The concept of corporate social responsibility emerged as a way to try to balance a company’s financial obligations to owners and shareholders with political and public demands to contribute directly to the wellbeing of the economy and society. It began as charitable giving and employee programs. But over the course of the twentieth century, as corporations sought ways to protect their reputations, mollify state regulators, and minimize the costs of social conflict, its meaning began to broaden to include the idea of corporations self-regulating to improve their transparency, consumer information, supplier practices, community engagement, and environmental management. Today, corporate executives commonly express the spirit of CSR as the voluntary pursuit of a “triple bottom line”: financial, social, and environmental.
In theory, achieving this triple bottom line, which CSR managers like to point out may require going beyond what local laws require, will grow a company, serve the needs of a society, and do no lasting ecological harm. Advocates often describe this as a “win–win–win” strategy for achieving “sustainable development,” generally defined along the lines of the United Nations’ 1987 World Commission on Environment and Development: “development that meets the needs of the present without compromising the ability of future generations to meet their own needs.”1
In practice, however, the consequences of pursuing CSR rarely follow this reassuring logic. As this chapter shows, the theory of CSR does seem to work reasonably well when CSR is aiming to improve production efficiencies, reduce operating costs, pry open markets, or offer competitive advantages. And looking over the past decade, CSR and sustainability policies have clearly been improving the environmental and social performance of some aspects of some firms.
Yet, as later chapters will document, gains are generally incremental and rarely shift a firm’s total consequences in any meaningful way; meanwhile, as we will see in this chapter, the corporate discourse around the wins of triple bottom line management wildly exaggerates the capacity of big business to promote planetary sustainability. This embellished discourse serves three strategic purposes: to soften criticism and generate praise for big business, including from human rights and environmental groups; to enhance corporate power over sustainability governance; and to justify a regulatory setting amenable to maximizing production, profits, and sales. This is the real business of CSR.
During the 1970s, 1980s, and into the 1990s the CSR branches of TNCs were mostly “greenwashing” business as usual with glossy brochures and philanthropic gifts. Today, at least in part, the CSR, philanthropy, and sustainability offices of every TNC – or what some firms now fold into a single unit in charge of “corporate responsibility” or “sustainability” or “citizenship” – still aim to protect corporate reputations, enhance brand value, and garner community support: what executives sometimes refer to as securing a “social license to operate.”
Philanthropic initiatives offer scholarships, support research institutes and charities, and donate to hospitals and universities. Monsanto and ExxonMobil are typical. “Giving is a natural part of what we do,” Monsanto tells us. Monsanto and the Monsanto Fund support agricultural research, youth organizations, and student bursaries, in recent years totaling more than US$2 million a day in giving, according to the company. The Exxon Mobil Corporation and the ExxonMobil Foundation similarly support education, NGOs, community development, arts and culture, and gender equality, as well as specific programs, such as one to combat malaria. For 2016 the company estimated its total giving at US$204 million.2
The corporate discourse around sustainability can sound a lot like advertising. Just about every service, activity, and product is now marketed as “sustainable,” as we see with the rhetoric of companies like BP and Coca-Cola. “Sustainability is at the heart of BP’s strategy,” reassures BP’s CEO. “Our work on sustainable business practices not only helps to improve the lives of individuals and families across the Coca-Cola system,” says the CEO of the Coca-Cola Company, “it also helps to strengthen the connections between our brands and the people who reach for them more than 1.9 billion times a day.”3
Or look at McDonald’s rhetoric. The company is “helping to lead a global movement on beef sustainability” and is now on a “journey to sustainable beef,” the McDonald’s Corporation tells customers. How? Well, in the company’s words, “every day all around the globe, McDonald’s is putting people, processes and practices into place to make sustainability the new normal – for our business, society, and the world at large.”4
What big business is not claiming to be ethical, responsible, and sustainable? The answer is none. And how often do the CSR and sustainability reports ignore a failure to meet a past commitment? The answer is all the time.
Still, there is more to CSR and sustainability policies than just philanthropy, upbeat messaging, triumphant declarations, shrewd marketing, and “corporate oxymorons” like “clean coal” and “safe cigarettes.”5 Especially since the mid-2000s the pursuit of environmental sustainability has become an increasingly valuable strategy to achieve traditional business gains.
