The Palgrave Handbook of Corporate Social Responsibility [1st ed. 2021] 3030424669, 9783030424664
Corporate Social Responsibility is more crucial now than ever, as society as a whole responds to challenges on a global
387 39 18MB
English Pages 1386 [1348] Year 2021
Preface
Acknowledgment
Contents
About the Editors
Contributors
Part I: Introduction
Corporate Social Responsibility and the Future: Setting the Scene
1 The Resources of the World
2 The Development of Corporate Social Responsibility
3 Defining Sustainability
4 A Typology of CSR
5 The Relationship Between CSR and Business Financial Success
6 Expanding the Definitions
7 A Focus on Sustainability
8 Is Sustainability Sustainable?
9 Conclusion
References
Part II: General Theory
Definitions of Corporate Social Responsibility
1 Introduction
2 The History of CSR
3 The Modern Era of CSR
4 CSR and its Critics
5 CSR in Businesses
6 Studies of CSR in Businesses
7 CSR and Profitability
8 Stakeholders and CSR in the 1980s
9 The CSR Pyramid in the 1990s
10 The Triple Bottom Line
11 CSR and the Social Contract
12 CSR - The Global Perspective
13 CSR in the World of Global Business
14 CSR in Government and Non-Governmental Organizations
15 CSR - Towards Global Acceptance
16 Summary
17 Cross-References
References
Theoretical Developments in Corporate Social Responsibility
1 Introduction
2 Definitions
3 Dichotomies and Divisions
4 Philosophical Foundations
5 Sociological Perspectives
6 CSR and Capitalism
7 Stakeholders
8 CSR and Legitimacy
9 Ethics
10 Environmental Issues and Sustainability
11 Communication and Reporting
12 Supply Chain Management and Consumers
13 Disclosure and Reporting
14 Accountability and Compliance
15 Implementation
16 Research into CSR
16.1 Research and the Academy
16.2 Research Methods
16.3 Research Topics
16.4 Future Research
17 Developments in CSR
17.1 Broadened Remit for CSR
17.2 Neoliberal Influences
18 The Future
19 Summary
20 Cross-References
References
Triple Bottom Line
1 TBL: The Naissance of a New Concept for an Old Concern
1.1 TBL Concept
1.2 TBL Critics
2 Codes of Conducts as a Tool for TBL Reports: From Issuing Codes of Conduct to Reporting the TBL Performance
2.1 Limited Resources for a Growing World
2.2 The Environmentalist Movement in a Liberal Philosophy
2.3 Global World, Global Problems, and Lack of Global Solutions
3 TBL and the Business Model: The Need for a Stronger Cooperation Between Governments and Companies to Facilitate the Transiti...
4 Future Directions: Quo Vadis, Triple Bottom Line?
4.1 New Concepts, But New Content?
4.2 To a Changed System and a Changed Leadership
4.3 To a New Sustainable Business Model
4.4 The Covid-19 Pandemic: A Chance to Rebuild the World
5 Summary
References
Key Literature
Equity and Regulation
1 Introduction
2 Social Contract, Equity, and CSR
2.1 Corporate Power and Influence
2.2 Corporate Governance
2.3 Balancing Economic and Social Priorities
2.4 Intergenerational Equity
2.5 Institutional Voids and Contextual Equity
3 Regulating CSR to Promote Stakeholder Equity
3.1 Beyond Individualism and Business Case
3.2 Enhanced Stakeholder Disclosure
3.3 Stakeholder Participation
3.4 Accountability and Enforcement
4 Summary
References
Cases
Corporate Responsibility Reporting and Storytelling
1 Introduction
2 History of Corporate Reporting
3 Impressions Management and Corporate Reporting
4 Impressions Management and Rhetoric in Corporate Reporting
5 Storytelling and Impressions Management
6 The Case of JPM
7 Results
8 Discussion
9 Summary
10 Cross-References
References
Key References
Brundtland and After
1 Introduction
2 The Brundtland Commission: Sustainable Development Through Multilateralism
3 Multilateral Mindsets and Sustainable Development
4 Transitioning Aspirations into Multilateral Action
5 Progressing Sustainable Development Agendas Post-Brundtland
6 Global Forums Progressing Sustainable Development Outcomes
7 1992 Rio Earth Summit
8 2002 World Summit on Sustainable Development: Johannesburg
9 2012 United Nations Conference on Sustainable Development (Rio+20) and ``The Future We Want´´
10 The 2015 UN Sustainable Development Summit
11 Approaches and Activities of the HLPF
12 2019 SDG Summit: Accelerated Action Agenda
13 Conclusion
14 Cross-References
References
Human Rights
1 Introduction
2 The International Human Rights Structure
2.1 Charter-Based Bodies under the United Nations
2.2 Submission of Universal Periodic Review (UPR)
2.3 United Nations Human Rights Treaty Bodies
3 Bangladesh Practice
3.1 Constitution and International Human Rights Instruments in Bangladesh
3.2 International Law under the Constitution of Bangladesh
3.3 Provisions Relating to Customary International Law in the National Constitution
3.4 Constitutional Provision Concerning Treaties Adoption and Ratification
4 Role of Higher Judiciary in Enforcing International Human Rights Law at a National Level
5 Indian Practice
5.1 Constitutional Provisions for the Protection of Human Rights
5.2 Role of Judiciary to Protect Human Rights
5.3 Indian Position in International Human Rights Discourse
5.4 Institutional Mechanism for the Protection of Human Rights
5.4.1 The Protection of Human Rights Act 1993
5.4.2 National Human Rights Commission
5.4.3 State Human Rights Commission
5.4.4 Human Rights Courts
5.4.5 The Citizenship Amendment Act 2019 (CAA): New Trends for Violation of Human Rights in India
6 Concluding Remarks
References
Legislations
Treaties
Cases
Part III: Environmental Aspects
Climate Change
1 Key Arguments and Current Thoughts in the Field
2 Historical Development
3 Environmental Commitment and Disclosure of Organizations
4 Climate Change Communication
5 Summary
6 Cross-References
References
Water Resources
1 Introduction
2 State of the Art
2.1 The Water Cycle
2.2 Wastewater Treatment
2.3 Water Pollution
2.3.1 Combined Sewer Overflow
2.3.2 Infiltration of Chemicals and Nutrients
2.3.3 Industrial Wastewater Discharge
2.4 Waste as Water-Polluter: An Overlooked Issue
3 Global Issues Concerning Water Resource Management
3.1 OECD Water Governance Indicator Framework
3.2 Conflict over Water
3.3 Environmental and Social Damages from Overexploitation
3.4 Running Out of Water: Desalination?
4 Sustainable Water Resource Management
5 Summary
6 Cross-References
References
The Emergence and Role of Nongovernmental Organizations
1 Introduction: Emergence of the International NGO Sector
2 Definition and Typology of International NGOs
3 Ideological Foundation of Charity and Philanthropy
4 External and Internal Determinants of NGO Sector Growth
5 Country Report: Defining the NGO Sector in the USA
5.1 US Government-NGO Relations
5.2 Scope of the US NGO Sector
5.3 US NGO Financial Environment
5.4 US NGO Umbrella Organization
6 Country Report: Defining the NGO Sector in the UK
6.1 UK Government: NGO Relations
6.2 Scope of the UK NGO Sector
6.3 UK NGO Financial Environment
6.4 UK NGOs in the European Union Context
6.5 UK NGO Umbrella Organization
7 Country Report: Defining the NGO Sector in Japan
7.1 Japan Government-NGO Relations
7.2 Scope of the Japan NGO Sector
7.3 Japan NGO Financial Environment
7.4 Japan NGO Umbrella Organization
8 Summary
References
Recycling
1 Introduction
2 Theory
2.1 Unlocking
3 Plastic
3.1 Institutional Response
3.2 Firm Response
3.3 Social Response
3.4 Technology
3.5 Soft PVC
3.5.1 Waste Treatment of Soft PVC
3.5.2 Future Perspective on Soft PVC
4 Electronic Waste and Recycling
4.1 Technology System
4.1.1 Waste Picking
4.1.2 Take-Back Programs
4.1.3 Firm Response
4.1.4 Institutional Response
4.1.5 Social Response
5 Textile Recycling
5.1 Technology System
5.2 Firm Response
5.3 Institutional Response
5.4 Social Response
6 Alternatives
7 Conclusion
8 Cross-References
References
Wastewater Disposal Techniques
1 Introduction
2 Wastewater Treatment Outline
3 Requirement of Wastewater Treatment
4 Attributes of Wastewater
5 Wastewater Treatment Stages
6 Chlorination
7 Wastewater Treatment Activities, Processes, and Procedures
7.1 Different Forms of Wastewater
8 Natural Wastewater Disposal Techniques
9 Wastewater Treatment Methods
10 The Conventional Methods
10.1 Activated Sludge
10.2 Trickling Filter Methods
10.3 Rotating Biological Contactor Method
11 Bioreactor Membrane Method
12 Type of Nonconventional Methods
13 Waste Stabilization Ponds
14 Construction of Wetlands
15 Oxidation of Ditches Method
15.1 Upflow Anaerobic Sludge Blanket (UASB) Method
16 Soil Aquifer Treatment Method
17 Disposal of Fecal Sludge and Treatment
18 Wastewater Recycles in Agriculture
19 Industrial Wastewater Treatment Method
20 Modern Methods Used in Wastewater Treatment
21 Obstacles in Wastewater Management
22 Summary
23 Cross-References
References
Sustainable Plastic and Corporate Social Responsibility
1 Introduction
2 The Invention of Plastic
3 Corporate Social Responsibility and Plastic
4 Uses of Sustainable Polymers
5 Problems with Using Plastic
6 Microplastics in the Environment
7 The Circular Economy
8 Reusing and Recycling
9 Future Perspective and Outlooks
10 Alternatives Available
11 Corporate Social Responsibility Revisited
12 Conclusions
13 Summary
14 Cross-References
References
Technological Approaches to Sustainability
1 Introduction
2 A Brief Definition of Technology
3 What Makes a Technology Sustainable?
3.1 Electric Energy Sources
3.1.1 Non-sustainable Electric Energy
(i) Coal-Fired Power
(ii) Oil and Gas-Fired Power
(iii) Nuclear Power
3.1.2 Sustainable Electric Energy
(i) Solar Power
(ii) Wind Power
(iii) Biogas Power
(iv) Hydrogen Fuel Cells
3.2 Other Energy Sources
3.2.1 Non-sustainable Energy
(i) Lead-Acid Batteries
(ii) Gasoline
(iii) Ethanol
(iv) Biodiesel
3.2.2 Sustainable Energy
(i) Pumped Hydro
3.3 Energy Usage (Lighting, Heat, and Transportation)
3.3.1 Non-sustainable Energy Usage
(i) Incandescent Lights
(ii) Internal Combustion Car
(iii) Battery-Electric Vehicles
3.3.2 Sustainable Energy Usage
(i) LED Lights
(ii) Solar Water Heaters
3.4 Waste Management
3.4.1 Non-sustainable Waste Management
(i) Landfill Disposal
3.4.2 Sustainable Waste Management
(i) Recycling
(ii) Bioenergy with Carbon Capture and Storage
3.5 Sustainable Construction Technologies
4 The Economic Perspective on Technology for Sustainability
5 Sustainability Technology and Public Policy
6 Summary
7 Cross-References
References
Part IV: Social Aspects
Governance of Migration and Sustainability
1 Introduction
2 Conquering the World Through Mobility, Ingenuity, Destruction and Adaptation and The Need to Develop Sustainable Ways of Coe...
3 The Promise of Globalization
4 Concluding Reflection on Where to Go from Here?
References
Sustainable Development Goal 8: Achieving Decent Work - An Illusion
1 Background
2 SDG, What It Is and How Different It Is from MDG?
3 Goal 8 of SDG: Decent Work and Economic Growth
3.1 The Concept of Decent Work
4 Agenda 2030 for SDG 8
4.1 The Importance of SDG 8
4.2 Where the World Is Now?
5 What Is Informal Employment and Informal Sector
6 Does MSME Create Jobs?
7 What Kind of Jobs MSME Create?
8 What Is the Possibility of Job Creation by Large Firms?
9 Solutions Ahead
10 What Are the Possible Future Developments?
11 Summary
12 Cross-References
References
Work-Life Balance and Well-Being at Work
1 Introduction
2 Work-Life Balance and Work Life
3 Work-Life Conflict
4 Methodology
5 Results
5.1 Work-Family Conflicts that Affect Work-Life Balance
5.1.1 Long Working Hours
5.1.2 Poor Family Relationship
5.1.3 Lack of Time
6 Health and Well-Being Initiatives to Promote Work-Life Balance Satisfaction
6.1 Flexible Working Arrangements
6.2 Work-Life Balance and Well-Being Coordinator
6.3 Healthy Meals and Dietitian
6.4 EAP Program
6.5 Education and Training
6.6 Day Care Services
6.7 Fun at Work
6.8 Healthy Working Conditions
6.9 Company Group Health Plan
6.10 Gym Membership and Exercise Classes
6.11 Meditation Room
6.12 Water Cooler in Offices
6.13 Team Working
6.14 Reduction of Working Hours
6.15 Appreciation and Respect
6.16 Fairness at Work
6.17 Vacation Leave
7 Employer Implementation of Family-Friendly Practices to Promote a Psychologically Healthy Workplace
7.1 Fun and Family Activities
7.2 Time Management
7.3 Work-Life Conflict Counselling
7.4 Improved Trust and Confidentiality
7.5 After School Programs for Employees´ Children
7.6 Good Work Relationships
7.7 Peer Support
7.8 Quiet Break Time
7.9 Bring your Child to Work Day
7.10 Respect and Fairness at Work
7.11 Flexible Working Arrangements
8 Discussion and Conclusion
References
Social Capital, Community Engagement, and Corporate Social Responsibility
1 Extended Stakeholder Model, Community Engagement, and CSR
2 Community Embeddings of CSR
3 Constructive Synergy Networks with Social Capital and CSR
4 Community and Corporates: Win-Win for All
5 Summary
References
Employee Volunteering
1 Introduction
2 Employee Volunteering Definitions: Different Terminologies with Slightly Different Meanings
3 Global Trends in Employee Volunteering
4 Effective Implementation of Employee Volunteering
4.1 Employers´ and Employees´ Motives in Conducting Employee Volunteering
4.2 Managing Employee Volunteering Effectively
4.3 Types of Employee Volunteering Activities
4.4 Benefits of Employee Volunteering
5 A Snapshot of EV Implementation in Indonesia
5.1 Respondents´ Profile
5.2 Practices and Employers´ Investment on Employee Volunteering
5.3 Measuring Employee Volunteering Outputs, Outcomes, and Impacts
5.4 The Benefits of Employee Volunteering to Employers and Society
5.5 Challenges and Key Success Factors in Conducting Employee Volunteering
6 Discussions
7 Summary
8 Cross-References
References
Socially Responsible Retailing
1 Introduction
2 Development of CSR in the Retail Sector
3 Literature Review and Theoretical Perspectives in Retail Context
3.1 Legitimacy Theory
3.2 Carroll´s CSR Pyramid
3.3 Sustainable Development Model
3.4 Stakeholder Pressures in the Retail Sector
4 CSR Reporting in the Retailing
5 CSR Issues in the UK Retail Sector
5.1 Environmental Performance
5.2 Community Investment
5.3 Health and Safety and Workplace Disclosures in CSR Reports
5.4 Customer Expectations
5.5 Community Expectations
6 Summary
7 Cross-References
References
Key References
Gender and Corporate Social Responsibility
1 Introduction
2 Feminist Discourses and Women in Working Life
3 CSR and Women
4 Summary
References
Internet Sources
Developing Trends
1 Introduction
2 Corporate Social Responsibility and Neoliberal Economics
3 Institutional Arguments for Corporate Social Responsibility
4 Corporate Social Responsibility Between Ethics and Economics
5 Toward an Institutional Concept of Corporate Social Responsibility: Defining the ``Good Citizen Corporation´´
6 Developing Trends of Sustainability After the 2020 Corona Crisis: Extension of Corporate Social Responsibility to All Dimens...
7 Summary
8 Cross-References
References
The State of Social Media Research in CSR Communication
1 Introduction
2 The Importance of CSR Communication Through Social Media
3 Main Themes in CSR Communication Literature Through Social Media
3.1 Theme 1. Stakeholder Engagement and Interactivity on Social Media
3.2 Theme 2. Best Practices on Social Media Platforms: Facebook and Twitter
3.3 Theme 3. Tactics for CSR Message Effectiveness
3.4 Theme 4. Transparency, Reputation, and Privacy
4 Opportunities and Challenges for CSR Communication on Social Media
5 Summary
6 Cross-References
References
Sustainability and Accountability in Higher Education Institutions
1 Introduction
2 The Social Responsibility of Higher Education Institutions (HEIs)
3 Redesign HEIs for the Future in Support of Sustainable Development
4 Accountability in HEIs in Favor of Sustainability
5 Summary and Cross-references
References
Part V: Economic Aspects
Foreign Direct Investment and Development in Developing Host Economies
1 Introduction
2 Benefits and Costs of DTTs
3 DTTs and FDI
4 Network Effect of Tax Treaties
5 DTTs and Taxing Rights
6 The Impact of Double Tax Treaties on Welfare
7 DTTs, FDI, and Welfare Development
8 Summary
References
Social Business: A New Chapter of Hybrid Business Toward Sustainable Development
1 Introduction
1.1 Corporate Social Responsibility (CSR)
1.2 Bottom of the Pyramid (BOP)
1.3 Social Entrepreneurship (SE)
1.4 Inclusive Business
1.5 Impact Investing
1.6 Circular Economy
2 Social Business: Meaning and Definition
3 Inception of Social Business
4 Why Social Business?
5 Social Business in Action: Practical Lessons from Grameen Experiences
5.1 Grameen Danone
5.2 Grameen Veolia
6 Designing a Successful Social Business
6.1 Targeting the Focus Area to Serve
6.2 Developing a Successful Business Model
6.3 Constantly Learning and Adjusting
6.4 Building Well-Organized and Sustainable Procedures
6.5 Assessing and Supervising Impact
7 Social Business Across the World
7.1 Campo Vivo (Colombia)
7.2 Hope Development Initiative (Uganda)
7.3 Instituto Muda (Brazil)
7.4 NextGen (Tunisia)
7.5 Cashpor (India)
7.6 Rizona (Kosovo)
7.7 Green Bio Energy (Uganda)
7.8 St. George Organic Herb Farm (Albania)
7.9 Human Harbor Inc. (Japan)
7.10 Ashoka (Germany)
8 Opportunities and Strengths of Social Business
9 Drawbacks and Challenges of Social Business
10 Social Business and Sustainable Development
11 Conclusion
12 Summary
References
Key References
Modern Slavery Disclosures in a Voluntary Regime
1 Introduction
2 Firm´s Incentives to Disclose Modern Slavery Information
2.1 Economic Perspective of Modern Slavery Disclosure
2.2 The Political Costs of Modern Slavery Disclosure
2.3 Firm Size as Proxy for Political Cost in Modern Slavery Issues
2.4 Industry Type and Modern Slavery Disclosures
3 Research Design
3.1 Data Sources
3.2 Predictor Variables
3.3 Content Analysis and Modern Slavery Index
3.4 Software for Content Analysis of the Modern Slavery Disclosure Index
4 Results and Discussion
4.1 Correlations Among Variables
4.2 Regression Analysis
5 Conclusion
References
The Legal Basis of CSR
1 Introduction
2 Part 1
2.1 A. Ethics, Morality, and Corporate Obligation
2.2 Public Policy and Public Interest
2.3 Voluntary and Community Work and a Company
3 Part 2
3.1 A. The Protection Provided to Stakeholders by the Legal System of England
3.2 Liability and Responsibility
4 Summary
5 Cross-References
Appendix 1: Legislation Protecting Rights of a Customer/Consumer
Appendix 2: Legislation Protecting Rights of an Employee
Appendix 3: Legislation Protecting Right of a Local Community and Protecting Environment
Appendix 4: Legislation Protecting Rights of a Shareholders/Investors and Creditor
Appendix 5: Legislation Protecting Rights of the Government, Local Government, and Governing Body
References
Primary Source
A. Cases
B. ECHR Case Law
C. Statute
D. Regulations and Delegated Legislations
E. EU Laws
Secondary Sources
Hansard/Parliament Report
UN/EU/ Government Publications and Reports
Constitutions of Associations
Books
Journal Articles/Academic Papers/Gray Papers/Websites
Integrated Reporting
1 Introduction
2 What is an Integrated Report?
3 The Evolution of
4 Advantages of
4.1 Enhanced Accountability to and Engagement with Stakeholders
4.2 Clear Framing and Articulation of Value Creation Model and Sustainability Strategy
4.3 Development of Systems Thinking and Collaboration
4.4 Embedding Sustainability into Decision-Making
4.5 Aligning Strategy with Value Integrators and Value Creation: A Long-Term Perspective
5 Disadvantages of
5.1 Assurance Issues
5.2 Confidentiality of Information
5.3 Increased Costs: Redesign of Reporting Structures
5.4 Senior Executive Support
6 Integrated Reporting Adoption
6.1 External Determinants of Adoption
6.2 Internal Determinants of Adoption
6.3 Integrated Reporting in Higher Education
7 Current Thoughts and Future Directions
7.1 Integrated Thinking
7.2 Multitude of Standard Setters
7.3 Future Directions of
8 Summary
9 Reading Resources
10 Cross-References
Appendix 1
References
Corporate Social Responsibility (CSR) in Multinational Companies (MNCs), Small-to-Medium Enterprises (SMEs), and Small Busines...
1 Introduction
2 CSR in SMEs
2.1 Characteristics, Strengths, and Weaknesses of SMEs
2.2 Drivers of CSR in SMEs
2.3 Challenges of SMEs in CSR Implementation
3 CSR in MNCs
3.1 Characteristics, Strengths, and Weaknesses of MNCs
3.2 Drivers of CSR in MNCs
3.3 Challenges of MNCs in CSR Implementation
4 Relationships Between SMEs and MNCs
5 Theoretical Perspectives on CSR in Terms of SMEs and MNCs
5.1 Carroll´s (1979) CSR Pyramid
5.2 Wood´s (1991) Corporate Social Performance Model
5.3 Freeman´s (1984) Stakeholder Theory
5.4 Waddock et al. (2002) Total Responsibility Management Framework
5.5 Windsor´s (2006) CSR Model
5.6 Hemingway and Maclagan´s (2004) Framework for Analyzing CSR
6 Comparison of SMEs and MNCs in Terms of CSR Strategies
6.1 Environmental Management
6.2 Employment
6.3 Communication of CSR
6.4 Supply Chains
6.5 Community Volunteering
6.6 Local Community
7 Summary
8 Cross-References
References
Key References
Gold Standard: Socially Responsible Investment Analysis
1 Introduction
2 Gold: The Beginning Socially Responsible Investment Analysis
3 Gold: The Middle Socially Responsible Investment Analysis
4 Gold: The Ending Socially Responsible Investment Analysis
5 Summary
6 Cross-References
References
How to Reap the CSR Fruits: The Crucial Role Played by Customers
1 A New Paradigm for Doing Business: The CSR Era
2 The Increasing Relevance of a Consumer-Based Perspective
3 Early Research: Segmentation-Based Profiling of Consumers
4 Behavioral Models: Between Rationality and Habits
5 The Forefront of Research on Responsible Consumers
6 Summary
References
Part VI: Regions and Segments
The UN Global Compact: An Overview of the Promise and Pitfalls
1 Introduction
2 History and Overview of the Global Compact
3 The Promise: Why the Global Compact is Widely Acclaimed
4 The Pitfalls of the Global Compact
5 The Global Compact and the COVID-19 Pandemic
6 Summary
7 Cross-References
References
Regulation of CSR from International, European, and Spanish Viewpoints
1 Introduction
2 Global Compact Such an International Reference
3 Nature of CSR: From Discretionary to Mandatory
3.1 Governmental Context: Encouragement and Regulation
3.2 Social Context and CSR Implementation Process
3.3 International Context and the Ultimate Purpose of CSR
3.4 Political Context from the Local Versus International Viewpoints
4 CSR Regulation from an International Viewpoint
4.1 CSR Regulation from the EU Directives Viewpoint
4.2 CSR Regulation from the Viewpoint of Spanish Directives and Law
5 Summary
6 Cross-References
Annex
References
Legislation
The Evolution of Institutional Environments in the Development of Corporate Social Responsibility in Selected ASEAN Countries
1 Introduction
2 Development of CSR in Malaysia
3 Development of CSR in Indonesia
4 Development of CSR in Singapore
5 Development of CSR in Thailand
6 Conclusion
7 Cross-References
References
Regional Review: Developed Countries
1 Introduction
2 CSR and the Rise and Fall of Neoliberalism and Globalization
3 CSR in North America and Europe
4 Summary
5 Cross-References
References
Regional Review: Latin America
1 Introduction
2 Foundations
3 Reflexive Practices About CSR in LAC
4 Some of the Environmental Problems in LA
5 Priority Concerns in Latin America: Evidence from Bibliography Review
6 CSR in the Region: Environmental Issues
7 Can We Talk About a Common Agenda?
8 Cross-References
Appendix 1 Frequent words in the Spanish texts
Appendix 2 Frequency of words in the Portuguese texts
Appendix 3 Frequent words in the English texts
References
Regional Review: Africa
1 Introduction
2 Methods and Analysis
3 Evaluation of Definitions
4 Classic and New Debates About CSR in Africa
5 Managerial and Academic Perspectives of CSR in Africa
6 Highlights of CSR Policies and Programs of Selected Companies in Africa
7 Role of Civil Society in CSR Awareness and Advancement
8 Contextualizing CSR in Africa
9 Conclusions, Research Implications, and Suggestions for Further Research
10 Future CSR Agenda and Direction in Sub-Saharan Africa
References
Corporate Social Responsibility in China
1 Introduction
2 Overview of CSR Development in China
3 Four Stages of CSR Development in China
3.1 Starting Stage (2001-2004)
3.2 Hovering Stage (2005-2007)
3.3 Spurting Stage (2008-2012)
3.4 Improving Stage (2013-2018)
3.4.1 Rabies Vaccine Incident
3.4.2 Jack Ma´s International Leadership
3.4.3 Guide 3.0 and Six Roles of CSR
4 Contributions of Nonprofit Organizations
4.1 Institute of Public and Environmental Affairs (IPE)
4.2 Alashan SEE Ecological Association
4.3 China Social Responsibility 100 Forum
5 Overseas Fulfillment of Social Responsibilities of Chinese Enterprises
6 Summary
7 Cross-References
References
Corporate Social Responsibility in India
1 Introduction
2 Applicability of CSR
3 Allowable Expenditures Toward CSR
4 Implementing of CSR Activities
5 CSR: Indian Corporates Overview
6 Why Does It Matter?
7 Indian Corporate Adopting CSR
7.1 Corporate Philanthropy
7.2 CSR: Global Overview
8 Governance of CSR in India
8.1 The Relevance of Section 135 Companies Act 2013
8.2 Recent Amendments to Section 135 of Companies Act 2013 (The Companies (Amendment) Act 2019)
8.3 Calculation of ``Net Profits´´ Under Section 198
8.4 Companies (CSR Policy) Rules 2014
9 CSR: A Boon for Society or a Burden for Corporate
9.1 CSR in India: The Way Forward
10 Conclusion
References
CSR in the USA and UK Versus CSR in Europe and Asia
1 Introduction
2 Qualifications
3 Growth Versus Sustainability
4 Growth
5 Sustainability
6 The Importance of History
7 Two Narratives, Two Agendas
8 Narratives or Ideology?
9 Legal Systems
10 Summary
11 Cross-References
References
Part VII: Sustainability
Resource Depletion
1 Introduction
2 Depleting Resources
3 Geopolitical Considerations
4 Extent of Remaining Resources
5 Reacting to Resource Depletion
6 Manufacturing Firms and Resource Depletion
7 Strategies for Dealing with Resource Depletion
8 Stockpiling
9 Technological Solutions
10 The Market and Its Inefficiencies
11 A Prognosis
12 Summary
References
Key References
Geopolitics of Natural Resources
1 Introduction
2 What Is Geopolitics?
3 The Chapter´s Approach
4 The Drive Towards Adventures
5 Power Relations and Rivalry
6 The Quest for Global Resources
7 Globalization - The New Imperialism?
8 Globalization and the Search for Natural Resources
9 Natural Resources and Conflicts
10 The Role of Corporate Social Responsibility
11 Addressing the Issues of Geopolitics
12 Summary
13 Cross-References
References
Artificial Intelligence and Social Responsibility
1 Overview
1.1 Basic Issues
1.2 Important Concepts and Their Relations
1.3 A Note on Literature Review
2 Major Historical and Contemporary Issues Surrounding the Relation of AI and SR
2.1 AI and Its Fundamental SR
2.2 AI and General Principle of SR
2.3 AI and Particular Types of SR
2.4 A Note on Social Implications of Introducing AI
3 Summary
4 Cross-References
References
Key References
Sustainability and Consumer Behaviour: Towards a Cohered Emergent Theory
1 Introduction
2 Corporate Sustainability, Performance and Consumers´ Reaction
3 Consumer Attitudes Towards Consumption
4 Challenges of Sustainable Development
5 Cohered Corporate Sustainability Development
5.1 CAS Module
5.2 Planned Learning Module
5.3 Emergent Learning Module
5.4 Deferred Learning Module
6 Conclusion
References
Tobacco CSR, Sustainability Reporting, and the Marketing Paradox
1 Introduction
2 CSR and Sustainability Reporting Frameworks
3 Tobacco Industry and Regulation
3.1 The Framework Convention on Tobacco Control
3.2 Regulations in Emerging Markets
4 Self-Reported Tobacco Industry CSR and Sustainability Performance
4.1 Developed Versus Emerging Markets
5 Critical Evaluation of the Tobacco Industry´s CSR and Sustainability Initiatives
6 E-Cigarettes, HTPs (Heated Tobacco Products), and the Tobacco End Game
6.1 Corporate Image Rebranding and Repositioning
6.2 Access to Advertising Channels, the Youth Market and Cross-Selling Opportunities
7 Tobacco Marketing in Emerging Markets
7.1 Product
7.2 Place
7.3 Price
7.4 Advertising and Promotion
8 Tobacco Marketing in Developed Markets
8.1 Product
8.2 Place
8.3 Price
8.4 Advertising and Promotion
9 Summary
9.1 Implications for Other Harmful Products
10 Cross-References
References
The Sustainable Development Agenda
1 Introduction
2 The Role of Sustainable Tourism and Sustainable Economic Development
3 ``Overtourism´´: Blessing or Disaster for Sustainability?
4 The Role of Local Community as Key Players in Sustainable Tourism
5 Stakeholder Interaction and Special Attention for Indigenous People
6 Governance and Manpower
7 Sustaining Tourism While Sustaining Mother Earth
8 Virtual Tourism: The Helping Instruments
9 Summary
10 Cross-References
References
Innovation and Sustainability
1 Introduction
2 (Traditional) Innovation
2.1 Multiple-Disciplinary Perspectives
2.1.1 Economic and Business Perspectives
2.1.2 Organizational Perspective
2.2 Origin of (Traditional) Innovation
2.3 Innovation Diffusion
3 Eco-innovation
4 Social Innovation
5 Sustainable Innovation
6 Summary and Concluding Remarks
7 Cross-References
References
Sustainable Marketing
1 Overview
2 The Evolution of the Concept
3 The Notion of Sustainability Marketing: Conceptualization and Definition
4 Different Facets of Sustainable Marketing
4.1 Environmental Dimension
4.2 Social Dimension
4.3 Economic Dimension
5 Synthesizing the Existing Knowledge
5.1 Lack of Studies that Focused on All Facets
5.2 Theory Used
5.3 Profiling the Green Consumers
5.4 Innovation in Sustainable Marketing
5.5 Focus Toward Quality of Life (QOL)
5.6 Dominance of Psychological Variables in Shaping Sustainable Consumer Behavior
5.7 Sustainability Marketing - Is It a Panacea?
6 Problems and Prospects of Sustainability Marketing
7 Conclusion
References
Key References
Corporate Human Rights Responsibility in Times of Increasing Socio-cultural and Political Isolationism
1 Introduction
2 Multinationals in the Context of Increasing Globalization and Socio-cultural and Political Isolationism
3 The Theoretical Framework for Corporate Human Rights Responsibility
4 Moving Beyond Mono-culturalism: Cases of Successful Corporate Human Rights Responsibility Practices
5 Principles for Corporate Human Rights Responsibility
6 Summary
7 Conclusion
References
Key References
Corporate Social Responsibility Reporting: Evolution, Institutionalization, and Current State
1 Introduction
2 What Is CSR and CSR Reporting?
3 Origins of CSR Reporting
4 The Evolution and Institutionalization of CSR Reporting
4.1 Generally Accepted Accounting Principles (GAAP)
4.2 The OECD Guidelines for Multinational Enterprises
4.3 SA 8000 Social Accountability International Labor Standard
4.4 Copenhagen Charter
4.5 UN Global Compact
4.6 European Union CSR Reporting Initiatives and EMAS
4.7 Global Reporting Initiative (GRI)
4.8 The ISO 26000:2010 Guidance on Social Responsibility and ISO Standards
4.9 AA1000SES (AA1000 Stakeholder Engagement Standard)
5 CSR Reporting in Academia
6 Future Prospects
7 Summary
8 Cross-References
References
Index
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David Crowther Shahla Seifi Editors
The Palgrave Handbook of Corporate Social Responsibility
The Palgrave Handbook of Corporate Social Responsibility
David Crowther • Shahla Seifi Editors
The Palgrave Handbook of Corporate Social Responsibility With 56 Figures and 85 Tables
Editors David Crowther De Montfort University Leicester, UK
Shahla Seifi Social Responsibility Research Network http://www.srrnet.org
ISBN 978-3-030-42464-0 ISBN 978-3-030-42465-7 (eBook) ISBN 978-3-030-42466-4 (print and electronic bundle) https://doi.org/10.1007/978-3-030-42465-7 © Springer Nature Switzerland AG 2021 This work is subject to copyright. All rights are reserved by the Publisher, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed. The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. The publisher, the authors, and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication. Neither the publisher nor the authors or the editors give a warranty, expressed or implied, with respect to the material contained herein or for any errors or omissions that may have been made. The publisher remains neutral with regard to jurisdictional claims in published maps and institutional affiliations. This Palgrave Macmillan imprint is published by the registered company Springer Nature Switzerland AG. The registered company address is: Gewerbestrasse 11, 6330 Cham, Switzerland
Preface
Corporate social responsibility (CSR) continues to be an important topic within the business community and equally so within the research community. As all concerned will understand, this is a very broad topic covering a wide range of issues; moreover, these issues continue to change and develop over time, so the most important topics now are very different to those a very few years ago and will almost certainly be different and continue to develop and change in the future. Although CSR is a term which is well known, it is normally interpreted to be concerned with the management of a business. Indeed, everyone might think that they can talk knowledgeably about it, but many do not even believe that issues involved in CSR are far wider than just human rights and governance. Issues such as natural environment, energy production and consumption, water, sustainable consumption, artificial intelligence, and human and animal health are just a few examples of issues to be tackled within the field of social responsibility. Equally, governance continues to be an issue of relevance and concern. The concept of governance is widely discussed and often in relation to the governance of corporations – hence, the ubiquity of the term corporate governance – and other bodies. The term has now been in existence for a considerable period of time and many people have considered what this means, leading to much theoretical development of the concept. Current concerns with such things as corporate failures and corruption have added more urgency into the debate, which has entered the arena of public opinion just as much as within business. The concept has gradually become incorporated into all aspects of life, politics, and business to such an extent that everyone is familiar with the concept and has some view of the issues involved. Probably an issue which has the greatest prominence at present is that of sustainability and within that the issues of climate change and environmental degradation. The concept is regularly mentioned by politicians and by the media. The concepts of CSR, governance, and sustainability are however largely treated as separate and discrete, with focus being on one or other of them. This book starts from the premise that they are in fact inter-related and good governance is a precursor to sustainability and CSR encompasses both. These all, therefore, form a focus within this book. The book considers a wide range of theory in order to elucidate the reader. This is however coupled with what is actually happening in practice as a way of addressing v
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Preface
the problems. In practice, the areas of application and implementation have risen to prominence and it is argued that a concentration upon these features will enhance our understanding by looking at fresh perspective. The focus of this book therefore is upon the application of the principles through engagement. The international locations of the authors show both that the issues are global and that we can best arrive at solutions through a synthesis of these various international perspectives. The concepts of corporate social responsibility (CSR) and sustainability have now been in existence for a considerable period of time and have entered the popular lexicon. Indeed, some have argued that sustainability has become dominant over CSR. This can be seen from the issues that are of concern to people currently researching in the field, dominated by concerns such as climate change. These have added more urgency into the debate which has now become ubiquitous with the realms of politics and public opinion just as much as within business. Indeed, sustainability is probably the most talked about concept at present. The concept of sustainability has gradually become incorporated into all aspects of life, politics, and business to such an extent that everyone is familiar with the concept and has some view of the issues involved. The concepts are regularly mentioned by politicians and by the media. Normally, the issue of CSR, in particular, is seen to apply to business alone, whereas in reality, it is highly relevant to the public sector also. In this book, therefore, we specifically do not specialize in context but consider the whole range of social and economic activity, although individual chapters focus upon particular spheres. To date, it has been generally accepted that sustainability can be considered and therefore managed by focusing upon the triple bottom line which is taken from the Brundtland report on sustainable development. In other words the three pillars of economic, environmental, and social are all that matter and can largely be dealt with as separate issues, despite Brundtland asserting that they were equal and must be addressed equally. In the public sector, however, priorities are different and these do not necessarily apply. In this book, we naturally look at these three pillars but consider them within different contexts and not as independent. The views expressed in the individual chapters are of course those of the authors concerned and it will be apparent that some views are in conflict with those in other chapters. This is international and each author can be considered to be an expert within the area they are writing about. The conflicts which exist show the diversity within the field and show that there are, as yet, no views which have universal acceptance. As editors, we believe that disagreement and discussion broadens the discourse and this is how developments take place and how consensus is arrived at. This is the philosophy by which we operate and this is just as apparent in all our activities, including other publications and out annual conferences. This can be seen by referring to the Social Responsibility Research Network website (www.srrnet.org). This book, however, stands on its own merits and one of its strengths is that the online version will be continuously updated to present latest findings and opinions. November 18, 2020
David Crowther Shahla Seifi
Acknowledgment
The editors would like to thank all contributors to this volume for their contributions. They would especially like to thank the Social Responsibility Research Network (www.srrnet.org) as most contributions to the work were produced by members of the Network – colleagues and friends.
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Contents
Volume 1 Part I
.......................................
1
Corporate Social Responsibility and the Future: Setting the Scene . . . . David Crowther and Shahla Seifi
3
Part II
Introduction
General Theory
....................................
25
Definitions of Corporate Social Responsibility . . . . . . . . . . . . . . . . . . . . Lan Jiang
27
.......
47
Triple Bottom Line . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Rodica Milena Zaharia and Razvan Zaharia
75
Equity and Regulation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Onyeka K. Osuji
103
Corporate Responsibility Reporting and Storytelling . . . . . . . . . . . . . . Merryn Paynter and Abdel K. Halabi
129
Brundtland and After . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Dianne Bolton and Terry Landells
149
Human Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Nour Mohammad and Syed Mohiuddin Hasan
177
Part III
199
Theoretical Developments in Corporate Social Responsibility Miriam Green
Environmental Aspects . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Climate Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Sibel Hoştut and Seçil Deren Van Het Hof
201
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Contents
Water Resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Linne Marie Lauesen
225
The Emergence and Role of Nongovernmental Organizations . . . . . . . Lowell J. Gretebeck
249
Recycling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Linne Marie Lauesen, Pia Duus Jensen, and Lene Ribens
275
Wastewater Disposal Techniques . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Izhar Alam and Azam Malik
299
Sustainable Plastic and Corporate Social Responsibility . . . . . . . . . . . . Armaghan Moghaddam and David Crowther
333
Technological Approaches to Sustainability . . . . . . . . . . . . . . . . . . . . . . Cuong Van Hoang, Thinh Gia Hoang, and Victor Kane
355
Part IV
381
Social Aspects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Governance of Migration and Sustainability . . . . . . . . . . . . . . . . . . . . . Michael Gagern Sustainable Development Goal 8: Achieving Decent Work – An Illusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Prabir Kumar Bandyopadhyay Work-Life Balance and Well-Being at Work . . . . . . . . . . . . . . . . . . . . . Nicole Cvenkel Social Capital, Community Engagement, and Corporate Social Responsibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Roopinder Oberoi
383
413 429
453
Employee Volunteering . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Risa Bhinekawati, Wiwiek M. Daryanto, Amelia Naim Indradjaja, Chrysanti Hasibuan-Sedyono, and Yanti Triwadiantini
471
................................
499
Gender and Corporate Social Responsibility . . . . . . . . . . . . . . . . . . . . . Ilke Oruc
525
Developing Trends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Jacob Dahl Rendtorff
545
The State of Social Media Research in CSR Communication . . . . . . . . Lina M. Gomez
577
Socially Responsible Retailing Ghulam Sughra
Contents
xi
Sustainability and Accountability in Higher Education Institutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Verónica Ribeiro, Sónia Monteiro, and Kátia Lemos
599
Volume 2 Part V
Economic Aspects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
613
Foreign Direct Investment and Development in Developing Host Economies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Hema Soondram, Martin Samy, and Bhavish Jugurnath
615
Social Business: A New Chapter of Hybrid Business Toward Sustainable Development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Arifur Rahman and Naznin Sultana
637
Modern Slavery Disclosures in a Voluntary Regime . . . . . . . . . . . . . . . Susi Sarumpaet and Hasan Fauzi
667
The Legal Basis of CSR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Sharoj Sharma-Nepal and Leo Isce-Taylor
693
Integrated Reporting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Elaine Conway, Fiona Robertson, and Iwi Ugiagbe-Green
753
Corporate Social Responsibility (CSR) in Multinational Companies (MNCs), Small-to-Medium Enterprises (SMEs), and Small Businesses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Gizem Aras-Beger and F. Dilvin Taşkın Gold Standard: Socially Responsible Investment Analysis . . . . . . . . . . Rute Abreu and Carlos Pinho
791 817
How to Reap the CSR Fruits: The Crucial Role Played by Customers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Pietro Lanzini and Antonio Tencati
843
Part VI
863
Regions and Segments . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
The UN Global Compact: An Overview of the Promise and Pitfalls . . . Nathan Andrews
865
Regulation of CSR from International, European, and Spanish Viewpoints . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . David Robles-Elorza, Leire San-Jose, and Sara Urionabarrenetxea
887
The Evolution of Institutional Environments in the Development of Corporate Social Responsibility in Selected ASEAN Countries . . . . . . Corina Joseph and Roshima Said
911
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Contents
Regional Review: Developed Countries . . . . . . . . . . . . . . . . . . . . . . . . . Michael MacLeod
935
Regional Review: Latin America . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Mariana Lima Bandeira, Genoveva Espinoza-Santeli, and Fernando López Parra
955
Regional Review: Africa . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . L. Raimi and A. S. Isiaka
991
Corporate Social Responsibility in China Hong Wang
. . . . . . . . . . . . . . . . . . . . . . . 1017
Corporate Social Responsibility in India . . . . . . . . . . . . . . . . . . . . . . . . 1041 Jagbir Singh Kadyan CSR in the USA and UK Versus CSR in Europe and Asia . . . . . . . . . . 1071 Nick Capaldi and Nadia E. Nedzel Part VII
Sustainability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1103
Resource Depletion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1105 Shahla Seifi Geopolitics of Natural Resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1131 Sam Sarpong Artificial Intelligence and Social Responsibility . . . . . . . . . . . . . . . . . . . 1153 Kristijan Krkač and Ivana Bračević Sustainability and Consumer Behaviour: Towards a Cohered Emergent Theory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1177 Frank Nyame-Asiamah and Peter Kawalek Tobacco CSR, Sustainability Reporting, and the Marketing Paradox . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1195 Steven Greenland, Karmen Lužar, and David Low The Sustainable Development Agenda . . . . . . . . . . . . . . . . . . . . . . . . . . 1223 Kurnia Perdana, Silvy Sondari Gadzali, and Rita Laslubiati Puspawijaya Innovation and Sustainability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1245 Cuong Van Hoang, Thinh Gia Hoang, Nam Hai Vu, and Dat Anh Le Sustainable Marketing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1269 Farzana Quoquab, Nur Zulaikha Mohamed Sadom, and Jihad Mohammad
Contents
xiii
Corporate Human Rights Responsibility in Times of Increasing Socio-cultural and Political Isolationism . . . . . . . . . . . . . . . . . . . . . . . . 1293 Rafaela Costa Camoes Rabello, Katharina Ruckstuhl, and David Sundaram Corporate Social Responsibility Reporting: Evolution, Institutionalization, and Current State . . . . . . . . . . . . . . . . . . . . . . . . . . 1321 Ferhan Sengur Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1347
About the Editors
David Crowther B.A., M.B.A., M.Ed., Ph.D., PGCE, FCMA, CGMA, CPFA, MCMI Professor, University of Bedfordshire, UK; London School of Commerce, UK; Ansted University, Malaysia; Shanghai University, China www.davideacrowther.org; www.srrnet.org David Crowther is expert in business administration, a games theoretician, and a psychologist while also a qualified accountant who has worked as an accountant, systems specialist, and general manager in local government, industry, and commerce for 20 years. After a number of years in the financial services sector, including a spell as divisional managing director during which he set up and ran a credit card scheme, he decided to leave the business world and become an academic. In 1994, he joined Aston University and there obtained a Ph.D. in 1999 for research into corporate social performance. In 2001, he became the first professor of corporate social responsibility in the world. David has published more than 60 books and has also contributed several hundred articles to academic, business, and professional journals and to edited book collections. He has also spoken widely at conferences and seminars worldwide and acted as a consultant to a wide range of government, professional, and commercial organizations. In 2002, he established the Social Responsibility Research Network, an international body which now has 1000 members. He is listed in Who’s Who in the World and various other directories. His current research focuses on sustainability and governance in the modern environment.
xv
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About the Editors
Shahla Seifi B.Sc., M.Sc., M.Eng., Ph.D. Secretary and Conferences Chair, Social Responsibility Research Network Visiting Professor, Shanghai University, China; Ansted University, Malaysia; and various universities around the world www.srrnet.org Shahla is an engineer by background and worked for over 20 years at the National Standards Institute of Iran. There, she was responsible for assessing products, developing national standards, and international affairs. After a spell in Malaysia, she relocated to the UK in 2013 where she is now based. A British and Iranian citizen, she continues to publish under her maiden name of Shahla Seifi. She currently researches, writes, and runs the Social Responsibility Research Network. Shahla has taught extensively – both students and managers – and translated much material into Farsi. As a qualified physical fitness trainer, she led courses in Tehran for a number of years. She edits or is a member of the editorial boards of several journals and book series around the world, and consults and speaks at various locations. Shahla has published more than 30 books (in either English or Farsi) and translated several into Farsi; she has published over 50 articles in English as well as numerous articles in Farsi. Her current research is concerned with extractive mineral depletion and sustainability.
Contributors
Rute Abreu Instituto Politécnico da Guarda/UDI-IPG/CICF-IPCA/CISeD-IPV, Guarda, Portugal Izhar Alam Department of Civil Engineering, Aligarh Muslim University, Aligarh, India Nathan Andrews University of Northern British Columbia, Prince George, BC, Canada Gizem Aras-Beger Faculty of Business, Yasar University, Izmir, Turkey Mariana Lima Bandeira Universidad Andina Simón Bolívar, Sede Ecuador and Universidad Estatal de Milagro, Quito, Pichincha, Ecuador Prabir Kumar Bandyopadhyay Symbiosis Institute of Business Management, Symbiosis International, Pune, India Risa Bhinekawati Business and Management, Sekolah Tinggi Manajemen IPMI, Jakarta Selatan, DKI Jakarta, Indonesia Dianne Bolton Swinburne University of Technology, Hawthorn, VIC, Australia Ivana Bračević Faculty of Humanities and Social Sciences, University of Zagreb, Zagreb, Croatia Nick Capaldi College of Business, Loyola University New Orleans, New Orleans, LA, USA Elaine Conway Derby Business School, University of Derby, Derby, UK David Crowther De Montfort University, Leicester, UK Nicole Cvenkel My Work & Well-Being Consulting Inc, Prince George, BC, Canada Wiwiek M. Daryanto Business and Management, Sekolah Tinggi Manajemen IPMI, Jakarta Selatan, DKI Jakarta, Indonesia
xvii
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Contributors
Genoveva Espinoza-Santeli Universidad Andina Simón Bolívar, Sede Ecuador, Quito, Pichincha, Ecuador Hasan Fauzi Faculty of Economics and Business, Sebelas Maret University, Surakarta, Indonesia Silvy Sondari Gadzali University of Subang, Subang, Indonesia Michael Gagern King Saud University, Riyadh, Saudi Arabia Lina M. Gomez The University of Tampa, Tampa, FL, USA Miriam Green Icon College of Technology and Management, London, UK Steven Greenland Asia Pacific College of Business and Law, Charles Darwin University, Darwin, NT, Australia Lowell J. Gretebeck Kyoritsu University, Tokyo, Japan Abdel K. Halabi Federation Business School, Federation University Australia, Churchill, VIC, Australia Syed Mohiuddin Hasan Casual Academic, Western Sydney University, Sydney, Australia Chrysanti Hasibuan-Sedyono Indonesia Business Links, Central Jakarta, Indonesia Thinh Gia Hoang School of Business and Management, RMIT International University, Ho Chi Minh City, Vietnam Centre for Applied Economics and Business Research, Hanoi, Vietnam Sibel Hoştut Faculty of Communication, Akdeniz University, Antalya, Turkey Amelia Naim Indradjaja Business and Management, Sekolah Tinggi Manajemen IPMI, Jakarta Selatan, DKI Jakarta, Indonesia Leo Isce-Taylor London, UK A. S. Isiaka Department of Accounting and Finance, American University of Nigeria, Yola, Nigeria Pia Duus Jensen Water and Waste Denmark, Vand og Affald, Svendborg, Denmark Lan Jiang London Metropolitan University, London, UK Corina Joseph Faculty of Accountancy, Universiti Teknologi MARA, Sarawak, Malaysia Bhavish Jugurnath University of Mauritius, Moka, Mauritius Jagbir Singh Kadyan Department of Commerce, Swami Shraddhanand College, University of Delhi, New Delhi, India
Contributors
xix
Victor Kane School of Business and Management, RMIT International University, Ho Chi Minh City, Vietnam Peter Kawalek School of Business and Economics, Loughborough University, Loughborough, UK Kristijan Krkač Zagreb School of Economics and Management, Zagreb, Croatia Terry Landells Swinburne University of Technology, Hawthorn, VIC, Australia Pietro Lanzini Department of Management, Ca’ Foscari University, Venezia, Italy Linne Marie Lauesen Water and Waste Denmark, Vand og Affald, Svendborg, Denmark Dat Anh Le Centre for Applied Economics and Business Research, Hanoi, Vietnam Kátia Lemos Research Centre on Accounting and Taxation, School of Management of the Polytechnic Institute of Cávado and Ave, Barcelos, Portugal David Low Asia Pacific College of Business and Law, Charles Darwin University, Darwin, NT, Australia Karmen Lužar Asia Pacific College of Business and Law, Charles Darwin University, Darwin, NT, Australia Michael MacLeod St Mary’s University, Calgary, AB, Canada Azam Malik Department of Human Resource Management, College of Business Administration, Prince Sattam Bin Abdulaziz University, Riyadh, Kingdom of Saudi Arabia Armaghan Moghaddam Iran Polymer and Petrochemical Institute, Tehran, Iran Nur Zulaikha Mohamed Sadom International Business School, Universiti Teknologi Malaysia, Kuala Lumpur, Malaysia Nour Mohammad Department of Law, Premier University, Chittagong, Bangladesh Western Sydney University, Sydney, Australia Jihad Mohammad Department of Management and Marketing, Qatar University, Doha, Qatar Sónia Monteiro Research Centre on Accounting and Taxation, School of Management of the Polytechnic Institute of Cávado and Ave, Barcelos, Portugal Nadia E. Nedzel Southern University Law Center, Baton Rouge, LA, USA Frank Nyame-Asiamah Leicester Castle Business School, De Montfort University, Leicester, UK
xx
Contributors
Roopinder Oberoi Department of Political Science, University of Delhi, Delhi, India Ilke Oruc Faculty of Economics and Administrative Sciences, Trakya University, Edirne, Turkey Onyeka K. Osuji School of Law, University of Essex, Colchester, UK Fernando López Parra Universidad Andina Simón Bolívar, Sede Ecuador and Instituto de Altos Estudios Nacionales, Quito, Pichincha, Ecuador Merryn Paynter Federation Business School, Federation University Australia, Churchill, VIC, Australia Kurnia Perdana Kelompok Studi Sustainability Lampung, Bandarlampung, Indonesia Carlos Pinho Universidade de Aveiro, GOVCOPP, Aveiro, Portugal Rita Laslubiati Puspawijaya Lampung Provincial Office of Tourism and Creative Economy, Lampung, Indonesia Farzana Quoquab International Business School, Universiti Teknologi Malaysia, Kuala Lumpur, Malaysia Rafaela Costa Camoes Rabello Commerce Division, Otago Business School, Te Kura Pakihi, University of Otago, Dunedin, New Zealand Arifur Rahman Latrobe Business School, La Trobe University, Kingsbury Drive, VIC, Australia L. Raimi Department of Entrepreneurship, American University of Nigeria, Yola, Nigeria Jacob Dahl Rendtorff Department of Social Sciences and Business, Roskilde University, Copenhagen, Denmark Verónica Ribeiro Research Centre on Accounting and Taxation, School of Management of the Polytechnic Institute of Cávado and Ave, Barcelos, Portugal Lene Ribens Water and Waste Denmark, Vand og Affald, Svendborg, Denmark Fiona Robertson Leeds Business School, Leeds Beckett University, Leeds, UK David Robles-Elorza ECRI Research Group, University of the Basque Country UPV/EHU, Bilbao, Spain Katharina Ruckstuhl Commerce Division, Otago Business School, Te Kura Pakihi, University of Otago, Dunedin, New Zealand Roshima Said Faculty of Accountancy, Universiti Teknologi MARA, Kedah, Malaysia Martin Samy Universite Des Mascareignes, Beau Bassin-Rose Hill, Mauritius
Contributors
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Leire San-Jose ECRI Research Group, University of the Basque Country UPV/ EHU, Bilbao, Spain Sam Sarpong School of Economics and Management, Xiamen University Malaysia, Sepang, Malaysia Susi Sarumpaet University of Lampung, Lampung, Indonesia Shahla Seifi Social Responsibility Research Network, http://www.srrnet.org Ferhan Sengur Aviation Management, Eskisehir Technical University, Eskisehir, Turkey Sharoj Sharma-Nepal Glasgow, UK Hema Soondram University of Mauritius, Moka, Mauritius Ghulam Sughra London School of Commerce, Cardiff Metropolitan University, London, UK Naznin Sultana Department of Marketing, Faculty of Business Studies, University of Dhaka, Dhaka, Bangladesh David Sundaram University of Auckland, Te Whare Wānanga o Tāmaki Makaurau, Auckland, New Zealand F. Dilvin Taşkın Faculty of Business, Yasar University, Izmir, Turkey Antonio Tencati Department of Economics and Management, University of Brescia, Brescia, Italy Yanti Triwadiantini Indonesia Business Links, Central Jakarta, Indonesia Iwi Ugiagbe-Green Leeds University Business School, The Maurice Keyworth Building, University of Leeds, Leeds, UK Sara Urionabarrenetxea ECRI Research Group, University of the Basque Country UPV/EHU, Bilbao, Spain Seçil Deren Van Het Hof Faculty of Communication, Akdeniz University, Antalya, Turkey Cuong Van Hoang National Economics University, Hanoi, Vietnam Nam Hai Vu Ho Chi Minh City University of Transport, Ho Chi Minh City, Vietnam Hong Wang School of Economics, Shanghai University, Shanghai, China Rodica Milena Zaharia Bucharest University of Economic Studies, Bucharest, Romania Razvan Zaharia Bucharest University of Economic Studies, Bucharest, Romania
Part I Introduction
Corporate Social Responsibility and the Future: Setting the Scene David Crowther and Shahla Seifi
Contents 1 The Resources of the World . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 The Development of Corporate Social Responsibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Defining Sustainability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 A Typology of CSR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 The Relationship Between CSR and Business Financial Success . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Expanding the Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 A Focus on Sustainability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Is Sustainability Sustainable? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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Abstract
Although CSR is a very broad topic which is dealt with extensively in this book, there are a number of issues which are not dealt with in any depth. This chapter serves as an introduction to the volume and also highlights some of the major issues which need to be dealt with. One of these is the resources of the world and their use which must be considered in terms of the changing human population and the effect which this happens. So obviously if the population grows and each person lives longer, then more resources are needed. This therefore raises issues in terms of sustainability which also need to be addressed. Keywords
Resources · Sustainability · Population · Globalisation · Transparency · Development D. Crowther (*) De Montfort University, Leicester, UK S. Seifi Social Responsibility Research Network, http://www.srrnet.org © The Author(s), under exclusive license to Springer Nature Switzerland AG 2021 D. Crowther, S. Seifi (eds.), The Palgrave Handbook of Corporate Social Responsibility, https://doi.org/10.1007/978-3-030-42465-7_94
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There are many views about corporate social responsibility and what issues it deals with. Arguably, there is a rough consensus of the most significant issues, which are often intertwined with the issues of sustainability and of governance. In this volume, a wide variety of scholars from around the world have shared their expertise and expressed their views and approaches. They are deliberately different and sometimes conflicting and this is deliberate as it reflects the diversity of views and the way in which the discipline is evolving and changing. So, you will not agree with everything you read in the volume – we do not agree with everything either. This is deliberate as only by considering this diversity and forming our own opinions can we hope to develop the discourse – and it is developing, with or without our contributions. Moreover, we respect the Sapir-Whorf hypothesis and consider that broadening our views and understanding comes from appreciating differing perspectives.
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The Resources of the World
It is generally assumed that the scarce resources of the world are the natural (i.e., biological) resources which can be reproduced through growth. Equally, however, we can be absolutely certain that all the resources of the planet are finite and must ultimately be a limiting factor to growth and development. The resources available to people are heavily used – and so Earth Overshoot Day gets earlier each year and clearly this is not sustainable. Although this refers to the biological resources of the planet, which are effectively renewable through growth from one year to the next, it is equally certain that the mineral resources of the world are finite in quantity and that these cannot be renewed. It is a statement of fact that once these mineral resources are used they are not available for future use and, despite the basis of economics assuming so, one resource can never completely substitute for another (Bretschger and Smulders 2012). Consider, for example, Easter Island: once the trees had been fully used then no resource was available as a substitute (Pakandam 2009) and such activities as sailing had to be terminated alongside the termination of the construction of the famous statues. The lack of sufficient resources of raw materials to maintain current production, let alone to provide for sustainable development as outlined by Brundtland (WCED 1987) has become known as resource depletion (West 2011) and is one of the problems which the inhabitants of the planet must currently face and address. The organization of the economic system which is currently operating within the world is determined by an assumption that development is both possible and desirable, and that markets and the pricing system acts as mediation for the acquisition of the additional resources required for that development. This is perfectly matched to the assumptions made by Brundtland (WCED 1987) and accepted unquestioningly ever since. Price has been accepted as the medium of exchange within the market system (Richardson 1995) and the free market has become dominant. As a consequence of this acceptance, the focus of governmental attention has been upon the operation of the pricing system with a desire to reduce transaction
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costs and agreeing and implementing the various rounds of GATT (General Agreement on Trade and Tariffs)/WTO (World Trade Organization – the successor to GATT) as the means for reducing the transaction costs of international trading. At the same time, environmentalists (e.g., Ciriacy-Wantrup and Bishop 1975; Monfreda et al. 2004) have been arguing that the resources of the world are overused and that this usage is not sustainable at this level; consequently, there is a general acceptance of the meaning of resource depletion (Prior et al. 2012). As far as the natural resources of the world are concerned, these are overused and Day on World Overshoot Day – the date in the year when humanity has exhausted the total natural resources of the planet for the year has been created. For the rest of the year, society operates in an effectively overdrawn mode and in ecological overshoot by making use of and depleting local resource stocks and accumulating carbon dioxide in the atmosphere. The concept was first introduced on December 29, 1970 showing that 50 years ago society was overusing the natural resources of the planet. Since then, the date has been observed earlier each year and the most recent years with corresponding dates are shown in Table 1. Thus, we can see that this day is observed earlier each year and the world is in trouble. We currently wait to see what effect the coronavirus pandemic will have upon this date and the future approach to environmental resources. It is equally known that the population of the world is continuing to increase over time (Table 2):
Table 1 World Overshoot Day
2014 2016 2016 2017 2018 2019
Table 2 World population
Year 2000 2005 2010 2015 2018 Projected 2020 2030 2050
24 August 13 August 8 August 2 August 1 August 29 July
Billions 6.15 6.54 6.96 7.38 7.63 7.80 8.55 9.77
Source: www.Worldometers.info (Worldometers is cited as a source in over 3500 published books, in more than 2000 professional journal articles, and in over 1000 Wikipedia pages)
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Table 3 Average life expectancy at birth
Year 1970 1990 2000 2005 2010 2015 2017
Life expectancy (years) 58.7 65.4 67.7 69.1 70.7 71.9 72.2
Source: The World bank https://data.worldbank.org/indicator/sp. dyn.le00.in
The rate of increase is running in excess of 1.0% p.a. although projections suggest this slowing to around 0.6% by 2050, at which point there is expected to be a population in the world approaching 10 billion. Inevitably, as population increases, economic activity increases, thereby increasing the demand for extractive resources. This will happen due to population increase even without any economic development which too will increase demand. At the same time, as population grows, the life expectancy also increases (Table 3). It can be considered that increased life expectancy indicates increasing economic prosperity and increased sophistication, as there is a relationship between these factors (Sen 1999; Cockerham et al. 2000).
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The Development of Corporate Social Responsibility
There has been considerable debate about the relationship between corporate social responsibility (CSR) and corporate governance, but in recent years the term corporate social responsibility has gained prominence, both in business and in the press, to such an extent that it seems to have become ubiquitous. There are probably many reasons for the attention given to this phenomenon, not least of which is the corporate excesses witnessed in recent years. For many people, the various examples of this kind of behavior – ranging from BCCI to Enron to Lehman Brothers to the collapse of Arthur Andersen – will have left an indelible impression among people that all is not well with the corporate world and that there are problems which need to be addressed (Some would argue that these cases are related to corporate social responsibility failures, some to corporate governance failures, and some to both. Our view is that the two are too inter-related to separate.) (Crowther 2004a). One of the implications of this concern, however, is that this is a new phenomenon – one which has not been of concern previously. Issues of socially responsible behavior are not of course new and examples can be found from throughout the world and at least from the earliest days of the Industrial Revolution and the concomitant founding of large business entities (Crowther 2012) and the divorce between ownership and management – or the divorcing of risk from rewards
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(Crowther 2004b). Thus, for example, in the UK (where the Industrial Revolution started), Robert Owen (1816) demonstrated dissatisfaction with the assumption that only the internal effects of actions need be considered and the external environment was a free resource to be exploited at will. Furthermore, he put his beliefs into practice, through the inclusion within his sphere of industrial operations, the provision of housing for his workers at New Lanark, Scotland. Thus, there is evidence from throughout the history of modernity that the self-centered approach toward organizational activity was not universally acceptable and was unable to satisfactorily provide a basis for human activity. Since that time, there has been a concern for the socially responsible behavior of organizations which has gained prominence at certain times while being considered of minor importance at others. The economic view of accountability solely to owners has only recently been subject to debate to any considerable extent. (See Crowther (2000a) for a full discussion of these changes.) Indeed the desirability of considering the social performance of a business has not always, however, been accepted and has been the subject of extensive debate. CSR therefore involves a concern with the various stakeholders to a business, but there are several problems in identifying socially responsible behavior: • Research shows that the concern is primarily with those stakeholders who have power to influence the organization. Thus, organizations are most concerned with shareholders, less so with customers and employees, and very little with society and the environment. CSR would imply that they are all of equal importance. • The definitions imply that CSR is a voluntary activity rather than enforced through regulation whereas in actual fact it is an approach and the voluntary – regulated debate is irrelevant. Claiming a concern is of course very different to actually exhibiting that concern through actions taken (Crowther 2004b). Definitions of CSR abound but all can be seen as an attempt to explain and define the relationship between a corporation and its stakeholders, including its relationship with society as a whole. Many too are phrased in terms of the triple bottom line, in a way which we argue trivializes the concept. Because of the uncertainty surrounding the nature of CSR activity, it is difficult to evaluate any such activity. It is therefore imperative to be able to identify such activity, and Crowther (2007a) argues that there are three basic principles (See Crowther (2002a) and Schaltegger et al. (1996) for the development of these principles.) which together comprise all CSR activity. They are: • Sustainability • Accountability • Transparency For many years now, the concept of corporate social responsibility has gained prominence and has gained increasing attention around the world among business
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people, media people, and academics from a wide range of disciplines. Increasingly also the scope of the concept has expanded from just business to include also public bodies and NGOs. There are probably many reasons (see Crowther and OrtizMartinez 2006) for the attention given to this phenomenon, not least of which is the corporate excesses which continue to become manifest in various parts of the world. These have left an indelible impression among people that all is not well with the corporate world and that there are problems which need to be addressed. Such incidents are too common to recount but have left the financial markets in a state of uncertainty and have left ordinary people to wonder if such a thing as honesty exists any longer in business. More recently, the language used in business has mutated again and the concept of CSR is being replaced by the language of sustainability. Such language must be considered semiotically (Barthes 1973) as a way of creating the impression of actual sustainability. Using such analysis then the signification is about inclusion within the selected audience for the corporate reports on the assumption that those included understand the signification in a common way with the authors. This is based upon an assumed understanding of the code of signification used in describing corporate activity in this way. As Sapir (1949: 554) states: . . . we respond to gestures with an extreme alertness and, one might almost say, in accordance with an elaborate and secret code that is written nowhere, known by none and understood by all.
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Defining Sustainability
Although it is widely accepted that the Brundtland’s definition of sustainable development (WCED 1987) applies equally to sustainability, most analysis of sustainability (e.g., Dyllick and Hockerts 2002) are only concerned with a two-dimensional approach of the environmental and the social. A few (e.g., Spangenberg 2004) recognize a third dimension which is related to organizational behavior. We argue that restricting analysis to such dimensions is deficient. One problem is the fact that the dominant assumption by researchers is based upon the incompatibility of optimizing, for a corporation, both financial performance and social/environmental performance. In other words, financial performance and social/ environmental performance are seen as being in conflict with each other through this dichotomization (see Crowther 2012). Consequently, most work in the area of corporate sustainability does not recognize the need for acknowledging the importance of financial performance as an essential aspect of sustainability and therefore fails to undertake financial analysis alongside – and integrated with – other forms of analysis for this research. (Of course, the fact that many researchers do not have the skills to undertake such detailed financial analysis even if they considered it to be important might be a significant reason for this.) We argue that this is an essential aspect of corporate sustainability and therefore adds a further dimension to the analysis of sustainability. Crowther (2007b) therefore argues that the third
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dimension, sometimes recognized as organizational behavior, needs to actually comprise a much broader concept of corporate culture. There are, therefore, four aspects of sustainability which need to be recognized and analyzed, namely: • Societal influence, which we define as a measure of the impact that society makes upon the corporation in terms of the social contract and stakeholder influence. • Environmental impact, which we define as the effect of the actions of the corporation upon its geophysical environment. • Organizational culture, which we define as the relationship between the corporation and its internal stakeholders, particularly employees, and all aspects of that relationship. • Finance, which we define in terms of an adequate return for the level of risk undertaken. These four must be considered as the key dimensions of sustainability, all of which are equally important. Moreover, we argue that these four aspects can be resolved into a two-dimensional matrix along the polarities of internal v external focus and short-term versus long-term focus, which together represent a complete representation of organizational performance. This works both in terms of financial performance and in terms of sustainable or environmental performance.
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A Typology of CSR
No matter whether the discourse is of corporate social responsibility or of sustainability, there exists a high degree of skepticism about the reality of corporate activity. Accusations of green washing – presenting a false picture – abound. We argue that this is a legacy of past behavior when such an accusation could reasonably be made about many organizations. Our argument is that CSR is a developmental process and changes as organizations mature in their behavior and attitude toward both their stakeholders and their ideas concerning social responsibility. Of course, we also acknowledge that there is a growing body of evidence to show that social responsibility behavior becomes reflected positively in the financial performance of a company, thereby providing a financial imperative for changing behavior. Moreover, we argue that there are stages of growth as far as CSR is concerned which become reflected in corporate behavior. These can be seen as increasing levels of maturity. In order to consider the implications for CSR, the typology developed by Crowther (2006) provides a useful vehicle. As he argues, it would be relatively easy to develop a typology of CSR activity based upon the treatment of the various stakeholders to an organization, but as Cooper et al. (2001) show, all corporations are concerned with their important stakeholders and make efforts to satisfy their expectations. Thus, a concern with employees and customers is apparent in all corporations, being merely a reflection of the power of those stakeholder groupings rather than any expression of social responsibility. Similarly, in some organizations a concern for the environment is less a representation of social responsibility and
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Table 4 Stages of maturity of CSR activity (From Crowther 2006) Stage of development 1
Dominant feature Window dressing
2
5
Cost containment Stakeholder engagement Measurement and reporting Sustainability
6
Transparency
7
Accountability
3 4
Typical activity Redesigning corporate reporting Re-engineering business processes Balanced scorecard development Sophisticated tailored measures Defining sustainability: Re-engineering processes Concern for the supply chain: Requiring CSR from suppliers Reconfiguration of the value chain
Examples Changed wording and sections to reflect CSR language (see Crowther 2004b) Energy efficiency programs Customer/employee satisfaction surveys (See Cooper et al. 2001) CSR reports Sustainability reporting Human rights enforcement: e.g., child labor Relocating high value added activity in developing countries
more a concern for avoiding legislation or possibly a reflection of customer concern. Such factors also apply to some expressions of concern for local communities and society at large. It is therefore inappropriate to base any typology of CSR activity upon the treatment of stakeholders as this is often based upon power relationships rather than a concern for social responsibility and it is not realistic to distinguish the motivations. A different typology was therefore proposed – one which is based upon the three principles of social responsibility outlined earlier. Moreover, it shows the way in which CSR develops in organizations as they become more experienced and more convinced of the benefits of a commitment to this form of corporate activity. The development of this typology is based upon research and interviews with CSR directors and concerned managers in a considerable number of large corporations, many of which are committed to increasing social responsibility. It demonstrates stages of increasing maturity (Table 4). This can be explained as stages of growth reflecting increased maturity. The stages can be elaborated as follows: Stage 1: Window Dressing The initial engagement with CSR was to change corporate reporting to indicate a concern for CSR without any actual change in corporate behavior. This is the stage which led to accusations of green washing. It is also the stage which most observers of corporate activity continue to see even though in reality probably every organization has progressed to a stage of greater maturity. Stage 2: Cost Containment Corporations are always of course looking at their processes and seeking to operate more efficiently, thereby reducing costs. Organizations have realized that some of these can be represented as CSR activity – with
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things like energy efficiency or water efficiency being obvious examples. So, there is a double imperative for this kind of activity – to improve financial performance and also improve the socially responsible image. Not surprisingly, therefore, corporations quickly moved from stage 1 to this stage – where action has been taken even though it is not necessarily motivated by a sense of social responsibility. Much of this kind of activity is easy to undertake and requires very little in the way of capital investment. Naturally this activity has been undertaken first. Activity requiring capital investment has a longer payback period and tends to be undertaken more cautiously, with the threat of regulation often being needed to encourage such activity. All organizations have progressed through this stage also, although it must be recognized that the possible actions under this stage will probably never be completed by most organizations. Such cost containment remains ongoing even when the easy targets have been addressed. Stage 3: Stakeholder Engagement As stated earlier, all corporations are concerned with their important stakeholders and make efforts to satisfy their expectations. Thus, a concern with employees and customers is apparent in all corporations, being merely a reflection of the power of those stakeholder groupings rather than any expression of social responsibility. Similarly, in some organizations, a concern for the environment is less a representation of social responsibility and more a concern for avoiding legislation or possibly a reflection of customer concern. Such factors also apply to some expressions of concern for local communities and society at large. For CSR, this concern has become formalized, often through the development of a balanced scorecard and such things as customer or employee satisfaction surveys. Most organizations have progressed through this stage also, with such activity being embedded into normal ongoing business practice. Gradually, the stakeholders involved expand so that it is normal for the supply chain also to be considered now. Stage 4: Measurement and Reporting Some companies have been practicing social and environmental reporting for 15 years, but for many it is more recent. Now most companies – certainly most large companies – provide this information in the form of a report. Over time, these reports have become more extensive and more detailed with a broader range of measures of social and environmental performance being included. So, most organizations have reached this stage of maturity also. The problem with this stage though is that at the moment there are no standards of what to report and so organizations tend to report different things, thereby hindering comparability. Organizations such as AccountAbility, with its AA1000 standard, and the Global Compact have sought to redress this through the introduction of a standard but none have gained universal acceptance. Consequently, it is probably true to state that this is the current stage of development for most organizations. Stage 5: Sustainability The discourse of sustainability has become as ubiquitous as the discourse of CSR and Crowther (2007b) report that every firm in the FTSE100, for example, mentions sustainability with 70% of them focusing upon this. Any
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analysis of these statements regarding sustainability, however, quickly reveals the uncertainty regarding what is meant by this sustainability. Clearly, the vast majority do not mean sustainability as defined by Crowther (2007c) or as defined by the Brundtland Report. Often it appears to mean little more than that the corporation will continue to exist in the future. A full understanding of sustainability would imply radical changes to business practice and a significant amount of process reengineering, and there is little evidence that this is happening. So, we argue that most companies are only starting to reach this stage of maturity and to grapple with the issues involved. Stage 6: Transparency One of the biggest issues of the moment – certainly in Europe – is the question of firms accepting responsibility for what happens further along their supply chain. This is something that has been brought about largely because of customer pressure and has come about because of the revelations made about such things as child labor, slavery, and other human rights abuses. So, it is no longer acceptable for a firm to say that what happens in a supplying firm – or even the supplier of a supplier – is not their responsibility. Popular opinion increasingly requires this transparency for companies and so we wait for some of them to become sufficiently mature to enter this stage that the firm is responsible for ensuring socially responsible behavior among their suppliers as well as in their own company. Thus, there have been examples of some very large companies – such as Gap or Nike – acknowledging responsibility and taking appropriate action to ensure change. This is an issue which is growing in importance and is being addressed by the more mature (in CSR terms) companies. Thus, it is claimed that some companies are at this stage in their maturing, but still a minority of companies. Stage 7: Accountability The final stage represents our wishes rather than actuality – at least so far! It is based upon the fact the multinationals can decide where to locate their operations and that all high value added operations are located in developed countries. For many, it would be relatively easy to transfer to less developed countries, and if that happened, then the company would be making a real contribution toward effecting change. And we argue that there is no real cost involved. Arguably much of the world has moved through these stages, but this is not true everywhere. Essentially, the argument has been made (see particularly Crowther 2007c) that CSR must be considered as a process of development for every organization – a process which is still taking place. Furthermore, every organization goes through the same stages in the same chronological order. Thus, the leading exponents of CSR are only now beginning to address stage 6 and possibly consider stage 7. Less developed corporations are at lower stages of development. What is significant about this, however, is that our argument is sustainability only starts to be recognized once a company has reached stage 5 of its development. More significantly, stages 6 and 7 are essential for true sustainability as it is only then that an organization
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recognizes – and acts upon the recognition – that it is an integral part of a value chain and that sustainability depends upon the actions of the complete value chain. In others words, an organization cannot be sustainable without its suppliers and customers. At the moment, it is doubtful if organizations recognize this and whether any organization is (yet) truly sustainable.
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The Relationship Between CSR and Business Financial Success
Often the more significant the power that multinational corporations and some groups of stakeholders in a firm have, the more is spoken about corporate social responsibility. Thus, a concept that was some kind of luxury some years ago, nowadays, has reached the top of the public opinion discussion. Some steps taken in the corporation’s development, in the environment and in the human values, can be the guilty causes of this CSR fashion. If in the beginning firms were small and there was no distinction between ownership and management, the economic development made that there was a necessity to join more capital to set up bigger enterprises. Thus, there were owners, who gave the funds, and experts in management, who managed the company and were paid by the owners. Agency Theory establishes this relationship between the principal, the shareholder, and the agent, the manager, bearing in mind that the goals of the shareholders must be got through the management of the agents. But, which are the shareholders’ objectives? Obviously to increase the enterprise value through the maximization of profits. But a company’s structure is nowadays more complex than before and there have appeared other people, not owners, directly or indirectly implied in the company’s operations – known as stakeholders. Multinational corporations have sometimes even more power than governments in their influence, and stakeholders have gained more power through the media and public opinion in order to require some kind of specific behavior from companies. Within this new environment, although explained in a very simply way, the primary objective of the company has become wider. Although generally speaking, the assumption may be that the first goal is to get financial performance in the company, after it the next step will be to comply with other socially responsible policies. That is because to pay attention to social objectives or to show an orientation to multiple stakeholder group could be considered a luxury, because it must have meant that the other basic company’s goal had been met. This argument is the basis of the first hypothesis about the relationship between CSR, linked to pay attention to stakeholders, and business success: “Better performance results in greater attention to multiple stakeholders” (Greenley and Foxall 1997, p. 264). While the other hypothesis about this relationship will run in the opposite direction: “that orientation to multiple stakeholder groups influences performance” (Greenley and Foxall 1997, p. 264), which means to “attend” to social policies in a better way. This double-side relationship increases the difficulty to try to empirically prove it. It seems that there is a clear relationship between CSR and business success, but
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although the measurement of business success may be easy, through different economic and financial tools such as ratios, the measurement of the degree of compliance of a company with social policies is much more difficult. We can have in mind some kind of indicators such as funds donated to charitable objectives, but a company can spend immeasurable quantities of money on charitable questions and have problems in the relationship with labour unions because of bad working conditions, or low wages, for example. In this sense there are, since a long time ago, some companies whose objectives include philanthropic aims. We can highlight in this point the Spanish example of the saving banks, which emerged with the peculiar distinction of including in charitable purposes in their aims. But finally, if they want to survive in the competitive market, they have to bear in mind the “traditional” objectives of profit maximization. It may be understood as the initial values are one, and then the market and the capitalism force the firm to change them in order to survive in this maelstrom. At the same time, a double-sided relationship operates, because socially concerned people bear in mind these basic aims, and the image of the saving banks is improved, which has got a direct relationship with the economic performance. This example may be only one speaking about the market inefficiencies (See Baumol and Batey Blackman 1993.) and the trend to acquire human values and ethics that must be forgotten when we are surrounded by this society and the market. In this attempt to satisfy the necessities of the stakeholders, there can appear other conflicts between the interests of the different groups included in the wider concept of stakeholders. Sometimes due to this conflict of interests and to the specific features of the company, it tries to establish different levels between the stakeholders, paying more attention to those that are more powerful, but it is questionable if there are some goals which are more socially responsible than others. In the end, the hierarchy will depend on the other goals of the company and will give an answer to those stakeholders that can threaten the performance of the economic goals. The difficulties in measuring the social performance of a company are also due to the ownership concept. This is because the concept of corporate social responsibility is really comprehensive. There are companies whose activities are really different but all of them have to bear in mind their social responsibility, and not only companies, but also people in whatever activity they do. From a politician to a teacher: ethics, code of conducts, human values, friendship with the environment, respect to the minorities (what not should be understood as a dictatorship of the minorities), and so on are values that have to be borne in mind and included in the social responsibility concept. The point of view of the concept can vary depending on the country or the region, because some important problems linked to basic human values are more evident in some countries than in other ones. These social problems cannot be isolated because they have got an important relationship with the degree of development of the country, so in the end it is the economy that pushes the world. Capitalism allows the differences between people, but what is not so fair is that these differences are not only due to your effort or work but are also due to have taken advantage of someone else’s effort.
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And this can be the case with multinational corporations, which sometimes abuse their power, closing factories in developed countries and moving them to developing countries because the wages are lower or, for example, because the security and health conditions are not so strict and so cheaper to maintain for the company. And then the same companies obtain big amounts of profits to spend them in philanthropic ways. Development conditions of regions can determine the relationship between CSR and business success, especially if, in some developing countries, damaging the environment is not allowed or there are no appropriate labor unions and so on. Because of lack of requirements or government’s attention, the global players use these facilities to obtain a better economic performance although they can be aware of their damaging policies. But not only the development degree has to do with CSR, countries or regions are deeply associated with human values through education and culture. The values are so deep inside us that even it is said that people from different regions of the world who have shared the same education, for example, ethics courses at the university, do not share the same human values, because they are marked by their origins. Perhaps it should be understood as the inclusion of ethics courses at the university degrees is useless because finally people will go on thinking what they thought at the beginning, depending on the values of their origin culture. But everything is not so simple, because there has been demonstrations of situations where different values have been imported from one culture to another and accepted as their own values without any problem: for example, the success of McDonalds food all over the world and even in the former communist countries – there is even a McDonalds restaurant in the Red Square, Moscow. So, it shows that the questions related to CSR are complicated and not so simple as they can seem at a first glance. This complexity can be argued as a disadvantage to take into account when speaking about the creation of global standards about companies’ socially responsible behavior: there are so many different cases that to establish a general regulation may be really difficult. But at the same time, this diversity can be argued to require this regulation, because there have been different initiatives, most of them private, and they have added diversity to the previous one and the subject requires a common effort to try to tackle the problem of its standards and principles. The latest financial scandals have shown yet again that it is not sufficient for internal codes of conduct or human values and that it is necessary to reach an agreement to establish an external regulation, at least at the level of global players and multinational corporations that play globally.
6
Expanding the Definitions
There is considerable evidence that the field of social responsibility is changing and maturing and the contents of this book reflect this continuing development. This can be seen from the issues which are of concern to people currently researching in the field. The concept of CSR has gradually spilled over to the
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other fields of inquiry so much so that today we can speak about the inclusion of social responsibility in any type of human activity (business, politics, justice, etc.). Increasingly, the terms social responsibility, corporate responsibility, sustainability, and governance have become intertwined and are often treated as synonymous. Recent years have seen a wide variety of misbehaviors from corporations and their leaders. Many would, however, consider that these corporations have however behaved no differently to most others and have merely been found out. Nevertheless, the distancing of the rogues from the rest has led to a tremendous resurgence of interest in behavior which has been classified as Corporate Social Responsibility (CSR). With that in mind, corporations have been busy repackaging their behavior as CSR although there is evidence that little has changed in corporate behavior except for this repackaging – the power of the semiotic (Crowther 2012) being far more potent in the modern world than the power of actual action and also obviating the need for such action. More recently terms such as corporate sustainability have become more fashionable, despite the core concepts remaining unchanged. Crowther and RaymanBacchus (2004) have argued that the corporate excesses, which have been disclosed and which have affected large numbers of people, have raised an awareness of the social behaviors of corporations. This is one reason why the issue of corporate social responsibility has become a much more prominent feature of the corporate landscape. There are other factors which have helped raise this issue to prominence, and Topal and Crowther (2004) maintain that a concern with the effects of bioengineering and genetic modifications of nature is also an issue which is arising general concern. At a different level of analysis, Crowther (2000b, 2002a, 2002b) has argued that the availability of the World Wide Web has facilitated the dissemination of information and has enabled more pressure to be brought upon corporations by their various stakeholders. But, Wheeler and Elkington (2001) talk about the end of corporate environmental report due to the fact that historically this report has not engaged stakeholders and it appears to have been an attempt at communication using the internet and social media as the vehicle. Another point of view, about the diffusion of information and its impact, was presented by Crowther and Seifi (2018a, 2018b). They explain the difficulties in identifying all stakeholders that are affected by a corporation’s activity. All these perspectives, therefore, raise the question as to what exactly is CSR and how it can be made manifest and to what extent it can be considered to be corporate social responsibility. According to the EU (2001: 8): . . .CSR is a concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis.
From these various writings about CSR we can infer that the social enterprise is not a new definition and has resonance with earlier ideas such as those of Dahl (1972: 18), who stated: . . ..every large corporation should be thought of as a social enterprise; that is an entity whose existence and decisions can be justified insofar as they serve public or social purposes.
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Shaw (2004: 196) explains that the principal characteristics of a social enterprise are: (i) The orientation, “. . .directly involved in producing goods and providing services to the market, making an operating surplus. . ..” (ii) The aim, “. . .explicit social aims (job creation, training or provision local services), strong social values and mission (commitment to local capacity building), accountable to their members and wider community for their social, environmental and economic impact. (An empirical study concerning the operational reporting of corporate natural assets (i.e., habitats, fauna and flora) can be seen in Jones (2003).) The profits are to their stakeholders or for benefit of the community.” (iii) And the ownership, “. . .autonomous organizations with loose governance and participation of stakeholders in the ownership structure.” All definitions – and there are many – seem to have a commonality, in that they are based upon a concern with more than profitability and returns to shareholders. Indeed, involving other stakeholders, and considering them in decision-making is a central platform of CSR. The broadest definition of corporate social responsibility is concerned with what is – or should be – the relationship between the global corporation, governments of countries, and individual citizens. For example, the OECD has studied investment in weak governance zones. More locally, the concept of CSR is concerned with the relationship between a corporation and the local community in which it resides or operates. One aspect of CSR is concerned with the relationship between a corporation and its stakeholders. In this situation, activity could be focused on employees (see Parker 1977). The corporation develops its codes of conduct that could make some progress in improving labor rules and process, but the scope is limited and it is unclear if they can make a significant impact without the help of Governments with law-enforcement. These efforts are likely to benefit only a small segment of the target workforce. (See for example Scherrer and Greven (2001).) For corporations, however, within the broad concept of CSR, there are three real issues which focus their attention at the moment: sustainability, corporate governance, and the relationship with stakeholders. All are issues which are global in their impact; we will look at each in turn, although it will become apparent that they are all interrelated within the broader concept of corporate social responsibility.
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A Focus on Sustainability
Over recent years, there has been a change in focus of corporate activity from a concern with the concept of corporate social responsibility (CSR) to one of sustainability. Indeed, many corporations which 20 years ago produced environmental reports and renamed them CSR reports have changed to now produce sustainability reports. One of the effects of persuading of the sustainability of corporate activity is that the cost of capital for the firm is reduced as investors are led into thinking that the level of risk involved in their investment is lower than it actually is. This is
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perhaps as significant as a reputation for good governance which also has a demonstrable link to the reduction in cost of capital. Sustainability implies considering the long term as more important than the short term and it implies a concern for the widest stakeholder community. These in turn imply that some changes in corporate behavior will be manifested rather than merely being a cynical following of fashion. The contributions in the book will help you form your own opinion about this. The globalization debate which has been taking place recently and still continues can be viewed dialectically as an opposition between the proponents of an unregulated market and the opponents of such unchecked capitalism. Few would dispute that in the present the proponents of an unregulated world – carefully packaged in the pejorative term of the free market – have the ascendancy. Thus, the dominant ideology of the modern western world is that of the free market which its supporters argue, if unregulated, maximizes economic wealth and optimizes its distribution. Consequently, there is increasing pressure upon governments around the world to reduce, and even eliminate, regulation so that we may all benefit from the prosperity which ensues from the free market. To support this assertion the idea of “trickle down theory” (Aghion and Bolton 1997) was invented by the Chicago School of Economics and widely accepted without the existence of any evidence whatsoever. Absent (whether by ignorance or by design) from the discourse of ideological pressure is the fact that a completely unregulated free market only operates effectively in a situation of perfect competition – in other words never! The opponents of an unregulated world are more difficult to be categorized as they represent a diverse collection of people and interests without a great deal of commonality except for their opposition to the dismantling of regulation and the ascendancy of global capitalism. Discourse between the two groups tends to be confrontational and often violent; indeed, it is problematic to describe it as a discourse as most of both sides are not particularly interested in discourse, preferring instead to seek dominance for their view. On the face of it, therefore, it would seem problematic to describe these differing views as dialectical as there seems little scope for any synthesis to emerge. One aspect of the synthesis which has developed however is encapsulated in the concept of corporate social responsibility. Following the argument of Sapir (1949) as developed by Crowther (2012), it is comfortable to assume a shared signification based upon a shared understanding of the language used; this shared signification may, however, be fictitious. An alternative – arguably more sinister interpretation would be to view the language of the statements concerning sustainability to be made in the Orwellian (Orwell 1970) sense of being used as a device for corrupting thought by being used as an instrument to prevent thought about the various alternative realities of the organization’s activity. How one views these interpretations is to a large extent dependent on one’s views of sustainability.
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Is Sustainability Sustainable?
A growing number of writers over the last few decades have recognized that the activities of an organization impact upon the external environment and have suggested that such an organization should therefore be accountable to a wider
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audience than simply its shareholders. Such a suggestion probably first arose in the 1970s (Although philosophers such as Robert Owen were expounding those views more than a century earlier.) and a concern with a wider view of company performance is taken by some writers who evince concern with the social performance of a business, as a member of society at large. This concern was stated by Ackerman (1975) who argued that big business was recognizing the need to adapt to a new social climate of community accountability, but that the orientation of business to financial results was inhibiting social responsiveness. McDonald and Puxty (1979) on the other hand maintain that companies are no longer the instruments of shareholders alone but exist within society and so, therefore, have responsibilities to that society, and that there is therefore a shift toward the greater accountability of companies to all participants. Implicit in this concern with the effects of the actions of an organization on its external environment is the recognition that it is not just the owners of the organization who have a concern with the activities of that organization. Additionally, there are a wide variety of other stakeholders who justifiably have a concern with those activities, and are affected by those activities. Those other stakeholders have not just an interest in the activities of the firm but also a degree of influence over the shaping of those activities. This influence is so significant that it can be argued that the power and influence of these stakeholders is such that it amounts to quasi-ownership of the organization. Indeed Gray et al. (1987) challenge the traditional role of accounting in reporting results and consider that, rather than an ownership approach to accountability, a stakeholder approach, recognizing the wide stakeholder community, is needed. (The benefits of incorporating stakeholders into a model of performance measurement and accountability have however been extensively criticised. See for example Freedman and Reed (1983), Sternberg (1997, 1998) and Hutton (1997) for details of this discourse.) Moreover Rubenstein (1992) goes further and argues that there is a need for a new social contract between a business and its stakeholders. Central to this social contract is a concern for the future which has become manifest through the term sustainability. The term sustainability has become ubiquitous both within the discourse of globalization and within the discourse of corporate performance. Sustainability is of course a controversial issue and there are many definitions of what is meant by the term. At the broadest definition sustainability is concerned with the effect which action taken in the present has upon the options available in the future (Crowther 2012). If resources are utilized in the present, then they are no longer available for use in the future, and this is of particular concern if the resources are finite in quantity. Thus, raw materials of an extractive nature, such as coal, iron, or oil, are finite in quantity and once used are not available for future use. At some point in the future, therefore, alternatives will be needed to fulfill the functions currently provided by these resources. This may be at some point in the relatively distant future, but of more immediate concern is the fact that as resources become depleted, the cost of acquiring the remaining resources tends to increase and hence the operational costs of organizations tend to increase. (Similarly, once an animal or plant species becomes extinct then the benefits of that species to the environment can no longer be accrued. In view of the fact that many
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pharmaceuticals are currently being developed from plant species still being discovered this may be significant for the future.) Sustainability therefore implies that society must use no more of a resource than can be regenerated. This can be defined in terms of the carrying capacity of the ecosystem (Hawken 1993). Viewing an organization as part of a wider social and economic system implies that the effects both internally and externally must be taken into account, not just for the measurement of costs and value created in the present but also for the future of the business itself. Such concerns are pertinent at a macrolevel of society as a whole or at the level of the nation state but are equally relevant at the microlevel of the corporation. At this level, measures of sustainability would consider the rate at which resources are consumed by the organization in relation to the rate at which resources can be regenerated. Unsustainable operations can be accommodated for either by developing sustainable operations or by planning for a future lacking in resources currently required. In practice, organizations mostly tend to aim toward less unsustainability by increasing efficiency in the way in which resources are utilized. An example would be an energy efficiency program. Sustainability is a controversial topic because it means different things to different people (Aras and Crowther 2009) and it is uncertain as to whether it can be delivered by MNCs in the easy manner as they promise (Schmidheiny 1992). The starting point must be taken as the Brundtland Report (WCED 1987) because there is an explicit agreement with that report and because the definition of sustainability in there is pertinent and widely accepted. Equally, the Brundtland Report is part of a policy landscape being explicitly fought over by the United Nations, Nation States, and big business through the vehicles of the WBCSD and ICC (see for example, Beder 1997; Mayhew 1997; Gray and Bebbington 2001). Recently, however, Crowther and Seifi (2016) have criticized this as a starting point, arguing that the debate has become stagnant and that these concepts are no longer relevant in the achievement of sustainability. There is a further confusion surrounding the concept of sustainability: for the purist sustainability implies nothing more than stasis – the ability to continue in an unchanged manner – but often it is taken to imply development in a sustainable manner (Marsden 2000; Hart and Milstein 2003) and the terms sustainability and sustainable development are for many viewed as synonymous. Ever since the Bruntland Report was produced by the World Commission on Environment and Development in 1987, there has been continual discussion concerning development (Chambers 1994; Pretty 1995) and this has added to the confusion between sustainability and sustainable development.
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Conclusion
Although there are many diverse opinions that have been expressed in this volume and it seems that there is no consensus, we argue that this is healthy debate which both broadens and develops the discourse. In doing so, it helps to make the arguments more robust and they can lead to a strengthening of understanding and
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theory. One thing that is certain, however, is that as the discussions have developed the scope, those discussions have continued to extend to cover all aspects of society and it operations. Indeed, it is not just society but also the environment which is a cause of concern and arguably climate change is one of the most significant topics at present. Although these aims are desirable, we must also state that we expect that the focus of concern will continue to change in the future and this should be encouraged. In this book, we have sought to set out a range of views about the most significant topics. Deliberately, we have not sought to restrict views to express one line of argument – rather the reverse. In doing so, we hope to spark debate and encourage development and innovations.
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Crowther D (2007c) Corporate sustainability reporting: a study in disingenuity? J Bus Ethics 87 (supp 1):279–288 Crowther D (2012) A social critique of corporate reporting. Gower, Aldershot Crowther D, Ortiz-Martinez E (2006) The abdication of responsibility: corporate social responsibility, public administration and the globalising agenda; in D Crowther & K T Caliyurt. In: Globalisation and social responsibility. Cambridge Scholars press, Newcastle, pp 253–275 Crowther D, Rayman-Bacchus L (2004) Perspectives on corporate social responsibility. In: Crowther D, Rayman-Bacchus L (eds) Perspectives on corporate social responsibility. Ashgate, Aldershot, pp 1–17 Crowther D, Seifi S (2016) The flawed logic of sustainable development. In: Caliyurt K, Yuksel U (eds) Sustainability and management: an international perspective. Routledge, London, pp 11–27 Crowther D, Seifi S (2018a) The need to reconsider corporate social responsibility. In: Seifi S, Crowther D (eds) Redefining corporate social responsibility. Bingley, Emerald, pp 1–11 Crowther D, Seifi S (2018b) The life and death of corporate social responsibility. In: Seifi S, Crowther D (eds) Redefining corporate social responsibility. Emerald, Bingley, pp 87–100 Dahl R (1972) A prelude to corporate reform. Bus Soc Rev Spring:17–23 Dyllick T, Hockerts K (2002) Beyond the business case for corporate sustainability. Bus Strategy Environ 11:130–141 European Commission (EU) (2001) Green paper – Promoting a European framework for Corporate Social Responsibility. COM (2001) 366 final. Brussels: Official publications of the European Commission, July 18 Freedman RE, Reed DL (1983) Stockholders and stakeholders: a new perspective on corporate governance. Calif Manag Rev XXV(3):88–106 Gray RH, Bebbington KJ (2001) Accounting for the environment. Sage, London Gray R, Owen D, Maunders K (1987) Corporate social reporting: accounting and accountability. Prentice-Hall, London Greenley GE, Foxall GR (1997) Multiple stakeholders orientation in UK companies and the implications for company performance. J Manag Stud 34(2):259–284 Hart SL, Milstein MB (2003) Creating sustainable value. Acad Manag Exec 17(2):56–67 Hawken P (1993) The ecology of commerce. Weidenfeld & Nicholson, London Hutton W (1997) Stakeholding and its critics. IEA Health and Welfare Unit, London Jones M (2003) Accounting for biodiversity: operationalising environmental accounting. Account Audit Account J 16(5):762–789 Marsden C (2000) The new corporate citizenship of big business: part of the solution to sustainability. Bus Soc Rev 105(1):9–25 Mayhew N (1997) Fading to Grey: the use and abuse of corporate executives’ ‘representational power. In: Welford R (ed) Hijacking environmentalism: corporate response to sustainable development. Earthscan, London, pp 63–95 McDonald D, Puxty AG (1979) An inducement – contribution approach to corporate financial reporting. Acc Organ Soc 4(1/2):53–65 Monfreda C, Wackernagel M, Deumling D (2004) Establishing natural capital accounts based on detailed ecological footprints and biological capacity assessments. Land Use Policy 21(3):231– 246 Orwell G (1970) Collected essays, journalism and letters, vol 4. Penguin, Harmondsworth Owen, R. (1816, 1991) A New View of Society and other writings. Penguin, London Pakandam B (2009) Why Easter island collapsed: an answer for an enduring question; Economic History Working Papers 117/09; London School of Economics, UK Parker L (1977) The accounting responsibility towards corporate financial reporting to employees. Acc Educ 17(2):62–83 Shaw E (2004) Marketing in the social enterprise context. Qual Mark Res Int J 7(3):194–205 Pretty JN (1995) Participatory learning for sustainable agriculture. World Dev 23(8):1247–1263 Prior T, Giurco D, Mudd G, Mason L, Behrisch J (2012) Resource depletion, peak minerals and the implications for sustainable resource management. Global Environ Chang 22(3):577–587
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Richardson GB (1995) The theory of the market. Revue Economique 46(6):1487–1496 Rubenstein DB (1992) Bridging the gap between green accounting and black ink. Acc Organ Soc 17(5):501–508 Sapir E (1949) The unconscious patterning of behaviour in society. In: Mendelbaum DG (ed) Selected writings of Edward Sapir. University of California Press, Berkley Schaltegger S, Muller K, Hindrichsen H (1996) Corporate environmental accounting. John Wiley & Sons, Chichester Scherrer C, Greven T (2001) Global rules for trade: codes of conduct, social labelling, workers’ rights clauses. Verlag Westfälisches Dampfboot, Münster Schmidheiny S (1992) Changing course. MIT Press, New York Sen A (1999) Economics and health. Lancet 354 Spangenberg JH (2004) Reconciling sustainability and growth: criteria, indicators, policy. Sustain Dev 12:76–84 Sternberg E (1997) The defects of stakeholder theory. Corp Gov 6(3):151–163 Sternberg E (1998) Corporate governance: accountability in the marketplace. IEA, London Topal R, Crowther D (2004) Bioengineering and corporate social responsibility. In: Crowther D, Rayman-Bacchus L (eds) Perspectives on corporate social responsibility. Ashgate, Aldershot, pp 186–201 WCED (World Commission on Environment and Development) (1987) Our Common Future (the Brundtland report). Oxford University Press, Oxford West J (2011) Decreasing metal ore grades: are they really being driven by the depletion of highgrade deposits? J Ind Ecol 15(2):165–168 Wheeler D, Elkington J (2001) The end of the corporate environmental report? Or the advent of cybernetic sustainability reporting and communication. Bus Strateg Environ 10(1):1–14
Part II General Theory
Definitions of Corporate Social Responsibility Lan Jiang
Contents 1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 The History of CSR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 The Modern Era of CSR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 CSR and its Critics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 CSR in Businesses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Studies of CSR in Businesses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 CSR and Profitability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Stakeholders and CSR in the 1980s . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 The CSR Pyramid in the 1990s . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 The Triple Bottom Line . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 CSR and the Social Contract . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 CSR – The Global Perspective . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 CSR in the World of Global Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 CSR in Government and Non-Governmental Organizations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 CSR – Towards Global Acceptance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Cross-References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
28 28 29 30 31 32 33 35 36 37 38 39 41 42 42 43 44 44
Abstract
This chapter introduces the history of Corporate Social Responsibility (CSR) starting from early debates about the relative legal obligations of corporate managers towards shareholders and the community, to modern concepts such as corporate sustainability. During this period, many different conceptual models of CSR have been developed, and the subject has grown to encompass ideas such as stakeholdership, business ethics, and social contract theory. The development and relationships between these ideas are outlined, together with references to the relevant literature. L. Jiang (*) London Metropolitan University, London, UK © Crown 2021 D. Crowther, S. Seifi (eds.), The Palgrave Handbook of Corporate Social Responsibility, https://doi.org/10.1007/978-3-030-42465-7_1
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In the nearly 90 years since the Berle-Dodd debate first introduced the notion of what became Corporate Social Responsibility into the public realm, the subject has changed significantly in many ways. Although the basic idea of CSR still goes back to the question of the extent to which businesses can and should concern themselves in areas outside the strictly limited area of shareholder profitability, the field has grown to include a broader range of areas in which CSR is seen to have a role. These are the government sector, the not-for-profit sector, charities, and nongovernmental organizations. In terms of how CSR is understood, many different terms have been used to define it, and it has gone under different names including stakeholder theory, social contract theory, business ethics. There has been much speculation on the future of CSR – it may cease to be regarded as a separate “add-on” to business operations and become fully integrated into all aspects of a company’s work. Recent trends suggest that there will be increasing partnerships between businesses, NGOs, and other NFP organizations – implemented globally. Keywords
CSR Definitions · CSR Studies and Development · CSR Globalisation
1
Introduction
This chapter introduces the history of Corporate Social Responsibility (CSR) starting from early debates about the relative legal obligations of corporate managers towards shareholders and the community, to modern concepts such as corporate sustainability. During this period many different conceptual models of CSR have been developed and the subject has grown to encompass ideas such as stakeholdership, business ethics and social contract theory. The development and relationships between these ideas are outlined, together with references to the relevant literature. The initial development of CSR as an important aspect of business practice started in the USA but has become commonplace worldwide and has been endorsed by international organizations. The different approaches to CSR in different countries and cultural contexts are also discussed.
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The History of CSR
The extent to which a corporate entity should have social responsibilities apart from its basic obligations to pursue profits for the benefit of its shareholders has been the subject of debate since the beginning of the twentieth century. A convenient and well-documented starting point could be taken as the debate between Adolf Berle, a US lawyer and diplomat, and author of author of a book on corporate governance (Berle and Means 1932) and E Merrick Dodd, a Harvard Law professor who
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authored a paper entitled “For whom are corporate managers trustees” (Dodd 1932). In this article Dodd states that “there is in fact a growing feeling not only that business has responsibilities to the community but that our corporate managers who control business should voluntarily and without waiting for legal compulsion manage it in such a way as to fulfil those responsibilities.” This belief contrasts with Berle’s view that “. . .corporations were simply vehicles for advancing and protecting shareholders’ interests and that corporate law should be interpreted to reflect this principle” (Berle and Means 1932, p 1049). This so-called Berle-Dodd debate of 1932 leads directly to modern debates about the nature and scope of what is now referred to as Corporate Social Responsibility (CSR).
