Does Corporate Environmental Responsibility Really Ensure a Green Future?
Oat milk, a water bottle, and the people that make our toilet paper. Despite their differences, what they all have in common is a conflict of interests when it comes to corporate environmental responsibility (CER).
In the age of environmental and ecological degradation, fingers are pointed at every possible actor involved in the chain of consumerism. At the most individual level, is it consumers who should buy more eco-consciously? Or is it in the hands of transnational cooperations, government policies, or institutions?
Corporate environmental responsibility is a branch of corporate social responsibility (CSR) that aims to facilitate the active reduction of environmentally adverse behaviours and participation in environmentally beneficial activities in daily business. Over the years, there has been more optimism for the advocacy of CER. The reasons for this lie at the levels of stakeholders, market forces, regulatory practices and consumers. Each level produces benefits, as well as challenges.
This diagram demonstrates the interplay of factors that make up an environmental, social and corporate governance rating. Within the environment pillar it includes; climate change, ecological footprint, resource use and pollution. ESG data is becoming more and more crucial for potential investors to get their hands on, as it allows them to really understand the values and ideologies of the company before they invest. How a company is governed reflects its core social and environmental values. This rating is an amalgamation of how companies try to ‘do the right thing’.
The topic of corporate responsibility recently hit a nerve in me after I read the BBC story of the cotton-picking Uighurs. Just under half a million Uighurs and other minorities are being forced into the cotton picking industry in the western region of Xinjiang in China. The cotton that Xinjiang’s Uighurs pick contributes to 20% of the world’s cotton.
To this day, many major fashion brands are complicit in this darkened side of the cotton industry. As this story came to light, it has brought the transparency and accountability of leading brands into question. The forced labour and human rights violation lives on the high streets and in our homes because of the failure of corporations committing to social responsibilities. If the fashion industry held themselves accountable, it would leave space for China to be scrutinised and made liable. Global brands have so much untitled power that their interests as a business innately matter to rest of us.
Corporate environmental responsibility can emerge out of a previous conflict or controversy that has left the company worse off. In the early 2000’s, Coca-Cola had a conflict of interest in the Palakkad District, Kerala in India. The over-extraction of water from groundwater reserves left the local community dry of clean and safe water resources. Moreover, they discharged wastewater into fields and rivers surrounding the plant, which made the wells and hand pumps unsafe for human consumption. Despite the amount of local outrage, which expanded to international outrage, Coca-Cola won the long judicial law suit of a licence renewal that meant they could continue to deplete groundwater resources in this area. The continual denial of issues that the company were accountable for led to decreased consumer trust. Consumer trust in a brand is so incredibly important, as it builds their reputation. In the following weeks after the reports were released, in India alone Coca-Cola’s sales dropped 40%. In this case, the corporation then built environmental and social responsibility into their business framework as a result. In this case, after making adjustments to their business policy, it positively influenced their sales, where we can see that sustainable economics can be a suitable option for businesses to follow in the future. Moreover, there are many studies that are indicating that prioritising environmental health in their strategy can give the company a stronger position in the competitive market.
The Amazon Paradox.
Something that we are sure of is that there is a constantly growing awareness of the environmental issues that have been implemented into contemporary economics, coined through the term ‘sustainable development’. Classical economic theories rested on the importance of constant economic ‘growth’, whereas ‘developing’ means to gradually better the state of the situation. The Amazon paradox is just an example of the wider paradox of economic activity, where economic growth is needed to fulfil the basic needs of an increasing population, yet economic growth is inherently responsible for environmental degradation. Take the Amazon rainforest as an example, 5.5 million km2 of expansive forest that houses the world’s most biodiverse ecosystems. The antithesis of this example comes from the multinational giant, Amazon. In 2018, Amazon emitted 44 million metric tonnes of CO2. To put that figure into context, that is more carbon emissions than some small nations produce. Amazon pledges to take on its corporate environmental responsibility, where they assured that they will source sustainable palm oil. However, many see this as an empty promise to save our rainforests, where the production of palm oil, no matter how sustainable, will always result in the destruction of the forest.
