Corporate Roles in Environmental Ethics

Corporate Social Responsibility and Environmental Ethics

Abstract/Introduction -- No one can argue that the international business community is becoming more and more complex as a result of globalism. In turn, this complexity is driven by an increasing understanding of sustainability, going "green," and bringing ethical and moral philosophy into the business community. British Telecom, for instance, noted in 2007 that it had reduced its carbon footprint by 60% since 1996, setting itself a target of 80% reductions by 2016 (Hawser, 2007). Francois Barrault, CEO, BT Global Services, said that by supporting sustainability his company hoped not only to reduce its carbon footprint but also to attract younger people who prefer to work for environmentally and socially responsible companies. He didn't always think that way, though. Barrault said that when he first met former U.S. vice president and environmental activist Al Gore, who showed him pictures of icecaps melting, he thought Gore was crazy. The issue Barrault faced was both intellectual and organizational -- what role does his organization have in the environmental and social responsibility of actions that have an effect on other countries or the world?

Corporate Social Responsibility -- The essence of corporate social responsibility (CSR) is a self-regulated approach integrated into a strategic and tactical business model that assures that organization's compliance with the spirit, ethics, and standards of the law. The goal of business in using CSR is to encourage actions and functions so that it does not become necessary for governmental regulations to force compliance. CSR does this by encouraging community growth, public disclosure and eliminating practices that harm or have the potential to harm society -- whether legal or not. The basis of CSR is doing what is right -- in the public interest while still maintaining corporate growth and profitability. In a way, this harkens back to the Social Contract theories of Rousseau and Locke -- if one does what is right for the individual, then society, one will profit as an organization (Kotler and Lee, 2005).

CSR interacts dimensionally with convergent levels of the environment; physical, social, consumer, and employees, really -- all stakeholders in the organization's milieu. It is most certainly not country or region specific, although there is some strife between the developed and developing world over the issue since the developing world believes it is unfair to hold them to the same standards when the developed world has had hundreds of years after industrialization to prepare, make errors, and atone (Koestoer 2008). Nevertheless, the manner in which CSR is affected by Internet Research, advertising, and as a fundamental privacy issue is huge. From an ethical point-of-view, then, one must ask how the Internet and subsequent technologies must be used in order to keep in line with the basic principle of CSR (Jonker & De Witte (eds.) 2010).

Pro-CSR arguments are, of course, quite obvious. The term began to be popular in the 1970s when so many new multinational corporations formed. Proponents to the idea argue that corporations make far more in long-term proift by operating within a global CSR perspective, allowing for stakeholders to believe that any number of moral and ethical principles are part of the business operation. Too, this idea is tied to the development of business ethics which became particularly visible in the post-1980 world of increased attention to sustainability and the greening of the planet (Pennings, et.al., 2008, 47-50).

There are really no arguments that state CSR is wrong, or that moral and ethical behavior should not translate into business. However, critics often argue that CSR distracts from the economic role of the business organization, and that CSR is nothing more than a preemptive tactice to limit the role of governmental regulation as a watchdog over the large multinationals. In other words, the public dialog is one of CSR, the private strategic plan is either pushing the fiscal limit as long as possible, delaying governmental regulation, or masking the true nature and intent of the organization itself (Visser, et.al., eds. 2008). Some also view the social responsibility of business as that of creating profits for stakeholders, which in turn, trickles down into various other aspects of the local, regional and national community. The more people employed, for instance, the healthier the economic outlook for a particular economic situation (Friedman, 1970).

Further, different dimmensions of CSR affect the robust nature, manner of application, and even public image of the organization. These may be broken down into five major templates:

Physical Environment -- CSR is neither monolithic nor one-dimmensional. The physical make up of a particular country, the nature of the demographics and geographical constructs allow for differeing terms like "value-driven CSR;" "stakeholder driven CSR:" or even "performance driven CRSR." In fact, it is this divergence between the developed and developing worlds that tend to cause the most consternation with CSR -- the developed world has already had three centuries of industrialization to arrive at their current position, yet wishes the developing world to follow not their rules, but the global explitives placed upon immigrant populations. This tends to cause cognitive dysfunction between the first and third worlds (Horrigan, 2010).