Nowadays, CSR goes well beyond greenwashing. In particular, what corporations often call “environmental sustainability” is more accurately understood as “eco-business,” a concept Jane Lister and I coined in our book, Eco-Business. Shaping the discourses of environmental management to improve corporate images and reputations is certainly a big part of eco-business. And so is reducing the risk of becoming a target of activist campaigns, community uprisings, or state regulators.
But the eco-business of just about every TNC now goes much further. It also involves putting in place tighter controls to manage risks and uncertainties within global supply chains. To gain more control firms are establishing codes of conduct and environmental reporting programs for subsidiaries and suppliers. Apple, for example, has a “Supplier Code of Conduct” that “requires” suppliers “to provide safe working conditions, treat workers with dignity and respect, act fairly and ethically, and use environmentally responsible practices wherever they make products or perform services for Apple.”6 Increasingly, TNCs like Apple are also auditing suppliers and subcontractors for compliance with these codes, including by hiring third-party inspectors.
Eco-business also involves participating in certification organizations and marketing certified products. The consumer good company Unilever – with brands such as Dove, Hellmann’s, and Lipton – has been a leader in setting up business-friendly environmental certification. The company, for instance, was a founding member of three of the world’s biggest nongovernmental organizations now certifying products as “sustainable”: the Forest Stewardship Council (FSC), established in 1993 to certify wood products; the Marine Stewardship Council (MSC), formed in 1996 to certify wild seafood; and the Roundtable on Sustainable Palm Oil (RSPO), established in 2004 to certify palm oil.
Today, the FSC logo is stamped on eight to ten percent of the world’s traded timber, with companies such as Home Depot and Office Depot selling large amounts of FSC-certified furniture, lumber, and paper. The MSC logo appears on around ten percent of the annual global wild seafood catch (by weight), with companies such as Walmart, Costco, and Carrefour now selling significant quantities. And the RSPO is certifying around twenty percent of the world’s palm oil as sustainable, with companies such as Ferrero, PepsiCo, Nestlé, and Procter & Gamble major customers.
Eco-business further involves implementing smart-packaging – from using lighter plastics to thinner cardboard – to decrease production and transportation costs. Coca-Cola in Britain, for instance, reduced its overall packaging by fifteen percent from 2007 to 2017. Eco-business also includes expanding waste and recycling programs to reduce expenditures and gain more control over the quality of inputs. Coca-Cola in Britain is again a reasonable example, with its plastic bottles now made from twenty-five percent recycled materials. The Coca-Cola Company, along with companies such as Mars, Danone, PepsiCo, and Unilever, have also sponsored a global initiative by the Ellen MacArthur Foundation (launched in 2016) that is aiming for a fivefold increase in global reuse and recycling of plastic packaging (up from around fourteen percent in 2017).7
As Lister and I argue, however, as TNCs trumpet their recent environmental gains and sponsorships, we need to be very careful to keep in mind that eco-business is ultimately a strategy to gain competitive advantages in a world spiralling into ever-greater environmental crisis. At its core it is endeavoring to secure increasingly scarce natural resources. It is striving to cut operating costs. It is seeking to enhance quality controls within supply chains, better manage risks, and reach into new markets. It is working to improve corporate images and retain a social license to operate. And it is aiming to enhance brand values, increase profits and sales, and ultimately grow the company into an even bigger and more powerful organization.8
It would be a mistake, however, to dismiss eco-business as the same across all companies. Some companies are doing more and going further. And some CEOs and many CSR managers clearly believe in the power of corporate sustainability to do great good: to produce, in the language of business, “shared value” for the economy and society.9 Assuming that CSR philanthropy and eco-business are merely serving the interests of business would be an even bigger mistake. On some measures these efforts are definitely improving some environmental and social conditions.
At times, these efforts can even seem to hold a potential for gains far greater than those possible through state regulation or nonprofit organizations. This is important to acknowledge, as the capacity for real – and seemingly far-reaching – gains explains much of the power of eco-business. This helps explain its power to enhance the images and reputations of big business. It helps explain its power to produce significant competitive advantages for those companies leading the charge. And it helps explain its power to convince states and NGOs that voluntary self-regulation is an efficient and effective governance pathway toward global sustainability.