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The Modern Era of CSR
The next significant event in the history of CSR came in the post WW2 period with Howard Bowen whose work provides a convenient marker for the beginning of the modern debate on CSR. Howard Bowen was an American academic economist who went on to become president of Grinnell College. In 1953, he published a book “The Social Responsibilities of Businessmen” (Bowen 1953) and is now widely regarded as the “father of CSR” (Carroll 1999). Bowen asked a basic question about “the obligations of businessmen to pursue those policies, to make those decisions, or to follow those lines of action which are desirable in terms of the objectives and values of our society” (Bowen 1953, p 6). In the years that followed other academic scholars continued to investigate this issue. Indeed, Adolf Berle himself eventually conceded, in contrast to his previously held views, that corporations were not constrained to simply follow their shareholders’ interests. In his 1954 book “The 20th Century Capitalist Revolution” he stated that “. . .the argument has been settled (at least for the time being) squarely in favour of Professor Dodd’s contention.” (Berle 1954). It is now generally considered that the 1950s was the period which marked the beginning of the modern era of CSR. During the 1950s there was an increasing awareness that corporate managers and board directors existed within the context of a society and they have some obligation towards that society. Literature during this period discussed about the obligations of the businesses towards to achieving the desired objectives, values and policies for the society. According to Heald (1957) the prevailing view of CSR was a recognition on the part of management of an obligation to the society it serves not only for maximum economic performance but for humane and constructive social policies as well. In the 1960s the concept of CSR underwent further elaboration and development, prompted by societal changes. It was the decade in which environmentalist movements were growing and there were increasing concerns about the Earth’s ecosystem and pollution levels, at least in the western world. In this period a major scholar and contributor to the field, William Frederick, wrote in an article: “businessmen should oversee the operation of an economic system that fulfils the expectations of the public. And this means in turn that the economy’s means of production should be
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employed in such a way that production and distribution should enhance total socioeconomic welfare. Social responsibility in the final analysis implies a public posture toward society’s economic and human resources and a willingness to see that those resources are used for broad social ends and not simply for the narrowly circumscribed interests of private persons and firms (Frederick 1960, p 60). Frederick went on to develop his concept of CSR and these will be addressed below. Closely following Frederick, Clarence Walton, in his landmark book “Corporate Social Responsibilities” addresses many facets of CSR in the context of the 1960s business environment. He presents a number of different varieties, or models, of social responsibility, including his fundamental definition of social responsibility: “. . .the new concept of social responsibility recognizes the intimacy of the relationships between the corporation and society and realizes that such relationships must be kept in mind by top managers as the corporation and the related groups pursue their respective goals” (Walton 1967, p 18). Keith Davis, another prominent writer of the time considered social responsibility as referring to “businessmen’s decisions and actions taken for reasons at least partially beyond the firm’s direct economic or technical interest” (Davis 1960). He became well known in this period for his views on the relation between social responsibility and business power and set stated his “Iron Law of Responsibility,” which is that “social responsibilities of businessmen need to be commensurate with their social power” Davis went on to develop a five-point model of CSR, described below, but his views are summarized in his statement that “[firms] responsibilities begin where the law ends” (Davis 1973).
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CSR and its Critics
It is important to point out that the concept of CSR attracted criticism starting from the early 1960s. These criticisms had their origins in the views put forward by Adolf Berle during the Berle-Dodd debate. The most prominent critic was Milton Friedman, later to win the 1976 Nobel prize for Economics. In 1962 in his book “Capitalism and Freedom” he wrote “Few trends would so thoroughly undermine the very foundations of our free society as the acceptance by corporate officials of a social responsibility other than to make as much money for their shareholders as they possibly can.” (Friedman 1962). He reinforced this view in later articles, stating “There is one and only one social responsibility of business – to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud” (Friedman 1970). But, on the other hand, Paul Samuelson, another distinguished economist who also went on to win a Nobel prize, argued that “a large corporation these days not only may engage in social responsibility, it had damn well better try to do so” (Samuelson 1971). In Friedman’s view, the only function of a business is to provide goods and services and to return a profit for its shareholders while acting within the law and paying taxes – this may be referred to as the “shareholder approach” to CSR. These
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criticisms of CSR were acknowledged by various scholars, including Walton (1967) but he nevertheless maintained that there was evidence, as he put it, that in large enterprises there was a “. . . willingness to support not only higher education and the arts but slum-clearance projects, reduction of air and water pollution, civil rights, job training for the unskilled, and the like. In most cases, the justification is enlightened self-interest — a principle cherished in the orthodox business creed and hallowed over centuries by slow accretions in the common law.” In Walton’s view corporations of the time were showing evidence of actively pursuing CSR objectives. Despite criticism the idea of CSR continued to attract interest, mainly is academia, and by the 1970s many definitions of it had been developed. By this time CSR as a general concept had started to be defined in more precise terms and various themes had started to be identified. The study of CSR in the 1970s began with Harold Johnson’s “Business in Contemporary Society: Framework and Issues” (Johnson 1971). Several definitions of CSR were given and discussed. Johnson summarized the prevailing view of CSR as coming from a firm which “is one whose managerial staff balances a multiplicity of interests. Instead of striving only for larger profits for its stockholders, a responsible enterprise also takes into account employees, suppliers, dealers, local communities, and the nation.” His “multiplicity of interests” is what would later be referred to as “stakeholders.” Furthermore “social responsibility in business is the pursuit of socioeconomic goals through the elaboration of social norms in prescribed business roles; or, to put it more simply, business takes place within a socio-cultural system that outlines through norms and business roles particular ways of responding to particular situations and sets out in some detail the prescribed ways of conducting business affairs.” Johnson acknowledged the central importance of profitability in a business “Social responsibility states that businesses carry out social programs to add profits to their organization.” Therefore, social responsibility is perceived by Johnson as long-run profit maximization. Another way to look at CSR in a business is to maximize “utility” – in this sense a business may have multiple objectives, not just to increase profits. A socially responsible entrepreneur or manager is interested not only in his own well-being but also in that of the other members of the enterprise and that of his fellow citizens. In practice, once a firm has attained its profit target, it may further act as if social responsibility were an important goal.
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CSR in Businesses
It was in the early 1970s that businesses themselves began to articulate an awareness of the importance of CSR. The Committee for Economic Development (CED) in the USA was founded in 1942 by a group of business leaders to promote policies designed to foster economic growth and development to benefit all Americans. In 1971 it published “Social Responsibilities of Business Corporations” in which it was stated that “business functions by public consent and its basic purpose is to serve constructively the needs of society. . ...business is being asked to assume broader responsibilities to society than ever before and to serve a wider range of human
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values. Business enterprises, in effect, are being asked to contribute more to the quality of American life than just supplying quantities of goods and services. Inasmuch as business exists to serve society, its future will depend on the quality of management’s response to the changing expectations of the public” (CED 1971). The CED also articulated its own conception of CSR – there is an inner core responsibility for a business to efficiently execute its core functions: products, jobs and growth. Outside of this, businesses must have a sensitive awareness of changing social values and priorities: for example, with respect to the environment; policies on recruitment and employee relations, human rights, health and safety etc. Finally, businesses should assume a role in newly emerging and still amorphous areas that actively improve the social environment. With this publication CSR is moving beyond the academic realm into mainstream business practice. During the 1970s more attention is now being given to the issue of how CSR can be implemented in practice; exactly what should businesses be doing (or not doing) in a CSR aware business environment. In 1973 Eilbert and Parket suggested the concept of “good neighbourliness” as a starting point (Eilbert and Parket 1973) – “The concept involves two phases. On one hand, it means not doing things that spoil the neighbourhood. On the other, it may be expressed as the voluntary assumption of the obligation to help solve neighbourhood problems. Those who find neighbourliness an awkward or coy concept may substitute the idea that social responsibility means the commitment of a business or Business, in general, to an active role in the solution of broad social problems, such as racial discrimination, pollution, transportation, or urban decay.” In this period the key question of what type of expenditure actually constituted an expenditure on the grounds of CSR was addressed, since it was understood that there was not necessarily a clear distinction between expenditures made on purely profit seeking grounds, and those motivated by socially beneficial or charitable objectives. A debate over the meaning of CSR took place in 1972, sponsored by the American Enterprise Institute, which addressed this issue. The debate was summarized in the book “The Modern Corporation and Social Responsibility” (Manne and Wallich 1972). From this debate came the following definition of CSR: “To qualify as socially responsible corporate action, a business expenditure or activity must be one for which the marginal returns to the corporation are less than the returns available from some alternative expenditure, must be purely voluntary, and must be an actual corporate expenditure rather than a conduit for individual largesse.”
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Studies of CSR in Businesses
Although the number of definitions of CSR was increasing in the 1970s, there was also more effort being put into the issue of exactly how the actions of a business could be made explicit and quantified. Some progress came as a result of work by Jules Backman (1975) who argued that CSR, like social accounting and social indicators, covers different facets of social performance. After noting that these terms are general rather than precise at this time, he defined social responsibility:
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“Social responsibility usually refers to the objectives or motives that should be given weight by business in addition to those dealing with economic performance,” examples of social indicators include the following: the employment of minority groups, reduction in pollution, greater participation in community programs, improved medical care, improved industrial health and safety – these and other programs designed to improve the quality of life are covered by the broad umbrella of social responsibility. Some insight into the issue of the extent to which the ideals of CSR were being taken up and implemented in businesses, and into the question of whether businesses agreed with the principals of CSR at all. And into the key question of whether CSR activities “worked” in the purely business sense or increasing profits. A study into the degree of acceptance of CSR at the conceptual level was conducted by Sandra Holmes (1976). In this study executives were presented with a set of statements about CSR and were asked whether they agreed with them or not. The executives were not given any definition of CSR, they were simply presented with a list of possible actions which their business might undertake based on issues that were generally felt to be what CSR was all about at the time. Executive opinions were sought on businesses’ responsibilities for making a profit, abiding by regulations, helping to solve social problems, and the short-run and long-run impacts on profits of such activities. Holmes further added to the body of knowledge about CSR by identifying the outcomes that executives expected from their firms’ social involvement and the factors executives used in selecting areas of social involvement. In another similarly “empirical” study, carried out by Bowman and Haire (1975) the extent to which companies were actually engaging in activities relating to CSR was studied. As in the Holmes study, described above, no explicit definition was given, the researchers chose to determine from the annual reports of a number of companies how much attention was given to CSR issues (taken from the academic studies of the time) relative to traditional business issues. However, what was not clear from these studies was the actual motivations behind these CSR activities which could have been more concerned with the pursuit of purely business opportunities, i.e., companies were looking for profit opportunities among the social issues within CSR. This possibility was later recognized by the well-known management theorist Peter Drucker who wrote on the idea that “the proper ‘social responsibility’ of business is to tame the dragon, that is to turn a social problem into economic opportunity and economic benefit, into productive capacity, into human competence, into well-paid jobs, and into wealth” (Drucker 1984).
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CSR and Profitability
Apart from the Holmes and Bowman studies there were other attempts to address the issue of the relationship between CSR and profitability during the 1970s. Several of these studies are detailed in Aupperle et al. (1985). Some of the results can be summarized as follows: Moskowitz (1972) concluded that high CSR firms outperform the Dow-Jones Industrials; Bragdon and Marlin (1972) that the better
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the pollution index, the higher the ROI; Vance (1975) found a negative correlation between CSR and stock price whereas Heinz (1976) found that CSR positively correlates with ROE. Alexander and Buchholz (1978) determined that CSR has no effect on stock performance. In general, all the quoted studies used fairly small sample sizes with data taken over periods of 2–10 years with differing criteria to define the various aspects of CSR. A different way to look at CSR in the same period was provided by S Prakash Sethi (1975). His approach was to look at CSR in terms of the extent to which different aspects of CSR were geared towards the immediate interests of shareholders. The three stages are referred to as Social Obligation, Social Responsibility, and Social Responsiveness. The first relates to a firm’s straightforward obligation to obey legal constraints; the second stage refers to compliance with prevailing social norms, beyond what is strictly required by law. The third stage is significantly more anticipatory and proactive – a long-term strategy is developed to communicate with and be responsible to all interested parties who are key to the decision-making process and participate in dialogue with these organizations; it is not just a consultation. At this, “Responsiveness” stage there is special emphasis on accountability and the role of such organizations within a dynamic social system. Companies need to be socially responsible for the well-being of the community. The year 1975 also saw the development by Davis of the model that incorporates the reasons why businesses should embrace CSR – this is referred to as the “five propositions model” which describe how and why businesses should adhere to the obligation to take action that protects and improves the welfare of society as well as of the organization (Davis 1975). These propositions are: (1) That social responsibility comes from social power – since businesses have power over various key issues such as environment, employment rights, etc., then society should hold businesses responsible for them; (2) Businesses should adopt a two-way relationship with society in terms of information flows and transparency; (3) Thorough costbenefit analysis – the technical feasibility and economic profitability and the short and long-term consequences of all business activities should be considered before undertaking them; (4) Social costs should be passed on to the customer – business cannot be expected to completely finance activities that may be socially advantageous but economically disadvantageous. The costs of maintaining socially desirable activities within business should be passed on to consumers through higher prices for the goods or services related to these activities; (5) Participation in society – if a business possesses the expertise to solve a social problem with which it may not be directly associated, it should be held responsible for helping society solve that problem. In short, since the business eventually will reap an increased profit from a generally improved society, they have the responsibility to generally improve society. Along with the increasing number of definitions and descriptions of CSR during the 1970s, there was also continuing criticism of it. It was suggested that the use of the work “social” was itself problematic and should be replaced by “public” (Preston 1975). This was because the word “social” was rather vague, too subjective, and lacked any real link to the internal processes within a business. It means different
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things to different people. On the other hand, the word “public” directly links the activities and decisions made by the business to external public policy processes. This change would “. . .stress the importance of the public policy process, rather than individual opinion and conscience, as the source of goals and appraisal criteria.” What they had in mind was that business decisions, perhaps motivated by CSR considerations, would have to be linked to public policies for implementation. However, the change never caught on. At the start of the 1980s another prominent academic, Thomas Jones entered the CSR discussion with his own definition of CSR, and note the explicit inclusion of workers and union participation: “Corporate Social Responsibility is the notion that corporations have an obligation to constituent groups in society other than stockholders and beyond that prescribed by law and union contract. Two facets of this definition are critical. First, the obligation must be voluntarily adopted; behaviour influenced by the coercive forces of law or union contract is not voluntary. Second, the obligation is a broad, extending beyond the traditional duty to shareholders to other societal groups such as customers, employees, suppliers, and neighbouring communities” (Jones 1980). This decade also saw the increasing adoption in the field CSR of term which has since become very widespread – the “Stakeholder.”
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Stakeholders and CSR in the 1980s
In 1984, R Edward Freeman, a professor at the Wharton Business school, published “Strategic Management: A Stakeholder Approach” (Freeman 1984). The term “stakeholder” was not new – in its business context it dates back to work done at Stanford University in the early 1960s and had also been used by Mitroff in his analysis of organizational structures (Mitroff 1983) – however, Freeman is generally considered to be the principle name in the stakeholder approach to CSR. Broadly speaking a stakeholder is “any person or group that can affect or is affected by a business organization” (Freeman 1984). Stakeholder theory deals with the analysis of the relative responsibilities a business has towards its stakeholders and its shareholders, and how to fulfil these responsibilities. Managers who wish their organization to achieve its fullest potential will take the interests of the stakeholders into account and studies on how this can be done form the basis of the stakeholder approach to CSR. In practice, the list of stakeholders includes the media, the government, political groups, trade associations and trade unions because all of these are linked to business organizations and can affect and are affected by them in turn. It even includes competitors. The firm has a responsibility to consider the interests and activities of all the above actors as well, and not just the monetary interests of the owners of the firm. Interest is assessing the extent to which CSR ideas were being adopted in practice by businesses continued. As described above, the studies by Holmes and Bowman in the 1970s had attempted to determine empirically whether CSR was having any impact on business decisions, but without any underlying theoretical definition of CSR. There was also a lack of knowledge of the relationship (if any) between a
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business’s degree of CSR and its profitability. In the words of Abbott and Monsen (1979) “the empirical study of corporate social involvement is in an underdeveloped state.” An attempt to remedy this situation was made in 1985 in a study by Aupperle et al. (1985) entitled “An empirical investigation of the relationship between corporate social responsibility and profitability.” In contrast to the studies mentioned above, it used a model of CSR and assessed business’s performance against this. The model used was a four-part definition of CSR developed by Carroll (1979). One significant advantage of this study is that it used factor analysis to partition the large number of questions regarding CSR into the four components of the Carroll model. The Aupperle study confirmed the priorities of the four components in this sequence: economic, legal, ethical, and discretionary. The four definitional components were separated into the “economic,” which was “concern for economic performance” and “legal, ethical, and discretionary,” which was labelled “concern for society” (as perceived by the firm). This acknowledges that not everyone sees the economic responsibility as a part of social responsibility but rather considers it something business firms do for themselves. It was assumed that “the social orientation of an organization can be appropriately assessed through the importance it places on the weight given to the three non-economic components compared to the economic.” The basic result of the study was the strong negative correlation between the Economic component and the other three components.
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The CSR Pyramid in the 1990s
In 1991, Archie Carroll refined his conception of CSR which had been used in the Aupperle study into a model which became known as the “pyramid of social responsibility” (Carroll 1991). Drawing on his earlier conception of CSR as a four-component construct – Economic, Ethical, Philanthropic (formerly Discretionary), and Legal, the CSR pyramid emphasizes the hierarchical dependencies between the four components: The base level is Economic – organizations are operating to generate profits and are required to find the ways for generating the profit which can be morally, ethically, and legally allowed and accepted. Next, we have the Legal level – businesses are required to obey the law of the host country and follow all relevant rules and regulations. The Ethical level rests upon the Legal level. Businesses are obliged to do what is right and just and act ethically towards the community and general public. The top level is Philanthropic – firms should contribute resources to the community to improve the quality of the life of the people connecting to them and act as good corporate citizens. Carroll’s Pyramid, as his four-component model came to be called, became a popular concept for understanding CSR, but still attracted criticism just like previous models going back to the 1950s. The general criticisms center on the absence of any explanation of how the four different components interact and influence each other (Geva 2008). Apart from that even his terminology was subject to criticisms – his “components” were quite different things: social responsibility should be thought of as a set of principles, social responsiveness is really a process, and social issues
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management is in the realm of policy (Wartick and Cochran 1985). And then there is the philanthropic component – just as with other efforts to develop a CSR model it is too subjective and difficult to define and quantify.
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The Triple Bottom Line
The decade of the 1990s saw further changes in how the relationship between businesses and society should be perceived with the concept of the “Triple Bottom Line” (3BL). Introduced by John Elkington (1997), it was prompted by an increasing awareness in, and concern for, “green” issues, sustainability, pollution and the Earth’s environment. This can be highlighted by the fact that the best-selling management book “In Search of Excellence” by Peters and Waterman, published in 1982 made no mention of the environment, but by 1988 “The Green Consumer Guide” (Elkington 1988) sold over a million copies. The 3BL model is a concept that encourages the assessment of overall business performance based on three important areas: Profit, People and Planet; the intersection of these is the domain of sustainability. The addition of concern for the planet added a new dimension. A consideration with profitability was traditional in business, the addition of people mirrored previously developed concepts in CSR but the explicit introduction of concern for the Earth’s resources significantly broadened the idea of what was meant by CSR. In 1994 the proliferation of differing definitions of CSR and an apparent lack of a unified understanding of it prompted William Frederick to study its conceptual development in order to understand how it had changes in time since its beginnings in the modern era in the 1950s. He concluded that CSR had evolved through various stages. Initially he defined them as CSR1 and CSR2 (Frederick 1994). In the definitions of CSR given above, which date from the 1950s, is that businesses have an obligation to act responsibly for social betterment. It may affect the company’s profits either positively or negatively and the company’s actions are generally supposed to have been voluntary. This form of CSR Frederick refers to as CSR1. Starting in about 1970 the element of “responsiveness” starts to supplant “responsibility.” Frederick calls this the start of the second phase, CSR2. Whereas the debates over CSR1 had been abstract and theoretical, with significant doubts from some scholars about whether there was any role for CSR at all, in CSR2 it was already assumed that there was. With CSR2, practitioners are already seeking opportunities for implementation. The world of CSR2, as pointed out by Frederick, takes the “moral heat” off businesses – “with the appearance of the CSR2 viewpoint, one can now reasonably hope that less attention will be paid to the moral standing of a company and more to its tangible activities as a socially responsible entity.” By the end of the 1990s not only had many different definitions of CSR been proposed, but other concepts had been developed which in many ways overlapped with CSR and had started to draw more attention from academic researchers. These included stakeholder theory, corporate citizenship and business ethics, concepts that encompassed similar ideals to CSR, and in some cases were synonyms for it.
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A clearer understanding of the fundamentally different ways in which scholars have approached CSR is gained by classifying the different approaches as descriptive, normative and instrumental (Donaldson and Preston 1995). Descriptive refers to an attempt to provide an “objective” description of CSR as phenomenon by focusing on behavior. Normative approaches aim to advise companies what should be done (this is sometimes referred to as business ethics). The instrumental, or strategic, CSR investigates relationships between organizational actions and outcomes, generating and testing hypothesis – it is a “managerial” approach to CSR. With this understanding, it can be seen that the early work on CSR, going back to Berle and Bowen, was highly normative, but that later on, with the work of Aupperle and Holmes, CSR studies had become more descriptive and managerial. In order to understand the commonalities between these concepts, Dahlsrud (2008) carried out a study of the content of journal articles and web pages based on 37 different definitions of CSR from the period 1980 to 2003. It was found that despite the many different definitions of CSR, it is fundamentally defined along five dimensions: environmental, social, economic, stakeholder, and voluntariness. All these dimensions are required for a definition of CSR and it is not possible, on the basis of the content of the articles, to separate them into different schools of thought. However, it is important at this point to discuss the concepts of business ethics and corporate citizenship and their role in CSR. These concepts, as noted above, were becoming increasingly used in the 1990s, either as parts of CSR or as synonyms for it. In most of the CSR models discussed above, starting from Berle, there is a significant normative component, i.e., businesses must behave “ethically.” At this point it is necessary to introduce another concept which started in the 1990s to become more relevant – the theory of “social contracts” (Gray et al. 1996).
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CSR and the Social Contract
The social contract is defined as the multitude of implicit and explicit expectations that society has about how an organization should conduct its operations (Deegan 2002). It has its origins in classical contracts theory which goes back to Thomas Hobbs and John Locke who used the contract model to specify the principles for the legitimate exercise of power by the state (Wempe 2007). In the context of CSR, a business acts ethically not because it is in its commercial interest (i.e., according to “shareholder theory”), but because it is part of how society naturally expects business to operate under the terms of the social contract. These expectations between businesses and communities are referred to “micro-social contracts” although they are not contracts according to the usual, legal meaning of the term. This view of how businesses make ethical decisions leads to the Integrated Social Contracts Theory (ISCT) of CSR (Donaldson and Dunfee 1999) – Stakeholder Theory identifies the partners to a business’s “social contract” and ISCT determines how they are treated.
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CSR – The Global Perspective
Entering the new millennium, 50 years had passed since the work of Howard Bowen had started the modern era of CSR and in the intervening period many different conceptions of CSR had been developed and definitions proposed. However, almost all the work done originated in the USA. As explained by Andrew Crane et al. (2008), “It was in the US where the language and practice of CSR first emerged. . .. The main reason for this lies in the specific characteristics of the US business system. . .. American society is characterized by fairly unregulated markets for labour and capital, low levels of welfare state provision, and a high appreciation of individual freedom and responsibility. Consequently, many social issues, such as education, healthcare, or community investment have traditionally been at the core of CSR. Philanthropy is high on the agenda with, for instance, corporate community contributions by US companies being something like than ten times higher than those of their British counterparts.” It is therefore a pertinent question to ask to what extent can these models be applied globally, and to consider what changing forces might be acting in the rest of the world to affect them. How transferrable are these models to other countries, particularly with quite different cultures and levels of economic development? This issue has become of greater importance in the twenty-first century due to the increasing degree of globalization in the world’s economy and attracted the attention of scholars active in the CSR field. Can CSR be internationalized? One good starting point from which to address these questions is the work of Wayne Visser who has used the Pyramid model developed by Carroll (1991) and adapted it to an African perspective (Visser 2006). This has not only enlarged the arena in which CSR is applicable, but also serves as a way of gaining further insight into Carroll’s pyramid itself. Why it is necessary to try to develop a CSR model that will work for developing countries – Visser gives four reasons (Visser 2008): Firstly, developing countries are growing fast in economies and this is, therefore, the productive market for business. Secondly, in developing countries, social and environmental crises are usually the more severe than in developed countries. Thirdly, due to globalization, economic growth, investment, and business activities, social and environmental impacts can have a significant effect on developing countries; and fourthly, there is a particular set of CSR programs for developing countries which are generally completely different from those in the developed countries. That is why CSR practices are important to the developing countries as is in developed countries, especially in contributing toward their socioeconomic and environmental development. In the case of Africa, studies suggest that the biggest difference between Carroll’s Pyramid and one more relevant to Africa is in the relative ordering of the four components. As Visser states “In Africa, economic responsibilities still get the most emphasis. However, philanthropy is given second highest priority, followed by legal and then ethical responsibilities” (Visser 2006). In other words, the Economic level is still the base layer, but more emphasis is given to Philanthropy than to Legal, and least of all to Ethical. A possible explanation for this is that in countries with less developed
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legal systems, or poorly developed legal infrastructure, more emphasis is placed on the Philanthropic component. The conclusion is that in developing countries less emphasis must be placed on legal compliance and more on philanthropy. The European case has also been studied and even in this case, in a socio-economic context which superficially resembles the USA, significant differences from the US case can be expected. As noted by Crane et al. (2008) “In other parts of the world, most notably Europe, the Far East, and Australasia, however, there has always been a stronger tendency to address social issues through governmental policies and collective action. Many issues that US companies would typically boast about as CSR on their websites, such as the provision of healthcare or fighting climate change, have not appeared until recently on the screens of continental European companies. The reason for this is that these issues have traditionally been considered a task for governments or, in other words, the corporate responsibility for social issues has been the object of codified and mandatory regulation.” The implied inclusion of Japan, Taiwan, and South Korea in this statement is interesting in terms of the institutional context for CSR since they are characterized by high bank and public ownership, patriarchal and long-term employment, and coordination and control systems based on long-term relations and partnerships rather than markets. Note, for example, the Japanese “Keiretsu” and the Korean “Chaebol,” these are characterized by life-long employment and include benefits, social services, and healthcare – not so much as a result of voluntary corporate policies, but more a response to the regulatory and institutional environment of business in those countries. In all the definitions of CSR, there is an ethical or philanthropic component; businesses must act for the “public good” and there have been debates and disagreements about what exactly constitutes this. In considering the fundamental motivations behind the need to “do good” and act ethically, it is clear that to a greater or lesser extent religion influences people’s habits, values, and attitudes which translates into influencing how people conduct business transactions and how they behave. This was recognized by Frederick (1986) and referred to by him as “CSR3” (Corporate Social Rectitude) the source of which must be based in core religious values. Religious beliefs can have a strong influence on the actions of businesses. As an example, the concept of CSR can be considered from an Islamic perspective (Dusuki and Abdullah 2007). According to which an Islamic perspective on CSR would draw from the principal of “Maslalah” (The Public Good) leading to an adaptation of Carroll’s Pyramid to what is called iCSR (islamic CSR) (Darus et al. 2013). Such a model would be particularly relevant to businesses in the Middle East. Apart from CSR in the USA, Europe, Africa, and Middle Eastern countries there are the interesting and important cases of countries that may be referred to as “in transition.” Two examples being Russia and China. Russia (together with other former Eastern European countries) has transitioned from a centrally planned economy in which state and private enterprises have coexisted in a context of weak government institutions. In China, there is much stronger control from the state. Studies of CSR in various countries including the UK, Italy, Poland, Turkey, the USA, the Middle East, Australia, Japan, and Korea are presented in the book “Corporate Social Responsibility – A Case Study Approach” ed. Mallin (2009).
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CSR in the World of Global Business
Despite the large number of definitions of CSR formulated since the 1950s, the difficulties of understanding its practical applicability, and questions over its meaning in different business contexts, CSR has now become a part of the business world. This is shown by the increasing adoption of CSR concepts as an integral part of many large corporations, many of which have adopted their own conceptions of CSR. For example, at Microsoft Corp. CSR is heavily geared towards the concept of Sustainable Development, and in advancing an agenda that furthers the UN’s Sustainable Development Goals program (Microsoft CSR report 2019). Other examples from individual companies in the area of CSR are as follows: Johnson and Johnson – “the company’s responsibilities to be fair and honest, trustworthy and respectful, in dealing with all our constituents (Johnson and Johnson 2000); Volkswagen (2000) adopt a position which builds both shareholder value and worker value in order to deliver ‘sustainable growth for the future.” They define CSR as “the ability of a company to incorporate its responsibility to society to develop solutions for economic and social problems.” Shell: “We all need to assess the impact our business makes on society and ensure that we balance the economic, environmental and social aspects of everything we do” (Responsible Business 1999). These companies, and others, are clearly showing an awareness of CSR however it is evident from the descriptions of their programs that they have not settled on any one of the specific models listed above. Rather, their implementations of CSR are simply the lists of generally desirable objectives connected with the environment, employee empowerment, and sustainability. As far as the motivations for the adoption of CSR practices in the world of globalized businesses are concerned, a key competitive advantage can be gained by the capability of a company to establish close relationships with its strategic partners, for example, in the supply chain. As an example, there is the case of the Swedish firm IKEA, which is heavily dependent upon suppliers to produce the bulk of its product range. IKEA’s conception of CSR has seen the company shift towards fewer suppliers and a more cooperative relationship in which the company works with suppliers on quality as well as environmental and social issues with a view to bringing suppliers to higher levels of performance in cooperation with the company (Andersen and Skjoett-Larsen 2009). In recent years a major driving force behind the increasing involvement of companies in the supply side has been the degree of public scrutiny they are now subjected to as a result of the internet, social networking and the globalized media. Many pressure and advocacy groups are focused on working and environmental conditions in the countries which predominantly serve as suppliers to large global corporations and are able to mobilize interest in their causes in countries where there are the major consumer markets. To see the kind of problems and adverse publicity that can afflict a company as a result of the practices of its suppliers consider as an example the recent case of Apple and its supplier Foxconn. In the age of increasing awareness of the need for CSR, companies are no longer considered by the public to be completely isolated from their business partners.
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CSR in Government and Non-Governmental Organizations
Apart from adoption at the corporate level, CSR has been widely adopted by many governmental, non-governmental (NGO), not-for-profit (NFP) organizations and charities. For example, in the UK the Department for Business, Energy and Industrial Strategy started its CSR strategy in 2014 under four headings: Environment, People, Procurement, and Community. The EU defines its CSR program (equivalently referred to as “responsible business conduct”) as the expectation that “companies understand their positive and negative impacts on society and the environment, and prevent, manage and mitigate any negative impacts that they may cause, including in their global supply chains” EU Commission (2019). A particularly interesting context in which to discuss CSR is that of NFP organizations and charities. Hitherto, all the discussions of CSR have centered on a key question of how the profitability requirements of a business can be reconciled with its social obligations (if any). This “economic” (or profit) requirement is an integral part of all the models described above. It might be thought that an NFP organization or a charity must necessarily be socially responsible since many are founded to deal with societal concerns and there’s no profit motive. However, if NFPs are viewed in the light of 3BL or Stakeholder Theory, for example, then service provision replaces the profit motive. The issue of CSR as applied to NFP organizations is discussed in detail in Crowther and Aras (2008).
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CSR – Towards Global Acceptance
As noted above, there are important issues regarding the extent to which CSR can be defined and implemented globally across different cultures and business environments. At a global level the World Business Council for Sustainable Development has introduced its CSR definition “the continuing commitment by business to behave ethically 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” (WBCSD 2008). In the UN system UNIDO defines CSR as “a management concept whereby companies integrate social and environmental concerns in their business operations and interactions with their stakeholders. CSR is generally understood as being the way through which a company achieves a balance of economic, environmental and social imperatives (“Triple-Bottom-Line-Approach”), while at the same time addressing the expectations of shareholders and stakeholders.” According to UNIDO the key CSR elements are “environmental management, eco-efficiency, responsible sourcing, stakeholder engagement, labour standards and working conditions, employee and community relations, social equity, gender balance, human rights, good governance, and anti-corruption measures” (note the use of Elkington’s 3BL concept of CSR and the inclusion of anti-corruption measures as an important part of CSR). UNIDO implements CSR in Small and Medium Enterprises (SMEs) through its REAP (Responsible Entrepreneurs Achievement Programme). REAP is a
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CSR-based management and reporting tool developed by UNIDO to assist SMEs in their efforts to implement CSR-based management in a way consistent with 3BL. The International Organization for Standardization (ISO) has also published guidance for the implementation of CSR concepts in an organization. As the world’s largest developer of voluntary international standards its support for CSR is significant but it does not provide requirements and is not certifiable. The ISO2600 (2010) “Guidance on Social Responsibility” is founded on seven core principles: accountability, transparency, ethical behavior, respect for stakeholder interests, respect for the rule of law, respect for international norms of behavior, and respect for human rights. Training is provided which is designed to work in all organizational settings anywhere in the world, however allowance is made for training programs to be modified and extended to suit different countries.
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Summary
In the nearly 90 years since the Berle-Dodd debate first introduced the notion of what became Corporate Social Responsibility into the public realm, the subject has changed significantly in many ways. Although the basic idea of CSR still goes back to the question of the extent to which businesses can and should concern themselves in areas outside the strictly limited area of shareholder profitability, the field has grown to include a broader range of areas in which CSR is seen to have a role. These are the government sector, the not-for-profit sector, charities, and nongovernmental organizations. In terms of how CSR is understood, many different terms have been used to define it, and it has gone under different names including stakeholder theory, social contract theory, business ethics, etc. A key question concerns the reason why the conception of what CSR means, and what it encompasses, has changed over the years. What factors have been driving CSR’s evolution? The period starting in the 1960s saw significant changes in the concept of CSR which reflected changing concerns in society, and because much of the theoretical development of CSR took place in the Western world, and specifically the USA, many of the events having the greatest impact on CSR took place there. The 1960s saw an increasing concern for environmental issues, an awareness of the potential risks of the world’s increasing population, resource depletion and pollution. These concerns were brought to a head by the Bhopal disaster of 1984 (Varma 2005). The Enron scandal of 2001 (Cruver 2003) also led to an upsurge of attention being paid to the concept of business ethics. More recently, there have been concerns over the social consequences of globalization and outsourcing on deindustrialization and unemployment (Van Neuss 2018). There has been much speculation on the future of CSR – it may cease to be regarded as a separate “add-on” to business operations and become fully integrated into all aspects of a company’s work. Recent trends suggest that there will be increasing partnerships between businesses, NGOs and other NFP organizations – implemented globally.
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As millennials come to dominate the workforce in the next 10–20 years it will be their attitudes towards social issues and business practices that will determine the future of CSR.
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Cross-References
▶ Corporate Human Rights Responsibility in Times of Increasing Socio-cultural and Political Isolationism ▶ Corporate Social Responsibility (CSR) in Multinational Companies (MNCs), Small-to-Medium Enterprises (SMEs), and Small Businesses ▶ CSR in the USA and UK Versus CSR in Europe and Asia ▶ Foreign Direct Investment and Development in Developing Host Economies ▶ Governance of Migration and Sustainability ▶ Triple Bottom Line
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Theoretical Developments in Corporate Social Responsibility Miriam Green
Contents 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Dichotomies and Divisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Philosophical Foundations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Sociological Perspectives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . CSR and Capitalism . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Stakeholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . CSR and Legitimacy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Ethics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Environmental Issues and Sustainability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Communication and Reporting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Supply Chain Management and Consumers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Disclosure and Reporting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Accountability and Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Implementation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Research into CSR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.1 Research and the Academy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.2 Research Methods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.3 Research Topics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.4 Future Research . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Developments in CSR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17.1 Broadened Remit for CSR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17.2 Neoliberal Influences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 The Future . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 Cross-References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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M. Green (*) Icon College of Technology and Management, London, UK e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Switzerland AG 2021 D. Crowther, S. Seifi (eds.), The Palgrave Handbook of Corporate Social Responsibility, https://doi.org/10.1007/978-3-030-42465-7_78
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Abstract
Corporate Social Responsibility (CSR) is a complex subject, as are theoretical developments within it. It is multidisciplinary, as are many disciplines in the social sciences. Perhaps because CSR is a relatively new area within the field of business and management (Crowther and Lauesen 2017), dealing, as will be seen, with a variety of issues and approaches, it spans many fields, theoretical perspectives, and research methodologies. One of the dialectics in writings on CSR has been between a “functionalist” approach, often seeing CSR policies as one among other corporation policies, and effective to a greater or lesser extent. A radical approach on the other hand regards corporations as being always mindful of the bottom line. CSR policies would then be tools to achieve that goal, be it with effective socially responsible outcomes or possibly as simply branding exercises to gain legitimacy and consumer support. With recent global developments, there are again different views as to the directions CSR will take. With the corona virus pandemic and the climate change crisis, broader questions have been brought into focus regarding the roles of the state and of international institutions, and their future relationships with corporations. The hitherto neoliberal ideology and practices which had weakened many governments in favor of private companies, including their taking over public services, is now under challenge. Environmental disasters and Covid-19 have exposed the need for strong governmental action both nationally and also through global cooperation. This raises questions about the future roles of corporations and other private organizations, and therefore of CSR, the ways in which it will develop, and the possible effects on societies world over. Keywords
CSR dichotomies · Sociological perspectives · Capitalism · Stakeholders · Legitimacy · Ethics · Environment · Reporting · Research · The future
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Introduction
Corporate Social Responsibility (CSR) is a complex subject, as are theoretical developments within it. It is a multidisciplinary subject as rightly are many disciplines in the social sciences. Some scholars specializing in other subjects might deny this for their own specialism, claiming it to be a pure and indeed superior subject whose approaches and methods should also be followed by scholars in other disciplines. Some classical economists have done exactly that (Ferraro, Pfeffer, and Sutton 2005). Perhaps because CSR is a relatively new area within the relatively new field of business and management (Crowther and Lauesen 2017), dealing, as will be seen, with a variety of issues and including many approaches, it spans many fields, theoretical perspectives, and research methodologies. CSR draws on different disciplines and shares common philosophical and sociological underpinnings with other fields in the social sciences. Conversely different
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disciplines encompass questions concerning CSR within their own ambits. CSR has been described as a “multifaceted, interdisciplinary, systematic and dynamic reality” (Ospina and Ospina 2017: 96). Retrospective as against prospective analyses are two further ways of conceptualizing and analyzing CSR. A retrospective analysis would look at what has/has not been done by corporations, allowing responsibility or blame to be attributed to the corporation(s) for the current state of affairs; a prospective one would be to suggest what corporations should do to effect CSR policies. Initially it was the former that was done, but after the second world war, reporting became much more forward-looking (Crowther 2018). Further complications, also applicable to many social sciences are the immense uncertainties regarding the future, particularly in the light of the current health pandemic which has wrought huge changes in societies the world over. How this will affect the future at the moment remains speculative as do questions as to how this might affect CSR. This chapter will attempt to navigate through what constitutes CSR scholarship and developments within it.
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Definitions
Definitions are often problematic. They tend to reflect authors’ preoccupations, assumptions, interests and values. This is as true of CSR as of any other concept or practice. According to Aras and Crowther (2012) there are no agreed definitions. It has been shown that the meanings of CSR, particularly in terms of the obligations companies should have to society, are unclear and contested, as are the expected outcomes (Iatridis and Kesidou 2013). A given by Frynas and Yamahaki (2016) is that CSR involves companies taking responsibility for the effects on broader society as well as on the natural environment, their responsibilities being beyond what is required by the law. Seifi and Crowther (2018) have offered several definitions, such as the relationship between global corporations, governments, local communities, other stakeholders and individual citizens. They argue that the focus should now be on sustainability, corporate governance and the relationships with supply chains and with stakeholders. Other definitions have focused on more specifically social and psychological matters such as bioengineering effects on diversity; the consequences of corporate behavior on economic wealth as against social well-being; the consequences on networked societies and the relationship between corporations and individual behavior (Crowther 2017). There has recently been an expansion to include political issues in the broader context of international development strategies (Frynas and Stephens 2014). Given the current global crisis regarding Covid-19, definitions and the boundaries of the subject could now well include the effects of corporate, governmental and more local bodies on public health in their own societies and also in other parts of the world, particularly on the relationships between the richer “north” and the poorer “south.”
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Dichotomies and Divisions
As well as divisions in subject matter, scholarship produced about CSR includes attitudes based on different philosophical traditions, sociological paradigms, political views, types of knowledge produced, the way they are framed and the values underpinning them. There are also differences as to what constitutes theory. Frynas and Yamahaki (2016), for example, argue that topics within CSR such as sustainable development have been confused with theory. They conceptualize theory as ideas that have actually been applied through CSR, such as agency theory and stakeholder theory. Another way of looking at theoretical underpinnings is to look more broadly at different sociological approaches outlined below, arguably underpinning some of the theories and practices applied in CSR strategies.
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Philosophical Foundations
The philosophical foundations of CSR are based on ideas of liberty, consent to be governed and equality before the law, including human rights, limited government intervention, and the idea of a social contract, concepts based on Locke’s, Hobbes’, Rousseau’s, and Kant’s writings. Some of these concepts were later developed by Friedman (1970) into the maximization of shareholder returns, pointing to one of the interpretations of CSR (Crowther 2017, 2018). On the other hand, Utilitarianism, the idea that the interests of all must be considered equally is supported by Hobbes’ (1651) Social Contract Theory and Rousseau’s (1762) ideas, and later implemented through centrally planned economies and welfare economics. For some there is a role for government in mediating between individual interests and the communal good. The importance of a contractual approach is based on Hobbes’ concerns to guarantee physical safety for all members of society; Rousseau’s wish to make good the loss of citizens’ social ties and legislative power; Locke’s wish to ensure equality for all in the law, and the right to retain private property against corporate predators; and Kant’s wish to uphold morality, especially in the area of economics (Filek 2015). These ideas have encouraged or obligated firms consider their responsibilities to wider non-owner as well as to owner interests (Haigh and Jones 2006). Related to this are concerns by corporations that their activities should be seen as legitimate, also in terms of outside state policy and regulation, and is linked with legitimacy theory – the assumption that companies must gain the approval of the wider community in order to legitimate their right to exist (Frynas and Stephens 2014). The idea that corporations should act outside state directives is countered by the Habermasian idea of “deliberative democracy,” in which concerns are raised about CSR being used by companies outside the compass of the state. Deliberative democracy requires the state to oversee and regulate CSR and other political powers of corporations, making them accountable by democratic means (Frynas and Stephens 2014). This is a dialectic that has been in play over recent decades,
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particularly after the advent of neoliberal practices and the privatizations encouraged by governments in the UK and in other countries since the 1980s, reducing the role of the state in areas previously regarded as being the state’s responsibility rather than being allowed to be opened up to market forces (Green 2016).
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Sociological Perspectives
One of the major divisions, mirrored in basic sociological paradigms such as those constructed by Burrell and Morgan (2016) are those between a “functionalist” approach and a radical one. In terms of CSR this would entail a difference in the way corporations are constructed: on the one hand, from a managerialist viewpoint – as organizations which to a greater or lesser extent, through good will and sincerity or the lack of these, through greater or lesser effectiveness, preach and practice CSR policies. Companies might be practising CSR from “the heart” – voluntarily with ethical, social, and environmental concerns; to gain social acceptance and legitimacy; or from a transactional perspective, as in transactional cost economics where an economic exchange is decided upon, underwritten by an agreement to ensure compliance (Frynas and Yamahaki 2016). On the other hand, a radical approach would be on the lookout for corporations being political players, always mindful primarily if not solely, of the “bottom line.” This could include their engagement with dishonest and corrupt practices, carelessness with health and safety issues both internally and regarding the wider community, and overriding workers’ rights through suspect employment policies. In this scenario, CSR would merely be one of the tools used to further the organization’s interests, the most obvious being to use its contribution to CSR (which might be insignificant as a proportion of its wealth, power and influence) as an advertising and branding exercise to gain social legitimacy rather than practising polices which would make actual differences to local and wider communities – what Iatridis and Kesidou (2013) have called “symbolic” as opposed to “moral” or “comprehensive” CSR. This would reflect a utilitarian perspective, with the company using a “costbenefit” analysis to calculate the most advantage it could gain for the minimal cost (Iatridis and Kesidou 2013). This dichotomy can be played out at various geographical levels: at a local community level, a national level, and a multinational, global level. This brings in another related, relatively new discipline – that of cross-cultural management. This too has been regarded in different ways. The functionalist view would investigate how management across different cultures was achieved by the multinational corporation in combination with the host nation and/or company, and what the difficulties were. A more critical or radical approach would see the situation as more exploitative – as a type of cultural and economic imperialism, with the aim of working out how to achieve “the bottom line” at minimal cost, rather than as a genuine attempt to meet and include the cultures of the emerging or frontier economies in which the multinational corporation is operating.
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If one includes corporate governance, employment policies and workers’ rights are likely to be considered as well. CSR policies and corporate governance in industries in Third World countries have their own difficulties. Governments may have different or minimal regulations and may be unwilling to address these further, and international standards may not be complied with (Seifi and Crowther 2014). This can raise problems regarding labor protection, complicated further by the existence of supply chains.
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CSR and Capitalism
The issues raised by some authors highlight assumptions about commonalities of interest between corporate social responsibility practices by large corporations with the welfare of communities from local to wider society, extending to the global arena. In terms of CSR’s relationship to capitalism, which some might see as crucial to answering questions about such commonalities, it has, on the one hand, been suggested that far from constraining business, or being harmful to society, it had positive effects (Hanlon 2007). Examples given by Hanlon include the previously hostile relationship between green pressure groups and the Ford motor company changing, as Ford saw “greening” cars as an opportunity for innovation. This was true also of relations between oil companies and previously hostile NGOs, combining to produce cleaner fuels (Hanlon 2007). A far more critical, approach is outlined by Shaw (2017b: 388): Considering the broad configuration of the global capitalist system, corporate social responsibility is too often a perfunctory gesture, providing yet another reason for business as usual; justifying the deeper extension of market forces into an already imploding social body.
Researchers who have examined the construction of the concept of CSR critically, have called for new conceptualizations of CSR, to allow for better understanding of CSR from humanistic and emancipatory perspectives (Ospina and Ospina 2017).
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Stakeholders
One question governing the issues raised above concerns who the stakeholders are. In agency theory, it is only the owners/shareholders to whom the managers of an organization are beholden (Crowther and Lauesen 2017). Therefore, in accounting terminology, the value created in the organization would be relevant only to the value created for shareholders. This would define CSR very differently from many of the definitions above, as according to this theory the interests of all sections of society apart from the corporations’ shareholders would be excluded. This has been seen as egoism versus the altruism depicting the corporation as a moral agent with a fiduciary duty of care to society (Crowther 2017).
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In stakeholder theory, on the other hand, there are various stakeholders, each entitled to have their interests and wishes met. If it is accepted that there are more stakeholders than only shareholders, questions arise as to who they are, and importantly whether they would have convergent or divergent interests with shareholders, and with the corporations themselves (Aras and Crowther 2012). This raises further questions about accountability, and to which stakeholders corporations are or should be accountable, leading to an important dichotomy in conceptions of CSR mentioned earlier – should matters of social responsibility be under the aegis of independent corporations or does the government have any responsibility for this, and should corporations be accountable to governments too? The situation is more complicated. There are different interests and goals among the various groups who might be regarded as stakeholders according to stakeholder theory, leading to potential conflict among groups. Within groups there are individual differences because of conflicts of interest leading to obfuscation as to the common purpose of a particular group (Aras and Crowther 2009). Aras and Williams (2017) also make the point that a single, universally accepted method of sharing out returns between stakeholders does not exist. However, it has been argued by many (e.g., Freeman 1984 cited in Frynas and Yamahaki 2016) that the stakeholders who really count are those with the most power and influence, as it is they who are able to exert pressure, for example, through government lobbying.
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CSR and Legitimacy
Another thorny question regards the criteria for success. Could they be the same for all stakeholders, assuming that they are recognized as being more than exclusively shareholders? And how can one evaluate corporations’ performance in order to see whether the criteria have been met? Lauesen has pointed out the “fake backdrops of corporate promises of being both financially and socially responsible,” which she has called “Corporate Social Potemkinity” (Lauesen 2015: 29). (This is after a myth about Potemkin, a government minister in the Eighteenth Century ordering a fake backdrop to be constructed aimed at beautifying the Dneiper River waterfront to impress the reigning Russian empress, Catherine II (Lauesen 2015: 29).) An even more radical discussion would be to raise questions about the legitimacy of these corporations at all, as intimated above by Shaw (2017b). Such questions might be further stimulated by problems of proven or suspected linkages between corporate actions and perceived undesirable social and ecological outcomes by certain groups of stakeholders; by the extent to which corporate self-interest was helping or harming long-term economic and social development; and the degree to which corporate behavior was altruistic (Crowther and Lauesen 2016). Lauesen (2016) has described problems experienced by stakeholders with corporations as “stakeholder dissonance.” Stakeholder dissonance resulted from a lack of trust by various stakeholder groups in the different types of organization stakeholders depended on. This could lead to a vicious cycle where the lack of trust in organizations resulted in there being a lack of incentives for organizations to fulfil
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their obligations in accord with the expectations of the broader society. This could then increase stakeholders’ dissatisfaction with the behavior of organizations and organizational outcomes. It could also lead to bigger questions such as putting large corporations in the frame for overall responsibility for societal economic, political and social inequalities and for the tensions between global social structures and processes and the different world economic and political systems (Said et al. 2014). The question of the relationship between an organization’s commitment to uphold and execute CSR values and its financial success is a related issue frequently raised and researched. Said et al. (2014) found that a corporation was attractive to investors where there was good governance. It could have positive effects for business, the environment, and people. Aras and Ingley (2017) have pointed to risks companies faced in having their reputations damaged, and their shareholder and stakeholder value diminished by unethical behavior. Conversely, they stood to gain social and economic value through commendable corporate action. However, this cannot always be the case. Aras and Crowther (2012) have argued that where corporations have claimed sustainability as a ploy, this could mislead investors into underestimating the risks actually present. Positive relationships between these, as many researchers have found, are complicated by evidence of many corporations’ poor CSR performance. This is so particularly in the light of frequent company practices of using CSR as a means to self-publicity rather than as a genuine effort to implement socially responsible change.
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Ethics
Ethics has played an important role in investigations regarding CSR, particularly from the 1980s onwards. Ethics is another problematic concept, as what is ethical or unethical can be dependent on the current values espoused by the various relevant actors. There is also the issue of deontological (the normative ethical theory that the morality of an action should be based on absolute standards – whether that action itself is right or wrong under a series of rules), as opposed to teleological ethics (the consequences or outcome of the action). Then there is the question of ethical relativism – the idea that moral principles are not universal. They are regarded either as being culturally determined and driven, or as a matter of subjective, individual choice (Crowther 2017). Ethics concerns organizations at various levels – global bodies such as the World Trade Organization (Klein 2014), political institutions, transnational and national organizations, and their particular accountabilities. On a political, environmental, community and employee level, there are questions about corporations upholding human and environmental rights. Counter-examples include the Nigerian state execution in 1995 of Ken Saro Wiwa, a nonviolent activist against the environmental degradation in his home territory of Ogoniland caused by multinational companies, particularly by the Royal Dutch Shell Company; the lack of employee and community protection in the Union Carbide disaster in India in 1984 which killed or
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disabled more than half a million people; the undermining of women breast-feeding their babies in several Third World countries through Nestle’s marketing of unnecessary alternatives to breast milk; and more recently the garment factory fire in Dhaka, Bangladesh, 2012, which killed over one hundred employees because of the company’s negligence regarding health and safety. Now in 2020 responsibility for public health because of the Covid-19 pandemic is a dominant, pressing and consequential question, alongside endemic and increasing inequality and poverty. This links in with other, longstanding issues concerning government ideology, policy and discourse; the effects of neoliberal policies in the western democracies in terms of inequalities, the downgrading of public institutions including health care, inadequate support for the vulnerable in this crisis, the ability or otherwise of people at the “sharp end” to be able to deal with this crisis, and the knock-on effects on their lives and on those of others in materially more comfortable situations. The possible roles of CSR in this are discussed below.
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Environmental Issues and Sustainability
Environmental issues, now at the forefront of CSR, cover a wide range of issues, among them environmental protection, waste management, consumption patterns, carbon footprints, responsible manufacturing, and the use of ecomaterials. Perhaps less frequently researched subjects include questions around food and food deserts. Shaw (2017a) has examined the relationships between socioeconomic status and diet, health and obesity. He has done research on “food deserts” or areas where there is poor access to healthy food for economic and geographical reasons. Sustainability has become a field in itself, and as with CSR also has different definitions, theoretical approaches, types of research, and its own stakeholders in the development of knowledge in this field. As with many other terms, it is “neither clearly understood nor consistently applied” (Wells and Ingley 2017: 70). With this also come practical problems similar to those regarding the implementation of CSR more generally. For example, company policies regarding the environment, their ecological footprints, and their policies regarding the resources of the planet, such as water. Issues of sustainability and sustainable development, terms often used interchangeably (Seifi and Crowther 2014), are closely linked with questions of socially responsible behavior. If one regards sustainable development as one of the bedrocks of CSR, it must be regarded as important as maintaining the financial health of organizations and ultimately of the economy (Crowther and Lauesen 2017). Seifi has used what may be a novel approach to questions of sustainability through her analysis of strategic decision-making by companies in terms of games theory. Companies, in the global capitalist system currently in operation, are naturally in competition with each other, gaining or losing market share in relation to other firms. Risk factors are therefore central to the decision-making processes in companies, which game theory, a branch of mathematics, is well equipped to analyze (Seifi 2017).
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Communication and Reporting
Communication is a vital part of CSR. It is useful not only as a provider of information from the company to the public about its CSR policies, but can also be used to harness public support and cooperation. The extent and range of reporting required has, as already mentioned, moved away from purely financial reporting to include environmental and social reporting – indicating the desirability of altruistic over egotistic values. This is an indication of the change and broadening of who the stakeholders are considered to be, and the increasing seriousness with which communication is regarded. All communication has to be evaluated in terms of whether it is providing valid and comprehensive information as against mainly branding exercises to improve the company’s image, also termed moral hypocrisy or a version of impression management (Morf et al. 2013). A new type of reporting has been developed to encompass social, environmental, and other changes – integrative reporting – which aims to go beyond financial questions. Instead of looking only at financial performance of the business, integrative reporting includes consideration of how various business functions, including, for example, human resources and sustainability, affect both the corporation and society in the future as well as what has happened in the past (Robertson 2015). Nonfinancial values created by organizations, such as the human, social and intellectual forms of capital set out by Bourdieu (1998), as well as the environmental and sustainable ones are included. This is increasingly practised and is regarded as providing more balance in monitoring and measuring company performance (Ingley and Aras 2017).
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Supply Chain Management and Consumers
The field of Supply Chain Management (SCM) in relation to CSR has developed particularly over the last two decades because of increasing globalization, initially covering environmental and economic issues and extending to social matters such as socially responsible sourcing, ethical concerns and those of sustainability (Feng et al. 2017). There have been demands made of multinational companies by their various stakeholders to protect and improve human rights, and rectify breaches of international guidance on health and safety issues in the workplaces of their suppliers in developing and emerging economies. This has resulted in companies rethinking their procurement policies, sometimes using more innovative and socially conscious approaches (Broomes 2016). This is another instance of the widening of CSR accountability from being solely to shareholders to a wider constituency, including suppliers, consumers, as well as employees and communities. It has also led companies addressing their concerns to wider issues in the whole supply chain, including purchasing and logistics in relation to CSR; cooperation, commitment, and trust in SCM; risks and production processes; sustainable development; environmental analysis; labor migration; and the social issues mentioned above (Feng et al. 2017).
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There are difficulties, of course, with the implementation of CSR policies particularly with supply chain processes. The difficulties of enforcement in developing countries has been mentioned elsewhere, and many of the CSR codes are only voluntary. Compliance is a problem, and there is still widespread malpractice, regarding, for example, child labor, freedom of association, and collective bargaining. And employees are often unwilling to complain for fear of losing their jobs and of threats of retaliation (Broomes 2016). Increasingly interest has shifted from the companies themselves to their suppliers in developing countries, and from a focus on metropolitan countries and how they manage their supply chains to suppliers in developing countries, the pressures they face from their customers and how they manage these. There are issues of trust between suppliers and their customers. In situations where suppliers in developing countries are successful in producing ethically sourced products, their international company customer might have other priorities such as uniform strategies with a desire for global integration rather than customized approaches to each host country or supplier. This could well put additional pressures on the suppliers (Feng et al. 2017). Then, as mentioned earlier, there are differences between multinational corporations’ cultures and those of their host countries, which can make for misunderstandings in addition to the likelihood of there being different ethical principles, norms, and type and extent of regulation. The priorities of multinationals may also be very different from those of the consumers at the end of the chain in the metropolitan countries. Consumer preferences have been increasingly concerned with CSR issues. Environmental and consumer pressure groups have taken action regarding retail companies over, for example, the working conditions of workers, usually in Third World countries. Clothing stores including Primark, Zara, Marks and Spencer and Gap have come under scrutiny for the way garment workers have been treated, and are put in the position of having to defend their companies often on grounds of ignorance. There has also been concerted action and increased awareness regarding results of harmful environmental actions by well-known corporations, such as the BP oil spillage in the Gulf of Mexico in 2010, and most recently the gas leak in Visakhapatnam, Andhra Pradesh, India, in May 2020, where the company had been operating illegally without environmental clearance from the government.
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Disclosure and Reporting
The ethical scandals of the 1980s and 1990s involving savings and loan failures; the Enron and other corporate failures and the failure of the financial system in 2008 have all led to the perceived need for honest and truthful reporting about corporations¸ particularly regarding corporate governance (Aras and Williams 2017). According to Crowther (2018: 1) “the purpose of corporate reporting has changed from one primarily of stewardship and accountability to shareholders to a more outward looking and forward looking perspective.” One of the important ways of securing accountability by corporations in terms of their social responsibilities is the
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extent to which they are prepared to or indeed encouraged by the state to disclose the true state of their policies and practices regarding CSR, including shortcomings as well as successes. Issues arising include the need for transparency by corporations, which involves imparting knowledge about companies’ activities, through reporting and other forms of communication such as the media the extent of their responsibilities and accountabilities; how their reporting is carried out – for example, whether it is aimed at internal or external users of the information or both, and the type and range of information disclosed (Crowther and Lauesen 2017). Would it be obvious, for example, whether the information was accurate, whether it was honest so that it was clear to what extent CSR policies were practised, their reach and effects, and what actual or potential conflicts of interest there might be. In fact, companies have used disclosure to establish their legitimacy, with environmental reporting for example. Legitimacy theory has focused on corporate social disclosure as one of the ways in which to assess whether the expectations of society are being met by CSR practices (Frynas and Yamahaki 2016). To the extent that corporations adopt CSR policies outside governmental regulatory frameworks, and to the extent that they are vulnerable to public pressures, the subjects of what is disclosed will vary according to the social pressures of the moment, it has been argued. Companies could be genuinely honest and comprehensive or only symbolically compliant. This could lead to weaknesses such that the disclosures might be about impression management, focusing in the interests of legitimation, on the positive aspects of the company’s performance, and ignoring those which might be received unfavourably (Morf et al. 2013). Crowther (2018: 12) has argued that the change in focus of corporate reporting has led to reports being less about actual company results and more about “image creation mechanisms.” This practice is of course more widespread, being the case also with governmental policy statements and briefings (see, e.g., Green 2020).
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Accountability and Compliance
This is an interesting question. One might expect most companies to comply with government legislation or regulation at least minimally. Of course, it raises difficulties to do with definitions and evaluations of what counts as compliance – the range or extent necessary, allowance for difficulties in full compliance, the time scale allowed. These questions are discussed further under “implementation.” There have been several codes of corporate governance following on from weak oversight and corporate failure such as the Bank of Credit and Commerce International (Nordberg and McNulty 2013; Green et al. 2008), and financial scandals regarding audit failures and alleged fraudulent behavior on the part both of managers and large shareholders in companies such as Coloroll, Polly Peck, and those owned by Maxwell (Nordberg and McNulty 2013). There was an updated code in 2009 following the financial crisis of 2007–2009 However, as Nordberg and McNulty (2013) point out, compliance can be
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compromised if the wording is not as strong as it might be. They show the differences between three corporate governance codes. In terms of “social practice,” the Cadbury Report and Code (1992) wanted institutional change to “restore legitimacy” after crises in UK companies; the Higgs-inspired Combined Code (2003) wanted institutional change to “reinforce legitimacy” and the 2010 UK Corporate Governance Code did not mention legitimacy at all. Instead it wanted institutional change to “enhance” boardroom “effectiveness” (Nordberg and McNulty 2013: 354). This seems a step away from accountability. Similarly, these authors point out that the Cadbury code stipulated “effective accountability” (Para 1.1), public accountability (Para 1.5), and open disclosure (Paras. 5.1–2, 5.9). Little direct mention was made of accountability in the 2003 code, but it was recommended that the major shareholders were given more access to a greater number of board members (Principle D.1). The 2010 code reduced the power of shareholders by stipulating that they should “pay due regard” to the company’s circumstances and be supportive of the company (Section Comply or Explain, Para.4) (Nordberg and McNulty 2013: 354–358). This reinforces the claim that accountability has been weakened. The concept of compliance too has been eroded in these codes over time. The Cadbury code required companies “to state whether they are complying with the Code and to give reasons for any areas of non-compliance” (Cadbury 1992, Paragraph 1.3, cited in Nordberg and McNulty 2013: 362). The 2003 code put the issue less forcefully through the use of the passive voice, which can obfuscate who the actors are and details of their activities (Green 2019). In this case, the phrase was “it is expected that . . . companies will comply with the Code’s provisions most of the time” (Financial Reporting Council, “Combined Code on Corporate Governance,” 1., cited in Nordberg and McNulty 2013: 362). This does not give details of the authority to whom companies are responsible, and the last phrase confirms that compliance is not always required. The 2010 code weakens the notion of compliance still further, stating that the code was not a “rigid set of rules” (“Comply or Explain,” Paragraphs 1–2, cited in Nordberg and McNulty 2013: 363). The conclusion of these authors was that codes of corporate governance were limited. The degree of effectiveness in achieving such goals was ultimately a “local matter” (Nordberg and McNulty 2013: 367). Chambers has described the phrase “comply and explain” as meaning that “UK corporate governance is so light touch as to have hardly any grip at all” and that “influential groups would like to keep it that way” (Chambers 2012: 33).
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Implementation
Reliance on assertions and declarations by corporations or smaller companies is insufficient both to have knowledge about what the companies are actually doing and also to be able to hold them to account for their actual CSR record. A gap between declarations and undertakings by companies and their carrying out CSR policies has been acknowledged by many, e.g., Iatridis and Kesidou (2013).
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Evaluations of CSR implementation brings to the fore many of the difficulties raised above: the problems of definition of what counts as CSR; the relationship of theory to practice (Crowther 2018), arising not only from company policy but also from broader values held outside the corporations. The philosophical and sociological approaches by researchers as well as by politicians, the press and the general public as to what counts as CSR also raise problems regarding evaluation. In addition, the company’s motives would determine the extent to which practice has followed assertion: corporation executives who were interested in engaging with CSR policies in more than a symbolic way were more likely to narrow the gap between the discourse of CSR and its realization in actual policies (Iatridis and Kesidou 2013). Lauesen (2015), in her international study of governance in water industries in Denmark, the UK, the USA, and South Africa has shown that even before the above points are considered, the discourse used also serves as a method for evaluating implementation. Discourse analysis serves to “capture the institutional framing and contrasting of different meanings of sustainable governance in the water sector” (Lauesen 2015: 163). This would of course apply to CSR more generally. It might make the task easier in some respects as it could provide a “handle” on evaluating the initial concept of CSR as framed by corporations, and then be used for comparisons with other discourses in those companies, and with their actual implementation of CSR policies. Lauesen highlights the discourses by the water companies and their regulators through qualitative research based on interviews and participant-observation in Denmark.
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Research into CSR
16.1
Research and the Academy
As with other areas of research in the social sciences, including in the organization and management fields generally, there are a number of caveats that must be pointed out regarding the type and quality of information provided. There are issues mentioned earlier regarding the inescapability of the type of knowledge produced through the particular values, paradigms, approaches, and methodologies used, and also through the external pressures on researchers by their institutions, funding bodies, and the organizations they are researching (Green 2019). It has been shown that in the management and management accounting fields, the type of knowledge and approaches favored the most in the academy and therefore constituting mainstream research is functionalist scholarship, where the focus is on managers in terms of their assumed prerogative and power to determine and implement policies, their goals, and as sources of information about their companies (Green 2019). This has been accepted mainstream research strategy regardless of the weaknesses in the range and quality of information available to senior managers in large companies. They cannot know what is happening throughout their organizations, particularly at levels below theirs (Dermer and Lucas 1986). There is also
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the potential problem of unverified self-reporting by the same people who are responsible for the policies under review (Van der Stede et al. 2005). Research funding can also present problems. In scientific research it is almost a truism that such research can risk being compromised by its funders if the latter have anything to gain or lose from the results. This issue has certainly been raised regarding management scholarship in the United States, and from there influencing academic work in the Anglo-Saxon world more generally. There were pressures, for example, from the Ford Foundation, which after the Soviet success in launching Sputnik in 1957, influenced business schools to change their curricula to include more statistics and quantitative methods – an approach, though valuable in itself, risks leaving out qualitative data essential to the understanding of organizational processes, and to successful and failed organizational outcomes (Green 2019). Companies allowing researchers access may, perhaps not unreasonably, require the researcher to undertake investigations more relevant to the company than to the researcher’s own academic goals and the knowledge sought (Crowther 2017).
16.2
Research Methods
Research methods have varied between positivist, objectivist, deductive schools of thought, using methodologies which test theories often through empirical observation of subjects that are considered not to be prey to human subjectivity, with surveys generally employed as means of data collection, analyzed statistically. Though used largely, but not solely in the natural sciences (Kuhn 1970; Feyerabend 1993), there are certain problems with this approach in the social sciences, such as the problem of measurement (Crowther and Lauesen 2017). Inductive research is very different. It is usually qualitative, hermeneutic, focused on the meanings people give to their own experiences. It has been regarded as particularly apposite for research into human behavior and therefore CSR, because of its flexibility, and the possibility of building an understanding and theories about an issue, allowing it to be studied in various ways using different approaches with a greater variety of research designs (Crowther and Lauesen 2017). There have been arguments by eminent social theorists such as Bourdieu for the inclusion of both objectivist (normally quantitative) and subjectivist (normally qualitative) approaches. This would take into account structural issues and also hermeneutic approaches where the actors’ attitudes and agency might be equally, if not more important in some instances, in understanding societal processes and outcomes. Reliance on objectivist scholarship alone was invalid, dangerous, and politically supportive of dominant social and political structures (Bourdieu 1990). Regarding CSR, purely objectivist scholarship could deny the input to knowledge of people affected by CSR policies at different, including local community levels. Claims have been made that the future of CSR will increasingly turn to qualitative, phenomenological research methods, as mainstream positivist, quantitative research
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is “too shallow” to address the complexities of CSR theory and practice (Samy and Robertson 2017). Interestingly, CSR research has been mostly qualitative. A similar criticism to that made about quantitative surveys, directed only at the CEO or senior managers, has been levelled at qualitative research in CSR: that it is self-referring and therefore highly subjective (Iatridis and Kesidou 2013). Another criticism made against qualitative research by these authors is that such scholarship has often ignored actual action, instead focusing on the rhetoric about CSR in companies (Iatridis and Kesidou 2013). The same criticisms have been made by scholars about objectivist, quantitative scholarship. In the management area, the focus there has been on abstract concepts such as structure, and research concerned with senior managers’ perceptions of their organizations’ systems. There has been an absence of research into actual practice, into the results of the implementation of management strategies and consequent organizational outcomes (Green 2019). Panozzo (1997: 459) wrote about “abstract models postulating the existence of idealized worlds and excluding involvements in field research . . . [which were] hardly justifiable in the social sciences.” A common criticism of qualitative research made by Iatridis and Kesidou (2013) is that the research was company-specific and could not be used to gain information about companies in general. This is certainly one of the big advantages of, for example, survey research which can reach a large number of respondents. (For further discussion about the merits and demerits of objectivist and subjectivist scholarship in the social sciences, and particularly in management see Green 2017a, b, 2019). Advantages for CSR studies claimed by various researchers using qualitative methodologies include analytic autoethnography, where the researcher’s own experience is taken into account alongside that of the participants being studied. It is posited that this enables a deeper understanding of the research. The example given involved the researcher’s unease with the information and the informants in the company she was researching, and led to her questioning the authenticity of the information, whether an “act” was being put on, and whether the information was being controlled by allowing only selected respondents to participate in the research (Duarte 2017). In order to combat the potential inauthenticity of CSR reports, Yekini (2017) has proposed a method of textual analysis, which it is claimed can better judge their content and quality. She uses a linguistic-based framework – semiotics – which she and others claim enables awareness of the role played by human agency in constructing their representations of reality (Yekini 2017). Lauesen (2017) points out that ethnographic methods, not used much before the 1990s for CSR research, highlight the meanings people give to their lives. The main methods cover a wide range: participant observation, interviews, textual and visual analyses. This methodology was particularly suited to in-depth studies of particular organizations and was good at getting “under the skin” of corporations and their CSR practices (Lauesen 2017: 277).
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Research Topics
Given what has been shown about the nature and complexity of what falls under the heading of CSR, it is to be expected that the number and type of research topics would be many and varied as are the research methodologies used. The range and focus of the subject is broad, from multinational corporations to small and mediumsized companies; from shareholders to a broad range of stakeholders. The following are some of the topics that have been researched under the rubric of CSR: perspectives and fashions; ethical issues such as human rights, employee conditions of work, confidentiality, actual performance, the managerial process; sustainability; supply chain management; consumer behavior; marketing; communication, including different types of reporting from annual reports through to integrative reporting; compliance; environmental issues including carbon footprints, responsible manufacturing, eco materials, and waste management; and a critique of the type of research already done and the methodologies used.
16.4
Future Research
It has been argued that further research is needed in the following areas: management/consultancy, organizing/implementing/documenting CSR, CSR practices, and how CSR is communicated. These are mainly to do with investigating actual practice – what is happening on the ground – potentially very different, as has been suggested, from what is represented and communicated through the multitude of media available (see, e.g., Frynas and Yamahaki 2016). As well as demands to broaden the subject matter of CSR and deepen analysis through looking at actual practice, another suggestion has been to pay more attention to issues of power, control and criminal activity. It has been suggested that investigations be made regarding the use of CSR as a political strategy by companies, replacing services in the recent neoliberal environment previously carried out by the state, and where both national governments and global bodies had failed to provide guidance and legislation such as in health and education. At the same time, corporations are continuing to act politically as pressure and lobby groups on governments to achieve their goals with regard to social and environmental regulation, along with other activities designed to increase their influence, such as “strategic philanthropy.” Conversely, governments are taking active roles with corporations, for example, by partnering their CSR activities (Frynas and Stephens 2014). There is the need for a more comprehensive analysis of CSR, combining environmental and social aspects with political issues and individual actors, and more extensive integration across the macro and meso levels at which CSR is played out, linking domestic with international, global CSR issues. At the individual level of analysis, there is also a place for future research on corporate crime, investigating the influence and responsibilities for this by senior executives and management teams (Frynas and Stephens 2014).
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17
Developments in CSR
17.1
Broadened Remit for CSR
As has been seen, one of the important developments in CSR ideology, societal expectations, and company policy has, particularly from the 1990s, been the broadening of the CSR remit. Because of social pressures, policy makers, from framing CSR as primarily financial, and beholden to their company’s shareholders, have now extended its degree of accountability to social and environmental matters, with increased transparency and standardization. Stakeholders now include more categories such as consumers and local communities, as evidenced through the extension of the reporting to include them (Morf et al. 2013). Financial and corporate scandals such as at Enron in 2002, resulting in a breakdown in corporate governance, have led to increasing pressure for businesses to assume wider responsibilities than solely to shareholders, and with more transparency (Morf et al.). This has manifested in several ways: there has been an increasing interest in corporate governance and sustainability at various levels – from the local to the societal. From a limited perspective of how firms conduct annual meetings and deal with auditors, there is now a much more general concern with how companies deal with and have an impact on all stakeholders including on the environment and ecosystem. This has encouraged the development of social and environmental reporting, and more recently, integrative reporting focused on the whole of society. And, in addition to the economic, environmental and social, concerns for human rights have also been added to CSR’s portfolio (Aras and Crowther 2012). Despite continuing cynicism, this has led to growing acceptance of the benefits of CSR by business, governments and the public. It has also led to further demands on corporations, for example, to ensure socially responsible behavior on the part of their suppliers throughout the supply chain (Crowther and Lauesen 2016). All this is reinforced by more information being made more available to the public through the internet. According to Crowther and Lauesen, the focus of CSR studies has also moved from an interest in large, multinational corporations to smaller, nationally based, single-site organizations, but companies with highly developed technologies, organizational performance, and reporting systems and social communication programs (Crowther and Lauesen 2017). Predictions have been made that in their continuing pursuit of legitimacy in society, there is likely to be an inevitable expansion of accountability that corporations will have with regard to CSR in ever increasing areas in line with new stakeholder demands, with more attention given to the avoidance of policies and practices deemed socially unacceptable. Evidence offered for this is the increasing number of CSR reports being produced by corporations about the environment and sustainability This is also leading to more transparency and disclosure. In the USA, the term Corporate Accountability has become preferable to some stakeholders such as activists and those in nonprofit organizations, as this signifies a shift in power from corporations to stakeholders (Morf et al. 2013).
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Rendtorff (2017) supports these arguments. He takes the concept of responsibility in CSR further, by suggesting that future research is likely to focus on ethical concerns rather than on strategic responsibility and profit, beyond any legal definitions of the concept. He argues that the concept of responsibility is bound up with accountability and with ethical principles for all levels of society in this period of globalization and technological advances. It has particular relevance now as a bulwark against harm to humanity and as a means to combine social, economic, and environmental issues so as to achieve sustainable development and the survival of humanity worldwide (Rendtorff 2017). These developments are, of course, tempered by the fact that different stakeholders have different degrees of power and therefore can exert influence only to varying degrees (Morf et al. 2013). The most effective pressure is always likely to come from those stakeholders and pressure groups with the most power and clout, particularly where CSR is not subject to regulation.
17.2
Neoliberal Influences
On the other hand, values, practices, and at the very least regulations regarding the CSR policies must be influenced by the current political, ideological, social, and ethical climate. Since the advent of the conservative Thatcher government in 1979, there has increasingly been an ethos of neoliberalism, perhaps reaching its peak during the austerity program introduced by the Conservative-Liberal Democratic government in 2010, allegedly to cope with the economic crisis of 2008. Thus, it has also been argued that the concept of accountability has shifted in the opposite direction, and that powerful organizations are no longer being held to account by the general public for the wider good. Privatization and the weakening of bureaucratic structures have reduced accountability within organizations under the guise of “empowerment” and changed the ethos, for example, of the privatized utilities from that of service to customers to profits for shareholders (Green et al. 2008). This shift in accountability and potential weakening of CSR has been intensified by the ideology and practices of neoliberalism. Neoliberalism, in a nutshell, has promoted values of economic efficiency and the “financialization” of many aspects of society hitherto governed largely by different values (Green 2016). With neoliberalism, values such as care and support for the vulnerable, kindness, the value of all things other than those financially calculable have been superseded by market values. These values have extended into areas of life previously regarded as immune from such values, such as politics, ethics, social welfare, education, and social norms (Brown 2005). In fact, market values have become seen as “an ethic in itself, capable of acting as a guide to all human action, and substituting for all previously held ethical beliefs” (Harvey 2005: 3). This ideology and practice have been rolled out in conjunction with a drawing back of the state from responsibilities for its citizens. The state would still be powerful, but would now act to facilitate market values, competition and rational
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economic values. Citizens would now have to take responsibility for themselves without being able to rely on the state for services and for financial and other help in times of need. As predicted as early as the beginning of the twentieth century by Max Weber (1978, cited in Brown 2005), this has led to a redistribution of wealth and power and to a substantial increase in economic inequality and in poverty and insecurity for many (Green 2016). As Brown (2005: 46) has explicitly put it, what is the case in the USA (applicable also to the UK and other countries) is “the ghastliness of life explicitly ordered by the market and measured by market values,” without the underpinning of moral or political principles (Green 2016). This has impacted on the role of other powerful institutions such as corporations. They are powerful players in this new regime where the market is supreme, and also as, with the privatization of so many services, the state is increasingly dependent on them to carry out services previously under the remit of the government, and as in so many instances, not with great success and not in the best public interest. The current health crisis has highlighted this situation. One example is Deloitte, a global multination, in conjunction with other private companies being contracted to set up networks of virus testing center and laboratory processing centers in various parts of the country. The result as reported in the Guardian by Lawrence et al. (2020) was “chaos at some sites, with results going astray, dangerously leaking swab samples arriving at labs, queues of more than three hours, and symptomatic people being unable to book a test or told to make round trips of more than 100 miles to test centres. Many still report results taking seven to 10 days to arrive – too long to be useful for quarantine purposes . . .”. The relegation by the state of other issues such as poverty alleviation to private companies is equally problematic. The handing out of benefits to claimants can constitute a conflict of interest with the private company in charge of the process. As Jones (2014: 181) has pointed out, control over the distribution of benefits has become “a mere funding stream for private companies” whose goals are to make money rather than to serve the needs of people. This has implications for CSR. If so much is now becoming the responsibility of private companies, what becomes defined and accepted as CSR could be very differently framed. If neoliberal principles and practices are maintained, what is regarded as acceptable and even desirable could focus much more on what is regarded as “making sense” financially. This would have implications for public services including health issues, for poverty alleviation and for the environment. It would be in contrast to the different ways in which working for the good of the community, the nation, society and the world might have been previously constructed. This potentially provides a serious caveat to the integrity of CSR practices. If these arguments are tenable, more comprehensive reporting may turn out in practice to be merely the trappings of CSR. However, this need not necessarily be the outcome. Arguments are given below for the possibility of a different strain of CSR, even with so much power and responsibility in the hands of private companies.
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The Future
It will be interesting to see whether the current public health crisis, which is engendering different values, incorporating more pre-neoliberal sentiments about the public good, will lead to permanent changes. Now the discourse is about “heroes” working in the health services tirelessly and endangering their own lives; there is anger at the lack of protection for “front line” staff or “key workers,” including social care workers, often at the bottom of the ladder in terms of pay and working conditions; and gratitude is expressed to those working to supply essentials such as medicine and food and to those doing deliveries – the “precariat” – often working under gig economy conditions and subject to exploitative working conditions with no job security, holiday or sick pay, and no pension contributions. The environment is, of course, also a critical issue. Thunberg has pointed out that greenhouse gas emissions rather than being reversed following the Paris Agreement had by 2018 continued to increase, and that 200 species were becoming extinct daily. According to the IPCC there needed to be a reduction of CO2 emissions by at least 50% by about the year 2030 in order to avoid a catastrophic, irreversible climate breakdown beyond human control (Thunberg 2019). A crisis brought on, many would argue, by capitalism. According to Werner at the American Geophysical Union (2012), “global capitalism has made the depletion of resources so rapid, convenient, and barrier-free that ‘earth-human systems’ are becoming dangerously unstable in response” (Klein 2014: 450). Could the Covid-19 crisis stop “everyone . . . talking about money” (Thunberg 2019: 22), and concentrate the minds of the powerful – in the private sector, in government, and in international institutions – to avert the climate crisis? Will capitalist institutions par excellence, multinational corporations and international bodies such as the World Bank and the IMF, be able to take coordinated action against a situation created by their own systems, and from which they are still currently benefitting? Ben-Ami, historian and former diplomat, has a different view. He predicts a retreat from globalization, but, he argues, unlike previous epidemics where there were significant changes in society, this pandemic will increase preexisting trends in current societies – those of deglobalization, unilateralism, and authoritarian surveillance capitalism. The evidence he cites are the failure of the EU to adopt a common strategy; the USA’s decision to withdraw support from the World Health Organization and the opportunities being seized by many authoritarian regimes to curb civil liberties (Ben-Ami 2020). Similar arguments are being put forward by others. The economist, Richard Blundell, has pointed to decreasing international cooperation, citing Brexit and the China-US trade wars. With increasing populism in many countries, there were huge issues regarding democratic accountability (Blundell 2020). Gordon Brown, former Prime Minister of the UK, has pointed out that most recently, the G20, the self-styled “world’s premier international forum for economic cooperation” has reneged on its promises in March 2020 to support countries in need as a result of Covid-19. This has impacted on the adequacy of support from the IMF and the World Bank to poorer countries (Brown 2020).
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And yet there is an urgent need for international coordination. Yuval Noah Harari, the historian, has stated unequivocally that “We need a universal, governmentsponsored healthcare system because the free market system can’t prepare and can’t deal with these epidemics” (Harari 2020). Gosh (2020) has argued that although such change looks impossible, the enormity of the current Covid-19 crisis might lead to an international economic collapse, the extent of which might lead to societal change. Thunberg (2019: 36) has pleaded for “a whole new way of thinking.” Instead of a political system based on competition, what is needed is cooperation, working together to share and protect the planet’s resources fairly. Mazzucato (2020) has put forward similar arguments. What was now needed was more shared knowledge rather than competition and a stronger global health system. Capitalism per se was not the problem. It was the kind of growth that mattered. For example, a Green Deal agenda, with changes in how procurement was structured, with public/private partnerships driven by government subsidies based on requirements for reductions in the carbon footprint could result in positive outcomes. Governments needed to have the confidence to override large corporations, and could do so through political coalitions. But much more was needed, such as reinvestment policies underpinned by legal structures. One needed other mechanisms such as a Climate Bank to provide finance for long-term environmentally protective innovation. For this, central leadership able to take new, strong directions was necessary (Mazzucato 2020). In addition, there was a need to remove the ease with which money could be made that was not productive. But the current system, unfortunately, was deeply embedded, extensive, and difficult to change, as it was tied to the structures already created. One had to target areas for change carefully (Pistor 2020). Positive signs were coming from more grassroots activity. Covid-19 has produced levels of humanity and cooperation greater than previously – for example, by state governors in the USA and by the mayors of various cities in Germany (Pistor 2020). Mazzucato has pointed to local initiatives in London, for example, by Camden Council, where the leader of the council has started from the problem rather than from the budget, leading to outcome-based budgeting. It is also worth speculating as to whether grassroots support for and anger in the UK at the situation of front-line workers in the current health crisis and widespread global outrage at the racist murder of George Floyd in the USA might lead to more permanent, grassroots action able to effect significant change. Where all this leaves CSR is unclear. The possibility for a more environmentally healthy and sustainable world, with greater social, political, and economic equality and more emancipatory possibilities through effective CSR policies, remains an open question at present.
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Summary
This chapter highlights the complexities of theoretical and other developments in Corporate Social Responsibility (CSR). The basis of this chapter is to show there are dialectical oppositions underpinning research into this subject. One major dialectic is
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between a functionalist view which would examine the outcomes and strengths and weaknesses of CSR strategies, and a radical view which would see corporations using CSR as one of their strategies to further their fundamental goals and interests in this advanced capitalist world system. Another dialectic in the development of CSR scholarship is regarding the future: will corporations become more important as state governments weaken, or, given crises such as the current virus pandemic, will governments regain control and be strengthened through working with other states and international organisations? The future of CSR and the way it develops is dependent on which of these or possibly other scenarios are realized – an outcome not easy to predict at the present moment. The chapter begins with definitions of CSR and then highlights the complexities of the subject by looking at its different philosophical and sociological foundations. Many of the various topics related to the ideology, processes, practices, and outcomes of CSR are then discussed: CSR and capitalism; stakeholders; CSR and legitimacy; ethics; environmental issues and sustainability; communication and reporting; supply chain management and consumers; disclosure and reporting; accountability and compliance; and the implementation of CSR policies. Scholarship into CSR is then considered in terms of the influence of the academy on the type of scholarship produced and its inherent pressures and problems. The research methods used in CSR research are discussed and are linked to epistemological and political underpinnings – the main differences being between deductive, objectivist, generally quantitative and inductive, subjectivist, usually qualitative scholarship. Future research in terms of increasing the range of topics; broadening analysis through linking the subject more closely with other factors such as environmental, social, and political issues; giving more emphasis on practice and using more critical perspectives have all been suggested in the CSR literature. Finally, future developments in CSR are considered. Arguments for the likelihood of there being a broader remit for CSR are presented. On the other hand, the presence and possible expansion of neoliberal influences with the increasing power of corporations and the weakening of national governments has been suggested as a counterinfluence on CSR and a potential decrease in its importance. Some have rejected this because of the current health crisis and the inadequacy displayed in this situation both by weakened governments and by inefficient private corporations. These authors argue that the need for strong governments working together and in more direct control of partnership with corporations is the only rational solution to this and future problems, such as the looming environmental crisis. Where each of these outcomes would leave CSR is at present unclear.
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Cross-References
▶ Corporate Human Rights Responsibility in Times of Increasing Socio-cultural and Political Isolationism
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▶ Corporate Social Responsibility Reporting: Evolution, Institutionalization, and Current State ▶ Definitions of Corporate Social Responsibility ▶ Integrated Reporting ▶ Sustainability and Consumer Behaviour: Towards a Cohered Emergent Theory
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Triple Bottom Line Rodica Milena Zaharia and Razvan Zaharia
Contents 1 TBL: The Naissance of a New Concept for an Old Concern . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1 TBL Concept . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.2 TBL Critics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Codes of Conducts as a Tool for TBL Reports: From Issuing Codes of Conduct to Reporting the TBL Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1 Limited Resources for a Growing World . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2 The Environmentalist Movement in a Liberal Philosophy . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3 Global World, Global Problems, and Lack of Global Solutions . . . . . . . . . . . . . . . . . . . . . . 3 TBL and the Business Model: The Need for a Stronger Cooperation Between Governments and Companies to Facilitate the Transition Toward Sustainable Development (see also Part 5, “Economic Aspects”) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Future Directions: Quo Vadis, Triple Bottom Line? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1 New Concepts, But New Content? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.2 To a Changed System and a Changed Leadership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.3 To a New Sustainable Business Model . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.4 The Covid-19 Pandemic: A Chance to Rebuild the World . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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Abstract
The triple bottom line (TBL or 3BL) is one of the most used concepts when it comes to discuss about sustainability. It was coined by John Elkington in 1994 and from that moment it grabs the attention of all of those interested to provide analysis about sustainability, at macro- and microlevel, or for those concerned about the challenges towards the way the world is developing or is governing. This chapter provides a navigation on the literature that deals with the TBL, pointing out the context of the historic development of the concept and the relationship with the concept of sustainability with which is considered synonym. R. M. Zaharia (*) · R. Zaharia Bucharest University of Economic Studies, Bucharest, Romania © The Author(s), under exclusive license to Springer Nature Switzerland AG 2021 D. Crowther, S. Seifi (eds.), The Palgrave Handbook of Corporate Social Responsibility, https://doi.org/10.1007/978-3-030-42465-7_2
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Also, the limits of the concept are presented. The second aspect discussed is the relationship between TBL and the codes of conducts. As TBL was defined by its creator as “a sustainability framework that examines a company’s social, environment, and economic impact,” codes of conduct are still the most important documents through which companies expose their commitment towards sustainability. A brief history of codes of conduct evolution, which is, in a way, a reflection of the TBL evolution, is provided. The reporting function of the codes of conduct and limits of the reporting activity are provided throughout this part. TBL as a sustainable business model is ending this navigation through the literature devoted to this generous topic. The literature written on this topic is huge and impossible to be covered in only one body of work. The expansion of the TBL concept is exponential. Some of the future developments of the TBL are presented in the end. The chapter ends with some key literature that reflects the issues discussed. Keywords
Codes of Conduct · Sustainability · Sustainable Businesses Model · Triple Bottom Line
1
TBL: The Naissance of a New Concept for an Old Concern
1.1
TBL Concept
Triple bottom line (TBL or 3BL or 3P – People, Profit, Planet) is one of the most used concepts, not only in management but also in economics, environmental studies, or governance. On Google search for “triple bottom line” gives over 227 million results in less than 0.8 s! This proves the incorporation of the concept in the ordinary as well as in the business vocabulary on a very large scale. The naissance of the concept came on a wave of a growing impugnment against the old paradigm, an axiom of the classical political economy, according to which the purpose of an enterprise is to produce profit for its shareholders and the performance of an economic activity should be given only by its financial result. The growing concerns about critical issues like environmental protection, labor standards, increase poverty, or corruption mobilize the large community to stand by and to act towards finding solution for these problems. Among these endeavors, SustainAbility, a consultancy agency and a think-thank founded by activists John Elkington and Julia Hailes in 1987, in the same year that the Brundtland Commission published Our Common Future (a manifesto considered coining sustainability concept), started an offensive to increase the awareness about the need to be proactive in including environmental and social issues on business agenda (see also chapter ▶ “Brundtland and After,” see also Part 3, “Environmental Aspects”). SustainAbility is very much the crucible of the triple bottom line concept. In 1994, the concept of the “triple bottom line” is coined by John Elkington in 1994s Cannibals with Forks.
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Elkington defines TBL, in his book, Cannibals with Forks: The Triple Bottom Line of twenty-first Century Business, using a parabola from the success in the French film industry (Elkington 1997, p. XI). He identifies the first bottom line as the financial one (economic dimension). The second is the environmental agenda and he associates the figure of the famous French actress Brigitte Bardot as symbolizing the two-bottom line French film industry success. Elkington, then, argues why these two dimensions were not enough in order to satisfy the demands of the public and to further preserve the success of Brigitte Bardot (the twobottom line). It is about the missing dimension, the social justice that is required by the society. Therefore, to satisfy the requirements of the sustainable development, triple bottom line approach is required. In 2018, at the anniversary of the TBL concept, Elkington (2018) restated the dimensions that defines TBL: “the triple bottom line is a sustainability framework that examines a company’s social, environment, and economic impact.” Elkington further considers that the new paradigm imposed by the TBL approach started these seven revolutions (Table 1). The idea of the TBL was not a new one. Even its creator mentioned that “when the three words finally come to me, I was totally convinced that someone must have used them before” (Elkington 2004). The idea that the purpose of a business should not be exclusively for profit, but also for taking into account social and/or environmental aspects was not new. Other scholars mentioned well before 1990s the fact that a company should have to take into consideration not only the shareholders’ interests (meaning profit) but also stakeholders’ benefits. Even before the launch of the stakeholder theory (coined by Edward R. Freeman in his work Strategic Management: A Stakeholder Approach), Howard R. Bowen mentioned in his seminal book Social Responsibility of the Businessman (1953, p. 3):
Table 1 The seven revolutions for a sustainable future Old paradigm Compliance Hard
Revolution 1 2
Focus Markets Values
3 4 5
Transparency Lifecycle technology Partnerships
Subversion
6
Time
Wider
7
Corporate governance
Exclusive
Closed Product
Sources: Adapted after Elkington (1997)
New paradigm Competition (going for the triple win) Soft (concern for future generations, wealth creation needs values) Open (no hiding place) Function (from conception to resurrection) Symbiosis (stakeholders want to be treated as partners, sustainability can be a 2 + 2 ¼ 5 (or even 50) game) Longer (building the infrastructure of a sustainable economy will take unusually longterm thinking, planning, and funding) Inclusive (from PR to competitive advantage and corporate governance, from factory fence to boardroom)
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TBL is often considered synonym with sustainability. In some cases, sustainability is defined through the same three elements (e.g., Ozanne et al. 2016) as the TBL. Glavas and Mish (2015, p. 625) defines TBL as “the practice of the sustainability.” Hammer and Pivo (2017, p. 27) related TBL with sustainability: “TBL means programs, policies and activities designed to create or retain jobs and wealth in ways that contribute to environmental, social, and economic well-being over time.” Even the United Nations (UN) induced the idea of similarity between TBL and sustainability. From the initial concept of sustainable development in the vision of the Brundtland Commission: “development that meets the needs of the present without compromising the ability of future generations to meet their own needs” (United Nations 1987, p. 37), 15 years later, UN adopts the TBL philosophy in defining sustainable development, marking the very strong association between these two concepts: “the integration of the three components of sustainable development - economic development, social development and environmental protection as interdependent and mutually reinforcing pillars” (United Nations 2002, p. 2).
1.2
TBL Critics
The beauty of the concept was not enough for applying it into practice. One of the critics brought to the TBL concept is the vagueness of it. “The triple bottom line is a sustainability framework that examines a company’s social, environment, and economic impact” (Elkington 2018) and “aims to measure the financial, social and environmental performance of the corporation over a period of time” (The Economist 2009). In this way, TBL is a descriptive concept. There are no mentions about the weight of the three pillars: are they equal? Should they be treated equal? The Elkington definition do not provide an explicit mention on this, leaving the idea that the three dimensions are equally balanced (as it is suggested also by the Brundtland Commission when sustainable development was defined). Hussain et al. (2018, p. 411) support this balanced view: “this approach gives equal weight to economic, environmental, and social dimensions.” Similarly, Alhaddi (2015, p. 7) says that “TBL places an equal amount of emphasis on each of the three lines, which brings more balance and coherence into the construct,” citing another five studies with the same conclusion. However, a balance between the three pillars is almost impossible to find in the real-life behavior. Even Elkington (1998, p. 40) says that “in the world of business, environmental performance is increasingly seen as a competitive and strategic issue for companies,” and Glavas and Mish (2015, p. 625) talk about “caring for the well-
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being of others and the environment in such a way that value is created for the business.” This induce the idea that this balance is not always possible, and the transition from the classical view (only profit matters) to the TBL (all three matter, in an equal part) it involves either assuming a decrease in profit or the hope that the spending on environment or social issues will be compensated by the increasing of sales as a consequences of customers recognition. Some studies (Welford et al. 2007; Weber 2010; Venkatraman and Nayak 2015) concluded that the managers are not necessary and convinced that the increase in sale or customer recognition will compensate the efforts made by companies in tackling environment or social aspects and that their commitment towards a TBL approach is rather determined by personal believes than economic reasons. There are limited empirical evidences on how companies balanced the tensions between the demands coming from the TBL dimensions and how do they respond to the pressures coming from internal and external critiques to harmonize the three pillars of the TBL approach. Another discussion on the TBL is about the must of seeing the elements of TBL together. And seeing together means an integration of them. Tullberg (2012, p. 318) “The bottom-line thinking is not only about a specific project ex post, but is even more important for an ex ante choice between alternatives.” According to Coffman and Umemoto (2010, p. 609), “if a triple-bottom-line (environment – economy – society) frame is adopted, the various goals should be integrated rather than juxtaposed.” Despite the fact that you may have three different reports (one on financial aspects, another on environmental issue, and another one on social justice) in order to have a general and comprehensive view on the sustainability of your company, the three aspects have to be approached together, in an integrative way, to generate synergy. TBL do not provide a systemic approach because of the lack of interdependence between the three dimensions, mentioning that TBL focus mostly on their coexistence (Sridhar and Jones 2013). Or, as Norman and MacDonald (2004) mention, the beauty of the concept lays on the promise of the integrative approach. With the lack of this integrative method, some consider that the TBL vision is only a concession for the public image, mimicry, trendy thing to do (Sridhar and Jones 2013), a sort of green washing (“the act of misleading consumers regarding the environmental practices of a company or the environmental benefits of a product or service” (Young and Dhanda 2013, p. 327)). Coffman and Umemoto (2010, p. 608) consider that “in the frame of ecological sustainability, the carrying capacity of the natural system is the ultimate .” One of the most discussed critique to the TBL concept is about the measurement capacity, as well as the novelty it brings. Norman and MacDonald (2004, p. 243) mention that “what is sound about the idea of a Triple Bottom Line is not novel, and what is novel about the idea is not sound” and that “on both conceptual and practical grounds the Triple Bottom Line is an unhelpful addition to current discussions of corporate social responsibility.” In their argument, Norman and MacDonald (2004, p. 249) point that the novelty of the TBL is “the aggregation claim,” meaning the possibility to calculate “a social bottom line,” based on the registered indicator. But exactly this aspect didn’t happen and is almost impossible to happen, because: “is good reason to think that it would be impossible to formulate a sound and relatively
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uncontroversial methodology to calculate a social bottom line” (Norman and MacDonald 2004, p. 249). In their vision, this transforms TBL to a simple, correct rhetoric, lacking in a practical utility. The impossibility to measure the “net social profit/loss” came from the fact that it is impossible to put in figures, in quantitative measures the aspirations and humans feelings as well as some social activities: “because of its inherent emptiness and vagueness, the TBL paradigm make it as easy as possible for a cynical firm to appear to be committed to social responsibility and ecological sustainability” (Norman and MacDonald 2004, pp. 256–257). Sridhar and Jones (2013) also address to the limits of the TBL in the area of measurement, systemic visions, and compliance. In terms of TBL measurements, the authors underline as the most difficulty to measure social aspects, which are more a qualitative aspect and require a specific approach: “the social impact through TBL requires a more interpretivist approach or a more qualitative approach in measurement” (Sridhar and Jones 2013, p. 96). Data aggregation is also an impediment in measuring TBL, as no methodology is proposed to harmonize data inside each component of the TBL as well as among the three pillars. Despite the fact that in the last years preoccupations in finding quantitative methods to evaluate social sustainability increased (e.g., Popovic et al. 2018; Kumar and Anbanandam 2019; D’Eusanio et al. 2019; Venkatesh et al. 2020), this limit addressed to TBL is still one of the strongest. Other critics bring into discussion the cost generated by the TBL approach. Jackson et al. (2011) identify several disadvantages. First, they address the costs involved by resources necessary to monitor and to report additional information regarding social and environmental issues, as well as implementing new activities corresponding to the TBL philosophy. Second, TBL may be a competitive advantage against other companies, but this may function only on short term, if this advantage is lost. Third, Jackson et al. (2011, p. 57) observe that for a fully implementation of the TBL, “the corporate environment has to be eradicated and rebuild,” which is almost impossible for any company. Finally, disclosing some less pleasant aspects of social and environmental company’s activity open the gate for critics and opponents, and may deteriorate he company’s public image. Implementing TBL at the level of a company is similar to implementing sustainable development, which, in the vision of Gray and Milne (2004, p. 74) “it seems profoundly implausible that an individual company could be sustainable (or responsible) in an unsustainable (or irresponsible) system.” This is in the same line with the critics brought by Jackson et al. (2011), regarding the need of a profound change at the level of the entire global economy. Who, how, and why somebody would make this change? As a (partial) response, Jacob (1994, p. 248) sustain that a successful implementation of the sustainable development would have as a premises a fundamental change of the life style: “such reform will require further commitment in the political sphere to lead the populations of both the First and the Third World away from consumption-oriented lifestyles and expectations.” This kind of change is still very far away, as long as economic growth is still the most pursued goal on the government agenda and the majority of companies are still in the era of profit maximization.
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The observation made by Steven Schilizzi almost 20 years ago remain valid until today and is probably the weakest point of the TBL: “Technically, only financial performance is measured in a clearly regulated and quantitative way. Environmental accounts do exist, but they are not (yet?) regulated and are not easily comparable across sectors or companies, or between countries. And social accounting is still in its infancy. Most importantly, there is no accepted framework to bring all three dimensions consistently together” (Schilizzi 2002, p. 25).
2
Codes of Conducts as a Tool for TBL Reports: From Issuing Codes of Conduct to Reporting the TBL Performance
As Dwyer (2005, p. 79) mentioned, “TBL is a planning and reporting mechanism and decision-making framework used to achieve sustainable development in both private and public sector organizations—an internal management tool as well as an external reporting framework.” Therefore, TBL is analyzed in the literature in strong correlation to codes of conduct, as instruments for assessing the dimensions of the triple bottom line (Painter-Morland 2006; Skouloudis et al. 2009; Milne and Gray 2013). (Codes of conduct, codes of ethics, code of business standards, code of business principles, code of values or code of behaviors are used here as synonyms, as the purpose of this chapter does not look for semantic differences between concepts (https://www.iasplus.com/en/binary/ifac/0611conduct.pdf, p. 5).) Codes of conduct “are broader sets of principles that are designed to inform specific laws or government actions” (Gilman 2005, p. 4), as well as ways of reporting not only financial but mostly environmental and social dimensions of their practices (Carroll 2018). It was a constant increase in the number, form, and complexity of the codes of conducts. As a number, more and more entities (companies, agencies, etc.) acknowledge the necessity of publishing their commitments towards other aspects than economic profits and financial performances. As forms, there are several types of codes of conduct. Jackson (2013, p. 2) identified three main categories: (1) externally generated codes of conduct, developed by governments or international organizations, (2) corporate codes of conduct, expressing individual companies’ ethical standards, and (3) industry-specific codes. UN uses four categories: (1) intergovernmental organization standards derived from universal principles; (2) multi-stakeholder initiative standards; (3) industry association codes; and (4) individual company codes (United Nation cited in Jackson 2013, p. 2). Ray Jenkins and Unies (2001), p. 20) classifies codes of conduct in five types: company codes (adopted individually by companies as a statement of the principles of doing business), trade association codes (agreed by a group of firms in a particular industry), multi-stakeholder codes (representing negotiations between several stakeholders, including companies, NGOs, or even governments), model codes (a sort of benchmark of what a particular organization regards as good practice in terms of codes of conduct), and intergovernmental codes (negotiated at an international level and are agreed to by national governments). Some scholars discuss also about global codes of conduct (Painter-
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Morland 2006; Carroll 2018). These codes look to various stakeholders’ interests and serve as guidance in daily operations as well as in long-term strategic management (Mark-Herbert et al. 2010, p. 3). In terms of complexity, codes of conducts evolved from simple principles “to follow” by business into a multistakeholder world (at the level of a company or an industry) to a complex of indicators aiming to measure and compare nonfinancial performance of companies or industries. The process of issuing codes of conduct emerged well before launching the concept of the TBL. Although codes of conduct were established starting with the beginning of the XX century, it was mostly after 1960s when the codes of conduct flourished in number, forms, and complexity. The development of codes is the result of a complex environment: the political response to companies’ behavior in a multipart and global environment (political emancipation of the new independent countries, the desire to control the benefits and the costs of the companies’ international activity, etc.), a reactions of companies (mostly multinationals) to internal and international pressure coming from a growing categories of stakeholders (employees, NGOs, international agencies, etc.), a diversification of the instruments used by companies to increase their competitiveness. All these aspects are connected to the TBL philosophy. Several reasons determined the flourish in number, forms, and complexity of codes of conduct, and the same reasons shaped the context that favor the emergence of the TBL concept. The change in the economic role of governments and their attitude towards multinationals and foreign investments, the growing concerns for environmental protection, human rights, minorities groups emancipation movements, and the increase of the awareness about the finite physical capacity of our planet have determined the diversity of attempts to translate these challenges into codes of conducts. The growing number of states as a result of gaining sovereignty changed the political landscape of the world. New states pursued for strengthening political and economic independence through securing economic gains from the explosive growth of the international capital flows. Also, as the internationalization process of the firm became more and more complex (from the reasons for which companies started to go internationally, to the new types of relationships developed with the host and home countries), the footprint corporations started to leave around the world became multifaced. Profitability for the shareholders as the most important goal of any business started to be questioned. Codes of conducts have been evolved following the waves of public pressure on environmental and social issues. As Elkington mentioned (2013), three waves market the response of companies, governments: the “limits,” “green,” and “globalization.” For the first wave (1960s to the end of 1980s), the response was mostly reactive and the behavior of companies was focused rather to compliance. The second wave (from the end of the 1980s to the end of 1990s) “green” characterizes the development in business process and products for sustainability, bringing a competitive response. The third one (beginning of the twenty-first century) “globalization” challenged the mode of business, leading to “market creation” (Elkington 2013, p. 7).