Social Environment -- Cultural and social environments are similar in many ways to consumer driven paradigms. The social enviornment is driven by sound fiscal management, the ability to react positively in a crisis situation, and the very nature of stakeholder priorities. Corporations are increasingly becoming more and more motivated to become socially responsible because their stakeholders expect them to understand and address the social needs of not only the community, but the global environment as well (Horrigan).

Consumer Paradigm -- For CSR to be effective, it must be embraced by consumers. Over the last several decades, there has been a considered rise in popularity in ethical consumerism that can be inexorably linked to CSR. As the global population rises, so do pressures on the world's natural resources required to meet consumer demans. Because of globalization, industrialization is robust in many nations and consumers are becoming more and more aware of their unique and individual decisions having impact to the environment. While there is little consistence over the globe, more and more consumers are demanding that businesses "go green" (Werther and Chandler, 2010).

Supply Chain Mangagement -- CRS within the global supply chain can be quite complex. At its most robust, it would ensure that appropriate CSR policies and responsibilities are being handled from every vendor, supplier, etc. throughout the entire supply chain. Lessening of this might very well allow most vendors to become part of the process; but as global economies merge, transparency is becoming the watchword and CRS is expected in all countries at all times (Corporate Social Resopnsibility in the Global Supply Chain, 2010.

HR/Employee Relations -- Many see CSR as an aid to both recruitment and retention; particularly in competitive markets in which the best and brightest graduate students are being coddled. It is now quite common for potential employees to ask about a firm's CSR policy during an interview; having such a comprehensive policy cn certainly improve the perception of a company. Additionally, if employees can become involved with fundraising, community volunteering, or some sort of global outreach, they are often far more likley to stay with their current company (Career Service, 2010).

Introduction to Sustainability - One of the basic tenets of corporate responsibility is the understanding of organizations acting as resource managers for the entire planet. Understanding the Gaia concept, or seeing the earth as a living organism -- the forests are the lungs, the wind and waves the blood stream, etc. often gives one pause when thinking about the effect a few thousand years of humanity has had on the Blue Planet. Sustainability, in ecological terms, is the capacity to endure0 it is the way biological systems remain diverse, yet evolving over time. The earth's long-lived and healthy forests and wetlands are examples of this trend. For humans, sustainability is managing the human impact upon the environment in a way that is long-term, less invasive, and ensures the survival of both the human population, the environment, and the social and cultural systems we have developed. Healthy ecosystems and environments provide vital chemicals for our atmosphere, resources for our technological needs, and assist us in agriculture. For an ecologist, it is this trend that is out of balance: overfishing, overuse of the land, killing the forests and polluting the environment. Negative human impact may be reduced on the environment through proper CSR management and conservation or by reducing economic consumption. The process of ssustainability juxtaposes with economic activity through social and ecological consequences. Sustainability economics centers around the integration of cultural, political, economic, and social ideas. It can take many forms, depending on the nature and robustness of the conditions (eco-villages, cities, reappraisals of economic sectors, work practices, etc.) -- all with the idea of using new technologies to adjust with the environment instead of against it (Adams, 2006).

Technological advances over several millennia gave human societies increasing control over their environment. The concept of feudalism, for instance, segmented the workers (serfs) from the managers (lords) and kept a fairly stable balance in rural areas during the Middle Ages and Renaissance. However, the industrial revolution of the 17th to 19th centuries changed the conception of sustainability by tapping into fossile fuels, increasing urbanization and segementation of labor, causing an unbalanced agricultural system in which food was not always available for the burgeoning city populations. Similarly, coal was used to power ever evoling engines and later to generate electricity. Society was protected from endemic disease through more technological advances in sanitation. The combination of conditions caused an unprecedented human population explosion and even greater urbanization. This also led to huge industrial, technological and scientific changes that continues to the present. For instance, from 1750 to 1850 the global population doubled from a relatively sustainable 500 million to over 1 billion people (Goudie, 2005) Concerns about the environmental and social impacts of industry were expressed by some Enlightenment political economists and through the Romantic movement of the 1800s. Overpopulation is not a new theory and a famous essay by Thomas Malthus correctly predicted that eventually humans would populate to such an extent that food, living space, and living standards would decline to the point where much of the population would expire. Ironically, Malthus is often quoted today (Daly and Farley, 2004).

