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Corporate environmental responsibility (CER) refers to a company's duties to abstain from damaging natural environments. The term derives from corporate social responsibility (CSR). [1]
| Part of a series on |
| Climate change and society |
|---|
Corporate environmental responsibility (CER) refers to a company's duties to abstain from damaging natural environments. The term derives from corporate social responsibility (CSR). [1]
The environmental aspect of corporate social responsibility has been debated over the past few decades, as stakeholders increasingly require organizations to become more environmentally aware and socially responsible. [2] In the traditional business model, environmental protection was considered only in relation to the "public interest". Hitherto, governments had maintained principal responsibility for ensuring environmental management and conservation.
The public sector has been focused on the development of regulations and the imposition of sanctions as a means to facilitating environmental protection. Recently, the private sector has adopted the approach of co-responsibility towards the prevention and alleviation of environmental damage. [3] The sectors and their roles have been changing, with the private sector becoming more active in the protection of the environment. Many governments, corporations, and big companies are now providing strategies for environmental protection and economic growth.
The World Commission on Environment published the Brundtland Report in 1987 to address sustainable development. Since then, managers, scholars, and business owners have tried to determine why and how big corporations should incorporate environmental aspects into their own policies. In recent years, an increasing number of companies have pledged to protect natural environments.
There are different perceptions of corporate social responsibility between government, the private sector, non-governmental organizations (NGOs) and society in general, and thus, the concept has no single definition.
Corporate social responsibility may cover:
The European Union defines corporate social responsibility as "...the concept that an enterprise is accountable for its impact on all relevant stakeholders. It is the continuing commitment by a business to behave fairly and responsibly and contribute to economic development while improving the quality of life of the workforce and their families as well as of the local community and society at large." [4] According to this definition, a CSR strategy is more focused on social aspects, particularly the interests of stakeholders.
Corporate environmental responsibility (CER) is, in many ways, connected to CSR, as both of them influence environmental protection. CER, however, is strictly about the consideration of environmental implications and protection within corporate strategy. The understanding of CER cannot be separated from CSR—both are interconnected and based on environmental protection. There are three major areas related to these two concepts—economic, environmental and social. CER is focused more on economic and environmental while CSR relates to social and environmental aspects. Economy, society, and environment all play significant roles in the development of an efficient and effective company strategy.
These cover the environmental implications of a company's operations:
Among the main drivers for CER are government policies and regulations. Many states provide their own legislation, regulations and policies, which are important in creating a positive environmental attitude within companies. Subsidies, tariffs and taxes play a vital role in the implementation of these policies. Another significant factor is the competitive environment among companies generated by media, public, shareholder and NGO awareness, which are also major drivers of CER. Another significant driver of corporate responsibility is that the private sector is largely responsible for the development of green technology and renewable energy sources meaning they are contributing towards climate change mitigation while still operating as a business. [5]
Challenges include the cost of regulation and difficulties in predicting economic gains, which could become problematic for a company's management. Additionally, new technologies are frequently too expensive for a lot of companies. [6] Another challenge is the lack of harmonization of regulations among different states—often there is a mosaic of propositions, leading to unclear strategies for environmental behavior, especially in multinational corporations. Further challenges of CES are whether corporations have a responsibility to go further than the current governmental legislation and Corporation a firstly responsible to produce profit for shareholders and producing goods for customers. Furthermore Companies work within the framework of the society and country that they operate in meaning that corporations cannot be held solely responsible for lack of legislation on pollution and emissions. Corporations emissions are also fractured between different sectors such as supply and outsourcing which can make it unclear what emissions the corporation is responsible. Further challenges is the argument of whether corporations should be held responsible for past emissions when the negative impacts were not known. [7]
The majority of international CSR studies focus on business practices and its aspects, such as business economics and the legality of environmental law. Most companies are noticing the importance of taking into account one of its most important stakeholders: employees and customers and their commitment to sustainability. Studies have demonstrated that once companies place sustainability practices they can be directly linked to financial success and customer satisfaction, which in turn can be used as a marketing tool. [8] Although every country has a different culture, and each country determines their own scale of environmental responsibility, research has shown that there is a standard global human values that drive customer needs and wants. Companies have taken initiatives to take sustainability and align it with each company's economic goals. Managers and other people at the top, play the key role in decision-making and implementing the firm's sustainability practices. [9]
Corporate social responsibility can prove to be more profitable for companies and to extend it survivability in markets because greater awareness on this topic, in both social and business markets, has been in higher demand. Customers have responded with overall satisfaction and loyalty when companies have a better CSR, especially in countries like Spain and Brazil. Culture has an impact on the CSR ratings and studies, as well as human values across different nations. [9]
This topic can also be found under sustainable development. This area is concerned with not only protecting the environment but maintaining economical growth. There were several agreements internationally to help adopt new business practices that held these standards, but they were considered individual and there was no law-abiding body to regulate nor implement them. [8]
One of the other factors that is considered an integral part of sustainable development are human beings, and specific groups and their habitat. Counties and companies that more developed would lead, and other small countries and business would slowly make gains. It is important to recognize that just because corporate environmental responsibility is being recognized that consumption is something that is not discouraged. [10]
The idea of corporate environmental responsibility is for humans to be more aware of the environmental impact and counteract their pollution/carbon footprint on the natural resources. [9] One of the main factors is to reduce carbon footprint and carbon emissions. [10] Many of the studies focus on trying to find a balance between economic growth and reducing waste and cleaner environments. [10]
Furthermore, many firms are discovering that there is an advantage to advocating for environmental regulations and preparing for them to be implemented before they become law. In a recent study, the researcher found that firms support climate change legislation as a means of gaining power over their competitors. Essentially, even if a new regulation hurts a firm in the short term, the firm may embrace it because they know that it will hurt their competitors even more. This allows them to come out on top in the long run. [11]
The environmental aspects of security have increasingly become a major issue being considered by states. Globalization also plays a key role in the adoption of new environmental strategies as a multi-faceted process influencing modern societies, and creating interconnected and multidimensional environments.