Consider Walmart’s sustainability strategy since 2005. Wading through Walmart’s CSR and sustainability reports since then, it is easy to forget that the company’s expansionist business model is in many ways the antithesis of what most people would think of as progress toward sustainability. To cut operating costs, as we saw in Chapter 2, Walmart pays low wages, minimizes employee benefits, prohibits unions, and runs no-frills outlets. To discount its prices, it bargains hard, buying cheap, disposable, nondurable goods in bulk. And to expand sales it drives smaller retailers near its stores into bankruptcy. This business model, as we will explore in Chapter 5, is propelling unsustainable consumption around the world, which in turn is driving the overharvesting of natural resources, the depletion of nonrenewable resources, the degradation from manufacturing, the pollution from long-distance transportation, and the overfilling of planetary sinks.
Walmart’s business model helps explain why the gains from the sustainability and responsibility policies of big business are not adding up to global solutions. Still, there is some truth to Walmart’s claim of being a leader among TNCs professing to be sustainable and responsible. Many analysts credit its 2005 “sustainability commitment” for shifting big business toward using CSR and sustainability programs to compete for business advantages, rather than seeing them as primarily public relations and damage control tools. Since 2005 Walmart’s sustainability strategy has done wonders for its reputation and brand image, with authors such as the Pulitzer-prize winner Edward Humes going as far as calling Walmart a “force of nature,” leading a “green revolution.”10
On some measures Walmart is greening its operations. Since 2005 Walmart has become the world’s biggest organic grocer. It has implemented policies to promote more responsible sourcing of food, including from smaller farms, organic growers, and agricultural producers with fair-trade and environmental certifications. And Walmart stores and Sam’s Clubs are now selling seafood certified by the Marine Stewardship Council, paper certified by the Forest Stewardship Council, and jewelry certified as ethical and conflict free.
Additionally, every year, as part of a commitment to reduce food waste, Walmart is donating hundreds of millions of meals worth of food to hunger-relief organizations. The company also has philanthropic programs to support communities after natural disasters, as well as promote veterans and women in retailing. This philanthropy adds up. In terms of cash and in-kind donations, for fiscal year 2016 (ending January 31) Walmart and the Walmart Foundation gave away US$1.4 billion.11
Walmart’s sustainability strategy has also clearly helped the company to improve its energy efficiency, waste management, and recycling. The energy efficiency of its US fleet of trucks doubled from 2005 to 2015, saving the company around US$1 billion. Stores across the USA have installed solar panels, with Target the only company in the USA with more installed capacity in 2016. Walmart is now diverting three-quarters of the glass, plastic, paper, cardboard, and food waste from its global operations from going into landfills. And worldwide the company reduced its annual plastic bag waste by ten billion bags from 2007 to 2013.12
Walmart’s sustainability strategy has also helped its suppliers to reduce inefficiencies, waste, and greenhouse gas emissions. And Walmart is pushing for even more changes here. In collaboration with environmental NGOs, for instance, in 2017 Walmart launched what it calls “Project Gigaton,” a “toolkit” to help its suppliers reduce greenhouse gas emissions by a gigaton (1 billion tons) from 2015 to 2030.
Sustainability and responsibility strategies similar to Walmart’s are also offering other global corporations opportunities to enhance brand value, improve efficiencies, cut costs, expand markets, and govern supply chains more efficiently and effectively, both environmentally and financially. They are also helping to legitimize self-regulation and self-governance by TNCs.
Look at the praise heaped on Walmart’s Project Gigaton by the Worldwide Fund for Nature/World Wildlife Fund (WWF) and the Environmental Defense Fund (EDF). “Project Gigaton is a testament to the transformative impact that leaders of industry can have on our greatest common challenges,” declared Carter Roberts, President of WWF in the USA. “As more companies follow in the footsteps of Walmart and their suppliers, we can achieve the critical mass needed to address climate change.”