The Amazon Paradox exists as an example of corporations attempting to ‘save the world’ with greener policies, yet they continue to make harm. Is there really such thing as ethical consumption under the classical economic system, a system that persists to only speak in a language of profits?
The Oat Milk.
This year there has been a boycott of the oat milk brand, Oatly. This controversy may seem somewhat petty and the pinnacle of millennial interests. However, to the sustainable food brand customers, selling 10% of the Swedish company to a trump-supporting, anti-sustainability equity firm, was simply outrageous. The firm that funded $200 million into Oatly supposedly invested into a Brazilian infrastructure company that is responsible for deforestation in the Amazon Rainforest. In response to the controversy that mainly found its platform on social media, Oatly defended the deal by stating that by collaborating with the Blackstone Group, they were moving capital into a sustainable direction. The founders talked about the key company values that they always wished to uphold in order to make real and deep-rooted change. They saw that the only way to accomplish that was to make their way into the mainstream market, into our supermarkets and shop floors. Being able to convince the Blackstone Group that investing in sustainability was profitable then it could have a vast positive impact on the future of business. Private equity firms have the collective worth of $4 trillion, and this incomprehensible figure just displays how so much power has been left in the hands of a few.
The People That Make Our Toilet Paper.
So, where on earth does the tree-to-toilet pipeline fit into this? Well, much like Oatly, Proctor & Gamble, which own toilet roll companies, such as Charmin, are involved in the deforestation of precious trees. They are reliant on the Canadian Boreal forest to extract fibre that goes into their throwaway tissue products. In this case shareholders will not tolerate the way that these global companies are driving deforestation. In fact, 67% of shareholders voted in favour of a resolution put forward by Green Century Equity Fund. Although, Canadian policy makers continue to give a green-light to companies involved in the degradation of the Boreal forest.
Companies like this one often hide behind misleading sustainability claims. This is where the term ‘greenwashing’ comes into play. You can find common examples everywhere; many of the brands next venture is to be more sustainable. Why? Because they know it will sell, it’s what the majority of customers and potential investors look for in a brand, as well as it being cost-effective and efficient. However, these two requirements bump sides. Sustainable products are rarely cheap and efficient, they require more money and time to process. Therefore, the company sells it as ‘green’ and ‘eco-friendly’, but what goes on in the back is often far from friendly.
The Water Bottle.
A striking example of greenwashing can be found in Fiji water bottles. When I saw these water bottles next to all the others in the supermarket, Fiji water really does grab your attention. I mean, at the end of the day it’s just a water bottle, but compared to the others it has a certain allure; a deeply fetishised picture of the tropics, one that taps into our imaginations and identities as a customer. Despite that, what they do seems harmless, putting pretty pictures on their packaging is what every brand does.
However, their recent advertising campaign was far from harmless. The water company sold their water as “bottled at the source, untouched by man”. This is a bold claim to make considering one plastic water bottle takes 450 years to break down in the environment alone. What’s more, is that selling an idealised image of the pure and clean water in Fiji is ironic considering 47% of Fijians don’t have access to clean, safe drinking water. Fiji water have a responsibility to acknowledge and settle on an advertisement strategy that doesn’t fool customers into thinking they are environmentally friendly, when in reality they are just a plastic water bottle company.
So in the face of a sixth mass extinction, we all know we need to be more sustainable in everything we do. That desire doesn’t always live up to reality, the vast majority of customers buy what’s cheapest, shrouding the fact that it is bad for the environment, and companies put a sustainable face on, but continue to rely on cheap production. We are living in an economic and moral dilemma. The first step in moving forward is changing institutions from inside to out; making them responsible for the price the environment pays.
Cedillo Torres, C.A., Garcia-French, M., Hordijk, R., Nguyen, K. and Olup, L., 2012. Four Case Studies on Corporate Social Responsibility: Do Conflicts Affect a Company’s Corporate Social Responsibility Policy?. Utrecht Law Review, 8(3), pp.51–73
Sindhi, S., & Kumar, N. (2012). Corporate environmental responsibility – transitional and evolving. Management of Environmental Quality: An International Journal, 23, 640-657.