climate change concerns, but they will become insufficient unless they are part of a wider coordinated corporate, industry, and government effort.

Many problems that firms have when embracing CSR, such as limited human skills, competencies, ethics, and resources, result in modest improvements to the climate change situation. Managers in many cases saw a conflict between genuine participation with the great problem of climate change and a corporate focus on short-term profit (Wright & Nyberg, 2017). As a result, businesses may begin CSR to protect the environment at first, but then must reevaluate to strike a balance between various scenarios of revenue and profit development, technical limitations, and acceptable legislation. This dilemma calls into question the usefulness of environmental CSR in combating the global issue of climate change. Green initiatives have a positive influence to some level, but the wider picture requires greater cooperative effort from interconnected entities such as government and institutional groups.



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