“A challenge like Project Gigaton will catalyze leadership and innovative solutions around the globe,” added EDF President Fred Krupp. “Forward-looking companies like Walmart, and the suppliers that will join them, know that our economy and our planet can – and must – thrive together. Consumers deserve both, and these businesses are leading the way.”13
TNCs do not hesitate to declare their willingness to take responsibility for advancing sustainability. “We have a responsibility to lead,” explained Alexandra Palt, director of CSR and sustainability at L’Oreal, the world’s biggest cosmetics company. “Each year, 1.7 million children die from pollution; people are starving because of climate change. We can’t wait until everybody is on board to start changing our practices.”14
Nor do TNCs hesitate to declare their enthusiasm for taking the lead across every political jurisdiction. “Every single person in the Coca-Cola system, we believe wholeheartedly that we cannot have a sustainable business and a growing business unless we have sustainable communities,” stated Muhtar Kent, then CEO of Coca-Cola. “We have a role and responsibility to play in helping to create sustainable communities, whether it is a village in Kenya or a metropolis like Mexico City.”15
Taking over responsibility for sustainability has strategic value beyond just the competitive advantages arising from the savings and efficiencies of eco-business. As ethics professor Allison Marchildon explains well, “the nature of the responsibility” does not require “fixing the problems” as defined by states or societies, but instead “gives corporations the political power to define what our public problems are and how they should be fixed.”16 Most significantly, big business is using its growing power over sustainability to steer NGO discourses, governmental agendas, and global governance mechanisms toward solutions amenable to more growth, profits, and control for big business.
Look at the 2016 Carbon Offsetting and Reduction Scheme for International Aviation, an agreement between the United Nation’s International Civil Aviation Organization (ICAO) and the international aviation industry to pursue “carbon-neutral growth” after 2020. The ICAO President called the scheme a “bold decision and an historic moment.” Britain’s minister of aviation hailed it as an “unprecedented deal.” Industry was equally enthusiastic. The deal is “at the cutting edge of efforts to combat climate change,” declared the head of the International Airline Industry Association. It has “decoupled growth in aviation from growth in emissions,” said a spokesperson for Britain’s Air Transport Association.17
The airline industry has good reason for its enthusiasm for the direction of climate governance. Carbon pollution from aviation, which now comprises two to three percent of the global total, is on track to rise two to four times by 2050. Yet the airline industry is exempt from the 2015 Paris Agreement on climate change. Nor does the Carbon Offsetting and Reduction Scheme cover all airlines, excluding, for instance, those in Russia, India, and Brazil. Moreover, the scheme does not require any airline to actually cut greenhouse gas pollution. The airlines did agree to strive for greater technological efficiency. Yet the primary way they plan to attain carbon-neutral growth is by charging passengers an extra fee to offset emissions. The scheme does not explain the procedures for offsetting these emissions; nor does it say where or how this will occur, although presumably it will involve planting lots and lots of trees, somewhere. What is clear, however, is the scheme will allow the international aviation industry to fly more aircraft, burn more jet fuel, and spew more greenhouse gases into the atmosphere.18
Most governments have been more than happy to delegate the responsibility and authority for sustainability to the private sector, seeing this as a more efficient, less confrontational path forward. Market-oriented, bottom-up, nonbinding, and industry-friendly interventions – such as public–private partnerships and voluntary offsetting – increasingly characterize global environmental governance. So do industry-guided and influenced certification schemes, such as the Forest Stewardship Council, the Marine Stewardship Council, the Roundtable on Sustainable Palm Oil, and the Round Table on Responsible Soy. And so do solutions that assume the necessity of moving forward with TNC investment, international trade, and industrial-scale production.
And shaping and controlling sustainability solutions is only part of the strategic value for big business of taking responsibility for sustainability. For agricultural, mining, and timber companies, for instance, it is dampening criticism by shifting culpability away from TNCs and onto the so-called “unsustainable” practices of smallholders, corrupt governments, illegal operators, and companies outside of their supply chains.
As we will see in the next chapter, taking responsibility for sustainability also serves three further purposes for big business. It is distracting from the continuing efforts by big business to avoid other responsibilities, such as paying reasonable wages, access fees, and taxes. It is concealing ongoing efforts by big business to thwart environmental regulations and hide exploitation deep in the shadows of supply chains. And it is functioning as a smokescreen to conceal poor, risky, and even illegal practices, as big business continues to pursue its core maxim: extract, exploit, expand.