By the late 19th and early 20th century, the industrial revolution had led to an exponential increase in the human conception of resources. The increase in the health and wealth of whole societies was seen as progress, although a number of economists began developing models that called sustainability into question. Ecology had now gained a more academic level and was seen as a viable science. These included: the interconnectedness of all living systems in a single living planetary system, the biosphere; the importance of natural cycles (of water, nutrients and other chemicals, materials, waste); and the passage of energy through trophic levels of living systems (Worster, 1994).

The next several decades brought us into yet another period of escalating growth, what some call "a great acceleration ... A surge in the human enterprise that has emphatically stamped humanity as a global geophysical force" (Robin, 2008). Alarms began ringing -- The Limits to Growth, The Club of Rome, and the realization that environmental problems were now global in scale. For example, one of the first major "paradigm shifts" occurred in 1973 and 1979 with the global energy crisis based on an overdependence on oil. A political and cultural schism developed; the richer, developed countries now wanted to regulate growth and environmental issues while the developing world, largely due to population dissatisfaction, needed to rapidly modernize, at whatever environmental cost (Turner, 2008).

What followed is another exponential growth pattern of human consumption, unchecked birth rates in most of the developing world, a scarcity of water and food in many areas of the world. While there is an increasing push towards recycling, protecting the environment, and going free within the modern business, situations like the Copenhagen Conference illustrate just how contentious the issue of sustainability has become. For much of the world, though, ecological economics now seeks to close the gap between ecology and more traditional economics. This, however, requires societies in all parts of the world to commit to recycling, lessening of their carbon footprints and, at the very least, more attention and investment in green energy and building processes (Kay, 2002).

Literature Review - Looking at the macro (global) first, we know that Sustainable development is considered to be a paradigm that allows human needs to be met for the present and future while still preserving the environment. The key is that all aspects of human culture remember that the responsibility of the present generation is to provide a world in which there are resources for the future. Sustainable development also implies the capacity for stewardship of natural systems, and more of equilibrium to growth. Essentially, this is broken into three parts: environmental sustainability, economic sustainability, and socio-political sustainability. For instance, using up all the water resources in a given area neither plans for the future nor helps the present. Instead, a sustainable template would develop resources appropriately and teach the populations to conserve or utilize the available resource base for adjusted needs.

Modern societies, therefore, need to manage economic, social and natural capital in order to survive, thus:

Consumption of Renewable Resources

State of the Environment

Sustainability

More than Nature's ability to replenish

Environmental Degradation

Not Sustainable

Equal to Nature's ability to replenish

Environmental Equilibrium

Steady State Economy

Less than Nature's ability to replenish

Environmental Renewal

Environmentally Sustainable

(Hart, 2007)

One of the practical aspects of modern sustainability, Green Building is also known as green construction or sustainable building. To build ecologically sound, however, we need to have a change of ideological and practical view. Technologically, a modern building is so complex that the old idea of improving efficiencies at the bottom line is not even a viable way to succeed. Instead, continued reinvention of both the company's product line and industry capabilities is not only necessary, but will help decide which companies succeed and which fail. Too, because the half-life of technology is so short, radical and category breaking innovation is needed not just to compete, but to provide the global environment with positive growth. To do this, though, managers and corporate executives alike need to allow dissent, innovation, and a push from the ground up, the sides, and yes, even the top, to realize such a needed change. With the worries about job loss, anger, attacks, problems, etc., why bother with dissent and innovation. It is simple -- the most important way an organization can ensure that it will grow and prosper, and be around for its employees and stakeholders, is to encourage dissent and innovation through its managers. However, the organization, if committed, can create a cultural renaissance that will absolutely transform the company -- and allow it several years of new, innovative, product life. Keep in mind that organizations, but their very nature, really do want to embrace and support innovative projects -- that is the entire basis for entrepeneurialship. However, ingrained processes often take organizations into different directions -- all of which involve a fear of risk -- a fear of losing what ground is already covered. However challenging this might be, most of the great people who have made the difficult and controversial decisions have had to face adversity to do so. One example was Winston Churchill, who was under intense pressure to surrender to Hitler and end the suffering of England. Instead, he said absolutely not -- and the rest is history. This is also the difference between a leader and a manger -- a leader is able to take the strategic or long-term view of a situation and work through the adverse conditions in. There is real power in being able to look outside the black and white into the world of the grey -- but it changes one's perspective of everything. Once one goes down that road, there is no turning back (Horibe, 2001).