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83
Limited Resources for a Growing World
1960s and 1970s were turbulent years for multinationals. ITT was accused of interfering in altering elections in Chile, Nestle was criticized for discouraging breastfeeding of babies in favor of a baby formula (Moran 2009; Sauvant 2015). In the 1970s, before coining of the TBL concept, national governments (mostly from developing countries) tried to regulate multinational companies’ activity and started to bring the discussion about the rights and obligations of national governments versus rights and obligations of multinational companies at the international level. The background of the international debate about codes of conduct was not only related to the lack of responsible conduct of multinationals regarding environment protection, bribery, or labor standards, frequently in developing countries, but mostly related to the desire of the South (developing countries) to increase the gains associated to international investment (Jenkins and Unies 2001, p. 2), coming mostly from the industrialized North. Some studies mention that 22 developing countries passed legislation controlling MNEs in the period 1967–1980 (Murray 1998, p. 6). Developed countries, also, introduced laws and regulations targeting multinational corporations’ activity. Numerous aspects covered by the codes of conduct were responses to allegations faced by multinational corporations. For example, in a research conducted on 174 codes in 1978 found that more than half of them covered questionable payments as a result of the bribery and corruption accusations brought to multinationals (Jenkins and Unies 2001, p. 5). Many codes have emerged at the initiative of international agencies and organizations as well as at the initiatives of governments. For example, International Chamber of Commerce (ICC) promoted Guidelines for International Investment in 1972, International Codes of Practice in Marketing in 1973, and Recommendation to Combat Extorsion and Bribery in Business Transactions in 1977. (Guidelines for International Investment promoted by the ICC is a follow-up of the ICC International Code of Fair Treatment for Foreign Investments in 1949 (ICC 2020, https://iccwbo.org/globalissues-trends/trade-investment/investment/).) These were designed to facilitate consultation between investors and governments, in order “to create a climate of mutual confidence conducive to an increased, and mutually satisfactory flow of international investment” and “to be helpful to the United Nations and other intergovernmental organizations in their efforts to promote constructive discussions” on the subject of codes of conduct (OECD 1998). These codes were legally nonbinding, the Chamber itself, as a private entity representing business community interests, recommending strongly that these guidelines not be considered rigid codes of conduct (Reinalda 2009, p. 495). In the vision of ICC, rather individual companies should establish for their own those principles and standards of responsible conduct. This reflects the strong preference of business for non-centralized, voluntary regulation, which persists even today (Murray 1998). OECD issued also a basic statement on foreign investment, The Declaration on International Investment and Multinational Enterprises, originally adopted by the Governments of 23 OECD Member countries in 1976. This was a “voluntary and not
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legally enforceable” (OECD 1998), general statement of policy regarding the rights and responsibilities of foreign investors. The Guidelines covered various aspects, from noninterference in political affairs of the host countries, abstention from corrupt practices, disclosure of information, competition, taxation, employment and labor relations, to environmental and consumer protection and transfer of technology (OECD 1998). Companies referred their reporting activity to these guidelines. The International Labor Organization (ILO), in 1977, adopted the Tripartite Declaration of Principles concerning Multinational Enterprises and Social Policy. The ILO Declaration was narrower in scope, focusing on the social aspects of TNC activities (Jenkins and Unies 2001, p. 4): it is addressed to governments, employers, and workers organizations, and sets out principles only in the field of employment, training, conditions work, and industrial relations which governments, employers, and workers (OECD 1998). One of the most ambitious attempts in terms of issuing a legally binding international instrument of rules to govern the activities of TNCs was launched in 1974. In 1974, United Nations founded the United Nation Centre on Transnational Corporations (UNCTC) an agency that supposed to issue an international, widely recognized set of principles for the conduct of multinational corporations, an effort to bargain national interest and sovereignty concern of countries towards international investments (mostly coming from developing countries) with business interests. (United Nations Centre on Transnational Corporations (UNCTC) served as a focal point for all matters related to transnational corporations. Became ‘United Nations Transnational Corporations and Management Division’, part of Department for Economic Affairs and Social Development in 1992 and ceased to exist in Jul 1993, when activities were integrated into the work Programme of E-XE3381 – UNCTAD (https://uia.org/s/or/en/1100024712).) Related to the social dimension, the Code should have to regulate the power of multinational companies in order to ensure the global protection of workers (Murray 1998). UNCTC aimed: further understanding of the nature of transnational corporations, and of their political, legal, economic and social effects on home and host countries and in international relations, particularly between developed and developing countries; secure effective international arrangements to enhance the contribution of transnational corporations to national development goals and world economic growth, while controlling and eliminating their negative effects; strengthen the negotiating capacity of host countries, in particular the developing countries, in their dealings with transnational corporations.
Despite the ambitious scope, the UN Code of Conduct for Transnational Corporations was never delivered in the form the initiative was launched, as the interest of countries were too diverse, and the attitude towards foreign direct investments of different countries changed over time. Not only the aspects related to the three dimensions of the TBL were difficult to negotiate, but rather the political interests and ideologies (communist countries versus capitalist nations) made the negotiations very difficult. Even if the Code of Conduct on Transnational Corporations was not crowned as it was minted to be, the extensive discussions on corporate behavior and government responsibilities, the critics addressed to multinationals about the
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inappropriate business conduct in some countries increased the accountability of companies towards their practices and behavior and transformed corporations into better citizens, with interests not only of the economic part of their activity but towards other aspects, as social and environment. Some governments, as the USA, issued recommendations to American corporations acting outside American border. For instance, in 1977, the United States adopted the Sullivan Principles and the Foreign Corrupt Practices Act (FCPA). The Sullivan Principles were issued initially as a set of standards for firms to follow to pressure on the apartheid government of South Africa to improve the living conditions of black workers, their families, and their communities (Murray 1998; Jackson 2013). FCPA was signed into law by President Jimmy Carter on December 19, 1977. Canadian Government’s issued some Guiding Principles of Good Corporate Behavior for Subsidiaries in Canada of Foreign Companies (1967), and in Japan, the Code of Behavior for Japanese Investors Overseas (1973) was passing on (Murray 1998). The pressure exerted by the international community determined some large corporations to issue private codes of conduct. Whether these codes of conduct targeted to improve organizational climate, to enforce companies’ values and culture, to restore company’s reputation, or to ensure the stakeholders that the company is committed to ethical practices, firms became more interested in issuing their private, specific codes of conduct and in reporting about their commitment to what society considered to be critical issues. Some private codes of conduct go backs to the beginning of the twentieth century. JC Penney Company issued its code in 1913, Johnson & Johnson, in 1940s. In the 1950s, between 15% and 40% of large companies reporting ethics codes (Adams et al. 2001, p. 199). In an analysis realized by OCDE in 1998 (OECD 1998, p. 17), almost all codes issued by enterprises prohibited the use of child or forced labor, some recommended the respect of private life (freedom of religion, sexual orientation, marital status, etc.) and the prohibition of every kind of harassment (physical, sexual, psychological, or verbal). However, some scholars considered that most of the corporate codes of conduct were externally directed, responsive to social critics, government, and the media pressure, lacked in specificity and credibility, focused on internal company behavior and, therefore, didn’t respond adequate to the diverse cross-cultural demands of the international market (Murray 1998). The 1980s brought a change in governments’ attitude towards foreign investments and multinational companies, from the purpose to regulate foreign capital to a more market-oriented vision. Interest in working on international code of conduct as well as in the attempts to regulate the investments inflows decreased, as foreign investments started to be considered beneficial. Even communist countries promulgated new laws for attracting foreign capital. Also, governments of developing countries become more experienced in dealing with foreign companies, having a better administrative infrastructure. Mostly, economic necessity turned countries to a positive attitude towards investments (Wallace 1990, p. 4). Oil shocks as well as external debt services crisis that brought high rates of unemployment and inflation motivated governments to limit the pressure on international agencies to promote
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international external code of conducts for controlling multinational activities. Profit dimension was in force, again! In terms of international codes of conduct, only the OECD Guidelines and the ILO Declaration kept their influence (Jenkins and Unies 2001). Despite a decline in the interest of issuing international regulations for companies’ behavior, political pressure from NGOs, individuals, even political parties created a large demand for responsibility, not only in relation to labor standards or corrupted practices but also in relation to the environmental issues. There was a concrete need for a concept capable to reconciliate economic development with environmental protection. The mains aspects that concerned international community were related to: which is the source of local environmental problems (local development or a consequences of global economic system)? Is the environment destruction a result of the model of development centered on economic growth or a result of poverty and underdevelopment? Are the solutions to environmental problems technology based or social and policies based? The 1980 World Conservation Strategy of the International Union for the Conservation of Nature was the first report that included a very brief chapter on a concept called “sustainable development.” It focused on global structural changes but did not reached a large audience. The UN initiated an independent commission in 1983, which was asked to provide an analysis of existing problems and ideas for their solution. This new organization was the Brundtland Commission, or more formally, the World Commission on Environment and Development (WCED). At the end of 1980s (1987), Brundtland Commission came with the first volume of “Our Common Future,” the organization’s main report, one of the strongest international manifestos towards sustainable development. Individual companies responded to the concerns related to environmental and social problems by issuing private codes of conduct. In 1980 continued the proliferation of individual corporate codes of conduct and an increased interest in being “good corporate citizenship” by a growing number of MNEs. In a research conducted by the Centre of Business Ethics in 1984 among Fortune 500 list of industrial companies and Fortune 500 list of services companies (279 companies have responded), almost 80% of them stated that they “took some steps to incorporate ethical values and concerns into their daily operations,” with more than 90% of them through codes of conduct. The most important specific goals pursued by the companies’ codes were, in order, “being a socially responsible corporation” (34.1%), “provide guidelines for employee’s behavior” (27.8%), “to improve management,” and “to comply with local, state and federal guidelines” with 15.7% (Centre for Business Ethics 1986, p. 86).
2.2
The Environmentalist Movement in a Liberal Philosophy
If the 1980s have been dominated by the employee’s issues and anti-corruption practices, the 1990s started the era of environmental concerns. A 1989 analysis of the content of 150 corporate codes of ethics found that many contained elements concerning: provisions about corporate treatment of employees, guidance for inter-
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employee relationships, treatment of “whistle-blowers,” definition and prevention of bribery and conflicts of interest, and regulations for employees’ political action and contributions (Arthur W. Page center 2020). The analysis found, however, that, despite the fact that the codes refers to these aspects, they rarely regulated elements such as a corporation’s impact on the environment or compliance with anti-trust laws. In 1990s, the increase in liberalization pushed forward the facilitation of foreign investments. Governments refined their policies to remove barriers against foreign capital, technologies, skills, developed incentives for investments, improved the conditions for doing business in their countries, and looked to foreign investments as a way to improve the access to other markets (Jenkins and Unies 2001, p. 3). A race for the most attractive business environment started. The political change in the Eastern Europe, developments in information technology change the attitude towards investments, and the ideology promoting liberalization and privatization was the leading approach. After almost 20 years of negotiations, UN failed in its attempt to issue a legally binding code of conduct for translational corporation, delivering a draft of recommendations for multinational enterprises. From some perspectives, this can be considered a failure and a recognition of powerful corporations over governments. From other points of view, it was a natural result of the exceptional development of the FDI and of the dynamism of the firm internationalization process, which were far most rapid than the capacity of governments to fully understand it (Moran 2009). However, with the same force as the globalization speeded around the world, the movements towards environmentalism and antipoverty grabbed the global attention. Starting with the 1990s the interest in assessing other aspects than profit for the corporations became more acute. A more stakeholder-based view has gradually come to prevail, as the firm is seen as having responsibilities to a wider set of groups than simply shareholders (employees and their representatives, customers, suppliers, governments, industry bodies, local communities, and so forth) (Hubbard 2009, p. 178). Environmental aspects and labor issues became the most addressed issues in the private codes adopted by corporations, and an increasing concern about the possible impact of multinationals operations on the environment characterized the decade. OECD Guidelines added in 1991 of a new Section (Section 8) to give prominence to environmental factors. A wide range of voluntary codes of conduct in the field of the environment have emerged in 1990s, the majority arisen around the 1992 UN Conference on Environment and Development (Earth Summit) (UNCED) and the 1995 Rio Summit. These codes range from intergovernmental, to international and national business declarations, to industry-based codes to individual corporate policy statements (OECD 1998, p. 18). Agenda 21 is particularly important, since it was prepared with both NGO and business input. It dedicates a chapter to business and addresses other recommendations throughout the document to enterprises. The full text of Agenda 21 was made public at the UNCED, held in Rio de Janeiro on 13 June 1992, where 178 governments voted to adopt the program. Other two leading international business codes of environmental conduct were developed: The Business Charter for Sustainable Development of the International Chamber of Commerce and the CERES principles.
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The World Business Council for Sustainable Development (WBCSD) was created in 1995 as a merger of the Business Council for Sustainable Development (BCSD) and the World Industry Council for the Environment. (It is a CEO-led organization of over 200 international companies, from all business sectors and all major economies, representing a combined revenue of more than USD $8.5 trillion and 19 million employees. The Council is also connected to 60 national and regional business councils and partner organizations (WBCSD 2020).) In 1991, the eco-efficiency term has been coined by the BCSD, and in 1992, the founder of the BCSD published the book “Changing Course,” “a practical introduction to new and necessary methods of running businesses so that the realities of business and the marketplace support the realities of the environment and the needs of human development” (WBCSD 2020). Companies became more and more aware about the acute necessity to focus their attention towards environment and to develop codes reflecting their conduct. Centre of Business Ethics conducted a follow-up research in 1990 on Fortune 1000 list of industrial and service corporations. This time, over 90% of the responded companies (244 companies) “took some stapes to incorporate ethical values and concern into their daily operations.” Quite similar to the previous research, the most important specific goals pursued by the companies’ codes were, in order, “being a socially responsible corporation” (95%), “provide guidelines for conduct” (94%), and “to ensure compliance to the law” with 79% (Centre for Business Ethics 1992, p. 86). In 1990s, a question raised up stronger than before: how sustainability can be measured? The codes of conduct became more elaborated, but little has been done in introducing a framework of analysis capable to assess the concrete implementation of those codes and the effects generated. As scholars appreciated, the international codes of conduct lack of consistency, of legally binding, of creating international rules and in proving symmetrical interests (for companies and governments) (Murray 1998). Private codes of conducts, despite the fact that they are an important tool in improving ethical performance for the company, they do not necessary work as they should have. As Lee (2003, p. 74) stated, “in particular, practical experience suggests that codes of ethics are flawed in these ways: offering a false sense of authority, reifying ethical concepts and issues, avoiding issues of appropriateness to the time and place, presenting ethical issues through single set of lenses, and considering the role of individuals and emotions.” Others consider codes rather a strategy of symbolic communications on sensitive issues, without substantially addressing those issues with concreate and measurable actions (Walker and Wan 2012). In this context, at the end of 1990s, John Elkington argues that social justice, economic prosperity and environmental quality, the three key elements of the new concept he coined, the triple bottom line, will be the yardsticks against which corporate performance have to be measured. TBL underlined, thus, the importance of reporting versus the importance of issuing codes of conduct. TBL continued the debate about the codes capacity to be translated into measures, as well as about the preoccupation of finding methods for measuring the social and environmental components of the TBL. The end of the 1990s marked, also, the naissance of some indices mint to be benchmarking for reporting. Thus, in September 1999, it was launched the Dow Jones Sustainability Indexes, “the longest-running global sustainability
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benchmarks worldwide, a key reference point in Sustainability Investing for investors and companies alike. The indexes also provide a systematic engagement platform to move sustainability up the corporate agenda” (Dow Jones Sustainability Indexe 2010).
2.3
Global World, Global Problems, and Lack of Global Solutions
The beginning of the new century increased the focus on reporting instead on issuing codes of conduct. Also, new challenges to report TBL components have been added. To the classical aspects (as anti-corruption practices, labor standards, workers’ rights, environment protection), new concerns have been added, emerged from the explosive development of Information Technology and Communication (as data protection) or from the pressures exerted by the environment degradation (climate change or sanitary crises). The two decades in the twenty-first century brought more complexity and more challenges to the reporting activity. Reporting has become a common expectation placed on companies targeting to be viewed as socially responsible. Climate change, biodiversity loss, and water scarcity are the three sustainability issues of most concern for global experts, with poverty and inequality considered the most urgent social challenges of those put forward (The GlobeScan-SustainAbility Survey 2019, p. 7). The weaknesses of the TBL reporting did not vanished: TBL remained very difficult to measure, sustainability still lack of consensus on what it entails, and a unified set of indicators capable to offer a direct, clear, and quantifiable value of the TBL dimensions was not achieved. Most of the indicators proposed to assess the TBL performance includes indicators well established, others that are not directly measured, but estimated, and others rough estimated based on some assumption, which are also estimated. Under these circumstances, it is not surprising that codes remained mainly an instrument of communication about the commitment of the organization towards sustainability. Commitment towards reporting TBL marked a sharp increase. The first decades of the new millennium show a movement from a voluntary to a mandatory highly standardized practice in reporting environmental and social dimensions of the TBL (Bedenik and Barišić 2019). In 2007, the survey conducted by The Economist among 1254 executive managers showed that only 22% of executives say their firms have formal TBL reporting, and that the biggest long-term benefit of the nonfinancial reporting is in the area of communication to investors and stakeholders about their organizations’ performance on sustainability (The Economist 2008). 2017 KPMG Surveys mentions that the rate of sustainability reporting for the world’s 250 largest companies (G250) is 93% and for a worldwide sample of 4900 companies (N100) is 75% (KPMG 2019). The majority of companies surveyed by KPMG uses some frameworks for their reporting. The Global Reporting Initiatives (GRI) framework is the most commonly used, with 63% of N100 reports and 75% of G250 reports applying it (KPMG 2019). Among other used frames for reporting are UN Global Compact Guidelines and UN Sustainable Development Goals. Numerous sustainability indicators and frameworks initiatives have been created since the Agenda 21 emphasized that “indicators of sustainable development need to
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be developed to provide solid bases for decision-making at all levels and to contribute to a self-regulating sustainability of integrated environment and development systems” (UNCED 1992). According to the International Institute for Sustainable Development (IISD), in November 2009, there were 842 sustainability indicators initiatives worldwide (Fonseca 2010). Global Reporting Initiative (GRI) is probably the best known independent international organization that launched sustainability reporting since 1997. GRI has its roots in the Coalition for Environmentally Responsible Economies (CERES) and the Tellus Institute. The GRI Standards represent global best practice for reporting publicly on a range of economic, environmental and social impacts. Sustainability reporting based on the Standards provides information about an organization’s positive or negative contributions to sustainable development. The principles that should underpin triple bottom line reporting under GRI Standards are: transparency, inclusiveness, auditability, completeness, relevance, accuracy, neutrality, comparability, clarity, and timeliness (PainterMorland 2006, p. 362). The 100 series of the GRI Standards includes three universal Standards applicable for every organization preparing a sustainability report. They guide reporters in using the Standards, reporting an organization’s relevant contextual information, and reporting how its material topics are managed (GRI 101, 102, 103). The 200 series of the GRI Standards include topic-specific Standards used to report information on an organization’s material impacts related to economic topics (201–2017). The 300 series of the GRI Standards include topic-specific Standards used to report information on an organization’s material impacts related to environmental topics (301–308). The 400 series of the GRI Standards include topic-specific Standards used to report information on an organization’s material impacts related to social topics (401–419) (GRI 2020). Unlike TBL, the GRI system proposes only a large number of minimum standards that corporations must meet, but without aggregating these standards and without attempting to rate or prioritize companies. If in 2000, there were 50 organizations that published reports according to the methodology proposed by CERES (2010), in August 2020 the CERES database comprises 14,885 organizations and 63,245 reports, and 93% of the world’s largest 250 corporations report on their sustainability performance (GRI 2020). There are some critiques to GRI, launched both by academia and managers. It is very difficult to navigate through all these standards and preparing a sustainable Report according to GRI Standards. Assessing and reporting according to GRI Standards is too costly, it requires a lot of work, specialized personnel, on some aspects there are no data or too “big data” and some of these data are not always reliable and lack in integrated indicators (which supposed to be the essence of the novelty of the TBL). GRI, in the eyes of critics, focused too much on internal performance, risking to serve rather as a PR exercise then a way to promote sustainability. GRI Standards need to focus more on depth and materiality and to endorse the interactive effects of organizations with the external environment. Markets need condensed indicators, adequate metrics and measures to assess and compare the impact of the organization in the society, in order to understand the sustainable reports (Fonseca 2010; Dyllick and Muff 2016, p. 15).
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UN Global Compact Guidelines aims to mobilize a global movement of sustainable companies and stakeholders to supports companies to do business responsibly by aligning their strategies and operations with Ten Principles on human rights, labor, environment, and anti-corruption, and to take strategic actions to advance broader societal goals, such as the UN Sustainable Development Goals, with an emphasis on collaboration and innovation (UN Global Compact 2010). On 1 January 2016, the 17 Sustainable Development Goals (SDGs) of the 2030 Agenda for Sustainable Development, adopted by world leaders in September 2015 at the UN Summit, officially came into force. (The Sustainable Development Goals (SDGs) are a collection of 17 global goals designed to be a “blueprint to achieve a better and more sustainable future for all.” The SDGs goals are: (1) End poverty in all its forms everywhere; (2) Zero hunger; (3) Ensure healthy lives and promote well-being for all at all ages; (4) Quality education; (5) Achieve gender equality and empower all women and girls; (6) Ensure access to water and sanitation for all; (7) Affordable and clean energy; (8) Decent work and economic growth; (9) Industry, innovation, and infrastructure; (10) Reducing inequality; (11) Sustainable cities and communities; (12) Responsible consumption and production; (13) Climate action; (14) Life below water; (15) Life on land; (16) Peace, justice, and strong institutions; and (17) Partnerships for the goals.) With more than 10,000 companies and 3000 nonbusiness signatories based in over 160 countries, and more than 60 local networks, Global Compact is the largest corporate sustainability initiative in the world (UN Global Compact 2020) (see also the chapter ▶ “The UN Global Compact: An Overview of the Promise and Pitfalls”). UN Global Compact Management Model follows six steps: commit (leadership commitment to mainstream the Global Compact principles into strategies and operations and to take action in support of broader UN goals, in a transparent way), assess (assess risks, opportunities, and impacts across Global Compact issue areas), define (define goals, strategies, and policies), implement (implement strategies and policies through the company and across the company’s value chain), measure (measure and monitor impacts and progress toward goals), and communicate (communicate progress and strategies and engage with stakeholders for continuous improvement) (UN Global Compact 2020). In order to align policies and operations with the Global Compact, companies have to follow governance (a continuous effort to ensure the company behaves in shareholders’ and increasingly stakeholders’ best interests) and transparency (a continuous effort to operate as openly as possible in the eyes of shareholders and other stakeholders alike). Specific considerations include documenting and communicating key economic, human rights, labor, environmental, and/or anti-corruption risks, opportunities, impacts, progress, and forward-looking plans, and engagement (engagement with stakeholders, both internally and externally, and a dialogue with governments, local communities, trade unions, and nongovernmental organizations), at every step of the Model (UN Global Compact 2010). The UN Global Compact 20th-Anniversary Progress Report: Uniting Business in the Decade of Action reveals that (UN Global Compact 2020):
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The movement towards more legally binding reporting is on the way. At the EU level, an European Directive has been adopted and companies with more than 500 employees need to report information about their business model, policies (and outcomes), risks, and nonfinancial key performance indicators in the following categories: environmental matters, social and employee aspects, respect for human rights, anti-corruption and bribery issues, and diversity on board of directors. The Directive offers considerable flexibility about what is reported and how (according to the EU Directive on the disclosure of non-financial and diversity information 2014/95/EU). Despite the increase concerns in reporting nonfinancial aspects related to business operations, and regardless the fact that more and more entities (companies and nonbusiness actors) publish on their activity, the effects of this endeavor are difficult to assess and to measure. Without any doubts, the awareness about the importance of the nonfinancial aspects that companies and other entities have to take care is on an increasing scale. The guidelines proposed by the benchmarks like GRI or United Nation Global Compact, or even the EU or Dow Jones family indexes are still “unaffordable” for small and medium-sized companies (SMEs), and the limits of the TBL or sustainability reporting remained the same: without a unified methodology for measuring social and environmental aspects, the companies code may be only a statement of good intentons.
3
TBL and the Business Model: The Need for a Stronger Cooperation Between Governments and Companies to Facilitate the Transition Toward Sustainable Development (see also Part 5, “Economic Aspects”)
In a general way, a business model is “a description of an organization and how that organization functions in achieving its goals (e.g., profitability, growth, social impact, . . .)” (Massa et al. 2017, p. 73). The most comprehensive approach to achieve sustainable operations (i.e., to integrate economic, environmental, and social thinking into core business activities) is the TBL approach (Dwyer 2005, p. 879). In fact, TBL demand business to grab the existing opportunities to design business models able to realign organizations’ search for profits with innovations that also
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benefit the environment and society, including initiatives in contexts of deep poverty and low-income markets (Massa et al. 2017, p. 74). The TBL concept suggests that firms not only need to engage in socially and environmentally responsible behavior, but, that they can achieve positive gains from this. Some authors define sustainable business models as those that “incorporate a triple bottom line approach and consider a wide range of stakeholder interests, including environment and society” (Bocken et al. 2014, cited in Massa et al. 2017, Table 1, p. 77). In an extensive research on business models literature, Massa, Tucci, and Afuah identified three major interpretations of the concept: (1) business models as attributes of real firms having a direct real impact on business operations, (2) business models as cognitive/linguistic schema, and (3) business models as formal conceptual representations/descriptions of how an organization functions (Massa, Tucci and Afuah, p. 76). The TBL framework may be involved in all these ways of interpretation. Attributes of real firms may involve activities to create and/or capture value, and outcomes that may be expected to result from these activities. The analysis performed by Massa et al. (2017, Table 1, p. 77) showed that all three dimensions of the TBL may be reflected in a business model, in a more concrete or in a more declarative manner. Focus on economic dimension of the TBL “How a company makes money” (Birkinshaw and Goddard 2009, cited in Massa, Tucci and Afuah (Massa et al. 2017, Table 1, p. 77)
Integrating TBL as a unitary concept “Sustainable business models incorporate a triple bottom line approach and consider a wide range of stakeholder interests, including environment and society” (Bocken et al. 2014, cited in Massa et al. 2017, Table 1, p. 77).
Business model as cognitive/linguistic schema refers to how business models are interpreted by organizational members, and their role and manifestation in social (inter)action, including organization-level sensemaking, environmental scanning and sensing opportunities, and the cognitive antecedents of business model design and innovation (Massa, Tucci and Afuah, p. 80). Again, the three dimensions of the TBL may be found in this interpretation, in an explicit manner (usually, when it comes about the economic dimension) or in a more inclusive way (when it refers to value creation, for example). Focus on economic dimension “it spells out how company makes money by specifying where it is positioned in the value chain” (Chesbrough & Rosenbloom, 2002, cited in Massa et al. 2017, Table 2, p. 81) “It also answers the fundamental questions every manager must ask: How do we make money in this business? What is the underlying economic logic that explains how we can deliver value to customers at an appropriate cost?” (Magretta 2002, cited in Massa et al. 2017, Table 2, p. 81)
Integrating TBL as a unitary concept “We view the. . .business model as the business unit managers’ perceived logic of how the unit in question functions and creates value, in connection with both its market environment, and within the corporation (i.e., with its other business units)” (Aspara et al. 2013, cited in Massa et al. 2017, Table 2, p. 81).
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Business models as formal conceptual representations/descriptions of how an organization function range from a clear emphasize on the profit dimension to a diffuse reflection of the TBL philosophy. Focus on economic dimension “A business model is composed of two elements, a business system and a profit model” (Itami and Nishino 2001, cited in Massa et al. 2017, Table 3, p. 83).
Integrating TBL as a unitary concept “A business model for sustainability helps describing, analyzing, managing and communicating (i) a company’s sustainable value proposition to its customers, and all other stakeholders, (ii) how it creates and delivers this value, (iii) and how it captures economic value while maintaining or regenerating natural, social, and economic capital beyond its organizational boundaries” (Schaltegger, Hansen and Ludeke-Freund 2016, cited in Massa et al. 2017, Table 3, p. 83)
This variety of TBL reflections on what sustainable business models mean mirrors not only the ambiguity and the vagueness of the TBL concept but also the need for ongoing changes in order to reach a functional sustainable business, based on TBL approach. Some of these proposed changes are radical and challenge the essence of the economic activity. Others emphasize the role of cooperation between business and governments, stressing the idea that the boundary between business and governments became very fluid. A third vison looks to the company itself and proposed changes that each company should make in order to became sustainable. The changes to the very essence of what economic development should be is proposed by the “New Left” movement, that denounced the focus on economic growth, which stress for a growing production and an increase of profits. In his manifesto, “Degrowth,” Kallis (2011) consider that as faster we produce and consume goods, the more we will harm the environment. If humanity does not want to destroy the life support systems of the planet, the global economy should slow down. Similarly, Tim Jackson in his book “Prosperity without Growth. Economics for a Finite Planet” (Jackson 2009, p. 1) proposes a change from the focus on economic output indicators (as growth and profit) to indicators that reflect more the other two dimensions of the TBL: elimination of injustice, of insecurity, of abandonment. The second view focused on the need for a partnership between companies and governments in order to promote TBL as a way of doing business. In this respect, Elkington (2013, p. 10) consider that the present way of “wealth creation” will generate “worsening environmental and social problems” and it is necessary a cooperation between governments and companies to build the transition towards sustainable development. In the view of Elkington, there are four types of companies, with four business models, and governments should encourage those that promote sustainable business paths and discourage those that harm the balance between humans and environment. Locusts and caterpillar companies are those considered by Elkington as relying on an unsustainable mode of business: these
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companies destroy “natural, human, social and economic capital,” on a smaller or larger scale, have the incapacity to foreseen the negative effects on the system on a long term, do not have the willingness to take care of warning and do not have the desire to learn from mistakes, “show single minded dedication to the business task at hand.” Some of these companies (the caterpillars) operate in fields where sustainable innovations took already place. Therefore, for these companies, governments should provide proper conditions to evolve towards a more sustainable mode of business (Elkington 2013, p. 11). But there are butterflies and honeybees’ companies with a strong commitment towards corporate social responsibility and sustainable development, regenerative, capable for co-creating a world of “increasing returns” (Elkington 2002, p. 5). These companies have to be promoted and supported and governments have to build strong, lasting partnership with them. The third view considers the individual business behavior and companies’ responses towards the social and environmental constrains. Some studies revealed that, when “pressed to choose between financial goals and societal goals, firms will normally favor their financial goals” (Van der Byl and Slawinski, 2015, cited in Wright and Nyberg 2017, p. 1635). Other studies denounced the fact that corporate initiatives such as greener supply chains or “carbon neutrality” are, in fact, motivated by business goals of cost reduction, productivity improvement, and market expansion, and not necessary by a change in the business model (Wright and Nyberg 2017, p. 1636). However, many companies address social and environmental issues on varying degrees, because this is what society expects from them. But the impact of these actions is rarely evaluated, many times remains vague, because clear metrics to assess and measure the social and environmental dimensions of the TBL are missing. As Dyllick and Muff (2016, p. 14) sustain, transparency and metrics are two essential condition in order to assess the truly sustainable business.
4
Future Directions: Quo Vadis, Triple Bottom Line?
It is clear that the humanity needs to be sustainable. The crises that affected world economy in the last two decades are a proof that despite beautiful concepts (as TBL), remarkable technological achievements and increased stewardship towards environment and social issues, we, as humanity, have done little and, in many cases, we failed to be sustainable. The current pandemic is one of the best examples of a failure, but, in the same time, can be an opportunity for an awake moment.
4.1
New Concepts, But New Content?
The extension of the concept is one of the directions towards TBL is going to. There are a lot of concepts proposed to continue the philosophy of the TBL and to enlarge its coverage (Elkington 2018). Quadruple bottom line (QBL) is one of them, with a fourth dimension as “spirituality,” “culture” or, largely, “well-being” or “purpose,”
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in order to move from the 3P to 4P. Another one proposes the extension to other component as “governance,” “compassion,” or “aesthetic.” “Carbon productivity,” the “sharing and circular economies,” “biomimicry,” “green economy and green business,” “zero-waste economy” are new perspectives on the path to sustainable business with new requirements toward companies and governments (Elkington 2018; Bedenik and Barišić 2019). These endeavors stream from the worsening of the problems the world confronts on. Coining new terms is not enough for making them to work or for improving the situation. If the direction is to enrich the concepts emerged from the TBL or sustainability, the direction should be, also, to address the limits these concepts demonstrated they have. Make them work seems to be the imperative the research should focus on.
4.2
To a Changed System and a Changed Leadership
Elkington (2018) looked back to the concept he coined 25 years ago and considers that TBL is more actual than ever, and its limits should strengthen the concept and solutions for the shortcomings have to be identified. “Change the system” and change the leadership proposes Elkington, and he recall that this was, in fact, the essence of the message of sustainability itself. His call for a profound change in the economy is supported by many others, in a more radical way. In “Good Economics for Hard Times: Better Answers to Our Biggest Problems,” two 2019 Nobel Prize winners for economics, Abhijit Banerjee and Esther Duflo, point out the importance of social justice and how the gains in the economic terms (larger GDP, larger profits) do not necessarily mean an increase in human well-being, if it is not distributed equitably. Targeting economic growth or higher profits can sometimes be counterproductive (Elkington 2018; Cassidy 2020). “Fundamentally, we have a hard-wired cultural problem in business, finance and markets. Whereas CEOs, CFOs, and other corporate leaders move heaven and earth to ensure that they hit their profit targets, the same is very rarely true of their people and planet targets” (Elkington 2018).
4.3
To a New Sustainable Business Model
Some scholars consider that the TBL is an intermediary stage for achieving sustainable business models. Dyllick and Muff (2016, pp. 9–11) identify three level of business sustainability (BST), from the concentration on economic dimension (BST1.0) to a dedication to environmental and social issues (BTS 3.0): “BST 2.0 is well captured by the definition used by the Network for Business Sustainability (2012): Business sustainability is often defined as managing the triple bottom line—a process by which firms manage their financial, social and environmental risks, obligations and opportunities. These three impacts are sometimes referred to as people, planet and profits. . . A BST 3.0 firm translates sustainability challenges into business opportunities making ‘business sense’ of societal and environmental issues.”
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The Covid-19 Pandemic: A Chance to Rebuild the World
The economic consequences of the Covid-19 pandemic seem to be disastrous. It is expected a contraction of the world economy to 5.2% in 2020 (World Bank 2020), but it can be larger, if things will go for bad. In this context, the “rebuild” term is quite appropriate. How will the world rebuild is the question. Some expect new paradigms to lead to more social justice and more environmental protection (A TBL economy!). This may involve a reconsideration of the development model, solving the equation of how can be given equal importance to the three pillars, or, why not, to reduce the importance of the economic dimension and to increase the weight of social justice and environment protection. But, will we have the power to abandon old habits? Robert J. Shiller, a professor of economics at Yale University, and winner of the 2013 Nobel Memorial Prize in economics affirms: “[. . .] the pandemic has created a wartime atmosphere in which fundamental changes suddenly seem possible. [. . .] There is also reason to hope that the pandemic has opened a window to creating new ways and institutions to deal with the suffering, including more effective measures to stop the trend toward greater inequality” (Foreign Policy 2020). However, the majority of personalities interviewed by Foreign Policy (2020) are rather skeptics in believing that the post-pandemic world will be different. On contrary, it seems that the autarchy and isolation are the preferred behaviors. This is a threat to sustainability, which requires a global and holistic approach, because “sustainability is primarily a global concept” (Gray and Milne 2004, p. 78).
5
Summary
This chapter provided a navigation on the literature that deals with the Triple Bottom Line concept (TBL), pointing out the context of its historic development and the relationship with the concept of sustainability with which it is considered synonym. There is an exponential increase of the literature dealing with TBL, and a unanimous recognition of the importance to have a TBL approach, both at macro- as at the microeconomic levels. Despite this, the theoretical and practical shortcomings of the concept are still in place and shape the behavior of the supporters and detractors of the TBL. The chapter brings into attention, also, the relationship between TBL and the codes of conducts. As TBL represents “a sustainability framework that examines a company’s social, environment, and economic impact,” codes of conduct are still the most important documents through which companies expose their commitment towards sustainability. A brief history of codes of conduct evolution, which is, in a way, a reflection of the TBL evolution, is provided. The reporting function of the codes of conduct and limits of the reporting activity are provided throughout this chapter. TBL as a sustainable business model is ending this navigation through the literature devoted to this generous topic. The chapter ends with some reflections on the future developments of the TBL, both in terms of concept expansions and of changes needed for a sustainable society.
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Ozanne LK, Phipps M, Weaver T, Carrington M, Luchs M, Callin J, Gupta S, Santos NJC, Scott K, Williams J (2016) Managing the tensions at the intersection of the triple bottom line: a paradox theory approach to sustainability management. J Public Policy Mark 35(2):249–261 Painter-Morland M (2006) Triple bottom-line reporting as social grammar: integrating corporate social responsibility and corporate codes of conduct. Busi Ethics: Eur Rev 15(4):352–364 Popovic T, Barbosa-Póvoa A, Kraslawski A, Carvalho A (2018) Quantitative indicators for social sustainability assessment of supply chains. J Clean Prod 180:748–768 Reinalda B (2009) Routledge history of international organizations: from 1815 to the present day. Routledge, London Sauvant KP (2015) The negotiations of the United Nations code of conduct on transnational corporations: experience and lessons learned. J World Invest Trade 16(1):11–87 Schilizzi S (2002) Triple bottom line accounting: how serious is it? Connections – Farm Food Resour Issues 3:24–27 Skouloudis A, Evangelinos K, Kourmousis F (2009) Development of an evaluation methodology for triple bottom line reports using international standards on reporting. Environ Manag 44: 298–311. https://doi.org/10.1007/s00267-009-9305-9 Sridhar K, Jones G (2013) The three fundamental criticisms of the triple bottom line approach: an empirical study to link sustainability reports in companies based in the Asia-Pacific region and TBL shortcomings. Asian J Bus Ethics 2:91–111 Stenzel PL (2010) Sustainability, the triple bottom line, and the global reporting initiative. Global EDGE Bus Rev 4(6):1–2 The Economist (2008) Doing good business and the sustainability challenge. Economist Intelligent Unit. Available at https://graphics.eiu.com/upload/Sustainability_allsponsors.pdf. Accessed 1 Mar 2020 The Economist (2009) Triple bottom line. It consists of three Ps: profit, people and planet. Available at: https://www.economist.com/news/2009/11/17/triple-bottom-line. Accessed 1 Mar 2020 The GlobeScan-SustainAbility Survey (2019) The 2019 sustainability leaders. Available at: https:// globescan.com/wp-content/uploads/2019/07/GlobeScan-SustainAbility-Leaders-Survey-2019Report.pdf. Accessed 1 Mar 2020 Tullberg J (2012) Triple bottom line – a vaulting ambition? Bus Ethics: Eur Rev 21(3):310–324 UNCED (1992) Agenda 21. Available at: https://sustainabledevelopment.un.org/content/documents/Agenda21.pdf. Accessed 1 March 2020 UN Global Compact (2010) UN Global Compact Management Model. Available at: https:// d306pr3pise04h.cloudfront.net/docs/news_events%2F9.1_news_archives%2F2010_06_17% 2FUN_Global_Compact_Management_Model.pdf. Accessed 1 July 2020 UN Global Compact (2020) Companies need to set more ambitious targets to achieve Sustainable Development Goals by 2030, United Nations Global Compact report shows. Available at: https://www.unglobalcompact.org/news/4577-06-15-2020. Accessed 1 July 2020 United Nations (1987) Report of the World Commission on Environment and Development: our common future. Available at: https://www.are.admin.ch/are/en/home/sustainable-development/ international-cooperation/2030agenda/un-_-milestones-in-sustainable-development/1987%2D %2Dbrundtland-report.html. Accessed 29 July 2020 United Nations (2002) Plan of implementation of the world summit on sustainable development – Johannesburg, South Africa, 2–4 September 2002. Available at: https://www.un.org/esa/ sustdev/documents/WSSD_POI_PD/English/WSSD_PlanImpl.pdf. Accessed 29 July 2020 Venkatesh VG, Kang K, Wang B, Zhong RY, Zhang A (2020) System architecture for blockchain based transparency of supply chain social sustainability. Robot Comput Integr Manuf 63:Article 101896 Venkatraman S, Nayak RR (2015) Corporate sustainability: an IS approach for integrating triple bottom line elements. Soc Responsib J 11(3):482–501 Walker K, Wan F (2012) The harm of symbolic actions and green-washing: corporate actions and communications on environmental performance and their financial implications. J Bus Ethics 109(2):227–242
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Wallace CD (ed) (1990) Foreign direct investment in the 1990s [nineteen hundred and nineties]: a new climate in the Third World. Martinus Nijhoff Publishers, Dordrecht WBCSD (2020) About us. Available at: https://www.wbcsd.org/Overview/About-us Weber J (2010) Assessing the “tone at the top”: the moral reasoning of CEOs in the automobile industry. J Bus Ethics 92(2):167–182 Welford R, Chan C, Man M (2007) Priorities for corporate social responsibility: a survey of businesses and their stakeholders. Corp Soc Responsib Environ Manag 15(1):52–62 World Bank (2020) The global economic outlook during the COVID-19 pandemic: a changed world. Available at: https://www.worldbank.org/en/news/feature/2020/06/08/the-global-eco nomic-outlook-during-the-covid-19-pandemic-a-changed-world. Accessed 29 July 2020 Wright C, Nyberg D (2017) An inconvenient truth: how organizations translate climate change into business as usual. Acad Manag J 60(5):1633–1661 Young ST, Dhanda KK (2013) Sustainability. Essential for Business CA Sage
Key Literature A critical analysis of the TBL concept provided by Norman, W. and MacDonald, C. (2004) has a strong argumentation A huge body of literature analyze the topic of TBL reporting. A smallpart of this literature was used for this article. Among outstanding works on this aspect may be mentioned Bedenik, N. O., & Barišić, P. (2019), Carroll, A. (2018), Milne, M. J., & Gray, R. (2013), Sridhar, K., and Jones, G. (2013), Jackson J.K. (2013), Painter-Morland, M. (2006), Jenkins, R., & Unies, N. (2001). Many others may be mentioned. Also, the websites of OECD, GRI, UN Global Compact or United Nation, just to mention few, offer useful and interesting information For a comprehensive analysis of the sustainability of business and the TBL, the articles of Wright, C., & Nyberg, D. (2017) and Massa, L., Tucci, C. L., & Afuah, A. (2017) and Elkington, J. (2002) will definitely provide a comprehensive view. On what is after TBL in sustainable business an interesting read is Dyllick, T., & Muff, K. (2016) There is a vast literature concerning TBL, impossible to cover. From the literature surveyed for this chapter, few will be mentioned here, the rest being on equal importance for the reader. On the TBL concept, the book of Elkington (1997), Partnerships from cannibals with forks: The triple bottom line of 21st-century business is a must read. The relation between TBL and sustainability is largely explained in the work of Hammer, J. and Pivo, G. (2017), Ozanne et al. (2016), Glavas, A. and Mish, J. (2015)
Equity and Regulation Onyeka K. Osuji
Contents 1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Social Contract, Equity, and CSR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1 Corporate Power and Influence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2 Corporate Governance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3 Balancing Economic and Social Priorities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.4 Intergenerational Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.5 Institutional Voids and Contextual Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Regulating CSR to Promote Stakeholder Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1 Beyond Individualism and Business Case . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.2 Enhanced Stakeholder Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.3 Stakeholder Participation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.4 Accountability and Enforcement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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Abstract
This chapter considers the role of equity and regulation in corporate social responsibility (CSR). In particular, the chapter addresses the question of how regulation can ensure that CSR practices reflect and promote stakeholder equity as underlined by the social contract theory and the stakeholder model which have had a major influence on the conception of CSR. In demonstrating that equity is a fundamental goal of CSR due to those theoretical models, the chapter shows that regulation is not antithetical to CSR despite the prevalence of the voluntarist and neoliberal orientations in practice and scholarly definitions. It highlights certain circumstances that may trigger the need for addressing stakeholder equity issues in the conception and practice of CSR which a regulatory framework needs to take into consideration. These include corporate power and influence, corporate O. K. Osuji (*) School of Law, University of Essex, Colchester, UK e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Switzerland AG 2021 D. Crowther, S. Seifi (eds.), The Palgrave Handbook of Corporate Social Responsibility, https://doi.org/10.1007/978-3-030-42465-7_6
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governance, clash between economic and social goals and matters of intergenerational equity, institutions voids, contextualism, and operations of multinational enterprises. The chapter shows that neoliberal orientations that promote individualism and self-regulation are unsuitable for stakeholder equity. Drawing on the institutional and stakeholder theoretic models, the chapter further identifies opportunities for integrating and promoting stakeholder equity while providing regulatory arrangements for CSR. Keywords
Corporate social responsibility · Equity · Institutions · Neoliberalism · Regulation · Stakeholder model · Social contract · Sustainable development
1
Introduction
This chapter considers the role of equity and regulation in corporate social responsibility (CSR). This is important since, on the one hand, the social contract theory demonstrates the importance of fairness for mutual existence in society. For this reason, the stakeholder foundation of CSR suggests the need for acknowledging and addressing the interests of different stakeholders. How stakeholders are treated is implicit in the definition of “stakeholder” as “any group or individual who can affect or is affected by the achievement of the organization’s objectives” (Freeman 1984: vi, 46) or as “groups of people who have a stake, a claim, or an interest in the operations and decisions of the firm” (Carroll 1991). Consequently, CSR can be described as “a set of related mechanisms for aligning corporate behavior with wider social and environmental goals, in which managerial, financial and regulatory aspects are combined in a mutually reinforcing way [as] a mechanism for stimulating organizational change” (Deakin and Hobbs 2007: 69–71). On the other hand, the notion of equity connotes fairness and fair treatment of competing interests and persons. Put differently, equity is about ensuring “social justice” (O’Faircheallaigh 2015: 92) for segments of society. The fair treatment element of equity is highlighted by Plato’s definition of justice as a “set and constant purpose to give every man his due” (Bloom 1968). Likewise, Rawls (1993: 5–6) suggested that justice requires “an equal claim to a fully adequate scheme of equal basic rights and liberties” for members of society. The linkage between equity and justice explains why Lord Denning (1981: 174) described the latter as “the solution that the majority of right-minded people would consider fair.” Nonetheless, equity remains an ideal for CSR prompting questions regarding how to ensure that it is implemented in corporate practices. This relates to the fundamental issue of the role of regulation in CSR. As Newell and Frynas (2007: 672) stressed, a key question in the conception and practice of CSR is whether its “role can be performed through business-as-usual practices, voluntarily and through the market, or does it need to be guided, regulated and driven by broader state-led developmental priorities?”
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Regulatory mechanisms can assist in ensuring that corporate actors promote and emphasize equity in CSR. The need for appropriate arrangements for promoting equity is acknowledged by the institutional theory which has been described as offering “a powerful explanation of both individual and organizational actions and processes” (Li et al. 2008: 328). In confirming that actions and behaviors of corporations and other social actors are determined or influenced by the institutional environment (Misangyi et al. 2008), the institutional theory projects the concept of “institutions” which are the “rules, norms, and beliefs that describe reality for the organization, explaining what is and is not, what can be acted upon and what cannot” (Hoffman 1999: 351). Institutions have also been defined as the “formal and informal procedures, routines, norms and conventions embedded in the organizational structure of the polity or political economy” (Hall and Taylor 1996: 940) and as “systems of established and prevalent social rules that structure social interactions” (Hodgson 2006: 2). Institutions can therefore be regarded as “the rules of the game in a society or, more formally, are the humanly devised constraints that shape human interaction” (North 1990: 3). In other words, institutions are explicit and implicit rules and norms (Powell and DiMaggio 1991) that guide and provide standards for, and impose constraints on, the behavior of actors within society. Within the concept of institutions are regulatory institutions which refer to formal laws, rules, and regulations and the mechanisms for their coercive enforcement (Scott 2001, 2008). CSR is traditionally regarded as a voluntary method of regulation corporations undertake, although this could be due to pressures from stakeholders. Nonetheless, it is also increasingly acknowledged that CSR can be utilized by governments and other regulatory institutions for regulating corporations and controlling their behavior (Osuji 2015; Osuji and Obibuaku 2016). The regulated version of CSR can be determined directly by the regulatory institutions or through the technique of coregulation involving the regulatory institutions and corporations. In either case, a regulated form of CSR can be used to articulate and promote stakeholder equity. As the Policy and Operations Evaluation Department of the Ministry of Foreign Affairs, The Netherlands, once pointed out, “CSR is no longer the sole domain of business” and the policies of regulatory institutions may be “particularly important in facilitating ‘beyond-compliance’ behavior” (IOB 2013: 12, 17, 32–33, 67–69). The exponential popularity of the concept of CSR can be traced to the stakeholder equity issues arising from the activities and operations of corporations. CSR is therefore seen as a method of realigning corporations for the realization of the need for promoting stakeholder equity and addressing the issues it may raise. In this way, CSR is a form of regulation considering that regulation can refer to methods of social control or ways of influencing the behavior of social actors (Osuji 2015) such as corporations. Regulatory interventions to advance CSR objectives will therefore need to promote equity and fair treatment of stakeholders as an integral component of CSR if they are to be properly aligned to the stakeholder model (Freeman et al. 2010; Bondy and Charles 2020) basis of CSR. The rest of this chapter is organized as follows. The next part shows how CSR is influenced by the social contract theory and the stakeholder model to emphasize
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equity and outlines different circumstances stakeholder equity issues may arise in the conception and practice of CSR. This is then followed by a discussion of how the regulation of CSR can be undertaken to promote equity with indications of various opportunities for doing that. The final part is the summary.
2
Social Contract, Equity, and CSR
The social contract theory is arguably a bedrock of CSR and may provide justifications for its regulation. The World Bank (2019: 124) suggests that the social contract theory can serve “as a policy package that aims to contribute to a fairer society.” According to the French philosopher, Rousseau (1895), social contract refers to the need for the co-existence and mutuality of rights and obligations of members with equity, equality, and freedom as the underlying principles. The social contract theory therefore argues against unfettered freedom, focusing on self-interest or giving special status to a group of social actors to the detriment of others. These ideas have influenced the central tenets of CSR, beginning with the underpinning stakeholder framework. The dynamic nature of the concept of stakeholder (Miles 2017) shows its adaptability to different contexts of corporate decision-making and operations where issues of equity may exist. Equity is therefore arguably embedded in CSR with its emphasis on the fair treatment of stakeholders by corporations. This goes to show that CSR is about striking the right balance between the interests of different stakeholders that may even potentially clash. This may explain why Waterman (1994: 26) pointed out that “companies have to operate within a complex [structure] of social and economic relationships, and that the most successful companies attempt to get each of these rights in what is often a difficult balancing act.” This is an implicit reference to the crucial role of equity in managing the interests of diverse stakeholders within the corporate governance framework as formulated under CSR. At the core of the integration of the concept of stakeholder in CSR is therefore the notion of equity in the governance and operations of corporations. In the extractive sector, for example, equity issues may affect various stakeholders (Sawyer and Gomez 2012; Dougherty and Olsen 2013). On the one hand, the mining corporations and their investors may benefit economically, and their tax payments contribute to the revenues of their host and home governments (O’Faircheallaigh 2015). On the other hand, mining operations may have adverse economic, social, and cultural impacts on the local communities where they are undertaken. These communities may suffer from environmental degradation and may lose access to aesthetic environments, artifacts and cultural heritage, and farmlands, fishing, and other economic resources. Residents of the host communities and employees of the corporations involved may suffer from disease and other conditions. Even future generations may be at a disadvantage by being denied the opportunity of sharing in the economic benefits from mining and suffering from environmental degradation.
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This example shows that there are several dimensions of stakeholder equity in the conception and practice of CSR. These are outlined below.
2.1
Corporate Power and Influence
A major component of the definitions of CSR is the role of corporations in promoting equity in the treatment of stakeholders. This arises from the view that the corporations’ access to resources is unmatched and unrivalled by other stakeholders or segments of society. In comparison to stakeholders like consumers and host communities, for example, corporations can determine whether production methods and processes are properly aligned with the ideals of CSR. Information asymmetry may also exist between corporations and stakeholders to the disadvantage of the latter. Corporations are therefore more likely than consumers and host communities to have access to up-to-date scientific knowledge, technology, and other resources for ensuring a more harmonious and sustainable existence between different stakeholders or segments of society. As “the primary instrument for wealth generation in contemporary economies” (Clarke et al. 2019), corporations are in a prime position to advance stakeholder equity in their multifaceted societal role epitomized by CSR. This is one of the justifications for the integrative and political models of CSR. Even in their interactions with governments and political institutions of states, corporations may not be “passive and powerless” (Anabtawi and Stout 2008: 1275) and this is manifested in several ways. While “companies today operate across the globe through a complex web of subsidiaries and affiliate concerns” (Deva 2012: 4), the evidence suggests that international law has a “modest role in holding corporations to account” (van Dam 2011: 225). Nonbinding initiatives at the international level such as the UN Global Compact and OECD Guidelines for Multinational Enterprises (OECD 2011) have done little to assuage the clamor for corporations to be socially responsible. Being that regulatory powers are normally territorial as confirmed by the cases of British Property in Spanish Morocco (1925: 641–642) and Trail Smelter (1941: [1165]), the governments of the locations and operations of corporations should, in theory, regulate them. Nevertheless, due to the globalization of business and other factors, it is increasingly clear that national “governments are seen to have become weaker as governors of business conduct” (Kourula et al. 2019). The governments’ desire to attract investments shows that the prevailing order is inter-state competition in business regulation and enforcement (Hackett and Moffett 2016) which has elevated corporations to a position of power that can trigger stakeholder equity issues. For example, while a corporation with “multinational capital [can seek] to limit state discretion to regulate in any way that would disadvantage it” (Smythe 2000: 77), this may entail negative consequences for stakeholders. Some corporations have more resources than states and, as such, are expected to assist in addressing social issues, including stakeholder equity related one. Moreover, being that corporations are often implicated in some of the social and equity issues in society, there is the need “to acknowledge that the responsibility associated
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with innovation necessarily is responsibility for the future it helps to create” (Grinbaum and Groves 2013). Of particular note is the political CSR approach (Scherer and Palazzo 2011) which reflects the point that “the CSR phenomenon illustrates, and provides evidence for corporate political power” (Wilks 2013: 197). As the concept of corporate citizenship suggests, corporations may need to be located “within a network of mutual responsibilities and obligations in their social environment. . . and in a political context within the wider debate on the role of business in society” (Matten and Moon 2013). Under the political CSR approach, corporations are expected to avoid “regulatory capture” by refraining from interfering with the rule making processes. This is due to the fact that when “regulatory capture” exists, rules may be weak and may not be enforced by the regulatory and administrative authorities. Another aspect of political CSR is that corporations should maintain socially responsible standards and not exploit weak substantive rules and inadequate rule enforcement irrespective of the regulatory framework where corporate operations are undertaken. While the first two aspects of political CSR are negatively framed, the third one refers to positive obligations. This is the idea that corporations should contribute positively to good governance. In other words, corporations are expected to actively use their knowledge, power, and influence to promote issues of equity in society. This may extend to undertaking activities traditionally regarded as the functions of the government (Osuji 2015; Osuji and Obibuaku 2016).
2.2
Corporate Governance
Stakeholder equity arguably provides the linkage between CSR and corporate governance. To undertake stakeholder equity roles in society, corporations need to apply CSR principles in their operations and governance structures. In the context of corporate governance, James Wolfensohn, a former president of the World Bank, reiterated that the “proper governance of companies will become as crucial to the world economy as the proper governing of countries” (The Economist, 1999: 32). In a foreword for Global Corporate Governance Forum, Sir Adrian Cadbury stressed that the aim of corporate governance “is to align as nearly as possible the interests of individuals, corporations and societies” (World Bank 2003). The need for stakeholder equity may explain the definition of corporate governance as “the system of checks and balances, both internal and external to companies, which ensures that companies discharge their accountability to all their stakeholders and act in a socially responsible way in all areas of their business activity” (Solomon 2007: 14). The need for inter-stakeholder equity is also implicit from the description of corporate governance as “the determination of the broad uses to which organisational resources will be deployed and the resolution of conflicts among the myriad participants in organizations” (Daily et al. 2003: 371). Three approaches have been proposed for dealing with the equity-related issues in the governance and operations of corporations: shareholder primacy, enlightened shareholder value, and stakeholder model. The way stakeholder equity issues are
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treated differ in these approaches and this is manifested in the kind of CSR practices they encourage. Furthermore, stakeholder equity is more likely to be prominent in corporate practice if a “corporate conscience” exists. A corporate conscience ensures that “[s]elf-interest is moderated and redirected, [although] not forgotten or extinguished” (Selznick 2002: 101). As Selznick (2002: 101) pointed out, a “corporate conscience is created when values that transcend narrow self-interest are built into the practice and structure of the enterprise [to become] an ‘organizational culture’, a framework within which the main goals of the enterprise are pursued.” For shareholder primacy, equity is focused on the shareholder class to the exclusion of other potential stakeholders. The shareholder primacy model of corporate governance prioritizes the interests of shareholders over and above the interests of other corporate constituencies. As such, corporate governance structures are either composed of shareholders (members in general meeting) or designed to represent the interests of shareholders (the board of directors). Complemented by the agency theory, shareholder primacy aims at ensuring that corporate structures and procedures advance the interests of shareholders. Consequently, the agency theory attempts to introduce measures for aligning the interests of corporate directors and managers as “agents” to those of the shareholders as their “principals” (see Jensen and Meckling 1976; Armour et al. 2017; Enriques et al. 2017a). When a corporation is solvent, stakeholders that are not shareholders are regarded by the shareholder primacy model as “outsiders” (Roe 2000; Keay 2010; Enriques et al. 2017b) and incapable of having their interests articulated in the governance processes and procedures. In the shareholder-centered approach of English company law (Nolan 2006), a long-standing line of cases including Percival v Wright (1902) and Caparo v Dickman (1990) confirms the preeminent position of shareholders and their interest in corporate governance. In Multinational Gas and Petrochemical Co. Ltd v Multinational Gas and Petrochemical Services Ltd (1983: 585), Dillon LJ pointed out that the implication is that “so long as the company is solvent the shareholders are in substance the company.” Moreover, shareholder primacy regards profit as the sole motivation for shareholders and consequently emphasizes profit maximization as a fundamental duty of corporate directors and managers. It is reasoned that this is to enable the evaluation of the responsibility and performance of the board of directors and corporate managers (Berle 1932). Profit maximization is notoriously supported by the case of Dodge v Ford Motor Co (1919: 684) where a US court stated that “a business corporation is organized and carried on primarily for the profit of the shareholders. . .and the powers of the directors are to be employed for that end.” Due to its twin focus on shareholder interests and profit maximization, the shareholder primacy approach is unlikely to promote stakeholder equity as facilitated by CSR. A popular proponent of shareholder primacy, Milton Friedman, once argued that “there is one and only one social responsibility of business – to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud” (Friedman 1970). This statement confirms that the shareholder primacy model is unlikely to promote stakeholder equity issues in CSR.
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While the enlightened shareholder value model (Keay 2007; Tsagas 2018) is a variant of shareholder primacy, it differs by allowing the consideration of the interests of non-shareholders. Nonetheless, its impact on the promotion of stakeholder equity is equally limited. While it does not prioritize profit maximization in the short term, the enlightened shareholder value model links CSR to the longer-term financial interest of shareholders. In other words, the focus of corporate governance remains shareholders and stakeholders may be considered only to the extent they may potentially affect the interest of shareholders. At best, the enlightened shareholder value model promotes an economic cost-benefit analysis approach to CSR (Villiers 2008: 97–98) with little room for consideration of stakeholder equity. The limited impact of enlightened shareholder value is evident in the statement of directors’ duties in section 172 of the UK Companies Act 2006 where “damage to non-shareholder interests will not in itself be indicative of breach” (Parkinson 2002: 55). Comparatively speaking, the stakeholder model seems in a better position to address equity issues in corporate decision-making processes and operations through the opportunities for the representation of stakeholder interests. Ways of representing stakeholder interests can include provisions for voting rights, veto rights, membership of and nomination to the board of directors, incorporation of stakeholder interests in the directors’ duties, accountability of directors, consultation rights, and disclosure requirements. By providing justifications for consideration of wider stakeholder interests, the stakeholder model appears to be “the most viable alternative to the competitive individualism which has left many casualties in society, and arguably damaged the quality of life for everyone” (Hamilton and Clarke 1996: 39). For example, in Lyonnais Bank v Pathe Communications (1991), a US court stressed the existence of a corporate “obligation to the community of interests that sustained the corporation, to exercise judgment in an informed, good faith effort to maximize the corporation’s long-term wealth creating capacity.” This is an implicit nod to the stakeholder model and confirms the wider stakeholder context of corporations, the need for recognizing the interests of diverse stakeholders and for balancing economic and social objectives.
2.3
Balancing Economic and Social Priorities
Within the equity conception of CSR is the expectation that profit, especially in the short term, should not be the sole consideration for corporate decisions and activities. In CSR, there is therefore very little room for self-centeredness, exclusive pursuit of profit and lack of consideration of stakeholder equity issues in corporate governance. Sir Adrian Cadbury likewise suggested that corporate governance “is concerned with holding the balance between economic and social goals and between individual and communal goals” (World Bank 2003). The need for balancing economic objectives and social issues is acknowledged in sustainable development which is often discussed in relation to CSR. The
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background to the Brundtland Report (WCED 1987) indicates that its conception of sustainable development reflects this need (Rajamani, 2003). In declaring that economic, social, and environmental factors are “interdependent and mutually reinforcing pillars of sustainable development” (United Nations 2002: Resolution 1, para.5), the 2002 Johannesburg World Summit on Sustainable Development similarly reiterated the need for social actors, including corporations, to balance economic factors with priorities of societies. A South African court in BP Southern Africa (Pty) Ltd v MEC for Agriculture, Conservation and Land Affairs BP (2004) therefore insisted that “[p]ure economic principles will no longer determine, in an unbridled fashion, whether a development is acceptable.” In other words, profit maximization has lower priority in comparison to stakeholder equity.
2.4
Intergenerational Equity
Following on from the need to balance economic and social priorities is the intergenerational equity factor that requires the consideration of the interests of future generations of stakeholders as part of CSR. Intergenerational equity is why corporations are expected to promote sustainable development in their operations and relationships. It flows from the Brundtland Report’s definition of sustainable development as the “development that meets the need of the present without compromising the ability of future generations to meet their own need” (WCED 1987). The anthropocentric language reflected in the Brundtland Report’s (WCED 1987) assertion that “every human being has the right to a clean and safe environment conducive to their health and well-being” and pioneered in Principle 1 of the 1972 Stockholm Declaration on the Human Environment (United Nations 1973a) is not limited to living generations of human beings. The Brundtland Report therefore emphasized the need to “ensure that the environment and natural resources are conserved and used for the benefit of present and future generations” (WCED 1987: 43). For similar reasons, article 49 of the United Nations Guidelines for Consumer Protection provides that sustainable consumption “includes meeting the needs of present and future generations for goods and services in ways that are economically, socially and environmentally sustainable” (United Nations 2016). While a South African court in BP Southern Africa v MEC for Agriculture (2004) referred to “the principle of intergenerational equity” as one of the bases for sustainable development, it is equally one of the reasons the environment is considered a critical stakeholder in CSR. As the International Court of Justice noted in Legality of Threat or Use of Nuclear Arms (2006: [28]), the environment “is not an abstraction but represents the living space, the quality of life and the very health of human beings, including generations unborn.” An emergent line of cases, including Urgenda Foundation v The Netherlands (Ministry of Infrastructure and Environment) (2015), Juliana v United States of America (2016), Greenpeace Nordic Association v Norway Ministry of Petroleum and Energy [2016], points to the need for the promotion of intergenerational equity by social actors like corporations.
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Institutional Voids and Contextual Equity
The promotion of stakeholder equity may be particularly problematic in “institutional voids” (Husted 2015) which exist where rules are weak or inadequately enforced. This can be due to when institutions, particularly governmental agencies, lack the capacity, resources, or willingness to effectively initiate, implement, and enforce provisions that promote stakeholder equity. In places of institutional voids, multinational enterprises and other corporations may be able to avoid international best standards in the treatment of vulnerable stakeholders such as employees, consumers, and residents of host communities and in their interaction with political and administrative institutions. If stakeholder equity is not an integral component of CSR, such corporations can easily escape responsibility by referencing relatively weak rules and standards. A related issue for stakeholder equity is when corporations operate in different jurisdictions and may be expected to acknowledge localized values, sensitivities, and needs as captured within the notion of “glocalization.” On the one hand, the notion of institutional voids highlights the need for universalization of standards for the promotion of stakeholder equity. On the other hand, the CSR discourse now accepts a contextual analysis of stakeholder equity matters since a one-size-fits-all approach of universalism may sometimes be unsuitable, particularly for countries at different stages of development (Osuji and Obibuaku 2016). It is for this reason that CSR can be “informed [by] each country’s political, economic, and cultural context, as well as by existing relationships between business, government, and civil society” (Ho 2013: 388). The disparity between countries is one of the reasons for challenges to the neoliberal orientations of the international economic law and international investment law. These areas of law, largely designed and dominated by the more developed countries (Chimni 2012, 2017; Miles 2013; Linarelli et al. 2018), are heavily influenced by neoliberal ideas such as free trade and liberalization championed by the World Trade Organization, the International Monetary Fund, and the World Bank (Babb and Kentikelenis 2018). They appear to provide for a system of “winners and losers” through “rules [that] determine who will benefit, who will lose and, perhaps more importantly, who will adapt to whom so as to render the policy goals of trade and investment rules most efficacious” (Perrone and Schneiderman 2019: 446). Juxtaposed with the Capability Approach (Sen 1999, 2004) and its emphasis on access to opportunities and resources and ability to make informed choices and achieve valued objectives, a neoliberal international economic system is clearly problematic for stakeholder equity. Consequently, objections to the international economic and investment laws expressed within the auspices of the United Nations include the General Assembly Resolution 3171 (United Nations 1973b), the Declaration on the New International Economic Order (United Nations 1974a), the Charter of Economic Rights and Duties of States (United Nations 1974b), and the Declaration on the Right to Development (United Nations 1986). Likewise, the Third World Approaches to International Law (Chimni 2006; Natarajan et al. 2016) and critical international
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political economy (Perrone and Schneiderman 2019) are scholarly attempts to challenge the neoliberal foundations of the international economic and investment laws and their roles in creating and sustaining disparities and inequalities, including between the Global North and the Global South. Against the backdrop of the calls for “real justice” (Hickel 2017) in the global economy, the rules of international economic and investment laws may not provide a defense to expectations on corporations to tackle stakeholder equity issues wherever they operate, particularly in institutional voids. This may explain why corporations are increasingly expected to exercise their power and influence to ensure that their corporate group members, supply and purchasing chains, affiliates, and other business partners adhere to equity standards in their dealings with stakeholders such as employees, consumers, host communities, and governments (Amaeshi et al. 2008). A line of cases, including Lovenheim v Iroquois Brands (1985), Nike v Kasky (2002), Lidl lawsuit (2010), and Auchan litigation (2015), originated from perceptions that the relevant corporations failed to address stakeholder equity issues. The fact that the twin company law concepts of corporate personality and limited liability would normally insulate the corporations from responsibility was largely irrelevant in the stakeholder demands. In other words, there are expectations that corporations should exercise a leverage-based responsibility that “arises from an organization’s ability to influence the actions of other actors through its relationships, regardless of whether the impacts of those other actors’ actions can be traced to the organization” (Wood 2012: 64). This CSR approach is gaining traction even in regulation going by the transparency provisions in the California Transparency in Supply Chains Act of 2010, the UK Modern Slavery Act 2015, and Australia’s Modern Slavery Act 2018. Since the universalization of rules may not be an excuse for lack of stakeholder equity, a globalization versus localization debate exists. Robertson (1995) observed the “tendency to cast the idea of globalization as inevitably in tension with the idea of localization.” Equity can be promoted when glocalization is applied to provide for the protection of both local values and ways of life and the “planetary common good” (Goffman 2020: 48–49). This may explain why the Brundtland Report (WCED 1987) recognized the need for balancing the global concern for environment protection with the need for sensitivity to local needs and priorities such as poverty alleviation in some developing countries. More recently, the Declaration of the Sustainable Development Goals 2015 emphasizes the importance of appropriate glocalization that promotes equity. While paragraph 1 of the Declaration proclaims its objective of global standards, paragraph 22 stresses that “[e]ach country faces specific challenges in its pursuit of sustainable development” and paragraph 63 suggests that “each country has primary responsibility for its own economic and social development.” Furthermore, paragraph 56 of the Declaration refers to the need for recognizing “different national realities, capacities and levels of development and respecting national policies and realities” while paragraph 59 acknowledges that “different approaches, visions, models and tools available to each country, in accordance with its national circumstances and priorities.”
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•Multiple stakeholder framework •Recognition of competing stakeholder interests •Non-exclusivity of shareholder interest •Balancing of interests •Lower priority for proit maximization •Fair treatment of stakeholders
•Social contract •Fair treatment •Social justice •Society and public interest •Little room for selfinterest •Protection of the vulnerable •Fairness Stakeholder Model
Equity
CSR Approaches
Regulation
•Ethical •Political •Integrative
•Beyond neoliberalism •Beyond voluntarism •Beyond self-regulation •Institutional theory •Co-regulation •Beyond business case •Enhanced disclosure •Stakeholder participation •Accountability •Enforcement
Fig. 1 Equity and Regulation
An equity-based approach may involve glocalization which requires that the existence of global standards and principles should not unnecessarily displace local needs and interests. Likewise, Sadurski (2004: 154) suggested the need for universalism that can “create a template which can be applied only if we infuse them with the factual circumstances of a given society[and] of its own patterns of disadvantage.” (Fig. 1).
3
Regulating CSR to Promote Stakeholder Equity
As discussed in the Introduction above, the institutional theory shows that institutions, including regulatory institutions, determine or influence the behavior of corporations and other social actors. It then suggests that the regulatory framework is crucial in determining the extent to which corporations may be willing to promote equity in their interactions with stakeholders in the wider responsibility approach of
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CSR. A suitable regulatory framework is necessary since, as the conflict theory suggests, corporate managers may be opportunistic and selfish (Gautier and Pache 2015; Osemeke and Adegbite 2016), particularly when stakeholders compete against one another for resources of corporations (Ford and Hess 2011). One of the findings of the agency problem by the agency theory studies is that the interests of corporate “insiders” like managers, directors, and shareholders may be different and possibly conflict with those of other stakeholders (Roe 2000; Enriques et al. 2017b). Being that the corporate insiders control the decisions and activities of the corporations, they may choose to ignore other stakeholders and may act contrary to the interests of those “corporate outsiders.” The question then is how regulation can ensure that CSR practices promote stakeholder equity as underlined by the social contract theory and the stakeholder theoretical model. CSR is traditionally influenced by voluntarism (CEC 2001, 2011; Wettstein 2012; Osuji 2015), including the proposition that CSR relates to “actions [which] basically are voluntary, that is they go beyond what is legally required” (Dam and Scholtens 2012). Voluntarism has, in turn, inspired the “voluntary by definition” (van Marrewijk 2003: 102) approach to CSR projected in definitions such as “a concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis” (CEC 2001) and “a discretionary allocation of corporate resources toward improving social welfare that serves as a means of enhancing relationships with key stakeholders” (Barnett 2007: 807). Similar definitions of CSR include a “voluntary corporate commitment to exceed the explicit and implicit obligations imposed on a company by society’s expectations of conventional corporate behavior” (Falck and Heblich 2007: 247) and “a firm’s voluntary actions to mitigate and remedy social and environmental consequences of its operation” (Fransen 2013: 213). Nonetheless, a challenge to the effectiveness of voluntarist CSR in addressing stakeholder equity is its reliance on pure self-regulation. The political and economic ideology of neoliberalism is implicit in the voluntarist approach being that it signposts self-regulation of CSR by corporations and other market forces. For example, in defining CSR as “the voluntary action businesses take over and above legal requirements to manage and enhance economic, environmental and societal impacts” (DBIS 2014: 3), the UK Department for Business Innovation and Skills prioritized corporate self-regulation. While neoliberalism seems polysemic, its main elements are free market capitalism and minimal governmental interference in business affairs (von Hayek 1948, 1973; Doherty 2007). In neoliberalism, the “motion of rights is to push away from – against others, against the state, against incursions, limitations, or encroachments upon our autonomy” (Brown 1995: 158). The emphasis on individualism and autonomy in its laissez-faire economic theory puts neoliberalism in conflict with the social contract theory and its proposition of fairness and fair treatment of segments of society, including stakeholders. While there may be some socioeconomic benefits associated with neoliberalism (see Fukuyama 1992), inequalities and unfair treatment of vulnerable sections of society are major concerns (Deneen 2018; Dallmayr 2019). Neoliberalism is implicated in a “global governance that can and do sustain and perpetuate global
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economic and geopolitical asymmetries and social hierarchies” (Tan 2019: 299). A good illustration is the case of Lochner v New York (1905) where the US Supreme Court invalidated regulations aimed at protecting the health and safety of workers and the public. Stakeholder equity concerns prompted latter cases such as Nebbia v New York (1934) and West Coast Hotel Co. v Parrish (1937) to overrule Lochner and its neoliberal foundations. At best, equity therefore receives a modest consideration in neoliberalism. It is not a coincidence that one of the well-known CSR objectors, Milton Friedman, is often cited in connection with neoliberalism (see Friedman 1962; Friedman and Friedman 1980). While challenging the analytical basis for “social responsibilities of business” Friedman (1970) described CSR as a “fundamentally subversive doctrine” and a “collectivist doctrine” that preaches “pure and unadulterated socialism.” Posner (2007: 422), another CSR critic, submitted that “in competitive markets, a sustained commitment to any goal other than profitability will result in the firm’s shrinking, quite possibly to nothing.” The emergent alternative to voluntarism regards CSR as a governance and regulatory mechanism while locating it within the concept of institutions as propositioned by the institutional theory. Brammer et al. (2012: 7) accordingly submitted that “[r]ather than seeing CSR purely as a realm of voluntary action, institutional theory suggests seeking to place CSR explicitly within a wider field of economic governance characterized by different modes including the market, state regulation and beyond.” The European Commission equally noted that “[c]ertain regulatory measures create an environment more conducive to enterprises voluntarily meeting their social responsibility” (CEC 2011: 3). In confirming a shift away from pure voluntarism, the Commission revised its definition to “the responsibility of enterprises for their impacts on society” (CEC 2011: 6). Consequently, CSR can undertake governance roles and be applied as a regulatory tool to address stakeholder equity issues (Osuji 2015). The backdrop is that the capacity to regulate is not exclusive to government and regulation can refer to the formal and informal rules of public and private institutions (Aßländer and Curbach 2014; Saurwein 2011). It is noteworthy that the G20/OECD Principles of Corporate Governance stress the importance a mixed method approach involving “legislation, regulation, self-regulatory arrangements, voluntary commitments and business practices that are the result of a country’s specific circumstances, history and tradition” (OECD 2015: 13). This suggests that CSR should not be left to pure self-regulation by corporations. There is a growing realization that “the question of the state’s role in advancing CSR is not whether governments will address this new policy arena but why, how, and with what effect” (Ho 2013: 375–376, 428). As acknowledged in the concept of orchestration (Schleifer 2013), regulations by governments and public agencies (Fox et al. 2002; Vogel 2005; McBarnet 2007; Albareda et al. 2008; Ward 2008; Ho 2013; IOB 2013) can assist in setting out CSR priorities and agendas and shaping and guiding corporate practices for the advancement of stakeholder equity. In other words, this approach to CSR involves co-regulation, which is a combination of regulatory intervention by public agencies and self-regulation by corporations and
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other private actors. Co-regulation is encapsulated in the concept of “relational state” (Gunningham 2008: 118; Ho 2013: 393–395). Co-regulation enables CSR to act as the “formal and informal ways in which business makes a contribution to improving to improving governance, social, ethical, labor and environmental conditions” (Visser 2008). It promotes the idea of a shared responsibility for equity for corporations, stakeholders, and sections of society. As Albareda et al. (2008, 35–36) observed, “only if responsibilities are shared in areas of common interest, assuming the active collaboration of all social actors, society itself and enterprise, in collaboration with the state, can today’s social and environmental challenges be met.” This is vital, particularly in institutional voids where legal rules and public enforcement are inadequate for addressing stakeholder equity issues (Johnston 2011; Johnston et al. 2019). In addition to the need for reflecting the stakeholder model, the following are illustrations of how equity can be integrated in a regulatory framework for CSR.
3.1
Beyond Individualism and Business Case
Pure self-regulation in furtherance of a neoliberal approach to regulation does not sit well with the stakeholder equity orientations of CSR. While it is important “to connect the internal capacities for corporate self-regulation with internal commitment to self-regulate” (Parker 2002: 246), the prioritization of stakeholder equity may be difficult in the absence of a regulatory framework since it is clear that “[b] eing lawful is not a choice we make or reject simply on our own [and y]ou can volunteer to avoid acting ethically, or to avoid even thinking about the topic” (Preston 2010: 259–2660). Consequently, “regulatory and other systems need to be designed to provide evidence of business commitment to ethical behavior, on which trust can be based” (Hodges 2016: 3). Stakeholder equity is more likely to be promoted if an instrumental or business case approach to CSR is avoided (Osuji 2011; Poruthiyil 2013). Due to the emphasis on an economic cost-benefit analysis in that approach to CSR, stakeholder equity can only be considered if it will have an impact on corporations’ financial performance, including in the longer term. If no such impact is evident, stakeholder equity issues can be ignored notwithstanding their significance and consequences for society and stakeholders. Unlike the individualism and self-interest orientations of the business case CSR, the alternative ethical, political, and integrative approaches to CSR (Osuji 2011; Schaltegger and Burritt 2018; Johnston et al. 2019) may assist in ensuring that “cultural values will shift away from short-term materialism toward a more socially beneficent ethic” (Goffman 2020: 48). The ethical CSR approach, for example, transcends corporate self-interest and references certain values, including the greater good of society and its present and future members. The political CSR encourages corporations to undertake public governance functions, including those that address stakeholder equity issues. The integrative approach justifies CSR on the basis that corporations are an integral part of society and, as such, should selflessly contribute
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to the good of society and its segments. Implicit in the notion of the tragedy of the commons is the issue of equity (Goffman 2020: 49) and the need for selfless contributions of corporations and other components of society for it to function well.
3.2
Enhanced Stakeholder Disclosure
Requirements for enhanced disclosure are necessary for improving the observance and promotion of equity in the conception and practice of CSR. A regulatory framework can encourage disclosure by making it compulsory, by attaching incentives to making disclosures, or imposing penalties for not engaging in it. While it enables corporations to generate, analyze, disseminate, and act on relevant data, enhanced CSR disclosure can play a few roles that can assist in promoting stakeholder equity. The first is the communicative role which is to report on corporate policies and activities and how they respond to stakeholder equity issues. This communicative role is highlighted in the 2011 OECD Guidelines where CSR disclosure is described as “value statements or statements of business conduct intended for public disclosure including, depending on its relevance for the enterprise’s activities, information on the enterprise’s policies relating to [human rights, employment and industrial relation, environment, combating bribery, bribe solicitation and extortion, consumer interests, science and technology, competition and taxation]; policies and other codes of conduct to which the enterprise subscribes, their date of adoption and the countries and entities to which such statements apply; its performance in relation to these statements and codes; information on internal audit, risk management and legal compliance systems; [and] information on relationships with workers and other stakeholders” (OECD 2011: 26[3]). The second role of enhanced disclosure is to facilitate the use of CSR as a regulation method. This arises from the impact of corporate reputation on stakeholders like consumers who may be interested in the equity goals of CSR. It has been noted, for example, that consumers now purchase “not only products, but also shares of responsibility in the moral and ecological economy that produces them” (Kysar 2005: 641). In the first instance, corporate reputation can be regarded as “a collective representation of a company’s past actions and future prospects and describes how key resource providers interpret a company’s initiatives and assess its ability to deliver valued outcomes” (Fombrun 2001: 294). Consequently, the International Organization for Standardization observed that the “perception and reality of an organization’s performance on social responsibility can influence, among other things: its competitive advantage; its reputation; its ability to attract and retain certain workers or members, customers, clients or users; the maintenance of employees’ morale, commitment and productivity; the view of investors, owners, donors, sponsors and the financial community; and its relationship with companies, governments, the media, suppliers, peers, customers and the community in which it operates” (ISO 2010: vi).
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A corporation’s reputation can therefore relate to its policies and activities on stakeholder equity. Nonetheless, if there are no regulatory provisions for disclosure, corporations may not be willing to disclose certain matters. Generally, corporations, like everyone else, can remain silent whenever there are no legal provisions to compel them, especially when they consider disclosures as potentially damaging or embarrassing to their reputation. In Hamilton v Allied Domecq Plc (2007: [20]), a UK court pointed out that “a failure. . . to speak might be regarded as morally questionable [but] that is different from. . . a legal duty to speak.” Conversely, corporations may be incentivized to promote stakeholder equity and avoid being seen as socially irresponsible if they are required to disclose what they are doing in that regard. The fact is that “[k]nowledge that such [socially irresponsible] conduct will be quickly exposed to the glare of publicity. . . makes it less likely to occur in the first place” (Hargovan 2009: 106). The need for positive CSR reputation is particularly crucial in competitive markets such as those for rival consumer goods where it can be critical to the survival, growth, and success of corporations. It flows this linkage to corporate reputation that enhanced disclosure can play an accountability role. As Bouten et al. (2011: 189) argued, the disclosure of CSR matters “is primarily driven by a desire for accountability.” Disclosure requirements can encourage corporations to promote stakeholder equity and to refrain from socially irresponsible practices (Osuji 2012). This is due to the fact that “the prospect of disclosure will deter reputation-conscious corporate managers from conduct that is likely to attract negative publicity when it is disclosed” (Ferran 2003: 497). It is therefore important to provide for an “effective disclosure system [that] will often be a significant inhibition on questionable corporate conduct” (Hargovan 2009: 106). Disclosure requirements can be a middle-ground approach to regulation of CSR, including the promotion of related equity issues. In contrast to a prescriptive approach, a disclosure-based regulation can be indirect and positively received by some as a more legitimate and less controversial regulatory intervention. The attractiveness is that “rather than the state banning the conduct – a step that could well be highly contentious – all that regulatory intervention in the form of disclosure requirements does is to force managers to make choices about the reputational risks they are prepared to take” (Ferran 2003: 497).
3.3
Stakeholder Participation
To promote equity, it is important that there are provisions for enabling and encouraging stakeholder participation in the CSR processes and procedures. The stakeholder participation in CSR-related matters such as environment protection is highlighted by principle 23 of the World Charter for Nature adopted in the General Assembly Resolution n.37/7 of 28 October 1982. Likewise, principle 10 of the Rio Declaration (United Nations 1992) provides that: Environmental issues are best handled with the participation of all concerned citizens, at the relevant level. At the national level, each individual shall have appropriate access to
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information concerning the environment that is held by public authorities, including information on hazardous materials and activities in their communities, and the opportunity to participate in decision-making processes.
Nonetheless, providing for stakeholder participation in the regulatory framework will leave little room for the shareholder primacy corporate governance model. As noted above, the shareholder primacy model recognizes only the interests of shareholders as worthy of consideration, especially when a corporation is solvent, and, as such, excludes other stakeholders from the corporate governance structures and procedures. Stakeholder participation can improve regulatory outcomes and assist in addressing equity issues for segments of society. For example, a comparative study traced the relatively advanced social welfare systems of Western Europe and Latin America to regulatory provisions for programmatic participation of community stakeholder groups through monitoring and policymaking (Falletti and Cunial 2018).
3.4
Accountability and Enforcement
To promote equity, it may be necessary to include stakeholder enforcement powers in accountability provisions. These provisions can include a range of substantive and enforcement rights such as monitoring, inspection and verification, complaints to administrative agencies, statutory torts, and access to judicial redress and remedies (Osuji 2015). Of particular note in promoting stakeholder equity is the linkage between justice and access to judicial redress. It is instructive that one of the goals of the Sustainable Development Goal as stipulated in Principle 16 is to “promote peaceful and inclusive societies for sustainable development, provide access to justice for all and build effective, accountable institutions at all levels.” Provisions for litigation and private remedies can control the behavior (Funk 2011) of social actors, including corporations, and are thereby potentially capable of enabling stakeholders to undertake regulatory roles with the objective of promoting equity. In the case of CSR disclosures, for instance, accountability provisions are critical for ensuring the relevance and promotion of stakeholder equity. The role of accountability is twofold in this regard. On the one hand, there is the need for legally enforceable measures to ensure that corporations undertake CSR disclosures and report on stakeholder equity issues. On the other hand, provisions may be required to encourage accurate CSR reporting by corporations and to dissuade them from defective disclosures by specifying the consequences for noncompliance. A purely voluntary approach to regulation of CSR is unlikely to work along this line due to the prevalence of selective, exaggerated, and even factually misleading disclosures that have no bearing to the relevant corporate policies, activities, and performance. This has triggered persistent allegations of “soft, unverifiable claims” (Clarkson et al. 2008: 309) “and bluewash” (Berliner and Prakash 2012: 151). The European Commission has also acknowledged that voluntary CSR disclosures can
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demonstrate “a gap between citizens’ expectations and what they perceive to be the reality of business behavior” (CEC 2011: 9). To ensure that disclosure is an effective regulatory strategy, it may be useful to provide for credible, and objective measures for evaluating CSR statements and performance (Osuji 2012, 2015). Provisions are also required to ensure that CSRrelated disclosures are visible to stakeholders and other interest groups in forms that are accessible to them. When disclosures are defective due to being inaccurate, incomplete, or misleading, it is important that there are legal consequences that clearly mark out the regulatory position (Osuji 2012). This will facilitate the deterrence, reputational, and regulatory roles of CSR disclosure by connecting corporate statements to what the corporations actually do. In fact, the combined insight from the institutional and stakeholder theoretical models is a potentially strong case for the diffusion of enforcement of regulatory provisions across public and private stakeholders and other segments of society (Osuji 2015). In contrast, a “mere busy body” (R v Inspectorate of Pollution, ex p Greenpeace (No. 2)) (1994) label is given to stakeholders that attempt to enforce rules and standards without references to enabling legal or regulatory provisions even if such are designed to protect the public interest or advance stakeholder equity. In addition to confirming that public and private actors are potentially within the class of “institutions” that can influence the behavior of corporations and other social actors, the institutional theory demonstrates that the nature of rules and their enforcement are equally important factors for such behavior. When enforcement powers are spread across different segments of society through the acknowledgment of the stakeholder model, private stakeholders are likely to be encouraged to act as institutional champions of equity in CSR. This can assist in plugging institutional voids where weak rules and enforcement have little impact on the behavior of corporations and other actors arising particularly when the formal public institutions are unwilling or unable to enforce regulatory provisions. The existence of institutional voids therefore suggests the need for a more expansive approach to enforcement to incorporate the application of the stakeholder model.
4
Summary
This chapter has considered the role of equity and regulation in CSR. The starting point is that the social contract theory is a significant influence on the conception of CSR and coupled with the latter’s stakeholder model foundations would constitute an implicit acknowledgment of equity. Stakeholder equity is particularly relevant in discussions of corporate power and influence, corporate governance, clash between economic and social goals, intergenerational equity, institutions voids, contextualism, and operations of multinational enterprises. While regulation is not antithetical to CSR, the prevalent voluntarist and neoliberal orientations in CSR practice and scholarly definitions encourage self-regulation. Self-regulation may, however, have limited effectiveness in promoting stakeholder
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equity and, as such, there is the need for direct regulation and co-regulation. The chapter draws on the institutional and stakeholder theoretic models to demonstrate different ways stakeholder equity can be integrated and promoted in regulatory arrangements for CSR.
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Corporate Responsibility Reporting and Storytelling Merryn Paynter and Abdel K. Halabi
Contents 1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 History of Corporate Reporting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Impressions Management and Corporate Reporting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Impressions Management and Rhetoric in Corporate Reporting . . . . . . . . . . . . . . . . . . . . . . . . . 5 Storytelling and Impressions Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 The Case of JPM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Discussion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Cross-References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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Abstract
This chapter provides an account of corporate social responsibility (hereafter known as “CSR”), through storytelling. CSR reports are becoming more widespread and managers can use stories and narratives in communications about CSR to attempt to manage impressions. The theory related to storytelling is outlined, and this includes impressions management, rhetoric, and the different storytelling descriptions. The chapter applies a deconstructive storytelling approach to the Annual and CSR Report of JP Morgan Chase & Co (hereafter referred to as “JPM”). The narratives used by JPM are examined as an example of how storytelling research is used to study impressions management strategies. As there have been few studies of company reports that link storytelling to CSR practices, this paper makes a useful contribution to an expanding literature, particularly in emphasizing storytelling.
M. Paynter (*) · A. K. Halabi Federation Business School, Federation University Australia, Churchill, VIC, Australia e-mail: [email protected]; [email protected] © The Author(s), under exclusive license to Springer Nature Switzerland AG 2021 D. Crowther, S. Seifi (eds.), The Palgrave Handbook of Corporate Social Responsibility, https://doi.org/10.1007/978-3-030-42465-7_63
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Keywords
CSR · Storytelling · Impressions Management · JP Morgan Chase & Co
1
Introduction
This chapter provides an account of corporate social responsibility (hereafter known as “CSR”), through storytelling. In recent decades, corporate reporting about CSR has become an institutionalized practice. A KPMG global survey found that 75% of the 4,900 “N100” companies and 93% of G250 companies issued CSR reports during 2017 (KPMG 2017, p. 4) (N100 companies are the top 100 companies by profit in each of the 49 countries and regions surveyed by KPMG and G250 refers to the world’s 250 largest companies based on revenue as ranked in the Fortune 500 (KPMG 2017)), representing a substantial increase from 1999 when only 24% of N100 and 33% of G250 companies produced these (KPMG 2017). Indeed today the general consensus, among academics and practitioners is that the impact of companies’ operations on society and the environment is a growing concern. Companies need to communicate about being accountable for their actions to retain social acceptance; and corporate reports are corporate accounts of the economic, environmental, and social impact of company operations (Jenkins and Yakovleva 2006). Some commentators claim the uptake of corporate reporting signals that companies have become more proficient at managing their economic, environmental, and social obligations (Hubbard 2009). Critics however argue that for the most part, reports about CSR are public relations tools that serve to manage company reputations (Milne and Gray 2013). CSR reports can also allow companies to obfuscate and greenwash the true nature of business activities (Aras and Crowther 2009). Furthermore, studies have found that the uptake of corporate reporting has not been uniform as some companies produced reports before others (Shabana et al. 2016). As further evidence, the KMPG’s survey, for instance, showed that 7% of G250 companies chose not to report about CSR at all (KPMG 2017). Consequently, there remains strong interest into companies’ motivations for CSR reporting, why they differ and determining the reasons whether the criticisms of CSR reports are justified (Wang et al. 2018). Substantial research have been conducted to understand corporate reporting both as a practice and as a social phenomenon, and these can be categorized according to whether reports are analyzed according to functional (or business case), the social, or the political perspectives. The functional perspective has focused on corporate motivations for the development and publication of reports. These include studying links between corporate reporting and the realization of business goals such as increasing shareholder returns, attraction and retention of talented employees, corporate advocacy, and shared values. The concept of shared values was coined by Porter and Kramer (2006) to describe instances when CSR strategies result in winwin scenarios that benefits both the environment and society and the business by creating wealth and competitive advantages.
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The social perspective has focused on understanding how social pressures have shaped corporate reports and, in particular, investigating the effects of institutional pressures, including pressures from stakeholders, competitors, and government regulators. The social perspective has been applied to understand why some companies commenced producing reporting before others and the measures taken to demonstrate accountability and transparency. These include external assurance certification, as well as the adoption of other third-party endorsements and standards such as the United Nations Global Compact, the Global Reporting Initiative (GRI), and, most recently, the United Nations Sustainable Development Goals (SDG). The political perspective focuses on understanding the different types power associated with corporate reporting. Based on Foucauldian notion that power is established through discourse, this examines how corporations use language to exert hegemonic power and prioritize business interests over environmental and social concerns (Clegg 1989; Spence 2007). Further, the political research perspective critically examines the underlying dominant ideologies in corporate reports through critical discourse analysis and the deconstruction methods, which involves analyzing the underlying meaning of language to understand how storytelling is used to convey meanings and manage impressions (Boje 1995). Interest in the political economy has gained traction in recent years, indicating that this area provides exciting opportunities for further research. The rest of this chapter is outlined in the following manner. Firstly a brief history of the practice of corporate reporting and CSR is presented. This is then followed by the links between impressions management, rhetoric, and the different storytelling descriptions. The case of JP Morgan Chase & Co (hereafter referred to as “JPM”) is introduced as an example of storytelling research, and an analysis is then made of this company’s 2018 Annual and CSR report. Narratives are provided as examples of JPM’s storytelling strategies used in the light of the political perspective focus. The summary then outlines the contribution of storytelling to the literature and also further research opportunities.
2
History of Corporate Reporting
Historically, the practice of corporate reporting on CSR evolved when companies began to produce narratives to accompany their annual financial statements at the start of the twentieth century (Crowther 2018). Prior to the twentieth century, the primary purpose of annual reports was to facilitate the relationship between managers and the owners of a business. From the early 1900s, companies started produce chairman’s statements, directors’ reports, and auditors’ reports to satisfy the demands of accounting regulators and investors (Crowther 2018). There are examples of companies publishing CSR-related disclosures during the early 1900s. Guthrie and Parker (1989), for instance, sourced CSR-related information from BHP’s annual reports dating from the company’s inception in 1885, and Maltby (2004) identified antecedents of CSR reporting in company reports published by
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Hadfields, British companies at the beginning of the twentieth century. Early annual reporting narratives chiefly reviewed business activities (Crowther 2018). From the 1970s, companies began to publish reports that were intended for widerexternal audience beyond its members or potential investors (Crowther 2018). These incorporated more environmental and socially related discourse and placed greater importance on the companies’ image (Crowther 2018). Compared to earlier annual reports, the orientation of annual reporting narratives became increasingly forward looking, while also becoming more disconnected from the annual financial statements (Crowther 2018). This change resulted in corporate reporting narratives becoming progressively more disconnected from the company’s actual performance results. From the 1990s, CSR disclosures were increasingly made in separate sustainability, or triple bottom line (TBL) reports (Beelde and Tuybens 2015). To understand the reasons why companies make disclosures about CSR, it is essential to understand the nature and purpose of CSR reporting and whether these alleviate stakeholder concerns about the impact of organisations on the environment and society. For the most part, companies are not formally obliged to make CSR disclosures (Nikolaeva and Bicho 2011). CSR reports are costly, requiring considerable time and organizational resources to produce (Wickert 2016), and yet CSR reporting has become an institutionalized practice by many of the world’s largest corporations (Higgins et al. 2015). Fundamental questions are asked about the function and company motivations for corporate reports about CSR (Beelde and Tuybens 2015), and in particular, what has motivated companies to commence reporting before others and whether CSR reporting has led to more accountability (Dienes et al. 2016). Companies have argued that CSR reporting serves to enhance reputation, meet investor demands, and fulfill commitments to demonstrate an ethical position to stakeholders (Dando and Swift 2003). Critics however express concerns that CSR reporting is disingenuous and only serves to obfuscate the real effect of corporate activity on the external environment (Aras and Crowther 2009). Milne and Gray (2013) contend that CSR reporting may lead to greater levels of unsustainability because they lack reliability or credibility. CSR disclosures have also been dismissed as virtue signaling, which refers to moralistic statements made by either individuals, governments, or companies for the sake of garnering approval and can be dismissed as a form of vanity (Shariatmadari 2016). Other criticisms arise from concerns that companies’ CSR reporting practices and CSR-related business strategies are driven by desires to pursue moral legitimacy, manage stakeholder perceptions and mask misconduct (Wang et al. 2018), and greenwash the company’s image (Seele and Gatti 2017; Siano et al. 2017).
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Impressions Management and Corporate Reporting
Companies use disclosures about CSR to manage impressions in company reports (Sandberg and Holmlund 2015). Impressions management is concerned with how individuals and organisations “present themselves to be perceived favorably by
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others” (Hooghiemstra 2000, p. 60), and the function is to actively shape the stakeholders perceptions of company’s image (Bansal and Kistruck 2006). Goffman (1959) is credited for establishing impressions management as a sociological theory. Goffman (1959) viewed people as actors that engage in performances in various settings before audiences and actors select behaviors that will make the most desirable impression. Goffman’s dramaturgical perspective of social interactions has been used to analyze how impressions are formed. According to Goffman, the characteristics and behavior of the actor and the audience, combined with other stimuli such as physical settings and organizational culture, affect how impressions are formed (Gardner and Martinko 1988). For corporate reports, physical stimuli are derived from the visual appearance of reports, including the physical layout and structure, the appearance and placement of photographs, color palettes, charts, and font sizes (Hrasky 2008). When a company image is shaped in a way that is consistent with social values, the organization can build stronger stakeholder relationships and enhance corporate reputation (Bansal and Kistruck 2006). Corporate reputation is an intangible asset that adds value by enhancing customer satisfaction and loyalty, aiding in employee attraction and retention, and enhancing the firm’s bargaining power and ability to attract the best professional service providers, raise capital on equity markets, and assist with preserving legitimacy following a crisis (Dowling 2002). Thus, impressions management strategies involving CSR disclosures can improve the company’s overall image, not just its CSR reputation. Unsuccessful or deceptive efforts to boost corporate images can undermine corporate reputations and erode CSR legitimacy (Hooghiemstra 2000). Harmful impressions management strategies can manifest in many forms and result in CSR reports being dismissed as hollow self-presentation devices, in which disclosures are self-attributional, and as greenwash (Thummes 2018). Thus, attention toward impressions management and CSR has increased considerably in recent decades, with the majority of research focusing on rhetorical strategies and tactics, but some attention has been directed toward visual strategies and multimodal impressions management strategies and semiotics (Hossain et al. 2018).
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Impressions Management and Rhetoric in Corporate Reporting
Rhetorical communications refers to the use of persuasive language to win over an audience. Studies into rhetoric draw upon political economy theories of CSR to enhance understanding of CSR disclosures and can be used to analyze how textual language is used to manipulate how others perceive company activities (Ihlen et al. 2011; Ellerup Nielsen and Thomsen 2007). Studies of rhetorical strategies have focused on how CSR discourse can be persuasive, but also hegemonic, and serve to maintain the ideological power of dominant groups within society (Spence 2007). Rhetorical language can appear in many forms, including vocabulary, grammar, and different argument types (Hossain
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et al. 2018). Rhetorical strategies in CSR discourse serve to present organisations in a favorable light, regardless of CSR practices, or past realities (González-González et al. 2019), and rhetorical theory can be used to explain how and why companies communicate about CSR in the way they do (Ihlen et al. 2011). CSR rhetoric is sometimes used to counter the negative impact of crises (Lindgreen et al. 2009). Until the early 2010s, the amount of literature on rhetoric and CSR was relatively scant (Ihlen et al. 2011). One of the few examples was a study by Neu et al. (1998) which reviewed environmental disclosures in the annual reports of 33 publicly traded Canadian corporations between 1982 and 1991. Studies of rhetorical language in CSR disclosures have mostly originated from Northern European countries, and in particular Denmark, Germany, and Norway (Morsing and Schultz 2006; Ellerup Nielsen and Thomsen 2007; Wehmeier and Schultz 2011; Ditlev-Simonsen and Wenstop 2011; Ihlen et al. 2011). In more recent times, the number of studies and investigations into the use of rhetoric in CSR communications has broadened into other organizational research disciplines (Vollero et al. 2018; GonzálezGonzález et al. 2019). It is important to understand the role of persuasion in the way that corporations address sustainability in company reports and the link between storytelling and impressions management.
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Storytelling and Impressions Management
Managers use stories and narratives in communications about CSR to attempt to manage impressions through a practice known as organizational storytelling (Auvinen et al. 2013). Organizational storytelling is the “collective storytelling in which the performance of stories is a key part of members’ sensemaking and a means to allow them to supplement individual memories with institutional memory” (Boje 1991, p. 106). Sensemaking refers to the ongoing retrospective cognitive process where people give meaning and interpret new information, events, and actions (Weick 1995). Weick (1979, p. 5) summarized the power of organization storytelling as: Organisations are often reluctant to admit that a good deal of their activity consists of reconstructing plausible histories after-the-fact to explain where they are now, even though no such history got them precisely to this place
Weick (1979) draws attention to the power of organizational storytelling as a communications and public relations tool, and in particular, how storytelling can be used to reconstruct historical events to create favorable impressions about the company’s past and justify current corporate actions and strategies. Successful organizational storytelling allows companies to control how individual members and stakeholders make sense of new information to help them determine a course of action, or strategy.