Corporate environmental responsibility is used by multinational corporations as well as small, local organizations. It is highlighted and more institutionalized because of stakeholders' awareness of the huge impacts of business activities on the environment. To understand CER, its relations with CSR strategies need to be recognized. CER and CSR are the main strategies that help in the creation of efficient and environmentally sustainable businesses.
The triple bottom line is an accounting framework with three parts: social, environmental and economic. Some organizations have adopted the TBL framework to evaluate their performance in a broader perspective to create greater business value. Business writer John Elkington claims to have coined the phrase in 1994.
Greenwashing, also called green sheen, is a form of advertising or marketing spin that deceptively uses green PR and green marketing to persuade the public that an organization's products, goals, or policies are environmentally friendly. Companies that intentionally adopt greenwashing communication strategies often do so to distance themselves from their environmental lapses or those of their suppliers. Firms engage in greenwashing for two primary reasons: to appear legitimate and to project an image of environmental responsibility to the public.
Corporate social responsibility (CSR) or corporate social impact is a form of international private business self-regulation which aims to contribute to societal goals of a philanthropic, activist, or charitable nature by engaging in, with, or supporting professional service volunteering through pro bono programs, community development, administering monetary grants to non-profit organizations for the public benefit, or to conduct ethically oriented business and investment practices. While once it was possible to describe CSR as an internal organizational policy or a corporate ethic strategy similar to what is now known today as Environmental, Social, Governance (ESG); that time has passed as various companies have pledged to go beyond that or have been mandated or incentivized by governments to have a better impact on the surrounding community. In addition, national and international standards, laws, and business models have been developed to facilitate and incentivize this phenomenon. Various organizations have used their authority to push it beyond individual or industry-wide initiatives. In contrast, it has been considered a form of corporate self-regulation for some time, over the last decade or so it has moved considerably from voluntary decisions at the level of individual organizations to mandatory schemes at regional, national, and international levels. Moreover, scholars and firms are using the term "creating shared value", an extension of corporate social responsibility, to explain ways of doing business in a socially responsible way while making profits.
A sustainable business, or a green business, is an enterprise which has a minimal negative impact or potentially a positive effect on the global or local environment, community, society, or economy—a business that attempts to meet the triple bottom line. They cluster under different groupings and the whole is sometimes referred to as "green capitalism". Often, sustainable businesses have progressive environmental and human rights policies. In general, a business is described as green if it matches the following four criteria:
Corporate behaviour is the actions of a company or group who are acting as a single body. It defines the company's ethical strategies and describes the image of the company. Studies on corporate behaviour show the link between corporate communication and the formation of its identity.
Environmental accounting is a subset of accounting proper, its target being to incorporate both economic and environmental information. It can be conducted at the corporate level or at the level of a national economy through the System of Integrated Environmental and Economic Accounting, a satellite system to the National Accounts of Countries.
Sustainability reporting refers to the disclosure, whether voluntary, solicited, or required, of non-financial performance information to outsiders of the organization. Sustainability reporting deals with qualitative and quantitative information concerning environmental, social, economic and governance issues. These are the criteria often gathered under the acronym ESG.
The Global Reporting Initiative is an international independent standards organization that helps businesses, governments, and other organizations understand and communicate their impacts on issues such as climate change, human rights, and corruption.
Robert Edward Freeman is an American philosopher and professor of business administration at the Darden School of the University of Virginia, particularly known for his work on stakeholder theory (1984) and on business ethics.