It is challenging, for certain, to change the culture of a company; but it is also challenging to enhance sustainability and to create an environmentally responsible company. We find that companies are wanting to "go green," based on a number of factors: Ethical (environmental goals and pressures); Pressure from Stakeholders; Increase in Governmental Regulations, their own internal organizational crisis, and the economic opportunities (or deincentives to not go green). Culture changes, and with it the most innovative companies change, too. Part of the cultural change over the past two decades has been the consistent and regular attitude towards ecology, carbon footprint, and sustainability. Many companies see that they have, or do, produce materials that are negative to either the people, the environment, or both. They see that changing this paradigm will not only be a good ethical and moral decision, but will likely encourage like-minded consumers to be loyal to them. The negative ecological effects of business and industry are well documented; this is no longer a theory, but a reality. Organizations that pay attention to the environment are the types of organizations that will grow and prosper in the 21st century. Of course, there are those in the developing world who are also concerned about the environment, but the rapid growth of globalism sometimes acts at cross purposes. The idea of a green business is not simply changing a few power sources or suppliers -- it is a complete paradigm that asks for an all-encompassing plan and commitment in every aspect of the business, and from every employee, vendor, supplier, and likely even customer. This, of course, is an ideal, and it may take years or even decades to reach that ideal. This author's point, though, is to move towards this in incremental steps but with a broad, overall vision that includes sustainability as its final goal (Townsend, 2006).

However, we cannot simply snap our fingers and change a system that has been in place for three centuries -- capitalism. In the modern economic system, that is mature capitalism for most countries, there should not be a conflict between quality and productivity. They are, in fact, two sides of the same, competitive coin -- one cannot improve productivity (and therefore return on investment) without improving quality. This is the new rule for capitalism, which should not be a new rule at all, but a basic premise. For example, when workers are paid for speeding up an assembly line, the results are typically recalls, poor product reception, and lower market share. A business can get a "quick" fix by sending out substandard work, but in the long-term, consumers will simply vote with their pocketbooks and, in this era of incredible competition for even one point of market share, this can translate into millions of dollars.

Modern capitalism, or quality in input, is also a state of mind. Improving quality to improve profits is really changing the attitude of your company and workforce. Realizing that consumers are smart, the modern capitalist will communicate with their client base and be honest about price increases, etc. In addition, new work structures, increased automation where appropriate, statistical quality control training and implementation on a regular basis are all part of the new capitalist equation. However, if the basic attitude about Capitalism 101 -- the delivery of high quality goods and services for profit -- is not met, all will be for naught (McCraw, 1998; Lovins, Lovins and Hawkin, 2007). It is the long-term vision and the desire to look at the contemporary marketplace with open and honest analysis that will separate companies in the new economy. Products and services abound, consumer loyalty must be earned.

CSR and the Philosophy of Change - The more modern a culture, the more technologically advanced its communication system; and the impact this has on daily life. In lesser developed countries, for example, the world-view is smaller, and depending upon mass communications (radio, television, etc.) society is rather isolated. Think of it this way: in a nomadic culture, say of Mongolian herdsmen, and posit that there is no radio or television, how would anything happening in Mongolia outside their realm have any relevance. Therefore, their view would be inward (their basic needs), and perhaps meeting with other groups. Another great way to think about this is the examples set forth in a movie, "The Gods Must Be Crazy," in which a Coke bottle drops from the sky and hits a Kung! Bushman.and the domino effect of technology in a primitive world.

Now, jump across nations and time to understand a different set of theories that explain the way society changes. According to author Malcolm Gladwell, a "tipping point" is anything that drastically changes an event quickly and unexpectedly. Individually, if one understands what causes tipping points, one will be better able to understand contemporary events. The framework of Gladwell's paradigm comes from the manner in which epidemics seem to "explode" -- almost a chaos theory of the way social epidemics evolve. Gladwell discusses three rules that he states are necessary in creating a tipping point or epidemic: the Law of the Few, the Stickiness Factor and The Power of Context (Gladwell, 2002).