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Stories are powerful communication tools because they can elicit emotional and personal responses from readers and may be delivered through a myriad of presentations and styles (Polkinghorne 1988). Companies use different types of media to convey stories including, but not limited to corporate annual reports, company websites, letters, advertising (i.e., print and other channels such as television, billboards, YouTube, etc.), social media pages on Twitter, Instagram, and Facebook, as well as testimonials and editorials in print media such as newspapers or business periodical magazines. Organizational storytelling has been applied to different areas of organizational research, not limited to strategy and leadership (Barry and Elmes 1997), knowledge and learning (Brown and Duguid 2000; Dalkir and Wiseman 2004), and organizational change (Boje 1991, 1995; Weick 1995; Rhodes and Brown 2005; Boje et al. 2016). However, organizational storytelling has not yet been applied as a theoretical lens for analyzing the CSR discourse in corporate reports. Storytelling theory provides a new avenue for corporate reporting and impressions management research. According to Rosile et al. (2013), there are six separate paradigms for storytelling research. Of these six, the most applicable paradigm to analyze corporate reporting of CSR and impressions management is the interpretivist paradigm. The interpretivist paradigm is social constructivist and “looks at patterns of deeper subjective, deconstructing narrative representations, looking for underlying semiotic structures, formalist functions” (Rosile et al. 2013, p. 561). Storytelling research allows for the analysis and evaluation of a range of impressions management strategies as many textual and visual types of organizational stories and storytelling strategies exist in corporate reports. Storytelling research also provides a means to understand how impressions are created in company reports about CSR through the deconstruction of stories that provides an opportunity to challenge the voice, ideas, types and styles, ideologies, and plots (Boje 2001). Unpacking these elements provides some indication of the extent that CSR has been integrated into company narratives but also provides an opportunity to discover how CSR discourse strategies respond to different circumstances. In particular, deconstructive storytelling research on the reporting of CSR can prove to be enlightening when details have been omitted from company reports. For example, the story told by a company that publishes a separate CSR report and yet omits CSR from the annual report is that CSR is has not been integrated in the business and is regarded as a peripheral activity independent from core activities (Yuan et al. 2011). Further, the way that companies report on CSR before or after a major event or a crisis situation can also raise a number of questions about corporate attitudes toward CSR. If the company reports on a series of new CSR initiatives introduced following a major reputational crisis, the implied story suggests that CSR is being used to manage public relations, rather than a genuine attempt to improve the company’s environmental and social accountability performance. Strategic narratives are those that describe the company’s goals and aspirations and the incorporation of CSR provides another indication of the integration of CSR into organizational storytelling (Yozgat and Karataş 2011). Theoretical explanations
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about strategic narrative storytelling were advanced by Barry and Elmes (1997) who explored how companies used language to influence stakeholders’ sensemaking about new strategies and persuade others toward to engage in actions. Strategic narratives may exist in corporate reports as mission statements, or value statements, but can also appear in Chair or CEO letters to shareholders, or as captions accompanying report headings and graphics. Barry and Elmes (1997) referred to three of Mintzberg’s ten strategic management schools: design, planning, and positioning schools, (Mintzberg’s 10 strategic management schools: design, planning, positioning, entrepreneurial, cognitive, learning, power, cultural, environmental, configuration (Mintzberg 1994)) and corporate strategic frameworks developed by Miles et al. (1978) (Miles et al. (1978) corporate strategy: organisations should position their strategies and processes within their markets as either defenders, prospectors, or analyzers, while avoiding becoming reactors.) and Porter’s (1980) five forces of competition (Porter’s five forces model: (1) bargaining power of suppliers, (2) bargaining power of buyers, (3) threat of substitutes, (4) threat of new entrants, (5) industry rivalry (Porter 1979) to explain company motivations for different types of strategic narrative storytelling strategies. Stories can be classified according to key characters, actions, motivations, and settings (Humphreys and Brown 2008), as well as story types (Boje 2008). For instance, stories often identify a protagonist who is either described as the leading character or as an advocate of a particular cause (Gabriel 2000). Gergen and Gergen (1987) classified stories according to the sort of change the protagonist undergoes in relation to a goal. Protagonists can also be passive, or be portrayed as an active agent. Protagonists’ predicaments can also be depicted as deserved, or fortuitous (Gabriel 2000). Aristotle outlined four types of stories; the comedy, tragedy, Greek romance, and the hero’s journey (Aristotle 2013; see also Gabriel 2000). Aristotle’s (2013) story types, sometimes referred to as poetic modes, are used to describe different story classifications, with each type employing different characteristics through which meanings are established from events. Once identified, story types can provide clues about the intended meanings being conveyed in corporate communications, including CSR reports (de Jong and van der Meer 2017). For instance, Chair/CEO’s letters occasionally referred to heroic deeds, describing how the company or their personal actions have “saved the day.” Meanwhile Greek romantic ideals such as misfortune overcome by love through philanthropic or social initiatives may be conveyed in a case study. A tragedy may describe undeserved misfortune, or trauma such as a workplace fatalities, environmental disasters, or company-/industry-wide crises. Finally, a comedy conveys a story about an unpredictable circumstance, misfortune, and deserved chastisement (Gabriel 2000). Another type of story type identified is the founding narrative. This refers to the company’s foundation or history and can sometimes be told using “journey” metaphors. For example, Boje (2008) discussed how Wal-Mart has periodically incorporated variations of this. Czarniawska (1998) described founding narratives as being examples of “petrified narratives” and referred to these as being like examples of historical artifacts that are preserved in the organization’s reality because they are continually being retold.
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Story type classifications have predominantly been used to analyze organizational change but not corporate reporting. For example, Boje (1991) studied story performance at an office-supply firm to determine how organizational participants made sense of change and gain political advantage. Another contribution by Boje (1995) examined Walt Disney as a storytelling organization to understand why some stories became dominant, while others about the darker side of Disney were marginalized and excluded. Boje and Rhodes (2006) examined the portrayal of McDonald’s clown, Ronald McDonald as a transformation leader. Boje et al. (2016) also used story types to study the microstoria of organizational change at Burger King. Storytelling research can also be useful for analyzing different stylistic strategy stories and visualization strategies in corporate reporting. Stylistic strategy stories convey meaning through representations and may incorporate “triple narratives” (Boje 2008, p. 105). The first narrative expresses the “facts,” the second uses photos, charts, and testimonials, while the third refers to the implied meanings from the reports, drawn from the thick empirics, or the deeper meanings from the text along with the superficial meanings. Boje (2008) illustrated how stylistic strategy storytelling theories can be applied to organizational research by relating them to a case study that described how the fast food restaurant chain McDonalds presented different images, such as how the stylistic appearance of McDonalds in France were different to other countries. Boje (2008) also explored the instrumentality of stylistic strategy stories and how companies’ misuse of these can lead to accusations from stakeholders that the company is being insincere. In summary, the different types of storytelling research can be used to conduct a multimodal analysis of corporate reports. A guide of the storytelling elements is provided in Table 1. This will be used to review JPM’s 2018 Annual Report and Sustainability Reports to illustrate how storytelling can be used to analyze corporate reporting.
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The Case of JPM
JPM is the world’s largest bank by capitalization. In 2018, the bank earned a net income of $32,474 million (US); it held assets of $2.6 trillion (US) and had operations worldwide (JP Morgan Chase and Co 2018a). As the world’s largest bank, JPM has attracted considerable interest in CSR literature. Feldner and Berg (2014), for example, analyzed the rhetorical strategies in the company’s 2012 CSR report as part of a study of 15 US companies. Referring to Aristotle’s 3 types of arguments, pathos, logos, and ethos, Feldner and Berg (2014) found all 15 companies (including JPM) relied upon logos reasoning the most and provided concrete examples of the CSR performance. Lauesen (2013) was critical of JPM’s CSR performance history, noting the company had invented a way to reduce loan risks through trading of credit default swaps (CDS), a high-risk lending market, which triggered the Global Financial Crisis. Scholtens (2009) compared CSR between 30 international banks and found significant differences among companies, countries, and regions. Between 2000 and 2005 JPM’s CSR
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Table 1 Storytelling research guide Strategic narratives, narrative, and visual storytelling strategies Strategic narratives
Story types
Category Integration of CSR in strategic narratives
Hero-epic
Comedic
Tragedy
Romance
Foundation narratives
Foundation and petrified narratives
Metaphors and idioms
Visual storytelling
Photographic images
Color and font sizes Charts
Description Exclusively referred to business strategies without any reference to CSR. Exclusively referred to CSR strategies without references to business matters. CSR strategic objectives incorporated in strategic narratives but stated after business strategic goals. CSR and business-related goals are fully integrated Protagonist as the hero. Centers around battles won, disaster averted, missions accomplished, challenges met, and crises resolved through great acts of courage Protagonist as a deserving victim or fool. Stories describing misfortune, ridiculousness, or calamities that are designed to generate mirth and amusement. Used to describe the protagonist as the survivor, humorist, and for stories that describe organizational misfortunes as an absurd farce Protagonist as undeserving victim. Tragic stories discuss the unintended consequences of human actions. Tragedy generates feelings of compassion, anxiety, and pity. Victimhood where identities are constructed around the injustices done. Tragic-comic stories: The use of witticisms to make light of a predicament The subject as the love object. Sentimentality, nostalgia, gentle, and tender in tone. Plots of romantic stories revolve around tokens of love, giving and receiving of gifts, gratitude, and appreciation A narrative that refers to the company’s foundation, or history Analogies, clichés, or a group of commonly used words and phrases. Examples include references to journeys, games and sports, as well as warfare and battles Camera position: camera angle up or down, proximity of camera to subject (close or far), pose/ stance of individual in photograph. Usually in an environmental setting Brighter colors used for positive results/less eyecatching colors used for negative results Differences in the portrayal of positive compared against adverse results
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performance had significantly improved in relation to its codes of ethics, sustainability reporting, and environmental management systems; environmental management; responsible financial products; and social conduct (Scholtens 2009). This paper analyzed the JMP Annual Report and Corporate Responsibility report for 2018. These reports were obtained and downloaded from the JPM website at www.jpmorganchase.com. NVivo was used to code information according to themes or categories that help with the qualitative inquiry process (McGraw and Dabski 2010). This coding is regarded as the critical link between data collection and the explanation of meaning (Charmaz 2008). MS Excel was then used to analyze the narratives (Saldaña 2015) on the basis of storytelling themes and characteristics in the literature according to the themes outlined in Table 1.
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Results
The first observations made from JPM’s Annual and CSR report were that the page lengths were considerably different. The Annual Report contained 300 pages, while the CSR report was 41. Of the 300 pages in the Annual Report, 68 included narrative content, while the remaining provided the financial reports and notes. The company’s corporate governance report is included within the financial report, along with a risk management report (being for enterprise risks, strategic risks, credit risks, market risks, country risks cybersecurity, fraud and insurance risks, staff conduct, legal risks, business continuity, and stress). A notable omission is the remuneration report, which typically provides details of monetary payments for board members and senior executives, including performance bonuses and criteria. This is interesting given that CSR-related performance bonuses can provide some indication of the degree to which CSR has been integrated into the business (Kolk and Perego 2014). Analysis was undertaken on the types of storytelling approaches used, and Table 2 provides a summary these under the headings of Strategic Narratives; Story types; Foundation Narratives; and Visual Storytelling. Narratives and examples of these are provided under the “Descriptions.”
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Discussion
This deconstruction of JPM’s Annual and CSR report has revealed a number of storytelling strategies and attributes that provide some clues of the degree that CSR has been integrated into the business, and how storytelling about CSR is used to manage impressions. Table 2 shows seven principles and strategies are provided that focused on CSR matters. This indicates that CSR is well integrated into the businesses strategic narratives, with equal emphasis placed on both business and CSR matters. In particular strong emphasis was placed on servicing customer needs and less on
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Table 2 JP Morgan Chase Storytelling Strategic narratives, stories, and storytelling strategies Strategic narratives
Story types
Category Integration of CSR in strategic narratives
Hero-epic
Comedic Tragedy Romance
Description JPM provided principles and strategies in the following order: 1. First and foremost, we look at our business from the point of view of the customer 2. We endeavor to be the best at anything and everything we do 3. We will maintain a fortress balance sheet – and fortress financial principles 4. We lift up our communities 5. We take care of our employees 6. We always strive to learn more about management and leadership 7. We do not worry about some issues Extensively employed throughout the CEO letter and accompanying commentary from other senior executives in the Annual Report to describe the company’s accomplishments and resilience in the face of adversity The following provides an example of a hero-epic story type from JPM’s annual report that describes the company’s achievements despite experiencing challenges in delivering services to clients, communities, and countries: “As I look back on the last decade — a period of profound political and economic change — it is remarkable how much we have accomplished, not only in terms of financial performance but in our steadfast dedication to help clients, communities and countries all around the world.” (JP Morgan Chase and Co 2018a, p. 2) None None Although there is some evident in narratives about the company’s social welfare programs and philanthropic contributions, when describing the delivery of services to clients. For example the following from the annual report provides an example of a romantic story type: “The new branches will enable us to better serve our customers, offer more good jobs and deliver on expanded lending and philanthropic commitments in our communities.” (JP Morgan Chase and Co 2018a, p. 3) This is considered an example of a romantic story type because it describes giving and offering services and honoring commitments to communities However the majority of narratives are delivered using the more decisive language evocative of hero-epic story types to describe missions accomplished and goals achieved (continued)
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Table 2 (continued) Strategic narratives, stories, and storytelling strategies Foundation narratives
Category Foundation and petrified narratives
Metaphors and idioms
Visual storytelling
Photographic images
Color and font sizes
Charts
Description None, but he CEO letter provided an extended retrospective commentary that commemorated the 10year anniversary of the Global Financial Crisis, the collapse of subprime lending, and the collapse of large financial institutions, Barings Bank and Lehman Brothers. The commentary piece was used to reiterate the resilience and strength of JP Morgan Chase and Co in the face of significant challenges and adversity ‘Doubling down’ “Our model for impact has yielded real results so we are doubling down on our commitment to drive inclusive growth and expanding the number of people and places we reach. JPMorgan Chase launched AdvancingCities — our largest, most comprehensive corporate responsibility initiative to date to invest in solutions that bolster the world’s cities and the people within them.” (JP Morgan Chase and Co 2018b, p. 67) Doubling down is a gambling term that relates to the game of blackjack and taking a risk (Koller 2004) Photograph of Chair/CEO is a close up “head-shot” taken from a horizontal angle within an open-plan office setting. Other company executives are all male, except for one female, and are all wearing formal business attire. The majority of photographic images accompanying CSR narratives about social initiatives show people in workplace settings The company’s blue brand theme colors are evident throughout the annual report, but the cover of the CSR report features the images of mosaic mural art produced by a Maryland-based nonprofit mosaic studio (JP Morgan Chase and Co 2018b) Charts show only positive business performance trends. Tables and symbols are also used extensively to present performance results. The inside cover page of the annual report provides tabularized report of the bank’s financial highlights for the 2018, 2017, and 2016 financial years (JP Morgan Chase and Co 2018a). The second page of the annual report shows 12 simplified symbolic images accompanied by captions that draw the reader’s attention to different areas of business financial success and CSR achievements, including the financing of 20,000 affordable housing for low income families and $500 million for the AdvancingCities Initiatives
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generating profits (see Table 2 where it is stated that “First and foremost, we look at our business from the point of view of the customer”.) The majority of storytelling by the Chair/CEO is delivered using a hero-epic approach that is particularly evident in statements that emphasize the firm’s achievements and accomplishments. There were many examples evident in retrospective commentary that commemorated the tenth anniversary of the Global Financial Crisis in 2008.This commentary described heroic efforts to avert disaster, as provided in the section headed with the caption, “JPMorgan Chase did everything it possibly could do to help during this time” (JP Morgan Chase and Co 2018a, p. 27). Narratives described how JPM acquired assets from both Bear Stearns and Lehman Brothers that had failed as a result of the crisis and loaned billions of dollars to US state governments, municipalities, hospitals, and schools to minimize disruption to the US and global economy. These storytelling strategies served to draw attention to the company’s resilience and heroic actions that had allowed it to withstand the crisis and the nobleness of its endeavors, by rescuing others in need and averting a much greater disaster. JPM reports revealed no examples of tragic or comedic storytelling types and only a few of romantic storytelling. The romantic type was used to describe customer relations and philanthropic activities, as many social welfare initiatives were also delivered in a hero-epic storytelling style. Few idioms and metaphors were also observed. As the case provided only 1 year of reporting, it is difficult to analyze the petrification of narratives in JPM’s reports over time; however the retrospective comments about the Global Financial Crisis could be construed as an example of a foundation narrative and argue against the need for new prudential government regulations by the US Government. Numerous visual storytelling strategies were used throughout the reports and included photographic images, visual graphics, and charts to convey both business and CSR information. The Chair/CEO letter to shareholders is accompanied by a photograph of the CEO. The photographic image is a close-up “head shot” portrait photograph from the shoulders up. The camera angle is horizontal and direct, neither angled up nor down, and the CEO is seated in a relaxed position, smiling, and dressed in business-casual attire (suit, shirt with no tie). The setting is in an openplan office with the unfocused background image showing office employees sitting behind large computer monitors. This signals that the CEO is not remote from the operations of the company and is not cloistered in an executive office or boardroom. The same photographic image appears in the CSR report. A major difference between the visual storytelling in the annual and CSR report is the latter uses a much wider and brighter color palette range and more photographs of people, cities, and artwork. The color palette evident the annual report is generally limited to conservative blue colors and is more formal, while the CSR report features mosaic mural art produced by a Maryland-based nonprofit mosaic studio (JP Morgan Chase and Co 2018b). In addition, the CSR report also contains many short vignettes about people who have benefited from JPM’s social initiatives. The effect of these stylistic storytelling strategies is that the CSR report is easier to read. The readability of reports is another impressions management strategy sometimes used by companies to draw readers’ attention toward stories intended to
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enhance reputation. Meanwhile more formal visual storytelling as evident in the annual report is considered more appealing to investors and the business community. Wang et al. (2018) however argues that reports with a lower readability can more easily obfuscate information about the company’s CSR performance. Further observations were that the narrative of the annual report was dominated by the Chair/CEO’s letter to shareholders, which is 49 pages. The CEO’s letter commences with the salutation “Dear Shareholders,” which indicates that it is addressed to the investment community; however the letter includes numerous references to CSR as well as business performance matters. The narrative content of both the annual and CSR report is predominately retrospective and provides reviews of the firm’s past CSR and business and is interspersed with short vignettes and case studies about JPM’s CSR initiatives and performance results of individual business units within the company. The CEO letter also provided extended commentary about public policy and global matters such as the economic development of China, and the opiate-abuse health crisis being experienced in America (JP Morgan Chase and Co 2018b). CSR initiatives in both reports purely related to social and community welfare, with no reports made about the environmental impact. This was further demonstrated when a word search of both reports yielded zero results for phrases such as “climate change.” Words such as “carbon,” “emissions,” or “environment” were only used in the context of the social environment in the CSR report (JP Morgan Chase and Co 2018b). One example of the numerous social commentaries provided related details about CSR initiatives of the firm’s Advancing Black Pathways initiatives that seek to address the social and economic inequalities experienced by black Americans. These initiatives included the sponsorship of high school students in disadvantaged communities, the provision of microfinance to entrepreneurs in economic depressed communities, and procuring company supplies from poor communities (JP Morgan Chase and Co 2018b). In summary, it is also apparent that much of the organizational storytelling in JP Morgan Chase & Co’s reports serves to assert and reaffirm its position as a market leader in a rapidly changing industry (JP Morgan Chase and Co 2018b). By its own admission, the company had underestimated the disruptive effects of new technologies such as cloud banking for allowing new entrants to the market such as PayPal and Square (JP Morgan Chase and Co 2018b). This is evident in the strategic principle statement “We endeavor to be the best at anything and everything we do” (JP Morgan Chase and Co 2018a, p. 15a). However, despite its competitive power, JPM’s organizational storytelling in company reports continues to reaffirm its connection with its customers, by prioritizing customer service and making a positive impact on social welfare, and local communities at grassroots levels.
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Summary
This chapter has provided an overview of corporate reporting in the context of CSR. Commencing with an overview of the historical development of corporate reporting, and function and purpose of the reports (Crowther 2018), the chapter then outlined
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the reasons why the practice has attracted criticism as being a public relations exercise that enables companies to engage in deceptive communication strategies and greenwashing. The chapter then described how understanding about the purpose and function of corporate reports vary between the functional/business-case perspective, the social perspective, and the political perspectives, and why the political perspective provides such rich and fertile ground for research (Boje 1995). The political perspective notes that power distribution between companies and stakeholders is not equal and that CSR reports are rhetorical, impressions management tools designed to assert hegemonic power over stakeholders. Following this, the different forms of impressions management strategies that are evident in corporate reports were noted, including visual and rhetorical impressions management tactics. Storytelling research is a new and unexplored tool for analyzing company reports that can be used to deconstruct the meaning of organizational storytelling about CSR. The storytelling research guide provided in Table 1 was demonstrated through an analysis of JPM’s 2018 annual and CSR report. Results were provided in Table 2 which showed how JPM’s narratives and visual storytelling methods can be analyzed. Further commentary elaborated on the results, but also highlighted how other details, including page length, and omissions from reports can also tell stories about companies’ impressions management strategies, and whether company claims about CSR performance are genuine. Results also showed that although CSR has been fully integrated in the company’s organizational storytelling in the annual report, business ideologies still govern the more formal appearance and format of business reports. The scope and complexity of storytelling theory research extends beyond the boundaries of this chapter, and the case study is provided as an illustrative example only. Obviously the scope and depth of this research could be greatly extended through a longitudinal study design, which would facilitate the study of story lines and plot developments over an extended period. Storytelling research in corporate reporting would also be further enhanced by interviewing company representatives and analyzing the content of corporate reports. The advantages of using storytelling research to analyze corporate reports are extensive. Storytelling provides a platform to understand how corporate reports convey multiple meanings about the organization and CSR. On one level, storytelling can be applied to analyze factual meanings conveyed about strategies and performance, but also used to investigate the implied meanings of linguistic choices and visual effects told through semiotics and the sub-contextual messages. It also explained how mismatches between implied meanings and factual meanings in corporate reports can erode corporate reputations and undermine attempts to create positive impressions. Further, storytelling can be used for a wide range of research applications, including the development of knowledge and organizational change and strategic management. Storytelling research can be analyzed from different academic fields, which range from marketing and advertising, to social psychology, semiotics, and linguistics. The disadvantages of storytelling arise as findings are often subject to the reader’s own understanding and interpretations. This can be partially mitigated through
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quantitative research methods, but these can be counterintuitive for analyzing the complexity of language. Another disadvantage from storytelling arises from the complexity of the language and semiotic theories that underpin this type of research, as highlighted by the lack of consensus academics about differences between the definitions of “narratives” and “stories.” Contributions by Boje (2008) and Rosile et al. (2013) have alleviated some of this confusion, but researchers need to exercise caution so the complexity of storytelling research does not detract from findings. Notwithstanding the limitations, storytelling research can help to uncover the underlying motivations and purpose of corporate reporting about CSR. Importantly the storytelling research guide provided in Table 1 provides future researchers with a tool to conduct their own storytelling in corporate reporting that can be applied to future research.
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Cross-References
▶ Corporate Social Responsibility Reporting: Evolution, Institutionalization, and Current State ▶ Governance of Migration and Sustainability ▶ Integrated Reporting ▶ Sustainable Marketing ▶ Triple Bottom Line
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McGraw P, Dabski S (2010) Corporate social responsibility reporting in Australia’s largest companies. Labour Ind 21(1):390–409. https://doi.org/10.1080/10301763.2010.10669411 Miles RE, Snow CC, Meyer AD, Coleman Jr HJ (1978) Organizational strategy, structure, and process. Academy of Management Review 3(3):546–562. https://doi.org/10.5465/ AMR.1978.4305755 Milne MJ, Gray R (2013) W(h)ither ecology? The triple bottom line, the global reporting initiative, and corporate sustainability reporting. J Bus Ethics 118(1):13–29 Mintzberg H (1994) The fall and rise of strategic planning. Harvard Business Review 72(1):107–114 Neu D, Warsame H, Pedwell K (1998) Managing public impressions: environmental disclosures in annual reports. Acc Organ Soc 23(3):265–282 Nikolaeva R, Bicho M (2011) The role of institutional and reputational factors in the voluntary adoption of corporate social responsibility reporting standards. J Acad Mark Sci 39:136–157 Polkinghorne DA (1988) Narrative knowing and the human sciences. State University of New York Press, New York Porter ME (1979) The structure within industries and companies’ performance. The Review of Economics and Statistics 61(2):214–227. https://doi.org/10.2307/1924589 Porter ME (1980) Industry structure and competitive strategy: keys to profitability. Financ Anal J 36(4):30–41 Porter ME, Kramer MR (2006) Strategy & society. The link between competitive advantage and corporate social responsibility. Harv Bus Rev 84:78–92 Saldaña J (2015) The coding manual for qualitative researchers. Sage. London Sandberg M, Holmlund M (2015) Impression management tactics in sustainability reporting. Soc Responsib J 11(4):677–689 Scholtens B (2009) Corporate social responsibility in the international banking industry. J Bus Ethics 86(2):159–175 Shabana KM, Buchholtz AK, Carroll AB (2016) The institutionalisation of corporate social responsibility reporting. Business & Society 56(8):1–19 Shariatmadari D (2016) Virtue-signalling’– the putdown that has passed its sell-by date. The Guardian. 20/01/2016 Siano A, Vollero A, Conte F, Amabile S (2017) “More than words”: expanding the taxonomy of greenwashing after the Volkswagen scandal. J Bus Res 71:27–37 Spence C (2007) Social and environmental reporting and hegemonic discourse. Account Audit Account J 20(6):855–882 Vollero A, Palazzo M, Siano A, Sardanelli D (2018) Managing CSR communication: a study of legitimacy-seeking strategies adopted by service and product companies. TQM J 30(5):621–637 Wang Z, Hsieh TS, Sarkis J (2018) CSR performance and the readability of CSR reports: too good to be true? Corp Soc Responsib Environ Manag 25(1):66–79 Weick KE (1979) The social psychology of organizing, 2nd edn. Addison-Wesley, Reading Weick K (1995) Sensemaking in organisations. Sage, Thousand Oaks Wickert C (2016) “Political” corporate social responsibility in small-and medium-sized enterprises: a conceptual framework. Bus Soc 55(6):792–824 Yozgat U, Karataş N (2011) Going green of mission and vision statements: ethical, social, and environmental concerns across organizations. Procedia Soc Behav Sci 24:1359–1366 Yuan W, Bao Y, Verbeke A (2011) Integrating CSR initiatives in business: An organizing framework. Journal of Business Ethics 101(1):75–92. https://doi.org/10.1007/s10551-010-0710-z
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Barry D, Elmes M (1997) Strategy retold: toward a narrative view of strategic discourse. Acad Manag Rev 22(2):429–452 Boje DM (2008) Storytelling organisations. Sage, London Czarniawska B (1998) A narrative approach to organisation studies. Sage, Newbury Park Gabriel Y (2000) Storytelling in organisations. facts, fictions and fantasies. Oxford University Press, Oxford Morsing M, Schultz M (2006) Corporate social responsibility communication: stakeholder information, response and involvement strategies. Bus Ethics Eur Rev 15(4):323–338 Rhodes C, Brown AD (2005) Narrative, organisations and research. Int J Manag Rev 7(3):167–188 Rosile GA, Boje DM, Carlon DM, Downs A, Saylors R (2013) Storytelling diamond: an antenarrative integration of the six facets of storytelling in organisation research design. Organ Res Methods 16(4):557–580 Seele P, Gatti L (2017) Greenwashing revisited: in search of a typology and accusation based definition incorporating legitimacy strategies. Bus Strateg Environ 26(2):239–252 Thummes K (2018) In the twilight zone between veracity and lying: a survey on the perceived legitimacy of corporate deception in reaction to ethical dilemmas. Int J Strateg Commun 12(1):1–24 Wehmeier S, Schultz F (2011) Communication and corporate social responsibility: a storytelling perspective. In: The handbook of communication and corporate social responsibility. WileyBlackwell, Boston
Brundtland and After Through Commitment to Capability Dianne Bolton and Terry Landells
Contents 1 2 3 4 5 6 7 8 9
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The Brundtland Commission: Sustainable Development Through Multilateralism . . . . . . Multilateral Mindsets and Sustainable Development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Transitioning Aspirations into Multilateral Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Progressing Sustainable Development Agendas Post-Brundtland . . . . . . . . . . . . . . . . . . . . . . . . Global Forums Progressing Sustainable Development Outcomes . . . . . . . . . . . . . . . . . . . . . . . . 1992 Rio Earth Summit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2002 World Summit on Sustainable Development: Johannesburg . . . . . . . . . . . . . . . . . . . . . . . 2012 United Nations Conference on Sustainable Development (Rio+20) and “The Future We Want” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 The 2015 UN Sustainable Development Summit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Approaches and Activities of the HLPF . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 2019 SDG Summit: Accelerated Action Agenda . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Cross-References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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Abstract
The Brundtland Report responded to an urgent call by the United Nations General Assembly to frame a global agenda for change toward advancing sustainable development by the year 2000 and beyond. It would articulate ways in which concern for the environment could translate into action across developed and developing nations and demonstrate interlinkages between people, resources, environment, and development. This chapter suggests that post-Brundtland it is useful to conceptualize the progress of sustainable development agendas as a
D. Bolton (*) · T. Landells Swinburne University of Technology, Hawthorn, VIC, Australia e-mail: [email protected]; [email protected] © The Author(s), under exclusive license to Springer Nature Switzerland AG 2021 D. Crowther, S. Seifi (eds.), The Palgrave Handbook of Corporate Social Responsibility, https://doi.org/10.1007/978-3-030-42465-7_9
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trajectory of increasing “commitment” to defined sustainable development goals and emergent “capability” to implement them. It traces a trajectory of progressing sustainable development agendas under the auspices of the General Assembly, the UN’s Economic and Social Council, the Commission on Sustainable Development, and the High-Level Political Forum. Specific attention is given to post-Brundtland summits that demonstrate the synergy between reaffirmation of commitments, the taking of considered action, and the development of capability through praxis. The Earth Summit in Rio de Janeiro in 1992, the 2002 Johannesburg World Summit on Sustainable Development, the 2012 Rio+20 UN Conference on Sustainable Development, the 2015 UN Sustainable Development Summit at which the Sustainable Development Goals were adopted, and the outcomes of the High-Level Political Forum subsequent to that summit are explored to this end. Reflections on these summits suggest changes over time to institutional structures, implementation of agendas, and capability building. Conclusions highlight the skills needed to progress agendas, arguing that Brundtland’s promotion of integrated thinking and knowledge generation multilaterally remains foundational to facilitating ongoing action. Keywords
Brundtland Commission · Sustainable development · Multilateralism · Collaboration · Stakeholder interactions · Praxis · Garbage can model of decision-making · Complexity
1
Introduction
Subsequent to the 1987 Brundtland Commission’s Report to the United Nations General Assembly (UNGA), it is useful to conceptualize the progress of sustainable development (SD) agendas as a trajectory of increasing “commitment” to defined SD goals and emergent “capability” to implement them. This trajectory of SD, under the auspices of the UNGA, the UN’s Economic and Social Council (ECOSOC), the Commission on Sustainable Development (CSD), and the High-Level Political Forum (HLPF), has generated political debate leading to various forms of action for over 30 years since the Report’s publication. By the time of the Brundtland Commission’s Report, “Our Common Future” (WCED 1987), there had been a long history of political and social concern around the characteristics of development and its broader impact. Waas et al. (2011) note how the focus of SD in the 1950s and 1960s was on increased growth and economic output. By the 1970s increasing poverty and inequality in developing nations were becoming identified as a feature of economic growth patterns, and in the 1980s, environmental protection was embraced in its definition. The Brundtland Report responded to an urgent call by the UNGA to frame a global agenda for change for achieving SD by the year 2000 and beyond. This
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agenda would articulate ways in which concern for the environment could translate into action across developed and developing nations and also demonstrate interlinkages between people, resources, environment, and development. Thus, the Commission faced two challenges: first, to demonstrate a comprehensive theory of SD that encompassed the dimensions identified by the UNGA, and, second, to suggest frameworks that could promote ongoing global cooperation across stakeholders at different levels of development and with different stakes – all under the aegis of a SD agenda. The Commission recognized the broad range of interconnected issues underpinning the diverse multilateral, multifaceted, multilayered, complex, and tension-ridden agendas of member states and other stakeholders. Hence the focus here is on the nature of the dynamic and interactive trajectory between commitment and capability to undertake multiple forms of action by member states within a framework of shared goals of achieving SD. The chapter commences with an outline of the Brundtland Commission’s perspectives on SD and its focus on multilateralism through shared values and collaborative action, across interconnected institutions, groups, and individuals in economic, social, environmental, and political arenas of human existence. Recognizing the complexity and tensions of interconnectedness and drawing on the theory of praxis (Freire 1970), the chapter explores the iterative cycles of action and reflection associated with the challenges of transitioning from aspirations to action, the core tenets of SD in such a complex and dynamic agenda, and the iterative and collaborative global practices reflecting the interpretation of these shared perspectives around SD and associated goals. In exploring how SD has been progressed though UN global forums, a 2017 adaptation of Cohen et al.’s (1972) garbage can model of decision-making is utilized as it deals with decision-making and action by stakeholders in complex environments. This model highlights how the flow of problems, solutions, participants, and choices are brought into a temporally ordered decision opportunity space, bounded by time and the availability, capability, and interactions of stakeholders. This is particularly relevant to UN forums progressing SD. The concept of praxis helps illustrate processes through which UN forums shape global commitment and action, and reflective and political evaluation and adaptation of UN agendas occur at a local level. Specific attention is given to post-Brundtland summits that demonstrate this synergy between the reaffirmation of commitments, the taking of considered action, and the development of capability through praxis. The Earth Summit in Rio de Janeiro in 1992, the 2002 Johannesburg World Summit on Sustainable Development, the 2012 Rio+20 UN Conference on Sustainable Development, the 2015 UN Sustainable Development Summit at which the Sustainable Development Goals (SDGs) were adopted, and the outcomes of the HLPF subsequent to that summit, are explored to this end. Reflections over the period of these summits suggest changes in approaches to institutional structure, implementation of agendas, and capability building. Concluding comments are offered on the skills needed to operate in an increasingly fragile, volatile, dynamic, and complex global environment in which the influence of Brundtland remains significant in promoting integrated thinking and knowledge
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generation multilaterally across all levels of global society, facilitating ongoing action to progress and innovate within a SD agenda.
2
The Brundtland Commission: Sustainable Development Through Multilateralism
The Brundtland Commission, or the World Commission on Environment and Development (WCED), was named after its Chairperson, Dr. Gro Harlem Brundtland, Prime Minister of Norway. Their Report defined “sustainable development” at a global level as being “development that meets the needs of the present without compromising the ability of future generations to meet their own needs” (WCED 1987, Ch. 2, para. 1). This definition reflected the Commission’s insight into the long-term common interests of nations, the impossibility of separating economic development issues from environmental issues, the high levels of interconnectivity between human and natural systems, and the realization that “. . . a new development path was required . . . for the entire planet into the distant future . . . [with] ‘sustainable development’ becom[ing] a goal not just for the ‘developing’ nations, but for industrial ones as well” (Overview, para. 10). Developing a committed movement toward high-order values as a basis for multilateral cooperation requires information exchange, education, and politicization to create awareness of and commitment to shared values at a national, regional, and global level. Subsequent stages of collaboration involve identifying goals and taking action. Taking action around multifaceted and contentious SD issues often requires nontraditional, expansive, and synergized thinking across interconnected institutions and actors in diverse economic, social, environmental, and political arenas, often characterized by ill-defined interlinkages. Historically, multilateral cooperation of this nature has occurred under conditions of intense pressure in which threats become visible and survival forces cooperation among multiple affected parties. Examples of such situations include world war, periods of global depression, the Global Financial Crisis of 2007–2008, and public health pandemics including HIV/ AIDS, SARS, and the current COVID-19 coronavirus. The Brundtland Report outlined the interlinkages between economic, social, political, and environmental drivers of development that perpetuate poverty and environmental damage and demand urgent response. It sought agreement between nations around this world view and their commitment to reverse negative externalities associated with contemporary patterns of growth. In so doing, it challenged centuries of philosophy underpinning the pursuit of competitive economic advantage, economic imperialism, and nation-state autonomy concerning economic, social, political, and ecological impacts of development and growth strategies. At certain points in history, irreconcilable tensions arise that challenge the continuity of these traditions. Such tensions have been highlighted in critiques of globalization. Goldin and Kutarna (2017) note the uncertainties surrounding attempts to develop regional and global solutions to emergent boundaryless problems by differentiating between “. . . the old gospel of globalization which
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transferred political power from the general public to elite technocrats . . . obscur [ing] many important political choices: about how to go about creating wealth, and about how to share the rewards and risks that follow” (p. 375). They contrast “globalization” as a gospel that obscures embedded political choices about the distribution of wealth created with “globalism,” the doctrine of becoming global. Such obscurity suppressed public political choice and fostered the backlash against the process of globalism. “The new, anti-globalization gospel deceives in the other direction. To those who are weary of being pushed around by unseen forces and processes beyond their control, it preaches the power of popular will to defy reality” (p. 376). Given this situation, they argue that “. . . our response is going to be patchwork and poor each time disaster strikes, and it is only going to strike more often” (p. 371). The current response of developed countries to the COVID-19 pandemic illustrates this point well as urgency and community demands appear to trump economic ideology in the short term. SD embraces these economic, social, political, environmental, and governance challenges systemically, each dimension inviting a refreshed mindset toward global and multilateral cooperation and collaboration. Goldin and Kutarna (2017) discuss the challenges of gaining consistent global cooperation over the short and long term to address climate change. They describe the 1997 Kyoto Protocol within the United Nations Framework Convention on Climate Change (UNFCCC), as a “flawed but best effort” (p. 371) framework resulting in a commitment of certain states to cut their own carbon pollution. They suggest that the Copenhagen conference of 2009 was different to Kyoto in that after 9/11 and the experience of the Global Financial Crisis the notion of globalization as an unquestionable approach to economic and social progress had been replaced by a realization that their constituencies would no longer provide popular support “. . . to make significant sacrifices for our common future” (p. 371). By way of contrast, the 2015 Paris Agreement within the UNFCCC took place against a background of increased evidence of extreme weather and rapidly increasing pollution, demonstrating to citizens globally the negative health impacts of a fossil fuel economy, particularly on newly industrializing countries. Thus, citizens were able to make judgments on the basis of their experience and scientific evidence. The leaders of the 197 countries who agreed to contain warming to less than 2 C had more confidence in taking these commitments back to their constituencies without major fear of political cost. Currently, however, 8 of the 197 countries are yet to ratify the agreement, and the USA has commenced its withdrawal (UNFCCC 2020). Goldin and Kutarna (2017, p. 372) conclude that many major global projects requiring global compacts are either on life support or stillborn. They suggest that the narrative of urgency is being dissipated by a new narrative “[w]e ought to be . . . but we’re not” (p. 373), leadership ignoring the needs of its citizenry to advance its own interests. They conclude that “. . . through too many successive crises, no leader has convincingly demonstrated how our present politics and economics can accomplish anything but to magnify the gains of the winners at the cost of the losers” (p. 366). However, the increased realization of the need for global solutions can be seen as challenging disassociation from global cooperation. Tension between leaders
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concerning measures to save lives or livelihoods in the current COVID-19 pandemic highlights further political divisions about the pre-eminence of economy over society. Politics of collaboration help citizens better appreciate challenges and risks to themselves and others through a more pluralist, holistic, and integrated lens. The theory of praxis, discussed below, demonstrates the essential constant and iterative dynamic between theory and practice for developing adaptive mindsets that can reject politically motivated solutions, often of a nativist and protectionist type.
3
Multilateral Mindsets and Sustainable Development
Dr. Brundtland identified the importance of multilateral thinking in her foreword to the Commission’s 1987 report, stating “[t]he challenge of finding sustainable development paths ought to provide the impetus – indeed the imperative – for a renewed search for multilateral solutions and a restructured international economic system of co-operation. These challenges cut across the divides of national sovereignty, of limited strategies for economic gain, and of separated disciplines of science.” By identifying systemic interlinkages between economic, social, and environmental drivers of SD, the Brundtland Commission asserted common global interests that required a paradigmatic rethink of the complex drivers of economic growth. The Report’s foreword stated that the Commission’s most urgent task was to persuade nations to return to multilateralism to address the downward spiral of linked ecological and economic decline, trapping the poorer nations, and ultimately affecting sustainable development paths globally. The Report sets out to demonstrate the multifaceted interlinkages between world poverty, disarmament, the north/south divide, environmental damage, basic education, and so on. Thus, the Commission’s perspective was radical in that it claimed to demonstrate common interests between nations to progress global economy and societal well-being, identifying major challenges that required multilateral cooperation. In effect, it openly challenged “the whole area of economic international relations” (WCED 1987, Chairman’s foreword). What was proposed was thus unashamedly aspirational. It presented an argument for political commitment to addressing interrelated complex global challenges, the core of which would require a new development path and associated economic order. Sneddon et al. (2006) have suggested that the Brundtland Commission’s Report helped initiate what is now regarded as three mutually reinforcing aims of SD, i.e., “the improvement in human well-being, more equitable distribution of resource use benefits across and within societies, and development that ensures ecological integrity over intergenerational timescales” (p. 256). They also recognized that the “three legged stool” characterization of this approach, with “three overlapping [and interdependent] spheres: economic security, ecological integrity, and social equity . . . [tended to discount]. . . the actual interrelations of those three ideals as complex and often contradictory in practice” (p. 256). They further identified fundamental contradictions between the necessity for economic growth in developing economies
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and improved ecological conservation, and a lack of attention to “power relations among the local-to-global actors and institutions supporting unsustainable development” (p. 254). Nevertheless, Sneddon et al. (2006) maintained that three major benefits arose from the Brundtland Commission. These were a renewed focus on the ethical tensions surrounding human-environment relationships and the ineffectiveness of institutions and lack of political will of both governments and citizens; the rise of a “new political discourse” embracing contested interests and a plurality of perspectives on sustainability; and the highlighting of more recent developments affecting sustainability not envisaged in 1987, i.e., decline in the legitimacy of authoritative science, new thinking to address failures in equating economic growth and development, and the rise of fundamentalist ideologies on the politics of significant nation-states such as the USA, Israel, and India. Goldin and Kutarna (2017) have identified the need for a “second renaissance” in human thinking and acting facilitated by “. . . a political technology called democracy” (p. 378), i.e., a democratic renaissance as a counter to what they perceived as the transfer of political power from citizenry to elite technocrats. Sanders (2017) and Chomsky (2020) have also raised the need for a new political order and discourse, further exploring the Brundtland Commission’s interlinkages between world poverty, disarmament, environmental damage, and human well-being, particularly as experienced in the north/ south divide. For example, as we write in May 2020, Chomsky has challenged US President Trump’s decision to freeze payments to the World Health Organization in the period of the COVID-19 pandemic, predicting it would lead to death in Yemen and across the African continent (Partington 2020). The aspirational narrative of SD foreshadowed such tensions. It suggested that to achieve the goals of SD would necessitate democratic process, whereby new political, economic, social, and ecological narratives could arise to address urgent global agendas through multilateral thinking and action, as an alternative to dominant and self-serving technocratic solutions presented as unchallengeable. The launch of the Progressive International, “a global initiative to unite, organize and mobilize progressive forces around the world” (Partington 2020), appears to be an example of uniting international and multilateral forces to promote a more progressive vision of the future to identify and address global threats including climate change. The complex and multilayered nature of pressures requiring such action was initially identified in Brundtland’s focus on the need for multilateral thinking in identifying and addressing global crises.
4
Transitioning Aspirations into Multilateral Action
The challenges of translating complex aspirations into urgent global projects associated with SD goals have been noted above. Over time, UNGA commentary concerning progress on implementing SD goals suggests that integrity of judgments and decision-making will be borne out by the ability to realize goals in practice. Subsequent to “Our Common Future,” there have been significant attempts to
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generate global action toward realizing its aspirations. However, increasing awareness of the urgency of the agenda can and will, through democratic processes, foster alternative discourse based on diverse interpretations, politics, self-interest, stages of development of members, etc. The rise of right wing politics in the aftermath of global crises including terrorism, person’s seeking refuge, financial collapses, and pandemic health threats has leveraged fears as populations seek certainty, often through supporting increasingly authoritarian government. Such an approach is in tension with the realities of demonstrated collaborative effort required to resolve complex challenges. Narrow, top-down decisions are rarely, if ever, capable of being fully implemented. Often, if not always, resolving complex challenges requires iterative cycles of goal setting, strategizing, taking action, evaluating outcomes, and revision drawing from perspectives of diverse stakeholders. This requires accepting overarching common interests to be actioned through “common but differentiated responsibilities and respective capabilities” (UN 1992a, para 3.1). Political attempts to shift responses to global challenges away from a global perspective to a national perspective are increasingly challenged by current complex global realities. For instance, Goldin and Kutarna (2017) decry US President Trump’s promise to put America first, “[w]e are tangled together. All our actions in every sphere defy the notion of borders. Neither open nor closed makes us safe. It is an absurd lens that simplifies away the very risks and complexities that we must start grappling with more seriously” (p. 381). Nevertheless, in the future, some leaders can be expected to obfuscate tough choices, denying legacies for future generations globally. Yet emergent global crises, such as COVID-19, are making increasingly transparent to the broader global community the costs of ignoring the interconnected consequences of global crises. Consequently, the implementation of Brundtland’s global aspirations warrants conceptualization as iterative, dynamic, and diverse global collaborative activity. Collaborative global activity can be fostered and coordinated; it cannot be controlled. While UN documentation increasingly acknowledges this dynamic and has designed structures and practices accordingly, public appraisal of outcomes, e.g., commentary on various climate summits, still often maintain expectations around linear progress by understating achievements in attaining collaborative mindset shifts and associated action. This is problematic from two perspectives: first it reinforces community expectations that such political shifts in mindsets and actions can be achieved in the short term; second it invalidates the learning process that will inevitably drive change. The theory of praxis, defined as the integration of theory and practice through iterative cycles of action and reflection (Freire 1970), appears to constitute a critical lens to appreciate the learning process underpinning the dynamic between commitment and capability development post-Brundtland. This includes the inculcation of SD into political agendas as well as skills and mindsets required to appreciate and act on them by the broader community. As noted earlier, this latter can be seen as including new and emergent capability for communicating increasingly rich and nuanced rationales for action (local and global), as well as personal attributes to
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maintain such goals in increasingly volatile, uncertain, complex, and ambiguous global environments. Thus, it is of value to critique the processes and outcomes of collaborative forums post-Brundtland, using, inter alia, the lenses of praxis and complexity to explore how key stakeholders have progressed the Brundtland agenda resulting in a broader and more nuanced perspective of the nature of progress and the capabilities that drive it.
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Progressing Sustainable Development Agendas PostBrundtland
Since “Our Common Future,” various global forums have been staged under the auspices of the UN to move from committing to the principles of SD to taking meaningful action. The focus here is on the complex dynamic that underpins “progress.” Progress can be conceptualized as an iterative process in which stakeholder nations prepare their contributions in the context of the political, economic, and social realities that they are experiencing. These UN global forums represent pressured environments in which national perspectives are voiced and multilateral accommodation and agreement are reached to the extent possible. The extent of agreement in forums and subsequent action will depend heavily on members anticipating and communicating their respective national economic, social, environmental, and political pressures. It has been noted similarly (Bolton and Landells 2017; Carter et al. 2011) that the culture and dynamics that operate in bounded global decision forums in sessions of the Conference of the Parties of the UNFCCC might be interpreted through the theoretical lens of the garbage can model (Cohen et al. 1972). This lens also appears relevant to review of post-Brundtland developments in SD. For example, in discussing the Copenhagen CoP, Carter et al. (2011) note that [p]roblems, policies and politics sometimes converge but more often than not attach themselves randomly and independently of each other . . . the summit was the garbage can into which the concerns around the issues of global warming and climate change were poured, there to attach themselves to the various solutions that the main protagonists – radicals, mainstreamers and skeptics – promulgated. (p. 684)
Bolton and Landells (2017) adapted the garbage can model to recognize the order generating force of dynamic stakeholder interactions within time-bounded decisionmaking opportunities, noting that outcomes emanating from the Copenhagen summit could be interpreted as iterative forms of progress in complex and volatile environments, rather than as “failures.” In the context of forums to promote SD, it is also valuable to acknowledge iterative and dynamic stakeholder-engaged decision-making both within and between global forums, nation-states, and regional blocs. Figure 1 below represents diagrammatically the dynamic interlinkages between UN forums (in which multiple stakeholders interact to reach agreement) and diverse national environments in which members reflect
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Fig. 1 Iterative and dynamic stakeholder-engaged decision-making between UN global forums and members
on existing UN agendas and prepare their statements on levels of commitment to UN agendas and action taken. In addition, the diagram demonstrates a further set of interactions between national decisions made and reported to forums and outcomes of forums communicated back to member states. This level of dynamism between forums and members reflecting on goals in the context of action taken synergizes the notion of praxis with the adapted garbage can model. The level of dynamism represented in the diagram embraces economic, social, and political drivers and shapers of action that can shift unpredictably and radically in complex and volatile environments. This level of dynamism was anticipated by Brundtland but did not dilute the breadth of the Report’s agenda and as such set the scene for response to contemporary global challenges and crises. For example, as this is being written, nation-states are responding locally to the COVID-19 coronavirus pandemic in ways that can deepen or diminish notions of political commitment to global crises. Freinacht (2017), in discussing the need for a “listening society,” regrets the lack of major political vision that cannot see past fragmented ideologies in identifying how society should evolve as globalized, digitalized, and post-industrial, i.e., reflecting “metamodern” politics that also embrace equality, freedom, and order as societal goals. Of relevance here is his focus on developing non-linear politics that allows the operation of paradox, experimentation, and vision and can accommodate leaps in action based on new levels of awareness. He suggests that a . . . foundational metamodern principle holds that you must continuously doubt your own ideological position. People are good at reconstructing their past, telling themselves that they always had this or that opinion or world view. In reality, people are a lot more flexible, adjusting as we go along in order to fit the norms . . . [we] all neatly and discreetly [change] our views when new social pressures [arise]. (p. 143)
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It is through this lens that a critique of the dynamics of progress of SD postBrundtland is undertaken. The focus here is to demonstrate dynamic and complex iterations of global agreement and national responses to better conceptualize the nature of a trajectory of progress.
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Global Forums Progressing Sustainable Development Outcomes
Global forums to progress the SD agenda have included the 1972 UN Conference on the Human Environment (Stockholm Conference); the first conference on international environmental issues; the 1983 UNGA that established a special commission (later called the World Commission on Environment and Development – or the Brundtland Commission) to report on “the environment and the global problematique to the year 2000 and beyond” (UN 2020a); the 1992 Rio Earth Summit where 178 countries adopted “Agenda 21” as a plan of action (UN 1992c); the 2002 Johannesburg World Summit of Sustainable Development and its “Plan of Implementation” (UN 2020b); the 2012 Rio+20 UN Conference on Sustainable Development at which the “The Future We Want” outcome set out to develop globally agreed SDGs (UN 2020c); and the 2015 UN Sustainable Development Summit, the outcome of which was “Transforming our World: The 2030 Agenda for Sustainable Development” in which the 17 high level SDGs were adopted by member states (UN 2020d). Agendas and outcomes from these forums recognized the challenges of taking action to implement a broad and complex SD agenda in which the linkages between economic, social, environmental, and institutional drivers were dynamic and took on diverse political priorities in different national settings. The shift from goal setting to the challenges of action and associated capability including global collaboration is reflected in the replacement of the Commission on Sustainable Development (CSD) by the HLPF on Sustainable Development at the Rio+20 Conference.
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1992 Rio Earth Summit
The 1992 United Nations Conference on Sustainable Development (the Earth Summit) created the CSD as the first UN body on SD, “sustainable development [being] a relatively new concept at that time” (UN 2013a). As a functional commission of the Economic and Social Council (ECOSOC), the intention was that the CSD would provide guidance on international institutional arrangements to support action, including the roles of the UNGA and the ECOSOC, the cornerstone of the UN’s intergovernmental framework for SD governance. The Earth Summit reaffirmed and built on the Stockholm Declaration of the UN Conference on the Human Environment (1972) as well as affirming goals of the Brundtland Commission to develop a common vision around the integrated and interdependent nature of the Earth. The outcome document clearly sought new and
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equitable global partnerships and agreements “. . . which respect the interests of all and protect the integrity of the global environmental and developmental system” (UN 1992b). It also committed member states to new levels of cooperation among them as well as between key sectors of their societies and people. The 178 member states at the Earth Summit also adopted Agenda 21, which identified the urgency of integrating environment and development concerns in order to fulfil “. . . basic needs, improved living standards for all, better protected and managed ecosystems, and a safer, more prosperous future” (UN 1992c, para. 1.1). This was to be achieved through global partnership to address contemporary and future global problems. Agenda 21’s major purpose was to engineer “. . . global consensus and political commitment at the highest level on development and environment cooperation” (UN 1992c, para. 1.3). Member states achieved a consensus that governments took primary responsibility for Agenda 21’s successful implementation, their efforts being supported and supplemented by international cooperation. Financial resources to support the role of developing nations and to strengthen the capacity of international institutions were identified by program area. Attention was drawn to the challenges of developing countries in their efforts to transform their economies while experiencing high levels of social and political tension. Of key significance, Agenda 21 acknowledged it was a dynamic program, with complex policy interlinkages to be interpreted and adapted across countries and regions at different stages of development, with different agendas and capabilities. Despite such challenges, the intention was that the overarching goal was to maintain “. . .full respect of all the principles contained in the Rio Declaration on Environment and Development” (UN 1992c, para 1.6). Accordingly, the document noted that member responses would evolve over time in light of changing needs and circumstances and that new forms of global partnership could potentially provide collaborative and targeted support to this end. The CSD’s mandate to monitor progress in the implementation of Agenda 21 included overviewing system-wide coordination and the integration of environmental and developmental goals through analysis and evaluation of reports from relevant organizations. It also considered information from governments, sometimes as national reports, regarding activities undertaken to implement Agenda 21 including problems faced such as financial resourcing and technology transfer. Agenda 21 elicited investigation of complex interlinkages globally and nationally and options for reconciling economic, social, environmental, and institutional objectives through more integrated political thinking, not unlike Freinacht’s (2017) metamodern politics described above. Chapter 40 recognized the need to develop sustainability indicators for assessing progress toward SD, for evaluating and communicating achievements and “. . . to contribute to a self-regulating sustainability of integrated environment and development systems” (para 40.3). Spangenberg (2002), from the Sustainable Europe Research Institute in Germany, noted that as a result of the CSD’s development of sustainability indicators, an additional institutional dimension to facilitate implementation was achieved. In 2004 he investigated sustainable development as integrated policy in Germany, focusing on four simultaneous problem areas detailed by the Brundtland Commission related to
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implementation. These included the environmental challenge, the increasingly unequal distribution of income and assets, the high number of people living in poverty, and the institutional challenge generated by flow-on effects that threatened peace and security. He concluded that such questioning of the untrammeled acceleration of a global deregulated free trade economy was foundational to understanding the concept of sustainability, as was an understanding of associated power structures. Spangenberg (2002, 2004) aimed to expand and test the CSD’s criteria for economic, social, environmental, and institutional sustainability, critiquing previous calls (e.g., World Bank 2000) that said little “. . . about the power structures behind the current development pattern and the need for change necessary to translate economic growth into a more equitable distribution of wealth and income” (2004, p. 76). Drawing from transdisciplinary research undertaken by Hans-BöcklerStiftung (2001), Spangenberg (2004) concluded that an integrated scenario across the four pillars of SD was the only scenario that addressed benchmarks concerning inequalities identified in discourse around SD to meet appropriate economic growth targets, as suggested by Brundtland. He concluded that such scenario analysis suggested that “. . . political initiatives towards integrated sustainability policies are possible and necessary if the current unsustainable trends are to be broken. This is a challenge, as for any innovative politics, but the reward is high: progress towards a socially, environmentally and economically sustainable society” (p. 84). Agenda 21 has engendered a range of critique and criticism over a significant period, particularly in the USA. The Guardian reported how certain southern states such as Arizona, Texas, and Missouri sought unsuccessfully to introduce legislation that prohibited action taken on Agenda 21 issues. Events in Alabama in 2012 demonstrate potential dangers of attempts to legislate against voluntary agreement to Agenda 21 in that “. . . one of the biggest dangers of anti-Agenda 21 bills lies in their often vague wording which can obscure their potential impacts. . . [e.g.] the Texas bill could . . . have barred non-profits that work with the UN from receiving any state or municipal funding” (Harman 2015). At a national level, the Southern Poverty Law Center in Montgomery Alabama noted that in the 22 years since the conclusion of the Earth Summit “. . . Agenda 21 has been transformed in much of the American public mind into a secret plot to impose a totalitarian world government . . . to crush freedom in the name of environmentalism” (2014, p. 5). It further suggests that this mindset goes further than extremists. In January 2012, the Republican National Committee denounced Agenda 21 as a “destructive and invidious scheme” oriented toward perpetrating a “socialist/communist redistribution of wealth” (2014, p. 5). Alternative concerns around the pace of implementation of Agenda 21 were raised at the UNGA’s 19th special session in 1997 concerning demonstrated capacity of the CSD to accelerate and strengthen action on “. . . the integration of economic, social and environmental objectives, sectors and issues and means of implementation.” Although it recognized that the CSD’s work had been catalytic in contributing to new actions, commitments, and deliberations on SD, it urged increased efforts to attract greater involvement of ministers and high-ranking bureaucrats, more
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interaction with international financial, development, and trade institutions and greater promotion of regional collaboration around projects and promotion of innovative practice. In 1998 the UNGA suggested that the CSD’s program for 1998–2002 might adopt a sectoral theme, starting with poverty, consumption, and production patterns. This approach allowed a greater focus around integrated policy to attract major sectoral and group interests. These interactions to exchange experience and best practice, often through voluntary communication and reports, implicitly brought together players with disparate forms of commitment and interpretations of a SD path. International financial, development, and trade institutions also brought their own political perspectives.
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2002 World Summit on Sustainable Development: Johannesburg
The World Summit on Sustainable Development in Johannesburg in 2002 further considered the challenges of implementing Agenda 21. The process of implementation relied on leveraging member reports, perspectives, and insights (particularly governmental) on developing integration across pillars of SD. Despite attempts to develop and share common indicators across themes to support comparable contributions, merging inputs around themes to achieve integrative thinking was a continuing challenge. Concerns were no less prevalent in relation to the CSD’s brief to take into account regional developments and facilitate exchange of perspectives in a manner that respected the mindsets, attitudes, and political agendas brought to these forums reflecting individual stakes in global cooperation. A major outcome at Johannesburg was its Plan of Implementation in which the respective roles of the UNGA, the ECOSOC, and the CSD in promoting SD were upgraded. The UNGA was asked to adopt SD as a key element of UN activities and give “overall political direction to the implementation of Agenda 21 and its review” (UN 2013a, para. 14). The ECOSOC was given a similarly challenging role to oversee system wide coordination “. . . and the balanced integration of the three dimensions of sustainable development.” In addition, it was to review the agenda of SD themes and their implementation and, in its substantive session “. . . take into account all relevant aspects of the work of the United Nations on sustainable development, promote greater coordination, complementarity, effectiveness and efficiency of activities of its functional commissions and other subsidiary bodies relevant to the implementation of Agenda 21” (UN 2013a, para. 14). The CSD was to place greater emphasis on implementation at “all levels” through promoting and facilitating partnerships. Given the perceived enormity of this task, it was suggested that cross-sectoral initiatives should be focused on specific sectoral issues, policy integration being achieved through the relevant ministers dealing with various dimensions of SD. Both themes and opportunities for negotiation were limited, the latter occurring every 2 years in sessions of the CSD.
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Thus, it might be argued that by the time the Johannesburg Conference occurred, tensions were arising from the enormity of the Agenda 21 brief and its related attempts to influence economic development and political agendas. Three tensions are highlighted. First, capability to implement Agenda 21 was underestimated in relation to both resources involved and the depth of skills required. Multi-stakeholder communication and sense-making skills of a high level were needed across individual actors working in networked institutional settings, governments, and bureaucracies, the private and NGO sectors, and academia and research. Second, it could be argued that the limited opportunities for forums and constrained resources encouraged a fragmented and possibly linear approach to SD at a national and international level. This approach potentially ignored the impact of political dynamism (associated with a global economy increasingly driven by technological innovation) on the responses and actions of member states. Third, as criticism of the CSD increased in terms of its capacity to achieve complex levels of implementation, solutions were increasingly sought to provide frameworks to enable more effective engagement of members and groups. Some member states complained that too many issues were clustered in each given year, thus obviating in-depth discussion; also, the review year supported a focus on progress, challenges, and exchange of experience but did not allow for lengthy negotiations. Thus, the 2-year cycle review and negotiation were not resulting in appropriate action (UN 2013a, para. 43). Likewise, decisions on thematic issues were often grouped with little chance of agreement on multiple complex issues (UN 2013a, para. 44). Some member states regretted the lack of opportunity for a more rigorous science-policy interface (para. 47). Also, a 1-week intergovernmental preparatory meeting every second year was rushed, and often lowest common denominator outcomes emerged with little attention to challenges and constraints arising in the review year. This resulted in prolonged negotiations in the policy year (paras. 49 & 50). Perhaps the most critical issue was that the CSD had become a forum for environmental ministries with occasional input from interested ministries, e.g. agriculture. However, ministries responsible for integrated planning such as finance or development were often not represented, so decisions made tended to lack legitimacy (UN 2013a, para. 52). Multi-stakeholder dialogues were seen as valuable for member states seeking multi-stakeholder partnerships in implementing SD policies. Partnership fairs were held for each session of the CSD, but time available hindered a review of their contributions and resource constraints limited the development of a partnership data base. These were seen as valuable educative forums that needed further development (para. 60).
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2012 United Nations Conference on Sustainable Development (Rio+20) and “The Future We Want”
At the UN Conference on Sustainable Development (Rio+20) in June 2012, the outcome document “The Future We Want” recognized the uneven progress since 1992 in SD and poverty eradication, acknowledging the impact of multiple financial,
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economic, health, food, and energy crises and anticipating their future frequency, “climate change [being] a cross-cutting and persistent crisis” (UN 2012, para. 22). Rio+20 also recognized that the Millennium Development Goals (MDGs) were providing a broad framework and focus for “. . . national priority-setting and for mobilization of stakeholders and resources towards common goals” (2012, para. 245) and re-committed to their achievement. In that context, the Conference recognized the importance of establishing sustainable development goals that built upon the MDGs, encapsulated Agenda 21 and the Johannesburg Plan of Implementation, and respected the 1992 Rio Principles. This focus on establishing SDGs acknowledged that it was necessary, in the interests of accelerated action, to identify a limited number of global goals that could be easily communicated but which took into account different national political, economic, social, and environmental realities as well as levels of development and associated capability. More concise representations of development goals were to be developed by “. . . an inclusive and transparent intergovernmental process . . . open to all stakeholders” (2012, para. 248), and the process coordinated with the post-2015 development agenda. Regional Economic Commissions would collect and analyze national data to inform this global initiative, assistance being given to developing counties to achieve the requisite capacity building. Rio+20 also mandated the establishment of a universal, intergovernmental High-Level Political Forum on Sustainable Development (HLPF) to replace the CSD and provide political leadership, guidance, and recommendations for SD. In 2013, the UNGA adopted a resolution on the format and organization of the HLPF which identified it as voluntary, state-led, and involving ministerial and other relevant high-level participants. In an effort to encourage an action-oriented approach, the states were to “. . . ensure that their participation . . .. reflect[s] the balanced integration of the social, economic and environmental dimensions of sustainable development from their national perspectives” (UN 2013b, para. 12). This upgraded level of participation was intended to constitute a dynamic platform that could better pursue an action-oriented agenda in response to new and emerging SD challenges (UN 2012, para. 85). The intention appears to address previous tendencies of the CSD for a potentially more prescriptive appraisal of national challenges. The report to the 67th session of the UNGA by the Secretary General on lessons learned from the CSD (UN 2013a) noted that the CSD had been largely successful in fulfilling its role as the cornerstone of the UN’s intergovernmental framework for SD governance. However, it was also noted by member states and the UN’s system organizations and major groups that the CSD over time “. . . had progressively lost its luster and effectiveness . . . including its lack of impact on the implementation of sustainable development policies; the ineffectiveness of its role in integrating economic, social and environmental dimensions of sustainable development in the work of the UN’s system; and its cumbersome decision-making processes and unclear outcomes” (2013a, para.3). Nevertheless, the importance of the CSD’s work “. . . in launching initiatives and introducing new topics into governmental debates . . .” (2013a, para. 3) concerning SD was also noted.
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The 2015 UN Sustainable Development Summit
In 2013 an Open Working Group of the UNGA scoped the SDGs which were presented at the 69th session of the UNGA. The resulting 17 SDGs were core to the outcome document of the UN Sustainable Development Summit in September 2015 entitled “Transforming our World: The 2030 Agenda for Sustainable Development” (UN 2015a) which outlined the post-2015 development agenda. The UN’s “Informal Summary” of the Summit suggests that the new format and organization of the HLPF successfully attracted a large number of heads of state and government as well as high-level leaders from business and civil society who “. . .welcomed the 2030 Agenda and emphasized its transformative, universal and inclusive nature, its applicability to all countries and stakeholders and its motto of leaving no one behind. Its linkages with peace, security, human rights and good governance were also lauded.” Eradicating poverty, including extreme poverty often incurred by crises (such as the current COVID-19 pandemic), was seen as the greatest global challenge and as essential for progressing SD. The 17 SDGs and 169 targets demonstrated a vision described as “supremely ambitious and transformational” (UN 2015b, para. 7). They would drive action over the next 15 years, addressing ambitions for determining that poverty is ended and that healthy people can fulfil potential with dignity and equality; the planet is protected from degradation; all people can enjoy fulfilling lives with prosperity in harmony with nature; peace is fostered to support just and inclusive societies free from fear; and partnership is mobilized to implement this agenda. The Brundtland Commission’s vision for SD as meeting the needs of the present without compromising the ability of future generations to meet their own needs had recognized “in essence, sustainable development is a process of change in which the exploitation of resources, the direction of investments, the orientation of technological development, and institutional change are all in harmony and enhance both current and future potential to meet human needs and aspirations” (WCED 1987, para. 15). The scope of the 2030 Agenda could be seen as more ambitious than Brundtland and no less ambitious than Agenda 21, in that it detailed means of achieving these high-level goals, e.g., concerning finance, technology, capacity building, trade, and systemic issues such as policy and institutional coherence, multisector partnerships, and key deadlines for data collection, monitoring, and accountability. The resolution adopted by the UNGA stated: . . . the framework we are announcing today goes far beyond the Millennium Development Goals . . . [n]ever before have world leaders pledged common action and endeavor across such a broad and universal policy agenda. We are setting out together on the path towards sustainable development, devoting ourselves collectively to the pursuit of global development and of “win-win” cooperation which can bring huge gains to all countries and all parts of the world. (UN 2015c, para. 18)
2015 was seen as a landmark year for multilateralism, a core tenet of Brundtland’s program. Implementation of the ambitious new agenda of the 2015 Summit was seen as relying upon new, enhanced, and dynamic global partnerships, embracing policies
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and actions suggested in the Addis Ababa Action Agenda on Financing for Development. 2015 also witnessed multilateral collaboration associated with the Paris Agreement’s response to climate change. Nevertheless, it was made clear at the 2015 Summit that each country had primary responsibility for economic and social development, emphasizing the role of national policies and development strategies. This premise is of particular significance in analyzing state responses to national, regional, and global crisis. Bolton and Landells (2017) argue that the Paris Conference in that same year also demonstrated a new form of transparency and “. . . agile infrastructure for multiple and dynamic actions to renegotiate and reshape global goals . . . includ[ing] an EU back down on legally binding emission cuts, US acceptance of clauses around ‘loss and damage’ and China’s and India’s agreement to an aspirational target of 1.5 warming” (2017, p. 87).
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Approaches and Activities of the HLPF
The annual meetings of the HLPF now serve as the central UN platform for the follow-up and review of the SDGs. The CSD had been criticized for the timing of its meetings and the lack of opportunity to review and facilitate interstate cooperation and cross-linkages in addressing emergent crisis as well as appropriately sponsoring global partnerships. The HLPF approach allows for more regular and deeper consideration of themed topics on an annual basis. This was to be achieved through review of state-led Voluntary National Reviews (VNRs) from both developed and developing countries. This themed annual approach was also seen as conducive to revitalized global partnerships, leveraging interlinkages across governments, bureaucracies, business, and civil society. However, concern was also expressed about the potential of the new and broader agenda to result in dispersion of resources with associated dilution of outcomes. In developing the program of themes, it appears that the High-level Segment of ECOSOC offered insights from National Voluntary Presentations concerning the need to ensure that MDG agendas were prioritized and followed through, particularly those concerned with poverty eradication. Consequently, in 2016, at the HLPF’s first meeting under the auspices of the ECOSOC, the theme adopted was that of “Ensuring that no one is left behind.” Of key significance here was the focus on institutional reform at the local level. The President’s summary of the High-Level Segment of ECOSOC and the HLPF noted the need for new national bodies to strategize, plan, coordinate, and review implementation around this theme. It was also recognized that “[h]uman resource capacities would be needed to ensure that government agencies effectively engage and manage complex, multilayered partnerships with other stakeholders, including the private sector and civil society, in ways that build trust and accountability for results” (UN 2015d, p.10). Governments were to lead such capability building which would require building statistical and broader analytical capacity to review progress, measure outcomes, and evaluate approaches (2015d, pp. 10 and 11).
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For the next three meetings in 2017, 2018, and 2019, the themes adopted were, respectively, “Eradicating poverty and promoting prosperity in a changing world,” “Transformation towards sustainable and resilient societies,” and “Empowering people and ensuring inclusiveness and equality.” Each of these meetings reviewed progress against a group of SDGs related to the theme as well the review of nationstate VNRs. At the 2019 meeting of the HLPF under the auspices of the UNGA, i.e., the SDG Summit 2019, progress against all of the SDGs was comprehensively reviewed, with the conclusion that progress on implementation of all SDGs was less than anticipated. This resulted in a renewed call to action to prepare for a decade of enhanced delivery for sustainable development. The HLPF for 2020 adopted the theme of “Accelerated action and transformation pathways; realizing the decade of action and delivery for sustainable development.” At the time of writing, the annual forum in July 2020 (during the COVID-19 pandemic) had recently taken place at which it was noted that the pandemic was having impact on progress across all 17 SDGs (listed below), the poorest, and most vulnerable people suffering disproportionately, “. . . what began as a health crisis has quickly become a human and socioeconomic crisis. Whilst the crisis is imperiling progress towards the SDGs, it also makes their achievement all the more urgent . . . A transformative recovery from COVID-19 should be pursued, one that addresses the crisis, reduces risks from future potential crises and relaunched the implementation efforts to deliver the 2030 agenda. . .” (HLPF 2020, p.1).
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2019 SDG Summit: Accelerated Action Agenda
The HLPF at the SDG Summit in September 2019 adopted a political declaration entitled “Gearing up for a decade of action and delivery for sustainable development.” In the Report of the Secretary-General on SDG Progress 2019, global efforts to implement the 2030 Agenda in the last 4 years were acknowledged but concern was expressed around: SDG1: The pace of poverty reduction SDG2: An increase to 821 million people undernourished in 2017 SDG3: The ongoing prevalence of major diseases such as malaria and tuberculosis SDG4: 262 million children and youth aged 6–17 being still out of school and half of children and adolescents not meeting minimum proficiency standards SDG5: Insufficient progress on gender equality SDG6: Billions of people still lacking safe water, sanitation, and hand-washing facilities SDG7: 800 million people being without electricity and having limited access to clean cooking fuels and technologies SDG8: The limited increase in employment opportunities, particularly for young people, over 50% employed in non-agriculture sectors being in informal employment
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SDG9: Least developed countries still facing serious challenges in doubling manufacturing industry share of GDP by 2030 SDG10: Income inequality continuing to rise, even as the bottom 40% of the population in many countries has experienced positive growth rates SDG11: More than 1 billion people continuing to live in urban slums SDG12: Worldwide material consumption increasing to 92.1 billion tons (an increase of 254% from 1970) SDG13: Climate change occurring at rates faster than anticipated and strengthened capacities for least developed countries needing to be scaled up much faster SDG14: Responsible use of ocean resources still being insufficient SDG15: Land degradation continuing and biodiversity loss increasing SDG16: Violence still depriving millions of their security and undermining public services and broader economic development SDG17: Overseas development aid declining, private investment flows often not aligning with SDGs, the digital divide continuing, and trade tensions ongoing The Report also provides insights into how the development of the VNRs has influenced or challenged planning documents and SD policies. In some instances, the 2030 agenda served as a blueprint for new plans and strategies, other members mapped the SDGs against existing documents. In some countries, the 2030 agenda has influenced or been integrated into visions for policy frameworks, national development plans, and on occasions regional agreements. In some countries, measures to increase the sustainability of economies have seen a decoupling of economic growth from natural resources, when low carbon economies are being pursued. A major challenge appears to have been incorporating SDGs into national financial structures and budget processes, specifically around financing plans for implementing SDGs. Not surprisingly, another area of challenge identified in VNRs appears to be that of developing integrated policies. Some countries have developed institutions to support coherent and integrated stakeholder involvement across sectors, e.g., inter-ministerial commissions. It is noted that in some countries including Bangladesh and Nigeria, an office to lead implementation of SDGs is located in the Office of the President or Prime Minister, thus allowing central access across government. In other countries, parliaments are involved in implementation and review of the SDGs as are high-level audit institutions. At the HLPF, policy coherence across government and from national to regional levels has been identified as another key challenge. In many countries, local governments have become more engaged in the implementation of SDGs than national governments. Another concern was the need to increase awareness-raising activities to promote long-term behavior change, particularly with younger generations. The integration of SDGs into educational curriculum was also suggested. It was noted that the engagement of civil society and the private sector had occurred in many forms, e.g., in the preparation of planning documents and their implementation: through multi-stakeholder institutions, meetings, forums, public consultations, etc. Since 2015, civil society has lobbied government to meet the
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SDG agenda and has also helped reach marginalized and vulnerable groups. A perceived weakness with the potential to exclude key constituencies was the reliance on larger NGOs rather than smaller community-based organizations. Academic and scientific communities have been involved in dialogue with policy makers, developing sustainable solutions and technologies, as well as instilling SDGs in graduate and post-graduate programs to influence attitudes and skillsets in the labor market. The engagement of the private sector is identified as essential in terms of long-term partnership to foster innovation and technology in driving solutions to meet SDGs. The UN has also redesigned its development system to better support the 2030 agenda and SDGs. Country teams are being built with more autonomous powers for resident coordinators, the latter providing strategic guidance through transparent and accountable processes. More resources are being allocated to these development activities.
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Conclusion
The title of this chapter suggests it is useful to trace the trajectory of SD since the Brundtland Report through initial commitment to the goals of SD toward shaping emergent capability to facilitate action. Information and analysis presented here suggest that the approach to implementing SD has witnessed a constant reaffirmation of its foundational principles. The breadth of the agenda demonstrates the complex and dynamic interlinkages that need to be considered in identifying development challenges. Its agenda constituted a political nemesis to narrow politico-economic doctrines that failed to understand global crises from a more complex, holistic, and equitable perspective. These complexities and tensions have accumulated since the time of its writing when the Commission noted “[t]he present decade has been marked by a retreat from social concerns. Scientists bring to our attention urgent but complex problems bearing on our very survival . . . We respond by demanding more details and by assigning the problems to institutions ill-equipped to deal with them” (WCED 1987, Chairman’s foreword). A core feature of the Brundtland Commission’s Report was its emphasis on multilateral involvement in determining problem sets and taking action. Since the Brundtland Commission, the UN and its associated bodies have wrestled with complex policy interlinkages and facilitating appropriate multilateral engagement to support action at all levels, from global to local. In other words, it is proving particularly challenging to develop structures and capability to facilitate an integration of economic, social, environmental, and governance agendas to support achievement of SDGs in an action-oriented environment. Thus, an understanding of progress cannot rely on linear thinking. There is no clear trajectory from commitment to capability building in implementing Brundtland’s agenda. Rather, progress post-Brundtland has relied on constant commitment and reinforcement of its principles, their relevance often being highlighted during emergent global crises. Commitment to achievement of goals emerging from these principles, in the form of SDGs and their associated targets, is thus an ongoing
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and dynamic process reinforced and informed by stakeholder interactions around implementation. Action is guided by SDGs but constitutes “cohesive, nationally owned sustainable development strategies, supported by integrated national financing frameworks” (UN 2015c, para. 63). So how might “commitment” and “capability” be conceptualized in the context of Brundtland and beyond? As demonstrated in Fig. 1, commitment has been reinforced by dynamic interaction and iteration within and between stakeholders in UN forums and in nation-state environments, the latter articulating responses to outcomes agreed at the forums and converting commitment into local action. PostRio+20 the notion of commitment was seen as more highly dependent on the success of stakeholder nations to take action. The HLPF became a resource for developing a more peer-based and transparent level of political action by nations. The adoption of an annual thematic approach also represented an attempt to reduce burdens associated with the broader SDG agenda and allow a deeper examination of interlinkages and integrated policy concerns, the challenges of which became clearer over time. Capability to take action has been identified repeatedly as a fundamental requisite over this period. However, experience has suggested that limited capability cannot be seen simply as a “blocker” to action. As noted in Fig. 1, the dynamic nature of stakeholder interactions in local contexts demonstrates a praxis, whereby “theory” encapsulated in agreement around philosophy, aspirations, and the SD agenda is interpreted and modified iteratively through practice and reflection. This appears to be a key premise of the Brundtland Report which acknowledges the critical need for human resource development “. . . not only to build up technical knowledge and capabilities, but also to create new values to help individuals and nations cope with rapidly changing social, environmental, and development realities” (WCED 1987, para, 45). In this context, the Brundtland Commission also identified challenges to achieving collaborative decision-making that can inform but not instruct process, also emphasized here as a core capability. The Chair of the Commission suggested that implementing SD plans required a regeneration of multilateral thinking and activity to cross the boundaries of national sovereignty, narrow economic thinking and dogma, and the silo-based disciplines of science. She concluded that “In the final analysis, this is what it amounts to: furthering the common understanding and common spirit of responsibility so clearly needed in a divided world.” The Commission noted that the members of the World Commission on Environment and Development came from 21 very different nations and disagreed often on details and priorities. Yet “. . .despite our widely differing backgrounds and varying national and international responsibilities, we were able to agree to the lines along which change must be drawn” (WCED 1987, para. 108). Similar experiences have been reported consistently by UN bodies and members in the post-Brundtland era, efforts being made to improve and capture capability to operate in these complex decision-making environments. Over time attempts to achieve better balance between guidance from UN bodies and from state-based reflections on experience have been facilitated and given a higher priority in the UN forums. Thus, the UN process for achieving SDGs can be
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characterized as providing a framework that is itself regularly reviewed from the perspective of its capacity to facilitate action through eliciting, from members, a greater awareness of the intrinsic value of emergent and collaborative capability to deliver outcomes. This has demonstrated conceptual and practical interlinkages between the notions of commitment and capability, envisaged here as a form of praxis. Requisite skills and capabilities of individuals and groups in this environment can be identified as essential to this process. In an increasingly crisis-ridden global environment, it is becoming apparent that decision-makers and citizens need to be aware of the risks associated with simple “here and now” solutions, often proffered as unilateral panaceas to maintain political advantage and stability. Thus, an appreciation is required of complex, systemic, and pluralist thinking concerning problem identification and solution generation as a basis for conceptualizing and responding to urgent global challenges more holistically. From a skills perspective, there is the need for capability to think critically in multilateral forums that is collaborative, evidence-based, reflects upon context, purpose, and outcomes, and is “humble” (Etzioni 2014) in that it does not shirk from undertaking iterative cycles of learning to accommodate stakeholder concerns. Reflecting these skill and capability requirements, Bolton and Landells (2017, p. 75), in discussing forms of decision-making appropriate to promoting sustainability agendas, note that “[t]hese agendas confront leadership and decision-makers by embodying persistent dynamism and associated ambiguity through challenging rational decision-making processes and associated power relations, introducing multi-stakeholder interests in transient key decision-choices, and requiring relevant and emergent knowledge from stakeholder insights for more holistic decisionmaking.” Their argument further suggests that the power of praxis will be exercised across all levels of power and hierarchy. Stakeholders at all levels will have to make sense of patterns of knowledge as a basis for judgment when dealing with real issues and draw upon other stakeholders to achieve appropriate outcomes. This will most likely occur in an iterative manner, because no one can determine or implement a comprehensive plan without input and adjustment. The need for these principles and skill sets was anticipated in the Brundtland Report and has been clearly demonstrated in progressing SD agendas in the post-Brundtland era. Tawney (1964) argued that too often and inappropriately, “[p]ower is identified with political power and political power is treated as a category by itself. It is regarded as possessed by individuals and members of a state or exercised by a state on behalf of its members.” Alternatively, Jennett and Stewart (1987) argued that power is lodged in civil society. Shifts in attitudes in civil society are unpredictable and can, in turn, shift the direction of political discourse and action, particularly in a networked world. For example, the current COVID-19 pandemic is challenging base principles of ideologically driven political leadership, particularly in relation to integrative thinking around economy, society, environment, and governance. Taleb (2014, p. 384) noted that “. . . globalization brings fragilities, causes more extreme events as a side effect, and requires a great deal of redundancies to operate
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properly.” He suggests that in complex global systems, consequences are highly unpredictable and so unilateral perspectives without engagement of other salient stakeholders can be identified as “epistemologically irresponsible,” i.e., an irresponsible use of limited data having significant unpredictable impact. The Brundtland Commission made great strides in identifying the need to integrate thinking and knowledge around SD multilaterally across all levels of society and globally, including addressing looming global crises that threaten sustainable futures. UN forums post-Brundtland have often expressed frustration with progress, but Chomsky (2020, p.1) reminds us that looming catastrophes cannot displace the day-to-day efforts toward addressing social justice agendas as “. . . such awareness and understanding presupposes a much broader sensitivity towards the tribulations and injustices that plague the world – a deeper consciousness that can inspire activism and dedication, deeper insight into their roots and linkages.” He adds that the urgency of looming crises cannot be addressed immediately “. . . readiness has to be created by patient work . . . frustrating or not, these preliminary stages cannot be skipped.” Education plays a significant role in consciousness-raising, intrinsic to effective political action. The post-Brundtland era has witnessed such constancy of activity in eliciting a growing consensus around commitment to its aspirational agenda. However, the convergence of agendas such as climate change, the COVID-19 pandemic and the different political priorities and capabilities of nations to deal with it, and the impact of increasing levels of wealth inequality all challenge the effectiveness of both national and global solutions that ignore multilateral agendas. However, the experience of this convergence of crises also creates the potential for a shift in global consciousness concerning the limits of neo-liberal thinking as illustrated by national political responses to the global financial crisis of 2007–8 and its aftermath and the impact of COVID-19. This situation validates Brundtland’s plea for multilateral thinking in identifying and responding to convergent global pressures that threaten sustainable futures. Often populist narratives in response to contemporary global crises, frequently promulgated for political advantage, attempt to jettison multilateral agreements and mindsets concerning sustainable development. As demonstrated above, the UN has been an essential platform for giving voice to developed and developing nations to identify and promote collaborative multilateral agendas to address interrelated global challenges, the role of the HLPF now attempting to facilitate this objective. Detractors of the UN are seeking to starve it of resources needed to enable the voices of developed and developing nations negotiate forms of intervention and accountability in achieving its agendas, including SDGs. It has been demonstrated here and in Fig. 1 that pressures brought to the UN will be influenced by politics within nations. In this vein, it is of interest to witness a range of political initiatives and global movements attempting to lend greater political status and commitment to new economic order, often aligned with the Brundtland agenda. Although Brundtland’s goals were seen as aspirational, they now appear to be increasingly represented in global political agendas that highlight the inadequacy of neoliberalism and right wing populism in responding to complex global crises.
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Chomsky (2020) suggests the urgent need for humanity to internationalize or become extinct in the face of a new order of global challenges. Demonstrating common interests between nations to progress global economy and societal wellbeing is being strengthened by the fact that national and international communities are directly experiencing, simultaneously, a range of negative externalities associated with climate change, increased discrepancy between wealth and community benefit, and often a lack of credible government intervention to support citizen wellbeing in periods of global threat. This environment provides an opportunity for increasing the transparency of politics of globalization, including the disparate accrual of wealth by a small elite at the expense of resource availability for other stakeholders to address contemporary global challenges. This reality highlights the critical need for multilateral engagement to progress sustainable development goals, reinforcing the urgency of furthering the Brundtland agenda as global challenges converge.
14
Cross-References
▶ Climate Change ▶ Innovation and Sustainability ▶ The Evolution of Institutional Environments in the Development of Corporate Social Responsibility in Selected ASEAN Countries ▶ The Emergence and Role of Nongovernmental Organizations ▶ The Sustainable Development Agenda ▶ Triple Bottom Line
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Human Rights Nour Mohammad and Syed Mohiuddin Hasan
Contents 1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 The International Human Rights Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1 Charter-Based Bodies under the United Nations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2 Submission of Universal Periodic Review (UPR) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3 United Nations Human Rights Treaty Bodies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Bangladesh Practice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1 Constitution and International Human Rights Instruments in Bangladesh . . . . . . . . . . 3.2 International Law under the Constitution of Bangladesh . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.3 Provisions Relating to Customary International Law in the National Constitution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.4 Constitutional Provision Concerning Treaties Adoption and Ratification . . . . . . . . . . . 4 Role of Higher Judiciary in Enforcing International Human Rights Law at a National Level . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Indian Practice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.1 Constitutional Provisions for the Protection of Human Rights . . . . . . . . . . . . . . . . . . . . . . 5.2 Role of Judiciary to Protect Human Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.3 Indian Position in International Human Rights Discourse . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.4 Institutional Mechanism for the Protection of Human Rights . . . . . . . . . . . . . . . . . . . . . . . 6 Concluding Remarks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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Abstract
Human rights are inherently involved with a human being regardless of race, color, nationality, language, religion, ethnic origin, or any other status. Human rights are N. Mohammad (*) Department of Law, Premier University, Chittagong, Bangladesh Western Sydney University, Sydney, Australia e-mail: [email protected] S. M. Hasan Casual Academic, Western Sydney University, Sydney, Australia e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Switzerland AG 2021 D. Crowther, S. Seifi (eds.), The Palgrave Handbook of Corporate Social Responsibility, https://doi.org/10.1007/978-3-030-42465-7_22
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applicable everywhere and at all times because of their universality and inalienability (Akbari 2019). The universality of human rights is recognized through the adoption of the Universal Declaration of Human Rights (UDHR) 1948. Article 1 of the UDHR recognized that “All human beings are born free and equal in dignity and rights” (UDHR 1948 art 1). This article indicates that there is no hierarchical order of human rights by their nature. All rights have equal status, and denial of one right invariably impedes enjoyment of other rights. Every state should give equal priority over all rights. For instance, the state cannot promote any right while ignoring the other rights. Every human right is considered equal and on the same footing. Keywords
Human rights · International law · Treaty · Bangladesh · Constitution · India · Obligations · Legal framework
1
Introduction
Human rights are inherently involved with a human being regardless of race, color, nationality, language, religion, ethnic origin, or any other status. Human rights are applicable everywhere and at all times because of their universality and inalienability (Akbari 2019). The universality of human rights is recognized through the adoption of the Universal Declaration of Human Rights (UDHR) 1948. Article 1 of the UDHR recognized that “All human beings are born free and equal in dignity and rights” (UDHR 1948 art 1). This article indicates that there is no hierarchical order of human rights by their nature. All rights have equal status, and denial of one right invariably impedes enjoyment of other rights. Every state should give equal priority over all rights. For instance, the state cannot promote any right while ignoring the other rights. Every human right is considered equal and on the same footing. Any attempt at creating any hierarchies of human rights is doomed to failure. Nevertheless, the question of the universality of human rights is still open to debate despite the UDHR coming to existence 72 years ago. Most of the countries have ratified the core international human rights instruments for the protection and promotion of human rights such as the ICCPR and ICESCR. However, still, human rights are violated everywhere in the world. In 1993, the Vienna World Conference on Human Rights noted that states have to protect and promote all human rights and fundamental freedoms, irrespective of their political, economic, and cultural systems. Paragraph 5 of the Vienna Convention recognizes that: “All human rights are universal, interdependent and inter-related. The international community should treat human rights globally in a just and equitable way, on an equal basis and with the same emphasis” (Vienna Convention 993: Para. 5). The World community declared in the Vienna Conference that every state should adopt and practice the rights enunciated in the declaration into the national constitution, or any other domestic law for the protection of human rights at a national level. Human rights arise as a natural right, developed as individual rights (when human rights
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provisions incorporated in the constitution) and finally realized as a universal right (Norberto Bobbio 1998: 30). Many of the states ratified the core human rights instruments, which create the legal obligation to the state for ensuring human rights in its territory. The basic principles of human rights are universal, inalienable, indivisible, and interrelated. Human rights are universal because everyone is born with and possesses the same rights, irrespective of their color, origin, gender, religion, culture, or ethnic background. Human rights are inalienable because people’s rights can never be taken away (Akbari 2019). All human rights are indivisible and interdependent due to their nature. Human rights are equal and horizontally harmonizing in their value and entitled to equal protection of the law, and no rights can be given more priority or importance over others. They are protected and promoted as a whole because they are complementary to each other. This chapter examines the application or status of international law and human rights treaties in the domestic legal system. The authors chose the jurisdictions of Bangladesh and India to generalize the present position of implementing the process of international human right law at the domestic level.
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The International Human Rights Structure
The United Nations Charter adopted in 1945 is the core international human rights instrument to respect human rights and human dignity. The Charter aims to achieve international cooperation to promote and protect the rights and freedoms of all people regardless of their religion, language, sex, and race (article 1.3). The United Nations Charter is a first global and imperative document which affirmed the human dignity and worth and legal protection of men and women, principles of equality and nondiscrimination (Aliyev 2016). There are various provisions in the Charter which aim at human rights protection such as Article 1.3, Articles 55 and 56 Article 76 c, article 13.1.b, and Article 62 and Article 68. The Article as mentioned above categorized three groups of norms of the Charter: Article 55 and 56 related to international economic and social cooperation; Article 76c related to norms on international trusteeship; and Article 13.1, Article 62.2 and 3, and finally Article 68 related to the jurisdiction of the United Nations bodies (Ibid). This is the document which provides universal respect toward the human rights and fundamental freedom of all people without making any distinction (Article 55.c). On the other hand, the International Bill of Human Rights comprises: The Universal Declaration of Human Rights, 1948; The International Covenant on Economic, Social and Cultural Rights, 1966; and The International Covenant on Civil and Political Rights, 1966. Other international human rights treaties were dealing with the various rights that protect and promote the human rights of people. The Universal Declaration of Human Rights adopted in 1948 is a document, which works for protecting the rights of everyone everywhere. The aim of the declaration is “a common standard of achievement for all peoples and all nations.” After passing 72 years of the declaration, it remains a primary source of global human rights standard (Hannum 1995). The declaration outlined 30 rights and
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freedoms that belong to every human being and nobody can take away from us. The UDHR first set out the core principles of human rights such as universality, indivisibility, interdependence and inalienability, and equality and nondiscrimination. Articles 3–21 contain all civil and political rights of a person, and Articles 3–27 defined the economic, social, and cultural rights. Over the years, these rights were incorporated into the national constitution, treaties, and convention and customary international law, through which human rights of all people were expressed and guaranteed. The United Nations is a mother organ to deal with the human rights system. This system consists of two essential mechanisms, i.e., Charter-based bodies and Treatybased bodies (committees). Charter-based bodies established under the United Nations Charter aim to uphold the international human right. Treaty-based bodies were created by the international human rights treaties to address and monitor the human rights situation of a particular state to comply with the human rights obligations in the particular treaty under which they have created.
2.1
Charter-Based Bodies under the United Nations
The Charter-based bodies are mainly responsible for enforcing and monitoring compliance with international human rights. This body includes Office of the High Commission for Human Rights (OHCHR) and Human Rights Council (HRC was established by the General Assembly (GA) in 2006 to replace the previous Commission on Human Rights in 1946). The primary function of HRC is to ensure the implementation of human rights, address the situation of human rights, and protect and promote human rights within all aspects of the UN work. The mechanism and procedure of Charter-based bodies is a special procedure of the human rights council and Human rights advisory committee.
2.2
Submission of Universal Periodic Review (UPR)
The Universal Periodic Review (UPR) is a peer review mechanism to examine the human rights records of all UN member states once every four and a half years. The UN General Assembly has created the UPR on 15 March 2007 through resolution 60/252. Conducting a periodic review is a fascinating and innovative development in human rights monitoring brought by the Human Rights Council (HRC). The purpose of this mechanism is to develop the human rights situation in all countries and address human rights violations wherever they occur (Begum 2016). Bangladesh submitted its first and second circle UPR reports in February 2009 and April 2013 respectively, reaffirming its stand on “Zero tolerance” against human rights violations law by enforcement agencies and their impunity. During the third UPR cycle that took place on 14 May 2018, Bangladesh is again expected to spell out steps they have taken to implement recommendations posed during their previous reviews, which they had committed to follow-up on, as well as to highlight recent human rights developments in the country. Presently, each year, forty-two states reports are
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reviewed at three HRC sessions, and each session reviewed fourteen state reports, which are generally held in January/February, April/May, and October/November.
2.3
United Nations Human Rights Treaty Bodies
The international human rights treaties created a legal obligations on state parties to implement the obligations enshrined in those treaties. The primary objective of the mechanism is to monitor and assess the extent to which states are respecting their obligations under those treaties (Begum 2016). These obligations are overseen by a system of the specialist committee, one for each treaty. Presently, ten treaty bodies are governing the international human rights. The committees are Human Rights Committee; Committee on Economic, Social and Cultural Rights (CESCR); Committee on the Elimination of Racial Discrimination (CERD); Committee on the Elimination of Discrimination Against Women (CEDAW); Committee Against Torture (CAT); Committee on the Rights of the Child (CRCD); Committee on Migrant Workers (CMW); Committee on the Rights of Persons with Disabilities (CRPD); and Committee on Enforced Disappearances (CED). All state parties to the treaties impose an obligation to submit an initial report within one or two years after the ratification of a treaty. Then, member states are required submitting periodic reports to the UN treaty bodies under the human rights treaties that they have ratified. As state parties of those treaties, Bangladesh should submit its report to the UN human rights treaty bodies in due time. On 15 January 2015, Bangladesh submitted its eleventh periodic report to the Committee on the Elimination of Racial Discrimination under article 9 of the convention on the Elimination of all Forms of Racial Discrimination 1965, and its eighth periodic to the CEDEW committee under article 18 of the CEDAW. Bangladesh is still far away to regularize the submission of report to the UN human rights committee. There is a lack of political will and coordination among the three organs of the state to submit the report on time. Bangladesh has also submitted some reports late since “reporting is a difficult and onerous process due to the need for extensive consultation and the compilation of comprehensive information from divergent sources” (Heyns and Viljoen 2002:33). Over the years only a small number of reports have been submitted to the UN Committees under a few human treaties. Reporting is widely seen as an ad hoc activity, a one-off burden that the state has to deal with every year and not a continuous effort involving an ongoing cycle of reporting, the dissemination of concluding observations and implementation (Heyns and Viljoen 2002:33).
3
Bangladesh Practice
Bangladesh got its independence in 1971 after the Liberation War against the Pakistani rule. The emergence of Bangladesh as an independent state was the cause and consequence of many deprivations and violations of human rights of the people of Bangladesh (then East Pakistan) by Pakistani military. The Liberation War
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lasted nine months and resulted in at least a hundred thousand deaths. The constitution of Bangladesh was adopted on 4 November 1972 and came into force on 16 December 1972, subsequently amended from time to time, including the last amendment on 8 July 2018. Bangladesh is a unitary, independent, and sovereign state, the state religion is Islam, and the state shall ensure equal status and equal right in the practice of the other religions (Art 2A constitution of Bangladesh). The President is the head of the state, but the Prime Minister is the head of the government and runs all executive power through the cabinet. After several decades of its independence, Bangladesh is still fighting to promote and protect the human rights of its citizens. The present situation of human rights in Bangladesh reflects the incapacity to win in the struggle to protect these rights in the territory. Although Bangladesh has adopted and ratified several series of international human rights treaties, it has not incorporated many of these instruments into national laws. In the absence of internalization of international human rights norms and principles into domestic legal system, the national human rights mechanism has largely remained ineffective in monitoring, preventing, and addressing human rights violations. There has been a little check on policies and practices that do not support human rights protections. Many existing socioeconomic and politico-legal inequalities and human rights violations have become the order of the day.
3.1
Constitution and International Human Rights Instruments in Bangladesh
Bangladesh has ratified almost all the core international human rights instruments to protect the human rights of its citizen at the domestic level. The crucial instruments Bangladesh acceded are the International Covenant on Civil and Political Rights (ICCPR) in 2000, the International Covenant on Economic, Social and Cultural Rights (ICESCR) in 1998, International Convention on the Elimination of All Forms of Racial Discrimination 1966 (ICERD), Convention on the Elimination of All Forms of Discrimination against Women 1979 (CEDAW), Convention against Torture and Other Cruel, Inhuman or Degrading Treatment or Punishment Act 1984, (CAT), and Convention on the Rights of the Child 1989 (CRC). As a state party of those treaties, Bangladesh should implement the rights recognized in those treaties. Apart from treaties and conventions, customary international law also acts as a significant source for human rights obligations for Bangladesh (Haque 2017). As noted earlier, human rights provisions are enunciated in both Part II and Part III of the constitution of Bangladesh. The former one contained the economic, social, and cultural rights called “fundamental principles of state policy,” and the latter one contained the civil and political rights called “fundamental rights.” However, economic and social rights are not fundamental; instead, these rights stand as some aspirational targets or welfare programs in the form of “fundamental principles of state policy” which as per Article 8(2) are not judicially enforceable. While rights placed in Part III are fundamental rights that have been made judicially enforceable under Articles 44 and 102 of the constitution, therefore, markedly, while economic
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and social rights under the constitution lack normative force, can it be an alternative to invoke normative force from the related international human rights instruments under which Bangladesh has undertaken obligations to fulfill those rights? The same proposition applies in case of civil and political rights in widening their scope beyond the constitutional scheme in light of international instruments binding Bangladesh. It may appear from the above exposition that Bangladesh has agreed to recognize a wide range of rights, subject to the reservations, and set forth in these instruments for its citizens and persons within its jurisdiction. However, some of the rights are not directly enforceable in a domestic court as the rights are not incorporated in domestic legislation, even though the state ratified those human rights instruments. The researcher will take an optimist view to analyze their actual position in the state territory, obviously, in the light of the Bangladeshi constitution and approaches of the higher judiciary.
3.2
International Law under the Constitution of Bangladesh
The constitution of Bangladesh does not contain any specific provision concerning international law and human rights law. Absences of provision do not mean that international law has no application in the domestic jurisdiction. The norms and principles of customary international law are binding on Bangladesh and part of the law of the land if it is not contrary to domestic legislation (Karim and Theunissen 2011). The first case concerning the application of international law is the Bangladesh v Unimarine S.A. Panama (1977) 29 DLR, SC 252. The Supreme Court held that customary international law is binding on states and gives effect on the norms and principles that are consistent with the domestic legal order (Karzon and Faruque 1999). The court cited the immunity of foreign mission envoys in the territory of Bangladesh as an excellent example of the application of international law on a state (Karzon and Faruque 1999).
3.3
Provisions Relating to Customary International Law in the National Constitution
There is no specific provision in the constitution of Bangladesh referring to the application of customary international law at a domestic level, despite the two Articles 25 and 145A that implicitly provide the state responsibility and obligations to follow the norms and principles of international law. Article 25 of the Constitution sets forth certain basic principles of international law that are relevant to customary international law, which shall be the guiding principles of governing Bangladesh’s international relations. These principles include, inter alia: “The state shall base its international relations on the principles of respect for national sovereignty and equality, non-interference in the internal affairs of other countries, peaceful settlement of international disputes, and respect for international
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law and the principles enunciated in the United Nations Charter, and based on those principles shall – (a) strive for the renunciation of the use of force in international relations and general and complete disarmament; (b) uphold the right of every people freely to determine and build up its own social, economic and political system by ways and means of its own free choice; and (c) support oppressed peoples throughout the world waging a just struggle against imperialism, colonialism or racialism.” Article 145A (Article 145A was substituted by the Constitution (Fifteenth Amendment, 2011)) of the constitution provides for the adoption and codification of the treaties at the domestic level. The relevant part is: “All treaties with foreign countries shall be submitted to the President, who shall cause them to be laid before Parliament: Provided that any such treaty connected with national security shall be laid in a secret session of Parliament.” These constitutional provisions refer to the application of customary international law at the domestic level when there is no explicit provision in the domestic legislation. If the domestic legislation has a clear-cut provision on any issue, the court will give effect to the domestic law rather than looking to international law (Haque 2017). This article (145A) declares Bangladesh’s adherence to the stance against the widespread violation of human rights and refers to customary international law (when required). Though it does not clearly stipulate the status of international law into our municipal arena, it may not be wrong to infer that it embodies certain normative principles of international law, i.e., principles of jus cogens, and thus, gives constitutional effect to these universal principles within Bangladesh. However, the complexity is that Article 25 itself has no legal binding force since it belongs to the Part-II of the Constitution that lays down the fundamental principles of state policy. Though principles laid down in Part-II shall be fundamental to the governance of Bangladesh, Article 8(2) of the Constitution shall be applied by Bangladesh in making laws, shall be a guide to the interpretation of the constitution and of the other laws of Bangladesh, and shall form the work of the state and its citizens, but they “shall not be judicially enforceable” (Art 8.2). Nevertheless, it is evident that Articles 25 and 8(2) call upon all three organs of the government to make possible the invocation, interpretation, and application of the peremptory norms of international law in appropriate cases (Karzon and Faruque 1999).
3.4
Constitutional Provision Concerning Treaties Adoption and Ratification
The Constitutional stance is not clear on how to ratify a treaty at the national level. There is no express constitutional provision in Bangladesh concerning the ratification of treaties (Karim and Theuissen 2011), and no mention of any requirement for
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the legislative approval of treaties. Article 145A of the constitution merely states “All treaties with foreign countries shall be submitted to the President, who shall cause them to laid before Parliament. . .,” and thus, no reference for the ratification of the treaties is provided. Therefore, an ambiguity arises as to whether the treaties require implementing legislation or parliamentary approval. This ambiguity is addressed in the case of Kazi Mukhlesur Rahman v. Bangladesh (1974) 26 DLR SC 44 (known as the Berubari case), where the court held that “treaty-making is an executive act and so also ratification if a Treaty contains provisions for ratification and that both fall within the ambit of the executive power of the State” (1974) 26 DLR SC at 47. Occasionally, some treaties have been placed before parliament for approval. The treaty making power is based on the executive not in the legislative. The President is conferred the power of treaty-making under the constitution of Bangladesh. Article 48(2) provides that “The President shall, as Head of State, take precedence over all other persons in the State, and shall exercise the powers and perform the duties conferred and imposed on him by this Constitution and by any other law.” On the other hand, Article 55 (2) (4) of the Constitution provides that “executive power of the Republic shall, under this Constitution, be exercised by or on the authority of the Prime Minister.” The Prime Minister will do every work with the consent of President. Besides, the Rules of Business of the Government 1996 require all draft agreements, protocols, and treaties to be submitted to the Cabinet for approval, which is headed by the Prime Minister (Khair 2011). Bangladesh has a parliamentary form of government in with the consent of President is the titular head of the State and the Prime Minister and the cabinet perform all executive power. In the absence of any specific constitutional provisions regarding the position of international law in the domestic legal order, courts are reluctant to follow or enforce the international law provisions while trying a case unless it is incorporated in domestic law. Bangladesh is a common law country and follows the dualistic theory to implementing the customary international law, i.e., all international treaties are required to be incorporated in domestic legislation before taking effect and enforced in court (Karim and Theunissen 2011).