A green company, also known as an environmentally friendly or sustainable business, is an organization that conducts itself in a way that minimizes harm to the environment. Examples of these actions may include the conservation of natural resources, efforts to reduce carbon emissions, a reduction of waste creation, and support of ecological conservation. Green companies often implement environmentally responsible practices across their entire value chain, from sourcing raw materials to manufacturing processes and distribution.
The chief sustainability officer, sometimes known by other titles, is the corporate title of an executive position within a corporation that is in charge of the corporation's "environmental" programs. Several companies have created such environmental manager positions in the 21st century to formalize their commitment to the environment. The rise of the investor ESG movement and stakeholder capitalism, has increased the need for corporations to address sustainability and social issues across their value chain, and address growing needs of external stakeholders. Normally these responsibilities rest with the facility manager, who has provided cost effective resource and environmental control as part of the basic services necessary for the company to function. However, as sustainability initiatives have expanded beyond the facility — so has the importance of the position to what is now a C-level executive role. The position of CSO has not been standardized across industries and individual companies which leads it to take on differing roles depending on the organization. The position has also been challenged as symbolic, in that it does not actually have the effect of increasing sustainable practices.
Corporate sustainability is an approach aiming to create long-term stakeholder value through the implementation of a business strategy that focuses on the ethical, social, environmental, cultural, and economic dimensions of doing business. The strategies created are intended to foster longevity, transparency, and proper employee development within business organizations. Firms will often express their commitment to corporate sustainability through a statement of Corporate Sustainability Standards (CSS), which are usually policies and measures that aim to meet, or exceed, minimum regulatory requirements.
Creating shared value (CSV) is a business concept first introduced in a 2006 Harvard Business Review article, Strategy & Society: The Link between Competitive Advantage and Corporate Social Responsibility. The concept was further expanded in the January 2011 follow-up piece entitled Creating Shared Value: Redefining Capitalism and the Role of the Corporation in Society. Written by Michael E. Porter, a leading authority on competitive strategy and head of the Institute for Strategy and Competitiveness at Harvard Business School, and Mark R. Kramer, of the Kennedy School at Harvard University and co-founder of FSG, the article provides insights and relevant examples of companies that have developed deep links between their business strategies and corporate social responsibility (CSR). Porter and Kramer define shared value as "the policies and practices that enhance the competitiveness of a company while simultaneously advancing social and economic conditions in the communities in which it operates", while a review published in 2021 defines the concept as "a strategic process through which corporations can turn social problems into business opportunities".
A socially responsible business (SRB) is a generally for-profit venture that seeks to leverage business for a more just and sustainable world. The objective of the SRBs involves more than just maximizing profits for the shareholders; it is also about creating positive changes and making valuable contributions to the stakeholders such as the local community, customers, and staff. In other words, the SRB is both profit-oriented and socially responsible as these companies seek to make financial gains, and at the same time, aim to improve the well being of the community. In doing so, the businesses engage in the voluntary initiatives with the aims of improving in various areas ranging from the social to environmental aspects of the society.
Environmental, social, and governance (ESG) is shorthand for an investing principle that prioritizes environmental issues, social issues, and corporate governance. Investing with ESG considerations is sometimes referred to as responsible investing or, in more proactive cases, impact investing.
Small and medium-sized enterprises (SMEs) have been identified as a problem area in the field of environmental regulation. Small and medium-sized enterprises are defined by the European Commission as having fewer than 250 employees, independent and with an annual turnover of no more than €50 million or annual balance sheet of €43 million.
Environmental certification is a form of environmental regulation and development where a company can voluntarily choose to comply with predefined processes or objectives set forth by the certification service. Most certification services have a logo which can be applied to products certified under their standards. This is seen as a form of corporate social responsibility allowing companies to address their obligation to minimise the harmful impacts to the environment by voluntarily following a set of externally set and measured objectives.
Traditionally, market orientation (MO) focuses on microenvironment and the functional management of an organisation. However, contemporary organisations have widened their focus to incorporate more roles, functions and emphasis on the macro environment. Firms have been concerned with short run success and often not taken into account the long-run ecological, social and economic effects from their activities. Despite growth in the MO concept, there is still a need to reconceptualise the concept with a greater emphasis on external factors that influence a firm.
India's National Voluntary Guidelines on Social, Environmental and Economic Responsibilities of Business (NVGs) were released by the Ministry of Corporate Affairs (MCA) in July 2011 by Mr. Murli Deora, the former Honourable Minister for Corporate Affairs. The national framework on Business Responsibility is essentially a set of nine principles that offer businesses an Indian understanding and approach to inculcating responsible business conduct.
Social accounting is the process of communicating the social and environmental effects of organizations' economic actions to particular interest groups within society and to society at large. Social Accounting is different from public interest accounting as well as from critical accounting.
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