The first rule is the Law of the Few which states that there exists a select few individuals in the world who are extremely important to society. Gladwell calls these unique individuals Connectors, Mavens or Salesmen (38). Connectors are people we highly trust and on whom depend. They are very popular people who know many people like the idea of "Six Degrees of Separation," the connectors exist to connect. These people or events in which these individuals participated become exceptional in their ability to "span many different worlds" (49). For instance, Gladwell takes a historical aphorism -- the Ride of Paul Revere, and uses it as an example of social change and the mythology of connections throughout the active role of history. Who remembers that another person, William Dawes, made a similar "ride" to warn of the British landing. Instead, the Law of the Few placed Revere as a Connector -- Revere had those traits that allowed him to become a cultural icon -- intrinsically, Revere knew who and what were important, and literally changed his world because of this.

The Stickiness Factor occurs when something is invented or concocted that is so memorable it touches the world in a way that triggers an epidemic. The Stickiness Factor can be used in a variety of ways, whether it is selling a product, teaching people or just trying to get a message across. When you can find what makes people "stick" you are able to get people to watch, learn, listen to, believe in and absolutely love your concept. If we think of cultural icons like the I-Pod, the I-Phone, and trace those efforts back to Apple; or if we simply look at certain television or movie icons that have become part of popular culture (e.g. "I'll be back, " "I made him an offer he can't refuse,") we can see the stickiness factor in entertainment.

Finally, The Power of Context allows the environment a crucial a role in tipping points and epidemics. Our location, chronology, and environment are important in the chaos that makes events occur and the circumstances that ripple from those occurrences. Ken Keyes wrote about this similar theory, calling it "The 100th Monkey Effect." Briefly, both state that there is a certain amount of energy inherent in thought (for argument's sake, let's say it takes 100 people to make a change). 99 people witness a crime and "have had it" -- then the 100th person comes along to their viewpoint and for some unexplained reason, the idea now becomes fact. Several examples of context theory are seen in history -- even something as simple as the invention of the airplane or automobile have roots in the idea of context, stickiness and the belief of the inventors as mavens or salesmen.

Essentially, then, a "tipping point" can occur anywhere and at any time -- the subtitle of the book, "How Little Things Can Make A Big Difference" epitomizes the way change occurs -- dramatic, unexpected, but change it does. In business, it is the "wow" moment; the "kick in the seat of the pants," and changes the direction and context of almost any situation. Mathematically, the tipping point is studies as network theory -- the more complex the event and number of individuals involved the more complex the predictability of the "event" becomes.

Ethics as a Business Paradigm - The standard business model that we all learn in school holds that the sole responsibility of management is to generate the greatest possible financial return for shareholders. This view focuses on fiscal responsibilities and expertise and argues that manager are neither equipped nor assigned to managing a global project morally -- social goals are outside the purview of the business model and clearly outside their own person responsibilities to their stakeholders. Additionally, focusing too farm on moral issues and too little on profit (Savage and McEltory 2005). The entire purpose of doing business globally is to grow the company, find more customers in a way that it the most appropriates l for the company. It would not make sense to trade abroad if there were no advantages -- be that tax incentives, greater profits, less regulation, different prices for workers, etc. Companies do need to keep in mind that customs and laws are different in each different company, but remain staunch in their desire to relocate in areas where the labor is inexpensive and laws are less restrictive (Mayfield, 2003). A contrary view is called the "socio-economic" view of foreign trade. This view argues that companies must, but the very nature of competition; respond to the evolving changes within that society. Simply looking at the profit structure does not tell the entire story and is a rather myopic view for a company, especially one investing a great deal of money relocate. Doing business internationally can proactively and positively affect the load economy as well gain long-term viability and good-will for the company -- as well AE become a significant marketing tool. Because of globalism, though, modern companies, especially those concerned with environmentalism, have had to think about global ramifications -- not just in the way they do business, but in the way they source materials, market, and even distribute products.