4
Role of Higher Judiciary in Enforcing International Human Rights Law at a National Level
As mentioned earlier, Bangladesh is a common law country and follows the dualistic theory, i.e., Bangladesh requires the incorporation of international treaties or conventions into the domestic legal system before giving the effect of these treaties or conventions at a domestic level. Bangladesh ratified most of the core international human rights treaties and covenants, but most of them have not yet been incorporated into domestic legislation. Subsequently, the status of international law and human rights remains unclear. The judicial invocation is explicit that where there is an explicit provision in the domestic legislation, international law
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and human rights will not be considered to settle a conflicted issue as in the case of Bangladesh and Others v. Samboon Asavhan (1980), 32 DLR 198. The Appellate Division of Supreme Court held “It is settled that where there is a municipal law on an international subject the national court’s function is to enforce the municipal law within the plain meaning of the Statute” (Ibid). The case concerned the illegal entry and fishing by a Thai fishing trawler in the territory of Bangladesh. Three fishing trawlers were captured by the Bangladesh Navy inside the territory of Bangladesh, and a case was filed against them for violation of territorial integrity and maritime boundaries. The Court held “the point touches international law. . . we are relieved from entering into a long discussion of diverse laws, conventions, rules and practices of International Law since there is a complete code provided by our Municipal Law” (Ibid). The Appellate Division of Supreme Court applied the national legislation Bangladesh Territorial Waters and Maritime Zones Act’ 1974 to settle the matter instead of applying the existing norms of international law. In the case of Saiful Islam Dilder v Bangladesh and Others (1998) 50 DLR 318, the case was concerned with the extradition and right to self-determination. The petitioner contended that the accused (Anup Chetia, leader of United Liberation Front Assam) should not be extradited because he was fighting for the right to selfdetermination for the people of Assam (Karim and Theunissen 2011). The petitioner also argued that the right to self-determination had been recognized as jus-cogens of international law, which is inserted in many international human rights instruments and therefore was binding on all members of the United Nations. Hence, extradition of Anup Chetia would violate the principles of international law, norms of human rights, and also Article 25 of the Constitution. Rejecting the argument of the petitioner, the court observed the extradition of Anup Chetia would, in fact, be. “in consonance with the Principles of State Policy and help base its international relations on the principles of respect for national sovereignty and equality, noninterference in the internal affairs of other countries . . .. Article 25(1)(c) enjoins upon the state to sup-port throughout the world waging a just war against imperialism, colonialism or racialism. We are afraid to accept the contention that as because Anup Chetia is struggling for “self-determination” for the people of Assam, handing him over to India would be violation of Article 25 of Constitution. The struggle in which ULFA and its Secretary General Anup Chetia is involved is not, in our opinion, “waging a just struggle against imperialism, colonialism or racial-ism” . . . Nor can it be said that the right to “self-determination” as canvassed in this petition falls within any of the three expressions viz. “imperialism,” “colonialism” or “racialism” as used in Article 25(1)(c) of the Constitution.” (Saiful Islam Dildar v. Bangladesh and others 50 DLR (1998) 318, 322–23). In the case of M. Saleem Ullah v Bangladesh (1995) 47 DLR 218, the petitioner relied on Article 25(1) and argued the constitutionality or legality of the government’s decision to participate in the UN-sponsored multilateral forces in Haiti was illegal because the operation was led by the United State of America and was illegal due to support the USA led operation. The petitioner also contended that government
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had violated Article 63 of the constitution, which only empowers the President to declare war with the assent of the parliament (Karzon and Faruque 1999). The court observed that: For the purpose of disposal of this petition Article 25(1) (b) is relevant. . . the decision, in our view, has been taken on the principles enunciated in the United Nations Charter which is in no way against fundamental principles of State Policy. The decision of the Government of the People’s Republic of Bangladesh is in consonance with the spirit of the Fundamental Principles of State Policy and in accordance with Chapter- VII of the Charter of the UN.
Therefore, it reveals that Article 25 of the constitution should be read in conjunction with Chapter VII of the UN Charter including principle 1 of the UN. The relevant case concerning the status of international law under the constitution of Bangladesh was Chief Prosecutor v Abdul Quader Molla (2013), where Chief Justice stated that Article 152 of the constitution, which has given the following interpretation, that the violation of international law does not have any coercive sanction in Bangladesh. Therefore, international law cannot be applied directly by a domestic court or tribunal if those provisions of law are inconsistent with an Act of Parliament or contrary to the judicial decision. In the case Hussain Mohammad Ershad v. Bangladesh & others (2001) 21 BLD (AD) 69, Hussain Mohammad Ershad, ex-President of Bangladesh, was stopped from going to London for his health checkups at the Zia international airport, Dhaka. He filed a writ petition challenging the order that violated his fundamental rights enunciated in Articles 31, 32, and 36 of the Constitution of Bangladesh, referring to the Article 13 of the Universal Declaration of Human Rights (UDHR) 1948. The High Court Division of Supreme court summarily dismissed the petition on the ground of section 7(4) of the Bangladesh Passport order 1974. However, on appeal, the Appellate Division of the Supreme Court took into consideration the constitutional provision vis a vis Article 13 of the UDHR while disposing of the appeal. The court held that “With regard to submission resting on Article 13 of the Universal Declaration of Human Rights we are of the opinion that such right is in the International Covenant and not a part of municipal law. Therefore, it has no legal binding force for Article 36 provides a complete answer” (2001) 21 BLD (AD) at 75. The Court agreed that domestic laws, whether constitutional or statutory law, do not always align with the provisions of international human rights instruments. In true sense, the domestic courts should not ignore the principles and norms of international human rights obligations in the country. If there is a conflict between domestic law and international law, domestic law will get priority with consideration of relevant principles enunciated in the international instruments. However, if there is clear-cut provisions in domestic law in any disputed matter, international law will not be considered in this matter and the national courts will apply the national laws but will draw the attention of the lawmakers to such inconsistencies (Khair 2011). The Supreme Court expressed similar views in the cases of Bangladesh v. Sheikh Hasina (2008) 60 DLR (AD) at 104 and State v. Metropolitan Police Commissioner (2008) 60 DLR (AD) at 660.
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Indian Practice
India is the largest democratic country in the world. As a successor of British common law, India was governed by the British practice, before adopting the constitution, as to the relationship between its domestic laws with international law (Kapoor 2002). However, the matter is now covered by the constitution. First, we will examine the relevant provisions of the constitution dealing with the status of international law into India’s domestic legal order, and as such, it will lead us to the examination of the general application of international human rights laws in India.
5.1
Constitutional Provisions for the Protection of Human Rights
The Constitution of India was adopted on 26 November 1949, when the Universal Declarations of Human Rights (UHDR) was in progress. Hence the drafter of the constitution was influenced by the basic core principles of human rights (2002, 7 SCC at 368). The constitution of India came into force on 26 January 1950. The constitution is the supreme law of the land, and all government organs derive their power from the constitution and must adhere to the suprema lex. The constitution has purposive existence, and it is not ephemeral, as it serves as a social, legal, and moral document and is legally enforceable. The Constitution of India is a transformative document (Robinson 2009) and has both direct and indirect provisions concerning the principles of administration, rights of the citizens, and limitation of the state power (Austin 1966) to protect and promote human rights wholly. The constitution is the foundation for the protection of human rights in India, especially Parts III and IV of the constitution namely fundamental rights (FRs) and directive principles of state policy (DPSP) comprise the “conscience of constitution”(Austin 1966). FRs are enforceable by a court of law if a state actor or nonstate actor violates these rights. The aim of enumerating the FRs in the constitution “is to safeguard the basic human rights from the vicissitude of political controversy and to place them beyond the reach of the political parties who, by virtue of their majority, may come to form the government at the Centre or in the State” (AIR 2000) SC 988). These rights include the right to equality (Articles 14–18), right to freedom (Articles 19–22), right against exploitation (Articles 23–24), right to freedom of religion (Articles 25–28), cultural and educational rights (Articles 29–30), and right to Constitutional remedies (Article 32). Judicial Review, justiciability, or enforcement became an inseparable concomitant of fundamental rights. No rights are absolute by nature; every right has some reasonable limitations or restrictions that are imposed by laws. Fundamental rights are not an exception; the state may impose certain restrictions on fundamental rights in the interest of state security and ensuring social justice (Kalse 2016) and may even be suspended or prevented in case of state emergency under Article 352 by the constitution (Art 358 and 359). All legislations must conform to fundamental rights (Art 13.2). Justice Beg rightly said in the case of ADM Jabalpur v. Shukla that the object of making certain general aspects of rights fundamental is to guarantee them
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against the illegal invasion of these rights by executive, legislative, or judicial organs of the state (AIR 1976 SC at 1207). The constitutional remedy guaranteed under Article 32 is itself a fundamental right. However, it is not a mere power of the Court but a constitutional obligation to protect and prevent the infringement of the fundamental rights of citizens. Fundamental rights are predominantly civil and political rights, and hence they are phrased in negative terms to prohibit the state from denying or restricting individual liberty, while the directive principles are the aspirations, framed as positive obligations. On the other hand, the directive principle of state policy provides a long list of civil, political, and economic rights of citizens. The primary purpose of these principles is to ensure social, political, and economic justice to all by laying down fundamental principles of governance. These principles need to be considered by the legislatures while enacting laws and by the executive authorities in enforcing laws. The directives principles mostly relate to the economic, social, and cultural rights which are unenforceable by a court of law, yet these rights have “fundamental values in the governance of the country, and it shall be the duty of the state to apply these principles in making laws for the general well-being, of its citizens, i.e. men, women and children” (Constitution of India, Art 37). There is no specific provision in the constitution regarding the status of international treaties into the municipal law. Only Article 51 of the Constitution refers to the international obligation arising from international law. It reads: The State shall endeavor to “foster respect for international law and treaty obligations in the dealings of organised peoples with one another; and encourage settlement of international disputes by arbitration” (Art 51.C). Article 51 of the constitution is a concrete provision that is dealing with the constitutional interpretation of international law at a national level. This article mandates the state to respect international law and to settle the international dispute by peaceful means, although it does not automatically incorporate international law into municipal law. However, article 51 is put in the category of unenforceable rights in part IV of the constitution. This article should be read with Article 37 of the constitution to understand the values of these rights, which are not enforceable by the Court of law but fundamental to the governance of the country, and it is the duty of the state to apply these principles in making law. It was observed in the case of Keshavanand Bharti v State of Kerala, and Chief Justice Sikri observed that “It seems to me that, in view of article 51 of the directive principles, this court must interpret language of the constitution, if not intractable, which is after all a municipal law, in the light of the United Nations Charter and the solemn declaration subscribed to by India.” Therefore, making laws is the exclusive power of the legislature; the legislature body can exercise this power to make a treaty binding on the state through ratification or approval. There are no laws that will restrict the government in exercising the power of making laws in matters of international law and relations, subject to the constitutional provisions or any other law made by the Parliament (Art 73). However, as per Article 253, the Parliament can enact laws to implement international obligations, notwithstanding the constitutional distribution of powers. As a result, the Supreme
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Court held that international law would apply in the domestic legal system where there is no conflict between international law and municipal law. The present stance in India is that approval of a treaty is required only if the treaty affects the rights of citizens or requires a new law or the amendment of existing municipal law. However, India follows the traditional dualistic theory in respect of the implementation of international law and human rights law at the domestic level. That means international law and human rights treaty are not automatically implemented in the national legal system, unless or until they are incorporated in the national legislation by an act of Parliament or judicial recognition. In a tiny number of cases, courts have applied the unincorporated treaties in the context of statutory interpretation and judicial review in administrative action. In this regard, the Indian Supreme Court had decided numerous cases invoking the international human rights treaties in deciding those cases. For example in the case of (Basu v. State of West Bengal (1997) 2 LRC 1), the Court invoked the International Covenant on Civil and Political Rights (ICCPR) in support of its constitutional holding and issued guidelines “to be followed in all cases of arrest or detention,” and ordered to disseminate those guidelines to every police station throughout the country (1997) (2 LRC). In another relevant case, (Vishaka and Others v. State of Rajasthan (1997) 3 LRC 361), the Court invoked The Convention on the Elimination of All Forms of Discrimination against Women CEDAW in support of its constitutional holding. The Court held that “the absence of enacted law to provide for the effective enforcement of the basic human right of gender equality and guarantee against sexual harassment . . . at workplaces. Accordingly, the Court proceeded to lay down guidelines and norms for due observance at all workplaces and other institutions, until legislation is enacted for the purpose” (1997) 3 LRC.
5.2
Role of Judiciary to Protect Human Rights
The ultimate role of the judiciary is to provide remedies to the people whose rights, enshrined in the constitution, are violated. Article 32 of the constitution is the main pathway to go before the Court for a remedy for violation of a fundamental right. It is the constitutional mandate to protect citizen rights in the country. Supreme Courts and High Courts have given extensive power to interpret constitutional provisions and to take action to enforce these rights. Articles 32 and 226 of the constitution provide for the remedy for the violation of these rights. Any aggrieved person can directly approach the Supreme Court or High Court of the concerned state to seek the remedy for the violation of a fundamental right. In such cases, the Court will issue the appropriate order, directions to the concerned authority to take measures for the fulfilment of the rights (Kaur 2017). The Supreme Court is the head of the judicial organ and provides redress for the violation of human rights of the people. The Supreme Court not only protects the rights that are enlisted in the fundamental rights in the constitution but also interprets the unenumerated rights in Part IV in the constitution. As a result, people enjoy not only enumerated rights but also unenumerated rights.
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The Supreme Court of India has dealt with numerous cases such as Maneka Gandhi v. Union of India (AIR 1978) SC 597) in which the Supreme Court interpreted the right to life as being connected with the “right to live with human dignity.” The interpretations of the Supreme Court are clear and used the theory of “emanation” to make fundamental rights more evocative and active. After that, in many other cases the court tried to establish the link between fundamental rights and directive principles, such as People’s Union for Civil Liberties and another v. State of Maharashtra and others (2014, 10 SCC 635) and Francis Coralie Mullin v. The Administrator, Union Territory of Delhi (1981, 2 SCR 516). In both the cases, the Court held that the right to life includes the right to live with human dignity and right to life would be meaningless if there is no human dignity in life. Therefore, through judicial interpretations, various rights have been recognized though not explicitly mentioned in Part III of the Constitution (Kaur 2017). The Supreme Court of India has played a proactive role in protecting and promoting human rights in the state. Many vulnerable or underprivileged people, especially children, women, and workers, are affected by violations of human rights. The judiciary has taken steps to ensure the human rights of those people through judicial invocation. For example, in the case of Labourers working on Salal Project v. State of Jammu and Kashmir (AIR 1984) SC 117, the Supreme Court held that no child below the age of 14 years could be employed and allowed to work in the construction process. The Court issued various directions related to child labor. Another relevant case is Vishal Jeet v. Union of India (1990) 3(3) SCC 318), where the Supreme Court asked governments to form an advisory committee to make suggestions for the eradication of child prostitution and to evolve schemes to ensure proper care and protection to the victims. The Supreme Court further showed its concern in the case of Gaurav Jain v. Union of India (1997, 8 SCC at 114) about the rehabilitation of minors involved in prostitution and held that juvenile homes should be used for rehabilitation of them and other neglected children. Discrimination against women is a common phenomenon in the contemporary world. Women’s position in India is more vulnerable, and they are often the victims of disparity and cannot enjoy their legal rights due to unequal treatment, religious mentality, and traditional customary cultural norms. The Constitution of India contained the provision of equality in Article 14, but still, women are discriminated in the workplace, educational institutions, and in the job market. However, Article 39 provides for equal pay for equal work for both men and women. Despite this constitutional guarantee, women are not treated equally. In this situation, the Court played a significant role and ordered the concerned authority to take appropriate measures not to discriminate against women. In the case of Associate Banks officers Association v. State Bank of India (AIR 1998) SC 32), the Supreme Court held that women workers are in no way inferior to male counterparts and hence there should be no discrimination on the ground of sex against women. In another case, State of Madhya Pradesh v.Pramod Bhartiya (AIR 1993, SC 286), the Supreme Court held that under Article 39 the State shall direct its policy toward securing equal pay for equal work for men and women.
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Indian Position in International Human Rights Discourse
India is the largest democratic and second most populated country in the world. Total population is estimated to be 1.37 billion. As a hugely populated country, the government can often fail to ensure all human rights to everybody. Nevertheless, the government tries to ensure the rights of all citizens. It has established principles in the human rights discourse that a state has tripartite duties to ensure human rights for its citizens: the duty to respect, duty to protect, and duty to fulfill human rights. India has ratified several international human rights instruments, which oblige the state to ensure human rights and provide maximum assistance for its citizens. Among the human rights instruments, India ratified two significant conventions that are part of the International Bill of Rights – the International Covenant on Civil and Political Rights 1966 (ICCPR) and the International Convention on Economic, Social and Cultural Rights 1966 (ICESCR). Additionally, India has ratified several other core international human rights instruments such as International Convention on the Elimination of all Forms of Racial Discrimination 1965, the Convention on the Elimination of all Forms of Discrimination against Women 1979 (CEDAW), the Convention against Torture and other Cruel Inhuman or Degrading Treatment or Punishments 1984, the Convention for the Protection of all Persons from Enforced Disappearance 2006, the Convention on the Rights of the Child 1989, and the Convention on the Rights of Persons with Disabilities 2006 (CRPD). The major problem faced by India is that India has made substantive reservations and not ratified the majority of some optional protocols such as optional protocol to the ICESCR 2008, optional protocol to the CEDAW 1999, and optional protocol to the CRPD 2006, which dilute the effect of treaties. However, the Supreme Court of India has taken a positive approach to interpreting the municipal laws following international treaties to fill in the gaps in such laws. For instance, in the case of Vishaka v State of Rajasthan, the Supreme Court delivered a judgment in August 1997, that stated: “International Convention not inconsistent with the Fundamental Rights and in harmony with its spirit must be read into these provisions to enlarge the meaning and content thereof, to promote the object of the constitutional guarantee” (AIR 1997) SC 3011, para 7). In another case A. D. M. Jabalpur v. Shukla (AIR 1976 SC 1207), the Supreme Court considered, inter alia, whether the Universal Declaration of Human Rights and other two principal human rights instruments ICCPR and ICESCR, 1966, were part of Indian Municipal law and whether they could be directly applied. It was opined by the majority judges that both these instruments are not part of municipal laws and do not automatically incorporate in the municipal legal system. Justice H.R. Khanna in his dissenting opinion contended that in conflicts between municipal laws and international treaties the municipal law will prevail, but in a case where “two constructions of the municipal law were possible, the court should give that construction as might bring about harmony between municipal law and international law or treaty.” He urged to construe constitutional provisions in such a way to avoid conflict with the Universal Declaration of Human Rights.
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In a subsequent case, Jolly George Varghese v. Bank of Cochin (AIR 1980 SC 470), Lordship Krishna Iyer concisely reaffirmed this view, J Article 11 of the International Covenant on Civil and Political Rights (ICCRP) which reads as “prohibits imprisonment of a person merely on the ground of his inability to fulfill a contractual obligation,” and the section 51 of (proviso) and order 21 rule 37 of the Code of Civil Procedure (CPC), a domestic law, raised a conflict between them. In that case, the court took a liberal approach, so as to bring about harmony between them and also to prevent any apparent conflicts. There are many good examples in the Indian legal history to adopt international law or treaties into the municipal law. Justice Krishna Iyer referred the Robertson book “Human Rights in National and International law” in which he pointed out that “international conventional law must go through the process of transformation into the municipal law before the international treaty can become an internal law.” (Robinson 1968). This epoch-making message formed the basis of interpretation in a series of subsequent cases and developed jurisprudence in implementing international human rights laws in India. Over the years, the judiciary broadened its interpretation going beyond the previous traditional stance of looking toward the parliament or to the Government for implementing legislation or directives. No doubt, India still follows the dualist view. Nevertheless, within the short premise of dualism, Indian courts are playing an influential and remarkable role that vividly poses the phenomenon of “judicial activism” or positive or progressive interpretation and thus are paving the way for the implementation of international norms.
5.4
Institutional Mechanism for the Protection of Human Rights
5.4.1 The Protection of Human Rights Act 1993 The Government of India adopted the Human Rights Act in 1993 (the Act) for the better protection and promotion of human rights at the national level. The primary objective of this Act is to ensure human rights through some organizational methods such as a Human Rights Commission at the national level, as well as at state level and Human Rights Court at the district level for better protection of human rights and matters connected with the protection of human rights. The Act contains the provisions to comply with the other international human rights instruments ratified by India. Human rights are defined by the Act in Section 2(d) as “the rights relating to life, liberty, equality and dignity of the individual guaranteed by the Constitution or embodied in the International Covenants and enforceable by courts in India.” The above definition, however, limits the scope of the functioning of the National Human Rights Commission. India ratified two Covenants: the International Covenant on Civil and Political Rights and the International Covenant on Economic, Social and Cultural Rights. International covenants are not applicable before the courts, so there is a need for laws which conform to these conventions.
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5.4.2 National Human Rights Commission The National Human Rights Commission (NHRC) was established in 1993 to enquire and investigate complaints of violations of human rights and to take preventive measures for such violations. It is an independent statutory body and empowered to exercise the power of a civil court in respect to summoning, attendance and examination of witnesses, and discovery and inspection of documents on affidavit. The commission also exercises the power of recommendations on different issues such as medical health, education, jail reforms, extrajudicial killing, unwarranted arrest, food safety, and violence against women. The composition of the commission is dealt with in chapter II of the Act, and section 3 provides that the commission shall consist of one chairman and four other members. The composition of commission is required to be as follows: (a) A chairperson who has been a Chief Justice of the Supreme Court; (b) One Member who is or has been a judge of the Supreme Court; (c) One Member who is or has been the Chief Justice of the High Court; (d) Two other members are appointed having knowledge of, or practical experience in, matters relating to human rights. The appointment procedure has been provided in section 4 of the Act that stated that “[s]election of Chairperson and members of the Commission is made on the recommendations of a committee consisting of the Prime Minister, Speaker and leader of the opposition in the House of the People (Lok Sabha) and Deputy Chairman and leader of the opposition in the Council of States (Rajya Sabha)”(The Protection of Human Rights Act 1993, Section 4). The commission has given extensive power to deal with the cases of human rights violations in the state territory. The power has been enlisted in section 12 with the commission having power to enquire suo moto; to intervene in any proceeding involving violations of human rights; to visit any jail or other institution where violation of human rights are threatened; to conduct a systematic review of government human rights policy; to review any factors; to study treaties and other international instruments; to undertake and promote research regarding human rights; and to spread human rights literacy among the vulnerable society. 5.4.3 State Human Rights Commission The State Human Rights Commission is a state-level organization, which was established to protect and promote human rights at the state level (The Protection of Human Rights Act 199- Section 21.1). The Commission is composed of a chairperson and four other members. The State Commission is empowered to perform similar functions, which have been entrusted to the National Human Rights Commission. The State Commission inquires into violations of human rights only in respect of matters related to any of the entries enumerated in List II and III in the Seventh Schedule of the Constitution. The State Human Rights Commission is excluded from the study of treaties and other international human rights instruments because it is a state-based not national-based institution. With regard to the mechanism for the redress of human rights grievances in union territories, the Minister of Human Affairs had taken the position that the best way to proceed may be through the extension of the jurisdiction of the state commissions of
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neighboring states into the adjoining union territories; a similar approach had been taken in respect to the High Courts in India.
5.4.4 Human Rights Courts The Protection of Human Rights Act 1993 stated in its preamble that it was to establish a human rights court in district level. The primary purpose for the establishment of a human rights court at the district level was to ensure the expedient trial of offences considered to be human rights violations at a grass-roots level. Section 30 of the same Act provided that a state government might, with the concurrence of the Chief Justice of High Court, by notification, specify for each district a Court of Sessions as a Human Rights Court to try the offences of violation and abuse of human rights. The session judge cannot take cognizance under the Criminal Procedure Code (CrPC) 1973. He or she only tries the cases committed to him or her by the Magistrate under Section 193 of the CrPC. The state government shall appoint a special public prosecutor to carry out cases in the human rights court under Section 31 of the Act. Human rights courts have been established in the States of Assam, Andhra Pradesh, Sikkim, Tamil Nadu, and Uttar Pradesh (Motilal and Nanda 2010). The Commission stays in touch with the concerned high courts to make clear the precise nature of the offences to be tried in such courts and other details regarding the conduct of their business (Ray 2004). The National Human Rights Commission has inquired into thousands of complaints, and it has submitted reports to the government on various matters wherein it has made several recommendations suggesting measures that may be taken to curb human rights violations. In August 2016, it had received 7822 fresh complaints and had disposed of 7772 fresh as well as old cases (Kaur 2017). 5.4.5
The Citizenship Amendment Act 2019 (CAA): New Trends for Violation of Human Rights in India India passed the Citizenship (Amendment) Act (CAA) 2019 on 11 December 2019 revising the earlier Citizenship Act 1955. After passing the Act, many international experts, including the United Nations Special Rapporteur on minorities, described the new citizenship law as discriminatory and against the constitutional principles of equality and equal protection before the law. The Universal Declaration of Human Rights 1948 specifically prohibits the arbitrary deprivation of nationality. Under this Act, for the first time India introduced the process for granting citizenship on the basis of religion. The CAA fast-tracks nationality for non-Muslim minorities, irregular immigrants from the neighboring countries of Bangladesh, Afghanistan, and Pakistan, but excludes Muslim. The exclusion of Muslim minority from the ambit of the law constitutes extreme discrimination. The Office of the United Nations High Commissioner for Human Rights called the law “fundamentally discriminatory.” UN Secretary-General Antonio Guterres was concerned about the future of religious minorities in India after the enactment of the citizenship amendment law, saying, “there is a risk of statelessness.” The United States Commission on International Religious Freedom said the US government “should consider sanctions against the
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home minister and other principal leadership” and held a hearing in March 2020 in which one of the commissioners raised concerns that the law “in conjunction with a planned National Population Register and a potential nationwide National Register of Citizens (NRC) could result in the wide-scale disenfranchisement of Indian Muslims.”
6
Concluding Remarks
The discussion, state practices, and case law mentioned throughout this chapter have shown that implementation of human rights treaty norms remains complex to apply in the domestic jurisdiction. The domestic court is not obliged to apply the provisions of the international law while trying the cases to follow the provision of the domestic statute. The major weakness of applying international law at the domestic level is due to lack of incorporation and the steady codification of international law (Kumm 2004) into national legislation. Despite recommendations by various international treaty bodies as well as the various decisions of the Supreme Court, the codification process remains steady and conservative (Karim and Theunisse 2011). Most of the developing countries have faced the same problem to incorporate the international human rights treaty norms at the national level. The judicial approach concerning the application of human rights norms in developing countries, however, remains inconsistent and conservative. A more liberal and robust approach is needed to ensure greater compliance with human rights norms in developing countries. The decision to reform by incorporating international law into the domestic legal system mainly rests on the political will of the lawmakers and the independence and shrewdness of the judges (Khair 2011). Treaty making power is an executive act; the president is conferred with the power to enter into treaties with the foreign countries. There is a tripartite involvement of the state organs to apply the international human rights treaty provision in domestic level, there is a tripartite involvement of the state organs. Before ratifying a treaty, it must consult with the legislature in order to avoid any subsequent domestic conflict and balance of power between the legislature and the executive. Hence, after the ratification of a human rights instrument, the legislature shall harmonize with it and enact necessary implementing legislation. The optimistic view is that where international law and domestic law are not in conflict, the judiciary can apply the human rights law directly in national level without the need for implementing legislation (Alam 2007:130), and if there is a conflict between domestic law and international human rights law, generally the court apply the domestic law. It should call upon the legislature to harmonize the complexity and remove the inconsistency in the domestic law. Judicial activism is a potent weapon to implement international human rights law in the domestic legal system. The higher judiciary should be proactive and give up the traditional and unadventurous approach to uphold state obligation under international law. An innovative interpretation of the existing domestic laws should harmonize with international human rights law for the exhaustive realization of those rights where
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the courts are not free to invoke international law. Many of the developing countries, even some developed countries, have a poor record to submit the periodic reports under the UN treaty bodies, and submitted reports do not reveal the real scenario of implementation of human rights treaties. All UN members’ states should be more responsible for fulfilling the reporting obligations under the human rights treaty regime.
References Akbari ZM (2019) The role and importance of human rights law. Daily Outlook, 1 December Alam MS (2007) Enforcement of international human rights law by domestic court. New Warsi Book Corporation, Dhaka, Bangladesh Aliyev SF (2016) Theoretical and Practical Issues of the Implementation of International norms on Human Rights to the National Legislation (the example of the Republic Azerbaijan). International Journal of Environmental and Science Education, vol.11(12):5070–5085 Austin G (1966) The Indian constitution: cornerstone of a nation. Clarendon Press, Oxford, p 56 Begum N (2016) Implementation mechanism of human rights treaties in Bangladesh: a critical analysis. Australian Journal of Asian Law, vol. 17(2) Hannum H (1995) The Status of the Universal Declaration of Human Rights in national and International Law. Journal of International and Comparative Law, vol 25 Haque EM (2017) Current international legal issues: Bangladesh. Asian Yearbook of International Law 3. BRILL/Nijhoff Heyns C, Viljoen F (2002) The impacts of the UNs human rights treaties on the domestic level. Kluwer Law International, The Haque Hurst H (1995) The status of the universal declaration of human rights in national and international law. Journal of International and Comparative Law 25 Kalse A (2016) A brief lecture on human rights in constitution of India Kapoor SK (2002) International law & human rights. Central Law Agency, New Delhi Karim B, Theunissen T (2011) Bangladesh. In: Shelton D (ed) International law and domestic legal systems: incorporation transformation and persuasion. Oxford University Press, Oxford Karzon RHS, Faruque AA (1999) Status of international law under the constitution of Bangladesh: an appraisal. Bangladesh Journal of Law 3(1):25 Kaur A (2017) Protection of human rights in India: a review. Jamia Law Journal 2 Khair S (2011) Brining international human rights law home: trends and practices of Bangladesh court. Asian Yearbook of International Law Kothari R, Sethi H (1987) Special issue on the politics of human rights, Lokayan, Bulletin, p 33 Kumm M (2004) The legitimacy of international law: a constitutionalist framework of analysis. The European Journal of International Law 15(3):907–931 Motilal S, Nanda B (2010) Human rights, gender and environment. Allied Publishers Pvt Ltd, Mumbai Norberto B (1998) The age of rights. Polity Press, Cambridge, UK Ray A (2004) National human rights commission of India: formation, functioning, and future prospects. Khama Publisher, New Delhi Robinson J (1968) Human rights in national and international law. Manchester University Press/ Oceana Publications, Dobbs Ferry Robinson N (2009) Expanding judiciaries: India and the rise of the good governance court. Washington University Global Studies Law Review 1(4):1–69 Subhan FA (2016) Theoretical and practical issues of the implementation of international norms on human rights to the national legislation (the example of the republic azerbaijan). International Journal of Environmental and Science Education 11(12):5070–5085
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Legislations The Citizenship Amendment Act 2019 The Code of Criminal Procedure 1973 The Constitution of the People’s Republic of Bangladesh The Indian Constitution The Protection of Human Rights Act 1993
Treaties Convention against Torture and Other Cruel, Inhuman or Degrading Treatment or Punishment Act (CAT) 1984 Convention on the Elimination of All Forms of Discrimination against Women (CEDAW) 1979 Convention on the Rights of the Child (CRC) 1989 International Covenant on Civil and Political Rights (ICCPR) 1966 International Covenant on Economic, Social and Cultural Rights (ICESCR) 1966 International Convention on the Elimination of All Forms of Racial Discrimination (ICERD) 1965 The Universal Declaration of Human Rights 1948 The Vienna Convention and Programme of Action 1993
Cases ADM Jabalpur v. Shukla (AIR 1976) SC at 1207 Bangladesh and Others v. Samboon Asavhan (1980), 32 DLR 198 Bangladesh v Unimarine S.A. Panama (1977) 29 DLR, SC 252 Bangladesh v. Sheikh Hasina (2008) 60 DLR (AD) at 104 Basu v. State of West Bengal (1997) 2 LRC 1 Chief Prosecutor v Abdul Quader Molla (2013) Civil Rights Vigilance Committee, SLSRC College of Law, Bangalore v. Union of India and others (1983) AIR Kant Francis Coralie Mullin v. The Administrator, Union Territory of Delhi (1981) 2 SCR 516 Gaurav Jain v. Union of India (1997) 8 SCC at 114 Gramophone Company of India Ltd. v. Birendera Bahadur Pandey (AIR 1984 S.C. 667) Hussain Mohammad Ershad v. Bangladesh & others (2001) 21 BLD (AD) 69, Jolly George Varghese v. Bank of Cochin (AIR 1980) SC 470 Kazi Mukhlesur Rahman v. Bangladesh, (1974) 26 DLR SC 44 Keshavanand Bharti v State of Kerala, Labourers working on Salal Project v. State of Jammu and Kashmir (AIR 1984) SC 117 M. Saleem Ullah v Bangladesh (1995) 47 DLR 218 Maneka Gandhi v. Union of India (AIR 1978) SC 597 People’s Union for Civil Liberties and another v. State of Maharashtra and others, (2014) 10 SCC 635 Saiful Islam Dilder v Bangladesh and Others (1998) 50 DLR 318 State v. Metropolitan Police Commissioner (2008) 60 DLR (AD) at 660 Vishaka and Others v. State of Rajasthan (1997) 3 LRC 361 Vishal Jeet v. Union of India (1990) 3(3) SCC 318
Part III Environmental Aspects
Climate Change Environmental Commitment, Disclosure, and Communication Sibel Hoştut and Seçil Deren Van Het Hof
Contents 1 Key Arguments and Current Thoughts in the Field . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Historical Development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Environmental Commitment and Disclosure of Organizations . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Climate Change Communication . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Cross-References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
202 205 208 212 217 218 218
Abstract
Perception, understanding, and being engaged with climate change issues require efforts of all stakeholders, not just individuals or special interest groups, as everyone has a responsibility in this global and complex issue. However, instead of expressing all stakeholders, the segmentation of stakeholders into relevant publics with similar values, beliefs, and behaviors is a useful approach in managing and communicating environmental disclosures as there is no single application that covers all stakeholders and offers solutions for everyone. This study reviews the relevant facts and key arguments about climate change and history and analyzes how organizational commitment, environmental disclosure, and climate change communication are conceptualized in the scientific literature. Several theoretical perspectives, such as institutional theory, stakeholder theory, legitimacy theory, and situational theory, clarify the motivations of organizations to disclose information and explain their commitment to environmental performance. To bring a deeper understanding of communicative actions and develop effective communication strategies, the communication model of Harold D. Lassell has been used in conjunction with the findings of current empirical studies in the field of climate change. S. Hoştut (*) · S. Deren Van Het Hof Faculty of Communication, Akdeniz University, Antalya, Turkey e-mail: [email protected]; [email protected] © The Author(s), under exclusive license to Springer Nature Switzerland AG 2021 D. Crowther, S. Seifi (eds.), The Palgrave Handbook of Corporate Social Responsibility, https://doi.org/10.1007/978-3-030-42465-7_12
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Keywords
Climate change · History · Environmental commitment · Environmental disclosure · Climate change communication
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Key Arguments and Current Thoughts in the Field
Climate change poses an enormous threat, stressful situation, and anxiety for the lives of people around the world. Many people are confronted with significant impacts of climate change, such as storms, floods, global warming, extreme rainfalls and droughts, and massive bushfires which caused significant damages in recent years. Scientific studies have shown that climate change directly contributes to these incidents. It is also argued that the number of severe tropical cyclones like hurricanes and typhoons will increase, with every rise of the global average temperature by onetenth (Eckstein et al. 2019). Since 1980, extreme weather events have become more frequent, the data on floods and other hydrological events have fourfold, and storms, extreme temperatures, droughts, and forest fires have more than doubled (European Academies’ Science Advisory Council 2018). Such occasions have significant social, ecological, and economic effects. For instance, in 2019, 14 weather and climate disaster events including flooding, severe storm, tropical cyclone, and wildfire resulted in the deaths of 44 people across the United States (NCEI 2020). Globally in 2017, 11,500 extreme weather events caused the death of more than 526,000 people; and economic losses between 1998 and 2017 amounted to around US$ 3,47 trillion (Eckstein et al. 2019). These data show that long-term changes in the Earth’s climate and patterns (History 2020) are now at the highest levels in history. The UN Framework Convention on Climate Change (UNFCCC 1992) expresses an expanded definition by arguing that climate change is attributed absolutely to human activity “that alters the composition of the global atmosphere and which is in addition to natural climate variability observed over comparable time periods.” The issues of climate change have been growing for decades in developed countries, but little is known in developing countries (Sudibyo 2017). Law (2019) argues that climate change is expected to be felt in every country, but due to many different threats, regional differences, and circumstances, its impact will not be felt equally for all countries. In some countries or regions, these threats will be worse than in others. Developing countries and countries with high poverty and inefficient governments are most affected by climate change. Experts argue that especially Haiti, Nigeria, Yemen, United Arab Emirates, Manila/Philippines, and Kiribati will be particularly affected (Law 2019). But also prosperous countries feel the climate effects more clearly than ever before, as the 2017 Atlantic hurricane season has shown. So effective climate change mitigation is therefore in the interest (Eckstein et al. 2019) and responsibility of all countries, regardless of any level of development. Maintaining emissions of greenhouse gases will cause an overall warming and further changes and challenges in all components of the climate system (IPCC 2013),
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including the atmosphere, ocean, terrestrial, cryosphere, biosphere, and anthroposphere (Gettelman and Rood 2016). Food production is closely linked to the climate. Long droughts and increased irrigation demands associated with a warmer and less stable climate will increase the demand for freshwater which will become less accessible with the reduction of glacier sources. Another major factor is heat stress on crops and livestock. Areas of the world that specialize in growing certain crops may not be suitable for these crops (Future of Life 2020). The worrying aspect of the issue is that many aspects of climate change and associated impacts will continue for centuries, even if anthropogenic emissions of greenhouse gases are stopped (Tschakert 2014). Climate mitigation efforts and progresses made by individual countries are monitored by the independent Climate Change Performance Index (CCPI). The ranking results are defined by a country’s total performance within the categories of GHG emissions, renewable energy, energy use, and climate policy. According to the index, Sweden leads the ranking, followed by Denmark and Morocco. The bottom five of the CCPI are the Islamic Republic of Iran, the Republic of Korea, Chinese Taipei, Saudi Arabia, and the United States (CCPI 2020). Some key terms of the important 58 words and phrases relating to climate change are 1.5 degrees, carbon footprint, carbon neutral, emissions, feedback loop, global warming, geoengineering, the Intergovernmental Panel on Climate Change (IPCC), and runaway climate change (BBC 2019). In the year 2019, climate change was described as the “greatest public health challenge of the twenty-first century,” which caused thousands of deaths and displaced tens of thousands of people from their homes (Climate Health Action 2019). Today, the coronavirus outbreak in China threatens the life of people, especially who have chronic health problems, and are 60+ years old. As a result of the coronavirus pandemic, the global economic shutdown in many European and Asian countries, and the United States lead to significant drops in emissions and a variety of gases related to energy, transport, and travel restrictions. Especially China and Northern Italy have recorded significant falls in nitrogen dioxide and carbon monoxide (McGrath 2020). It is likely that the bans for traveling, working from, and staying at homes, the standstill of the aviation and tourism industries, will decrease emissions similarly in many other countries. But there are also warnings that levels could rise rapidly after the pandemic (McGrath 2020). Economic shocks, diseases, and wars experienced in the past caused a decline in the emissions worldwide. However, emissions show an increase again once the economy is back, patients overcome diseases, and wars end (Temple 2020). This seems also corresponding with the current pandemic coronavirus and reductions of emissions. According to several investigations and statistics, human-made greenhouse gas emissions are shown as the main cause of climate change (UN 2020). Greenhouse gases are defined as “those gaseous constituents of the atmosphere, both natural and anthropogenic, that absorb and emit radiation at specific wavelengths within the spectrum of terrestrial radiation emitted by the Earth’s surface, the atmosphere itself, and by clouds” which causes the so-called greenhouse effect (IPCC 2013). Without natural greenhouse gases, the Earth’s average temperature would be about 18 C
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(0 F), instead of the current average of 15 C (59 F) (Ma 1998). Major greenhouse gases in the Earth’s atmosphere include water vapor (H2O), carbon dioxide (CO2), nitrous oxide (N2O), methane (CH4), and ozone (O3) (Breeze 2017). Various investigations disclose that among these gases, the carbon dioxide is the most harmful anthropogenic gas which is shown as the biggest trigger of global warming caused by human activities. Human-caused CO2 emissions come from the combustion of fossil fuels used in energy production, transportation, industrial processes (cement or hydrogen production, burning of biomass), and buildings (IPCC 2005). Major gases are the halocarbons and chlorine- and bromine-containing substances (IPCC 2013). So it can be repeated that humans are the major culprits of causing climate change (Oppenheimer and Anttila-Hughes 2016). In February 2020, the global atmospheric carbon dioxide average was expressed as 414,11 parts per million. Today, carbon dioxide levels are much higher than any data in the last 800,000 years (Lindsey 2020). In addition to the high carbon dioxide level, the average of the global surface temperature also showed the highest level of the last 141 years (1880–2020), with an average temperature departure of 1.14 C (2.05 F) above the twentieth-century average (CO2 Earth 2020). There are many applications people can do to ensure their future life as prosperous as possible. Our preferences will take us all to a more livable future. The road on the individual level involves daily decisions in many areas that can be reached such as driving and flying less, switching to a “green” energy provider, and changing the eating and buying habits. Social scientists have found that when one person makes a sustainability-oriented decision, other people do too. Customers at a US cafe who were told that 30% of Americans had started eating less meat were twice as likely to order a meatless lunch. Or, households in California were more likely to install solar panels in neighborhoods that already have them (Ortiz, 2018). James Clear examines the role of social connection when it comes to changing belief systems. He argues that persuading people to change their minds is the process of persuading them to change their tribe. If they give up their beliefs, they run the risk of losing their social ties. And if loneliness is the result, nobody wants to crumble their worldview. The way to change people’s minds is to become friends with them, to integrate them into your tribe, and to bring them to your circle. They can now change their beliefs without the risk of being abandoned socially (Clear 2018). Starting a conversation about climate change can be difficult. The most important when talking about climate change with those who don’t share your views is that people cannot communicate effectively when they feel threatened. Direct attacks, whether in the form of arguments, evidence, or name-calling, limit our capacity for reason, empathy, and self-reflection. People should feel safe and heard and then find common ground (David Suzuki Foundation 2020). Individuals’ contributions are essential to reach these goals but not enough; changes on a larger, system-wide basis are needed such as renewing our subsidy system or setting new rules and incentives for industries such as agriculture, transportation, deforestation, and waste management. Individuals need to exercise their rights both as citizens and consumers and to pressure governments and companies to make necessary system-wide changes (Ortiz 2018). In this context several actions
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are discussed within the climate change adaptation and climate change mitigation categories that express different things (WWF 2020). The essential challenge is that climate change adaptation and mitigation cannot be dealt with the efforts of a single person, a group, or one authority (Atun 2018). Such a significant threat needs applicable actions and policies with involvement, awareness, and communication of several stakeholders, such as governments, public institutions, businesses, communities, non-governmental organizations, media, individuals, and opinion leaders. In this study, the relevant literature on climate change has been reviewed, and key arguments and important findings on current thoughts in the field, historical development, and recent studies on corporate commitment, environmental disclosure, and climate change communication have been highlighted and discussed.
2
Historical Development
The first reported coal production and consumption dates as far back as 4000 BC to China where carving took place out of black lignite (a form of coal) (Golas and Needham 1999; Ritchie and Roser 2020). The big change in the population and industry, the beginning of the Industrial Revolution (about 1760) in the eighteenth century, stemmed from the use of coal as a mechanical power source, which later replaced the existing energy sources like wood, wind, water, and wax (Mumford 1934). The French physicist, Joseph Fourier, implied to the greenhouse effect when he compared the influence of the atmosphere to the heating of a closed space beneath a pane of glass (Jones and Henderson 1990). In several studies, Fourier’s (1827) article is being cited as the first reference in the literature to the atmospheric greenhouse effect (Fleming 1999). Fleming (1999) argue that there are indeed greenhouse analogies in Fourier’s writings, but they are not central to his theory of terrestrial temperatures, nor are they unambiguous precursors of today’s theory of the greenhouse effect. Irish physicist John Tyndall (1822–1893) is best known for his work on the absorption of heat by gases such as water vapor and carbon dioxide in the atmosphere (Tyndall 1861, cited in Hawkins 2018). Starting in 1861, he published a series of studies on greenhouse gases to trap heat in the Earth’s atmosphere (Darby 2016). Today, the Tyndall Centre in the United Kingdom represents an important unit to develop sustainable responses to climate change and to promote informed decisions on climate change mitigation and adaptation (Tyndall Centre 2020). In 1856, American Eunice Foote discovered that heat was absorbed by carbon dioxide and water vapor, 3 years before Tyndall (Hawkins 2018). Svante Arrhenius (1859–1927), one of Sweden’s leading chemists in 1896, thought that what people are doing on an increasing scale can make their land a little warmer (Baum 2016). Arrhenius’s article determines for the first time the contribution of carbon dioxide (CO2) to the greenhouse effect and speculates whether changes in the atmospheric concentration of CO2 contribute to long-term changes in climate (Arrhenius 1896). He argues that because of the natural greenhouse effect caused by the infrared absorption capacity of water vapor and carbon dioxide, the average surface
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temperature of the earth is about 15 C (Enzler 2020). According to Arrhenius, doubling the CO2 concentration would lead to a 5 C temperature rise (Enzler 2020). The 1903 Nobel Prize in Chemistry was awarded to Arrhenius, appreciating the extraordinary services that chemistry has advanced with the theory of electrolytic decomposition (The Nobel Prize 2020). Swedish physicist Knut Angstrom (1900) found that even in diminutive concentrations found in the atmosphere, CO2 strongly absorbs parts of the infrared spectrum (BBC 2013). Although the carbon dioxide theory of climate change was avoided in the early 1900s, it came back to the agenda in the 1930s (Jones and Henderson 1990). Since 1938, investigations of Guy Stewart Callendar, Gilbert Plass, Hans Seuss, Roger Revelle, Charles Keeling, and others stimulated the carbon dioxide theory of climate change and put it on a more solid scientific foundation (Fleming and College 2001). Guy Stewart Callendar (1898–1964), a specialist in infrared physics, is noted for identifying the link between the artificial production of carbon dioxide and global warming, called the “Callendar Effect” (Fleming and Fleming 2007). In the 1950s, scientists began to explore how carbon dioxide absorbs infrared radiation. The first reliable estimates of the emission fraction that remain in the atmosphere instead of dissolving in the ocean were presented. In the late 1950s and 1960s, research moved toward calculating the mean global surface temperature with an increase or decrease of the atmospheric carbon dioxide (Jones and Henderson 1990). Möllers’ (1963) calculations give a + 1.5 C when the CO2 content increases from 300 to 600 ppm. Although the modelers of the 1950s and early 1960s showed good results to encourage them to insist, they were still far from producing details of the Earth’s current circulation patterns and climatic zones (Spencer 2011). In the 1960s, modern computing eased to model the general circulation of the atmosphere and improved weather forecast (Oppenheimer and Anttila-Hughes 2016). Computer models have consistently shown that a doubling of the CO2 may cause warming of 2 C or 3.6 F within the next century (History 2020). In the late 1960s, research on CO2 and global warming has come to the agenda of international organizations. The North Atlantic Treaty Organization (NATO) was the first who recognized the environmental problems facing the international community when it set up the scientific research Committee on the Challenges of the Modern Society (CCMS) on November 24, 1969. The Committee provided knowledge and experience on social, health, and environmental issues in both civilian and military communities (NATO 2014). By the 1970s, substances other than carbon dioxide, such as water vapor, clouds, and minor atmospheric gases, were discussed in detail. Scientists discovered that the cooling effect of particulate matter, a by-product of dirty, fossil fuel combustion techniques significantly offsets the warming effect of carbon dioxide (Oppenheimer and Anttila-Hughes 2016). The peak of crude oil production in the United States was in 1970 (Heinberg 2005). Global cooling, a different climate concern, came up in the early 1970s (History 2020). Scientists claim that the tendency for cooling is due to sulfate particles from burning fossil fuels, which can diffuse sunlight and reduce atmospheric warming. This intuition proved true that when the United States and other countries started reducing sulfur emissions to lower acid rain and respiratory
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diseases in the 1970s, the cooling suddenly ended. Since 1975, the average global temperature has increased by about 0.6 C (Gramling 2019). From the late 1970s through the 2000s, rapid warming of the Northern Hemisphere (NH) and reduction of the Arctic sea ice followed (Delworth et al. 2016). Climate change and atmospheric warming as a result of the accumulation of CO2 and other “greenhouse gases” (GHGs) such as water vapor (H2O), carbon dioxide (CO2), or methane (CH4) have finally attracted concerted scientific research (Tucker 1997). Related research received attention from the United Nations and government leaders around the world. The United Nations Conference on the Human Environment, byname Stockholm Conference, held in Sweden from June 5 to 16, 1972, was the first United Nations (UN) conference that focused on international environmental issues and politics. Delegates from 114 governments attended the conference. The environmental action plan presents 109 specific suggestions on international organizations, natural resource management, pollution, human settlements, and educational and social aspects (Boudes 2020). In the 1980s and beyond, different models continued to find significantly different numbers on climate in one region or another (Spencer 2011). It is difficult to compile absolute estimates of the global average temperature. Global temperature data comes from many observation stations around the world, using different methods for calculating (Sharp 2018). Widespread drought and fires occurred in the United States in 1988, while temperatures have reached record levels compared to the past (History 2020). In the same year, scientific consensus that carbon emissions would warm the climate was sufficient to become an important political issue (Oppenheimer and Anttila-Hughes 2016). In 1988, the Intergovernmental Panel on Climate Change (IPCC) was established to provide governments scientific information to develop climate policies. The IPCC currently represents 195 countries (IPCC 2020). IPCC scientists review thousands of scientific articles published annually for the assessment reports to provide a comprehensive summary of what is known about the effects and future risks of climate change, the driving forces, and how adaptation and mitigation options can minimize these risks (IPCC 2020). In 1992, countries joined the United Nations Framework Convention on Climate Change, an international treaty as a framework for international cooperation to struggle climate change by limiting the average global temperature rises and dealing with the inevitable effects (UNFCCC 2020b). The Kyoto Protocol signed by President Bill Clinton and adopted on December 11, 1997, in Kyoto Japan, aimed to reduce six greenhouse gases (CO2, N2O, CH4, sulfur hexafluoride (SF6), hydrofluorocarbons (HFCs), and perfluorocarbons (PFCs)) in 41 countries and the European Union. Currently, there are 192 parties to the Kyoto Protocol (IPCC 2013; UNFCCC 2020a; History 2020). Since 1800, global fossil energy consumption has increased more than 1300 times. The great diversity of fossil energy consumption in the twentieth century resulted in a decrease in coal production. Total coal production declined from 96% in 1900 to less than 30% in 2000. Global CO2 emissions increased from 2 billion tonnes in 1900 to over 36 billion tonnes in 2015 (Ritchie and Roser 2017). Today, crude oil is the largest source of energy, accounting for about 39% of fossil energy, followed by coal (33%) and natural gas (28%) (Ritchie and Roser 2020). As reported
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by Friedrich et al. (2017), the top three greenhouse gas emitters such as China, the European Union, and the United States contribute to more than half of the total global emissions. As reported, 100 companies (most of these are coal and oil producing companies) are responsible for 71% of global emissions since 1988 (Byskov 2019). All types of energy production constitute 72% of all emissions. According to the World Resources Institute (2017), the primary sources of greenhouse gas emissions are electricity and heat (31%), transportation (15%), manufacturing (12%), agriculture (11%), and forestry (6%). Contributions to combat climate change will be reached with the choices made in our daily life at the level of nations, communities, and individual lifestyles. Countries around the world are rising their targets in combating climate change. The Paris Agreement was adopted in Paris on December 12, 2015, to address the major issues of climate change. The Agreement provides a roadmap to reduce emissions and create climate resistance. It aims to strengthen the global response to the threat of climate change by keeping the global temperature rise slightly below the pre-industrial levels of 2 C and to maintain efforts to further limit the temperature rise to 1.5 C (UNFCCC 2020c). It came into force on November 4, 2016, drawing a new route in efforts to combat global climate change (UNFCCC 2020b). All parties should engage in adaptation, submit, and periodically update communication describing their priorities, needs, plans, and actions (UNFCCC 2020c). As of April 2018, 175 parties have ratified the Agreement, and 10 developing countries reiterated their national adaptation plans for the first time to respond to climate change (UNFCCC 2020c). Countries agreed to work to limit the global temperature rise well below 2 C (UN 2020). In 2018, Greta Thunberg a teenage activist from Sweden started sitting in front of the Swedish parliament every Friday, requesting the government to reduce emissions by 15% per year. She aimed to make her voice heard by the United Nations, the US Congress, and the British Parliament. On September 20, 2019, Thunberg led the biggest climate demonstration in history with 4 million people from 161 countries and became the face of the youth climate movement of recent times. Further, she gave an emotional and tearful speech to world leaders at the UN Climate Action Summit in September 2019 (Woodward 2020).
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Environmental Commitment and Disclosure of Organizations
Previous research on environmental commitment and strategic responses of organizations has identified several drivers and motivations for environmental responses. Since the mid-1990s and early 2000s, continuity models range from a reactive stance that denies responsibility to proactivity, where managers envisage developments. Between these two extremes, defensive and harmonious positions can be seen, characterized by reluctant admission and acceptance of responsibility (Kolk and Pinkse 2004). A study conducted by Bansal and Roth (2000) revealed that three motivations, such as legitimation, competitiveness, and social/ecological responsibility, trigger corporate responsiveness. Boiral (2012) outlined the determinants of
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corporate commitment to reduce GHG emissions as business motivations, social and environmental motivations (defined as sustainability drivers by Littlewood et al. 2018), and pressure from various stakeholders. Economic motivations are related to corporate competitiveness or potential financial benefits, which may result from the reduction of greenhouse gas emissions (Boiral 2012). Minimizing the carbon footprint of processes can result in profits such as minimizing regulatory compliance costs, controlling risks, reducing operating costs, responding to stakeholders, increasing revenues, and competitive advantage (Ervin et al. 2013). Environmental and social motivations for businesses focus on the importance of meeting social expectations and showing organizational commitment to climate change (Boiral 2012). Nakao et al. (2007) investigated 121 corporations spanned over 19 categories in the manufacturing sector and found that the attempts to address environmental issues are not seen as a “cost factor” but as an “important strategic factor” supported by the market. Hence, the hypothesis that a company’s environmental performance has a positive effect on its financial performance and vice versa is supported statistically by Japanese companies. Socially and environmentally driven corporations will link their corporate initiatives to emissions reduction with human rights and a quality environment, which will lead to clear results in terms of transparency, accountability, litigation, legislation, and governance structures (Clapp 2005; Ahman 2006; Okereke 2007). In contrast, Le Menestrel and de Bettignies (2002) argue that oil corporations, which carry out climate activities on social and environmental motivations, will make deeper cuts than companies whose actions are based on economic rationality. Several theories clarify the motivations of organizations to disclose information and explain their commitment to environmental performance (Bewley and Li 2000; Ali and Rizwan 2013; Talbot and Boiral 2015; Omran and Ramdhony 2015). Institutional theory explains the adaptation of specific organizational practices or forms (in a particular organizational area) with the concepts of isomorphism and decoupling (Deegan 2009). While decoupling refers to situations in which organizations decouple structures from work activity to avoid the detection of inconsistencies between structure and work, which could result in loss of legitimacy (Ogawa and Scribner 2002), isomorphism refers to the adaptation of institutional practices of other organizations (Dillard et al. 2004) influenced by several stakeholder pressures, organizational pressures, and professionals’ own willingness (Deegan 2009; Ali and Rizwan 2013). Organizations provide environmental commitment or performance as a reaction to coercive isomorphism due to political effects from national and local governments and the problem of legitimacy or mimetic isomorphism due to uncertainty from standard responses such as suppliers, customers, and competitors. A further possible reaction is normative isomorphism, which is associated with professionalization (social stakeholders) (DiMaggio and Powell 1983; Dögl and Behnam 2015). Clarkson et al. (2008) classify two theoretical perspectives that are contrary to their estimates: economic theory such as voluntary disclosure theory and sociopolitical theories (see also Patten 2002) such as stakeholder theory and legitimacy theory. According to the voluntary disclosure theory, organizations will disclose
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good news and retain bad news (Bewley and Li 2000). Dawkins and Fraas (2010) argue that companies with low environmental practices will disclose less information to prevent negative exposure. The theory contains also information that is not required by law or enforcement or goes beyond what is necessary and is useful for stakeholders to make decisions (Dawkins and Fraas 2010). Popular communication tools for communicating voluntary disclosures to different stakeholders are corporate web sites and standalone environmental reports (Clarkson et al. 2008). Corporations can use web sites to interact with audiences and provide information directly to individuals without having to pass through the gatekeepers of the news media (Esrock and Leichty 1998). Environmental reports focus on reporting noneconomic performance to make organizations more accountable and transparent (Yongvanich and Guthrie 2006). The emphasize on the triple bottom line concept, based on economic, social, and environmental dimensions, creates value for companies or organizations (Elkington 2006). Previous studies classify the motivations for voluntary disclosure as information asymmetry, corporate control competition, capital market transactions, stock compensation, management capability signals, increased analyst coverage, and mandatory disclosure limitations (Graham et al. 2005; Shehata 2014). The restrictions can be summarized as the precedent for disclosure, proprietary rights costs, agency costs, and political costs (Graham et al. 2005; Shehata 2014). Boiral (2013) analyzed sustainability reports from the energy and mining sector and found that 90 percent of the major negative events were not reported, the disclosed information presents a trend toward organizational narcissism and proliferation of misleading images. So while voluntary disclosure theory predicts a positive association between environmental performance and the level of discretionary environmental disclosure, legitimacy theory and stakeholder theory predict a negative relationship between environmental performance and the level of discretionary environmental disclosures (Clarkson et al. 2008). While the voluntary disclosure approach focuses on the right to good performance, the legitimacy approach is aimed at justifying low performance and reducing social and political pressures (Dawkins and Fraas 2010). Legitimacy theory suggests that organizations are constantly trying to ensure that they operate within the boundaries and norms of their community (Guthrie et al. 2006). It relies on the notion that there is a “social contract” between an organization and the society in which it operates (Deegan 2002; Deegan 2009). Organizations with poor environmental performance try to increase discretionary environmental disclosures to change stakeholders’ perceptions about their actual performance, as they are subject to greater political and social pressure, and threatened legitimacy (Clarkson et al. 2008). The study conducted by Prado-Lorenzo and Garcia-Sanchez (2010) verified the importance of legitimacy, especially for those with poor social and environmental performance. While legitimacy theory treats the whole society as a single group and expects the organization to meet the expectations of the whole society, the stakeholder theory classifies the whole society (Ali and Rizwan 2013) in more homogenous groups and subgroups. Although there are numerous definitions, no common consensus can be stated on what the concept of stakeholder means (Miles 2012). However, a vast majority
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of investigations adopt the definition idealized by Freeman (1984) (Mainardes et al. 2011). Freeman defines a stakeholder as “any group or individual who can affect or is affected by the achievement of the organization’s objectives” (1984). Environmental information is used or perceived differently by different stakeholders. Therefore management should target its environmental disclosures to different audiences (Bewley and Li 2000). Freeman’s (1984) stakeholder map consists of 12 stakeholders including activist groups, competitors, customers, customer advocate groups, employees, financial communities, government and political groups, owners, trade associations, suppliers, and unions. Mitchell, Agle, and Wood (1997) define stakeholder salience as “the degree to which managers give priority to competing stakeholder claims” and classify stakeholders by their possession of the attributes power, legitimacy, and urgency, which has been widely used in the environmental management literature (Murillo-Luna et al. 2008). Stakeholders’ pressures can be classified as internal and external pressures (Wood and Jones 1995). Previous studies found that the main source for climate change issues comes from external pressures such as governments, media, and the public, who are increasingly aware of issues to greenhouse gas emissions. These pressures are increasingly made in sectors with high carbon emissions, such as cement, oil, and transportation industries (Okereke 2007; Boiral 2012; Cadez et al. 2018). Boiral (2012) argues that institutional and social pressures to reduce greenhouse gas emissions do not only depend on public policy and relations between governments and companies. Various other stakeholders can also have a significant impact on the implementation of emission measures and controls, such as investors, customers, suppliers, or competitors. The external stakeholder list continues with business associations, professional associations and chambers of commerce, financial markets and insurance companies, environmental groups, and local and national experts (Boiral 2012; Ali and Rizwan 2013; Murillo-Luna et al. 2008). Significant internal stakeholders are employees, management, leaders, and company headquarters (Littlewood et al. 2018). Murillo-Luna et al. (2008) classified the large number of stakeholders who demand companies to protect the environment into five groups: regulatory stakeholders and corporate government stakeholders are the groups that managers are most concerned about. Other groups are defined as external economic stakeholders, external social stakeholders, and internal economic stakeholders. Alternative classifications have been identified in previous studies conducted by Henriques and Sadorsky (1999) and Buysse and Verbeke (2003). Pressure from stakeholders to reduce greenhouse gas emissions is often perceived as one of the main drivers not only for corporate commitment but also for improving carbon performance (Boiral 2012). Littlewood et al. (2018) examined the European high emission industry and found that business drivers and stakeholder pressure increased corporate commitment to climate change action and higher commitment led to increased GHG performance. MurilloLuna et al. (2008) argue that the pressure from all stakeholders can discipline the environmental behavior of corporations and leads to greater environmental proactivity.
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Climate Change Communication
The issue of climate change communication has been studied by many researchers. Gammelgaard Ballantyne (2016) analyzed the body of scholarly literature on climate change communication and found that the research within climate change communication clusters around five main perspectives, such as public understanding of climate change, mass media, strategic communication, communication effects, and conceptual articles (historic overviews, conceptual, and theoretical frameworks of climate change communication). Most of the research on climate change communication has been carried out in developed countries, like the United States, the United Kingdom, Australia, Canada, and Western European countries. There is a need to expand the climate change communication research to developing countries, where little is known (Chadwick 2017). Besides becoming a notable topic in science and society, it has become something like a booming industry alongside more established communication businesses, such as health communication, risk, and crisis communication, science communication, and environmental communication (Nerlich et al. 2010; Chadwick 2017). Growing areas of climate research include civic engagement and public participation, organizational communication, and persuasive communication to influence individuals’ climate related attitudes, beliefs, and behaviors (Chadwick 2017). Lorenzoni et al. (2007) investigated the barriers that the population of the United Kingdom perceives in engaging with climate change issues. His findings demonstrate that people have personal, social, and moral responsibilities for climate change. However, these people also have barriers for not acting at the individual and social levels, which limits the cognitive, affective, and behavioral elements of their engagement. The individual barriers for not taken actions are identified as lack of knowledge, uncertainty, and skepticism, externalizing responsibility and blaming business, distrust in information sources, regarding the issue as a distant threat, or being reluctant to change lifestyles. Social barriers are described as lack of political action, business, and industry or enabling initiatives (Lorenzoni et al. 2007). In this context, effective communication efforts should be directed toward overcoming these individual and social barriers to public engagement (Ockwell et al. 2009). Ockwell et al. (2009) point out that the presence of widespread and deep-rooted social barriers poses challenges for efforts to mitigate climate change and weakens the reliance on individuals’ volunteer actions. As a complex, uncertain, global, and long-term problem, it is difficult to understand climate change and relate it to the individual level. Moreover, such an issue should be shared among individuals, scientists, businesses, industries, governments, and other countries (Lorenzoni et al. 2007). Situational theory is used by several researchers to explain the impact of communication behavior on attitudes, cognitions, and behaviors (Rawlins 2006). Grunig and Repper (1992) differentiate the term stakeholder from the term public. They argue that organizations identify their stakeholders in line with their employment, marketing, and investment strategies, but “publics arise on their own and choose the organization for attention.” Publics, thus, are organized around issues (Hallahan
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2000). Dewey (1927) and Blumer (1946) describe publics as critical components of the democratic process; they define publics as a group of people, who face a similar problem, recognize the problem that affects them, and organize and act similarly to resolve those problems (cited in Kim and Grunig 2011). The situational theory also provides a way to segment people into several groups relevant to communication practitioners (Grunig 1997). The segmentation of publics, or more precisely audiences, based on the variables of problem recognition, constraint recognition, and involvement allows a comprehensive understanding of stakeholders by uncovering what turns them into active and aware publics and less active ones, such as latent public and non-publics (Grunig and Hunt 1984; Grunig and Repper 1992; Grunig 1997; Kim and Grunig 2011; Illia et al. 2013). Active publics present high levels of involvement and problem recognition and lower levels of constraint recognition (Rawlins 2006). These people do something about the issue because they know how it affects them. They actively seek information and act on it (Chung et al. 2014). Aware publics are defined as those individuals who recognize the issue, process information, and might take action but are limited by lower levels of involvement and problem recognition or higher levels of constraint recognition (Rawlins 2006). Latent publics are aware of the issue but do not recognize it as a problem. This public could become active or aware as information changes its cognitions about the issue. Non-publics defined as passive groups or as individuals who face no problem, who have no knowledge and involvement with an organization or an issue (Grunig and Repper 1992; Hallahan 2000; Rawlins 2006). Hallahan (2000) redefined and expanded the typology defined by J. Grunig and differentiated between inactive and aroused publics, which J. Grunig combined as latent publics. Inactive publics are conceptualized as groups of individuals with relatively low levels of knowledge about an organization and low levels of participation in their activities. Aroused publics are groups of people with high level of involvement who have recognized a potential problem or issue. Several different factors can cause their arousals, such as personal experience, political parties, media reports, advertisements, discussions with friends, or special interest groups. In general, the public is also used to define segments, which is a group of people who share certain demographic, psychographic, or geodemographic features and thus are likely to behave or respond to organizational actions or messages similarly (Hallahan 2000; Rawlins 2006). Chung et al. (2014) explored the interactive impact between different types of local publics and their exposure to a supportive or opposite message about a hypothetical local governmental plan to build a nuclear power plant on community engagement intentions. The results show that regardless of the message types, active publics are more likely to participate in community activities than anyone else. While active publics strongly oppose the harmful facility, the inactive publics remain passive. However, aware and aroused publics were significantly affected by messages. A convenient way in dealing with communicative actions is to follow Harold D. Lassell’s communication model of “Who, says what, in which channel, to whom, and with what effect?” (Lasswell 1948). To understand the context of climate change communication these questions can be answered as follows:
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Who says it? Information can be provided by various stakeholders, such as government, politicians, scientists, advocates, experts, business people, citizens, celebrities, business associations, non-governmental organizations (NGO), and international organizations, research institutions, consultants, or people of different ethnic or socioeconomic backgrounds (Moser 2010; Sanz-Menéndez and Cruz-Castro 2019). It has been found that science is among the most confident institutions. At a time when science and politics collide, public confidence in scientists increases. A survey conducted in the United States finds public confidence in scientists equally with the public’s confidence in the military. It also exceeds the levels of public confidence in business leaders, elected officials, and the media (Funk et al. 2019). A research conducted by Sanz-Menéndez and Cruz-Castro (2019) measures the reliability attributed by citizens’ to scientific information on CO2 emissions disclosed by several institutions, such as business associations, government, and non-governmental organizations, international organizations, and national research institutions. The results show an institutional reliability gap in science communication. Information provided by the scientific institutions was found to be more reliable than that provided by the government or the business sector. Information supplied by the government was more reliable than the information provided by business associations. And the information provided by IPCC or Greenpeace was significantly more reliable than the information provided by business associations. The authors point out that the reliability of scientific information on climate change is higher when the source is perceived closer to scientific institutions and lower when it is connected to business associations. What is said? The content relates to questions about sources of information on climate change and reliability (Moser 2010). A link to traditions, experiences, shared values and beliefs, global patterns, and collective actions can be created to lead to strong arguments (Von Storch and Krauss 2005; Thompson and Schweizer 2008). Thompson and Schweizer (2008) outlined the main strategies for creating messages and communicating about climate change, such as know your audience and select a credible ambassador for this audience, know what kind of claim you are asserting, and why it is appropriate for your audience. Connect your message to cultural values and beliefs, make the message meaningful, and address the meaningful values to your audience. Lead with your strongest argument or confident point, strengthen the message by telling your audience what specific actions you can take to make a difference, and connect to global patterns and collective action. Develop a system perspective of the problem and potential solutions, and partner with other organizations, key players, leaders, employees, artists, and neighbors. Start from inside by involving organization’s top leaders, inspire actions internally, and communicate about it as actions and events are effective modes of communication. In which channel? An important issue in climate change communication is the used form and channel, which differently affects the persuasiveness of communication (Moser 2010). Various forms from written (books, newspapers, letters, leaflets, and reports) to verbal communication (speaking, storytelling, or conversation) or from non-verbal communication (gestures, body language, sign language, and facial expressions) to visual communication can be distinguished (Moser 2010). To make
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the message more acceptable, reach a broad target, and raise awareness among publics print, broadcast media, and the Internet (web sites and social media) can be used effectively. Convincing alternatives besides traditional media are photographs, arts, movies, documentaries, adverts, school programs, grassroots movements, and events (see also Thompson and Schweizer 2008; Nerlich et al. 2010; Schäfer and Schlichting 2014). In general, while face-to-face communication is more convincing and effective on personal behavior, dialogic and interactive forms of communication tend to provide more learning and active participation than one-way, written, or verbal communication (Moser 2010). The visualization of climate change through photography calls attention to communicate both temporal (long-term and developmental) and unseen (not always visible) environmental issues, through a medium that privileges the “here and now” of the visual (Doyle 2007). Corner et al. (2015) conducted a three-country, online survey in the United States, the United Kingdom, and Germany, where participants responded to a series of psychological measures related to their views about climate change and their evaluation of images. Participants answered a series of questions concerning their beliefs about climate change and willingness to take various actions. The report summarizes the key findings and emphasizes that the images used to communicate climate change should be more diverse than polar bears and melting ice. Also Doyle (2007) argues that photographs of glaciers temporarily represent the already seen effects of climate change. Key research findings of the investigation conducted by Corner et al. (2015) are summarized as: 1. Show “real people” not staged photo-ops: Authentic images are favored over staged photographs, which are seen as tricky or even manipulative. Politicians, notoriously low on credibility, attracted some of the lowest scores. 2. Tell new stories: Images that participants could quickly and easily understand like chimneys, deforestation, and polar bears on melting ice tend to be positively evaluated. Familiar and “classic” images can be particularly useful for audiences with limited knowledge or limited interest in climate change, but in other audiences, they prompt cynicism and fatigue. Less familiar and more thoughtprovoking images can help tell a new story about climate change and remake the visual representation of climate change in the public mind. 3. Show climate causes at scale: People may not necessarily understand the links between climate change and their daily lives. Individual “causes” of climate change may not be recognized in this way and, if so, can cause defense responses. If communicating the links between “problematic” behaviors and climate change, it’s best to show these behaviors at scale, for example, a congested highway instead of a single driver. 4. Climate impacts are emotionally powerful: Images of climate effects can stimulate the desire to react, but emotionally strong images can also be overwhelming. Coupling images of climate effects with behavioral “action” for people to take can help overcome this. 5. Show local (but serious) climate impacts: When images of local climate effects show an individual or a group of people with identifiable emotions, they are likely
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to be the most powerful. However, a balance must be struck between localizing climate change (so that people realize the issue is relevant to them) and trivializing (by not making clear enough links to the bigger picture) the issue. 6. Be very careful with protest imagery: Images depicting protesters attract low scores and widespread cynicism. Most people do not feel close to climate change protesters, so protest images may strengthen the idea that climate change is for them rather than for us. Protest images, including people directly affected by climate impacts, were seen as more authentic and therefore more compelling. 7. Understand your audience: The levels of concern and skepticism associated with climate change determine how people react to images. Images of distant climate impacts produce much flatter emotional responses among those on the political right. Images depicting a solution to climate change often create positive feelings for the political right and those on the left. So we can never rely on an image that appeals to everyone in the same way (Nicholson-Cole 2005). People’s previous perceptions, experiences, attitudes, social background, cultural orientations, and behavioral tendencies affect the messages they receive from the images of climate change and their further reactions and behaviors (Myers 1994). People react not according to abstract concepts and scientific data but to traditions, experience, and shared values (Von Storch and Krauss 2005). To whom? The heterogeneous nature of the individuals (Nicholson-Cole 2005) creates a major challenge for climate change communicators (Hine et al. 2014). Considering generic stakeholder groups will not provide effective communication and interaction for environmental issues. The situational theory provides convenience in determining within the stakeholder categories, in which publics will communicate actively, passively, or not at all about organizational decisions or environmental issues affecting them (Grunig 2005; Rawlins 2006). The segmentation is an important start to manage people; otherwise, all stakeholders will be treated the same (Curtin and Jones 2000; Muñuzuri et al. 2016). The segmentation of publics (active, aware, latent, and non-public) based on the variables problem recognition (high vs. low), level of involvement (high vs. low), and constraint recognition (high vs. low) explains why some people become active in certain issues or situations (Grunig and Hunt 1984; Kim and Grunig 2011). Here, organizations probably will ignore non-publics, such as lack of resources (Hallahan 2000; Kim and Grunig 2011). The growing interest in segmenting publics or audiences is a possible strategy for developing more effective communication strategies targeted and tailored to subgroups of publics who share similar values, beliefs, behaviors, or policy preferences related to climate change (Hine et al. 2014). With what effect? Macnamara (2006) emphasizes that communication is ensured when an audience somehow receives, understands, interprets, retains, and acts on information. Measurement and evaluation should start early and take place throughout the communication project as a continuous process, but planning and evaluation investigations are not used adequately in communication campaigns. Costs, uncertain how to measure, lack of standards, and lack of interest are shown as the main
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reasons for not measuring or evaluating. Applications require major reform to achieve professionalism (Macnamara 2006). Noble and Watson (1999) identified the leading models in public relations and corporate communications to explain research and evaluation. These models are “The Preparation – Implementation – Impact Model” (Cutlip et al. 1985), “The PR Effectiveness Yardstick” (Lindenmann 1993), “The Pyramid Model of PR Research” (Macnamara 2002), and “The Unified Model of Evaluation” (Noble and Watson 1999; Macnamara 2006). Communication efforts should aim to establish a meaningful engagement with the aspects of understanding, emotion, and behavior (Ockwell et al. 2009). There is no direct relationship between communication and behavior change or a single dimension that fits all solutions. What is needed is a mixture of measures where communication is only one and works only when it is embedded in other approaches that are more directly linked to practical behavior in social life (Nerlich et al. 2010).
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Summary
Climate change is not a subject that is recently discussed and researched. In several studies on the atmospheric greenhouse effect, citations date back to the studies from the 1820s. While until the 1960s, especially physicists and chemists worked on CO2 and global warming, researching environmental issues has come to the agenda of international organizations, such as the Committee on the Challenges of the Modern Society (NATO) and the United Nations Conference on the Human Environment in the late 1960s and beginning of 1970s. Further establishments are the Intergovernmental Panel on Climate Change in 1988 (IPCC) and the United Nations Framework Convention on Climate Change in 1992. The Montreal Protocol in 1987 points to the fact that the main sources of greenhouse gases in the atmosphere are produced entirely by human activities. The Kyoto Protocol signed in 1997 sets binding targets to industrialized countries to reduce greenhouse gas emissions. Today many disciplines have contributed to climate change studies. This study explores the scientific literature on history, key facts about climate change, and organizations’ environmental commitment to climate change and climate change communication. The literature draws attention to several theoretical perspectives, such as institutional theory, voluntary disclosure theory, legitimacy theory, and stakeholder theory to identify the motivations for environmental commitment and to clarify the relationship between environmental performance and the level of environmental disclosures. Further, it presents the interrelated motivations of corporate responsiveness or corporate commitment to climate change ranging from business to social and environmental drivers, which are also defined as strategic factors (Nakao et al. 2007). Climate change is a global, multidimensional, and complex issue linked to human activities. As a crucial threat, it cannot be shaped or managed by the efforts of a single group or the lifestyles of individuals. Involvement, awareness, and support are needed from several stakeholders, especially from governments, public7 institutions, businesses, industries, communities, non-governmental organizations, and the media. The segmentation of stakeholders into publics
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according to the levels of involvement, problem recognition, and constraint recognition for the same issue (Grunig and Hunt 1984) is a useful approach in managing and communicating environmental information effectively. A convenient way to bring a deeper understanding of communicative actions and reach publics through effective communication strategies is the use of Harold D. Lasswell’s (1948) “Who says, what, on which channel, to whom and with what effect?” communication model with current findings of empirical studies conducted in the field. Climate change is a planetary threat and therefore requires large-scale reforms that can only be implemented by governments. Individuals can be most responsible for their own behavior, but governments have the authority to enforce legislation that forces industries and individuals to act sustainably. In response, we all contribute to global warming through the cumulative effect of our actions (Byskov 2019). However, it can be difficult to motivate people to change their views and behavior toward climate change. Two basic techniques, such as asking and listening, can help people to change behavior and overcome curiosity, misinformation, and lack of knowledge. And our preferences in this sense will take us to a more livable future.
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Cross-References
▶ Resource Depletion
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Water Resources Linne Marie Lauesen
Contents 1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 State of the Art . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1 The Water Cycle . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2 Wastewater Treatment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3 Water Pollution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.4 Waste as Water-Polluter: An Overlooked Issue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Global Issues Concerning Water Resource Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1 OECD Water Governance Indicator Framework . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.2 Conflict over Water . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.3 Environmental and Social Damages from Overexploitation . . . . . . . . . . . . . . . . . . . . . . . . . 3.4 Running Out of Water: Desalination? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Sustainable Water Resource Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Cross-References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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Abstract
Water is one of the most important resources for life on Earth. The main use of water is for food, drinking, and watering, and it depends on a plentiful and good water quality. However, clean freshwater resources are scarce, and the climate change with extensive droughts has worsened water scarcity in many places. A clean water resource also depends on proper wastewater management, since polluted wastewater disposed into natural water bodies also affects the freshwater aquifers ultimately. Water must be seen in its entire cycle, from rain, hail, and snow from the sky dispersing into the sea, rivers, streams, and groundwater aquifers alongside the human systems of freshwater abstraction to wastewater management and outlet. To obtain sustainable water resources, responsible water L. M. Lauesen (*) Water and Waste Denmark, Vand og Affald, Svendborg, Denmark e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Switzerland AG 2021 D. Crowther, S. Seifi (eds.), The Palgrave Handbook of Corporate Social Responsibility, https://doi.org/10.1007/978-3-030-42465-7_16
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management in all aspects of the water cycle is required including: the prevention of overusing freshwater from scarce water aquifers; the prevention of further climate changes to stabilize and preferably in the future reverse extreme weather situations; as well as preventing the pollution of natural water bodies with untreated wastewater and waste in general. Keywords
Freshwater management · Waste and wastewater management · Water pollution · Water resources · Water scarcity
1
Introduction
The existence of life depends on the availability of fresh and uncontaminated water on our Planet. However, during the last half century, water availability has been a global issue concerning many regions especially in areas, where freshwater is scarce. Furthermore, global water resources are on demand from an increasing population – especially in regions where scarce water resources of both quantity and quality are decreasing. The competition for water resources between societies and businesses has increased during the last century, which results in both social, economic, and political challenges, especially aggravated by droughts and the climate changes (Durán-Sánchez et al. 2018). The latest OECD report from 2020 on freshwater abstraction shows a variety of water consumption per capita related to countries in different regions (See Fig. 1). Countries in the northern hemisphere with less agricultural activities as a primary source of income use less water per capita than countries where agriculture and manufacturing of products are more water demanding, for instance, in the USA, Canada, Ireland, Greece, Australia, and New Zealand. Though, data is missing Asia, South America, and Africa, where it is assumed that these regions have a relatively high water consumption either due to its main agricultural activities as well as for its production activities such as manufacturing and mining activities. When addressing water resources, two issues arise concerning the availability of freshwater: • Quantity • Quality Both issues are relevant because the sustainable state of water resources requires both plentiful resources of freshwater for all demands as well as the quality of the water must be safe and uncontaminated. This implicates a wider understanding of why water resources are not plentiful enough as well as why and from which resources it may be contaminated. For instance, if a plentiful freshwater resource is maintained by river water, the issue may be that this is contaminated from various polluting human activities, such
Fig. 1 OECD Environment Statistics: Water: Freshwater abstractions. (OECD 2020)
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as wastewater outlets, land erosion activities, water–air exchanges, for instance, acid rain, river–sea exchanges for salt contamination, and so on. Therefore, when discussing water quality in relation to water resources, other influences will be addressed. Today, sustainable management of water resources in society thus requires plentiful access to good quality water including eliminating the disparate resources dividing the availability of water among societies, and prevent the overexploitation of water, the pollution of water, and subsequently the degradation of associated aquatic ecosystems.
2
State of the Art
Many regions in the equatorial belt have suffered from water depletion and water scarcity for a very long time, especially in North Africa, the Middle East, South and Central Asia, North China, North America, and Australia. Access to pumped groundwater wells has since 1940s provided freshwater for many people, while the groundwater development for municipal, industrial, and agricultural supplies in 2000 has resulted in a global groundwater withdrawals of approximately 750– 800 km3/year (Shah et al. 2000; Scanlon et al. 2012). Good quality freshwater has increased the health of many people, but the flipside of this is that many groundwater reserves globally have been depleted, well yields have decreased, pumping costs have risen, water quality has deteriorated, aquatic ecosystems have been damaged, and land has irreversibly subsided (Konikow and Kendy 2005, p. 317). Groundwater depletion thus a natural consequence of withdrawing water from an aquifer. In good aquifers in regions, where rainwater is capable of infiltrating quickly into the groundwater aquifers, over time a new equilibrium has been reached, which sustains the aquifer for all external requirements. However, in fossil or compacting aquifers, where recharge is either unavailable or unable to refill it, depletion becomes permanent, and the further depletion is seen (Theis 1940; Konikow and Kendy 2005, p. 320). Public water abstraction from groundwater resources for household freshwater is a necessary consumption to maintain and enhance health among people and livestock living on Earth. However, the major impact on the groundwater depletion stems from indirect consumption used in the production of food, textiles, and other goods, which also represents human consumption eventually. Food production involves a large chain of water-consuming production sectors from agriculture to manufacturing facilities. Different water consumption key figures have been published recently to enhance the public awareness on how much water is used on a global average to produce (Table 1) goods (https://waterfootprint.org/en/ resources/interactive-tools/product-gallery/): Materials used for clothing, shoes, and accessories followed by food products like meat, dairy, and beverages score high, whereas vegetables beyond coffee beans, chocolate, etc. score lower in water consumption.
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Table 1 Water consumption for producing popular foods, drinks, and textile materials. (Source: Water Footprint Network Hoekstra and van Heek (2017). Below vector drawings are from www. pixabay.com – free of use, citation free) Illustration
Product Coffee
Liter per kilogram water used in production 18,900
Chocolate
17,196
Leather
17,093
Beef
15,415
Cotton
10,000
Tea
8860
Butter
5553
Chicken
4325
Egg
3300
Cheese
3178
Bread
1608
Beer
1420
Wine
870
Apple
822
Banana
790 (continued)
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Table 1 (continued) Illustration
Product Potato
Liter per kilogram water used in production 290
Tomato
214
Typically, it is luxury western lifestyle products such as coffee, chocolate, leather products, and meat, which have become everyday use in many rich countries, are very water-consuming in the process of making goods. Environmental assessments of vegan versus meat-eating diets have shown that all impacts regarded including the water footprint: a vegan diet has a less impact than a carnivorous diet. (https://www.azocleantech.com/article.aspx?ArticleID¼907) Regarding water footprint, a vegan diet requires up to 40% less than a carnivorous diet. Feed production, livestock breeding, fertilizer manufacture, farm operation, and the final food processing all require water before it ends on the table of the consumers. Approximately, 3,000 liters of water a day per person on average is used for a carnivorous western diet and cutting the meat from the diet could save half of that amount. (https://phys.org/news/2018-09-meat-free-diets-footprint-scientists. html) Health debates on vegan diets versus carnivorous is another discussion omitted here. Water resources used for food, production, and welfare differ from 1,500 to 10,000 liters of water a day per person depending on where you live. (https:// waterfootprint.org/en/water-footprint/personal-water-footprint/) Although water is a renewable resource, the availability and the regeneration of groundwater from depletion of water resources are diverse. This requires an understanding of how water is disposed and how it is cleaned afterward to enhance environmental health as well as the regeneration of new freshwater.
2.1
The Water Cycle
The water cycle consists of a natural planetary water exchange between the weather’s water release in the form of rain or snow, which runs or infiltrates into various natural water resources such as groundwater aquifers, rivers, dams, and the ocean (see Fig. 2). From these water resources, waterworks extract water, purify it if necessary, and distribute water to consumers. When consumers use water, they subsequently dispose wastewater, which is treated in wastewater treatment plants and finally disposed into a water body again. From the water body, steam evaporates into the weather systems again, and the water cycle begins anew. The critical step in the water cycle is the transformation from wastewater to water disposal. If all used water were cleaned to the same quality as the extracted water, the
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Fig. 2 The water cycle. (Illustration: Tankefuld)
cycle would theoretically be perfect. However, this is obviously not so. Wastewater treatment is expensive, and thus businesses and municipalities dispose various degrees of still polluted waters back into nature. Below are shown various issues related to the wastewater management, which ultimately has caused the unsustainable conditions, which many water bodies and aquifers are found in.
2.2
Wastewater Treatment
In most parts of the world, wastewater is treated centrally with the best available technologies, such as biologically as well as chemically. A high-technological wastewater treatment system consists of a sewer system, which transports
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Fig. 3 Combined sewer system. (Source: Teknologisk.dk. Drawing: Claus Riis)
wastewater from all buildings to local wastewater treatment plants. The system is only as robust as the design, it was created with (Fig. 3). Old combined sewer systems consist of a single pipeline system collecting both sewerage as well as rainwater to drain the surface. The old single-line system has several weaknesses, of which the major is its limitation to carry extended rainwater, which requires multiple intermediate overflow outlets to natural water bodies with combined sewerage and surface water, which has not been treated on a wastewater treatment plant, and thus pollutes the natural water bodies. (https://www3.epa.gov/ npdes/pubs/o&M.pdf) Newer separated sewer systems from the 1980s consist of twin-pipe systems with one line for sewerage and another for rain- and surface water. This double-line system is more robust toward overflow, and the separation of sewerage from rain- and surface water means, that the pollution of the water bodies in case of overflow outlets only happens with the rain- and surface water. The sewerage continues its transport to the wastewater treatment plant. Recent Millennial systems under the term Green Infrastructure such as bioretention facilities, such as rain gardens, gabions, green roofs, porous pavements, local dams, wadis, canals, etc., treat rainwater locally where it falls in order to reduce the risk of flooding as well as reducing the pollution from when rain meets the surface and becomes infected with pollutants present on the surface, such as roads, parking lots, etc. These local systems have become popular as a tool used in public service (De Sousa et al. 2012), because when private landowners manage rain fallen locally without burdening the sewer infrastructure, they can often receive public refunds of connection fees for the private rainwater main to use for the green investment (Fig. 4).
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Fig. 4 Separated sewer system. (Source: Teknologisk.dk. Drawing: Claus Riis)
The above three typical systems are of course very isolated seen in the entirety of a wastewater system, because most infrastructure is built on all three methods throughout times. Many cities and towns have a large amount of old single-line systems carrying combined sewerage and surface water in the same pipe system, whereas newer systems of double line have separated the two water streams, and a few areas have begun separating rainwater out of the pipeline system to treat it locally where it falls. This means that the three types of infrastructure are interwoven, and ultimately what many municipalities struggle with today is the continuous and enhanced combined overflow outlets, which with the climate changes resulting in more extreme weather and more stormwater has risen dramatically during the last few decades. It all comes down to taxpayers’ (voters’) and investors’ willingness to pay a higher price for a better wastewater infrastructure, which is a balance that is hard to strike in most societies. However, the combined system overflow outlets have meant throughout history that many groundwater aquifers are unavailable as a freshwater supply, because they are intensely polluted or drained, and surface water bodies are similarly affected with wastewater, which means that water taken from rivers, streams, and lakes must be chemically treated before it is suitable for drinking water quality in households and businesses ultimately. Furthermore, some industrial wastewater outlets to natural water bodies are still present although many governments have regulated and forbidden direct wastewater outlets with extremely polluting contents. Likewise, the draining from agricultural fields leads nutrient and fertilizer and pesticide pollutants into water streams and the groundwater aquifers, which too is unmonitored.
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Regarding protecting and mitigating the groundwater depletion as well as enhancing the sustainability of surface waters, wastewater treatment, reduction of combined overflow with sewerage pollution as well as reduction of industrial and agricultural outlets is crucial in protecting the environment as well as enhancing the water availability for all in terms of securing better freshwater resources.
2.3
Water Pollution
In this section, specific issues regarding water pollution are discussed, which contributes to the issues of water shortage in quantity as well as in quality. The issues covered are the before mentioned combined sewer overflow, infiltration of land use chemicals and nutrients from agricultural activities, and wastewater discharge from industrial sites.
2.3.1 Combined Sewer Overflow Combined sewer overflow (CSO) into natural water recipients is a result of rainwater run-offs into older single-pipe sewer systems from impervious surfaces on inhabited areas all over the world. CSO contains fecal particles such as suspended solids, nutrients with biochemical oxygen demand, oil and grease, floatables, toxic pollutants, pathogenic microorganisms, and other pollutants (https://www3.epa.gov/npdes/pubs/o&M.pdf) from sewerage, road surfaces and spill, rooftops biofilm, animal feces, and various chemicals used to clean and deice surfaces as well as water-bound pollutants absorbed into rain particles from the air, etc. (Schroeder et al. 2011). CSO is polluting water environments affecting living water species, cause oxygen depletion, and chemical and particulate build-up in the food-chain, but it is especially critical, when the water body is also used as freshwater resource, and thus freshwater deriving from surface waters such as rivers, lakes, etc. requires intensive purification with harsh chemicals before sending it to the taps (Jalliffier-Verne et al. 2015). With growing population, cities, wealth and welfare, more housing, infrastructure, and thus more solid surfaces combined with increased stormwater events, CSO has increased as well. The work initiated in societies for capturing, storing, and utilizing CSO to reduce flooding as well as water pollution has increasing accordingly. (https://link.springer.com/chapter/10.1007/978-3-030-11818-1_1) Before 1970s, most societies did not have wastewater treatment plants, and therefore all outlets from sewer systems was more or less discharged untreated to the water environment causing major pollution disasters with fish kill and death of other animals living in or by the waters (birds, seals, etc.) as a result. The invention of the biological and chemical wastewater treatment was thus a major leap in reducing the vast water pollution taking place globally (Tarr 1979). Since there is always a risk of a larger stormwater event than we have seen so far, no sewer system is (or cannot be) designed to capture and store all amounts of water run-offs from stormwater, outlet from the sewer system is necessary in order to
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prevent flooding and health issues related to the contact between citizens and sewerage. However, the risk of polluting the natural waters with CSO can be reduced severely, either by enhancing the sewer system with more and larger storage capacity, or to reduce the amount of rain- and surface-water run-off collected in it. The balance to strike is between costs and risks because sewer infrastructure is at large scale a high cost investment for societies (Schroeder et al. 2011). A continuing debate regarding either changing combined sewer systems into separate systems (one pipe for sewerage, another pipe or local infiltration for rain and surface water) or enhancing existing combined sewer systems with larger storage capacities, where as much combined sewerage is sent for treatment at the wastewater treatment plant, is going on. The benefit of separating combined sewer systems into separate systems is the minimization of sewerage pollution from CSO. However, there are also polluting elements in surface water, and the direct outlet of surface water will be more frequent over the year, which means more accumulated pollutants over time will be discharged into the recipient waters. Furthermore, separating surface-water from sewerage not only requires public investments in the main pipeline systems; households and businesses will also need to invest in separating private mains, which is expensive for them as well. (As a guideline or a rough estimate collected from the know-how of Danish public wastewater service officers working with sewer infrastructure, separating a single pipeline into a double pipeline system on a private one-family housing lot costs minimum 3 months net salaries (after taxes) in Denmark, which means that private households often need to take additional mortgage loans to complete such task.) Another solution, which has become more popular since the Millennium, is managing rainwater locally, where it falls, infiltrating, or leading as much as possible into green private and public areas and further on into natural water bodies and groundwater aquifers. The emerging literature on green solutions for rainwater management is growing worldwide; however, with extreme rainwater events – either stormwater or prolonged rain seasons – these solutions have its limitations as well (see Lauesen 2019). Furthermore, with a rising sea level, groundwater levels follow, and the risk of preventing infiltration of rainwater into the ground is therefore obvious in many areas. Thus, the right solution to plan sewer infrastructure and minimize CSO is complex. The combination of enhancing existing combined sewer systems and separating sewerage from rain and surface water is going on in multiple societies to minimize polluting water resources and mitigate flooding. The environmental benefits are often politically weighed against the costs, which dampens the initiatives for sustainable solutions in times of less risk of flooding; however, when a city or a municipality repeatedly has faced flooding with combined sewerage, the willingness to invest – both publicly and privately – is seen higher. There is among wastewater professionals a saying called “grantmaking rain,” meaning when rain catastrophes causing flooding are severe or frequent enough affecting many people and house and landowners, the political willingness for public investment in sewer infrastructure increases dramatically to make necessary wastewater management more sustainable.
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2.3.2 Infiltration of Chemicals and Nutrients Another source of water pollution stems from the agricultural field treatment with nutrients, pesticides, herbicides, and other harvest-promoting chemicals. These treatments in conventionally driven fields and woods leave residues to infiltrate into local water streams and the groundwater as an un-monitored impact on water resources. The impact of nutrients residue discharges to water environments enhances unwanted growth of algae as well consumes oxygen as a natural chemical reaction leading to oxygen depletion, which ultimately affects all living species in the waters affected the same way as mentioned above regarding CSO. A recently discovered environmental impact, though, is detected in many places in the groundwater, which is used in many countries as the main freshwater resource. (DMS is, for instance, found in almost a third of all groundwater wells in Denmark in March 2019 according to a national widened test for new pesticides, herbicides, fungicides, etc. https://www.dr.dk/nyheder/indland/svampemiddel-fundet-i-hvertredje-drikkevandsboring-det-er-den-vaerste-forurening-af) Centuries of use of pesticides, herbicides, fungicides, and other agricultural harvest-promoting chemicals have left a huge variety of decomposition products found in alarming amounts beyond the internationally approved limits in the groundwater aquifers. For instance, the degradation product desphenyl-chloridazon (DPC) derived from the herbicide n-chloridazon (n-CLZ) and dimethylsulfamide (DMS) derived from the fungicide Tolylfluanide, among thousands of other transformation products, have recently closed many groundwater wells in Europe and elsewhere (Kiefer et al. 2019; Lauesen and Bjerre 2020). Tests with advanced water treatment such as ozone or hydrogen peroxide treatment to further decompose the pollutants is taking place as part of research as well as in practice on waterworks, because some water companies have faced severe challenges in meeting freshwater demands after closing vital pumping wells due to pollution from agricultural residues (Kaarsholm 2019, forthcoming 2020). Comparable tests with these advanced techniques have correspondingly shown that ozone treatment of, for instance, DMS leaves a degradation product that unfortunately is even more harmful than DMS itself. It is the carcinogen N-Nitrosodimetylamine (NDMA), which is a byproduct created when oxidizing DMS with ozone, when bromide is present in the groundwater (https://www.who. int/water_sanitation_health/dwq/chemicals/ndmasummary_2ndadd.pdf) (ref). NDMA can be removed by UV irradiation below 0.005 μg/l given the water is not severely contaminated. NDMA is not removable by air stripping, activated carbon adsorption, reverse osmosis, or biodegradation according to the World Health Organization (WHO). However, newer studies indicate that activated carbon adsorption may play a vital role in polishing the results from other advanced water treatment techniques. Oxidization with hydrogen peroxide does in some tests do not create NDMA as a pollutant. However, it will need prepurification for iron and manganese in order not to react with these natural components, and requires further and very costly UV-treatment, because the biofilm is exposed when oxidized, which means that certain nutrients will blossom as another unwanted byproduct.
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A third variant is treating groundwater with chlorine; however, this method is more expensive compared with ozone or hydrogen peroxide (Krüger A/S 2019). The cost of such advanced water treatment adds exceptionally costs to the water production, up to doubling the basic costs per cubic meter calculated in a local waterworks in Svendborg, Denmark (Sølling et al. 2019).
2.3.3 Industrial Wastewater Discharge The UN estimates 80% of the global wastewater flows is discharged directly into the ecosystems without being reused or treated. (https://www.unwater.org/water-facts/ quality-and-wastewater/) This contributes to the 1.8 billion people use a feces and chemically contaminated drinking water source risking of contracting cholera, dysentery, typhoid, and polio. Although many societies have incorporated industrial wastewater into the public wastewater treatment system, industrial wastewater discharges still serve a major pollution source for natural water resources. Manufacturing is the greatest generator of wastewater among the main industrial sectors (including mining and quarrying, the production and distribution of electricity and construction). Only a proportion of wastewater is treated before being discharged from most of these sectors. The industrial wastewater contains a broad spectrum of pollutants, for which there are treatment technologies available. However, the cost of treating industrial wastewater prevents many industries from investing in them, although they are very cost-effective concerning the potential for reusing water. In low-cost production areas in highly populated regions of Asia serving most of the Western World’s consumption needs regarding manufacture, electronics, etc., the industrial wastewater discharge has given room for various pollution disasters, which affects the millions of inhabitants and farmers living on basis of river water for human and livestock water consumption (e.g., Mohanakavitha et al. 2019). The mining industry is often situated in or near diverse and sensitive environments, and the mining operations generate wastewater discharges, which affect surface and groundwater quality and thus drinking water supplies. Even abandoned mines can cause extensive losses of aquatic and terrestrial habitat. Mining has according to the US Environmental Protection Agency, for instance, impacted thousands of miles of streams and rivers throughout the western USA due to active and historic mining of metallic ores (e.g., iron, copper, lead, zinc, molybdenum, tungsten) and precious metals (gold, platinum, and silver). (https://www.epa.gov/ npdes/industrial-wastewater) The extent of industrial wastewater generation, however, is largely unknown. Globally, data and information concerning the volume of wastewater produced by industry are very deficient, the UN Industrial Development Organization says. (https://www.unido.org/news/wastewater-and-industry-world-water-developmentreport) In the European Union, for example, limited data show that wastewater generation has generally decreased. In China, a study by Ma et al. (2020) shows that from 2004 to 2015, first an incline in wastewater discharges was observed, and toward the end of the study, a decline has been observed mainly because the
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government has had focus on regulating wastewater discharges in order to enhance the environmental condition in rivers such as the Yangtze river, etc. In nations where scarce water resources threaten the livelihood of many inhabitants, industrial wastewater treatment is a focus that needs to be taken more seriously to improve water resource management for the sustainability of all living species. Thinking of wastewater as a vital part of the entire water circle and a resource for creating more freshwater availability and accessibility has a large potential to solve both environmental issues as well as life-supporting issues concerning reducing water scarcity.
2.4
Waste as Water-Polluter: An Overlooked Issue
When discussing water pollution, the obvious thing is to concentrate on improper wastewater management, however, waste management also affects many water resources negatively, and must be taken into consideration as well. In 2016, 2.1 billion tons of waste was generated estimated globally, of which approximately 33% is not handled environmentally safe (Kaza et al. 2018, p. 3). Waste has historically been stored as landfill, and although many nations have shifted from landfilling to incineration and recycling waste, still one-third of the generated waste ends as landfill and in the sea. Waste landfill produces toxic percolate (leachate) when rain dissolves the multiple surfaces and interacts with liquids in the waste and infiltrates into the groundwater (Poulsen and Møldrup 2005). The percolate from landfill consists of a concentrate of organic and nonorganic components including organic matter, phenols, ammonia nitrogen, phosphate, heavy metals, and sulfide (Kamaruddin et al. 2015, p. 113). Waste mountains are seen in many states, and the percolate from these have meant that freshwater abstraction from groundwater is not an option. In recent decades, many states with smaller amounts of waste landfill have changed from open landfill to closed. Open waste landfill is when percolate is not prohibited from infiltrating the ground, and closed waste landfill is when solid geo-textiles are closing the landfill, and drainage systems collects the percolate for treatment in a specialized wastewater treatment plant. However, the massive open waste landfills as high as small mountains in Asia, the Middle East, Eastern Europe, South America, and Africa are so large that it seems inevitable that percolate is producing a major issue concerning pollution the groundwater and other natural water bodies near them. Many nations in the above areas are changing into closed landfills in newer dumping sites and where possible in old sites. Although the USA, Canada, and most of Europe have changed into waste incineration and closed landfill sites, they too have a major part in exporting waste to these very nations with massive waste landfills, and thus they too are responsible for the problem as well (Kaza et al. 2018). Newer studies have suggested percolate management by clean soil coating and tree planting on top of old landfills to recover them and reduce percolate generation (e.g., Poulsen & Møldrup 2005; Kamaruddin et al. 2015; Qualls and Haines 1991; Hongve et al. 2000).
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Global Issues Concerning Water Resource Management
Different responses for mitigating water-resource depletion has been executed by societies such as locating and developing new supplies, augmenting supplies, conserving the groundwater, and reallocating existing supplies to other sites (Molle 2003). Augmenting supplies stands for both improving water quality or increasing water quantity. Improving the water quality is often done by water treatment, whereas quantity augmenting is mostly done by decreasing discharge or increasing recharge, for instance, with rainwater or treated municipal wastewater. Furthermore, decreasing the use of pesticides and nutrients in agriculture as well as reducing combined sewer overflow and industrial discharges is also a feature involved in augmenting the freshwater supplies eventually. Conserving groundwater can be done by various means: • Reducing pumping can be accomplished through administrative, legislative, or management controls, including economic incentives to reduce demand to save water. Lining irrigation canals to reduce seepage in agricultural areas, unless they are part of the natural feedstock for the underlying aquifer from the beginning. • Land-use change, for instance, redirecting area use from farmland to woodlands or likewise conservation of former cultivated lands also protects the groundwater aquifers, because woodland and other use of natural areas are not cultivated as water intensely and thus does require further irrigation than natural rain. Reallocating water such as selling water, exporting water on the water markets, leasing, trading, and other such trading mechanisms can move limited water from lower to higher productivity sectors, as an alternative to further depletion when executed carefully and sustainably for both the “selling” and “buying” aquifers (Konikow and Kendy 2005, p. 320). A widely recognized model (e.g., the Rio de Janeiro and Dublin conferences) to accommodate the human and businesses’ needs for plentiful of high-quality water is known as Integrated Water Resources Management (IWRM)), which is a process of coordinating and developing the management of water, land use, and related resources in order to maximize the economic and social well-being outcomes in an equitable manner without compromising the environment and the sustainability of vital ecosystems (Durán-Sánchez et al. 2018, p. 1191). The triple objective – to maximize economic outcomes, social well-being without compromising the sustainability of vital ecosystems – however have conflicting goals, since the economic and social optimums require the depletion of the vital ecosystems, which water resources are a part of. Balancing water resource sustainability in times of irreversible damages facing global societies from the climate changes, brings the competition further ahead among the three goals.
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Sustainable water resource management to fully contribute to the objectives of society, now and in the future, while maintaining their ecological, environmental, and hydrological integrity, which to some extent is voluntarily documented in sustainability indexes has largely been ignored or criticized by as well businesses, researchers, and authorities and in contemporary IWRM-systems (Loucks 2000; Oxley et al. 2016; Durán-Sánchez et al. 2018). Although several attempts to standardize and monitoring and reporting the sustainability effects of IWRM systems and actions have been made, critique has also followed. IWRM is a means to set and obtain goals with regard to transparency for operators as well as publicly in terms of documenting to which degree a certain operation is Often, in the zeal to document a system to be sustainable, ambitious goals, and key performance indexes, and monitoring attempts have been set; however, when it comes to real-life measurements, results, implementation in practice, etc., the goals have often not been met (Petit 2016). The major problems with IWRM concerns the accessibility, reliability, and comparability of data across IWRM systems and concepts. Data is often incomplete or defined in larger or smaller scales than the basins and aquifers relevant, and in the case of trans-border water resources, national and international cooperation for data exchange shows great shortcomings. Reliable benchmarking is often carried out nationally regarding IWRM, and although some data is exchanged internationally through intergovernmental agreed statistical indicators, these data are often comprised of different underlying measurements, which ends up in a few overall indicators in large groups, where the results are hard to dissect into concrete changes needed to make in practice locally. An example on environmentally useful and comparable data, which is used intergovernmental and reliably, are national statistics comprised into comparable groups of data, which can be analyzed in various softwares, for instance, Life Cycle Assessment (LCA) systems. Apart from multiple different databases available in most LCA programs, a relatively new database – ExioBase – has been developed based on international statistics collected by all OECD countries and interwoven in a way, so import and export as well as origin of production processes are comparable. However, since national statistics too are measured differently, the comparable data are assembled sectorially. This means, although water resources are interwoven locally, nationally, and sometimes internationally, the database of ExioBase is forced to operate on very large-scale measurements. Regarding water resources, ExioBase has one overall category freshwater collection and distribution; two categories for wastewater treatment – food and industrial, respectively; and one for biogas production from sewage sludge including landfill. These very broad categories cover all activities, products, consumption, etc. with in- and outgoing streams nationally as well as internationally. It means that all activities and products are connected globally, so, for instance, when a wastewater treatment plant uses electricity, its origin is from many countries besides electricity production in the specific country in question. And so forth: all
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consumption involves import and export, which is a very precise way of measuring through national statistics, but very coarse resolution concerning categorization, because every country, every municipality, every local site may run things differently. IWRM is a system which involves a holistic approach to manage (especially fresh) water resources compatibly with sustainable development issues. In other words, IWRM is not documenting water management as usual (Petit 2016, p. 59). Since its inception in the 1990s, IWRM has developed into a complex system encountering the entire water cycle about its impact on the freshwater resources on both short- and long-term scales. It emphasizes the involvement of both users and decision-makers at all levels and all stakeholders involved. As the ambitious concept unfolds, the critique becomes more obvious: how is it possible for a single water management framework to be universally useful across different physical, economic, social, cultural, and legal conditions, has been asked (Medema et al. 2008). Furthermore, universal indicators to fulfill the aim of IWRM systems in relation to sustainable development has also shown its shortcomings. There is a vast variety of water scarcity indicators as well as indexes used in different IWRM systems. Even indicators used nationally can exclude vital data locally as well as trans-boundary. Some indexes have been critiqued for being too complex to understand, and the mere use of such indexes and indicators is not politically neutral. There is a geopolitical signal in using on or another indicator or index, for instance, in justifying certain investments over others (Petit 2016, p. 59). That could be competing for international funds for advanced water treatment systems by over-exaggerating water shortage issues as well as the opposite to hide neglects of necessary investments nationally or locally. The overall goal for IWRM systems was to connect indicators with the United Nations’ Millennium Development Goals, although other organizations have suggested more and/or other indicators. However, the hardest critique of the IWRM systems is the indicators and their lack of effect in practice, lack of transferability between nations, and lack of quantification (Petit 2016, p. 60). In the next, the OECD Water Governance Indicator Framework is discussed.
3.1
OECD Water Governance Indicator Framework
The OECD Water Governance Indicator Framework (WGIF) is a tool supporting the implementation of the OECD Principles on Water Governance, adopted by the OECD Regional Development Committee in 2015 (OECD 2018a, n.p. see “About”). The WGIF is a voluntary assessment tool for OECD nations to adhere to with regard to its self-reporting on its water governance policy frameworks (what), institutions (who), and instruments (how), and their improvements over time across governance scales (local, basin, national, etc.) and water functions (water resources management, water services provisioning, and water disaster risk reduction). It has a multistakeholder approach rather than a reporting, monitoring, or benchmarking perspective, and its primary objective is to give a transparent display for all
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Fig. 5 OECD Principles on Water Governance (OECD 2018a, p. 5)
stakeholders on the state of the water resources and which methods, tools, practices, etc. that does or does not work (Fig. 5). The WGIF as a framework is structured as most OECD policies – to enhance efficiency, effectiveness, and trust in the public sector’s engagement as the main governance goals. Since most data is noncomparable across boundaries, as discussed previously, the more than 100 questions asked are being evaluated by each national member through a Traffic Light System of 36 indicators. Finally, an action plan, where nations describe how they work with water resource management concludes the WGIF. Respondents shall choose the color corresponding to the level of implementation in which the assessment is carried out as shown in Fig. 6. Respondents shall then identify the expected trend over the coming 3 years in terms of improvements, decreases, or stable situations, compared to the assessment related to baseline scenario as shown in Fig. 7.
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Fig. 6 OECD water governance indicator framework, traffic light baseline for respondents (OECD 2018a, p. 8)
Fig. 7 OECD water governance indicator framework, expected progress (OECD 2018a, p. 8)
Fig. 8 OECD water governance indicator framework, results of stakeholder consultation (OECD 2018a, p. 8)
Finally, respondents are requested to signal the level of consensus among stakeholders using a water drop signature to evaluate it as shown in Fig. 8. The first results gathered in 2018 based on 170 stakeholders from various OECD member countries, confirmed the above-mentioned critique of self-assessment concerning WGIF-evaluation: The results consist of a high number of eclectic case stories related to individual member states’ responses, which are as different as assumed, however indicates a high level of transparency and trustworthiness, although incomparable. What the survey concluded, however, is that 80% of the respondents used the principles for a multistakeholder dialogue, to assess their water governance performances, to guide reform processes and practices, to build capacities, and develop research (OECD 2018b, p. 17). The indicators were used to make road for sharing knowledge (from the case stories) and to enhance awareness on individual member state level on which ideas can be used to make progress in improving the state-of-the-art of the national and local water resources.
3.2
Conflict over Water
Despite the former, unfortunately, conflicts over water exits in many places in the World. Especially, where rivers and/or groundwater aquifers run through more countries. Geopolitical issues, such as discrimination and prohibition of access to water, causes conflicts between, for instance, the USA and Mexico (the Colorado River); Israel and Jordan, Lebanon, and the State of Palestine (the Jordan River); Egypt, Ethiopia, and Sudan (the Nile River); and Kazakhstan, Uzbekistan, Turkmenistan, Tajikistan, and Kyrgyzstan (the Aral Sea) (Kameri-Mbote 2007). Where water conflicts between nations enhance other geopolitical conflicts, on a smaller-scale, water conflicts also occur between regions, municipalities, and even
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neighbors in small communities. Let alone surface water running onshore, flooding, and damaging private and public properties. Upstream water issues often empower upstream rulers, whether it is the first, who dams a river for water harvesting, or the one who lives on the highest spot, from whose area a flood from a rainstorm runs down and harms downstream citizens. The challenge of securing safe and plentiful water for all is one of the most daunting challenges faced by the world today. . . Too often, where we need water, we find guns. Population growth will make the problem worse. So will climate change. As the global economy grows, so will its thirst. Many more conflicts lie just over the horizon. (Ban Ki-Moon, United Nation’s General Secretary, 2008, January 24. https://www.un.org/sg/en/ content/sg/speeches/2008-01-24/address-prepared-delivery-davos-world-economicforum)
3.3
Environmental and Social Damages from Overexploitation
Besides social conflicts over water, environmental and social damages from overexploitation of water resources are found, especially in the developing countries. Most producing multinational companies manufacture goods or mine or harvest resources in Asia, Africa, and South America, which consumes so much water that populations suffer from water shortage. For instance, cotton growing in Uzbekistan, where water consumption has created droughts and desert-like conditions in the area, and textile production in India and Bangladesh as well as beverage production harvest so much water that people cannot find water for their daily living (Menon 2016). Similarly, in drought-plagued California, where the almonds and grapes for wine-making is highly represented, farmers have a right over citizens to use water prioritized for production (Langridge and Ansell 2018). Even rivers have run dry because of over-exploitation of water consumption for agriculture in the equatorial area (Pearce 2018).
3.4
Running Out of Water: Desalination?
Coastal nations have tried to solve the problem of water shortage with desalination plants to convert salt water from the sea to freshwater, however with a huge cost. Where desalination plants were new and represented a tremendous hope in solving water shortage in many nations, these plants have shown their shortages as well. Where the results are good – it is possible to convert salt water into freshwater with reverse osmosis; however, it comes with a huge cost – economically as well as environmentally. The plants and the method are very effective, and salt water is plentiful. These are the major benefits. However, to do the conversion (reverse osmosis) requires a large consumption of energy, the plants are expensive to build, the brine from the salt removed harms the environment, and the CO2-footprint is massive (Abdelkareem et al. 2018).
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However, when the pros and cons are weighed against each other, desalination makes sense in areas highly suffering from water shortage despite the environmental costs, which in the future hopefully may be solved, both for economic, social, and environmental reasons. Businesses as well as nations have an economic interest in reducing energy costs, which subsequently reduces the CO2-footprint, and the brine issue will be of society’s interest to regulate, because the pollution both harms the nature including other freshwater resources nearby, and thus society in general.
4
Sustainable Water Resource Management
During the 1960s, the environmental scientist with a PhD in medicine, James Ephraim Lovelock (1919-) proposed the GAIA-hypothesis suggesting that life on Earth is a complex interacting system that can be thought of as a single organism, which adapts to changes in order to sustain life (Lovelock 1972; Lovelock and Margulis 1974). Later in 2006, Lovelock refined his theory stating that human activity in reducing planetary biodiversity, disposing nonreversible waste (e.g., nuclear), and emitting greenhouse gasses uncontrollably to the atmosphere eliminates the Planets capability to retain life sustainably (Lovelock 2006). From this perspective, Lovelock recommended a concept, he calls sustainable retreat, realizing that the state of the Planet has become irreversible with respect to some processes (e.g., the climate changes) that we cannot control, and the solution is to lower the human resource use and substitute depleted resources with less environmentally harmful types of resources. Lovelock asks: “Is there nothing, we can do to bring back the lush and comfortable Earth of a few hundred years ago? Probably not in times measured on a human scale” (Lovelock 2010, p. 22). He suggests, however, some courses of action as part of a planned program for survival as a civilized animal on a changed and hotter planet: • Adapt to a changing climate with rising sea levels, intense storms, and droughts • Prepare for climate refugees and assemble ourselves in oases with freshwater resources, raw materials, and food supply • Reduce the radiation input from the sun through geoengineering inventions to shield the Earth • Synthesize food and energy sources from other than fossil origins • Restrain our overuse of natural resources Lovelock’s main explanation for the cause of the misery of the Planet is the overpopulation. Had we been one billion instead of seven billion people on Earth, the situation would have been better, and the sustainability of the Planet more foreseeable, Lovelock explains. Sustainable retreat may be a way to escape the locked-in situation, also regarding the unequal distribution of goods and resources – simply to reduce our consumption to the most necessary and share from the “oases” that exists.
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Concerning water resources, a sustainable retreat approach would not mean reducing our basic need for fresh and high-quality drinking water, which is necessary for the upkeeping of life itself, but to reduce our indirect water use, which to a large extend is unnecessary, and reuse wastewater resources and treat it, so what is returned has the same quality as what was retrieved.
5
Summary
It is not necessary for us to maintain a modern Western World lifestyle characterized by a predominantly carnivorous diet, high consumption of fast and luxurious fashion, accessories and electronics, long-distance traveling, etc., but instead live more self-sufficient consuming locally grown vegetarian food, drop the use-andthrow-away culture and reuse, upcycle, repair, and, in general, surround ourselves with less property and goods, and reduce high-energy consuming activities, which demands airfreight such as long-distance traveling and mail-ordering etc. The sustainable retreat strategy on reducing water demands, treating wastewater sustainably, and think of water resources as a holistic system, where every drop of water is part of an entire water cycle, which should be protected sustainably, seems not pessimistic but adequate as a realization of the human activity has reached the point of no return, which Lovelock indirectly states. We cannot roll the time hundreds of years back to a world full of plenty undamaged resources; however, we can adapt to the world, humans have created, and with ingenuity and carefulness reduce our consumption to a necessary need instead of a luxury need, which – ultimately – will have a less negative effect on the water resources and its availability for people and living species on Earth. As a famous, controversial, and oftentimes media-ridiculed Danish climate researcher, Bjørn Lomborg said to the journalist from Politiken in November 2018 regarding the best way for individuals, who wants to contribute to mitigating the global warming crisis and cut their CO2 footprint is to “become poor” (Lomborg 2018, p. 4). With that response, Lomborg referred to poor people having almost nothing, impact the environment the least. Ironically, few understood the sarcasm because the devil was in the detail. The point, Lomborg tried to pursue was similar to Lovelock’s: to solve global environmental issues with global action and technological inventions for a greener and more sustainable consumption. Regarding making global water resources sustainable, the scale of the water crisis is too large for individuals to have enough effect on alone in reducing their direct as well as indirect water consumption. If we shall avoid the climate refugees in the future, which Lovelock talks about, solutions need to be scaled accordingly. Nations need their governments to introduce a much harder regulation on wastewater management and industrial and agricultural freshwater consumption, because the lack of technology is not an issue regarding water protection nor water treatment the same way as with green energy. The willingness to implement water regulation and the costs it requires is the biggest obstacle for water resources to become sustainable.
Water Resources
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Cross-References
▶ Geopolitics of Natural Resources ▶ Resource Depletion ▶ Sustainable Plastic and Corporate Social Responsibility
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The Emergence and Role of Nongovernmental Organizations Historical Review of the NGO Sector in the United States, Great Britain, and Japan Lowell J. Gretebeck
Contents 1 2 3 4 5
Introduction: Emergence of the International NGO Sector . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Definition and Typology of International NGOs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Ideological Foundation of Charity and Philanthropy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . External and Internal Determinants of NGO Sector Growth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Country Report: Defining the NGO Sector in the USA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.1 US Government–NGO Relations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.2 Scope of the US NGO Sector . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.3 US NGO Financial Environment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.4 US NGO Umbrella Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Country Report: Defining the NGO Sector in the UK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.1 UK Government: NGO Relations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.2 Scope of the UK NGO Sector . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.3 UK NGO Financial Environment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.4 UK NGOs in the European Union Context . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.5 UK NGO Umbrella Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Country Report: Defining the NGO Sector in Japan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.1 Japan Government–NGO Relations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.2 Scope of the Japan NGO Sector . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.3 Japan NGO Financial Environment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.4 Japan NGO Umbrella Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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Abstract
Nongovernmental organizations or NGOs were recognized at the turn of the century as a “third sector” to work together with the private and public sectors to “fill the gap” in helping people in need. Since the end of World War II, in particular, we have witnessed the most dramatic increase in international NGOs, with over 4,000 organizations now engaged in a broad range of overseas relief L. J. Gretebeck (*) Kyoritsu University, Tokyo, Japan © The Author(s), under exclusive license to Springer Nature Switzerland AG 2021 D. Crowther, S. Seifi (eds.), The Palgrave Handbook of Corporate Social Responsibility, https://doi.org/10.1007/978-3-030-42465-7_92
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and development activities. The global NGO sector is now equal to the eighth largest economy in the world, with annual spending of more than $500 billion dollars, which is comparable to the annual budget of the World Bank. These nonprofit entities employ 19 million workers, and engage thousands of volunteers to serve both domestically and abroad. Governments worldwide now recognize NGOs as important “partners in sustainable development” and have come to depend on these organizations to implement projects due to a favorable track record in reaching the “poorest of the poor” at the grassroots level. Extensive research has concluded that NGOs have a comparative advantage over government assistance programs which are often viewed as bureaucratically inefficient and limited in poverty reach. This chapter provides an historical review of the emergence and role of the international NGO sector, followed by three country reports (the USA, the UK, and Japan) that examine the context of the NGO sector in each country. Keywords
Nongovernment organizations · Charity · Philanthropy
1
Introduction: Emergence of the International NGO Sector
The definition of the word “poor” has significantly different meanings, depending on the place of an individual’s birth and historical background. Growing up in the USA, “poor” could mean not buying a new house, or perhaps having to postpone a summer vacation. In sharp contrast, being “poor” in parts of Africa or South Asia means something completely different: for millions of people, poor means a reduced life expectancy, deficiency in caloric and food intake, poor sanitation and lack of safe drinking water, lack of access to land due to caste discrimination, the frequent loss of newborns, inability to read and write, and low school attendance. White (1991) elucidates the life of the poor in the following words: They live in makeshift single roomed houses; they have few and poor quality clothes; they have little in the house but a few cooking pots and dishes; they may have no bed but sleep on bamboo mats; they have at best a few ducks and chickens, sheep or goats; they eat at most twice a day and may go without food all day at the lean times of the year. . . the poor quality of their diet means that they commonly suffer from illnesses (White 1991, p. 5).
It is estimated that over one-half of the world population still live in the grips of poverty – as defined as those who live on less than five dollars and fifty cents a day (World Bank 2020). What these numbers do not tell is the fact that poverty disproportionately affects children and women. UNESCO (2020) estimates that 264 million school-age children are deprived of education. Furthermore, WHO (2020) reports that 6.2 million children under the age of 15 die each year from preventable diseases, which could be treated with simple interventions such as
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immunizations, adequate nutrition, clean drinking water, and appropriate health care. Of this number, 5.2 million deaths occurred during the first 5 years of life. Millions of other children remain on the streets, subject to a life of crime, prostitution, and illiteracy. Clearly, in this age of Internet, Twitter, and CNN news, the disparities between the rich and the poor have become even more visible. In response to the poverty crisis, millions of people throughout the developed world have come together to ask the question, “How can individual citizens make a difference in eliminating or alleviating poverty in our world?.” This fundamental question on the part of men and women from Wall Street to Ginza has served as the catalyst in the establishment of citizen-based groups, commonly known as nongovernmental organizations or NGOs. Tens of thousands of international NGOs have now emerged as actors in the fight against poverty.
2
Definition and Typology of International NGOs
Let us begin by clarifying that the term NPO most often refers to organizations that operate domestically within a given country, whereas NGO/INGO is commonly used to describe a nonprofit organization that is headquartered in a developed country – such as the USA – but is focused on program delivery in developing countries. The concept of an international nongovernmental organization is not new. In fact, a type of NGO existed in prehistoric communities thousands of years ago (Smillie 1996). The more recent use of the term NGO as we know it today came into existence in the late twentieth century, and was officially sanctioned by the United Nations in 1950. However, it should be noted that some of the well-established Northern NGOs have origins that go back before the term NGO came into use. For example, Save the Children Fund was founded after World War I in 1919 by Eglantyne Jebb. Also, Oxfam began work in 1942 to provide famine relief to victims of the Greek Civil War. Similarly, Care USA dates back to 1946 when its main program included sending food packages to war-torn Europe (Smillie 1996). The term NGO is used to cover a wide range of organizations. NGOs are also diverse in program activities, ranging from child welfare to agriculture development to microfinance. As such, there is much confusion about the real operational definition of an NGO; this confusion is compounded by the fact that many other words are used interchangeably with NGO. Scholar Najam (cited in Fisher 1997) lists 48 different acronyms used for NGOs. However, NGOs are most commonly referred to as the “third” or “voluntary” sector. NGOs are also defined as “voluntary organizations,” meaning that citizens contribute their time, money, and resources to support the organization (Korten 1990). The current literature provides numerous typologies and a means of categorization. The most common categories include developmental, environmental, relief, and consulting (Edwards and Hulme 1996; Korten 1990; Riddle and Robinson 1995; Ronalds 2012). Carroll (1992) takes this definition one step further and categorizes an NGO by purpose and primary activity undertaken. Purpose categories include charity, relief, development, political action, and advocacy. On the other hand,
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activity categories include social, education, research, lobbying, and networking. Similarly, Clark (1991) puts NGOs into six categories based on the types of activities: relief and welfare agencies; technical innovation organizations; public service contractors; popular development organizations; and advocacy groups or networks. As another example, Salamon and Anheir (1997) propose an operational definition for the nonprofit sector, based on five characteristics: formal; private; separate from the government; nonprofit distributing; self-governing; and voluntary. One well-known NGO typology was proposed by Korten (1987); this scholar categorizes all nongovernmental organizations at a particular organizational stage or life cycle. Although several researchers have used the metaphor of the human life cycle to describe organizations, Korten was the first to propose an international NGO (INGO) model of evolution. The Korten model suggests that NGOs move through a three-stage sequence of organizational development. The first stage was that of providing emergency relief, such as food, health care, and housing. The work of the international NGO during this initial phase focused on symptoms of poverty, but did not usually address the root causes of human poverty. During this stage, overseas beneficiaries directly received both material and financial support. Clearly, project content was narrowly defined as providing humanitarian assistance to marginalized populations. Related NGO’s level and term of support were contingent upon funding and staffing. In short, logistics management – including the shipment of in-kind contributions – was considered the key management function of the northern organizations. Furthermore, the level of support to beneficiaries was contingent upon the capacity of the NGO to raise funds and administratively monitor disbursements. The seeds for this first phase were planted as early as 1647 when Irish protestants sent food and medical supplies to help the early settlers who were impacted by conflict with American Indians. Moreover, British charities – during the sixteenth and seventeenth centuries – funded the activities of early missionaries who worked to educate Indians and African Americans. This stage saw the establishment of some of the largest NGOs that were able to mobilize funding to help people in need. The earliest international NGOs founded during this first generation included the American Red Cross in 1881, followed by Catholic Charites in 1910, and Save the Children, UK, in 1919. Then, during and following World War II, many US and European organizations began work to help people who were displaced by the war in Europe and Asia. World Jewish Relief began operating in 1939, followed by Lutheran Immigration and Refugee Services in 1939, and UMCOR in 1940. According to the Korten model, the second generation of NGO life involved a transition from emergency relief to helping people become more self-sufficient. The underlying rationale for this change is that poverty alleviation and long-term, sustainable development would require that people at the grassroots level develop knowledge and skills to provide for their long-term needs. With this objective in mind, NGOs focused on activities such as preventative primary health care, improved agriculture production, and clean water provision. Northern organizations played an essential funding, planning, and training; however, project initiatives would be sustained through the efforts of the beneficiary local community. One of
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the first scholars who influenced this shift in thinking was John Sommer, author of Beyond Charity, in 1977. This approach is often described as “empowerment” of the people to help themselves. He cautioned that international NGOs must work to develop healthy partnerships with community-based organizations and individuals that do not promote dependent relationships (Sommer 1977). The third and final stage of NGO organizational development, according to Korten, is when the NGO works beyond the grassroots community to seek changes at the institutional and policy level. Specifically, NGOs at this level work to collaborate and establish linkages with the business sector, educational institutions, and governments to alleviate poverty. In making this shift, people recognize that authoritative and corrupt policies in beneficiary countries serve as obstacles to sustainable development. As such, international NGOs then accept responsibility to work in close coordination with domestic institutions to provide technical assistance and to promote local control, thus lending support to long-term sustainability. Although Korten identified this “third generation” as a type of linear evolution, most INGOS today tend to offer programs which blend second- and third-generation programs (Campfens 1996; Korten 1990).
3
Ideological Foundation of Charity and Philanthropy
The historical development of the NGO sector can be traced back to two distinct ideologies. The first ideology is that of Greco-Roman heritage in which care for the community and individual social responsibility is highly valued. This heritage is based on the premise that the social problems facing a community can be solved through collective community action. The second ideology contributing to the growth of the NGO sector emphasizes the Judeo-Christian belief that one’s faith relationship with God influences decisions to compassionately help people in need. Thereafter, out of these two ideologies emerged two types of nonprofit philosophy – philanthropy and charity. Philanthropy centers on that of donating a part of one’s well-earned financial resources for the common betterment of human livelihood. Here, the emphasis is on the individual’s responsibility to the community in which he or she lives. Charity, on the other hand, is based on acts of compassion to help others; it is best defined as one’s moral obligation to help those who are less fortunate. The literature further confirms that the well-developed NGO sector in the USA was the direct result of citizens banding together for a common good since the colonial period. At that time, people opposed a strong central government, and favored state rights and individual citizen involvement through charity to solve social problems.
4
External and Internal Determinants of NGO Sector Growth
The literature presents a clear distinction between external and internal determinants of NGO organizational development. First, one of the most significant academic writings, which addresse the external factors that have contributed to the growth of
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the nonprofit sector, was by Lester M. Salamon (1996) in work titled “The Emerging Nonprofit Sector.” In this writing, he confirms that NGOs are “open systems” whose development is determined, in great part, by factors external to the organization. Salamon asserts the following: the existence of the nongovernmental sector is the result of heterogeneity, or limitations of both the market and government to meet unsatisfied demand for collective goods; the size of the NGO sector is inversely related to the level of social services provided by governments; the level of economic development is a factor affecting the growth of the sector; the scope of the sector is determined by a supportive legal system; and religion and historical traditions, such as Judeo-Christian tradition, have influenced the development of nongovernmental organizations (Salamon 1996, pg. 9–10). On this point related to the environmental context of NGO growth and development, there is considerable overlap in thought between the writings of Salamon and other scholars in the field. For example, Farrington and Bebbington (1993) advocate that the mere development of the NGO sector is in direct response to failed government macro-development policies and aid programs over the past 20 years. These scholars argue that government “trickle-down economic theory” is flawed and that in practice at the grassroots level, the “rising tide does not lift all boats,” since institutional building and community-level reforms have not been adequately addressed. Following the lead of Salamon, other scholars) are advocates of the “theory of political space” to explain the growth of the NGO sector. This theory states that it is ultimately the government that defines the growth parameters of the sector by adopting public policy that will either encourage or discourage NGO activity. It is “within political space available” that NGOs and community-based organizations “intervene in the socioeconomic system, thus affecting and potentially challenging the prevailing patterns of development at the micro-level” (Wignaraja 1984, p. 5). As a corollary note, it is also argued that a lack of knowledge about the political environment in which one operates is a major factor contributing to NGO failure at the grassroots level. Our attention now turns to internal dimensions of NGO development. While most organizational theory has its roots in the business sector, many of its ideas are relevant to NGOs (Lewis 2001, p. 86). Although not NGO specific, one of the most comprehensive studies on organizational development was earlier presented by Hodge and Anthony (1984) in which they summarize eight pillars of organizational theory to explain why organizations develop. While all eight pillars may seemingly play a role in organizational development, two stand out in the current literature to support the development of the NGO sector. First, power theory states that organizations develop in order to influence others. A view of the NGO landscape today will show that this is indeed a major internal objective which has influenced the development of many nongovernmental organizations. Amnesty International and Greenpeace are but two examples of advocacy organizations that have come to fruition out of a desire to influence public policy and debate. A second and related theory which also explains the development of the NGO sector is the organizational goal theory. In sum, a desirable, unrealized condition is the basis for organizational
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development. Many development NGOs, such as Care and World Vision, which seek to alleviate world hunger and disease would fall into this category. (Hodge and Anthony 1984) There is a separate stream of research that distinctly links the availability of government and bilateral funding to the growth of the NGO sector. Data released by OECD (2019) indicates that the level of grants provided by private agencies and NGOs during the 2000–2018 period have grown fourfold from 10 billion dollars to more than 40 billion dollars today. It is argued that this high level of financial growth has enabled NGOs worldwide to take a more active role in international development programs in cooperation with governments and official aid agencies. It is estimated that one in eight of those living in poverty today are assisted by NGOs. The United Nation’s Human Development Report indicates that some 250 million people are affected by the work of NGOs, and that the number will most likely increase in the years ahead (UNDP 2019). NGOs are no longer considered minor players in the development arena, but important partners in implementing sustainable poverty alleviation programs. The increase in government funding channeled through Northern NGOs on a global basis speaks to the importance NGOs play in both charity provision and sustainable development programming. Many industrialized countries now channel 15% or more of official development assistance (ODA) through NGOs. The data shows that the US and European governments have especially close working relationships with NGOs to carry out relief and development projects. Sweden reports a comparatively high support level of 30%, followed by 29% in Switzerland, and 25% in Norway (OECD 2019). Following the pattern set by other leading industrialized countries, Japan has recently adopted new initiatives to channel more official development assistance (ODA) funding through nongovernmental organizations. What are the reasons for this change in funding pattern? First, governments have come to rely on NGOs to implement projects because of their comparatively good track record in reaching people at the grassroots level. NGOs are viewed as effective entities that work to remedy the “root causes” of poverty by increasing family income and improving basic health care, education, workers’ rights, and democratization. Michael Cernea (1988) was one of the earliest proponents that northern development NGOs have a comparative advantage over government programs. In a report commissioned by the World Bank, Cernea identifies four areas where nongovernmental organizations have superiority: (a) NGOs reach the poor in remote areas where government reach is limited (b) NGOs operate at lower costs as a result of the voluntary nature of their activities and lower overhead (c) NGOs better promote local community participation (d) NGOs are better able to adapt to local environmental conditions (Quoted in Lewis 2001, p. 77)
On the other hand, government-aid programs are often seen as bureaucratically inefficient and limited in poverty reach. Some studies suggest that as much as 30% of
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government-to-government development assistance is improperly used (Kenny 2017). Scholar Tim Brodhead (1988) echoes this point by writing that we have “witnessed an apparent shrinking of the roles,” and “dissatisfaction with the quality of state-provided services” (p. 9). Another reason given by the proponents of the funding change is that national aid programs often fail to address the structural causes of poverty, but are geared toward symptoms of a more fundamental problem. For example, critics point out that governments spend millions of dollars on quality health care programs, such as the building of hospitals, but fail to adequately address preventative issues like providing clean water and other preventative care. Therefore, from the standpoint of cost-efficiency and long-term program effectiveness, NGOs are an increasingly favored vehicle to implement development programs (Brodhead 1988, pg. 9). Research carried out by McGann and Johnstone (2006) identified other key factors that have contributed to the impressive growth of the NGO sector during the past 20 years. First and foremost, the development of civil society on a global scale has resulted in an environment where the establishment of nongovernmental organizations is viewed as favorable. With the fall of communism, societal values have shifted to place more emphasis on freedom of speech, an independent judiciary, and the desire of people to assemble to address key problems facing local communities. Typically, organizations that have been established through this process are not directly associated with governments but, rather, are independent – such as schools, universities, art associations, and religious organizations. In fact, civil society often fulfills the role of monitoring government actions, demanding accountability, and offering alternative policies which uphold societal accepted norms. Another reason cited for the rapid development of the NGO sector has been the creation of intergovernmental organizations – including the United Nations and World Bank – that were given legitimacy to work and develop civil society and institutions throughout the world. As a result of this mandate, hundreds of NGOs were established to fulfill a mission of both democracy and development. The NGO growth story is also related to technological and communication advancements. With the explosive growth of the Internet, the flow of information across borders is unabated. Today, grassroots and community-based organizations are in an unprecedented position to make their voices heard. The cries of injustice by those who live under authoritarian governments are easily seen and heard on evening news broadcasts throughout the world. A final characteristic of an expanded nonprofit sector is a globalization of NGO project funding. Local village communities are now able to establish funding partnerships with a broad range of international NGOs and intergovernmental institutions. This shift towards more direct funding flows has had a profound impact on the growth of southern NGOs and community-based organizations (CBO) (McGann and Johnstone 2006). The dramatic increase in microfinancing programs available is merely one example of this shift of direct funding from northern donors to people living in poverty.
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Country Report: Defining the NGO Sector in the USA
Alexis de Tocqueville in his 1835 book entitled Democracy in America wrote that a major strength of the new democracy was the development of strong voluntary organizations. Ian Smillie (1997) contends that the growth of the US nonprofit sector was due to a “fear of socialism and a fundamental mistrust of governmental action” (Smillie 1997, pg. 249). In commenting about the birth of the nonprofit sector in the USA, Lester Salamon (1997) writes, “Several factors have accounted for this phenomenon. One of these certainly was the deep-seated hostility to royal power and centralized state authority that the religious non-conformists who helped populate the American colonies brought with them when they fled the Old World. Hostile to state power, they were inclined to do things themselves” (Salamon 1997 pg. 282). As a result, private philanthropists aggressively supported the building of hospitals, universities, and community-based organizations out of a sense of private responsibility for the public good. During the first 30 years of the twentieth century, philanthropic activities were viewed as a clear alternative to government social welfare programs. Similar to other developed countries, the creation of US development nonprofit organizations, commonly termed NGOs, first emerged from a Christian and humanitarian tradition after the end of World War II. At the end of the war, the world faced serious post-war problems related to refugee resettlement, rebuilding of educational institutions, and the provision of basic health care needs. Hundreds of US international development organizations were incorporated during this period that were both religious and secular in nature. CARE, Catholic Relief Services, Project Hope, Institute of International Education, and Christian Children’s Fund are but a few of the major US NGOs that came onto the international development scene in response to post-war humanitarian needs. There are numerous scholars who have written about the emergence of the US nonprofit sector, including NGOs that require mentioning. Two significant writings include Beyond Charity: U.S. Voluntary Aid for a Changing Third World in 1977 by John G. Sommer and a second writing of importance is a book written by Brian Smith in 1990 entitled More Than Altruism: The Politics of Private Foreign Aid. It is significant to point out that both Sommer and Smith divide the evolution of US private assistance into three periods,as shown below (Sommer 1977; Smith 1990). • Period 1 – Up to 1900 Evangelical missionary endeavors result in extensive volunteer activities. The emergence of the NGO sector during this period is closely related to evangelical revivals. The goal of these early organizations included both proselytizing and providing humanitarian assistance. Main projects consisted of schools and hospitals. Philippines was one of the first locations of assistance since it was America’s first colony acquired from Spain at the turn of the century. The American Red Cross was a major organization established during this period in 1887.
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• Period 2 – 1914 to 1945 Growth of the nonprofit sector patterned the economic growth of the USA. During this period, there was an emergence of religious and secular groups to provide relief for disasters abroad. For example, the American Friends Service Committee was founded in 1917 to provide relief and medical services to civilian victims during and after World War I. Another example was the establishment of America Save the Children, which initiated a development approach that went beyond charity to include long-term child and family welfare. • Period 3 – 1945 to Present The distinction of this third period is a shift from short-term emergency aid to the contemporary model of designing and implementing long-term sustainable development programs. After World War II, church programs began to offer secular aid programs, without the goal of proselytizing. Examples include the Catholic Relief Services, Church World Service, and Lutheran World Relief. Another characteristic of this period was a new focus on building the capacity of indigenous partners in the field by offering training and technical assistance. Also, close working ties with the US government is a characteristic of this evolutionary stage.
5.1
US Government–NGO Relations
The NGO sector’s focus on long-term development, as noted above, opened the door for a close working relationship with the US government. Early in the twentieth century, officials of the government began to see that their policy goals of promoting democracy and economic development to be consistent with many nongovernmental organizations. As early as 1948, the US Agency for International Development (USAID) Advisory Committee on Voluntary Aid issued a statement that supports the role of NGOs in international economic development. Historically, the US government has aggressively adopted legislation to promote private philanthropy. Perhaps the most significant legislation promoting the growth of the sector was the 1936 Tax Act which allowed individuals and corporations to deduct charitable donations from income tax payments. Today, almost 80% of all private giving in the USA is from individuals, followed by eight % from foundations, seven % from bequests, and five % from corporations. It is commonly believed that the amount donated by the general public is indeed influenced by tax policy. In 2019, for example, a one-dollar donation actually cost the taxpayer only 72 cents due to IRS tax deductibility rules. The US tax environment is seen as comparatively favorable among Western countries. Aside from a favorable tax environment, incorporation of a private voluntary organization (PVO) is a relatively easy undertaking. Nonprofit organizations must initially register with the Internal Revenue Service (IRS) under section 501 of the Internal Revenue Code. Thereafter, to maintain tax-exempt status, the organization must submit a basic information reporting form (Form 990) on a yearly basis. Additional registration with the USAID is also required if the organization seeks government funding for international development work.
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In 2018, the Advisory Committee on Voluntary Foreign Aid completed an evaluation of the working relationship between private voluntary organizations and the US government. Although a government-sponsored committee, members consist of development specialists in the fields such as health, education, relief, and community development. The committee report stated there have been numerous efforts to improve NGO–GO relations such as increased consultations, new grant policies, and streamlining of NGO registration procedures. At the same time, however, the report cited areas where improvement is required, including the need for local NGO strengthening, sharing of information about “best practices,” and improvement in educating the general public on issues related to international development and foreign assistance.
5.2
Scope of the US NGO Sector
The term NGO as used in the United States usually refers to an organization that is engaged in work related to the “development of the third world.” The most common program areas include health care, agriculture development, environmental protection, refugee care, and economic development. Since the sector has such a broad program mandate, it is difficult to pinpoint the exact number of NGOs operating in the USA. According to the National Center for Charitable Statistics (McKeever 2018), in 2020 there were 1.6 million domestic and international nonprofit organizations classified by the IRS as tax exempt – and this number increases, on average, four to five % a year. It is also significant to point out that the nonprofit sector contributed approximately 1 trillion dollar to the US economy in 2016, which accounted for 5.6% of the country’s GDP. Statistics reveal that private giving in 2018 totaled 427 billion dollars. Moreover, it is estimated that 25% of US adults volunteer each year, contributing 8.8 billion hours with an estimated value of 195 billion dollars (McKeever 2018). Regarding program concentration, most US NGOs historically focused their efforts on emergency relief. Beginning in the 1970s, however, there was a major shift towards development programming in the areas of health care and education. Another major shift seen within the US NGO community is the approach to programming overseas. Throughout the 1970s, a vast majority of US development organizations had extensive direct program implementation overseas. Today, however, most US NGOs have developed an approach to development which calls for the identification of quality local partners (i.e., Southern NGOs or community-based organizations) to implement development programs. In fact, USAID now requires US private voluntary organizations to identify local partners in order to qualify for financial assistance (USAID 2017).
5.3
US NGO Financial Environment
NGOs in the USA encompass a wide range from small to some of the largest in world. The data reveals the high amount of financial inflows into some of the major US development organizations (USAID 2020). According to Forbes, the top 10 charitable
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organizations in the USA in 2019 had revenue exceeding $1 billion dollars annually, and another 100 organizations report revenue exceeding $100 million dollars. The US government has generally had a positive working relationship with its NGO community. The sector is viewed as a valuable partner which implements US development and relief programs. The US Budget Office reports that up to 28% % of ODA is channeled through nongovernmental organizations. At the same time, government officials in recent years have criticized many US NGOs for becoming overly dependent on the US government for financial support. USAID reports that NGO dependency on government funding has consistently increased since 1990. CARE USA, for example, reported in 2010 that government and agencies grant support accounted for 50% or $246 million dollars in revenue, compared to $129 million in donor contributions (Care 2010) Conversely, some major US NGOs have developed a policy of limiting its dependency on government funding. Christian Children’s Fund reports that 95% of its funding comes from private contributions. Author Smillie (1997) comments on the issue of government support of NGOs in the following manner: The dependency question remains more substantive in the US than in other countries because of the importance placed by the government on US strategic and programmatic objectives of development assistance. Dependency, of course, can be seen as a two-way street. USAID is heavily dependent on US PVOs for the effective delivery of food aid and for a high proportion of its emergency assistance. And, PVOs are also increasingly recognized as an important window of, and channel to, the development of pluralism in countries where the development of democratic institutions is a priority (Smillie 1997 pg. 247).
Currently, USAID provides two basic forms of support to the nongovernmental sector, including contracts and grants. Many of the grants offered to NGOs retain a matching requirement of 25 to 50% of the grant amount. The main US government grant support programs to NGOs include: • Matching Grants – The program supports capacity-building approaches and sustainable development methodologies. Support is provided to areas such as microenterprise, health care, environment, civil society, and agriculture. Awards are made for 3 to 5 years. The program requires that the NGO match at least 50% or more of the costs. • Child Survival Grants – Program maintains a 25% cost sharing requirement. Grants are targeted to meet health care needs of children and mothers, with an emphasis on nutrition and HIV/AIDS. The program provides for two-year and four-year grants. • Farmer to Farmer Program – Started in 1995, this program was established to provide technical assistance and training to farmers in developing countries under the US Farm Bill; the program sponsors approximately 600 volunteers each year, with a budget of $10 million.
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• Development Education Grants – This program was initially started in the early 1990s to promote public discussion in the USA on the topic of world hunger. The fundamental purpose was to increase US public awareness of the factors relating to world hunger. A limited $500,000 is available within this budget category. • Food Aid – The USA is a major provider of food aid throughout the world. In fiscal 2017, 2.5 million tons of commodities valued over $1 billion were donated to people in need. Over 90% of US food aid channeled through NGOs, such as CARE, Adventist Development and Relief Agency, Catholic Relief Services, and World Vision Relief and Development. • Emergency Aid – In addition to food aid, the US government budgets approximately $200 million for disasters worldwide. Approximately 60% of this funding was programmed through NGOs. • NGO Overhead Funding – The US government shares overhead costs under a formula known as Negotiated Indirect Cost Rate Agreement (NICRA). US government support of nongovernmental organizations began during World War II and increased rapidly during the 1950s and 1960s. The Office of Private and Voluntary Cooperation was established in 1974 to coordinate cooperative efforts between USAID and private voluntary organizations. A USAID report cited the key governing principles of the NGO–GO relationship. These principles include the following: • Objectives of USAID and the PVO community can be strengthened through improved consultation and dialogue. • Broad-based participation is vital to program sustainability and success of development efforts. It is USAID policy to promote opportunities for participation by host country organizations. • Private voluntary organizations must remain private and independent. US PVOs working with USAID must receive a minimum of 20% of their financial support for overseas activities from non-US government sources.
5.4
US NGO Umbrella Organization
The main NGO umbrella organization in the USA is InterAction, whose main objective is to promote the status of the NGO sector and support the capacity development of member organizations. InterAction’s committees focus on a broad range of development issues, including advocacy, development education, advancement of women, disaster response, and refugee care. The organization publishes a monthly newsletter, maintains a website, and conducts extensive dialogue with USAID regarding development programs. In 2020, InterAction had 180 members, who were involved in a broad range of development and relief activities worldwide. According to a 2020 InterAction Annual Report, these member organizations received more than $15 billion annually in private contributions to support marginalized people (InterAction 2020).
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The second major NGO grouping in the USA include organizations that are officially registered with the US Agency of International Development (USAID). Today over 500 US NGOs were registered with the USAID; these organizations received more than $1.5 billion from the US government through grants and specialized contracts. What differentiates NGOs associated with InterAction from organizations registered with USAID is the level of cooperation with the US government. Thirty-five (35) percent of InterAction members do not accept government funding.
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Country Report: Defining the NGO Sector in the UK
The nonprofit sector in the UK is one of the oldest and most developed in the world. Secondary information reviewed indicates that philanthropy took hold with the adoption of Elizabethan Statute of Charitable Uses in 1601 (Kendall and Knapp, p. 250, edited by Salamon 1997). The formalization of philanthropy was in direct response to the economic and social turmoil of the period, and the seeming limitation of the state to adequately meet the needs of the people. Other scholars note that the problems associated with industrialization and rapid population growth brought about increasing demands on both the philanthropic sector and the state. The inability of the state to solve the many societal problems opened the door for the establishment of voluntary organizations at the local and national levels. Still other experts point out that it was the middle class that served as the impetus behind the growth of the nonprofit sector. The prominent areas of activity include orphanages, housing, schools, adult education, culture, and the arts and the environment. This early philanthropic activity set the scene for a well-developed nonprofit sector in the years ahead. Since the sixteenth century, many charitable organizations in the Great Britain have been active players in providing aid beyond their own country. The earliest of these international agencies were church-related organizations. Along with missionary organizations, educational institutions were founded to “educate” people in colonized countries in Africa and Asia. The first two educational institutions provided such aid included the Royal Society, founded in 1660, and the National Adult School Union, founded in 1798. One of the first secular voluntary organizations was Save the Children, in London.
6.1
UK Government: NGO Relations
Generally speaking, the relationship between the British government and the NGO development community can be described as positive. The backdrop of this close working relationship is a recognition on the part of the government that it alone cannot solve all societal problems. A favorable tax environment for NGOs, coupled with a streamlined registration process, has promoted the growth and development of the sector.
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In 1979, a new conservative government under the leadership of Margaret Thatcher came to power, with the commitment to limit and reduce the role of the government in many areas of social welfare support. Although it was extremely difficult in the face of a prolonged economic recession, voluntary organizations across the country stepped in to fill the gap to provide care to the needy. Later, in 1997, the newly elected Labor Government acted to take a more direct role in working with the NGO sector to eliminate poverty worldwide. A new Department for International Development (DFID) was established; DFID has its own Minister in the Cabinet, also called the Secretary of State for International Development. Under the leadership of its new Minister, the British government has set out four key DFID objectives related to development: • • • •
Refocus aid on poverty eradication Build partnerships with developing countries and the private sector Promote public understanding and support for development Ensure that government policies take into account the objective of sustainable development
The registration and approval process for applying as a nonprofit organization in the Great Britain is considered comparatively straightforward. Once recognized by the government as an organization aimed at benefiting the general public, taxexempt status is granted; furthermore, the door is then open to receive government funding to support a vast array of programs and projects. The most notable program which supports the NGO sector is the National Lottery Charity Support Program. This program started in May 1997, when Britain’s new National Lottery Charities Board announced that it would allocate 5% of its charity grants to international development organizations. Grants totaling $39 million were given to 130 organizations engaged in international development activities. It is assumed that lottery funds will be a significant source of funding in the years ahead.
6.2
Scope of the UK NGO Sector
As of March 2020, the government reports that 168,000 organizations were registered as charities, which had a total annual income of 79 billion pounds. Charities earning more than 5 million pounds accounted for 1.3% of the total organizations and 72% of revenue. Of this number, approximately 400 organizations are designated as development NGOs and receive about one-fifth of all private sector donations. In 2020, a total of 340 development NGOs are registered with the British NGO networking organization known as BOND (British Overseas NGOs for Development). Also, 12 of Britain’s 50 largest organizations are primarily concerned with overseas relief and development work. Furthermore, the charity sector as a whole employs more than 600,000 people, of which 1.6 million are engaged in a wide range of volunteer activities (BOND 2020).
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Of the 340 organizations registered with BOND, a vast majority or 70% of the NGOs are engaged in education, while 60% cite capacity building and 50% human rights as the primary program area. Furthermore, British NGOs report a high degree of involvement in health care, community education, and economic and rural development. On the other hand, the least represented program activities include water sanitation and the environment.
6.3
UK NGO Financial Environment
NGOs in Great Britain vary greatly in size from small issue-oriented groups to some of the largest organizations in the world. Christian Aid, Oxfam, and CAFOD are examples of some of these largest development NGOs. Great Britain is second, behind the USA, in terms of financial flows to nongovernmental development organizations. Today, private income to the top 500 UK NGOs exceeds $3 billion annually. According to BOND, income from members has grown 59% to a level of 3.89 billion pounds for the 10-year period ending in 2016. Individual giving accounted for 31% of income earned(BOND 2020). Similar to the USA, the British NGO community maintains a close working relationship with its government. The year 2016 data shows that the British government supported 33% of the funds earned by BOND members. Official funding for NGOs has remained relatively constant at a level of 10% since 1995. As shown, the British government currently has in place four funding schemes for NGOs: The Emergency Aid Funding; Joint Funding Scheme (JVS); VolunteerSending Agency Support; and Bilateral Desk Funding. • Emergency Aid – As its name suggests, these funds are made available to NGOs to assist in providing short-term relief to areas of the world hit by natural disasters. Approximately one-third of NGO supported money is allocated for emergencies. • Joint Funding Scheme (JFS) – The focus of the JFS is to fund poverty-focused projects. Often these projects are in very remote areas that are not deemed a priority of regular government programs. In this sense, the government takes advantage of NGO initiatives to reach out to those in need. Under the JFS program, NGOs may also allocate up to 10% of total program costs for UK administrative costs. Also, partial overseas administrative costs may be covered with JFS funds. • Volunteer-Sending Support – A key component of government support is funding to six volunteer-sending NGOs. There are two main objectives of this funding scheme. First, the British government wants to send volunteers overseas to work in projects that have a direct result in reducing global poverty. A secondary objective is to indirectly change the attitudes and values of people through a large body of volunteers returning to life in the UK. Volunteer Services Overseas receives 77% of the program budget, while five other organizations receive, on average, 4% to 5% of total program expenditures.
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• Bilateral Funding Program (BFP) – The BFP is designed to provide direct funding to Southern NGOs. One bilateral scheme, known as the British Partnership Scheme, allows British embassies to allocate funds to local NGOs.
6.4
UK NGOs in the European Union Context
NGOs in the UK are influenced greatly by the European Union content in which they operate. It is important to point out that the 18 core members of the EU currently channel approximately 17% of all ODA funding through Northern and Southern NGO partners. Generally, over 20% of EU’s budget is managed by NGOs. The main European umbrella organization is the NGDO-EU (Nongovernmental Development Organizations of the European Union) which represents some 800 organizations. NGDO-EU meets five times a year and sets general program and policy guidelines for European Union – NGO cooperation. British NGOs also cooperate with other European NGO networking organizations such as the Association of World Council of Churches, EUROSTEP – a grouping of 22 member agencies which focuses on the cooperation with multilateral institutions, and WIDE (Network Women and Development) in Europe – a network which promotes awareness of gender and development issues. In 2018, more than $1 billion Euros were contributed by the EU to NGO programs and activities. It is estimated that 1.7% of the EU budget and 6.8% of the European Development Funds are channeled through NGOs (2018, ECA). The majority of the EU funding, or 65%, was allocated to humanitarian aid and food assistance. A vast majority, 44 out of 69, of the projects for refugees and displaced persons were implemented by NGOs. The European Community Humanitarian Office (ECHO), which coordinates the EU’s humanitarian operations in nonmember countries, manages one-quarter of all international assistance. In addition to financial support, European NGOs provide 45% of world food aid. The food aid program is administered by EURONAID (European Aid), an agency of 24 European NGOs engaged in food aid programs. The sending of volunteers and developmental education at home are two additional ways in which the EU supports the NGO sector. However, the volunteer program known as the European Volunteer Service (EVS),only comprises 5% of all volunteers in the EU. Regarding development education support, the EU will cover up to 50% of development education program costs. The main country recipients of grant funding and budget allocation are as follows: Germany (18%); Great Britain (14.1%); Italy (13.3%); Belgium (11.9%); and the Netherlands (10.2%). At the time of this writing, it is uncertain how Britain’s decision to leave the European Union will impact its future cooperation with NGOs that are headquartered in EU countries. Early reports indicate that this cooperation will continue; however, it is expected that the government will place priority on funding home-based organizations that are engaged in international relief and development activities.
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UK NGO Umbrella Organization
The main NGO umbrella organization, British Overseas NGOs for Development (BOND), was established in 1993. The establishment of BOND was the result of dialogue between the NGO community and the government regarding the need to have a body that serve as a link on development issues. It can be said that the establishment of BOND tends to benefit smaller NGOs which do not have ready access to government officials, unlike many of the larger British NGOs. Thus, BOND has played an important role for smaller organizations with limited financial resources. In addition to serving as a channel between NGOs and the Department for International Development, BOND conducts various training sessions for nonprofit organizations. In 2020, BOND reports a membership of over 340 UK NGOs (BOND 2020). There are also a number of other NGO groupings which are focused on a particular program issue. The largest NGOs in Great Britain, for example, are members of a network organization known as the Disasters Emergency Committee (DEC), whose primary role is to coordinate aid appeals with the local media. A related organization which includes the top management of these same organizations is the British Overseas Agencies Group (BOAG); here, NGO managers meet regularly to discuss a variety of development issues and to coordinate program strategy. A unique characteristic of the British NGO community is their strong links to academic institutions. In cooperation with the academic community, NGOs regularly participate in the activities of the Development Studies Association, a major academic umbrella which focuses on development-related research. Also, it is commonplace for academics to hold positions on NGO boards and also to take the lead in assisting NGOs in program design and evaluation.
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Country Report: Defining the NGO Sector in Japan
Japanese philanthropy has a limited, yet long history dating back to the seventh and eighth centuries. Much of the early philanthropy was limited to the building of temples and private schools for classical education. Historical documents reveal that Todaiji and Shitennoji Buddhist temples engaged in an indigenous form of fundraising known as kanjin to support hospitals, orphanages, homes for the elderly, and hunger charities. The Buddhist sects did not operate as independent institutions, however, but were utilized by the central government as a part of the feudal administrative system. Public participation in supporting these activities was not considered voluntary since Japanese households were required to formally register at some temple, and financially support the activities through offerings. Buddhist sects throughout Japan continued to play a prominent role in philanthropic activities through the end of the Edo period. The landscape of Japanese philanthropy witnessed significant changes during the Edo Period to include activities supported by the private initiatives of wealthy
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businessmen, prominent farmers, and Christian missionaries. Wealthy Osaka merchants, in particular, participated in philanthropic activities by supporting private schools known as shijuku. These schools offered coursework in classical literature, in addition to modern and western thought. These merchants, together with wealthy farmers, became involved in supporting shijuku because they believed that a high level of literacy was a necessity in their business dealings with foreigners. Still another early example of Japan’s private indigenous efforts in social welfare and relief occurred in 1829. Nawa Saburoemon Sukenari and 191 others contributed funds to purchase land in Akita Domain for agriculture production, and thereafter used the earned income to help poor farmers and orphans. This project known as kan-on-ko exists today as a social welfare organization. Jesuit missionaries also played a role in early Japanese philanthropy by establishing nursing homes and leprosy hospitals early in the Edo period. Groups known as misericordia collected funds to support social welfare activities. Although Christianity was banned in 1638, many of these early institutions continued in operation. As Japan opened its doors to Western influence late in the nineteenth century, Catholic and protestant missionaries become more engaged in philanthropy through the creation of mission schools, and a number of local relief organizations, to help people afflicted with disease or living in poverty. The Japan Leprosy Mission is an example of a relief organization established during this period; it was founded for the purpose of caring for Japanese lepers, and is still active today in promoting health care activities. In 1911, under the leadership of the Emperor and leading industrialists, the Imperial Relief Association (onshi-zaidan saiseikai) was established to provide medical relief to the poor. During this time, similar foundations (koeki hojin) were established under Civil Code 1896. In subsequent years, as Japan’s economy expanded, foundations such as Mitsui Ho-on Kai were formed by Japanese industrial or zaibatsu groups. Under military dictatorship in the 1930s and 1940s, all nonprofit organizations came under the control of the state. Mutual help community organizations (chonaikai) were put under the control of the central government. Furthermore, grassroots youth organizations were merged into one national organization. Scholars today believe that this historical development of totalitarianism halted the growth of Japanese philanthropy, and had a negative impact on the growth of the nonprofit sector long after the war. Japan’s new constitution and legal system adopted after the war facilitated the establishment of many new nonprofit organizations, particularly organizations involved in labor rights and women’s issues. The trade union movement, which was prohibited during the war was encouraged by the occupying forces; these organizations played a significant role in promoting issues related to worker’s rights. Christian organizations played a very active role in Japanese philanthropy during the immediate post-war period. In 1952, for example, Agape Workshop for the Disabled was founded by Japanese Christians to care for handicapped people in the Kanagawa prefecture. Leading Catholic and protestant
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denominations throughout Japan worked to establish social welfare institutions for the elderly and disabled. The year 1960 brought the birth of the first Japanese NGO, the Japan Overseas Christian Medical Cooperative Service, to provide medical services to neighboring Asian countries, especially Nepal. JOCMCS was established by Japanese Christians who desired to help people of other nationalities. In addition to JOCMCS, Japanese Christians took the initiative to establish many of the first NGOs during the 1960s and the 1970s. The Asia Rural Institute (ARI) was started by Christians to train agriculture leaders from developing countries throughout Asia. The Christian Child Welfare Association International Sponsorship Program (CCWA), established in 1975, is another example of a Christian-initiated NGO formed to support poor children and families throughout Asia. The indigenous phase of Japanese NGO development grew significantly in the late 1970s. The year 1979, in particular, is considered to be a “watershed” year in the history of Japanese NGOs. In response to an influx of Indo-Chinese refugees, Japanese citizens became aggressively involved to assist individuals in need. As such, indigenous organizations such as the Japan International Volunteer Center (JIVC), Caring for Young Refugees (CYR), and the Japan Sotoshu Relief Committee (JSRC) were established by Japanese citizens to help people in need. The growth of indigenous NGOs that are concerned with specific social and environmental problems continued throughout the 1980 and 1990s. In the late 1990s, however, newly established NGOs seemed to have a broader mandate to be engaged in a variety of fields such as rural or community development, health care, education, and human rights, to name a few. Examples of indigenous NGOs with a more general mandate include the Asian Health Institute (1980), Japan International Volunteer Center (1980), and Association of Medical Doctors in Asia (1984).
7.1
Japan Government–NGO Relations
Government–NGO relations in Japan have been strained over the past decade because of a most restrictive registration process for NGOs, and an unfavorable tax environment. Japan’s complex legal environment is often cited as an obstacle to the development of the nonprofit sector. Critics argue that Article 34 of the 1896 Civil Code gives the government excessive control over the sector in the form of burdensome reporting requirements, restrictive legal recognition, and unfavorable tax treatment. Although NGO–Government relations in Japan are gradually improving, there is general consensus that the current state of affairs remains relatively poor (Menju 1996, p. 149–151). Positively speaking, the government appears to be reaching out to the NGO sector by agreeing to modify the laws that govern nonprofit organizations. In December 1998, the specially-designated nonprofit organizations law went into effect, thus giving corporate status to volunteer groups by recognizing them as official organizations. Proponents of the new NPO law believe this change will encourage the creation of new nonprofit organizations because it will now be easier for
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organizations to carry out basic activities such as renting office space and opening bank accounts. NGO–Government relations have been a controversial issue and will most likely remain on the table for discussion in the years ahead. MOFA Japan currently provides support to Japan NGOs through various schemes. In fiscal 2016, 29 organizations received ODA funding to implement 38 projects in 15 countries. These projects focused on health care, water system provision, and support for people with disabilities. Starting in 2000, the Japan Platform – a consortium of 50 NGOs, government agencies, and members of the business community – cooperate to provide emergency humanitarian support. The government-sponsored JOCV (Japan Overseas Cooperation Volunteers) program, started in 1965, stands out as having the greatest impact. In cooperation with JICA, this program sends skilled volunteers – aged 20 to 39 – to work with local NGOs and government entities in more than 80 countries. To date, over 40,000 Japanese volunteers have served abroad in education, agriculture, and education programs. The Ministry of Foreign Affairs also sends seniors – aged 40 to 69 – to serve in developing countries. As of today, over 6,000 seniors have served in more than 70 countries. It is significant to point out that Japanese volunteers often return to Japan and play a significant leadership role in local NGOs, educational institutions, and the public sector. New legislation allows local government officials to take a leave of absence to work in an ODA project. This has resulted in a number of teachers joining JOCV as project volunteers. There has also been growing interest on the part of the business community in Japan to launch CSR programs. One of the most well-known CSR initiatives in recent years included Panasonic Corporation’s 100 Thousand Solar Lanterns Project. Since 2013, the company has cooperated with Japan NGOs and grassroots organizations to provide solar lights to needy people who have limited or no access to household in developing countries, including Cambodia, India, Vietnam, and Myanmar (Gretebeck 2019).
7.2
Scope of the Japan NGO Sector
Sources indicate that as many as 400 NGOs are operating in Japan, however, only 225 organizations are officially registered with the Japan NGO umbrella organization, JANIC. In comparison to the West, the Japanese NGO sector is relatively young. The mean age of Japanese NGOs in the present database stands at approximately 12 years. As previously noted, it was not until the late 1970s that the first major phase of NGO establishment occurred, when many international organizations opened branch offices in Japan. Between 1970 and 1980, 34 NGOs began operations; however, the main thrust of NGO growth occurred after 1985. Our attention now turns to the program characteristics of Japanese NGOs. Currently, Japan NGOs involved in seven major areas: 1) education; 2) health care and child support; 3) environmental protection; 4) women support; 5) community development; 6) employee training; and 7) agriculture development. More specifically, 60% of Japanese NGOs identify education as one of its program activities,
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while 25% report education as the primary program objective. Likewise, 47% of NGOs list health care as one of their program activities, with 15% listing this area as primary. Moderate involvement is reported in the areas of environment, women support, community development, and employee training. The program areas least represented by Japanese NGOs include handicapped care, slum development, microbusinesses, human rights, and housing. Since 2000, the number of Japanese NGOs engaged in the above categories has dramatically increased. In percentage terms, women support and agriculture have experienced the greatest increase. In absolute terms, however, the number of NGOs involved in education and health care have seen the most significant increase. The exceptions to this growth trend include areas of refugee support, human rights, and housing for the poor; these areas have either remained constant or even declined in number.
7.3
Japan NGO Financial Environment
A major characteristic of Japanese NGOs is relatively low budget levels, with the exception of branch offices of international organizations. According to the data released by JANIC in 2019, 70% of Japan NGOs have comparatively low annual budgets in the $50,000 to $400,000 dollar range. Only 30 NGOs in Japan have budgets exceeding $1 million dollars. Of this number, six of the largest NGOs were Japan branches of international NGOs and four were Christian organizations with significant overseas donor support. Another financial characteristic is that the level of donations, as a percentage of total income, is relatively low at 28%. In fact, 44% of NGOs receive less than 15% of their income from donations. Additionally, project income provides approximately 11% of the sector’s income, while income generated from endowment programs generate a mere 1% of total revenues. A significant government financial initiative that has contributed to the growth of the sector was the establishment of the Ministry of Foreign Affairs NGO Subsidy Program in 1989. The program was designed to subsidize the costs of Japanese NGOs working in areas such as health care, improvement of local industries, environmental conservation, and the sending of expertise. In 1995, projects which support women in development were added to the government list of acceptable projects. The number of projects supported under the subsidy scheme grew from 23 in 1989 to 600 in 2010. Moreover, during the same period, total program expenditures increased from approximately $1 million to over $30 million. Under this program, Japanese NGOs are eligible for a subsidy of 50% of the total project cost, up to 10 million yen. This program today provides needed support for smallscale NGO programs that are difficult for the government to carry out. A second avenue of government funding available to Japanese NGOs is the Grant Assistance for Grassroots Human Security Projects (GGP). According to the Ministry of Foreign Affairs ODA 2020 Annual Report, a grassroots organization overseas can apply for a grant up to $100,000 dollars to support health, education, and
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infrastructure projects. This program is primarily managed by Japanese embassies and consulates overseas in more than 120 countries.
7.4
Japan NGO Umbrella Organization
The main NGO umbrella organization in Japan is the NGO Center for International Cooperation (JANIC), whose main objective is to promote the development of the NGO sector, and to serve as a link between the NGO community and the Japanese government. JANIC maintains a small office in central Tokyo, whose staff work on a range of issues including advocacy, development education, disaster response, and promoting the legal status of NGOs in Japan. JANIC currently has more than 250 member organizations, who are engaged in a wide range of development programs throughout the world, with a focus on Asia. JANIC also works to maintain open dialogue with the Japanese government by promoting regular meetings between member organizations and government officials (JANIC 2020).
8
Summary
Nongovernmental organizations today play a significant role in relief and development activities throughout the world. These entities are viewed as “partners in sustainable development,” working closely together with governments and multinational organizations to plan and implement programs that reach people at the grassroots level. Primary research carried out over the past 20 years shows that NGOs have a comparative advantage over government assistance programs in alleviating poverty and developing long-term sustainable programs. The millions of children that die each year due to illness and malnutrition is witness to the fact that our journey must continue. Clearly, there is a growing need for nongovernmental organizations to maintain an active role, in partnership with government agencies, to alleviate poverty, care for refugees, and protect the environment. In the world of limited resources, governments alone cannot reach “the poorest of the poor.” Therefore, the landscape of poverty throughout the world requires more effective NGO– Government partnerships. However, this new development paradigm will require that NGOs become more effective and accountable organizations, both at international and grassroots levels.
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Recycling Linne Marie Lauesen, Pia Duus Jensen, and Lene Ribens
Contents 1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Theory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1 Unlocking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Plastic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1 Institutional Response . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.2 Firm Response . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.3 Social Response . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.4 Technology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.5 Soft PVC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Electronic Waste and Recycling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1 Technology System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Textile Recycling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.1 Technology System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.2 Firm Response . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.3 Institutional Response . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.4 Social Response . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Alternatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Cross-References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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Abstract
Recycling is an omnipotent issue that has involved humans in all times of history to a larger or lesser degree. Many materials are already in the recycling loop, such as the recycling of paper and cardboard, wood products, metal, glass, organic components, home appliances, etc. However, some waste
L. M. Lauesen (*) · P. D. Jensen · L. Ribens Water and Waste Denmark, Vand og Affald, Svendborg, Denmark e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Switzerland AG 2021 D. Crowther, S. Seifi (eds.), The Palgrave Handbook of Corporate Social Responsibility, https://doi.org/10.1007/978-3-030-42465-7_38
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elements have not found a way to enter the recycling process, because it is hard, expensive, and complex to recycle it. This chapter focuses on the recycling of plastics, electronics, and textiles that currently lack sorting technologies, infrastructure, legislation, and social acceptance to be recycled at scale. The chapter concludes that many issues still need to be solved before the solution to recycling these three waste fractions is present and that the agents in doing so involve both businesses, researchers, politicians, authorities, and consumers. Keywords
Recycling · Plastic · Electronics · Textile · Technology · Institutional · Firm · and Social Responses
1
Introduction
Recycling is a very broad term covering issues regarding all waste fractions in today’s world. Recycling has always taken place in the history of mankind; however, the amounts of waste polluting the environment is today so vast that recycling and some of its derived forms such as reuse, upcycling, downcycling, etc. is even more relevant than it has been before. Globally, the newest data from 2016 shows that recycling as a waste treatment is only used on 13.5% according to the World Bank Group report “What a Waste 2.0” (Kaza et al. 2018, p. 34) (Fig. 1). Open dump of waste represents the majority on a global scale with 33%, unspecified landfill a second place with 25%, and beyond recycling (13.5%), waste incineration takes 11%, sanitary landfill with collected gas 7.7%, composting 5.5%, controlled landfill 4%, and other handling 0.3%. Seen from an environmental perspective, open dump and unspecified landfill are the most polluting waste management methods, and these two categories represent in total 58% of the global waste management. Open dump is environmentally uncontrolled and pollutes land areas inhibited by humans and other living creatures on Earth as well as the oceans. Unspecified landfill may be allocated on certain sites on shore; however, the category includes the extensive pollution from toxic percolate (leachate), which infiltrates the ground and nearby water resources and damages soil and water. (Waste landfill produces toxic percolate (leachate) when rain dissolves the multiple surfaces and interacts with liquids in the waste and infiltrates into the groundwater. The percolate from landfill consists of a concentrate of organic and nonorganic components including organic matter, phenols, ammonia nitrogen, phosphate, heavy metals, and sulfide. See the chapter “Water Resources.”) Recycling, as one of the least environmentally harmful choices regarding waste management, is on a global scale not happening much, and its potential for changing
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Fig. 1 Global waste treatment and disposal in percent. (Source: Kaza et al. 2018, p. 34)
waste management from being relatively unsustainable at the moment into being more responsibly taken care of is obvious. The literature of recycling is growing both in the academic and in the private and business sectors, and the development is rapid, so the way things were done even 5 years back has in some areas changed again, often to the better but sometimes also to the worse. Some recycling has reached good results. For instance, in the 1980s, the issue was the cutdown of the rain forest with the aim for producing furniture and making paper and cardboard products. Today, paper and cardboard are recycled in most parts of the world, and new paper and cardboard are made almost entirely out of recycled paper and cardboard. Wood certifications and legislation have also made it possible to avoid using hard wood and rainforest wood for products, although issues regarding deforestation of the rain forest have continued for other reasons: making room for palm trees, for cheap oil products, and for other farming purposes. Wood is today also recycled and made into other products, as is home appliances, all metals, glass, bricks, building materials, cars, and many other waste fractions. Those waste fractions are in the recycling loop already, although many things could be done to recycle them even more and better. In this chapter, the most problematic waste fractions according to its contribution to worldwide pollution of land sites and the ocean, the lack of recycling technology, infrastructure, legislation, as well as the social acceptance to recycle are described. These fractions are:
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– Plastics – Electronics – Textiles “Since 1950, close to half of all plastic has ended up in landfill or dumped in the wild, and only 9% of used plastic has been adequately recycled. Every year, it is estimated that 4 to 12 million metric tons of plastic waste ends up in the oceans1. How plastic waste is processed remains extremely variable from country to country, and recycling remains considerably under-used.” (d’Ambrières 2019, p. 12) “Electronic waste (e-waste) is one of the fastest-growing pollution problems worldwide given the presence of a variety of toxic substances which can contaminate the environment and threaten human health, if disposal protocols are not meticulously managed.” (Kiddee et al. 2013, p. 1237) “In recent decades, fashion and other textiles have been increasingly reduced to disposable items. What is considered a trend today will disappear in the depths of a wardrobe tomorrow. With low prices and ever-changing collections, fashion brands and the clothing industry as a whole are tempting shoppers to over-consume mass-produced items made from low quality textiles. . . Textile waste has therefore become a big problem in recent years (https://labfresh. eu/pages/fashion-waste-index?locale¼en).”
More issues, for instance, the decomposition of vessels, the disposal of hazardous materials and chemicals, and other issues, are also relevant; however, the limit of this chapter requires selection of subtopics. The chapter discusses plastics, electronics, and textiles because these fractions are used in everyday households. The recycling of these fractions thus involves most people, and the solution to its recycling success severely depends on citizens, households, businesses, and everybody on the planet. The chapter is structured, so after the acknowledgment for all those who have assisted us in writing this chapter, the approach to dealing with the issues at hand 9using Gregory C. Unruh’s techno-institutional complexes theory is shown and then continues the discussion of the recycling of plastics, electronics, and textile fractions of human waste. Finally, the chapter concludes with a discussion concerning the entire recycling movement and its future.
2
Theory
In this chapter, an institutional “approach to recycling” is embedded, because recycling involves both human behavior (culture), technology, legislation, and other agents such as specialized companies which interact in the field representing different institutional orders (Berger and Luckmann 1967) created by social mindsets and typified actions, which unconsciously has become institutionalized. The chapter is structured and inspired by Gregory C. Unruh’s institutional theory about techno-institutional complexes (TIC) (Unruh 2000, 2002). TIC is a composition of reciprocal technological systems and institutions.
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Unruh’s theory has a systems approach. This approach applied to recycling can illustrate, for instance, why “green transition” is hard, if you exclusively focus on one perspective. That could be a perspective focusing solely on technology development without having in mind, for instance, how legislation, infrastructure, behavior, etc. impacts how new technology will be a success or an obstacle. Unruh call this “lock-in” when an entity in society (for instance, the legislation) hinders “green technology” in breaking through, and he asserts that you need to approach the entire “system” and not only partials if you want to make changes to it. Unruh has four components, which the chapter is built up against: – – – –
Technological system Social response Institutional response Firm response
Unruh (2000) argues that coupling the institutional with the material or technological aspect in TIC consists of reciprocal-dependent components tied together in a network, which makes the systems hard to change. In his paper Understanding carbon lock-in (2000), he describes how technologies have become interwoven in the industrial economies’ technical systems and social arrangements. This has created a path dependency and the lock-in of systems: “TIC [Techno-Institutional Complex] arise because large technological systems, like electricity generation, distribution and end use, cannot be fully understood as a set of discrete technological artifacts but have to be seen as complex systems of technologies embedded in a powerful conditioning social context of public and private institutions. TIC develop through a path-dependent, co-evolutionary process involving positive feedbacks among technological infrastructures and the organizations and institutions that create, diffuse and employ them.” (Unruh 2000, p. 818)
When a TIC system is created, it is hard to unlock, because the technological systems and the social arrangements have become “systemic” barriers. Lock-in is possible both on the technological and the social level. “Once locked-in TIC are difficult to displace and can lock-out alternative technologies for extended periods, even when alternatives demonstrate improvements upon the established TIC.” (Unruh 2000, p. 818)
Unruh also use the term “dominant design” (Unruh 2000, p. 820), which means that a given system not necessarily is the most appropriate system but that a range of more or less random factors through a gradual development has led to that specific system or design to be dominant. These random factors can be timing, strategy, historical circumstances, and different types of scale advantages such as economy, learning effects, expectational effects, and network advantages (Unruh 2000, p. 820).
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The four components in Unruh’s theory, i.e., the technological system, social response, institutional response, or firm response (Unruh 2000, p. 827), are in this chapter used to understand “recycling” and the lock-in systems that may be present in the transition from a use and throwaway or incineration paradigm to a recycling and reuse paradigm. The chapter also inspects the possibilities and barriers that legislation as well as social behavior implies, for instance, the environmental costs of recycling, which is often neglected in the media and the general excitation of the recycling movement including industrial research. Lately, in the EU, the waste directive is being implemented in full scale, which means that waste is to be recycled to a larger degree than ever before and incineration of waste shall be as minimum as possible. This change is an institutional response, which has consequences for the other parts of the techno-institutional complex, which the waste system consists of. The changed legislation means that technology needs to change as well to make a full system change, for instance, in introducing sorting facilities for different fractions of waste. For instance, Denmark has (among other countries) historically built district heating facilities for incinerating waste, which means that the new transition into recycling and reuse requires new sorting facilities, a change of the renovation vehicles’ designs, as well as households’ waste bin type and number of necessary bins according to the fractions to be sorted at the source (OECD 2019). An institutional response is also how the waste tariff is set or other incentives changed to make people sort their waste in more fractions than before. “Firm response” is also important: Is it possible to find the right bidders on the market, are there suppliers of the right waste bins or the technology required, and what is the cost? Similarly it is with the social response enabling the recycling agenda.
2.1
Unlocking
Unruh (2002) describes three approaches to minimize the unwanted environmental changes: 1. Avoid system changes and treat outlets/disposals (end-of-pipe solutions). 2. Continue the old system but change single components into a new configuration (continuity). 3. Substitute the system entirely with a better system (discontinuity). According to Unruh, there are no examples of discontinuity in larger systems, which are due to lock-ins in political priorities and powerful components in existing techno-institutional complexes, for instance, the conservation of the incineration facilities for waste because of large municipal loans taken historically to invest in these plants to begin with. Unruh (2002) points out that although continuity can have the advantage that costs are often lower on the short scale and there may be less inertia in the green
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transition, there is also a risk of choosing solutions, which are less optimal in the long run. It is worth managing the unlock mechanism: external technologies, which may be evolved in niche sectors, and institutional changes. Regarding the institutional changes, Unruh says that political change can be hard, and social changes can often precede initiating such changes. In the next sections, the four terminologies of Unruh’s are used: technology system, social, institutional, and firm responses, to structure the description of the three chosen waste fractions studied regarding their potentials and uses with regard for recycling: plastic, textile, and electronic waste.
3
Plastic
It is difficult to imagine life without plastic. It is used for food packaging in order to lengthen its longevity, for toys, clothes, electronics, and much more. Plastic is a light, strong, and flexible material useful for many purposes, however, problematic when it has served its purpose and ends up as waste. Beaches are covered in plastic waste, huge islands in the sea made from plastics, and animals that have mutated or are mutilated or have died after digesting plastic waste. New problems with microplastics in water, in the food chain of animals, and in the environment in general have appeared, and the effects of the microplastic on our ecological systems are unknown. Finally, challenges collecting and recycling the plastic waste from households and consumers are tremendous. The issue of collecting and recycling household waste is the theme of this section.
3.1
Institutional Response
One of the reasons why plastic is difficult to recycle is due to the complexity of the material. Plastic is a common connotation of multiple compositions with different qualities of which some are relatively easy to recycle, whereas others with the current technologies available are impossible to use again. By 2025, the EU Waste Directive requires the member countries to introduce producer responsibility regarding ensuring that packaging is designed and produced for reuse or recycling. By 2025, 65% of all packaging must be recycled (i.e., 50% of the plastic packaging) (https://ec.europa.eu/environment/waste/packaging/index_ en.htm, https://eur-lex.europa.eu/legal-content/DA/TXT/?uri¼legissum% 3Al21207). The main challenge to fulfill the EU requirement for recycling plastics is the need for the establishment of national or local plastic sorting facilities to enable the recycling of plastics in relevant industries. There is little experience in such sorting facilities – especially high-tech machinery to carry it out – most experiences in
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plastic sorting is when industries themselves collect their own products back in order to recycle it directly into new products of the very same kind as the old one. Manual sorting such as this has the challenge of logistics. Who shall collect the plastic, who shall transport it to the relevant production sites, and in which condition shall the old item for reuse be in? These questions are elaborated on in the next.
3.2
Firm Response
Plastic waste from EU Member States is found on dumping sites in Malaysia and Indonesia, where it is used for, e.g., fuel in smaller factories or burned in the street creating immense environmental problems. This had led to a renewed focus on the recycling of plastic in the EU. In newer tenders, bidders are awarded according to how high percentage of plastic waste is sorted in “pure” plastic types. In these tenders, it is demanded that plastic waste must be treated in EEA countries. Here, used plastic can only be exported outside the EEA once it has been transformed to plastic pellets. It is, however, a difficult and resource-demanding task to control the entire value chain, and even the purchasers face challenges controlling what happens to the plastic once sorted in different plastic types for recycling. The industry claims to be willing to make sorting plants for plastics if the amount is large enough and chastises the municipalities for the lack of sorting in the collecting stages.
3.3
Social Response
Trust in the “system” is crucial for households to choose to sort plastic waste. Thus, it is a backset when the media shows that plastic ends up as polluting other parts of the world. The motivation for households to sort waste declines, and the distrusts affect other trust issues in the municipalities and the state. The general assumption is that all waste is incinerated anyway, which destroys many years of good waste sorting efforts in the municipalities. Likewise, requirements for cleaning materials before discharging it demotivate households to sort waste. The local municipalities have many different contracts with collectors, and the requirements for different fractions differ as well, locally as nationally, and make issues very complicated for households to make an effort to a better waste sorting at the source. Authorities need to create common criteria for waste sorting and cleaning to obtain uniformity among municipalities and collectors.
3.4
Technology
A rapid development in recycling technologies for plastic is going on many places around the world. Pilot project, however, in small scale is tried out in various
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places; however, the industry hesitates to include recycled materials and refers to the lack of plastic sorting and amount in the municipalities and claims that there is no “market” for recycling plastic domestically. In other words, the industry asks the municipalities and utility companies to push the technology development in assuring enough sorting and amount before the industry is willing to invest in recycling plants. In the next section, the issues in recycling soft polyvinylchloride (PVC) is dealt with, because it is one of the plastic fractions that are most difficult to recycle and has the most polluting issues regarding emissions from incineration.
3.5
Soft PVC
In the 1950s and 1960s, the invention of plastic revolutionized many industries, because it was a light and strong material compared with steel and concrete and it could have many colors. Depending on its composition, plastic manufacturers could produce a long range of different plastic types with different properties. However, one property was especially sought for: soft and flexible plastic, which was invented with the soft PVC. At the time of the plastic evolution, no one cared for the waste, because the over-excitedness of the new wonder material was very immense (https:// plast.dk). Today, we deal with the consequences of this neglect, and the world is full of plastic waste in millions of different compositions. Most of the plastics are not fit for recycling and are often incinerated in district heating plants or are disposed onto “waste mountains.” This section focuses on soft PVC, which is made of crude oil, chloride, and additives, which initially forms a hard kind of plastic. The hard PVC is suitable for recycling and is typically collected for recycling through a WUPPI scheme (The plastic industry’s national scheme for collecting and recycling hard PVC). Differently, it is with the soft PVC, which has many softeners added, which troubles the recycling of it. Especially phthalates are problematic because it has environmental as well as health issues. In the EU, the REACH regulation controls the components in soft PVC, and by 2020, the EU Member States have agreed to stop the import of products with troublesome phthalates (The EU regulation to ensure the protection of the environment and human health towards the risks of chemical exposure; https:// pvc.dk).
3.5.1 Waste Treatment of Soft PVC In the EU, some recycling of soft PVC is going on. In some countries, however, soft PVC is not collected fractionally, and is thus not recycled, because the common opinion among authorities and citizens is that soft PVC has limited recycling value because of the difficulties in removing the troublesome additives. Incineration of soft PVC is politically unwanted because of the chloride in the smoke, which is transferred into hydrochloric acid. The smoke, however, can be neutralized, but when one kilogram soft PVC is incinerated, two kilogram rest products are created, which must be treated as hazardous waste, which is required,
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disposed as controlled landfill (https://pvc.dk/wp-content/uploads/2019/04/ Hvordan-haandteres-PVC-affald-i-Norden.pdf). Other countries prefer incineration prior to landfill disposal until a better solution for disposing soft PVC, such as Norway and Sweden, where soft PVC is thought of as a resource for energy making by incineration.
3.5.2 Future Perspective on Soft PVC Another method to recycling soft PVC is refining, also called “feedstock recycling.” The soft PVC is with this method digested into small substances, from which the carbon content can be reused in the production of other materials. Refining is also interesting regarding other plastic types, especially for the large amount of mixed plastic or low-quality plastic, which is hard to recycle today. All in all, the future development in making soft PVC recyclable concerns the efforts in removing the phthalates. The producers of soft PVC should be forced to make a similar agreement as the WUPPI regulation, because soft PVC with the technology on the marked is suitable for recycling; however, the issue with phthalates must be solved.
4
Electronic Waste and Recycling
Electronic waste, or e-waste, generated in 2014 was according to the United Nations University (https://unu.edu/news/news/ewaste-2014-unu-report.html) 41.8 million tons consisting of approximately 30% small equipment (vacuum cleaners, microwaves, toasters, electric shavers, and video cameras); 28% large equipment (washing machines, clothes dryers, dishwashers, electric stoves, and photovoltaic panels); 17% temperature-exchange equipment (cooling and freezing); 15% screens; 7% small ICT equipment; and 3% lamps (Baldé et al. 2015). In 2018 this amount is expected to approach 50 million tons (https://www.statista.com/statistics/499891/ projection-ewaste-generation-worldwide/). E-waste consists of both hazardous (brominated flame retardants, lead, cadmium, polychlorinated and polybrominated biphenyls, mercury, and polyvinyl chloride), valuable (copper, silver, gold, and palladium), and recyclable materials. E-waste has traditionally been exported legally as well as illegally to China, India, and Africa, where it is recycled manually through hand dismantling, open burning, and acid leaching in order to recover gold, copper, and other valuable metals. Handling of e-waste has lately included a higher extend of regulation with extended producer responsibility laws making electronics manufacturers responsible for handling e-waste regarding taking care of minimizing risks for occupational health and environmental risks. E-waste is today collected informally via “waste picking” or formally through voluntary or mandatory producer “take-back” programs. Waste picking versus takeback programs are described in the next for illustrating the differences between the most significant and hazardous recycling method and the best available technology (BAT) in electronic recycling (Lucier and Gareau 2019, p. 2.).
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Technology System
4.1.1 Waste Picking Waste picking is the most hazardous yet the most profitable way of recycling e-waste with the least costs for the recycling industry in India, China, and Africa. Waste picking is low-cost, however, labor-intensive, and thus manually collected and sent to a recycling site, where hazardous components such as batteries and freon are removed. The manual processes include dismantling with screwdrivers and hammers, and the mechanical processes include dismantling with conveyor belts, shredders, and magnets. Precious metals such as silver, gold, copper, etc. are extracted through a refining process with chemicals, heat, or with metallurgical treatment. The competition for the precious metals in e-waste is very high, which makes many recycling companies offering low-cost strategies, which include human health disasters and no environmental protection. The components that cannot be sold or used as secondary raw materials are disposed of through means such as incineration or landfill. Rare earth elements with the highest resale value and risk of depletion are neodymium, europium, dysprosium, terbium, and yttrium which are found in LED lighting and touchscreen technologies, which can result in radioactive contamination (Lucier and Gareau 2019, p. 3). Child waste pickers have been found to suffer from respiratory problems, lead poisoning, and neurological, digestive, and bone problems. Airborne metal dust and chemical exposures are high occupational health risks in all the manual operations.
4.1.2 Take-Back Programs In the EU, take-back programs have been introduced, and as expected they cannot compete financially with the low-tech, high-risk waste-picking industries. Approximately 90% of the gold in discarded mobile phones can be recovered when manually dismantled, whereas only 26% is recovered through mechanical shredding. Take-back programs including extended producer responsibility (EPR) is executed in a number of US states, in the EU, and across many countries in Asia, Africa, and Latin America. These programs involve both low-cost labor-intensive dismantling and preprocessing in China, India, and Africa and high-tech end processing with modern facilities (e.g., the EU countries) (Lucier and Gareau 2019). “Safe conduct” programs are another alternative to recycling e-waste, which includes reuse of electronics. It can either be reused directly, because the device is functioning but “old,” or it may be refurbished into new electronic. The safe conduct programs include asking users to either give away their old but still working electronic devices, so others can take it for free (https://www.ugeavisensvendborg. dk/ugeavisensvendborg/Genbrugsstation-indfoerer-en-Her-maa-du-tacontainer/ artikel/399839), or asking for it to be sold on auctions, where the profit goes to research or charity purposes, for instance (https://www.odenserenovation.dk/omodense-renovation/nyheder/afslutning-paa-frit-lejde-kampagne/, https://www. assensforsyning.dk/da-DK/Affald/Kampagner/Frit-lejde-en-kampagne-omgenbrug.aspx).
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In general, mobile phones have a good secondhand sales potential in both reusing and refurbishing, since new mobile phones are expensive. Thus, many shops offer as well new mobile phones as well as “old,” refurbished ones, and they offer repair of old phones as well. However, it only goes well with electronic products less than 6 years for a smartphone and 10 years for laptops and desktop PCs and high-end speakers (http://ecircle.rf.gd/eol-reuse-repair-and-refurbishment/). After that age, direct reuse or refurbishment has no longer a market potential (Zhilyaev 2019).
4.1.3 Firm Response Out of the total e-waste, only 20% of e-waste was in 2016 documented and recycled properly, and 80% was unknown. Although the export e-waste to developing countries for low-cost recycling has declined a bit, the overall e-waste management market is mainly segmented into recycling and reuse, respectively, dispose and trash on the market in 2019. The increased awareness about health and environmental hazards of disposal and handling of e-waste and the technological advancements for recovery of precious metals from electronic scrap are making recycling an attractive and feasible option for recycling companies. In 2019, Europe dominated the global e-waste management market; however, during the forecast period, Asia-Pacific countries are expected to hold the largest growth potential for this market. Over the past 4 years (2016–2019), the e-waste management market has merged, expanded, and relocated their service facility centers, and at the moment, the largest recycling actors on the market are Electronic Recyclers International, Inc. (ERI) (US), Aurubis AG (Germany), Sims Metal Management Limited (USA), Umicore (Belgium), Boliden AB (Sweden), Global Electric Electronic Processing Inc. (Canada), Triple M Metal LP (Canada), Tetronics (International) Limited (UK), Enviro-Hub Holdings Ltd. (Singapore), and Stena Metall AB (Sweden) among others (Baldé et al. 2017) (https://www.globenewswire.com/news-release/2019/11/ 21/1950754/0/en/E-waste-management-Market-to-be-Worth-45-78-Billion-by2025-Exclusive-Report-by-Meticulous-Research.html). 4.1.4 Institutional Response The EU take-back programs are not as new as it could be expected by reading this chapter. Actually, the legislation on e-waste dates back to the beginning of the millennium. It is more likely the member countries’ implementation and practices on using the e-waste legislations that have taken speed almost 20 years after its initiation. The directive on waste electrical and electronic equipment (WEEE Directive 2002/96/EC) was provided for the creation of collection schemes where consumers return their WEEE free of charge. In order to tackle the fast-increasing waste stream, the new WEEE Directive 2012/19/EU became effective on 14 February 2014. The EU legislation restricting the use of hazardous substances in electrical and electronic equipment (RoHS Directive 2002/95/EC) entered into force in February 2003 and was recasted in 2013. The legislation requires heavy metals such as lead, mercury, cadmium, and hexavalent chromium and flame retardants such as polybrominated biphenyls (PBB) or polybrominated diphenyl ethers (PBDE) to be
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substituted by safer alternatives (https://ec.europa.eu/environment/waste/weee/ index_en.htm). The WEEE Directive says that “Member States have a responsibility to collect information on all WEEE” and “WEEE which has been received by all treatment facilities should count towards the target” (https://ec.europa.eu/environment/waste/ weee/pdf/WEEE%20workshol%20february%202017/All%20WEEE%20flows% 20workshop_Introduction.pdf). However, the Global E-waste Monitor 2017 showed that in 2016, Asia was the region that generated by far the largest amount of e-waste (18.2 Mt), followed by Europe (12.3 Mt), the Americas (11.3 Mt), Africa (2.2 Mt), and Oceania (0.7 Mt). Of the total of 44.7 Mt. in 2016, approximately 1.7 Mt. are thrown into the residual waste in higher-income countries and are likely to be incinerated or landfilled. Globally, only 8.9 Mt. of e-waste are documented to be collected and recycled, which corresponds to 20% of all the e-waste generated (Baldé et al. 2017) (https:// collections.unu.edu/eserv/UNU:6341/Global-E-waste_Monitor_2017__electronic_ single_pages_.pdf).
4.1.5 Social Response The University of Southern Denmark has completed a large-scale online survey regarding mobile phones, laptops, tablets, and desktop PCs in Denmark asking respondents on the online sales market called dba.dk “How did you acquire the device you are currently using?” The results showed that although most respondents wanted new electronic devices, up to 25% used secondhand devices (Zhilyaev 2019).
The biggest obstacle identified was a lack of warranty or guarantee coming with secondhand products. People expect secondhand products to be less reliable and afraid that if they will have some problems, there will be nothing they could do in this case (http://ecircle.rf.gd/direct-reuse/)
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Direct refurbishment is when a shop or sales company acquires used but fully or partially functionally electronic devices from private users and subsequently refurbishes the device for resale. The refurbished products are professionally tested, fixed, and cleaned (physically and from personal data) and are provided with a new warranty (http://ecircle.rf.gd/direct-refurbishment/). However, the main obstacles on both direct use and direct refurbishment are: • Lack of awareness of refurbishing and its environmental, convenience, and economic benefits • Lack of trust issues • Careless pre-use resulting in these wearing out quickly • Only high-end refurbishment market of e-products • Unreasonably low-acquisition price provided by refurbishers compared to secondhand markets • Lack of data safety and warranty Another obstacle is the way electronics are produced today. Many items are unsuitable for repair, and is not fit to open, because it is glued or melted together. This makes repair a complicated, time-consuming, and expensive task.
5
Textile Recycling
In 1970, approximately 25 million tons textiles were circulating worldwide (https:// dakofa.dk/element/hvordan-looper-vi-tekstilerne/). Today, it is about 100 million tons, and in 2030 it may well be doubled to 200 million tons. The remarkable rise comes from an expanded clothes consumption throughout time combined with the global population increase and the enhanced global living standard. The average use time of clothes has fallen 25% between 1998 and 2005, and most textiles, unfortunately, end up as landfill, although today many countries do collect some amounts of the textiles for recycling. In Europe, Germany collects about 74%, Denmark 44%, and Holland 37% textiles today. These textiles are being recycled into new fibers and often used in new clothes and for insulation of vehicles and mattresses, etc. However, the former is still an exception. As with plastics, the degradation of textiles leads to weaker strength in fibers, so a certain amount of downcycling occurs in the recycling process.
5.1
Technology System
T-shirts, for instance, are made of the weakest kind of fibers, so better fibers may end up in the production of new t-shirts. Used t-shirts, however, often end up as insulation fills in vehicles and mattresses, because most fibers have lost its
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strength. Jeans, or denim, on the other hand, are made of stronger fibers and can be recycled into new cloth or even new jeans. A pair of recycled jeans can have up to 30% recycled denim fibers mixed with virgin cotton fibers to reach the strength standards for new jeans (Lindström et al. 2019; Koszewska 2018). However, the cost of recycling fibers for textiles for clothes and fashion is still higher than using virgin materials, so new technology to produce at lower costs for recycling more textile is necessary. The benefit is the environmental impact emissions, which is as low as 3.8%. Even with only 12% of recycled content, recycled denim fabric has a much lower environmental impact than a similar virgin fabric, for instance, a reduction in water consumption by 9.8%, energy consumption by 4.2%, and CO2. Recycled shoes made from PET bottles, CDs, care tires, and other synthetic materials have also been on the market for more than a decade (Sarioğlu and Kaynak 2017; Kaynak and Sarioglu 2018; Palme et al. 2017) (https://www. brooksrunning.com/en_us/06-17-2009.html). Technologies can help textiles being decomposed into stronger fibers. The use of a lubricant pre-treatment on cotton and polyester textiles can decrease the friction during shredding in the process of making new textiles. This gives longer and stronger fibers and reduces the melted areas of polyester material (Lindström et al. 2019). The mixture of recycled polyester and cotton has found another new technological invention. These materials are often used in polycotton, which is typically used in service textiles such as sheets and towels at hospitals and hotels (Palme et al. 2017). Recycled textiles can be divided in open-loop or closed-loop recycling methods. Closed-loop recycling is garments used as raw materials for the manufacture of new products of similar quality, and open-loop recycling is garments used as raw materials to manufacture industrial products of lower value (Payne 2015: Russell et al. 2016). Recycling textiles can be done mechanically (typical for cotton) and chemically (typical for polyester). Mechanical recycling involves cutting, shredding, and mechanically disassembling materials, whereas chemical recycling breaks down polyesters for repolymerization. Disassembling textiles has been tested in lab scale, but full-scale technology still needs to be developed and set in production (Leonas 2017; Sandvik 2017). Exactly how much fiber strength is lost in the process of recycling textiles and how much virgin material is needed to fulfill the requirements is yet unknown. It may very well vary from product to product. Yet, the process of recycling fiber to fiber for polymers is less costly and uses up to 59% less energy – than extracting virgin materials (https://fashionunited.uk/news/fashion/how-sustainable-isrecycled-polyester/2018111540000). For cotton, the shredding process, the bleaching and recoloring involved, the mix of fibers for the final fabric, and the necessary mix with virgin cotton to sustain the desired strength are a process that involves more work and a higher cost (https://gabrielfariasiribarren.com/en/ organic-cotton-vs-recycled-cotton/). Recycled cotton will, however, reduce water and energy consumption in comparison with the growth and generation of virgin cotton.
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Firm Response
Reuse and recycling of textiles reduce the environmental impact compared to incineration and landfilling; however, apparently reuse is more beneficial than recycling, because recycling is a more complex process. Nevertheless, the avoided production of new products and the relatively clean recycling processes should not cause a turnaway from recycling textiles (Sandin and Peters 2018, p. 353). The overall production costs of making old clothes into usable fibers for new clothes and securing the quality and strength of the fibers in the recycled clothes are still making products made of recycled fabrics and materials premium priced. Others have found a new way of avoiding the extended costs of shredding fibers into entirely new making of clothes, and this is where fashion and clothes making and other textile recycling are used in the upcycling movement. Upcycling consists of recycled clothes in larger fabric parts, which does not implement the shredding and degradation of fibers. Instead, pieces of used clothes are patchworked into new clothes styles. This has become trendy among young consumers, is both made commercially and privately, and exposed on do-it-yourself sites such as Pinterest and Etsy.com. Although there are many barriers and technology needs for the recycling of textiles to take speed, the fashion trend in recycling and buying recycled clothes is becoming a fashion trend even in the developed countries and especially in the young generations (Koszewska 2018, pp. 344–346). • BIONIC (converts plastic bottles into new polyester yarn for textiles) (https:// www.bionicyarn.com/polymer.html) • Tonlé (uses surplus textile scrap from larger manufacturers) (https://tonle.com/) • Mud Jeans (leases jeans, recycles and upcycles fabrics) (https://mudjeans.eu/) • G-Star (creates new denim fabrics out of returned jeans) (https://www.g-star.com/ en_dk?utm_nooverride¼1&bgid¼16199-NIJJKVHCKBOAQ-243590330566& gclid¼Cj0KCQjwl8XtBRDAARIsAKfwtxC_uMN-F0lossyblyyg9WO3cxOZW mO2kO8HxjOKsK-5loErOHkiK3kaAl3iEALw_wcB) • ReShare (recycles used military workwear into new textile products) (https:// www.reshare.nl/) • ReBlend (makes yarn and textiles out of no longer wearable fabrics) (https:// www.reblend.nl/) • ReCover (recovers upcycled cotton yarns) (https://www.recovertex.com/) • H&M (collecting and recycling of clothes and footwear reuse) (https://www2.hm. com/da_dk/dame/Kampagner/16r-garment-collecting.html) High-end fashion companies have also adopted the ideas of recycling textiles and using it for their visions of being a part of the circular economy trend. Companies such as Stella McCartney, Bethany Williams, EcoAlf, Doodlage, Recode, Bundgaard Nielsen, Suave, Zurita, Eileen Fisher, Vivienne Westwood, Katie Jones, Waste Not, Spencer Phipps are among the abovementioned front-runners in using recycled textiles in their collections (https://www.stellamccartney.com/
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experience/en/sustainability/themes/materials-and-innovation/recycled-nylon-poly ester/, https://www.fashionrevolution.org/usa-blog/7-fashion-brands-that-are-design ing-out-waste/, https://motif.org/news/top-sustainable-fashion-designers/). Yet, recycling has its limitations in the circular economy. The degeneration of both polymer and cotton fibers means that the recycling is weakening the fibers each time it is regenerated, as mentioned earlier. In the plastic industry, PET bottles from beverage companies can be remelted and used approximately 25 times, and plastic pipe-making of the highest strength for water mains can have up to approximately 25% recycled plastic but requires 75% virgin plastic in order to maintain its strength to lie in the ground and resist traffic load (https://fashionunited.uk/news/fashion/ how-sustainable-is-recycled-polyester/2018111540000). Although technology for recycling textiles is present, the industry is still lacking investing in it. The issues are lack of proper waste management and textile sorting; lack of standardization; lack of regulation; and, ultimately, lack of customer awareness and of demand (Hole and Hole 2019).
5.3
Institutional Response
There are several barriers for recycling textiles to be overcome (Ljungkvist et al. 2018, pp. 4–5). • Reduction in demand for European used clothes in developing countries because of strong growth in export from Asia • Higher-quality demands for recycled clothes • Chinese ban of imports of waste streams from Europe including textiles • Collection volumes growth in Europe • Historically low prices for nonreusable textiles • A need for new fiber-to-fiber recycling solutions • A need for automated sorting solutions to lower costs • A need for new chemical recycling technologies, i.e., for separating mixed fiber textiles and generating the same fiber quality as virgin. • A need for extended producer responsibility payments or from local and/or central government in return for environmental (and social employment) services carried out by the collectors. The sustainability of recycling textiles has been investigated for its footprints (carbon, energy, ecological) as well as the measuring of the reusability of textile products, and full LCAs have been assessed in the textile industry (Taken from the Handbook of Life Cycle Assessment (LCA) of Textiles and Clothing edited by Subramanian Senthilkannan Muhtu. This book volume is from 2015.). The carbon footprint of a typical new pure cotton t-shirt shows that the yarn spinning is the highest energy consumer followed by the knitting process, the sewing process, and the cultivation and ginning process of raw cotton, and the least energyconsuming processes are the bleaching and drying. However, the studies reviewed
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do not include the use phase of the textiles, where washing and cleaning and the general use-and-throwaway culture as well as commercial interests in supporting that culture may have an even further impact on the life cycle of a t-shirt (Roos et al. 2015). The energy footprint of polyester fiber-based weaved textile production in India requires higher amount of energy compared to natural fiber, for instance, cotton or wool. The highest energy consumption stage in the production is the dyeing process followed by the fiber production, spinning, weaving, clothing, and other knitting processes (Palamutçu 2015, p. 36). The ecological footprint of two different shoes, one basically synthetic shoe and one mainly leather shoe, shows that synthetic material has in general a much lower ecological footprint than leather, despite the leather production is often a by-product of the main uses of the animal in question (milk and meat production). These are normally subtracted from the calculations (Roca and Herva 2015) (https://www. puma-catchup.com/pumas-environmental-impacts-decrease-15-since-2013/; https:// www.stellamccartney.com/experience/en/sustainability/themes/measuring-ourimpact/). Leather has a higher ecological footprint despite that leather production is a by-product of meat production, because there is limited skin on an animal, and the animal takes a certain amount of land, food, and water and emits methane gasses, which has a negative impact on the greenhouse gas emission. The energy used in the process of making leather shoes, however, is also higher than synthetic shoes, because synthetic shoemaking is a more automated process, and making leather shoes takes more handwork and skilled staff to make. The costs – economic, and ecological impact from emissions on recycled textiles versus virgin textiles may explain why the recycling of textiles has not caught the same interest as, for instance, the reuse of plastic. Only 1% of recycled textile finds its way into new clothes since recycling technologies are only starting to emerge. The EU Parliament adopted in 2018 a circular economy package that will ensure that textiles are collected separately in all member states, by 2025 at the latest (EU Briefing from January 2019). However, the main ecological footprint in the life cycle of clothes is the use phase of the clothes, i.e., the water, energy, and chemicals in detergents used in washing, tumble drying and ironing, and the microplastics shedding into water. The most efficient way to reduce the environmental impact of clothes is if the consumers reduce washing/iron times and temperature; wash at full load; avoid tumble-drying; purchase eco-friendly fibers, and donate clothes that are no longer used to be reused or recycled (Beton et al. 2014).
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Social Response
The pop-up of secondhand mini-markets, stores, and collective events has a special appeal to the young, visionary, and fast-fashion consumer segments, who often have not much money to buy expensive fashion. The trend is rising in large cities as well
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as in small towns, and the concept of renting a clothes rail or a shelf and selling clothes that is good enough for direct reuse is becoming more and more popular in many cities. Facebook market is another example of an online platform, where people sell multitudes of things, as well as eBay, Etsy.com, Pinterest, and locally used market platforms (see also Diddi et al. 2019). Consumers’ interest in recycled clothes and textiles and sustainable solutions has increased. The idea of sustainable consumption and circular economy attracts consumers for reusing and recirculating textile waste. However, consumers ask for more transparency and information from the companies engaged in recycling textiles, and they want to know how the recycling process affected the environment (e.g., Vehmas et al. 2018; Weber et al. 2017; Diddi et al. 2019). A survey of consumer behavior regarding recycled clothes in Canada involving 410 people in Ontario with varying demographic characteristics asked how they currently manage their textile waste. The results showed that consumers with a high fashion index (i.e., fashion consumers) are more interested and more likely to participate in alternative methods (e.g., resell, swap, and take back) for removing unwanted textiles. Consumers with low fashion index (i.e., non-fashion consumers) manage their textile waste differently and typically donate and dispose their unwanted clothes (Weber et al. 2017). Young consumers habits of buying recycled fashion show their engagement in sustainable clothing consumption behavior including perceived value, sustainability commitment, uniqueness, acquisition from known sources, and lifestyle changes. Specific reasons for young consumers asked to not engage in sustainable clothing consumption include perceived lack of variety/style, budget constraints, skepticism, lack of knowledge/skills, emotions attached to consumption, perceived lack of availability, and consumers’ self-indulgent behavior (Diddi et al. (2019, p. 200) interviewed 41 young consumers.). Recycling textiles is thus in an urgent need for creating a sustainable planet, but the trend and fashion that have already begun have a growing potential market because of its sustainability. However, the road toward the fashion industry and the consumers becoming sustainable is still long and paved with obstacles such as the need to develop better collection systems, shredding and chemical procedures, and keeping costs down for the market to grow.
6
Alternatives
Plastic, textiles, and electronics as waste fractions share some of the same issues regarding recycling. They are all composed of multiple blends of different materials within their respective categories. Therefore, the recycling of them requires large machinery and extensive labor and logistics to divide all parts into multiple subfractions before they can be recycled. Alternatives to plastic and textiles as raw materials of which products are created are present within their own categories of products.
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Plastic, which basically is a fossil oil product, can be manufactured with vegetative oils (e.g., rasp and sunflower seeds, etc.) as alternatives. However, studies have shown that strength of the so-called biodegradable plastic as well as the strength of recycled fossil plastic products is harder to obtain compared to the virgin fossil plastic. Yet, biodegradable plastics are well suitable for a long range of lightweight products used in the daily households such as wrap, food packaging, disposable tableware, toys, etc. (https://plast.dk/2018/03/nye-lego-klodser-bliver-produceret-isukkerroer/). Some high-strength products can be manufactured on alternative materials than plastic. For instance, alternatives for plastic pipes are concrete and steel pipes, although these alternatives have a higher impact on the sustainability of the planet than plastic, unfortunately. Textiles are made of both natural and polymer fabrics, and in this respect, the polymer fabrics share the similar issues as plastic products, i.e., they originate from fossil oil. Natural textiles such as cotton, silk, and wool are reproductive, which gives them a better environmental footprint than polymer; however, leather, which is also a natural product, has a high impact in terms of CO2 outlet, because the animals, where it comes from, emit methane into the air and there is a limited amount of natural leather compared to cotton, for instance. New alternatives have been used in fabrics lately, such as hemp, bamboo, and other natural fibers woven into fabrics or blended with cotton, and these alternatives have shown even less impact on the environment, because they do not require as much water as cotton plants, for instance (Kumari et al. 2013). Electronics, on the other hand, has not changed in material compositions but in amount. Each component, such as chips and electronic devices, has become smaller and smaller in time; however, the amount of electronics used today is massive and so is the waste fractions. Computers have replaced much of the old paper-born decades prior to the millennium, and with the growth of the Internet, the cable industry has put many meters of copper and aluminum into the ground as well as satellites into space. It is hard to imagine alternatives to a growing need for global communication through electronic media, so in that respect, the aim for recycling outdated electronic parts seems the only way to limit the footprint hereof.
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Conclusion
An ongoing theme when it comes to recycling and sustainability is whether the transition to a “greener” society requires changes in our everyday behavior or if we can find technological solutions to “fix the problem.” In spite of the increased focus on the sustainability of our planet, there seems to be an ongoing and persistent idea that we can continue our lifestyle of today and even expect an economic growth in BNP and at the same time mitigate the climate changes and reduce our environmental impact. The chapter has shown that there is a long way to go before that idea may be true if it ever will be true. The main obstacles in terms of recycling are the lack of technology, sorting facilities, and social behavior such as buy and throwaway, which
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historically has only increased the waste on Earth to amounts that seem unlikely to go away or even to be diminished. Recycling is not hereby excluded as a useful tool. However, recycling is not the quick fix as optimists wishes it to be. There are a lot of uncertainties in how to make recycling work, and the costs of recycling can end up in being so high that consumers and industries will not pay for it, which is apparent in the plastic, textile, and electronics industries as dominant factors at the moment. And the environmental costs must also be taken into consideration. Recycling is one tool among many which is needed to overcome the sustainability problem of waste generation and overconsumption. Another tool is minimizing or at least diminishing consumption and thereby diminishing waste generation. Minimizing consumption may even be a stronger tool than recycling; however, the obstacles for embedding this worldwide seem also not accomplishable, because this would require almost seven billion people to accept social changes that affect welfare and lifestyle changes in ways, and only few are willing to. As proposed by Unruh’s model on techno-institutional complexes, systemic changes must, however, happen as an interaction between changed lifestyle/social response and technological development, institutional response, and firm response if the waste issues on our planet can be overcome. Recycling is one thing, but it still has issues in itself, which needs to be addressed: source separation of household waste must be supplemented by technological development that ensures the recycling of the collected household waste and in some cases also by technology that facilitates and eases the task of the individual consumer.
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Cross-References
▶ Geopolitics of Natural Resources ▶ Resource Depletion ▶ Sustainable Plastic and Corporate Social Responsibility Acknowledgments Dorte Eeg Auerbach, Magnus Kristian Hansen, and Lene Stig Andersen have counseled the authors in the process of writing this chapter. Furthermore, Dorte Grastrup-Hansen and co-author Pia Duus Jensen have granted permission to borrow parts of the theory chapter in their master thesis, “Om borgernes sortering af husholdningsaffald,” Aalborg University, December 2015, to reproduce translation into English for this chapter as well.
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Wastewater Disposal Techniques Izhar Alam and Azam Malik
Contents 1 2 3 4 5 6 7
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Wastewater Treatment Outline . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Requirement of Wastewater Treatment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Attributes of Wastewater . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Wastewater Treatment Stages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Chlorination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Wastewater Treatment Activities, Processes, and Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.1 Different Forms of Wastewater . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Natural Wastewater Disposal Techniques . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Wastewater Treatment Methods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 The Conventional Methods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.1 Activated Sludge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.2 Trickling Filter Methods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.3 Rotating Biological Contactor Method . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Bioreactor Membrane Method . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Type of Nonconventional Methods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 Waste Stabilization Ponds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Construction of Wetlands . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 Oxidation of Ditches Method . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.1 Upflow Anaerobic Sludge Blanket (UASB) Method . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 Soil Aquifer Treatment Method . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Disposal of Fecal Sludge and Treatment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 Wastewater Recycles in Agriculture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 Industrial Wastewater Treatment Method . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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I. Alam Department of Civil Engineering, Aligarh Muslim University, Aligarh, India A. Malik (*) Department of Human Resource Management, College of Business Administration, Prince Sattam Bin Abdulaziz University, Riyadh, Kingdom of Saudi Arabia © The Author(s), under exclusive license to Springer Nature Switzerland AG 2021 D. Crowther, S. Seifi (eds.), The Palgrave Handbook of Corporate Social Responsibility, https://doi.org/10.1007/978-3-030-42465-7_90
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20 Modern Methods Used in Wastewater Treatment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 Obstacles in Wastewater Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 Cross-References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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Abstract
Each and every human activity which uses water generates wastewater; however as the overall demand for water rises, the quantity and quality of wastewater generated. The major challenge is to provide an increasingly growing global populace with plenty of freshwater with increasing demands for growth of more power, more nutrition, more enterprise, and more consumption. Whereas wastewater is a vital component of the water conservation process, water is all too frequently seen as more of a nuisance to be disposed of or a hazard to be overlooked after it is used. The consequences of the negligence are now clear. The specific effects, including aquatic habitat depletion and waterborne disease from polluted freshwater sources, have reaching consequences to the well-being of ecosystems and the livelihoods of peoples. Facing with the ever rising demand, wastewater is attaining a momentum as a safe alternative water source, shifting the wastewater management paradigm through “treatment and disposal” to “recycle, reuse, and resource conservation.” Thru this manner, wastewater is no more seen as some kind of problem that requires a solution, rather than as part of a solution to the problems that society and the world facing today. This chapter focuses on the new wastewater technology which has been used in the world for the treatment of wastewater. The wastewater treatment methods are evolving with the rapid technical and time shift. Scientists and researchers are busy seeking new sewage treatment methods which are simpler to install and less costly to use. This chapter discusses wastewater treatment current methods which can make the water be reused for various purposes. Keywords
Wastewater · Waste Disposal · Water Treatment Methods
1
Introduction
Wastewater is water which is polluted with human being activity. Wastewater is “water used from any confluence of household, industrialized, commercial, or agricultural purposes, groundwater flow, or storm water runoff, and any infiltration by sewer or sewage system.” Wastewater is water which has changed in organic, physical, or chemical properties by adding up other substances which make it unsafe for other uses such as consumption (Xiao et al. 2017; Camargo et al. 2016). The daily activities of human beings are mostly water reliant, and thus dispose “waste” through water. Most of the stimulants include body waste (urine and facets), facial
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conditioner, scalp, food waste, greasy, cleaning liquid, textile detergents, toilet roll, toxins, cleaning products, dirt, and bio-organisms (germs) that can cause illness and harm to the ecosystem (Malik et al. 2019; Jain 2017). The supply of water should end up as wastewater which makes its disposal very important. Using new technology for water treatment is the only way to eliminate most of the pollutants present in water to create a safer environment and a significant public well-being. Wastewater management means ecologically sustainable wastewater management and supporting community health, economic, social, and political robustness (Capodaglio 2017; Massoud et al. 2009).
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Wastewater Treatment Outline
Treatment of wastewater is a relatively recent concept since drainage systems were established well before the nineteenth century. “Night soil” had been put in containers along the roads before this time, and the workers drained them into tanks for “honey wagons” (Grady et al. 2011; Crites et al. 2014) sent to rural locations for disposal. In the nineteenth century, flush toilets resulted in the quantity of waste for this farmland. Because of this transport problem, cities started using drainage and storm sewer system to transfer wastewater to water bodies, contrary to Edwin Chadwick’s suggestion in 1842 that is “rain to the river and sewage to the land.” Waste discharge into watercourses has resulted in grotesque pollution and ill-health for surface water users (Lutchmiah et al. 2014; Zhang et al. 2016a). Lindley, an engineer, planned the first “modern” wastewater carrying sewage system in Germany, in the city of Hamburg in 1842. The Lindley system was advanced and essentially made up of quality materials with the accumulation of sewer pipes and sewer accouterments – the Lindley concepts are being practiced currently (Bani 2011). Wastewater treatment only became recognizable after the water bodies’ assimilative capacity was surpassed and health problems were unavoidable. The cost of treating wastewater is paid by discharging societies into the system. Producing portable water from wastewater has been producing great advances today. Previously, whatever the capability of the receiving source, a minimum level of treatment is needed unless discharge permits are issued (Bagal and Gogate 2014; Ayub and Alam 2016). The emphasis is also now evolving from unified systems to much more efficient, decentralized treating wastewater system (DEWATS) in emerging and developing countries where wastewater technology is inadequate and traditional methods are hard to control (Ugya and Ajibade 2016).
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Requirement of Wastewater Treatment
Treatment of wastewater is very important for the reasons set out below, most critical to the:
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1. Reduction in the environment of biodegradable organic compounds: Chemical compounds such as nitrogen, phosphorus, carbon, and hydrochloric acid in organic matter must be degraded by oxidation into gases that are either emitted or which remain in water (Gikas 2017). 2. Minimization of environmental nutrient concentration: nutrients such as nitrogen and phosphate from wastewater enrich water bodies in the environment or make them eutrophic resulting in the growth of phytoplankton and other algae. Such plants reduce oxygen in water bodies, which hinders marine life (Valentino et al. 2015). 3. Pathogen eradication: Pathogens are microorganism which causes disease in flora and fauna and humans and are often called as microbes because it is very tiny for the human eye to see. Examples of microorganisms or microbes consist of bacteria or germs (like Vibrio cholerae), protozoa (such as Entamoeba histolytica, Giardia) virus (like hepatitis, Enterovirus, and E-coli virus), and fungus (like Candida albicans) (Donde et al. 2018). These microbes may form and absorb in the faeces (excreta) of animals and humans in large number (Alkaya and Demirer 2015). 4. Water recycling and reuse: Water is a precious, limited resource that is sometimes accepted as fact. Population has increased in the last half of the twentieth century, bringing pressure to bear on already limited water resources. Urban development has also transformed many areas of the agrarian environment (Boschee 2014). The increasing population means that more food needs to be provided for the growing population and livestock, as humans are realized to be by far the biggest consumer of available water, ensuring that economic growth puts new requirements on available water supplies. Water storage is also a major problem with overdrawn groundwater resources, temporarily and spatially (Harou and Lund 2008). The recycling and reuse are crucial for sustainable development for these reasons.
4
Attributes of Wastewater
Wastewater has unique features, depending upon its source. Industrial wastewater with municipal or household wastewater can be discharged together. If it is to be discharged with domestic wastewater, industrial wastewater might require some pretreatment (Tang et al. 2016; Malik et al. 2019). Wastewater characteristics differ from industry to industry and thus are using different types of treatment methods – for instance, a cocoa manufacturing unit using a skimming tank method in its initial treatment phase to manage spilled cocoa butter, whereas a beverage plant may bypass that in nature (Alam and Ayub 2019). The harmful pollutants which are present in the untreated wastewater are normally classified into biological, physical, and chemical. A number of factors are included to assess these pollutants (Sun et al. 2016; Yan et al. 2014).
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Treatment of wastewater is divided into three groups. 1. Physical Pollutants • Electrical conductivity (EC) shows the salt concentration. • Suspended solids (SS) include suspended (but not dissolved) solid particles in water. • Total dissolved solids (TDS) contain aqueous solutions and small quantities of macrobiotic matter submerged in water (Deng and Zhao 2015). 2. Chemical Pollutants • Dissolved oxygen (DO) represents the quantity of present oxygen in the water. • Chemical oxygen demand (COD) refers to the oxygen equivalent of the microbial activity of a sample which is prone to heavy chemical oxidation. • Biochemical oxygen demand (BOD) refers to the amount of oxygen that microbial cells need in a water sample to decompose organic matter over a reasonable period of time. • Total organic compound (TOC). • Total P represents the volume of phosphorus in a sample of all forms. • Total Kjeldahl nitrogen (TKN) is an organically bound calculation of nitrogen ammonia. • Dissolved NH4-N and NO3-N (ammonium and nitrate, respectively) (Boschee 2014). 3. Biological Pollutants • Total coliforms (TC) contain both fecal and common soil coliforms. • Microorganisms, which are a strong predictor of possible groundwater contamination. • Fecal coliforms (FC) are sources of contamination of fecal material by water. The lead indicator is Escherichia coli, or E. coli. • Helminth research checks into the water for worm eggs (Jain 2017) Wastewater treatment process: The unit operations and processes in wastewater treatment can also be categorized as such due to the nature of the pollutants in wastewater – physical, chemical, and biological (Han and Qiao 2014). The operations and processes of the units in the treatment of wastewater are summarized as follows: Physical processes include methods in which there are no significant chemical or biological modifications and the use of purely physical phenomena to boost or treat wastewater. Instances may be coarse testing to eliminate larger specialized objects and (or clarify) sediment. Physical Operation Unit • Large suspended material screening. • Equalization of flow • Navigation • A granular medium filter system • Communication of wastewater • Sedimentation
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Chemical treatment consists of using a certain chemical reaction or process to enhance the quality of the water. Possibly chlorination is the most widely used chemical procedure. Chlorine, a potent oxidizing compound, could be used to remove pathogens and slow down the rate of decomposition in wastewater. Pathogenic kill is accomplished when the chlorine activates essential biological processes (Ahmed et al. 2017). Ozone is another effective oxidizing agent that was often used as an oxidizing disinfectant. Chemical Operation Unit • By chemical precipitation • By adsorption • By disinfection • By dechlorinating various chemicals Biological wastewater treatment techniques used microorganisms, mostly bacteria, to create stable end products in the biochemical decomposition of wastewater. More microbes, or sludge, are produced, and part of the waste is converted into carbon dioxide, water, as well as other end products (Tran et al. 2016). Biological wastewater treatment technique can be classified into anaerobic and aerobic processes, depending on the level of dissolved oxygen available in the water. Biological Unit Operations • Rotating biological contactor method • Activated sludge processing • Pond of stabilization method • Anaerobic digestion method • Aerated lagoon method • Trickling filter method Although the devices used in sewage treatment are diverse and are likely to combine biological physical and chemical approaches, it can be classified into six processes in practice: (A) Preliminary treatment method (B) Primary treatment method (C) Secondary treatment method (D) Disinfection method (E) Sludge treatment method (F) Tertiary treatment method
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Wastewater Treatment Stages
There are three wide treatment stages: primary, secondary, and tertiary (Fig. 1). Preliminary treatment often takes precedence over primary treatment (Zhao et al. 2014).
Fig. 1 Wastewater treatment process. (Source: Overview of wastewater treatment process (2017, March))
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(A) Preliminary treatment extracts suspended solids coarsely and the grits. The screening separate both in chambers respectively. This increases the operation and management of future treatment units. During this treatment process, flow measurement tools, often standing wave flumes, are required (Talvitie et al. 2015). At most plants, preliminary testing is used to safeguard the treatment processes of pumping equipment and reaction kinetics. Preliminary treatments are designed to strip or cut off the large suspension and suspended matter, reduce heavy inorganic solids, and extract excessive quantities of oil or lubricnats (Chavan et al. 2016). The following devices are widely used to influence the goals of the preliminary treatment: • Screens, rack, bar, or fine • Grit chambers • Pre-aeration tanks • Comminuting devices – grinders, cutters, shredders Chlorination can also be used in preliminary treatment simultaneously to the above given method. Although chlorination can be used in treatment at all stages, it is considered a process of its own making. Preliminary methods for the treatment require careful design and development (Wu et al. 2005). (B) Primary treatment extracts organic and inorganic solids able to settle by skimming through sedimentation and surface materials (scum). At this stage, 50% of BOD5, 70% of suspended solids, and 65% of grease and oil can be extracted. It also extracts some organic nitrogen, ammonium salts, and toxic substances. At this stage, however, neither colloidal nor dissolved constituents are being removed. The primary sedimentation unit effluent is known as primary effluent (Bhuptawat et al. 2007). In this treatment, the majority of the solids capable of settling are isolated or eliminated from wastewater by the physical sedimentation process. Any of the colloidal solids are often extracted when other additives are used in the primary sedimentation tanks. Wastewater bioavailability in primary treatment is of short-term purposes (Yoo et al. 2010). The primary aim of treatment is to reduce wastewater velocity enough to allow solids to settle and to surface floatable material. The primary treatment can therefore consist of sedimentation tank and clarifiers (Rusten and Ødegaard 2018; Zou and Curran 2017). Settling tanks can be divided into four general classes, due to differences in design, operation, and application: 1. Septic tubes 2. Two story Imhoff septic tanks and other proprietary units 3. Plain sediment transport tank with mechanical removal of sludge 4. Upward flow clarifiers with mechanical sludge elimination Many auxiliary treatment systems adopted when chemicals are used. Those are: 1. Chemical feedings units 2. Mixing devices 3. Flocculators
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(C) Secondary treatment is the application of primary effluent treatment and removes residual organic matter and dissolved particles. Using aerobic biological treatment systems, biodegradable dissolved and colloidal organic matter is extracted too. Deletion of organic matter occurs while removing compounds of nitrogen and phosphorus and microbial pathogens (Liénard et al. 2001; Verlicchi et al. 2012) mechanically as in trickling filters, activated sludge methods that rotate biological contactors (RBCs), or nonmechanically as in anaerobic treatment, oxidation drainage canals, stabilization ponds, etc. Secondary treatment is largely based on aerobic microbes that biochemically break down organic solutes into inorganic or stable organic substances. It is analogous to the recovery zone where a stream is self-purified (Giannakis et al. 2016). The secondary treatment systems can be divided into four groups: 1. Stabilization ponds 2. Activated sludge and finalized settling tank modifications 3. Intermittent filters to a sand 4. Trickling of secondary settling tank filters (D) Tertiary treatment or advanced processing is utilized when removing particular components of wastewater that cannot be eliminated by secondary treatment. Advance process reduces large quantities of nitrogen, phosphorus, toxic substances, recyclable organics, bacteria, and viruses (Maizel and Remucal 2017). The secondary effluent conventional sand filter (or similar media) and the newer membrane material are two techniques that can be used to control system. These filters were developed, and both filters and membranes strip helminths. The new method is disk filtration, using large canvas storage discs attached to revolving filtering devices (Krzeminski et al. 2019). During this process, irradiation disinfection of chlorine, ozone, and ultraviolet (UV) can be done to make sure that water meets existing global urban and agricultural reuse requirements.
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Chlorination
This is a treatment technique that has been used in all phases of wastewater treatment for many reasons and also before preliminary testing (Huang et al. 2011). For the following reasons, it includes the application of chlorine to wastewater: 1. Disinfecting or destroying pathogenic species 2. Prevention of decomposing wastewater: (A) Control of odors (B) Plant protection structures 3. Plant operating aid: (A) To sediment (B) Filter trickling (C) Bulking in activated sludge 4. Reduction or retardation of demand for biochemical oxygen (BOD)
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While chlorination has become commonly adapted over the years, particularly to disinfection, several methods are still being employed to accomplish disinfection and specific treatment ends. The most frequent use of ozone (Kupoluyi et al. 2018). Ozonation can be used more widely in the future, considering the toxicity of chlorine and chlorinated compounds for fish as well as other living organisms (Singare and Dhabarde 2017).
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Wastewater Treatment Activities, Processes, and Procedures
The treatment methods are comprised of unit processes and procedures, and the treatment programs make up their integration. Unit operations and unit process terms are also used interchangeably, as it can occur concurrently in the same treatment area. In general, the following concepts are accepted (Boiocchi et al. 2016; Durán and Durán 2018). • Physical unit operations: This method of treatment of prevailing physical forces (e.g., scanning, flotation, filtration, mixing, flocculation, and sedimentation,). • Chemical unit processes: This processing methods in which pollutants are eliminated or transformed by the introduction of chemicals or through chemical reactions (e.g., adsorption, disinfection, and precipitation). • Biological unit processes: These forms of treatment use biological activity (e.g., removal of carbonaceous organic matter, nitrification, denitrification) to eliminate pollutants (Akter et al. 2018).
7.1
Different Forms of Wastewater
The different types of wastewater that can be treated by using natural method of treatment are: • • • •
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Municipal wastewater Selected industrial wastewater Agricultural and ballast water Polluted storm water runoff
Natural Wastewater Disposal Techniques
Natural wastewater treatment technologies use natural or synthetic self-treatment processes that occur in soil, water, and wetland environments (Crites et al. 2014). These treatment techniques are known according to processing technology and general arrangement.
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Wastewater Treatment Methods
There seems to be conventional and nonconventional methods for treating wastewater that have been demonstrated and observed to be effective in treating wastewater. Conventional methods have a fairly high degree of automation compared with nonconventional methods of handling wastewater and typically need pumping and strength. To operate and maintain the system, it requires skilled labor.
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The Conventional Methods
Instances of conventional methods for treating wastewater involve trickling filter, activated sludge, and rotating methods for biological contactors. Trickling filters and rotating biological contactors are sensitive to temperature, eliminating very little BOD and costing much more trickling filters to build than activated sludge process. Activated sludge methods are much more costly to operate because water pumps and blowers require more energy (Hu et al. 2018). Within the following parts, these methods are discussed in depth.
10.1
Activated Sludge
Activated sludge is based on the biological treatment processes which implement growth of dissolved organisms to expel BOD and solid wastes (Fig. 2). It is based on the hypothesis that intense wastewater aeration produces bacterial flocks (activated sludge) that destroy microbial content and are segregated by sedimentation (Baronti et al. 2000; Van Haandel and Van Der Lubbe 2007). The system consists of ventilation and settlement reservoirs and other machineries like return and disposal pumps, air circulation blenders and blowers, and a flow measurement system. A segment of activated sludge is reused to keep the active bacteria in the tank concentrated. Primary wastewater is combined with reverse -activated sludge to generate blended liquid that is aerated over a given period (Radjenović et al. 2009). The enabled sludge species use the necessary organic matter as food by Fig. 2 Activated sludge. (Source: Wastewater treatment plant (WWTP) Activated Sludge n.d.)
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aerating the environment, thus creating stable solutes and more species. The suspended matter particles formed mostly by process and the extra organisms form the basis of the activated sludge. The solutes then are removed from wastewater throughout the sedimentation tanks and introduced to the powerful aeration tank. To boost system efficiency, the accumulated solids and microbes are regularly removed from the system (waste activated sludge) (Jafarinejad 2017). The performance of an activated sludge treatment system is affected by parameters such as temperature, rate of return, oxygen concentration available, presence of organic matter, amount of pH, frequency of waste matter, time of aerobic treatment, and wastewater contamination. Therefore, an equilibrium between the quantity of food (macrobiotic matter), microbes, and dissolved oxygen should be maintained (Korzeniewska and Harnisz 2018; Wei et al. 2018a). Activated sludge processes occupy less energy compared with filter trickling and are of high removal efficiency. The downside is that at one end of the tank, BOD is greater than others; at that end the microbes would be biologically more active than the other, except a full mixing activated sludge system mechanism is employed.
10.2
Trickling Filter Methods
This is a development cycle wherein the microbes are responsible for treatment that’s also connected to a packed inert material (Fig. 3). It consists of the round big tank with material from the vessel, e.g., volcano rocks, boulders, or synthetic fibers (Persson et al. 2002; Aslam et al. 2017). Wastewater is delivered from above which trickles thru the membrane pores enabling for the adsorption of organic material in wastewater with inhabitants of microorganisms (aerobic, facultative bacteria, microorganisms, anaerobic bacteria, and pathogens) connected to channel as a biological film or filth coating (estimated 0.10 to 0.20 millimeters thick). Decomposition of the macrobiotic substance through the microbial cells occurs in the upper layer of the slime layer (Żyłka et al. 2018). As bacterial activity hardens the layer, oxygen cannot reach the medium face, and aerobic bacteria evolve. The microbial film keeps growing to an extent that microbes near the surface are unable to hold the medium, and a portion of the substance layer falls off the filtration system. That method is called the sloughing process (Wells et al. 2014). Compared with activated sludge process or some package treatment plants, the process is simpler. However, due to the use of electric power, its operation and maintenance requirements are high. Maintaining trouble-free execution of the trickling filter requires labor force, e.g., preventing congestion, maintaining optimum flushing, and controlling filter flies. It is also suitable for fairly affluent, densely populated regions with a sewerage network and water treatment that is centrally controlled, even suitable for the treatment of gray water (Van den Akker et al. 2011; Thatai et al. 2019). This method also needs more volume compared to some other systems and has odor and filter flies capacity.
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Fig. 3 Trickling filtration method. (Source: Rotating Biological Contactor n.d.)
Waste Water
Biological growth layers
Media discs or panels
Anaerobic
Aerobic
Shaft
Media support 35-40% submerged
Disk Media
Side View Treated Water
Media disc or panel Motor
Organics Air CO2 Other oxidized products
One media pack
Optional air distributor pipe
Front View
Fig. 4 Rotating biological contactor method. (Source: Trickling Filtration n.d.)
10.3
Rotating Biological Contactor Method
Rotating biological contactors (RBCs) comprise a horizontal, rotating shaft with vertically arranged, plastic media (Fig. 4). Instead, the biomass-coated materials are subjected to sewage and oxygen in the atmosphere as the shaft turns steadily about 1–1.5 rpm (needed to sustain hydraulic tensile stress for shedding and also to maintain torque to retain solid in ejection), with about 40% of the materials being soaked (Najafpour et al. 2005). Large surface area enables a large, stable population
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of biomass to expand, with constant and automated overgrowth shedding and removal in a downstream clarifier. Biofilm thickness can reach 2–4 mm based on the resistance of the wastewater and the disk rotational speed. RBC methods are generally new, although it seemed best suited for municipal wastewater (Ugya and Ajibade 2016). It is installed in several petroleum plants due to numerous of their capacity to restore quickly from outraged circumstances (Fielding et al. 2019). The RBC system is relatively customizable when the need arises; if volatile containment of organic matter content becomes necessary, RBCs are also very easy to enclose. RBCs need minimum power consumption and also can be driven through air compressor that can also sanitize the machine. Those who follow normal operational methods require a relatively qualified workforce.
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Bioreactor Membrane Method
This method offers more than a single stage in treatment. Membrane bioreactor (MBR) systems have special integration of technology anaerobic and microbial aerobic biological with an optimized membrane system that can be combined in other biological wastewater treatment plants that are suspended-growth (Le Clech et al. 2003). Wastewater is monitored prior to actually entering the biological tank. Aeration inside the aeration-reactor region provides microbial respiration with oxygen and holds the solids in suspension (Fig. 5). MBR depends on the immersed membranes in order to maintain active biomass (Drews 2010). This enables the biological mechanism to function at longer than usual sludge age which is around 20–100 days and to boost concentrations of mixed liquor suspended solids (MLSS) (8,000–15,000 mg/l) in order to more effectively remove contaminants. High concentrations of MLSS reduce the requirements for biological volume, and the space needed for conventional biological processes only 20–30%. MBRs occupy a limited area of land because it removes any need for secondary treatment resulting in tremendous savings both in footprints and structural costs (Wang et al. 2014). It can perform at greater concentrations of biomass (MLSS) than traditional methods of
Fig. 5 Membrane bioreactor (MBR). (Source: Stauffer and Spuhler n.d.)
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treatment. The facilities can be extended easily by adding further membranes to established aquifers without increasing the ground cover. Reuse quality doesn’t really necessitate tertiary treatment, polymer add-on, or any further processing activities to meet the standards. This reduction in system operations further strengthens system efficiency and reduces operations management (Bagheri and Mirbagheri 2018). The usually high quality of the wastewater reduces the disinfection burden during treatment.
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Type of Nonconventional Methods
These are low-cost, low-tech, less complex biological treatment systems for municipal wastewater operations and maintenance. Although these methods are landintensive compared to conventional elevated rate biochemical functions, they are far more efficient in the elimination of pathogens and do so effectively and reliably unless the program is completely implemented and not interrupted (Crini et al. 2019). A few of the nonconventional techniques involve stabilization ponds, constructed wetlands, oxidation ditch, and treatment with soil aquifers.
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Waste Stabilization Ponds
The waste stabilization ponds are human-made shallow lakes consisting of one or more chain of anaerobic, facultative, or ripening ponds (Khan et al. 2009). This is a low-tech treatment process involving four or five different level ponds, with diverse biological activities (Fig. 6). Treatment of wastewater occurs when components are dissolved by sedimentation or converted by biological mechanisms (De Simone et al. 2005). The anaerobic wetlands are specifically constructed to settle and remove suspended particles and to decompose other organic matters (BOD5). By the use of oxygen produced by phytoplankton in the pond, organic matter will be further
Fig. 6 Waste-stabilizing. (Source: Quiroga 2005)
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converted into carbon dioxide, nitrate, and phosphate in unicellular ponds. Fermentation ponds typically extract nutrients and microbial pathogens so that primary treatment takes place in untreated sewage, while secondary and tertiary level treatment occurs in optional and maturing ponds, respectively (Awuah et al. 2002). Anaerobic wetlands are usually 2–5 m deep and achieved large capacity models equal to 100 g BOD5 and m3/d contributing to pond-wide anaerobic environments (Alexiou and Mara 2003). Anaerobic ponds can remove 60% of BOD5 at 200 C if properly designed. The optional ponds seem to be 1–2 m deep and obtain an anaerobic pond analogous to the sewage. In some designs it receives raw wastewater which acts as facultative ponds. That is why there is a further loss in organic matter, nutrients, and pathogenic microorganisms. Algal biomass is more stable in maturation ponds, and more common is the removal of nitrogen and ammonia (AmengualMorro et al. 2012). It normally flows from one pond to the other under gravity, which often needs no pumping. It’s less power-dependent, and therefore, due to power cuts, plant operations cannot really be disrupted. Nonetheless, its disadvantages include odor problems, and the proper functioning of a large area of land needs that.
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Construction of Wetlands
The constructed wetlands are structures planned and built to use wetland vegetation to help manage wastewater in a far more regulated environment than natural wetlands do (Kayombo et al. 2005). Constructed wetlands are environmentally safe and the right choice to handle urban and industrial wastewater in secondary and tertiary ways (Fig. 7). These are ideal for extracting macrobiotic materials, suspended solids waste, minerals, heavy metals, pathogenic contaminants, and harmful pollutants. It is not suitable for handling raw sewage and municipal Aquatic plants
Hydrological gradient Treatment zone (sand)
Inlet pipe
Water level
Impermeable liner
Slope 1% Distribution zone (gravel)
Fig. 7 Construction of wetland. (Source: Wang et al. 2017)
Collection zone (gravel)
Adjustable standpipe
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wastewater pre-treatment to preserve the wetland ecosystem’s ecological balance. The free water surface (FWS) and the subsurface flow (SSF) systems are two types of CW (Stottmeister et al. 2003). Even as title indicates, water flows over the ground with FWS and the species of plants are embedded in the sediment layer underneath the water source. For SSF, water is flowing through a porous channel, like sand, which roots the plants in. It is ideal for the treatment of secondary or tertiary pollutants, as well as offering habitats attributable to anaerobic condition at and near the water surface (Mburu et al. 2013). There is still anoxic condition at the bottom sediment. Scirpus (bulrush), Lemna (duckweed), Pistia stratiotes (water lettuce), Eichornia crassipes (water hyacinth), Typha latifolia sp. (cattails). and Phragmites (reed) were known and are used in developing wetlands. CWs are comparatively cheaper to install and easy to maintain (Sundaravadivel and Vigneswaran 2001; Dabell et al. 2006). It helps in providing effective and convenient wastewater treatment and is considerate of varying hydrological and pollutant load rates. Constructed wetlands often provide economic advantages, like enjoying panoramic views of green areas, enabling natural ecosystems, and supplying cultural and recreational facilities. Dabell et al. (2006) found that nitrogen and toxic substances have been washed out, keeping the fish healthier, bigger and more plentiful. It eventually led to a reduction in poverty. However, it does have other drawbacks such as land requirements; their design and service specifications are currently imprecise. CWs are biologically and geologically diverse, and the mechanisms of their processes are not fully understandable. This project isn’t absolutely low cost because it was built with some energy-dependent modules.
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Oxidation of Ditches Method
Oxidation ditch is a revamped microbial treatment method for active sludge which requires a 24–48 h hydraulic processing period and a 12–20-day sludge duration biodegradable organics removed. Typically, oxidation ditches are total mixing systems, but they can be altered. Standard treatment systems for the oxidation ditch consist of a single or multichannel layout inside a loop, or oval (Wei et al. 2018b). The oxidation ditch is usually followed by preliminary therapy, such as bar screens and sand filters (Fig. 8). Primary settling is often performed before an oxidation ditch, and after clarification tertiary filters may be needed, based on the specifications for the wastewater (Abusam et al. 2001). Deionization is needed, and reaeration before final disposal can be appropriate. Aerators that are mounted vertically or horizontally provide ventilation, oxygen transfer, and exposure to air throughout the drain. The flow to the aeration tank is aerated and mixed by a secondary clarifier with return sludge. The final mixture enters with oxygen into the mixed liquor to engender bacterial activity and intent velocity helps ensure microbes are in contact with the influential. Aeration improves the amount of dissolved oxygen but reduces as biomass occupies oxygen in the ditch when mixing. At movement, solids also stay in suspension (Li et al. 2013). Oxidation ditches need less land in comparison to waste stabilization ponds, and they are also easy to manage than processes like
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Oxidation Ditch
Air
Effluent Sewage Flow Direction
Returned Sludge
The sensor head is free from dirt even through a large amount of dirt floats on the surface of the sewage
Angled Float Holder
Fig. 8 Oxidation ditch. (Source: Oxidation Ditch Type Treatment Process n.d.)
sludge activation. A standard process of flow chart is shown in Fig. 8 for the treatment plant using an oxidation ditch.
15.1
Upflow Anaerobic Sludge Blanket (UASB) Method
Upflow anaerobic sludge layer is an anaerobic mechanism that uses a sheet of microbes to absorb pollution sources (Fig. 9). This is a method of anaerobic digestion process that forms a blanket of activated sludge that suppresses within the tank. Sewage passes upward through the pad, and the anaerobic microorganisms digest (degraded) it (Natsheh and Gazzar 2017). An upward stream associated with gravity setting motion, with the assistance of flocculants, suspends the blanket. Small granules of sludge start to form whose outer edge area is covered by bacterial aggregations. In the absolute lack of any supporting matrix, the flow conditions generate a selective environment in which only those pathogens, able to attach themselves, survive and continue to spread (Yang et al. 2019). The granules successively form dense compact biofilms, called granules. The upflow anaerobic sludge reactor usually works when retaining desirable microbes as extremely active and quickly settling granules. In the UASB reactor, the separation of gas occurs when high solid retention time is reached, which seperate silt solids. The special gas-solidliquid reactor separators allow biogas collection and anaerobic biomass recycling. Biogas contains between 50% and 80% of methane. UASB is ideal for primarily
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Fig. 9 Upflow anaerobic sludge blanket. (Source: Babbo 2018)
soluble industrial wastewater treatment with high COD. It could also be used for treating low and medium resistance wastewater effluents (Liang et al. 2020). This is appropriate for warm environments, low energy consumption, less construction and operation, fewer operational skill prerequisite, very little waste generation, recovery of resources through biogas processing, and stabilization of waste as manure. UASBs however have relatively low quality of wastewater compared to processes such as the activated sludge system (Tare and Nema 2010). The system nevertheless requires continuous monitoring to ensure that the slurry blanket is maintained and therefore not flushed out. The heat is produced as a by-product of electricity generation and may be used to heat the digestive tanks.
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Soil Aquifer Treatment Method
Soil aquifer has a very tremendous potential for regular domestic sewage treatment, as long as the potential is not surpassed. Slightly treated effluent from sewage is permitted to enter the soil under managed conditions (Nema et al. 2001; Onesios and Bouwer 2012). Therefore the unsaturated or “vadose” area acts as a natural filter and can effectively eliminate all dissolved particles, recyclable waste, bacteria, viruses, as well as other microbes (Fig. 10). It could also achieve significant decreases in levels of nitrogen, phosphorus, and toxic substances. Just after sewage has entered the groundwater and treated in passage through the vadose zone, it is normally permitted to flow certain distance thru the aquifer for more filtration until it has been collected from the aquifer (Idelovitch and Michail 1984; Scheurer et al. 2009). Soil
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Fig. 10 Soil aquifer treatment plant. (Source: Sattar et al. 2018)
aquifer processing is an advanced filtration method with low-tech equipment. It has an esthetic benefit over traditionally treated wastewater, as wastewater from a SAT facility is clear and odor-free and is regarded either as groundwater or as an effluent. Disposal sewage travel adequate distance thru the mechanism and slowing down periods must be long enough just to generate desirable results of sewage (Sharma and Kennedy 2017).
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Disposal of Fecal Sludge and Treatment
Sludge comprises inorganic solids which have been contained in the raw water. Silt from both the main and secondary clarifier and primary biological treatment should be treated (Koné et al. 2007). Depending on the treatment and processes, the sludge generated is typically in the form of a liquid and semi-solid actually contains by mass between 0.25% and 12% of solids (Ingallinella et al. 2002). Sludge is processed with a number of techniques, which may be used with different permutations. Thickening, conditioning, dewatering, and drying are recommended to reduce sludge humidity, while absorption, recycling, decomposing, wet air oxidation, and vertical tube reactor designs are also used to treat or reinforce sludge organic compounds (Agyei et al. 2011; Strauss et al. 1997). The following methods of thickening and stabilization are discussed below. Thickening: The thickening is achieved by raising the liquid content to increase the solid content of sludge. An improvement in solid quality from 3% to about 6% will significantly reduce the total volume of sludge by 50% (Fig. 11). The method which is used for thickening sludge is usually physical in nature: it includes settling flotation, centrifugation and gravity thickening (Vanyushina et al. 2012; Ting-lin et al. 2005).
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Thickening by Flotation
EFFLUENT
BACK PRESSURE CONTROL VALVE
FLOAT OUT
INFLUENT SLUDGE DISCHARGE
PRESSURIZATION PUMP(S)
SATURATION TANK
AIR CONTROL PANEL
COMPRESSOR Urban water Systems
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© PK,2006 - page 12
Fig. 11 Thickening. (Source: Regan n.d.)
Fig. 12 Stabilization. (Source: Bowen et al. 1992)
Stabilization: Sludge stabilization is intended to reduce microbe content, remove harmful odors, and minimize or eliminate anaerobic fermentation ability (Fig. 12). Some techniques used to stabilize the sludge involve lime, heat treatment, biomass gasification, anaerobic, and recycling (Rey et al. 2018; Outwater et al. 2019).
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Wastewater Recycles in Agriculture
Wastewater is used in irrigation for agriculture as well as for disposal use and is therefore an environmentally acceptable method of disposal (Pedrero et al. 2010). Nonetheless, some level of treatment would usually be provided to untreated wastewater before it’s used for farming, garden, or aquaculture irrigation (Bahri 1999). For many industrialized countries, primary treatment is the minimum requirement for pre-planning treatment required to irrigate wastewater. Unless the wastewater is used to irrigate that are not consumed by humans or to grow crops gardens, distilleries, and also some refined plant products, adequate treatment can be considered (Heinz et al. 2011). Nutrients are indeed a particular advantage in municipal wastewater and treated effluents as supplementary fertilizers. Effective use of wastewater treatment for crop production will largely rely on successful strategies to optimize crop yields and quality, preserve soil fertility, and protect the environment (Kavitha and Namasivayam 2007). There are several alternatives, and a confluence of these alternative solutions will provide an objective function for a specific set of parameters. The user ought to have prior knowledge relating to the supply of effluents and their quality. Effluent from wastewater can be mixed with conventional water, or used only (Levy et al. 2011; Chen et al. 2000).
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Industrial Wastewater Treatment Method
The project to also be constructed depends largely on the wastewater characteristics that are generated from that industrial sector (Malik et al. 2019). However, according to Kamala and Kanth Rao (1989), the basic principle is waste prevention via properly disposing procedures which invariably results in a reduction in quantities as well as a decrease in strength. Untreated waste is treated the same way as household or municipal wastewater – preliminary, primary, secondary, and specialized treatment levels. This also refers to most of the approaches discussed during treatment. However, there could be peculiarities with different industries depending on their major contaminant, e.g., heavy metals, dyeing, etc. (Sonune and Ghate 2004; Srivastava and Majumder 2008). Industrial wastewater is produced from distilleries, microbreweries, textiles, chemicals, and pharmaceutical products; organizations, hotels, and mineral extraction are dominant; and our rivers are also the significant source of pollution. Many of these small-scale industries untreated empty their sewage into near the area drainage (Ranade and Bhandari 2014).
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Modern Methods Used in Wastewater Treatment
There are modern techniques that could be used in wastewater treatment of the wastewater that are also effective and affordable. These filtering techniques will easily enable to get clean water in no time.
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1. Ultraviolet (UV) Purification Method This method of purifying water uses ultraviolet light to help kill bacteria and other toxic materials in the water. This is an extremely safe procedure (Tipton 1993; Alawais and West 2019). The purifier comprises a minute mercury lamp that produces diminutive UV radiation from the wave. The radiations act by destroying the water and penetrating microorganisms and viruses through the cells. It in turn destroys their capacity to regenerate. However, this process requires more filtration steps as the dead bacteria stay in the water until a different filter is added to help physically remove the dead germs (Zhang et al. 2017) 2. Nanotechnology Method The concept sounds for many commoners scientific, but it is a very simple method. This technology uses nanotechnology containing titanium dioxide. This process bring down immediately bacteria and other water pathogens. With the help of ultra violet rays it also helps break down unprocessed materials (Kunduru et al. 2017). However, the nanotechnology approach does not use the water treatment membrane which is based on polymer. This method is incredibly cheap and easy to use. It is also eco-friendly as it aims to minimize the accumulation of microorganisms on drilled surfaces that are known to grow quickly (Bergman 1992; Ahmed et al. 2014) 3. Electrocoagulation Method Electrocoagulation (EC) is a modern wastewater purification process, as it incorporates the benefits of coagulation, flotation, and electrochemistry. This technique utilized electrical current in the process of treating and setting fine particles into motion. It is an effective electrochemical process for purifying different forms of polluted heavy metal in the water which has recently gained much attention due to its high efficiency in removing multiple pollutants. This method was successful in eliminating organic and inorganic contaminants with low to almost no by-product waste generation. Several researches focus on use of electrocoagulation to purify various types of wastewater to highly contaminated refinery effluents, like polluted groundwater. The study revealed the evaluation of the electrocoagulation process’s efficiency in extracting heavy metals from water and industrial wastewater (Ayub et al. 2020). 4. Reverse Osmosis (RO) Purification Method RO purification that is generally referred to as reverse osmosis (RO) is among the most frequently used water treatment methods. This process includes the use of membrane technologies that enable soluble minerals and other contaminants to be separated in water. This membrane has ultra delicate pores which only allow the passage of water. The water passes most of the toxic compounds in the water behind. And a person needs to buy the right RO to help keep the essential minerals in water (Garcia-Suarez et al. 2019; Stitou et al. 2019). 5. Acoustic Nanotube System Method The system was developed to assist in the purification of water by NASA’s Johnson Space Center. The acoustic nanotube technique enables a sieve that is usually surrounded by small-size nanotubes to get out of the contaminants in the water (Zhang et al. 2016). It enables to move the water away from the pollutants
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Fig. 13 SunSprings. (Source: The SunSpring Hybrid n.d.)
while allowing to separately collecting filtered water (Gu et al. 2018; Goodman et al. 2017) 6. Sun-Spring Method Sun-Spring system is a portable water purification system, powered by solar and wind, which uses ultraviolet rays to provide safe drinking water in areas lacking access to clean water utilities. Water is pumped, normally with a pumping system, squeezed and filtered, and all chlorinated inside the Sun-Spring (Ballesteros Pascual 2018). It is a water purification method that enables distill drinking water up to 5,000 gallons in a single day (Fig. 13). It utilizes a battery which runs on renewable energy only. It is an eco-friendly and a cost-effective approach too (Sarkar et al. 2017)
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Obstacles in Wastewater Management
Management of wastewater can often be faced with socioeconomic problems while not technically challenging. The following are a few of the issues discussed:
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(a) Infrastructure: Many politicians don’t really care about wastewater facilities, and really very limited expenditure is provided. Nevertheless, it is important to consider wastewater installations as valuable as water treatment plants, as almost all the water provided finishes as wastewater (Ratner and Gutierrez 2004). (b) Water pollution sources: The impacts of wastewater effluent on water quality are immense, affecting the marine landscape and interrupting the aquatic ecosystem as a result. The food human beings consume includes carbonaceous matter, minerals, organic compounds, and salts and is found in urine and (black water) feces. In recent years, medicines (drugs), chemicals, and hormones (contraceptives) have also been released into wastewater treatment systems. The discharge rules must be followed strictly, too. This will keep the water supplies safe for future generations (Calkins 2005). (c) Selection of appropriate technology: Since most developing countries’ economies are charity-driven, wastewater plant funds mostly come from donors. Because of this it appears to recommend the technologies that should be implemented (Oh et al. 2018). In this purpose, when the stakeholders take over the plant, it is very difficult to handle the processes and maintenance of equipment, as the technological skills, energy consumption, etc. are not viable. (d) Sewage production: Wastewater treatment results in sewage sludge output. A safe form of disposal must be added. When it is to be used in agriculture, then attention must be given to the risks associated (Switzenbaum 1995; Kong et al. 2019). Because of accumulation of heavy metals in wastewater, it is often believed that agricultural usage will result in accumulation of heavy metals in soils polluting crops. (e) Recycle: Sewage which meets the disposal requirements could be used for agriculture activities like fisheries or irrigation for agriculture. The question, however, is that reuse is dangerous if water systems are not managed and monitored constantly to ensure good wastewater quality (Villarín and Merel 2020).
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Summary
This chapter concentrates on several conventional and modern methods of measuring, handling, and disposing of this wastewater. This chapter knows the importance of these wastewater disposal or treatment methods, and it will make better future for tomorrow and keep our people secure by taking responsibility in doing so in a standard protocol. Natural methods of treating wastewater occur thru the natural activities that happen with in soil, water, or wetland ecosystem. The most frequently used methods are waste stabilization ponds which are used to process, recycle, or store wastewater in the short term. Only certain technology solutions used are substantial wetlands built by growing plants, phytoplankton, and covered with gravel and other substances of varying particle sizes. The wetland technique consists of a small lake, specifically designed to this end. The microbial inner layer found in loamy soil, is used to remove a mud barrier, plastic packaging, and plastic, blocking
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up the ponds, and is also used for secondary wastewater treatment. The strengths of stabilization ponds are a comparatively straightforward layout, smaller size of specialized equipment, resources and advanced technology, and low operational cost. A significant benefit of wetlands seems to be the chance of decentralizing water treatment plants into a number of minor modules with a prevalent water flow of industrial water into the receiving water bodies, probably to many other prevalent cleaning divisions. Soil filters use porous filter component potential to support biological, physical, and chemical methods in removing pollution. The vitally important process is the microbes’ biological decomposition of organic pollutants which enhances life on the filter surface of the material. Industrial water management would also have to adapt to fullfil the demand of increasing population and development trends, evolving construction patterns, technical advances, and several other societal factors which have affected waste management practices in the past. Sewage water treatment methods require extensive methods to ensure the water body which receives the wastewater is protected. Qualified and trained operators of treatment plants assess and track incoming waste, treatment cycle, and end effluent. The main objective of treating wastewater ought to be the efficient, economical, and sustainable management of wastewater. In summary, the comprehensive technology provides their role, but sufficient consideration needs to be delivered to it. It applies in particular to mechanical treatment, which is a crucial feature of entire system in general for wetlands and soil filters. Generally the term “water recycling and wastewater disposal” is used synonymously with wastewater reclamation and water reuse. In several parts of the world, different methods of recycle and treatment with some other forms of water recycling called “gray water” are practiced for wastewater reuse management. The gray water which comes from residential, commercial, and industrial bathroom sinks, bath tub, shower drains, drains of clothing washing machines, etc. is recyclable. Proper sewage treatment and disposal is the most important requirement for a safe lifestyle, which may influence the spirit of life. All human being are responsible for future treatment of wastewater and minimizing waste for different purposes rather than using underground water, canals, and rivers. In most advanced countries, wastewater reuse is now widely practiced. Therefore, water recycling is reused as treated wastewater for several specific beneficial uses, such as farming and landscape irrigation, industrial operations, flushing toilet, replenishment of groundwater recharge, etc. Recycling of wastewater provides numerous benefits, such as economic benefits, particularly for those cities facing water shortages. Due to contact with recycled water which has been treated with the standards limits, requirements, and regulations as per country, no recorded report to effects of human health problems occurs. Until now, adoption of wastewater treatment and disposal methods has been a problem for most developing countries. Factors such as economic, political, intensity, and cultural background rely on identifying pollution control in these countries as the most important elements. Structuring depends on the technical factors as one of the reasons that obstruct further innovations. The broad range of available multiple wastewater disposal and
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treatment processes can be seen most evocatively enabling the selection of suitable solution for every population or catchment area in a technologically and economically sound way. System specification is mostly combinations of wastewater or disposal water quality criteria based on the needs of land, infrastructure costs and project operating costs, degree of mechanization and operating convenience, and simplicity with one or more appropriate treatment processes. All the techniques discussed in this chapter can be applicable in most developing countries, but they are, of course, implemented according to the energy consumption of the plants, the machinery needed, and the technical expertise. Easy methods, strategies, and different technologies are identified and strongly suggested where appropriate. Water is a vital source of human life on earth; steps must be taken to safeguard freshwater for the sustainable growth.
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Cross-References
▶ Climate Change ▶ Corporate Social Responsibility and the Future: Setting the Scene ▶ Recycling ▶ Sustainable Plastic and Corporate Social Responsibility ▶ Technological Approaches to Sustainability ▶ Water Resources Acknowledgments This publication was supported by the Deanship of Scientific Research at Prince Sattam Bin Abdulaziz University, Al Kharj, Kingdom of Saudi Arabia.
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Sustainable Plastic and Corporate Social Responsibility Armaghan Moghaddam and David Crowther
Contents 1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 The Invention of Plastic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Corporate Social Responsibility and Plastic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Uses of Sustainable Polymers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Problems with Using Plastic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Microplastics in the Environment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 The Circular Economy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Reusing and Recycling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Future Perspective and Outlooks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Alternatives Available . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Corporate Social Responsibility Revisited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Conclusions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Cross-References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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Abstract
Plastic has become a ubiquitous product over the last few decades and in many industries, and it also has become an essential part of domestic life. There are so many uses for it that are beneficial. Nevertheless, public perception has changed recently, and views have become polarized, so plastic has had a bad press recently after many years of being considered as beneficial. The corporate social responsibility impact of plastic is potentially significant and is thoroughly discussed. Moreover, the polarization into good and bad is considered in this chapter A. Moghaddam (*) Iran Polymer and Petrochemical Institute, Tehran, Iran e-mail: [email protected] D. Crowther De Montfort University, Leicester, UK e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Switzerland AG 2021 D. Crowther, S. Seifi (eds.), The Palgrave Handbook of Corporate Social Responsibility, https://doi.org/10.1007/978-3-030-42465-7_68
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alongside the benefits of plastic, the problems with its use, alternatives available, and possible solutions. We finish with a prognosis for plastic in the future. Keywords
Plastics · Polymers · Sustaibility · Bio-based · Recycling · Cicular economy
1
Introduction
Pollution caused by plastic has recently entered popular consciousness in a major way, not just for its effects upon wildlife and sea life (Eriksen et al. 2013) but also for the effects it is having upon human health (Wright and Kelly 2017). The issue is of course not new (see, e.g., Ryan 1987) and has been discussed extensively over several decades. Public reaction has nonetheless been extreme, and the danger is that plastic is being cast as universally harmful and undesirable – with ire being directed in particular at “single-use plastic,” which is commonly used for packaging. It is, therefore, necessary to set the record straight and to consider applications of plastic and its desirability or otherwise. Primarily, and from a materials engineering perspective, materials can be classified as metals, ceramics, polymers, and their composites (Rösler et al. 2007). A polymer is a macromolecule comprising a large number of small units, called monomers, that join together to form a long chain. Monomers are often organic, meaning that they comprise carbon and hydrogen, as well as oxygen, nitrogen, and the like. In general, polymers are classified based on different aspects. Based on their origin, they are classified as natural or synthetic. An additional group of semisynthetic ones also exist that comprise polymers prepared from natural recourses through human-made processes. Most common monomers exploited for polymer production are based on fossil hydrocarbons or petrochemicals, and the resulting polymers are not degradable, resulting in products that are not desirable from a sustainability point of view. Based on thermal effects, they can be classified as elastomers, thermoplastics, and thermosets. Elastomers, or in a more general term (that is always not technically correct) rubbers, are materials that respond to relatively small forces with a relatively short lag-time, and their shapes change drastically, and when the force is released, they change back to their original form. Due to low mechanical properties, they need to be “cured” or vulcanized for enduse, meaning that it cannot be fluidized by heating. Depending on the chemical structure, most curing processes are based on chemical agents. The resulting material is generally not degradable nor recyclable. The terms thermoplastic and thermoset evince the effect of thermal changed on the processability of the materials. A polymer that can flow due to heating is a thermoplastic (or in general a plastic), whereas a thermoset does not flow upon heating until degradation. While the effect of heating on thermoplastics is reversible and they turn back to a solid state when cooled down, the degradation of thermosets is irreversible.
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More specific classifications are based on the structure (linear, branched, or crosslinked), polymerization type (polyaddition or polycondensation), and degradability (nonbiodegradable and degradable) (Schweitzer 2000; Swallowe 2013; Iwata 2015; Francis and Kumar 2016). Hence, when the term “plastic” is used, it commonly refers to the type of polymer that is thermo-processable and recyclable. Since the invention of polymers, many forms of plastic have been invented, and these are used in many different products ranging from food containers to compact discs to insulation foams to clothing. Commonly known types include nylon, polypropylene, melamine, and silicone. The advantage of polymer is that it is lightweight and strong (per unit weight) and can be easily molded into a wide variety of shapes (Thompson et al. 2009). It can be rigid and strong or completely flexible. Most importantly, it is cheap and can easily substitute for other more expensive or difficult to work with materials. Plastic is a valuable material that has many uses in our society, ranging from a substitute for scarce metals and minerals to medical assistance. Indeed medical treatments in their current form would simply be unavailable in many instances without plastics. It is light in weight, flexible, durable, and cheap to produce; more significantly, it is hygienic, versatile, and has led to many new forms of treatment, including the current investigations on 3D printing of body parts. The uses are extensive and must be recognized in our indignation about its volume within society. The major mineral which is used in the production of plastic is oil, and the British Plastics Federation states that 99% of plastics are based on fossil fuels. Estimates of the proportion of fossil fuels that are used to make plastics range from 4% to 10%, although the US Energy Information Administration states that the majority of this comes as by-products of other processes. Reuters, however, reported in 2018 (https://uk.reuters.com/article/us-petrochemicals-iea/rising-use-ofplastics-to-drive-oil-demand-to-2050-iea-idUKKCN1ME2QD. Published 5 Oct 2018) that plastic production would drive the demand for oil until 2050. It is reasonable to assume hence that plastic production forms a significant proportion of the oil industry output and will form a major driver of peak oil – known as Hubbert’s peak. Dr. M. King Hubbert was a specialist in geology who worked for the Shell Company. In 1956, he proposed a theory about the scarcity of resources such as fossil fuels (Hubbert 1957). This theory is generally famous as Hubert’s peak and declares that gas and oil production will rise to a peak amount but quickly afterward reduce by shortening of resources. This theory was to justify the future decrease in oil production in America, and it is commonly considered as true for that case. Dr. King Hubbert provided a graph for oil production according to which by reaching the reserves peak of production, it will decelerate, and oil reserves will be lower in amount. This model, which was provided for American oil production, has been proven to be correct everywhere. The peak point is called Hubbert’s Peak, and by its arrival, now or soon, oil reserves will decrease, which will have impacts on the environment where demand is increasing continually. The debate, nevertheless, continues as to whether Hubbert’s Peak has arrived at a global level. Certainly, it has arrived in some areas such as America and the North Sea, but there is doubt whether it has arrived for the whole world. At the moment, it can be argued that the
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world seems to have been benefitted from global warming since by melting of the northern ice cap, major oil resources are expected in the polar region. Anyhow, energy is the main fuel for sustainable development, and other resources can not suffice to make up for the lack of oil as a major fuel. As a result, as Vincent claims, the main reason for the existing interest in sustainability is depletion of resources and, in particular, energy resources, actual or impending (Vincent et al. 1997).
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The Invention of Plastic
While from millions of years ago, humans started to use “natural” polymers such as animal skin and plant fibers in their lives, a more comprehensive study on polymers in the modern sense dates back to the twentieth century, rendering polymer science a relatively new one. Hermann Staudinger, a German chemist, proposed the concept of polymers as high molecular weight materials linked by covalent bonds, calling them macromolecules, a theory which granted him a Noble Prize in chemistry in 1953 for his long research in the field. Initially, the synthetic polymers were developed to mimic natural polymers such as silk, natural rubber, and ivory. The first plastic, based on nitrocellulose, was prepared by Parkes and Hyatt in the 1860s. Celluloid was produced by adding camphor to nitrocellulose, giving rise to the first thermoplastic materials, also known as celluloid, which was later used as a movie film in the 1900s. It was shown to the public during the Great International Exhibition in 1862 to considerable interest but not much commercial application. It could be processed into a transparent product that could be molded into an ivory-like product. Another instance was based on milk protein (casein) reacted with formaldehyde, called galalith. The first commercially successful thermoset product was Bakelite, invented by Leo Baekeland in New York in 1907 by reacting phenol with formaldehyde, which later became available in the 1910s (Meikle 1995). Phenolformaldehyde (Bakelite) opened the route for the development of synthetic plastics, accordingly (Mülhaupt 2013; Gupta and Chopra 2019). Bakelite was widely used and had many applications for over 50 years until superseded by more versatile plastics. It has, however, remained popular for collectible items (Cook and Slessor 1992). While those initial efforts may not have been successful at reaching properties similar to those of natural polymers, today, the properties of synthetic polymeric materials surpass the properties of the many costly nature-made materials. No other group of materials can be “tailor-made” like polymers to give rise to specific characteristics. Polymers can be architecture to be along with other properties rigid or soft, brittle or rough, transparent or opaque, or electrically or thermally insulating or conductive (Mülhaupt 2004, 2010). Hence, since the 1970s and through the introduction of products with practical applications, polymer production has incremented tremendously and approached hundreds of megatons per year (Zhu et al. 2016). Plastic has long been used as a substitute for other materials in manufacturing (for instance, Cochran 1988), in packaging (for instance, Lange and Wyser 2003), in
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clothing, in medicine (for instance, Chung et al. 2009), or in combination with other materials. It has been used for many reasons, including better performance and durability, but also for being economical. It is, nonetheless, currently a major problem as much cannot be recycled in most cases and is not biodegradable. So the planet is becoming littered with discarded and unwanted plastics, which is threatening the environment (Moore 2008) as well as human life. Thus we can see that plastic has the potential to be socially responsible due to its many uses and benefits and has been used extensively for the last 100 years. Since then, over 10 billion tons of plastic have been produced. We must not forget this while we currently complain that plastic is one of the leading causes of pollution at present. Having said that, we must also recognize that plastic has become a problem, not just in littering the countryside with discarded rubbish but also because it has caused death to animals and has even entered the food chain so that we are all ingesting plastic fragments when we eat and drink. This, of course, is a major problem – and we must do something about it.
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Corporate Social Responsibility and Plastic
It is clear that plastic has a considerable impact on our lives, and therefore the corporate social responsibility (CSR) impact must be significant. This issue can be looked at in terms of the three pillars defined by Brundtland and also known as the triple bottom line. It is clear that there is an economic impact of plastic, and indeed that one of the primary drivers of the extensive use of plastic is the economic impact – in order words, products made with plastic are normally less expensive to make and to use compared to products based on other materials. One of the problems, however, is that the economic impact is considered in isolation from the other two pillars, to which we now turn. As far as the social pillar is concerned, then there have been a number of effects, with some being positive and some being negative. For example, it has increased the hygiene impact of many products and fostered safety in such things as food for consumption in terms of packaging. On the other hand, it has encouraged disposal of items and the fostering of single-use followed by discarding of many products. While this might increase hygiene for medical products and treatments, it is less so as far as both food consumption and packaging are concerned. It is in the environmental pillar that the effects have been most profound, encouraged at least in part by the effects on the other two pillars. The effects have been brought about mainly by the discarding of plastic products no longer required for further use. It is no exaggeration to state that plastic permeates the environment, and discarded plastic can be found everywhere from the deepest parts of the oceans to the tops of mountains to the bottom, not to mention outer space. It is interfering with and killing wildlife and even being ingested and inhaled by humans. It is not possible to exaggerate the effects upon the environment which have been made by plastic. As the effects upon all three pillars have been significant, it is apparent that the CSR effects of plastic have also been significant, and these will be explored further below.
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CSR for the polymer industry can be defined and classified according to different points of view. Small and big corporations, consumers, nonconsumers, and our next generations, as the heirs of the earth, have different rights and responsibilities in accordance with their position. Each position may give rise to different issues, and laws and regulations have addressed those issues to some extent. What lawmakers have in mind while legislating new laws related to polymers is robustly associated with the concerns related to global warming. Each step of producing, using, and managing the waste of polymers leave carbon footprints that need to be managed attentively to let the earth be a planet livable for future generations. Nonetheless, consumers play an immense role in this not only by raising awareness but also through recycling and choosing more environmentally friendly products. Although recently more options concerning being eco-friendly are available, many consumers cannot distinguish them, and they either need to be educated, or more comprehensive labeling systems need to be implemented where petrochemical-based products, especially packaging is legal and green options, are available (Sam et al. 2015).
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Uses of Sustainable Polymers
The world of modern human life is encompassed by plastic, and in general polymers, and imagining a world where polymers do not exist is becoming progressively more difficult; they have become an inseparable part of the day-to-day life, from packaging materials such as bags that consist of a high percentage of polymer usage to clothing, paints, sanitary care materials, medical devices, kitchen utensils, car parts, disposable containers, construction materials, coatings, adhesives, sealants, modern electronic devices such as polymer batteries as well as smartphone screens, etc. (Larson 2015; Carraher Jr 2017). These products are a result of decades of ongoing research and development in the polymer sector in academia as well as industry. Every day, new polymeric materials emerge in the market and little by little replace other materials such as metals, wood, ceramics, natural fibers, and their composites. Nonetheless, higher demand for polymer production equals higher energy consumption and, in general, waste production. While the utilization of polymers may be more energy-efficient in some cases, for instance, in membranes used for purification purposes, the production step itself can be considered environmentally non-friendly in most cases. Although a modern world calls for high demand in polymer production, producing the same commonly used polymers causes the scarce oil recourses to deplete rather fast, and a high amount of nonbiodegradable waste to be produced. Nature-based and biodegradable polymers are recently used more widely to address these issues. Since these materials typically lack the properties required for day-to-day life purposes, numerous research groups around the world have been working out on them to salvage that problem. A distinguished group of natural polymers used in the industry is polysaccharides. The reason why polysaccharides are so well known is that they are the most abundant renewable resource of natural polymers. They can be found both in plants and animals, and the amount of polysaccharides prepared synthetically is much smaller compared to the nature-made
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ones (Dumitriu 2004). Starch, cellulose, and chitin are the most famous materials in this group. Through the deacetylation of chitin, chitosan is obtained, which is a very versatile material in different sections of the polymer industry. From the new generation of active food packaging for better protection of the product to agricultural, environmental, and medical applications, chitosan has proven to be a promising material for a sustainable petrochemical-free future (Halake et al. 2016). Some natural gums, such as Xanthan gum, are also in this family, with a bacterial source. It is widely used in the pharmaceutical, cosmetic, and food industry (Shanmugam et al. 2005). Another important player in this arena is the family of polyhydroxyalkanoates. This group is based on bacteria, but studies have also been conducted to derive them from plants. This group is very promising as packaging materials. And last but not least, in the group of widely used natural polymers comes the family of polyisoprenes. Their resource is a family of trees that grow in lowaltitude moist forests. They are mostly seen as latex and in tire production. Natural polymers can be blended with synthetic ones to give rise to biodegradable materials, but due to the incompatibility of their natures, the research to improve their properties is ongoing progress. The role natural polymers play in medical applications is more distinct. Although natural polymers cannot be tailor-made like their synthetic counterparts in most cases, they can be modified using different methods to evince a good performance. The reason why natural polymers are appealing for the medical field is not only due to favorable biocompatibility and biodegradability, but the fact that they are similar to the extracellular matrix, which is the environment around cells in physiological conditions, and therefore, they can be efficient in biological environments. To date, FDA has approved various polymers for different applications, and annually, numerous pieces of studies are published in this area. Apart from polymers that are common in other parts of the industry like polyhydroxyalkanoates, cellulose, or polysaccharides such as chitosan, other most specific polymers that happen to be more rare and expensive in most cases are also used in the medical section. Other instances of polysaccharides include dextran that is prepared from bacterial sources, hyaluronic acid that is prepared from rooster combs or bacterial sources, or alginate that is prepared from seaweeds and is also used in the food industry. As a high percentage of the body is made from proteins, protein-based natural polymers have been extensively used for medical applications. Instances include collagen that is derived from bovine, porcine, or marine tissues, and gelatine, the hydrolyzed form of collagen (Olatunji 2015). The applications include drug delivery systems, scaffolds, wound dressings, sensors, implants, tubes that are used inside or outside of the body such as catheters, and the like (de Lima Nascimento et al. 2019; Pan et al. 2019). Disposable personal care hygienic products such as sanitary pads and diapers are also controversial in the sense of waste management (Khoo et al. 2019). While reusable products are available in the market as eco-friendly solutions to address that problem, Scotland has become the first nation to legislate free sanitary products for all women. While such bills highly contribute to the welfare of women and are necessary for accomplishing the goal of the more just country, it contributes to the issue of waste management (Hait and Powers 2019).
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Producing biocompatible polymers has evolved from being just a theoretical science into a genuine technology in the medical manufacturing domain. Using these polymers, the science of conventional medicine has changed immensely, and new doors have been opened for patient welfare. Personalized and customizable devices can be prepared using polymers, making them a favorable candidate for the development of modern medical treatments. Using polymers, more intricate biocompatible systems can be prepared in shorter periods compared to other materials that can benefit both physicians and patients. By developing new materials that are reported daily, combining these materials, and creating composites, as well as developing new methods of processing these materials, medical devices that mimic physiological conditions more than ever before are introduced to the market. Different international procedures, such as ISO 10993 and ISO 13485, have been developed to standardize the clearance of these systems for the end-user. The gap between the final prototype and the product that is introduced to the market is rather large and time-consuming for this sector compared to the other sectors of the polymer industry, which is obviously for taking appropriate safety measures. These systems are evaluated depending on the level of contact as well as the time of the contact with the physiological conditions. In addition, for some degradable products such as absorbable sutures that are commonly used for treating internal organs, the products of degradation are also of importance for the clearance procedure. However, what makes these products more prominent in the subject of CSR is related to these safety measures. In order for these products to pass the biocompatibility tests, which are usually the first step of cellular analysis for medical devices, not only the material should be favorable for the cells to grow in adjacent to, but also the level of small residual molecules such as the monomers that comprise the polymers should be low enough so that they cannot cause any toxicity to the cells. The catalysts and solvents used to synthesize these polymers are ordinarily highly toxic. The procedure of purifying these materials, as aforementioned, usually consists of non-eco-friendly processes, such as using solvents that are commonly not water-based, or energy-consuming processes, such as freeze-drying, that are used to remove the residual particles while maintaining the structure of the product. While most medical devices have an immense added value in the market and are, without a doubt, an essential part of modern science, they might not be the most environmentally friendly products. Accordingly, trends in preparing materials have been toward more green routes. For instance, where a specific pH is needed to carry out the synthesis, instead of using chemical solvents, substances such as extracts of leaves like tea and mint or flowers (Hardiman 2019; Malarvannan et al. 2019). Another approach consists of exploiting solvent-free routes of synthesis, such as using high-pressure chambers, ring-opening polymerization, or utilizing microwave where a step that requires a high volume of solvents, usually organic ones, is eliminated (Murray et al. 2015; Kai et al. 2018). “Green” chemistry, on the other hand, is an effort aiming at sustainability in the field of materials science, directed at utilizing more abundant and lower cost starting materials other than petrochemicals, more eco-friendly methods of synthesis such as solvent-free ones or waterborne ones that do not give rise to
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toxic waste during production, and lower energy consuming routes of production that give rise to durable materials that biodegrade at the end of their life-cycle (Malinconico 2017). As “green” products are now a rather novel concept, their definition might yet be ambiguous and fulfilling all criteria mentioned above, a challenge that is yet to be taken in coming years for academia and industry. Hence, while bio-inspiration might be the key to solving the issue of sustainability, mimicking the apparent simplicity and yet intricate products of nature is still too perplexing for mass production. The aim is not only preparing materials that are sustainable but are versatile in application and can serve for different purposes. The examples are artificial eye implants, super-hydrophobic coatings inspired by the lotus flower, super adhesives inspired by gecko feet, or self-healing materials (Zhang et al. 2016). Nature is, therefore, a bio-engine with a significant energy efficiency that should be used for inspiration, and scientists from different areas conduct interdisciplinary research to give rise to said versatile products (Irimia-Vladu 2014). Just like biological systems, having products that can recover from finite damages is an intriguing concept, which is studied as self-healable materials. They can repair defects imposed on them, for instance, by mechanical stress, and retain the properties. The concept of self-healing materials as widely used commercialized products might be a little implausible at the moment, but they can change the way we understand and use materials, and their commercialized form can have an immense impact on their environment from the sustainability point of view. Preparing materials that are intrinsically self-healable is intricate and complex, but selfhealable materials can also be obtained through preparing composites, in methods that are called extrinsic self-healing. A method that is commonly used for that purpose is using microcapsules that can be based on natural oils such as linseed, neem, Tung, or coconut oil (Karami et al. 2019). Another method to take advantage of sustainable resources to prepare polymeric materials is by using natural fibers incorporated with polymers. To reinforce polymer matrices for special applications, fibers based on glass, carbon, Kevlar, and the like are used. Instead, jute, flax, hemp, and similar natural fibers can be used to reinforce polymeric materials (John and Thomas 2012). While opportunities, in theory and even in lab-scale, are endless for preparing products that are composed of renewable resources, their commercialization as economic choices might need more time.
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Problems with Using Plastic
The fundamental problem with plastic is that many forms are simply not biodegradable and will effectively last forever. Thus we can picture the world gradually being submerged under mountains of plastic! Or perhaps even worse is that it breaks down into microscopic fragments that enter the food chain. And this has already happened – we have all eaten small fragments of plastic. So the question is – what should we do?
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As aforementioned, the production of polymers has incremented tremendously caused by not only the consumption culture but also the affordability of polymers, rendering the polymer industry worth billions of dollars. Accordingly, the demand for polymers is an ever-growing issue. Nevertheless, management of the polymer waste through recovery and recycling is still not efficient enough, and a considerable portion of produced polymers is left in landfills, or worse, ends up in oceans (Gourmelon 2015). Polymer waste comprises a large proportion of the total waste production in most regions of the world and poses as one of the essential international agendas in this domain, especially in the marine pollution form (Haward 2018). Estimation evince that about 90% of plastic waste is not recycled (Wang et al. 2019a). Globally, the annual average per capita plastic consumption is 43 kg. In Asia, that number is around 20 kg, while in Western Europe and North America, it approaches 100 kg. In fact, GDP affects plastic consumption levels positively. Nevertheless, the waste issue threatens areas with lower GDP more due to the lack of recycling culture and facilities (Babayemi et al. 2019). The major problem which has captured public attention is single-use plastic – plastic, which is normally for packaging and is used once and then discarded. However, this is obscuring the real problem. Other plastic can be recycled and reused, but it is still not biodegradable, and the circular economy cannot really address this problem. We can recycle plastic bottles numerous times, and we can turn waste plastic into things like shoelaces, but the reality is that as we continue to manufacture products from plastic, then more enters into the environment and will eventually break down into microscopic fragments for us to eat! We need, therefore, either to cease using plastic and lose its benefits or to develop processes that will enable us to deal with waste plastic. Fortunately, such processes do actually exist. Thus it has been discovered that microbes exist which can digest plastic and break it down into its basic components. Also, plastic has been developed, which is actually biodegradable. Equally alternative materials exist which can be used instead of plastic for such purposes as packaging – and are being used. In general, these are all more difficult to use than plastic and more costly to produce and work with but provide a satisfactory solution. It is essential that humanity turns to some of these alternatives immediately. However, there is still use which can be made of plastic which will benefit us. Getting rid of plastic is not advocated here, but only more sensible and thoughtful use, which considers the future as well as the present. A lot of our problems at present have arisen because we have thought of solutions to immediate problems without properly considering the longer-term implications. According to Spengler, one approach is to recycle the resources that have been consumed (Spengler et al. 1997). Wilson considers this as a growing business that can make up for the scarcity of resources but only to a limited extent (Wilson et al. 2006). Reck reports that this is beneficial but problematic and that we are far away from any complete recycling of minerals (Reck and Graedel 2012). This is because growth will continually require more of the resource than has been previously consumed. Technological development can lead to less use of the resource as can the development of substitute resources. These, too, are limited in extent and can lead to different resources becoming depleted in addition.
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Microplastics in the Environment
One issue which has caused much public interest is the matter of microplastic. Basically, as already stated, the major problem with plastic is that it is not biodegradable within any reasonable timescale. It does, however, break down into smaller and smaller units, eventually becoming microplastic – pieces too small to be seen. This microplastic has become ubiquitous. Large pieces of plastic have caused problems and the death of many animals and fish which have tried to ingest this, believing it to be food and died as a consequence. Microplastic is more of a problem, however, as it can be ingested with any conscious awareness and therefore has become existent within all animals, including humans. Indeed it has been estimated that humans consume about 50,000 microplastic particles each year and inhale about 25,000 more particles (As reported by National Geographic 6 June 2019). This is the equivalent of each of us consuming a credit card every year. Many studies exist which show the ubiquity of microplastic in the many environment: in sea water (for instance, do Sul and Costa 2014), in deep sea water (for instance, Van Cauwenberghe et al. 2013), and in freshwater (for instance, Eriksen et al. 2013). It has also been found in the human food chain both in inputs (for instance, Yang et al. 2015) and outputs (for instance, Mason et al. 2016). It seems, therefore, that such particles are everywhere and affecting all life, both animal and human. The consequences of such pollution, however, remain uncertain but will be either detrimental or, at best, neutral – certainly not beneficial. Solutions to the problem of microplastics do not currently exist, but they are a major focus of public attention. There are two aspects to the problem. One is to remove the particles which permeate the environment. The other is do ensure that no more particles are created to add to the problem. It must be recognized that some will always be created naturally through wear and tear in use, but this can be minimized. One approach to this is through the acceptance of the circular economy.
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The Circular Economy
The principles of the circular economy are already becoming embedded in our behavior. Basically, they require us to minimize waste and reduce our excessive consumption. This means more recycling and more reusing of materials, and this does not come naturally to the way of life we have become accustomed to. Already though, we are accepting the practices of sorting waste for recycling, using renewable energy, and so forth, and companies have become involved, such as when clothing shops facilitate recycling of clothes within stores. Such this will become more common and more accepted. At the moment, such things are new, and cities and companies have a role to play in both publicizing this and in enabling recycling to take place. Furthermore, it is important to be aware of new ideas that occur in other parts of the world and probably adopting them. After all, sustainability is a problem for the world as a whole, and we must all play our part toward its achievement rather than just thinking about our own country or locality. It should also be noticed that the
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approach of the circular economy is not the new way to achieve sustainability but is only one step – albeit a significant one – along the way toward sustainability. There are several aspects to the circular economy, and the first one is to reuse materials rather than treat them as waste. Plastic does not easily lend itself to reuse – for example, bottles cannot readily be cleaned and decontaminated and then reused. This is equally true of packaging, which is a major use to which plastic has been put. This has led to the existence and widespread use of what is known as single-use plastic – plastic, which has been designed specifically to be used once and then discarded. This is, of course, a major source of pollution and has recently become a focus of attention. Recently a lot of attention has been given to this problem and to the elimination of such single-use plastic. Of course, in order to solve this problem, alternative methods of packaging are needed. It has been estimated that there is a recycling rate of around 30% for such plastic (Van Eygen et al. 2018). There are problems with recycling such waste, and Hahladakis recommends cascading the material into alternative uses is a better solution, although they remain silent as to what those alternative uses might be (Hahladakis and Iacovidou 2018). Indeed it is not apparent what alternative uses actually exist, although it should be noted that many companies have managed to develop laces for shoes made from recycled plastic. Nevertheless, most authors (for instance, Dahlbo et al. 2018) acknowledge that more needs to be done with regard to the recycling of such plastic. Another use found for plastic is what is known as feedstock recycling or chemical recycling. This is a process that changes the chemical structure of plastic waste and converts it into shorter molecules, which are then ready to be used for new chemical reactions (See Plastics Europe https://www.plasticseurope.org/en/focus-areas/circulareconomy/zero-plastics-landfill/recycling-and-energy-recovery). One example would be processes such as gasification and pyrolysis, which break down plastic waste to produce synthesis gas (syngas) as well as other liquid and semi-liquid products. In addition, new depolymerization processes are under development to convert some types of plastics back into monomers for the production of virgin plastics. According to Perugini, this is considered to be the best option for dealing with waste plastic packaging (Perugini et al. 2005). As far as alternative packaging materials, then paperbased products exist, which are biodegradable, but more recently, the development of biodegradable plastics has progressed sufficiently to make them economically attractive (Song et al. 2009). One of the main uses of plastic packaging is in the context of domestic food and comestibles, and here significant progress is needed to reduce the amount of packaging. There is some evidence that this is already happening in some developed countries (Silvenius et al. 2014). An alternative solution is to develop microbes that can consume plastic and dispose of waste in this manner. Work has been done in this area, and Anthierens have shown the potential of bacteria in this respect (Anthierens et al. 2011). Similarly, Ghosh has shown that there is considerable potential in the development of microbes to achieve this and thereby reduce pollution (Ghosh et al. 2013). Indeed Aznar has argued that the high energy content of plastic makes it highly suitable for conversion into other forms of energy such as gas (Aznar et al. 2006). In fact, anaerobic consumption of all waste, including plastic, has become a viable form of
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energy production in many European countries, and this is a trend that seems likely to continue to grow in popularity as it solves the problem of waste disposal also.
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Reusing and Recycling
It seems to be recognized that achieving sustainability will require some form of market transformation, but Smallbone concludes that this is a consequence of achieving sustainability rather than a driver for change (Smallbone 2004). The circular economy is one approach based upon a combination of recycling and reusing, but Wilts points out that this is problematic actually to implement (Wilts 2017). At the moment, therefore, it remains a fashionable concept rather than any real solution, although Haji has proposed the repurposing of disused oil rigs in the Gulf of Mexico to extract cobalt from the sea and thereby create material for batteries (Haji and Slocum 2019). So it seems that technological developments are being proposed to address this issue, but to what extent is at the moment unclear. Systems for collecting and recycling the waste post-consumption based on the region, depending on accessibility and consumption culture, can both contribute to the environment and be economical (Singh and Cooper 2017). However, one of the main issues about the waste management of polymers is the fact that they are hardly ever produced as virgin materials, meaning that additives that modify and enhance their properties are added to them through production. These additives include antioxidants, pigments and dyes, UV and heat stabilizers, flame retardant agents, plasticizers, cost-reducing fillers, antifoam agents, antimicrobial and antibacterial agents, oxygen scavengers, anti-fogging agents, and so forth (Bart 2005). While additives make polymers cost-efficient and practical for the end-user, they impose environmental problems after the life-cycle of the product. Many of these additives immigrate to the surface of the material over-time and can be released in the soil or water via direct contact, where they are abandoned. Another issue is the fact that they need to be fully incorporated in the material with a uniform distribution to be efficient and make the recyclability of polymers more challenging. Nevertheless, the most common methods of recovering polymers are allocated to plastics. The process can be started by citizens through separation and sorting, making it more efficient and cost-effective. The effect of public awareness on this issue can be more prominent in areas with higher population densities. While China is responsible for 20% of the global production of plastics, it also used to be the leading importer of plastic waste. However, since January 1, 2018, China’s ban on plastic waste import has been put into effect, leading to a significant impact on the waste management dynamics domestically and globally. A large portion of imported plastic waste was domestically exploited in products that contain recycled plastics, leading to a higher demand for plastic waste recycling. While this ban may have caused China an economic loss in the short run, it caused other regions, especially in Europe and North America, to change their capacity of treating plastic waste (Wang et al. 2019a; Huang et al. 2020). In 2019, the European Parliament voted to ban single-use plastics that mostly include packaging, cutlery,
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and dinnerware. This ban caused extensive media coverage, leading to legislative measures in different states of the USA about plastic bags (Eckert 2019). These laws push these countries toward a circular economy, where the value of materials is maintained for as long as possible, and waste is minimized, making the economy more sustainable as a result (Geisendorf and Pietrulla 2018).
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Future Perspective and Outlooks
It has been recognized for a considerable period of time that the significantly extensive use of plastic for packaging has been causing problems. Solutions have also existed for a significant period of time, and it has been pointed out that naturally occurring thermoplastics and elastomers exist, which are completely biodegradable and can provide an alternative in some applications (Steinbüchel 1992). Indeed Lenz points out that such biodegradable plastics have been around since the 1920s, which poses the question as to why they have not been more heavily developed and used given that disposal problems have also been recognized for a long time (Lenz and Marchessault 2005). Similarly, Mooney shows that plant-based biodegradable plastics can be produced, which are viable alternatives to the current oil-based products and are completely biodegradable (Mooney 2009). Poirer similarly points out that polyhydroxyalkanoates are plant-based, can be produced at reasonable costs, and are completely biodegradable and argued that polyhydroxyalkanoates could provide suitable biodegradable plastics (Poirier et al. 1995). Ren, however, points out that these biodegradable plastics create new challenges for waste management but suggest that such problems are surmountable with suitable management of the processes (Ren 2003). Nevertheless, Sudesh argues that such biodegradable plastics are sustainable alternatives even when considering the effects on the environment both in their growth and production and in their subsequent disposal after use (Sudesh and Iwata 2008). In considering biodegradability, then Flieger shows that there are two bases for the production of such plastics: one is based upon chemical synthesis while the other is based on microbial fermentation (Flieger et al. 2003). While some have focused upon their production, others (for instance, Huang et al. 1990) have focused on their disposal after use. Both, of course, need to be considered in assessing the benefits of their use as alternatives. No clear answer seems to exist except that environmental effects are clearly outweighing economic impacts in the present. It can, therefore, be reasonably assumed that the development of biodegradable plastics will be a priority in combatting the detrimental environmental effects of plastic waste. Apart from considering the form in which future plastics, and their alternatives, might take then the other major development is concerning the disposal of all discarded plastic which currently exists. As Geyer reports, by 2015, 6300 million tons of plastic waste had been generated (Geyer et al. 2017). While nearly 10% had been recycled, the vast majority (79%) have accumulated in landfills around the environment. They estimate that if no action is taken, then this will rise to 12,000 million tons in the environment by 2050, thereby illustrating the extent of the problem. One possibility is the existence of microbes that consume plastics (Zaikab 2011; Saxena 2018). This may be a development that can address the problem, but at
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present, this remains uncertain. It seems, however, that this is an area that will be explored in a search for the solution to unwanted plastic and the environment.
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Alternatives Available
Quite obviously there are alternatives to plastic which had to be used before the invention of plastic and the development of uses for such plastic. Plastic has been used for convenience but primarily for cost advantages. Some convenience is based on the lightness in combination with the strength and/or flexibility of plastic, making it suitable for many applications. Examples might be in the manufacture of consumer durables. Another convenience is the ease of hygienic production and storage, which would make it of great value for medical uses. Irrespective of cost advantages, the replacement of plastic in such applications would be problematic as alternative materials would not have the same advantages. Basically, these alternatives would need to be plant-based products or metal-based products. Metal-based products would have the problem of increasing scarcity of the metals themselves (Seifi and Crowther 2018; chapter “▶ Resource Depletion”; Seifi 2019) as well as increased rigidity and increased weight. Plant-based products would be basically papers based and would have many advantages in terms of biodegradability, but the production would have many detrimental environmental effects. In other words, there are disadvantages to any alternative which could be selected. And this is all independent of any economic effects. There are, however, many products for plastic that are used, which could be equally satisfactory with alternatives products. The packaging is probably the main such use for which alternatives are available. Similarly, Gautham considers alternatives to crockery and cutlery and argues the traditional methods used in areas such as southern India can be readily adapted for use (Gautam and Caetano 2017). Humbert argues that glass is very suitable for storage and has been widely used; indeed, it is still used for much storage (Humbert et al. 2009). Wang argues that biodegradable products are equally suitable for use in many production processes (Wang et al. 2019b). Scherer, on the other hand, considers the use of biogenic products for use in children’s toys and shows that although these products are equally acceptable, they are, in fact, considerably more expensive, and therefore the appeal is limited to more affluent families (Scherer et al. 2017). It is clear, therefore, that there are many alternatives to using plastic for many purposes. Some alternatives are very suitable and readily adaptable, whereas others can be problematic. Nevertheless, it is indisputable that much effort is being put into research and development of alternatives to the use of plastic.
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Corporate Social Responsibility Revisited
In terms of social responsibility, then it can be argued that the effects of plastic have been caused by a failure to link together the three pillars and address them together. The present approach to CSR seems to be to address this in terms of sustainability, and this, too, integrates the three aspects. It is also argued that sustainability takes a terotechnological approach and considers everything in terms of its life cycle. Thus a
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sustainable approach takes into account not just the initial manufacture and use of the plastic but also its treatment and disposal at the end of life. It is this end of life treatment which has caused all the problems which have been attributed to plastic, and it is here where current action and research is being undertaken. It is recognized, of course, that much research is being undertaken into initial production and into use and alternatives to use in practice, but all of this is being driven by the problems of disposal after use. All this effort is being undertaken as governments, firms, and individuals have belatedly recognized their social responsibility in this respect and are striving to perform more satisfactorily.
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Conclusions
Clearly, there are problems with the role of plastic in aiming toward sustainability. As Lovelock has pointed out, it is indisputable that irreversible changes are already taking place to the planet and its balance, suggesting that the measures being considered and undertaken are too little and too late; current evidence from NASA seems to support his argument (Lovelock 2010) (https://climate.nasa.gov/evidence/. (Accessed 4/5/2019)). However, in our rush to dichotomize, we must not characterize plastic as bad. To do so is to deny the many benefits which have arisen from the use of plastic and the difficulties which would ensue if we abolished all uses of plastic in our life. It is necessary to acknowledge and remember that plastic is beneficial as well as detrimental and to react accordingly. This means that we need to assess the problems and find solutions while maintaining the benefits. Alternatives are being developed to plastic which will enter use – but again, it is essential that we understand that alternatives may well not be without problems of a different kind. Nothing is really wholly beneficial or detrimental, and a balance is needed. One of the prime problems, however, is not plastic per se but its use and misuse. In particular, the major problem is not its use but what happens at the end of its use: in other words, the disposal of plastic which has been used and has no further use. As plastic is not biodegradable in most cases, then just discarding it and assuming that nature will take care of the problem is no solution. Nor is burying it with other waste in landfills. The problem with microplastics has been caused primarily through the breaking down of discarded plastic. The problem with plastic is entirely humanmade and caused by careless discarding of used plastic. It is here where the solution is needed. Moreover, of course, one of the problems for sustainability is that a full terotechnological assessment is never made when a product is invented or developed. Disposal is an integral part of the design and use of a product and needs to be incorporated into the design process. Then future problems such as this can be avoided. For plastic, unfortunately, this was never undertaken, and disposal must now be reverse-engineered into the process. We must, however, maintain a sense of perspective and balance. It is clear that a focus upon the problems with plastic merely obfuscates the fundamental issues in finding sustainable solutions. It goes without saying that there are problems with excess plastic, which need to be recognized. Nevertheless, plastics are beneficiary in
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many aspects of our lives and our life would be more difficult without them. This needs to be promulgated, and plastic seems to be in need of defending. The problems, nonetheless, need to be addressed, and these are threefold: • Excessive use of plastic need to be discontinued and alternative, sustainable, solutions used when viable. • Attention needs to be paid to decisions not just to current problems and solutions but also to long-term effects and implications. • Proper attention needs to be paid to the disposal of used plastic so that it is reused when appropriate and does not cause pollution. All of these are common sense, and reuse and disposal are normal aspects of sustainability. Equally, the consideration of the longer term is an integral part of any sustainability planning but is often neglected in the cause of speed and cost-saving. These seem to require a culture change within people, and this needs to be addressed more urgently than any problems with the use of plastics. As for a prognosis regarding plastic, then it seems reasonable to state that plastic is beneficial and needed – at least in some circumstances. What is needed is a reasonable approach that is not just based upon an assessment of economic cost, but this is just an integral aspect of any approach to sustainability. It is also reasonable to assume that more care will be made in the use of plastic in the future, with less being used. It also seems reasonable to assume that solutions will be sought – and hopefully found – that the problems of disposal and especially to the problem of microplastic permeating the environment. However, there will not be a plasticfree future.
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Summary
In the modern world, life is not imaginable without plastics. While it is clear that a world that runs on petrochemicals threatens sustainability, there are ways to make amends to mother Earth. Alternative options such as bio-based plastics that are sustainable in production as well as recyclable petrochemical ones are available, but not all of them are economically logical options at the moment. With the new rules and regulations in the world about the production and consumption of plastics, plus the public awareness about the problems associated with their consumption, corporations have stepped up. They are trying to appeal to the public, produce economically, and obey rules, which have ended up moving towards a circular economy and a more sustainable life cycle in the production of plastics.
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Cross-References
▶ Resource Depletion
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Technological Approaches to Sustainability Cuong Van Hoang, Thinh Gia Hoang, and Victor Kane
Contents 1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 A Brief Definition of Technology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 What Makes a Technology Sustainable? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1 Electric Energy Sources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.2 Other Energy Sources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.3 Energy Usage (Lighting, Heat, and Transportation) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.4 Waste Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.5 Sustainable Construction Technologies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 The Economic Perspective on Technology for Sustainability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Sustainability Technology and Public Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Cross-References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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Abstract
One of the most significant challenges that most of the countries have faced in realizing sustainable development is developing and adopting the necessary technologies. This chapter aims to provide a summary of the up-to-date research literature related to technological approaches to supporting sustainability as C. V. Hoang National Economics University, Hanoi, Vietnam e-mail: [email protected] T. G. Hoang (*) School of Business and Management, RMIT International University, Ho Chi Minh City, Vietnam Centre for Applied Economics and Business Research, Hanoi, Vietnam e-mail: [email protected] V. Kane School of Business and Management, RMIT International University, Ho Chi Minh City, Vietnam e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Switzerland AG 2021 D. Crowther, S. Seifi (eds.), The Palgrave Handbook of Corporate Social Responsibility, https://doi.org/10.1007/978-3-030-42465-7_37
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well as their current development and their implications for users. In addition, economic and political perspectives of sustainable technologies are discussed to provide further comprehensive views related to the emergence of this phenomenon. However, while it is reasonable to argue that technology contributes toward reducing pollution, there is evidence that it currently does not yet create sustainability but instead lessens the extent of unsustainability. Therefore, authors call for further contributions from academics and practitioners to contribute to sustainable development by technical approaches more feasible. Keywords
Technologies · Sustainability · Innovation
1
Introduction
The United Nations (UN) Sustainable Development Agenda by 2030 was approved in the UN Sustainability Development Summit in September 2015 (United Nations 2015). The UN Sustainability Development Summit developed a new set of indicators together with existing universal sustainable indicators, to accomplish 17 Sustainable Development Goals (SDGs) and 169 targets by 2030 (United Nations 2015). The 17 SDGs included (Table 1): The 17 SDGs have continued the well-known Millennium Development Goals (MDGs) commenced in 2000 (UN Millennium Development Project 2005; United Nations 2005). The MDGs were formulated through a member state-led procedure, widely supported by governments in multiple countries and civil public society (Sachs 2012; Hoang 2018). The new SDGs benefited from the practice of MDGs, and they also carried forward the MDGs’ efforts by addressing the emerging challenges in sustainable reform (Saith 2006). This effort advances the international partnership and reflects the consolidation of MDGs while allowing them to be further sustained through the promotion of the SDGs. Table 1 The 17 Sustainable Development Goals. (Source: United Nations 2015) The 17 Sustainable Development Goals (SDGs) Goal 1: No Poverty Goal 10: Reduced Inequality Goal 2: Zero Hunger Goal 11: Sustainable Cities and Communities Goal 3: Good Health and Well-being Goal 12: Responsible Consumption and Production Goal 4: Quality Education Goal 13: Climate Action Goal 5: Gender Equality Goal 14: Life Below Water Goal 6: Clean Water and Sanitation Goal 15: Life on Land Goal 7: Affordable and Clean Energy Goal 16: Peace and Justice Strong Institutions Goal 8: Decent Work and Economic Growth Goal 17: Partnerships to achieve the Goal Goal 9: Industry, Innovation and Infrastructure
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Technological development and innovation are a priority for achieving the SDGs (Nguyen et al. 2019). When adopted and developed effectively, technologies can be deployed to identify challenges for sustainable development and to help the users overcome these challenges from the micro-organizational level through the mesocultural level to the macro-social level (Saith 2006; Hoang et al. 2020). Moreover, the relationship between science and policy makers has become a vital component of the UN’s intention to establish, adopt, practice, and review an empirical evidencebased sustainable development policy (Fehling et al. 2013). It is also critical to identify emerging demands and to build connections between thematic issues, in order to offer appropriate solutions for each case (Brinkerhoff et al. 2007). In recent years, socio-technical system (STS) theories have emerged. (The socio-technical system considers requirements including hardware, software, personal, and community aspects. It applies an understanding of the social structures, roles, and rights (the social sciences) to inform the design of systems that involve communities of people and technology. Examples of STSs include emails, blogs, and social media sites such as Facebook and Twitter.) The STS considers requirements including hardware, software, personal, and community aspects. It applies an understanding of the social structures, roles, and rights (the social sciences) to inform the design of systems that involve communities of people and technology. Examples of STSs include emails, blogs, and social media sites such as Facebook and Twitter. Locally appropriate and context-informed technological application and innovation are vital to ensure long-term commitments to sustainable development (Robert et al. 2005; Pasmore 2006; Sachs 2012; Nguyen et al. 2019). Hence, strategies and processes for assessing the potential capacity, efficiency, and economic perspectives of those emerging technologies are important as they will facilitate and help us to further understand the design, development, and scaling of these technologies and how they can be used to achieve sustainability. In addition, the pursuit of a balance between the validation and development of new technologies in different societies may require an in-depth understanding of how technologies influence social, economic, innovation, and ecological aspects across different contexts (Sachs 2012). Besides, responsible leadership performed by government and business leaders is crucial to the delivery of appropriate technology and innovation-supporting policies for community and the environment (Chel and Kaushik 2018; Hoang et al. 2020). To understand how technology can potentially support the SDGs, it is crucial to understand all aspects of technologies in relation to sustainability concerns (Robert et al. 2005; Sachs 2012; Chel and Kaushik 2018). Hence, the main objective of this paper is to summarize the up-to-date research literature related to technological approaches to supporting sustainability, their current development and their implications for users. This chapter is organized as follows: after the introduction section, the second section provides a brief definition of technology. The third section introduces and discusses current developments in technologies that support sustainability efforts. The economic and political perspectives of sustainable technologies are considered in Sects. 4 and 5. Finally, Sect. 6 provides a brief summary of this chapter.
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A Brief Definition of Technology
Technology is able to transform a configuration of energy and matter into another configuration through its operation process. For instance, an automobile’s engine transforms gas (e.g., chemical energy) into motion (e.g., mechanical energy) in a vehicle. As technology can change the state of matter, it can be understood as a transformation process (Thiam 2011). From the view of natural science, technology can be seen as the application of natural laws to govern the transformation process (Shum and Watanabe 2009). Alternatively, technology can be perceived as the intelligence through which one configuration of matter can be transferred to another. Hence, technological innovation can be reflected via the refinement of intelligence that is illustrated through the transformation process (Grübler 2003; Walker 2016; Nguyen et al. 2019). In this vein, technology has been defined as a process with inputs and outputs in accordance with the laws of nature, in which inputs are transformed into outputs. Based on this perspective, technological innovation can be perceived as a knowledge advancement (Grübler 2003; Hoang et al. 2020). Hence, a technological product like a motorbike can be seen as a device that incorporates knowledge. However, in this context, technology can have different meanings at multiple levels of generality; for instance, gasoline or diesel engines might each be called a “technology.” We can use a variety of words for the recognition of technology; for example, we can call a motorbike or a radio a device due to its small size and self-embodied form of technology. Furthermore, we can call a solar system an installation as it is an assembly of components. In common discourse, the terms installations, plants, or devices are used, meaning that technology cannot be precisely distinguished (Verganti 2009). In this chapter, the authors present the view that technology is a process, in which inputs can turn into outputs. However, we may refer to all devices or installations that use specific technology as the term “technology,” in order to improve readability. For the general public, sustainable technology implies renewable energy (such as solar power and wind power). Although environmentally friendly technologies and techniques for using energy efficiently have not been mentioned much in the business press, they are crucial for a sustainable economy (Addison 2017).
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What Makes a Technology Sustainable?
Table 2 presents a brief list of technologies, both non-sustainable and sustainable, across a variety of domains. Five categories have been frequently mentioned in the sustainability and innovation literature. This section will provide a brief description of those technologies and relevant well-known literature.
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Table 2 List of technologies in both forms of non-sustainable and sustainable across a variety of domains. (Source: author) Category Electric energy sources
Non-sustainable Coal-fired power
Oil and gasfired power
Nuclear power
References Senior et al. (2000), Singh et al. (2003), Bugge et al. (2006), and Thitakamol et al. (2007) Chang et al. (2004), Li and Bai (2010), Fleten and Näsäkkälä (2010), and Casey et al. (2018) Ghorashi (2007), Elliott and Elliott (2007), HoreLacy (2010), and Pearce (2012)
Sustainable Solar power
References Phillips (2013), Dombi et al. (2014), and Mulvaney (2019)
Wind power
Yang et al. (2013), Tian et al. (2013), and Yang and Chen (2016)
Biogas power
Rao et al. (2010), Budzianowski (2012), and Surendra et al. (2014) Edwards et al. (2008), Offer et al. (2010), and Stephens et al. (2016) Deane et al. (2010), Ardizzon et al. (2014), and Rehman et al. (2015)
Hydrogen fuel cell
Other energy sources
Lead-acid batteries
Gasoline
Ethanol
Biodiesel
Sauer and Wenzl (2008), Forsberg (2009), Pavlov (2011), and Reddy (2011) Goldemberg et al. (2008), Onat et al. (2014), and Li et al. (2014) Goldemberg (2007), Gupta and Verma (2015), and An and Zhao (2017) Achten et al. (2007), Yee et al. (2009), and Castanheira et al. (2014)
Pumped hydro (dams or storage)
(continued)
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Table 2 (continued) Category Energy usage
Non-sustainable Incandescent lights
Internal combustion car
Battery-electric vehicle
Waste management
Landfill disposal
References Pearce and Russill (2005), Sayigh (2013), and Montoya et al. (2017) Myung and Park (2012), Ma et al. (2012), and Wang et al. (2013) Offer et al. (2010), Eberle and Von Helmolt (2010), and Poullikkas (2015) Troschinetz and Mihelcic (2009), Kamaruddin et al. (2015), and Townsend et al. (2015)
Building technologies
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Sustainable LED lights
References Adams et al. (2008), Singh et al. (2015), and Doppelt (2017)
Solar water heater
Shukla et al. (2009), Dagdougui et al. (2011), and Hossain et al. (2011)
Recycling
Green (2007), Reuter (2011), and Schill and Shaw (2016) Lee et al. (2010), Azar et al. (2013), and Smith (2016) Tam and Tam (2006), Ding (2008), Chen et al. (2010), Hwang and Tan (2012), Minke (2012), and Kibert (2016)
Bioenergy with carbon capture and storage Renewable energy, biodegradable materials, green insulation, smart applications, cool roofs, electrochromic smart glass, water efficiency technologies, self-powered buildings
Electric Energy Sources
Electrical energy refers to the energy that has been converted from electric potential energy or kinetic energy. This kind of energy is provided by the integration of electric current and electric potential. At the moment that electric energy is transformed into another type of energy, it ceases to be electric potential energy. Hence, electric energy is potential energy before it is transferred to other types of energy (e.g., heat, light, motion, etc.) for its users. Examples of non-sustainable electric energy include coal-fired power plants (Senior et al. 2000; Singh et al. 2003; Bugge et al. 2006), oil and gas-fired power (Chang et al. 2004; Li and Bai 2010; Fleten and Näsäkkälä 2010), and nuclear power (Ghorashi 2007; Elliott and Elliott 2007; Pearce 2012). Solar power (Phillips 2013; Dombi et al. 2014; Mulvaney 2019), wind power
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(Yang et al. 2013; Tian et al. 2013; Yang and Chen 2016), biogas energy (Rao et al. 2010; Budzianowski 2012; Surendra et al. 2014), and hydrogen fuel cells (Edwards et al. 2008; Offer et al. 2010; Stephens et al. 2016) are typical examples of sustainable electric energy.
3.1.1
Non-sustainable Electric Energy
(i) Coal-Fired Power Coal-fired power plants are one of the most crucial fossil fuel power stations on the planet. A coal-fired power plant or coal-fired power station is a thermal power plant that burns coal to create electricity (Senior et al. 2000). In a coal-fired power plant, coal is pulverized and burned in the furnace with a boiler. Steam from the furnace is used to spin turbines and generate electricity. Hence, during this process, the energy stored in the coal is transformed into thermal energy, then mechanical energy, and, finally, electrical energy (Singh et al. 2003). The coal-fired power plant has been criticized as its operation generates air pollution and causes thousands of deaths each year, although it generates over a third of the world’s electricity. Power stations that use coal emit over 10 gigatons of carbon dioxide every year, which is one-fifth of total emissions (Thitakamol et al. 2007). Coal-fired power stations are reported to be the largest source of greenhouse gases causing global warming. They are being eliminated in several countries in Europe and America. However, they are still used in some less developed countries in Asia and Africa (Bugge et al. 2006). (ii) Oil and Gas-Fired Power In an oil and gas-fired power plant or power station, natural gas and oil are burned to produce electricity. Oil and gas-fired power plants are one type of fossil fuel power in which the chemical energy encased in oil and natural gas (e.g., primarily methane) is transformed into thermal energy, mechanical energy, or electrical energy (Chang et al. 2004). Hence the applications of these power plants are diverse; they can be used to heat rooms and buildings or materials, to produce hot water or to provide electric energy for machines and vehicles (Li and Bai 2010). Oil and gas-fired power stations emit around 500 g of CO2 per kWh of electricity generated. This is about half that of coal-fired power stations but more than ten times that of nuclear power and renewable energy. According to Fleten and Näsäkkälä (2010), natural oil and gas have generated one-quarter of the world’s electricity, and they contribute a substantial part of gas emissions in addition to other types of pollution. They therefore contribute to global warming. On the other hand, like other fossil fuel types, oil and gas-fired power plants can provide seasonal dispatchable generation to balance the use of renewable energy (Casey et al. 2018). (iii) Nuclear Power In a nuclear power plant, nuclear reactions are used as the main energy source to produce heat; this heat is used to spin steam turbines to generate electricity. Nuclear power is primarily gathered from three main sources: nuclear fission, nuclear decay, and nuclear fusion reactions (Ghorashi 2007). Currently, the largest part of nuclear
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power electricity is generated by nuclear fission. Much of the existing literature on nuclear power pays particular attention to producing electricity from fusion power. The use of nuclear power has resulted in the lowest levels of fatalities per unit of energy generated, compared to other power plants such as coal-fired power plants and oil and gas-fired power (Ghorashi 2007). Since nuclear power was commercialized in the 1970s, it has prevented thousands of pollution-related deaths. However, it has created more than 60 billion tons of carbon dioxide (Elliott and Elliott 2007). Furthermore, the use of nuclear power has additional risks related to accidents in the nuclear power station. A number of nuclear power accidents have occurred, such as the Soviet Union Chernobyl disaster in 1986, the Fukushima Daiichi nuclear disaster in Japan in 2011, and other nuclear submarine accidents. Recently, there is still debate about the advantages and risks of the use of nuclear power (Hore-Lacy 2010). Several international institutions such as the World Nuclear Association and Environmentalists for Nuclear Energy advocate the use of nuclear power as a clean, renewable, and sustainable energy source (Pearce 2012). Nevertheless, other institutions such as Greenpeace and Nuclear Information and Resource Service claim that nuclear power threatens communities and ecology.
3.1.2
Sustainable Electric Energy
(i) Solar Power Solar power is the process of converting sunlight into electricity energy. It can be generated directly using concentrated solar power or indirectly by employing photovoltaics (PV). While the concentrated solar power technique uses lenses or mirrors in a large area of sunlight and then turns the energy into heat and electric energy, PV cells transform sunlight into electric energy via the photovoltaic effect (Phillips 2013). PV was originally adopted in small- and medium-sized electronic devices such as calculators and remote controls powered by a solar cell. Large commercial solar power plants were first developed in the 1980s, and currently, the largest concentrated solar power plant is in the Mojave Desert of California, USA (Dombi et al. 2014). Over time, the costs of solar power have reduced, leading to the number of solar PV systems increasing to millions, and PV power plants with hundreds of megawatts are being developed. Thus, solar PV has become a low-cost technology able to harness environmentally friendly energy (Mulvaney 2019). Many developed countries have set up significant solar power capacity in their national grids to provide an alternative for conventional energy sources. Meanwhile, a number of developing countries have paid attention to the utilities of solar power to minimize their dependence on fossil fuels and reduce their carbon footprint and gas emissions. (ii) Wind Power Wind energy is the process by which wind is used to generate mechanical power via turbines. Mechanical power is then converted into electric energy. Historically, wind power has been utilized for milling or pumping (Yang et al. 2013). Wind power is a common renewable power source, and it has less impact on the environment compared with fossil fuels. In recent decades, wind farms, comprising multiple
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wind turbines, have emerged as one of the most significant renewable energy sources. Although wind power is an affordable energy source compared to other energy sources, the construction of wind farms may have negative impacts on land resources and the ecosystem (Tian et al. 2013). Wind farms need to be built and spread over a large area, and they need to catch the wind. The location of wind farms needs to be carefully considered as they need to be constructed in rural areas, which may result in the industrialization of the countryside. Hence, they have negative influences on ecology such as habitat loss. One way to reduce the impact of wind farm construction is to locate them offshore, although this may result in increases in construction and maintenance costs. Another challenge for the utilization of wind energy is that wind power is an intermittent energy source that varies significantly over short time scales. In addition, wind power neither generates electricity nor can be dispatched on demand. As a result, other electric energy sources must be employed together with wind power in order to maintain a constant electric supply (Yang and Chen 2016). Furthermore, if the proportion of wind energy supply increases, the grid may need to be upgraded; otherwise it may be damaged. Although power-management techniques can be adopted to successfully monitor the operation of wind farms and wind power such as geographically distributed turbines, exporting and importing power to neighboring areas and energy storage, the development and construction of wind energy and wind farms still need further research and testing (Yang et al. 2013). (iii) Biogas Power Biogas energy is a renewable energy source that is generated from the breakdown of organic structure in the anaerobic environment, normally including methane and carbon dioxide (without oxygen) (Rao et al. 2010). The anaerobic environment is created in a closed system, called an anaerobic digester or bioreactor. Biogas is created from biological materials, for instance, food waste, agricultural waste, municipal waste, and plant material. Bioenergy is generated through biogases including methane and carbon dioxide, which are burned or oxidized (Budzianowski 2012). The bioenergy released from biogas allows biogas to be used as an energy source that can be used for purposes such as heating. A gas engine converts biogas into electric or mechanical power. Unlike wind power, biogas can be stored as compressed natural gas (CNG), which can be used to provide fuel for motor vehicles (Surendra et al. 2014). Regarding the material of biogas, the growth of organic material can be used to either convert to the biogas energy source or nurture the forthcoming organic materials. Hence, biogas is one of the most useful and common renewable resources as its production cycle is sustainable and it does not release carbon dioxide (Surendra et al. 2014). (iv) Hydrogen Fuel Cells A fuel cell is a device that can transform chemical energy into other energy sources (normally electric). The logic behind the hydrogen fuel cell is similar to that of any fuel cell; it uses hydrogen and oxygen gas as the main sources of energy (Edwards et al. 2008). After the reaction, hydrogen fuel cells generate electricity, heat, and
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water; they are an environmentally friendly energy source. The development of hydrogen fuel cells can be seen as a crucial improvement over other energy sources such as oil and gas-fired plants or nuclear power stations as these produce harmful by-products (Offer et al. 2010). Furthermore, since they convert chemical energy directly into electric energy, hydrogen fuel cells are more efficient than traditional fuels such as oil, gas, and coal. They first convert chemical energy into heat, then mechanical energy, and finally electric energy, as well as releasing greenhouse gases (Stephens et al. 2016). Finally, the production of hydrogen fuel cells does not need additional extraction and refining processes like oil or gas – as oxygen is available in the air, producers of hydrogen fuel cells only need to provide the fuel cell with hydrogen, which can be produced in a very environmentally friendly manner (Stephens et al. 2016).
3.2
Other Energy Sources
Other energy refers to energy that has been converted from potential energy sources into energy for the user’s purpose. Non-sustainable energies include lead-acid batteries (Sauer and Wenzl 2008; Forsberg 2009; Pavlov 2011; Reddy 2011), gasoline (Goldemberg et al. 2008; Onat et al. 2014; Li et al. 2014), and ethanol (Goldemberg 2007; Gupta and Verma 2015; An and Zhao 2017). Sustainable energies include pumped hydro (Deane et al. 2010; Ardizzon et al. 2014; Rehman et al. 2015) and biodiesel (Achten et al. 2007; Yee et al. 2009; Castanheira et al. 2014).
3.2.1
Non-sustainable Energy
(i) Lead-Acid Batteries The lead-acid battery was firstly invented in 1859, and it can be seen as the earliest rechargeable energy source. Although it has a low energy-to-weight ratio and energy-to-volume ratio, it is able to provide sustained energy at a certain time. Due to this feature and an affordable price, they are attractive for users and are especially used in motor vehicles for automobile starter motors (Sauer and Wenzl 2008). As lead-acid batteries are low-cost compared to the latest technologies, they are still widely used even when other technical energy can offer higher energy densities. Larger and more convenient lead-acid designs are broadly used for storage in backup power supplies in a variety of electronic devices such as mobile phones, laptops, and electric vehicles and power supply in cell phone towers and even in stand-alone power systems. In this modern equipment, a modified version of the battery can be used to enhance storage times and reduce maintenance requirements (Pavlov 2011). More recent applications of lead-acid batteries can be found in a wide range of fields in modern life, varying from the lead-acid batteries used in automobile starter motors to the wet cell standby batteries used for backup power supplies for computer centers and grid energy storage. Lead-acid batteries are also used in emergency
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lighting and sump pumps (Pavlov 2011). They can be used to support mobile vehicles; for example, huge lead-acid batteries are used to provide energy for the electric motors in diesel-electric submarines when submerged, and they are used as emergency power on nuclear submarines (Forsberg 2009). In addition, valve-regulated lead-acid batteries are used in backup power supplies for alarms and smaller computer systems and for electric scooters, electric wheelchairs, electrified bicycles, and battery-electric vehicles (Reddy 2011). However, the application of lead-acid batteries has attracted criticism due to their implications for society as well as for the environment. In 2003, the Environmental Defence and the Ecology Center of Ann Arbor, Michigan, claimed that batteries of vehicles on the road contained around 2,700,000 metric tons of lead and lead compounds (Forsberg 2009). Long-term exposure to lead and lead compounds can cause brain and kidney damage and hearing impairment. Reddy (2011) reported that the automobile industry consumes more than 1,000,000 metric tons of lead every year, although lead recycling can only deal with 40,000 metric tons of lead, and the rest ends up in landfills. Moreover, another 70,000 metric tons of lead are released during the lead mining and manufacturing process each year. Although several efforts have been made to devise an alternative to lead-acid batteries, they deliver limited results. These alternatives are unlikely to replace lead-acid batteries due to the latter’s low cost and convenience (Pavlov 2011). (ii) Gasoline Gasoline is a petroleum-derived flammable liquid, which is used in a similar way to fossil fuels (e.g., oil and gas-fired energy) in internal combustion engines. It includes organic compounds gathered through the fractional distillation of petroleum with additional additives (Goldemberg et al. 2008). The usage and pricing of gasoline are a result of multiple factors such as crude oil prices, processing and distribution costs, international demand, tax, and the availability of gasoline sources. The price of gasoline in each country is determined mainly by national pricing policy (Onat et al. 2014). The wide use of gasoline in internal combustion engines results in significant negative impacts on ecology, and it contributes to the increase in greenhouse gas emissions. In addition, the production, application, transport, storage, and delivery of gasoline can release pollutants into the environment as a liquid or vapor, as leakage from storage tanks or spills (Onat et al. 2014). The environmental concerns regarding the consumption of gasoline emerged from not only the complications of gasoline production, extraction, and refining but also from the amount of carbon dioxide released from the usage of gasoline. The combustion of 1 US gallon (equivalent to 3.8 l) of gasoline generates nearly 9 kg of carbon dioxide (Li et al. 2014). Moreover, unburnt gasoline reacts with sunlight in the atmosphere to produce photochemical smog, which is visible as a brown haze and is toxic to humans (Li et al. 2014). (iii) Ethanol Ethanol fuel is an energy source generated from ethyl alcohol, the principle ingredient in alcoholic beverages like beer, wine, or brandy. It is mainly used as an additive for gasoline, and it has been used widely as an alternative fuel in internal
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combustion engines. Ethanol is commonly made from biomass such as corn or sugarcane (Goldemberg 2007). This demonstrates a positive energy balance, meaning that the process of producing ethanol fuel does not need more energy than the amount of energy contained in the fuel itself. Ethanol-mixed gasoline is broadly used in the USA and EU. Biomass is the main material for the production of ethanol, and it needs to go through several steps such as growth, gathering, fermentation, distillation, and burning before it can be used to make ethanol (Gupta and Verma 2015). All of these stages need appropriate resources and infrastructures. Carbon dioxide is released during the fermentation and combustion of biomass. The generation of carbon dioxide can be reduced during the production of ethanol compared to the production of gasoline because carbon dioxide is absorbed by plants (An and Zhao 2017). Hence, overall, the production of ethanol releases fewer emission gases than gasoline. (iv) Biodiesel Biodiesel is the use of vegetable oils or animal fat to produce fuel containing propyl, methyl, or ethyl esters. Biodiesel is a form of biofuel; it is classified as environmentally friendly energy, and it can be used in standard diesel engines (Achten et al. 2007). Biodiesel can be used alone as an energy source, or it can be blended with other petroleum diesel according to different formulas, and it can be used for heating. Recent literature on energy studies suggests that a biodiesel blend (e.g., B30 biodiesel blend) reduces the amount of carbon monoxide released into the environment by around 80% and particulate matter emissions by about 30% (Achten et al. 2007). Meanwhile, Yee et al. (2009) found that B20 biodiesel blend reduces emissions in vehicle engines, while other research reports that there is variance in the carbon emissions of biodiesel depending on the material used. The usage of soy as feedstock resulted in the highest gas emissions, while used cooking oil generated the lowest carbon emissions (Castanheira et al. 2014). One of the main drivers for the wide use of biodiesel is the desire to be independent of fossil fuels and other renewable energy sources. Hence, a country can gain benefits from the use of biofuels without increasing pollutants. While the total energy balance has still attracted interest from scholars and policy makers, it is clear that dependence on fossil fuels such as coal, gas, and oil has reduced (Castanheira et al. 2014). The increasing interest in biofuels, as well as other environmentally friendly energy sources, has several implications such as a decline in gas emissions, pollution, and biodegradation (Achten et al. 2007). Nevertheless, there is much evidence to show that converting plants to fuel results in land being used for this purpose at the expense of feeding people – a problem in some places. Also it takes energy to convert plant matter into fuel – causing pollutants. In addition, the development and widespread use of biofuels is not without criticisms. For instance, a number of associations like Rainforest Rescue and Greenpeace claim that the cultivation of plants used for biofuel production is exacerbating climate change and destroying the sensitive ecosystems in rainforests. Furthermore, the popularity of biodiesel has contributed to world hunger because arable land is being used to grow oil palms, soybeans, and sugarcane rather than food
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(Yee et al. 2009). Nevertheless, a variety of organizations supporting sustainability initiatives such as the Environmental Protection Agency have concluded that biofuels are an ecologically friendly energy source.
3.2.2
Sustainable Energy
(i) Pumped Hydro Pumped hydro (dams), pumped-storage hydroelectricity, or pumped hydroelectric energy storage is a way to produce and store energy. This power storage approach stores energy in the form of the gravitational potential energy of water; water is pumped from a lower level and stored in a higher elevation reservoir (Deane et al. 2010). For off-peak inexpensive electric power, water is pumped to a higher elevation reservoir, and water is unleashed to spin turbines and generate electric energy. In brief, pumped hydroelectric systems help to reduce electric demand pressure by providing electricity in peak times. Pumped-storage hydroelectricity is usually used together with intermittent energy sources such as solar or wind energy or excess energy from fossil fuels such as coal-fired and gas-fired power plants, to be saved for higher demand periods (Ardizzon et al. 2014). Pumped-storage hydroelectricity can be seen as one of the largest capacity systems of energy storage. The primary challenge for the development of pumpedstorage hydroelectricity is the particular geographical conditions required, such as height and strong, available water flow (Deane et al. 2010). Hence, suitable locations are likely to be in mountainous areas, possibly in scenic spots or places of residence. Thus, in order to develop pumped-storage hydroelectricity dams, several political, social, and environmental concerns need to be dealt with (Rehman et al. 2015). Many recent pumped-storage hydroelectricity dams have avoided these sensitive positions by being built in secluded areas such as disused mines.
3.3
Energy Usage (Lighting, Heat, and Transportation)
Energy usage includes devices, appliances, and engines that use energy to serve a human purpose. Examples of non-sustainable energy usage are incandescent lights (Pearce and Russill 2005; Sayigh 2013; Montoya et al. 2017) and internal combustion cars (Myung and Park 2012; Ma et al. 2012; Wang et al. 2013). On the other hand, light-emitting diode (LED) lights (Adams et al. 2008; Singh et al. 2015; Doppelt 2017), solar water heaters (Shukla et al. 2009; Dagdougui et al. 2011; Hossain et al. 2011), and battery-electric vehicles (Offer et al. 2010; Eberle and Von Helmolt 2010; Poullikkas 2015) represent sustainable energy usage.
3.3.1
Non-sustainable Energy Usage
(i) Incandescent Lights Incandescent lights or light bulbs use electric energy to burn a filament until it glows. In incandescent light, the filament is located in a bulb to keep the lighting filament
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away from oxidation. Electric energy is provided to the filament by terminals. In addition, a bulb socket provides mechanical support and electrical connections (Pearce and Russill 2005). The production costs of incandescent lights are quite low. Moreover, they do not require external regulating equipment, and they can work well in both alternating current and direct currents. Hence, incandescent light is widely used (Sayigh 2013). Incandescent bulbs and heat generated by the filament have delivered and motivated many useful applications, from headlamps and flashlights to incubators, infrared heating, and lava lamps. For a certain capacity of light, an incandescent light bulb generates more heat than other light bulbs; therefore it consumes more energy than other lamps such as fluorescent lamps and LEDs. In an incandescent bulb, around 95% of the energy absorbed is converted into heat rather than lighting (Pearce and Russill 2005). Moreover, the usage of incandescent light bulbs may increase the load on the air-conditioning system in an office where airconditioning is used. As a result, several countries and areas have started to phase out the use of incandescent light to minimize energy consumption (Montoya et al. 2017). (ii) Internal Combustion Car In the internal combustion engine, the combustion of the fuel happens with an oxidizer in a combustion chamber, in which the expansion of high-pressure gases generated by combustion places pressure on pistons, spin turbines, and rotors, which implies a transformation from chemical energy to mechanical energy (Myung and Park 2012). Typically an internal combustion engine is powered by fossil fuels such as coal, gasoline, or oil. However, there is increasing usage of environmentally friendly energy sources such as biogas or methanol (Ma et al. 2012). The usage of the internal combustion engines has serious issues for the environment, such as gas emissions resulting from the incomplete combustion of carbonaceous fuel. In addition, derivatives from the operation of internal combustion engines such as carbon dioxide, water, and particulate matter have a negative impact on human health, causing asthma, lung cancer, and cardiovascular issues (Wang et al. 2013). Automobile traffic on the street creates noise, as do aircraft flights, especially supersonic-capable airplane and rocket engines (Wang et al. 2013). (iii) Battery-Electric Vehicles The battery-electric vehicle, only-electric vehicle, and all-electric vehicle are forms of electric vehicle that are powered from chemical energy stored in the chargeable battery. Battery-electric vehicles use an electric engine and motor controllers rather than internal combustion engines and fossil fuels (e.g., gas or oil) for operation. Battery-electric vehicles use charged batteries on board for propulsion. Battery-electric applications have become more popular and attractive since the price of fossil fuels has increased and since the introduction of new battery technologies such as lithium-ion, which can provide higher possible acceleration and energy density. There is a wide range of battery-electric vehicle applications, from electric cars and battery-electric trains to electric railcars and electric scooters. Batterypowered electric trains in the form of battery-electric multiple units have served commercially in several countries such as Japan and China (Offer et al. 2010). In
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those battery-electric trains, battery power has been used for propelling when moving on railway lines that are not electrified. Meanwhile, a battery-powered electric car is an automobile in which propulsion is powered by an electric engine. Battery-powered electric cars contribute to reductions in gas emissions and pollutants. According to a report by Eberle and Von Helmolt (2010), using an electric car may help to reduce carbon dioxide emissions by 30%, cutting down dependence on fossil fuels and combustion. Although electric vehicles do not generate much pollutant and are expected as a sustainability effort (Tuan 2012; Grieco 2015), the production of those vehicles generally still produces pollutants. The lithium-ion batteries, as well as other energy sources used in these vehicles, take a lot of materials and power to make due to the extraction process of the lithium, which is essential to the battery. This implies that the bigger the battery-electric vehicle, the more carbon dioxide emitted (Poullikkas 2015). Minerals used to create lithium and materials for lithium-ion batteries present challenges for ecology due to chemical and mineral leaks, creating health problems for plants, animals, and humans living nearby. Hence, powering vehicles by batteryelectric reduces pollution only and does not eliminate it. Therefore, battery-electric vehicle cannot be considered as sustainable energy work.
3.3.2
Sustainable Energy Usage
(i) LED Lights LED lights are a form of electric light used in light fixtures to generate light using LEDs. LED sources are neat, which means that they offer flexibility in the design of light fixtures and good control over the distribution of light with small reflectors or lenses. Due to the small size of LEDs, control of the spatial distribution of illumination is flexible, and the light output and spatial distribution of an LED array can be organized without efficiency loss (Adams et al. 2008). LED light bulbs have a life span many times longer than an incandescent or fluorescent lamp, and they are more efficient. An LED light bulb uses only about 10% of the electric energy that an incandescent lamp needs. In addition, unlike fluorescent light, frequent switching on and off does not impact the life expectancy of LED light bulbs at the proper temperature (Singh et al. 2015). Converting from incandescent lamps to LED lights can result in a positive, sustainable impact on our ecology. By reducing electricity consumption, the usage of LED lights helps to reduce our carbon footprint. In addition, there are a variety of reasons for the usage of LED lights as an environmental-friendly lighting device (Doppelt 2017), as follows: • LEDs last longer: traditional fluorescent lamps may only last 34,000 h; however, LED lights have been found to surpass 70,000 h of testing. • Low maintenance: LED lamps are self-contained, meaning that they do not need a ballast to operate. LED lights integrate drivers and chips into the tube itself, so when the light goes out, the only thing we need to replace is the light.
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• Recyclable: aluminum, plastic, and even the driver and chip components of LED tubes can go to a commercial recycling plant to be broken down and turned into something else. (ii) Solar Water Heaters Solar water heating is a process to transfer energy from sunlight into heat for heating water. It uses solar thermal collectors. The solar water heater is broadly used for residential and industrial applications (Shukla et al. 2009). Solar water heaters boil fluid (e.g., water or working fluid) directly or indirectly via light-concentrating mirrors, and they pass it into a storage system for usage later (Dagdougui et al. 2011). The amount of heat delivered by a solar water heating system depends mainly on the amount of heat delivered by the sunlight at a particular place and time. In sunny, warm locations, a solar water heater system can be cost-effective. At higher latitudes, design requirements are required to improve the efficiency of the solar water heater system, which increases operation costs. The main concern is, therefore, the large initial investment for solar water heating systems, and balancing this investment can take a long time (Hossain et al. 2011).
3.4
Waste Management
Waste management and waste disposal are techniques and activities for managing waste from collection to the final disposal stage. This involves several steps such as accumulation, transfer, treatment, and disposal, together with the management and use of particular technologies and techniques for the waste management process.
3.4.1
Non-sustainable Waste Management
(i) Landfill Disposal Landfill disposal is a place used for the disposal of waste by burial. Landfill disposal is the original form of waste treatment, and it has been the most popular approach to managing waste disposal. It is still utilized in many countries and areas around the world (Troschinetz and Mihelcic 2009). Landfill disposal also brings some potential problems for the environment, for example, contamination of groundwater, soil contamination, air contamination, damage to facilities caused by heavy garbage trucks, and leachate (when precipitation falls on open landfills, water percolates through the garbage and becomes contaminated) (Kamaruddin et al. 2015). Another serious problem generated by landfill disposal is landfill gas, which is generated by anaerobic digestion by microbes. In some modern landfills, this gas is collected and utilized for several purposes, such as the production of electricity (Townsend et al. 2015). Landfill gases can be emitted from the surrounding environment such as air, water, and soil. In well-managed landfills, these gases are gathered and used (Townsend et al. 2015).
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Sustainable Waste Management
(i) Recycling Recycling is a process of transforming waste into new material and items. It is an alternative approach to landfill disposal waste management, and it can save resources, reduce energy usage, generate fewer greenhouse gas emissions from incineration, and cut down water pollution from landfills. Recycling is a primary part of the modern waste hierarchy (e.g., reduce, reuse, and recycle) (Green 2007). Recycling intends to improve environmental sustainability by replacing inputs such as raw material and resources and redirecting waste outputs. Recyclable materials include a variety of components such as paper, metal, plastic, textiles, and batteries (Reuter 2011). The composting of biodegradable waste, such as food or garden waste, is also listed as a form of recycling. Although recycling is part of the modern waste hierarchy, it is not without criticisms. Critics claim that the costs and energy used in the collection, delivery, and recycling of materials outweigh the costs and energy used during the production of the new ones. In addition, employment in the recycling industry is a trade-off for jobs lost in mining and industries associated with the production of new materials (Reuter 2011). In 2010, architect William McDonough and chemist Michael Braungart published a book in which they reported the fundamental challenge inherent in recycling, resulting from the reality that most products were not designed for recycling (McDonough and Braungart 2010; Green 2007). These authors suggest that products should be designed with an entire closed loop for each part, so that those parts can be delivered back to the environment by either biodegradation or endless recycling (Schill and Shaw 2016). (ii) Bioenergy with Carbon Capture and Storage Another approach to overcoming the challenge of gas emissions and air pollution, contributing to cleaning the air, is bioenergy with carbon capture and storage (BECCS). BECCS is a process of bioenergy extraction from biomass, in which carbon is separated and stored to remove it from the atmosphere (Lee et al. 2010). BECCS may help with climate change mitigation by collecting and storing carbon with bioenergy in the form of biofuel – an environmentally friendly energy (Azar et al. 2013). Since 2019, several facilities have used BECCS techniques to gather around 1.5 million tons of carbon dioxide. In addition to BECCS, other nonBECCS techniques have been used for the removal and storage of carbon dioxide, such as afforestation, biochar, carbon dioxide air capture, and biomass burial (Smith 2016).
3.5
Sustainable Construction Technologies
Sustainable construction technologies contribute to making construction works more energy-efficient and environmentally friendly. They deliver the low level of gas emissions and pollution and cause no impacts to the environment. In
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construction work, green building construction plays a crucial role in every development stage (Tam and Tam 2006). Every element of construction, including design, materials, and systems, has been used to conduct operations and construction in sustainable and efficient ways: • Renewable energy: in sustainable construction, both active and passive solar energy have been used to heat or provide electrical energy for construction machines. Moreover, passive solar energy is a system that takes advantage of sunlight through heat-absorbing surfaces and windows to warm and provide boiled water for the house. The heat-absorbing surfaces and windows reduce the fossil energy requirements for warming houses during winter (Hwang and Tan 2012; Kibert 2016). • Biodegradable materials: the usage of biodegradable materials is a sustainable effort to help construction works became more environmentally friendly. The traditional construction approaches result in the accumulation and emission of pollutants, toxins and carbon dioxide, which can take a hundred to a thousand years to decompose. Biodegradable materials, on the other hand, can help to reduce negative impacts on the environment and to accelerate decomposition because they can be broken down in a short time without releasing toxins. Biodegradable materials have been used to make building foundations, walls, and insulators and as a part of sustainable construction technologies (Kibert 2016). • Green insulation: insulation is one of the vital issues for modern construction. Green insulation provides an ecology-friendly approach by encouraging the use of easy-to-find and recyclable materials such as paper and denim textiles (Chen et al. 2010). • Smart applications in building management: green construction and home management technologies imply the development and employment of energy-saving and self-sufficient technologies. These applications include smart home applications based on the Internet of things, smart closed-circuit television, network architecture, home security applications, and energy-harvesting wireless technology for self-powered wireless switches (Ding 2008). • Cool roofs: cool roofs are green design technologies that help to reflect heat and sunlight, thereby minimizing heat absorption and thermal emittance. They help to keep homes and buildings within a specific temperature range (Kibert 2016). • Electrochromic smart glass: another technological application to manage the temperature in a house is the use of electrochromic smart glass. This application can work particularly in summer periods or in tropical countries in order to prevent heat, ultraviolet ray, and solar radiation from the sun. Electrochromic smart glass allows the users to adjust the amount of solar radiation it reflects. Thus, it helps to save energy as well as costs for heating, ventilating, and airconditioning (Ding 2008; Minke 2012). • Water efficiency technologies: a number of water management technologies associated with green construction techniques have been recently introduced. Technically, water efficiency technologies include the reuse and adoption of
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efficient water management systems, for instance, dual plumbing technology, rainwater collection, and water conservation fixtures. According to the report by Ding (2008), the employment of these technologies in developed countries in 2018 resulted in a reduction in water wastage by 15% (Ding 2008; Hwang and Tan 2012). • Self-powered buildings: self-powered buildings facilitate construction with a lower amount of energy consumption. The buildings are designed and constructed with the aim of producing sufficient energy to meet their own demands or even supply excess energy back to the national energy grid. One example is the use of wind turbines and heat-absorbing surfaces in skyscrapers, in which heavy air propels the turbine blades and heat-absorbing surfaces catch sunlight to generate the energy requirements for the building (Minke 2012). In summary, there are three fundamental features that distinguish sustainable technologies from non-sustainable technologies, studied from a wide range of disciplines. The first feature is renewability – energy sources such as wind, sunlight, and biofuel are classified as sustainable as they either come from renewable sources or release a small amount or even no pollutants or gas emissions into the environment. Energy from non-renewable sources such as fossil fuels is not sustainable as their use harms the environment. The second feature is nontoxicity and safety; green technologies used in waste management and construction do not generate any toxins, pollutants, or emissions for the community or ecosystem. The final feature is efficiency. In order to reach sustainability, there is a requirement for efficiency in the use of finite natural resources. Although several studies tend to equate sustainability with renewability, safety and efficiency are equally vital for the sustainable development of human society. The further analysis, considering economic and political perspectives, will be discussed in the following sections.
4
The Economic Perspective on Technology for Sustainability
The use of sustainable technologies has attracted interest not only from natural scientists and engineers but also from economists (Smith et al. 2010; Boons et al. 2013; Mokyr et al. 2015; Hoang 2018). While other scientists focus on the efficiency and the capability of technologies in different contexts, economists pay attention to costs and valuation to develop, introduce, and operate technologies. From the economic point of view, it is necessary to consider the total costs of inputs and byproducts and the process of transforming inputs into outputs: • Cost of development and economic perspective of technology’s capacity: Whether a sustainable technology is being developed or purchased, its costs are associated with its capacity. In general, the capacity cost of technology is calculated by monetary value per unit of capacity. The fundamental concern
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of economists is how unit capacity cost has changed to consider the purchase and self-development of sustainable technology (Smith et al. 2010; Bohnsack et al. 2014). (Fixed) costs of purchasing or self-development: Costs of purchasing, leasing, or self-developing sustainable technologies are fixed costs as they are unchanged regardless of whether or not technologies are successfully purchased or developed. To provide a proper comparison of technologies with different lifetimes, fixed costs are illustrated per unit of time, normally per year. The purchasing or development costs of technologies are the starting point for this economic analysis. Those costs need to be leveled over the useful life of these technologies to calculate annual cost. Levelized cost is equivalent to the price that could be paid per year to hire or develop the technologies (Geels 2010; Bohnsack et al. 2014). (Variable) costs of operation: The primary difference between fixed costs and variable costs is that variable costs of the input of technology increase when more output is produced. Examples of variable costs include energy costs, material costs, and labor costs, which increase in the process of generating output. Total costs of sustainable technology: refers to the sum of the fixed costs of purchasing or self-development and the variable costs of operation – in other words, the sum of variable operating costs and the expense of purchasing or selfdevelopment. The cost of producing one unit is known as the average total cost per unit of output of technology. Valuation of technology or device: the conventional question regarding the development of sustainable technology from the perspective of economists is: does the device or technology cost more than it is worth? Value is always the fundamental concern of economists. Besides the development of sustainable technologies and devices, economists have provided techniques for the precise evaluation of technologies and devices. The fundamental concept of investment in these new technologies was represented through the present, and future values of investment cash flow and the main concern were how to discount the investment amount of those technologies in the future to an equivalent amount of investment in the present. The discount rate used for financial decision-making establishes that equivalence. The development of financial technologies facilitates that calculation. Microsoft Excel, Open Office, and Apple Numbers are examples of these applications (Bohnsack et al. 2014; Mokyr et al. 2015).
Sustainability Technology and Public Policy
An initiative such as the development of technical approaches to support sustainability is of public interest, and it needs support from policy makers in the form of regulations and encouragement policies (Costantini and Crespi 2013; Nguyen et al. 2019; Hoang et al. 2020). Although private sectors can support technologies for sustainability through self-development, innovation, and green technology transfer, these practices still need support from public policies relating to sustainable
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technologies. Examples of support from the government are monetary policy and tax credits; by allowing lower interest loans for some applications of sustainable technologies, the government can encourage organizations to consider green production and to import environmentally friendly technologies, which makes a significant contribution to sustainable initiatives (Foxon and Pearson 2008). Another effort that the government could make is to put pressure on national energy providers to promote the supply of renewable energy or reduce tax for those who provide renewable energy (Seyfang and Smith 2007). Moreover, there is a need for the development of national emission recognition systems and renewable portfolio standards, which can offer credits and/or certificates of carbon footprints and the use of renewable energy for institutions. This policy may encourage institutions to pay attention to sustainable initiatives as there has been recent pressure from stakeholders in this area (Nash 2009).
6
Summary
As an emerging field of study, sustainable development or the sustainability discipline goes beyond a single research stream, and it should be considered from a multidiscipline perspective. Although sustainable technologies can be perceived as an ideal approach to support the sustainability movement, this should be demonstrated through several aspects, with a focus on the attributes of sustainable technology from the perspectives of multiple stakeholders. Technical aspects, economic aspects, and the political point of view all need to be considered. The field of sustainability raises critical questions about appropriate supporting technology – how the choice of technology depends on local knowledge, context, and culture. Technology and technical devices are embedded deep in human society, and their roles have been widely recognized. It is easier to make changes to technology than to influence human lifestyle, which is required to solve the problems that we are currently facing. Therefore, changes in technologies to support sustainability initiatives and to help achieve the SDGs are worth considering seriously. However, while it is reasonable to argue that technology contributes toward reducing pollution, there is evidence that it currently does not yet create sustainability but instead lessens the extent of unsustainability. Therefore, authors call for further contributions from academics and practitioners to contribute to sustainable development by technical approaches more feasible. This chapter provides a discussion and summary of the current research and achievements in technologies, and it deliberates how technologies can be used to support sustainability initiatives. In brief, ideas that readers should take away from this chapter are as follows: • Sustainable or green technologies require less energy or power, consume fewer natural resources, and do not directly or indirectly harm the environment. They also have a low life cycle impact on ecology, and they can be recycled easily at the end of their lives. Other forms of technologies can support sustainable efforts and
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provide alerts of non-sustainable activities in particular areas. Those technologies can be employed within the operations of an entity in a particular area, or they can be promoted and developed by the government in order to improve environmental protection activities. Moreover, before making a decision about the use of a sustainable technology, it is necessary to consider whether the technology is appropriate within the adopting context. It is also necessary to consider the demands of people as well as the economic consequences of sustainable technologies. • An economic perspective on technology should be considered by not only looking at the technical issues of technologies but also by paying attention to the detailed costs of developing or purchasing technology. This will support the assessment of the efficiency of sustainable technology and determine whether the technology or device is worth the price that is being invested in it. • Policy makers play a vital role in supporting the development and introduction of new sustainable technologies to align with the SDGs. Policy makers can support the usage of renewable energy and sustainable technologies and techniques and prevent non-sustainable activities.
7
Cross-References
▶ Innovation and Sustainability ▶ Recycling
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Part IV Social Aspects
Governance of Migration and Sustainability Michael Gagern
Contents 1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Conquering the World Through Mobility, Ingenuity, Destruction and Adaptation and The Need to Develop Sustainable Ways of Coexistence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 The Promise of Globalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Concluding Reflection on Where to Go from Here? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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Abstract
More than anything else sustainability is a function of mindfulness. As humans live in a symbiotic relationship with planet Earth, they are neither masters nor mentors of their habitat. Instead, they must learn a lot about and from “Gaia” just to survive. In their 80,000 years of exploring the planet, they have built and discovered many things but scientists give serious warnings to humanity because they are destroying their environment at a breathtaking speed. This seems to be in their “nature.” They base their actions on misleading beliefs. But instead of following the destructive opinion that money and profit are the best guides to happiness for the greatest number of people, the time has come to put the cooperative side of humankind to a test, it could be just in time. Each generation creates its own drama and each generation finds solutions to the problems they encounter. So it seems and so we can hope. The fact that horror has been with us all the time does not justify more horrible behavior, on the contrary: there is progress in humanitarian and civilized standards. This may be one of the secrets and promises of sustainability.
M. Gagern (*) King Saud University, Riyadh, Saudi Arabia © The Author(s), under exclusive license to Springer Nature Switzerland AG 2021 D. Crowther, S. Seifi (eds.), The Palgrave Handbook of Corporate Social Responsibility, https://doi.org/10.1007/978-3-030-42465-7_5
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Keywords
Sustainability · Governance · Distributional justice · Gaia · Mindfulness · Migration · Refugees symbiotic · Empathy · Development · Profit · Planet · People learning · Cooperative · Scientific knowledge based · Globalization · Mesopotamia · Achaemedic · Mobility · Medieval · Islamic Golden Age · Hugenots · France · England · USA · Germany · Persia · Afrika · Baghdad · Spain · Statue of liberty · House of Wisdom · Great Green Wall
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Introduction Human beings and the natural world are on a collision course. Human activities inflict harsh and often irreversible damage on the environment and on critical resources. If not checked, many of our current practices put at serious risk the future that we wish for human society and the plant and animal kingdoms, and may so alter the living world that it will be unable to sustain life in the manner that we know. Fundamental changes are urgent if we are to avoid the collision our present course will bring about.
This is the beginning of a letter, which 1700 leading scientists including most of the Nobel Prize laureates published in July 1992. It was updated in 2002. In 2017, scientists from 184 countries signed a second letter. It carried the most signatures of scientists in history – 15,364. They were concerned that nothing had really changed. In November 2019, more than 11,000 scientists from 153 countries declared “climate emergency.” Their message was an urgent appeal to (among other things) decarbonize our production and consumption, eat less meat, and altogether consume less (World Scientists 1992). Scientists give serious warnings to humanity. According to them, we have a big problem with the sustainability of planet Earth. Even children now know that the carrying capacity of the planet affects their future. But what we really do not have is a proper understanding of the reasons and the remedies, because things are getting too complicated, as they are moving too fast. This fact is mirrored in a vast literature, which is very helpful as it illuminates many aspects and details of the problem. And there is still a lot of clarification needed. Under these circumstances, there is a general feeling accompanying the current crisis of the Corona pandemia COVID 19 that we are lucky to be forced to push the reset button and think a little about the things to do and the values, which are at the basis of human survival tools and culture. The amazingly unanimous governance of the pandemia, resulting in a worldwide standstill, has the effect that there is hardly anyone who does not question the “needs,” which are driving us into destroying our habitat. In this chapter, the reset button will be pushed decisively to stop for a moment and reflect on governance and sustainability. The debate on corporate governance and sustainability is not very old because both concepts have been developed in the more recently evolving awareness of the dangers arising from the ruthless application of capitalistic principles to the monopolistic structures of the global economy. As sustainability is an ancient problem of society, it is independent of accidental
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economic ideologies. Humankind’s survival on the planet through appropriate governance of sustainability must therefore be seen in the broader context of political and philosophical organization of people and their affairs. Corporate governance must follow and not the other way around. This chapter is qualitative and not quantitative. The reason for this is its broad scope. On the one hand, it is theoretical in the tradition of phenomenological philosophy, i.e., it attempts to uncover structures and facts through observation, comparison, and hermeneutic analysis. On the other hand, it draws from history. It is not detailed but more about patterns and traits, which appear to the attentive observer as having had a durable influence on the situation humankind is facing right now. In this sense, it is also deliberate because the examples are taken from the very personal and thus limited understanding of the author. Sketches of stories that tell history. In this process, the numerous parts of a puzzle are pieced together to form a hopeful picture of sustainability. From the point of view of the development of nature and humanity, the planet looks like a success story; does it not? In this vein, the following analysis has three major political issues, which concern the development of humankind: 1. Conquering the world through mobility, adaptivity, ingenuity, and destruction How did humankind get where they are? Where are all the seven billion and more people coming from? And what happens in the process of expansion and globalization? 2. The need to develop sustainable ways of coexistence. What do they want on planet Earth? Here we look – also in a very broad sense – into issues of human “mentorship.” The question is whether greed and self-interest necessarily remain the strongest motivation in the struggle for the resources of the world? Or is there a chance for a cooperative and knowledge-based solution of conflicts? 3. The promise of globalization. How big can we think? 4. In the fourth paragraph, the results of the discussion will be bundled up and a few ideas about the future of governance and sustainability will be suggested.
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Conquering the World Through Mobility, Ingenuity, Destruction and Adaptation and The Need to Develop Sustainable Ways of Coexistence
The specific difference to all previous worlds we know is in mobility. Parts and particles of goods and services are moving at an incomprehensible speed over the globe to be assembled and sold “just in time.” Wind, rain, weather, water, clouds, birds and fishes, germs, pesticides, minerals, and waste are roaming the world from one end to the other. Trillions of pictures can be projected in each and every living room or satellite station instantaneously, algorithms and ideas, bombs, sunrays, atoms, capital and debts, and also people, lots of people are constantly moving,
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many of them as refugees. At the same time as many of these people desperately seek to reach a safe port to get away from hunger, rape, murder, mutilation, a cold winter or a rough sea others are stuck in their home offices conferencing and chatting with distant business partners or family over the internet while grabbing a cup of coffee or a sandwich with a cold drink from time to time to overcome the boredom of the teleconversation. Most people are doing something to secure their lives and their life styles with some kind of productive or organizational work needing more or less sophisticated labor, some are serving food or drinks or tending to patients and some are overseeing the work of the others, some are rich and some are poor, there are those who suffer and others who thrive. Today more than two billion human beings live on less than the 2000 to 2500 calories required for a flourishing life and half of them are classified as undernourished. According to the FAO, with an expected 2.5 billion or 35% more people by 2050, the food production alone would need to increase by 70% to ensure everybody’s well-being. “If all 7 billion people living on the planet today were to ‘sustain’ their lives by consuming a comparable amount of resources as the average American, it would require four to five more Earths.” (Rifkin 2014, 359). Several of the mobile elements, which makeup the whole of the moving Earth need delivery notes or passports, or passwords, most do not. All of them affect the welfare and the sustainability of the planet. Humankind may never be able to govern most of them, but we can have an influence on their behavior. The current crisis triggered by the corona virus is just proving the ability of events to sack the spirit of the civil rights, which have been fought for over the last 400 years in the moment it takes to enact a decree. Many people now ask themselves whether the same or similar crises could not be used to change counterproductive habits of competitiveness like the profitability and the superiority complex. If the fight of everyone against everyone is not a law of nature we can follow more rational and less destructive alternatives, which humankind has also in its behavioral toolkit. Efficiency is one. Caring for the environment is another; and cooperating and sharing with nature and the whole of mankind is the third impulse guiding our activities. In the famous discussion of the triple P bottom line: Profit, People, and the Planet, these very basic and very rational as well as intuitive principles are now generally regarded as the companion navigators for sustainable and responsible behavior. John Elkington has written innumerable books and articles on sustainability and corporate governance, the future of the economy, and the planet. He is credited to have coined the eye-opening concept of the triple-bottom line in 1994 (Elkington). Another author, editor, and activist who deserves special mention here, because he is a restless pioneer in bringing the issues of sustainability and governance and corporate social responsibility to the attention of a broad public is David Growther. In a recent very useful survey paper on governance and sustainability which he published together with Güler Aras, they summarize what it is all about: Management can be interpreted as managing a firm for the purpose of creating and maintaining value for shareholders. Corporate governance procedures determine every aspect of the role for management of the firm and try to keep in balance and
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to develop control mechanisms in order to increase both shareholder value and the satisfaction of other stakeholders. And referring to Sethi, another very famous and formative thinker in the field, they sum up the state-of-the-art: In other words, corporate governance is concerned with creating a balance between the economic and social goals of a company including such aspects as the efficient use of resources, accountability in the use of its power, and the behavior of the corporation in its social environment (Güler and Growther 2008; Sethi 2002). We will try to take the discussion even a step further. In the following historical sketch of human development throughout the last 80,000 years, the governance of sustainability will reveal itself as a weird success story of the combination of human adaptive power and ingenuity with the symbiotic genius of the planet, its ability to generate resources, and shrug off destructive behavior of humankind and natural forces. One of the questions, which we are not able to answer though at this point of our development, is the following: With all its destructive energy will humankind put an end to the cooperation between humankind and planet Earth or will we find the path to synergy, which would mean sustainability? But we will try to find a clue. Long before recorded history people migrated in a search for better living conditions. Some of them were just curious or adventurous, but most of them were running away from some kind of misery. It seems that we are all from Afrika. Did new technology, improved nutrition, or some genetic mutation allow modern humans to explore the world? Possibly, but scholars point to more mundane factors like drought. Scientists do not agree on the time of the departure – sometime more recently than 80,000 years ago. Same with the point of departure, but most researchers now appear to be leaning away from the Sinai, once the favored location, and toward a land bridge crossing what today is the Bab el Mandeb Strait separating Djibouti from the Arabian Peninsula at the southern end of the Red Sea (Giuliotta 2019). Seventy six thousand years ago tools were found in Southern India, which match those of Afrika. At one point modern man, on his touring of the world, killed or outlived all other hominids. We know too little about their handling of conflict and competition. Most likely, they fought about partners, land, and resources. Humankind has lived through climate changes, droughts and floods, epidemies, wars, and ups and downs of cultural technological and social development; 10,000 years ago some nomads began to settle and build fences exchanging goods and services, defending their property against other migrants like people, animals, and the weather. The first cities were built around 9500 years ago. History begins. In any case, wherever he went, sapiens managed to put an end to a considerable part of the biodiversity that erectus had spared. Many of the large mammals became extinct elsewhere only when modern man appeared on the scene on the new continents (Glaubrecht 2019). As far as Archeologists are concerned, the oldest city is Çatalhöyük in what is today Turkey. It is dated back to 7500 years before our time. From a point of view of its architecture, this settlement was strictly egalitarian. It was composed entirely of domestic houses, with no obvious public buildings.
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This was very different from Uruk, which was founded about 5000 years ago. Scripture, legal codes, and trade documents are known from this time. The society was already hierarchically organized and so was the city and its architecture (Mark 2014). One of the oldest cities, which is continuously inhabited, is Damascus, a city of incredible cultural achievements, adventures, innovations, and destruction until today. And so are many other cities in the region but also in faraway Mesoamerica traces of human settlement have been found. Disputes among Archeologists about their age and characteristics are interesting and new discoveries and surprises are to be expected. It seems, however, that there is a certain simultaneousness of city like settlements across the globe. People travelled very long distances developing expertise and instruments for hunting, sources of nourishments, growing crops, making dresses. We know now that the production of linen tissues dates back 34,000 years in the black sea region and not, as previously assumed 8000 years in the Pharaonic time. Looking at all the great achievements humankind has accomplished and all the horror humankind has come about while achieving all this, the question arises what the driving force behind all this might be. It seems to be more than just looking for food and procreation, greed, superiority, and power. Sanity and well-being are the fundamental building stones of happiness. A very interesting hint comes from the United Nations in its constitution of the WHO in 1948. In the second paragraph of the Preamble of the constitution it states: “The enjoyment of the highest attainable standard of health is one of the fundamental rights of every human being without distinction of race, religion, political belief, economic or social condition.” Health is defined as “the state of complete physical, mental, and social well-being.” (WHO). With this definition, WHO detached health from previous purely biomedical perspectives and the close links between the professional disease system. Health is defined as multidimensional: it encompasses physical, mental, and social components that influence each other. This definition of happiness seems to be so deeply rooted inside our nature that after the horror of the Second World War in 1948, it was unanimously adopted by the world community. It is interesting to note though that parallel to the explosive postwar development of environmental and sociopsychological problems in the late 1990s the final documents of central WHO conferences and assemblies also added an ecological and a spiritual dimension. The basic constitutional text from 1948, however, was not revised. The discussion about spirituality as “4. Dimension” is still of great importance in the Asia-Pacific region and in the Arab-Islamic member states of the WHO. In Europe and North America, it is (still) largely ignored. So what keeps humankind hunting for happiness? In search for good guidance to answer this question, great epochs of history can be studied. Glamorous periods like pharaonic Egypt (4000 BC–30 BC). The Pharao (ethym. “great house”) was responsible to guarantee the divine balance on earth. Visitors of the famous pyramids and temples are haunted by the still unsolved puzzles of this mysterious time – The dynamic empire of Alexander the Great. As
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a contrast to the pharaos, he was only 32 when he died but he is considered as one of the most important persons in history. He had Aristotle as his tutor until he was 16years-old. We will find a lot of inspiration in the Greek culture and civilization, which has shaped the Occident like no other culture. The Greek dramas and masterpieces of philosophy are still played, taught, and discussed in schools and universities. We can study Rome and its imperial gesture. Its systematic approach to building sustainable infrastructure and a rational constitutional order has been incomparably influential. We are still discovering the secrets of the Maya or the big Kingdoms in Afrika, China, India, and other global players vying for the title of the most fabulous leaders in history. It is impossible to do all this here, of course. There are, however, noteworthy epochs, which stand out by their leaders’ global perspective, supported by wellthought-out case law, openness, and a great eagerness to learn. One such epoch, which is called the “Golden Age of Islam” (800–1258) was also inspired by the idea of free and evidence-based research. The translators, researchers, scientists, and poets of this time were the first to evaluate empirical and theoretical knowledge from ancient texts, which they translated with great zeal. Most notably the books of Aristotle were translated and commentaries in Arabic were written. Open minded visionary Califs attracted scientists, artists, and great minds from all over Europe, Africa, and Asia. This remarkable culture, which was under Arabic Islamic governance extending from Cordoba, Spain in the West to India in the East had an enormous influence on Western culture and civilization, but unfortunately it is not very much present in the textbooks of Western students. But it deserves special mention from the point of view of sustainability and governance: the paradox of humankinds striving for cultural behavior and mindless destruction. The average educated person may know stories about Karl Martells’ victory over the Arabs in Tours/France but who knows anything about Abd al Rahmanal-Gafiqui, the Emir of Andalusia and powerful representative of Abd al-Malik the Umayyad Calif of all Islam who over a distance of 4000 km from Damaskus controlled the military and civil operations in Tunisia, Marokko, and Spain? It is fair enough to tell our children about the courage and “chuzpe” of Charles “the Hammer,” grandfather of Charlemagne. This brave nobleman saved France from Muslim occupation. But our children should also know about the breathtaking splendor of the Arab appearance, their cavalry and armor, their style and their self-confidence, and altogether their lead by technology and civilization. The Umayyad Caliphate (661–750) was the second of the four major caliphates established after the death of Prophet Muhammad. It covered 11,100,000 km2 (4,300,000 sq. mi) and 33 million people, making it one of the largest empires in history in both area and proportion of the world’s population (Wikipedia, various authors 2020c). After the battle, Martell collected the dresses and armor of the dead Arabs, copied them and started to build the first European cavallerie. This was in 732 ff. Impressed by his success the pope asked him to help defend Rome and Christendom. The house of Charles became the dominant kingdom in Europe. Meanwhile in Spain, Arab
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Califs expanded their rule and influence. With a few exceptions, this was done successfully on the basis of intercultural living and learning and Islamic governance with intervals of appalling religious fanatism like the Berber confederation under the Almohads (1130–1269) until in 1492, ironically in the year of the discovery of America, after repeated battling among the different Arab governors and with the Catholic princes and kings the Emirs in Spain and North Africa, the Muslims were defeated and thrown out of Spain. The memory of intercultural tolerance was destroyed, the coexistence, and mutual inspiration of Christians, Muslims, and Jews abolished. The names of Maimonides and Averroes were only weak reverberation of a gigantic but forgotten intellectual and spiritual cross fertilization, which Christian storytellers and historians didn’t bother to mention much to the effect that it would not become part of the Western narrative. The self-righteous and narrow-minded tone of the Edict of the Expulsion of the Jews (1492, Alhambra decree translated from the Castilian by Edward Peters.) is really astonishing. Its authors were absolutely certain that their cause was just. But what they said was: we tried everything, including ghettoization and 12 years of Inquisition, to prevent Catholics from having contact with Jews but some of them still mix and pray together. This is a crime, because it could induce the Christians to distance themselves from the Church. As a result 250,000 Sephardic Jews were evicted. The Catholic Church survived this assault on human decency, civilized behavior did not. But before all this happened the Golden Age of Islam had its revival in the Middle East and more precisely in Baghdad. Through the very fashionable but also astonishingly successful trick of killing the entire assembled Umayyad nobility in their residence in Damaskus the Abassids took over the kalifate and started their own rule over all of Islam (Spuler 1960) After the murder of the Ummayyad Leadership, the Abbasid caliph, al-Mansur, turned East to the Euphrat and Tigris rivers and founded a completely new city, which he made his capital choosing the name Madinat al-Salaam or City of Peace. This region was not a newcomer to the civilized world. Al-Mansour’s grandson became the illustrious and colorful oriental fairy tale figure Harun Al-Rashid who turned the city, which was now called Baghdad into the most glamorous place on earth. Together with his son al-Ma’moun, he instituted the fantastic academy project of The House of Wisdom, where Muslims, Christian, and Jewish researchers gathered to contribute to the enormous treasure of knowledge through translations, discussions, experiments, research, which was spreading from Persia to Spain. Persian expertise in governance had an enormous influence. Al Ma’moun, who had a Persian mother, is quoted as saying: The Persians ruled for a thousand years and did not need us Arabs even for a day. We have been ruling them for one or two centuries and cannot do without them for an hour.
From Persia, Istanbul, Cairo, Marokko, and Spain arrived famous medical doctors, scientists, and philosophers. Charlemagne was in friendly exchange with Harun Al Rashid.
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All these people and places of excellence and learning had one thing in common: the passion for knowledge and the dedication to science. Again: not much of this is known in the West. In an attempt to wake us up from this strange historiographic amnesia the diplomat, historian, journalist Michael Hamilton Morgan tells the story of the enduring Legacy of Muslim Scientists, Thinkers, and Artists. His fascinating book “Lost History” is the account of Muslim civilization and how for more than 400 years it influenced the scientific, cultural, and political developments in East and West. During this time, the passion for knowledge and the cosmopolitan dedication to science has led to the inventions in Mathematics, Algebra, Cosmology, and Geometry. Optics, astronomy, chemistry, and even aerodynamics, with their groundbreaking insights, which became guideposts for the European Renaissance (Morgan 2007). In 1258, Hulagu Khan, a grandson of Dschingis Khan sacked Baghdad. It took just 13 days for the Ilkhanate Mongols and their allies to bring the Golden Age of Islam to an end. An eyewitness reported how the Mongols were “crashing down” on the city. . .. “the mighty Tigris River running black with ink from the precious books and documents destroyed along with the Grand Library of Baghdad, the Bayt al-Hikmah.” In only weeks, the seat of learning and culture for the entire Muslim world was in ruins. (Szczepanski 2019)
At the same time, the crusades were raging. Unlikely friends and foes were fighting and bargaining for power between Baghdad, Kairo, Jerusalem, Konstantinopolis, and Rome. Murder, betrayal, occupation, expulsion, exploitation, destruction of irreplaceable values, and rebuilding of cities of stunning beauty. Trade was developing on an ever larger scale, cities were granted privileges in return for credits and more countries were being explored, more freedoms sought, more genocide and more wars, more beautiful music, art, and architecture. Armies of mercenaries kill for articles of faith which they cannot even read. At the same time, humanists crawl into the dusty stacks of monastic libraries to find old Latin books of value. Lucrezius’ “De Rerum Naturae,” the classic compendium about the nature of things was such a treasure. When it was finally found and copied it became one of the most influential basic texts of Renaissance scientific literature (Greenblatt 2011). More research, knowledge, technological development and – in the final analysis – more destruction of planet earth, did anybody in all this time bother about sustainability? People were, of course, striving for continuity, when things went well, and poetry was full of eternity. Of course, we all know that golden Ages never last and even while they were blooming, there was no end to murder, hunger, sickness, betrayal, and destruction. We don’t know why. Even less do we know how to do better in a sustainable way. But we can try (Wikipedia, various authors 2020b). This region was not a newcomer as an area where people were looking for happiness. Seven hundred years before, the Golden Age Mesopotamia was a mythological place of paradise-like abundance.
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History, including mythology and its expression in art and literature, is a sequence of refinement and destruction. Hunting, fighting, luxury, sophistication of manners, and unrestrained consumption of heroism, greed, and terror. Heavenly abundance alternates with murderous deprivation. It is certainly very instructive to study this epoch in Mesopotamia more closely from the point of view of the tension between advanced technology and ignorant power obsession, the two poles that limit our chances for a sustainable and civilized way of life still today. Flourishing cities in Babylon, Persepolis, the mythological figures of Gilgamesh and Nimrod, Akkad. Pasargadae, for example, the Utopian city, which was founded by Cyrus the Great, who established the Achaemenic Empire in Persia (reign 559–530 BC). He and his followers built a remarkable infrastructure with postal services, national currency freedom of religious services, and liberal courts and the promotion of scientific research. The first declaration of Universal Human Rights. When he read about this city, the 16-year-old, 1886 born Brazilian student Manuel Bandeira was deeply impressed by its beauty. In 1930, when he was already a famous poet he published the poem called “Vou-me embora pra Pasárgada” (“I’m off to Pasargadae” in Portuguese), in a book entitled Libertinagem. It seems that for generations every Brazilian school kid knew this poem by heart. It touched their longing for a perfect world. ou-me embora pra Pasárgada Vou-me embora pra Pasárgada Lá sou amigo do rei Lá tenho a mulher que eu quero Na cama que escolherei [. . .] E quando eu estiver mais triste Mas triste de não ter jeito Quando de noite me der Vontade de me matar — Lá sou amigo do rei — Terei a mulher que eu quero Na cama que escolherei Vou-me embora pra Pasárgada.
I’m off to Pasargadae I’m off to Pasargadae There I am friends with the king There I shall have the woman I want In the bed of my choice And when I’m sadder So sad there’s nothing left When at night I feel A desire to kill myself — There I am friends with the king — I will have the woman I want On the bed of my choice I’m off to Pasargadae.
Cyrus was an idol for Alexander the Great. When Alexander shortly before he died only 32 years old conquered Persia sacking its capital Persepolis (330), he ended 200 years of Achaemenic reign. When he came to Pasargadae he wanted to visit Cyrus in his tomb. According to Livius, he found it looted and robbed. He gave order to bury the remains of his bones decently and repair the coffin and the tomb royally. The guardians of the tomb had this office for generations. They were interviewed and tortured because Alexander wanted to get the names of the thieves, but when they did not say anything he had to release them. In recent years, the archeological sites of Persepolis and Pasargadae, which are now UNESCO World Heritage sites were threatened by the “Sivand Dam.” Many archeologists and Iranians were worried. The planning and finally the
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building of the dam were of course hidden from the public as much as possible and even though the flooding seems less of a threat now because the level of the lake was taken back the humidity still is. Luckily an international effort to dig in the site before flooding has preserved a great amount of archeological treasures. We could open here a full chapter of dam crimes, which are still being committed all over the world and which are not only directed against history and archeology but against people, their homesteads and their subsistence. But this would not stand alone and would be a never ending story (Roy 2002, 58 ff). It is also very obvious that we cannot cover the whole universe of empires, which have contributed to the formation of both governance and environmental consciousness of humankind. It would be great to do this. In this case, we would among others need to deeply understand the 800 years of Ottoman rulership (thirteenth to twentieth century and the Czarist as well as the Soviet and more than everything else the Chinese and Japanese Empires, which cultivated a more balanced relationship between nature and technology than Western countries. What we want to understand here though is not the individual acts but the pattern of beliefs and the way humans prioritize their being in the world. From what we have seen so far, it seems that subjugation and submission is the most elementary form of human coexistence and also the most elementary way of dealing with nature. China and Japan seem to have elaborated alternatives. The explicit aim of traditional Chinese garden design, for example, is to achieve harmony between earth, sky, stones, water, buildings, paths, and plants (the so-called seven things). Humans, as the eighth, could then find perfect harmony with and in them. In a unique composition of Chinese Gardens and City views, which he collected on his several visits to China the Architect, Sharoun assistant, medical doctor, and philosopher Alfred Schinz has left us a book of rare beauty, where he shows and explains what building with nature really is. We will come back to this Taoist approach in the concluding remarks as we hold true that the sanity of ourselves and our planet will depend on our ability to change attitudes along these lines (Schinz 1989). There is another trait of human affairs, which is worth mentioning. Migration seems to offer itself as a blueprint for understanding the dynamics of sustainability and change. Throughout history, migrants and refugees were welcomed by farsighted Kings and governors, who understood the high-value of skilled labor for their own economies. Cyrus was one but there were others. By the fifteenth century, there were immigrants from all over Europe in Medieval England and they were spread all over the country. We know this from documents that have survived including letters, court records, and – most of all – tax records in the alien subsidy returns, a list which included details like names, place of residence, and sometimes occupations and origins. In the later Middle Ages, all foreign-born males and some females (in cases where they were heads of households) were taxed and their names, occupations, and places of residence were written down.
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One Medieval historian has said that the records show that no one was more than ten miles away from an immigrant. Foreign-born people included goldsmiths, bakers, inn-keepers, doctors, priests, farm laborers, tailors, brewers, weavers – in fact, a whole cross-section of occupations in towns and countryside. Official reception of immigrants was sometimes warm, especially in the fourteenth century. In the 1330s, King Edward III gave strong protection to Flemish weavers. After the Black Death in the late 1340s, so many people had died that there was a serious shortage of workers and artisans. At this time, immigrants were welcomed to fill the gap and there were foreign-born workers in most towns and villages. In 1354, a law gave aliens who appeared in court the right to be tried by a half-alien jury. After 1370, “letters of denization” gave migrants the same rights and protection as English citizens (BBC 2020). On the whole, foreign-born immigrants settled well during the Middle Ages and became part of local communities. While they were classed – and taxed – as aliens, their children born in England were full citizens. Some did very well indeed, rising to be mayors and freemen of their towns or highly regarded in their occupation. Entries in tax records together with archaeological finds and DNA evidence also suggest the presence of people from Asia or Africa. Although most medieval immigrants settled peacefully and became part of their communities. At times of crisis, they could be vulnerable and at risk of violent attacks. The craft guilds in cities such as London believed foreign workers were undercutting them and so saw them as a threat to their members’ livelihoods. They frequently put pressure on their rulers to impose controls on immigrant workers. • In 1270, one month after inviting foreign cloth workers, King Henry III reversed his decision and expelled all except the skilled weavers. • In 1325, King Edward II arrested all foreigners living near the south coast. • In 1439, King Richard II forced foreign merchants to live with English householders who were told to spy on them. All of these measures were imposed because English merchants placed a lot of pressure on weak kings. Flemish merchants, French migrants, and Irish immigrants were all expelled from England at different times. During the 1381 Peasants’ Revolt, rioters in London murdered about 150 foreign weavers and merchants. The story goes that they were asked to say the words “bread and cheese” and if they answered with an accent, they were beheaded (BBC 2020). Throughout the sixteenth and seventeenth century, Europe was heavily shaken by religious conflicts and wars between Catholics and reformist Protestants. On August 18, 1572, Henry of Navarre (1553–1610) got married to the daughter of the French King Henry II. A few days after his wedding the St. Bartholomew’s day massacre began in Paris. Several thousand Protestants who had come to Paris for Henry’s wedding were
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killed, as well as thousands more throughout the country in the days that followed. Henry escaped death, thanks to the help of his wife and his promise to convert to Catholicism. In 1589, he inherited the throne from Henry III, who had been murdered by a fanatic Catholic. Henry IV was dedicated to what we call today a sustainable way of development. With the help of the Duke of Sully, his right hand, he initiated agricultural reforms, took care of finances and trade and protected forests from further devastation. He built a system of tree-lined highways, and constructed bridges and canals. He had a 1200-m canal built in the park at the Chateau Fontainbleau (which may be fished today) and ordered the planting of pines, elms, and fruit trees. He added the Grande Galery to the Louvre Palace. More than 400 m long and 35 m wide, this huge addition was built along the bank of the Seine River. At the time, it was the longest edifice of its kind in the world. King Henry IV, a promoter of the arts by all classes of people, invited hundreds of artists and craftsmen to live and work on the building’s lower floors. This tradition continued for another 200 years, until Emperor Napoleon I banned it. Henry IV was considered a “good King.” He is said to have wanted a chicken in every farmer’s pot on Sundays. Henry IV was a ruler who was inspired by the spirit of the enlightenment, primarily interested in promoting civil unity in an atmosphere of tolerance. In the Edict of Nantes, 1598, he granted the Calvinist Protestants of France substantial rights (Wikipedia, various authors 2020a). 100 years later and after the devastating 30 years religious war, which was settled under the slogan: “cuius regio ejus religio” – “whose realm his religion” – Ludwig XIV (reign 1653–1715) grandson of Henry IV, less educated, less tolerant, but power hungry and obsessed by the idea of absolute monarchy revoked the Edict of Nantes and edited in its place the Edict of Fontainebleau on October 18, 1685, which is reminiscent of the Edict of Granada (see above). In fact, the whole setting reminds us of the ongoing bloody quarrel between Sunni and Shia in the Arab world. More than 200,000 Reformed French Protestants (Huguenots) were forced now to convert to Catholicism – or leave France. At this time, Europe had about 100 million inhabitants from Portugal to the Urals, from Norway to Sicily. Frederick William (1620–1688) Elector of Brandenburg and Duke of Prussia reacted within days. With his Edict of Potsdam October 29, 1685, he invited tens of thousands of Huguenots to Brandenburg. The prince declared that he felt obliged to help the Huguenots “out of fair pity,” “which we must have with our companions of faith who are badgered for the sake of the holy Evangelii.” (“aus gerechtem Mitleiden, welches wir mit unsern, wegen des heiligen Evangelii und dessen einer Lehre bedrengten Glaubens-Genossen haben müssen”.) (Kleikamp 2015)
Indeed, the Huguenot host countries across Europe were not only interested in immigration for humanitarian reasons. After the devastation of the Thirty Years’ War and the ensuing plague an estimated 30–40% of the population had been lost – the
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rulers tried to repopulate their lands. The idea behind it: the more people lived in a country, the more they could produce, and the more production and consumption could be taxed. In turn, healthy public finances laid the foundation for a powerful army, the pillar of the ruling family. In addition to humanitarian considerations, there were also economic goals that led to Brandenburg–Prussia making intensive efforts to help the Huguenot immigrants. The Edict of Potsdam wasn’t directed primarily to the better-off among the Huguenots, who anyway preferred developed countries such as Netherlands or England – but to the destitute, but hard-working skilled and commercially qualified immigrants (Sauer 2017). The Edict of Potsdam was a major contributor to the revival of the economy of destroyed Brandenburg, and thus laid the foundation for the strengthening of Brandenburg–Prussia. The country not only allowed potential new citizens to practice their religion in accordance with the French Reformed rite, but also promised them tax breaks, building materials, and easy admission to the guilds. It seems that particularly in Uckermark arriving families by default were shown empty but ready farmsteads, they received building material, seeds, two horses, a cow, and 50 “Thaler.” Due to their many talents and professional experience, the welcome by the host countries and their discipline and eagerness to succeed the Huguenots became a very important sustainability factor in the social and economic life of Germany. In the more recent history, there are periods, where people travelled long distances to earn their living in a foreign land and culture because they had heard about the scientific inventions, the physical and spiritual freedom, which reigned in these countries. They had skills and talents to contribute to what was already blooming there and through this give and take crafts became highly sophisticated, trade exploded, path-breaking inventions, and stable institutions changed the outlook on feasibility. Scientists, thinkers, and artists reshaped the whole life. People lineup in their holidays to buy entrance tickets for museums which tell about these times of long lasting stewardship over people and environment. The Renaissance period (roughly 1400–1700) is such an epoch, not only in Italy but in all of Europe with people like Francis Bacon, Rene Descartes, John Locke, David Hume, Denis Diderot, Benjamin Franklin, Johann Sebastian Bach, Johann Wolfgang von Goethe, Georg Friedrich Händel, Thomas Jefferson, Baruch Spinoza, Raffael, just to name a few. . .. The magic of this epoch was people’s unconditioned trust in scientific research and free critical thinking and arguing; and the belief in the rights of men (and women). But it didn’t just happen like that. Much opposition from the side of the old schools of thought, survival agony of political and religious hierarchies expressed themselves in wars and revolutions. Yet it happened. Out came a new conscience of the general human rights and the organization principles for implementing and safeguarding them. The minds of the people began to open up for tolerant behavior. One of the great thinkers of this time, the German philosopher Immanuel Kant made this famous comment in defense of the scientific approach:
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Our age is the age of criticism, to which everything must be subjected. The sacredness of religion, and the authority of legislation, are by many regarded as grounds of exemption from the examination of this tribunal. But, if they are exempted, they become the subjects of just suspicion, and cannot lay claim to sincere respect, which reason accords only to that which has stood the test of a free and public examination. (Kant 1781)
Many great minds were attracted by this liberating approach to knowledge and reasoning: Industrialization modern medicine and chemistry, electrification, mobility, nuclear physics, immense increase of productivity, cosmological revolution, electronics, etc. sprang from this new look at the world. Centers of learning, universities, and academies were founded. The whole world was on the move and in transition. This was the time where the pirates where so successful as Buckminster Fuller explained in a wonderful speech on spaceship earth, because they confronted themselves with the bold question: “how big can we think?” (Buckminster Fuller 1969; See also Sloterdijk 2009). This is precisely the question, which will serve us as guidepost for further inquiry. Actually it will lead to suggesting that a new age of enlightenment is in the making to reroute the mainstream from its deadlock regarding the management of planet earth. It is not exaggerating to say that humankind is risking its very existence on the planet because it is not thinking big enough. One of the interesting features of the human sense of ethical behavior is the evidence on which it is based. Just imagine the following conversation of two boys Pete and Toni who are craving for sweets. Pete says: “go to your mother while she is sleeping and take a 5 Dollar note from her drawer. Toni says: I cannot do that.” “Why?” Toni asks. “What if she wakes up?” “You could kill her.” Evidently, he could not. Now taking this example together with all the possible sophisticated arguments pros and cons the appropriation of the 5 Dollar note and applying it to the current state-of-the-art of the worldwide appropriation of property you will be confronted with a mind blowing statistical number: 10% of the population of the world control 80% of the total wealth. Obviously the 90% who own the rest were not all sleeping, when the 10% took all these riches (Loesche 2017). Why do they keep quiet? This is because opinions and beliefs are manipulated. The famous Scottish Philosopher David Hume (1711–1776) has expressed this link between obedience and opinion control in a very simple and eye-opening way. He begins his seminal essay Of the First Principles of Government with the following statement: • Nothing appears more surprizing to those, who consider human affairs with a philosophical eye, than the easiness with which the many are governed by the few; and the implicit submission, with which men resign their own sentiments and passions to those of their rulers. When we enquire by what means this wonder is effected, we shall find, that, as Force is always on the side of the governed, the governors have nothing to support them but opinion. It is therefore, on opinion only that government is founded; and this maxim extends to the most despotic and most military governments, as well as to the most free and most popular. The soldan of Egypt, or the emperor of Rome, might drive his harmless subjects, like brute beasts, against their sentiments and inclination: But he must, at least, have led his mamalukes, or prætorian bands, like men, by their opinion. (Hume 1741)
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The tool kits for belief creation and opinion control have not changed much over time. Promises, bribes, and punishment on the one side, suspicion, denunciation, and demonization on the other were always appropriate means of bringing people to the “right” side. Confronted with an army of marketing specialists, psychologists, statisticians, lobbyists, designers, and modeling artists and – last not least – military, police, secret service the average person is generally too weak and too ignorant to build his or her own opinion let alone reach out to and convince enough other people to change anything. History seems to show that those who fortified their power always had to struggle and eventually lost their case against those who were fighting for a different set of opinions. History also teaches us that no matter how powerful the tyrants and how mighty the Kings, their court and their cronies: the basic laws and the human rights were convincing people enough to again and again smash dictatorships and feudal ranks or bureaucracies. And, by the way, how easy would it be, if the enemies of human progress would be the rich, the kings, capitalists, bureaucrats, and dictators, lobbyists, gurus, or whisperers or even “the system.” The truth is much more complex. Hannah Arendt in her famous book on the Eichmann trial (1972) has left the world of political thinking with the disturbing concept of “evil” as the totally nonideological, entirely prosaic “combination of careerism and obedience.” There is nobody left to blame except ourselves. If the civilized people of the world want to win the battle for the planet they must win the minds of the people of the world. When it comes to justice of distribution the opinion battles are too big to be picked up here. Actually, we probably have to leave them to the latter part of this century, when – hopefully – the issues of scarcity and sustainability will be settled. If they are not we will be back to zero. In the meantime, we have to settle with what we have, when discussing property in the context of sustainability. The most influential bundle of arguments derives from the persuasive work of John Locke (1632–1704). He is the founder of political liberalism and one of the greatest political thinkers of modern times. Even though scholars have found contradictions and flaws in his writing we owe him several insights, which have shaped most of the constitutional rights, the American declaration of independence, the declaration of the human laws, and most of contemporary beliefs about private property and economic and political freedoms. In his famous chapter Vof the Second Treatise of Government, he gives three reasons, which justify the appropriation of private property. 1. It must be acquired through your own labor. 2. It should not rot or be spoiled. 3. There must be enough of the same quality for everybody else. On the assumption that nature as a whole was given to all of humankind for everyone’s benefit and enjoyment these are very simple and intuitively evident maxims for the justification of appropriating individually parts of the planets wealth. Adding to this, the equally plausible requirement of efficiency and the
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need of conflict resolution through a legitimate governance it is just to say that Western civilization has emancipated from natural law, civil and religious wars, feudal arbitrariness, the “tragedy of the Commons,” merkantile and capitalist exploitation, communist mismanagement, and neofeudal globalism by adapting the three Lockean principles to the technological, social, legal, and political needs which have evolved over time. And we are still in the process of trying to adapt and improve it. At least we can say that governments still draw their legitimization from their performance with respect to these Maxims and principles and the ensuing opinions and beliefs. And this is how Locke could be read today: (A) Property and Profit. A good or a service belongs to you if you appropriated it through your own labor. This maxim makes still sense, when the government and the labor market guarantee decent jobs for everybody. In fact, the freedom to contract combined with the profit motive on the side of the entrepreneurs and all kinds of educational and social security measures on the side of the state have led to the massive creation of property based on skills, efficiency, and an unforeseen development of technology. Obviously, some people have amassed much more property than others. Currently, the debates about this fact are strangely civilized but they may just as well turn fast into anger and even wrath. Probably most of the belief in property and profit derives from the insight that the profit motive has been a fantastic motor of innovation and productivity. But it is not anymore. The most disputed part of this maxim is the utilitarian justification of the profit motive as the single most important driving force of private appropriation of property. This justification is founded in the assumption that competition is regulating the market and this is definitely not any more the case. On the contrary, The good old law of diminishing returns has come back to haunt economists, i.e., they are confronted with the fact that technological progress and globalization force the big players to adopt monopolistic strategies producing and pushing irrational and immoral amounts and kinds of goods and services into the market in order to compensate for diminishing returns. Due to technological progress the “Zero marginal cost society” has become real. The same technology replaces human labor. So unless the technology becomes part of human heritage in the form of a commons maxim one loses its validity. If you cannot appropriate property through your own labor you must be supported and fed by other sources of wealth than your own labor. At this moment, it comes handy that the global economy is shifting, as Rifkin convincingly argues, toward zero marginal cost (Rifkin 2014). If the big players of the capitalist game in the long run do not succeed to stop the paradigm shift something like the old Hippy slogan comes true: “all good things in life are free, when you steel them from the bourgeoisie.” A new Era of prosperity is raising its head. (Hofmann 1971)
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(B) Planet Earth Maxim two: Nothing should rot or be spoiled. According to Locke, nothing was made by God for humans to spoil or destroy. As long as you are talking about acorns or any part of a deer, which you hunted it seems evident that you should not hoard them until they rot. But what about money? What about it? Money is very liberating. It was the most important means for paupers to escape feudal serfdom and still today it is the door to freedom, when without money dependent members of a community are much more helplessly exposed to violence and extortion. The pride of a child, when spending her or his first own money on whatever they want shows very clearly the liberating effect of property and money. It is evident that personal freedom grows with the ownership of money especially, when there is enough of it for everybody else and its value is stable. It increases the choice between goods and services and things, which can be appropriated, it gives security and it can fund ideas and start creative processes. But money also lends itself to be used in destructive ways. Speculation is one, conspicuous or destructive consumption is another. Bribery is an oldfashioned tool for those who want to push through a project against competitors or any kind of opposition. For those in power or strategic positions it can be a welcome additional income. Hoarding money is taking it away from people who may urgently need it. Hoarding also hinders the flow of money in an economy and may lead to stagnation. Money can also rot away in an inflation or deflation, or in a stock market crash in wars and catastrophies of all kinds, destroying social, and cultural values. Big money pushes into each and every hidden spot, which promises fat returns for the investor. And this is all that counts. The bigger the operating unit is the more profit is the prime attractor. We know all this as a result of our own experiences. Does money as a means of conservation of goods and value justify an unlimited number two maxim? Of course not. Since the time of Locke’s analysis, we have learned very important things about the laws of money, accumulation, thermodynamics, which have changed our understanding of design, labor, energy, production and consumption, and contexts of a living whole. If scarcity is no more the problem there is room for new ways of distributing the fruits of the ingenuity of humankind. For the fundamental structural changes in our economy and society caused by the developments of “Industry 4.0” see also Scheer (2020). From where do we take the audacity to endanger our lives on the planet? For Christians including Locke, the founding fathers and most of the Western basic laws the source of these beliefs is Genesis 1,28 where God, according to the King James Bible blessed the creature he had just made and said unto them Be fruitful, and multiply, and replenish the earth, and subdue it: and have dominion over the fish of the sea, and over the fowl of the air, and over every living thing that moveth upon the earth.
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There has been a great amount of debate about the meaning of this mission. Who are Adams heirs? All of mankind or only the white believers and if so which part of them? And what does “subdue” and “dominion” imply? Does it imply appropriation, murder, and extinction? The story of creation including the history of its interpretation is embarrassing for believers and theologians. Today theologians try to distance themselves from the “merciless abuse of the Genesis formula by Christians” (Gerstenberger 1992; Amery 1972, 1985). In a very sober paper Vom Sinn und Missbrauch der Herrschaftsformel (Sense and abuse of the dominion formula), a German protestant theologian puts it very bluntly: “The facts force us to express our distrust of the ruling humanity. Whoever in this “human” way abandons what has been entrusted to him to destruction and accepts his own downfall, would immediately have to be declared insane and removed from governmental responsibility” Locke couldn’t have put it better. (Gerstenberger 1992)
In the Qu’ran, God himself is wondering why man wanted to have the stewardship over the earth so badly while heaven, earth, and mountains declined. Of course, God knows that man has already proven to be unjust and ignorant: Indeed, we offered the Trust to the heavens and the earth and the mountains, and they declined to bear it and feared it; but man [undertook to] bear it. Indeed, he was unjust and ignorant https://quran.com/33/72-73?translations¼20 (in other translation: a tyrant and a fool)
What is the way out? Well, first of all it is not really clear that humans are the guardians of the planet. The American evolutionary biologist Lynn Margulis in her revolutionary book Symbiotic Planet and jointly with James Lovelock in their Gaia hypothesis describes our planet neither as a creation of God nor as the result of selection but as a property developing out of the relationship between living beings, the spherical planet on which they live and the sun as a source of energy. Gaia, the system emerges from ten million or more connected living species that form its incessantly active body. . .The sum of planetary life, Gaia, displays a physiology that we recognize as environmental regulation. Planetary life survived at least three billion years before humanity was even the dream of a lively ape with a yearning for a relatively hairless mate.
Margulis insists that there is no evidence, that we are “chosen” or important just because we are so dangerous and numerous. Gaia is the regulated surface of the planet “incessantly creating new environments and new organisms.”
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And it will continue to exist after humankind may have vanished from the face of the Earth. Earth life in its 3000 million year history has withstood impacts equal to or greater than the total detonation of all stockpiled nuclear bombs. Gaia is “the mother of invention.” What all this means is that we better begin to cooperate in the sense of going the symbiotic way instead of continuing to trot on the hard, competitive, survival of the fittest path. Because whoever favors the latter finds him or herself confronted with the dilemma of not knowing how fit they would turn out to be. It may be interesting to note that the dilemma of the survival of the fittest led Hobbes (1588–1679) and his colleagues to arguing for the social contract and to pleading for the formation of democracies with their constitutions and division of powers. We owe to them a relatively stable political life, which is now very much in danger of being wiped off the surface of Gaia in a similar way in which the sustainability of our life on the planet is threatened. We should understand that we must not fight but cooperate. Humankind is indeed too ignorant to be trusted the mentorship over Gaia. But we can try to study and understand symbiosis. Symbiosis is a fact or at least a good term to describe something very basic happening in the evolution. It is observed by scientists. Sustainability is more an expression of hope. We hope that our cooperation with the planet will lead to a pleasant and durable residence on earth. Sustainability is a basic right of both planet and people. But it is not clear what it really means and more importantly, what the stakes are for the interested parties. True, sustainability lends itself to drama. The world collapsing, no air to breathe, no food to eat, no habitat to live in. Millions of refugees from the poor to the rich countries. Millions of people from the shores of the sea seeking refuge in the highlands. The Dutch buying homes in the Eifel, Bangladeshi trucking to Sri Lanka. Billions of people tucked away in quarantine, Millions dying from new brands of viruses. What is the role of sustainable behavior? Sustainability is a perfect generator of opinion battles, which as a matter of fact leave the observer clueless, because they are fought on a very high level of abstraction, leaving little room for conclusions relative to burning issues on the practical side of daily life agendas. Like always the definition of the term depends on the point of view of the defining person or group and their social status. People’s interest in the issue varies from concerns about the climate, vanishing resources, and the capacity of the financial system to keep up its control over the allocation of money decisions, political stance or maybe psychological, demographic, developmental or environmental assumptions. This is very complicated. Humankind must understand that they are responsible for their part of the maintenance of the planet which means that we must work constantly and
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consistently for a living for ourselves and future generations and not for creating and accumulating waste. Unfortunately, the opposite is the case. Governance, both private and public, draws their power from manipulating people’s opinions in favor of mindless consumption. This is why polls are playing an increasingly dominant role in the election processes. For the same reason marketing has moved from the second row of auxiliary science to the first rank of strategic tool in the management hierarchy. And this is also the rationale behind the cancerous growth of lobbyism in the last 30 years. Governments, business firms, and interest groups are in fierce competition over the minds of people. The common goal of all these institutions is opinion generation and control. And the best way to produce and control beliefs is through the generation of fear. Obedience will follow suit. The current economic, political, and social crisis generated through events like the Corona virus pandemia is a very telling example. Here we have a task to do. We ought to fight for the minds of the people through empathy and the elimination of ignorance and fear. (C) People Enough of the same quality for everybody else True: too many people now on this planet, too little space, limited resources. It seems that in spite of the gigantic productivity of technology there cannot be enough for everybody of the same quality. In China, Italy, US, New York among other places around the globe people are choking to death through fine dust, which makes more sensitive for other diseases (currently it is the Corona Virus Covid-19, which is adding a new quality to the health hazards threatening the world but there will be others) Wales are eating plastic, soils and water are losing vitality and fertility is under the pressure of poisoning, carbon, and erosion. • The UN World Food Program is telling us that each year 800 million people in the world are going to bed hungry. 3.1 million children are starving to death before they are 5 years old. Some 795 million people in the world do not have enough food to lead a healthy active life. That’s about one in nine people on earth. • The vast majority of the world’s hungry people live in developing countries, where 12.9% of the population is malnourished. • Asia is the continent with the most hungry people – two thirds of the total. The percentage in southern Asia has fallen in recent years but in western Asia it has increased slightly. • Sub-Saharan Africa is the region with the highest prevalence (percentage of population) of hunger. One person in four there is malnourished. • One out of six children – roughly 100 million – in developing countries is underweight. • One in four of the world’s children are stunted. In developing countries, the proportion can rise to one in three. • If women farmers had the same access to resources as men, the number of hungry in the world could be reduced by up to 150 million.
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• 66 million primary school-age children attend classes hungry across the developing world, with 23 million in Africa alone. • WFP calculates that US$ 3.2 billion is needed per year to reach all 66 million hungry school-age children. • Anemia, overweight, obesity are becoming a curse of poverty and irresponsible food production. Some 795 million people in the world do not have enough food to lead a healthy active life. That’s about one in nine people on earth (World Food Program 2019). The most challenging task for the world community is to fix this disastrous situation. The many failed attempts of politicians, business people, institutions, scientists, and charities to explain the human condition and solve the problems arising from it are only proof that we have no clue. It seems to be too complex and getting out of our hands. Stating this simply and in the context of the current debate on governance and sustainability we are asking: How can the governments of the world be equally caring for efficiency, quality, and justice? It seems that they cannot. Why not? Don’t we have the Bill of Rights, the Declaration of Independence, the Basic Laws and Constitutions of all civilized countries, the Human Rights, and also dozens of UN organizations whose concern is exactly this: the establishment and preservation of the quality of life? (Feisal and Rauf 2010). The belief in private property is one reason. Money can be wonderful and has liberated the ingenuity of people from the feudal bondage but it has itself developed into a big and dangerous hungry monster chasing, wasting, demolishing value, by trying to control every cell, virus, DNA, everybody’s consumption habits, and attaching a price to everything in the world, and this is the reason why Maxim 3 is so important. In our context, Maxim three says that appropriation of wealth is fine as long as there is enough of the same quality for everybody else. Now this is increasingly interesting in a historical as well as in a normative perspective. Who is this “everybody else”? Who was it for Locke? Precolonial Europeans only? People above a certain income level? Investors? State employees? Only men? And does this maxim imply that the wealth of the planet must be distributed equally, e.g., between the colonial powers, G7, G8, G20? Or among States with an arsenal of nuclear weapons? Does it also mean that value or price tags must be attached to everything which can be accessed? All this has been believed by many people. But let us not be confused. There will probably always be people raising their hands as forgotten candidates for distributive justice and there will always be untaxable goods. Does it mean that nobody should own anything and that – like in an ideal communist or monasterial community all should participate in the common good like in a universal Commons? In fact, the old idea of the commons from which Locke was distancing himself in his book is being reactivated in the present discussion of a new and sustainable form of planetary management. Again, Jeremy Rifkin is an inspiring advocate of the transition from an ending property based to an access-based paradigm (Rifkin 2019).
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It would be very rewarding to study this question more deeply. The many failed attempts of politicians, business people, institutions, scientists, and charities to explain the human condition and solve the problems arising from it are only proof that we have no clue. It seems to be too complex and getting out of our hands. And it could have been so nice. Has humankind not gained access to the deepest and farthest places, the best guarded secrets of creation, have we not solved the mechanical, electronic, and even informational and genetic puzzles of the production process to a point where the production of goods and services at almost zero marginal cost is not an Utopia anymore? All this potential is in the books, in the declarations, and in many human hearts. And there is enough money looking for investment opportunities. Earlier generations could not have dreamt of the success of science and technology, which our time has achieved. So why is humankind not using its technological progress to generate peace and prosperity for all? Because strangely enough we have not made a very decisive step in this direction. Economists have looked into the modes of production but they have neglected to understand the modes of distribution. In the field of politics, a lot is known about contracts and conflicts but little about making and preserving peace.
3
The Promise of Globalization
According to the United Nations now more people than ever live in a country other than the one in which they were born. In 2019, the number of migrants globally reached an estimated 272 million, 51 million more than in 2010. International migrants comprise 3.5% of the global population compared to 2.8% in 2000 and 2.3% in 1980 (Taran et al. 2016). Of the 70 million forcibly displaced people (end of 2018) 26 million were refugees, 3.5 million asylum seekers, and over 40 million internally displaced persons, who are the most vulnerable of all. Since 1996, 75,000 fatalities on migratory routes were counted (migration data Portal 2020). Where can they go? Today, for anyone thinking about or dreaming of relief from hardship, prosecution, poverty, or oppression the most powerful symbol of a golden door into a better future is the statue of liberty on Ellis Island. On October 28, 1886 President Cleveland inaugurated the enormous statue, then the highest building in New York, a present of the French people to the people of America to commemorate the day of independence (July 4, 1776). Cleveland at least finished his short and halfhearted inauguration speech by describing the name of the statue as an expression of hope: “a stream of light shall pierce the darkness of ignorance and man’s oppression, until liberty enlightens the world.” More inspiring and promising than the President’s speech was the poem of the famous author, translator, traveller, and activist Emma Lazarus “The New Colossus.” This piece of poetry had been part of a not very successful fundraising effort for the pedestal (the American contribution to the Statue). Only much later and after her death the sonnet was mounted on a bronze plaque inside the pedestal of the statue of liberty in memory of both the author and the cause.
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The most often quoted lines of this poem allude to the difference between the monumental war heroism of statues like the Colossus of Rhodes, “the brazen giant of Greek fame” and modern compassion for the homeless as expressed by the mighty “Mother of Exiles.” “Keep, ancient lands, your storied pomp!” cries she With silent lips. “Give me your tired, your poor, Your huddled masses yearning to breathe free, The wretched refuse of your teeming shore. Send these, the homeless, tempest-tost to me, I lift my lamp beside the golden door!”
In the eighties of the nineteenth century, the rage of the Civil war with its more than 600,000 deaths (April 12, 1861–May 9, 1865) was history. War, poverty, and prosecution were not. Millions of people from Europe and Asia were now seeking refuge in the Land of unlimited possibilities. And this was only the beginning of the great immigration movement which has shaped, strangely enough, the picture of the United States of America until today. Strangely, because the United States being 100% a land of immigrants until today keep a very strict and sometimes incomprehensible control of who is allowed to enter and who is not. Nevertheless, the symbol of the golden door to freedom is still, and in spite of all attempts by the current government to scare off migrants, the statue of Liberty and North Amerika remains the heaven of hope and promise. In spite of all the misery, which may be the reason for migration it carries with it a big promise. The world is ready to learn from its mistakes as well as from its successes. Many countries are now ready to get more organized. The governance of migration has become a big issue. The biggest project matching development needs with migration movements is the UN 2030 Sustainable Development Agenda. Each of the 17 goals of this agenda has implications relevant for development and migration. The UN has a work in process document were the action fields and implications are meticulously listed. If the world community would use these areas as their to-do list together, we would be able to overcome most of the problems we encounter (ODI 2018). There would be, however, a certain need to think bigger than we currently do. We would also need to turn our minds away from ignorance and prejudices. We must adopt evident moral principles. Behind each and every course of action there is a set of beliefs, which model the principles of good governance. It is suggested here to give up most of the beliefs, which have formed the cultures in which we grew up and start to befriend us with knowledge and experience based solutions and empathy for other people. Then, we will be able to meet the challenges of the future. Is it not possible, for example, to follow Rifkin and other pioneers plan to stop destructive behavior and stay alife on earth? Just because we have the means? The awareness of the urgent need to act is also documented in other international agencies dealing with the same issues. The “International Organization for Migration (IOM) Global Migration Data Analysis Center (GMDAC) has quite recently established an information platform for governance of migration, where they display
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a brief evaluation of migration policies. So far 50 countries are participating. The tool is quite useful as it concentrates on 90 indicators grouped under six different dimensions of migration governance. This migration governance framework (MIGOF) serves as a platform for the discussion and implementation of a humane and orderly migration. As an intergovernmental organization, IOM acts with its partners in the international community to assist in the meeting of operational challenges of migration; advance understanding of migration issues; encourage social and economic development through migration; and uphold the human dignity and well-being of migrants and everybody on earth. The latest legislation on the migration of skilled labor from developing to Western industrialized countries is proof of an increasing imbalance of supply and demand of skilled labor. As a consequence, particularly people with skills in any technical, construction, communicational, sanitary, educational, and medical areas are being courted to migrate from their homes into these host countries. Emigration can be a great loss or even disaster for the countries from where these people migrate. Yet, it may also be an unintended but inevitable step forward to sustainability worldwide. Migration was and is today a carrier of peace, tolerance, education, and mutual understanding and cooperation. But no matter how we act and even when mischief, climate catastrophes, epidemics, and mutual destruction would just walk over us destroying cultures and habitat of mankind, it is good to know that nobody is responsible but ourselves. It is also good to know that Gaia is most probably able and ready to help us understand how symbiosis functions. We don’t really know.
4
Concluding Reflection on Where to Go from Here?
The world finds itself trapped in the triangle of ingenuity, ignorance, and fear. What we need more than anything else is mindfulness. The great Buddhist searcher and teacher Thich Nhat Hanh in his book Happiness: Essential Mindfulness Practices (2009) talks about Reverence of Life, Happiness, Love, Loving Speech, and Deep Listening, Nourishment and Healing as essential mindful practices. Many people have read his books or attended his lectures, among them a lot of CEOs, who were particularly convinced by the effect that Thich Nhat Hanh’s words had on the performance of their upper management. He impressed them deeply and motivated them to do their work more diligently. But did they really listen to what he said, when he shared his deep knowledge about these very fundamental practices and particularly about the “Reverence for Life”? This is, what he asks us to practice: To be aware of the suffering caused by the destruction of life. Committed to cultivating the insight of interbeing and compassion and learning ways to protect the lives of people, animals, plants, and minerals. Determined not to kill, not to let others kill, and not to support any act of killing in the world, in our thinking, or in our way of life. Seeing that harmful actions arise from anger, fear, greed, and intolerance, which in turn come from dualistic and
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discriminative thinking, Cultivate openness, non-discrimination, and non-attachment to views in order to transform violence, fanaticism, and dogmatism in ourselves and in the world. (Nhat Hanh 2009)
And that is exactly, what we were talking about in this chapter on governance and sustainability. 1. Mindfulness is the principle of sustainability. It helps us to avoid the trap of stultifying beliefs and gives guidance to the togetherness through which we can overcome anger, fear, greed, intolerance. 2. The principles, which since Lockes seminal work on government justify the private appropriation of the treasures of the planet are still basically valid and even evident, but they must be adapted to new circumstances, in particular to social, scientific, and technological developments. 3. Scientific and technological development is the result of the incisive human inclination to learning. 4. Migration is the movement, which is based on the promise of a common heritage and carries with it the hope for symbiotic sharing of individual and cultural treasures. With the zero marginal cost society in the making, this is a very good moment for humankind to let productivity cover the cost, forget profit, cooperate with the planet, and solve the problems of hunger, sickness, war, and destructive behavior creatively in a sustainable way in the spirit of distributional justice. It is a good omen that 15 of the top 25 US tech companies worth over 4 trillion US$ in total had first or second generation immigrants among their founders. https://www. odi.org/opinion/10489-video-infographic-technology-migration-and-2030-agenda More than 20 African countries are planting 8000 km of trees and other plants, a great green wall to stop the Sahara from extending to the South. A new beginning in the spirit of togetherness. Is it a coincidence that the largest projected living structure on the planet, the Great Green Wall, which will be three times the size of the Great Barrier Reef, reaches across the Sahel Zone from Senegal in the West to Djibouti in the East from where humans setoff to conquer the world? The Wall promises to be a compelling solution to the many urgent threats not only facing the African continent but also the global community as a whole: climate change, drought, famine, conflict, and migration. Good luck to all the wonderful people who worked on this project and thanks to the visionary botanist Barbe Baker who had the idea.
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Rifkin J (2014) The zero marginal cost society. The internet of things, the collaborative commons, and the eclipse of capitalism. Campus, Kindle Rifkin J (2019) The green new deal. Why the fossil fuel civilization will collapse by 2028, and the bold economic plan to save life on earth. Amazon, Kindle Roy A (2002) Die Politik der Macht, btb Sauer T (2017) Die Hugenotten in Berlin. First published G/GESCHICHTE 6/2015 „Die Hugenotten“. https://www.g-geschichte.de/plus/hugenotten-in-berlin/. Accessed 30 May 2020 Scheer A-W (2020) Unternehmung 4.0. Vom disruptiven Geschäftsmodell zur Automatisierung der Geschäftsprozesse. Heidelberg Springer Schinz A (1989) Cities in China. Urbanization of the earth, vol 7, Gebrueder Borntraeger Berlin – Stuttgart Sethi SP (2002) Standards for corporate conduct in the international arena: challenges and opportunities for multinational corporations. Bus Soc Rev 107(1). cf. Güler and Growther Sloterdijk P (2009) Wie groß ist “groß”? Klimaforscher leiten nach 500 Jahren eine neue Reformation ein. Aber noch hat niemand bestimmt, was der Erdenkörper vermag. https://www.welt. de/welt_print/debatte/article5556427/Wie-gross-ist-gross.html. Accessed 30 May 2020 Spuler B (1960) The Muslim world: a historical survey. I: the age of the caliphs (trans: Bagley FRC). E. J. Brill, Leiden Szczepanski K (2019) How the Mongols took over Baghdad in 1258. ThoughtCo. https://www. thoughtco.com/the-mongol-siege-of-baghdad-1258-195801. Accessed 30 May 2020 Taran P (GMPA-Global Migration Policy Associates) et al (2016) The sustainable development goals and migrants/migration regarding the UN 2030 sustainable development agenda, relevant SDGs, implementation actions, realization measurement indicators and rationals for inclusion a work in progress: version 3, UN.org. https://www.un.org/en/development/desa/population/ migration/events/coordination/14/documents/backgrounddocs/GMPA_14CM.pdf. Accessed 30 May 2020 WFP, various authors (14 August 2019) 2019 – hunger map. Nutrition, zero hunger. 2020 © World Food Programme. https://docs.wfp.org/api/documents/WFP-0000108355/download/?_ga¼2. 181981287.1955974916.1591091284-1541304941.1591091284. Accessed 30 May 2020 Wikipedia, various authors (26 May 2020a) Henry IV of France. https://en.wikipedia.org/wiki/ Henry_IV_of_France. Accessed 30 May 2020 Wikipedia, various authors (29 May 2020b) The Abbasid Golden age (775–861). https://en. wikipedia.org/wiki/Abbasid_Caliphate#Abbasid_Golden_Age_(775–861). Accessed 30 May 2020 Wikipedia, various authors (1 June 2020c) Umayyad Caliphate. https://en.wikipedia.org/wiki/ Umayyad_Caliphate. Accessed 30 May 2020 World Scientists’ Warning to Humanity (1992) Human beings and the natural world are on a collision course. http://www-formal.stanford.edu/jmc/progress/ucs-statement.txt. Accessed 30 May 2020
Sustainable Development Goal 8: Achieving Decent Work – An Illusion Prabir Kumar Bandyopadhyay
Contents 1 Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 SDG, What It Is and How Different It Is from MDG? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Goal 8 of SDG: Decent Work and Economic Growth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1 The Concept of Decent Work . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Agenda 2030 for SDG 8 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1 The Importance of SDG 8 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.2 Where the World Is Now? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 What Is Informal Employment and Informal Sector . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Does MSME Create Jobs? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 What Kind of Jobs MSME Create? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 What Is the Possibility of Job Creation by Large Firms? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Solutions Ahead . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 What Are the Possible Future Developments? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Cross-References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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Abstract
Sustainable Development Goal (SDG) has evolved from Millennium Development Goal (MDG). It is therefore logical to discuss on MDG from the perspectives of its achievement and shortcomings, which can explain the rationale for adoption of SDG. World political leaders, scientists, and philosophers came to a consensus on different goals and targets for ending poverty worldwide as a developmental goal in 2000, and these goals and targets are institutionalized in the UN Millennium Declaration and become the MDGs. Prior to the declaration of MDGs, poverty reduction was the main agenda of UN, but it was thought to be combated by strategies focused toward economic liberalization, infrastructure P. K. Bandyopadhyay (*) Symbiosis Institute of Business Management, Symbiosis International, Pune, India e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Switzerland AG 2021 D. Crowther, S. Seifi (eds.), The Palgrave Handbook of Corporate Social Responsibility, https://doi.org/10.1007/978-3-030-42465-7_87
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development, and institutional and governance reform. This approach was criticized by academicians and civil society advocates on the ground that it neglects the poverty and human dimensions (Fukuda-Parr and Hulme 2011). Growth in GDP is not a prerequisite for human development. Recent example of achieving improvement in human dimensions without improving much in GDP growth by Bangladesh is a case in point. MDG consists of 8 goals having 18 targets. The UN later developed for better monitoring of progress 48 indicators. All these are integral part of the main objective of eradication of extreme poverty and dehumanizing conditions. MDG recognizes the multidimensional nature of poverty. Keywords
SDG · Decent work · UBI · Profit sharing · MDG
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Background
Sustainable Development Goal (SDG) has evolved from Millennium Development Goal (MDG). It is therefore logical to discuss on MDG from the perspectives of its achievement and shortcomings, which can explain the rationale for adoption of SDG. World political leaders, scientists, and philosophers came to a consensus on different goals and targets for ending poverty worldwide as a developmental goal in 2000, and these goals and targets are institutionalized in the UN Millennium Declaration and become the MDGs. Prior to the declaration of MDGs, poverty reduction was the main agenda of UN, but it was thought to be combated by strategies focused toward economic liberalization, infrastructure development, and institutional and governance reform. This approach was criticized by academicians and civil society advocates on the ground that it neglects the poverty and human dimensions (Fukuda-Parr and Hulme 2011). Growth in GDP is not a prerequisite for human development. Recent example of achieving improvement in human dimensions without improving much in GDP growth by Bangladesh a case in point. MDG consists of eight goals having 18 targets. The UN later developed for better monitoring of progress 48 indicators. All these are integral part of the main objective of eradication of extreme poverty and dehumanizing conditions. MDG recognizes the multidimensional nature of poverty. International NGO networks questioned the legitimacy of MDGs, and they were also critical of the content as they perceive that MDGs will not advance the antiliberalization reform agendas. At the same time governments of the developing countries though accepted MDGs but not with whole hearted support as they find it not innovative enough as these goals are part of the countries’ development agenda for a long time. We have to keep in mind that the MDGs were finalized by an expert group. And while finalizing the goals and targets, they kept in mind the availability of the data across the world. Therefore, the design of the goals suffers from availability bias. The five omissions that different stakeholders were very critical
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of are reproductive health services for all; governance, human rights, and democracy; limited scope of gender empowerment; narrow view of decent work (raised by ILO); and lack of time bound targets for goal eight, which is global partnership for development. Some of the omissions were later incorporated. Phillip Alston (UNDP 2003) pointed out the nonalignment of the MDGs with the Vision of Millennium Declaration with core values – human rights principles. Recognizing the short comings of the MDGs, the UN examined the process of goal setting along with the content of MDG and came out with SDGs, which was launched in September 2015 at the UN general Assembly. The year 2015 was selected as the target date of meeting MDGs.
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SDG, What It Is and How Different It Is from MDG?
SDG is also not free from criticism. Considering the large number of stakeholders, it is a challenge to get any proposition accepted by all with equal enthusiasm. So, at this stage, it is prudent not spend space with contentious issues; rather we look at it positively and see what it offers. With 17 goals and 169 targets, it addresses many of the omissions of MDGs. The central issue of SDG is to address global agenda of sustainable development. MDG was more toward the need of the developing countries as if not much is left for the developed world to do, whereas SDG is more inclusive. These goals are relevant for both poor and rich countries. The goals were developed through a more participative process involving “open working group”; thus it gains more legitimacy. The scope of the goals of SDG is broad instead of addressing only eradicating poverty. It addresses economic, social, and environmental sustainability. The seventeen sustainable development goals are reproduced (UNDP 2015): 1. “End poverty in all its forms everywhere 2. End hunger. Achieve food security and improved nutrition and promote sustainable agriculture 3. Ensure healthy lives and promote well-being for all at all ages 4. Ensure inclusive and equitable quality education and promote lifelong opportunities for all 5. Achieve gender equality and empower all women and girls 6. Ensure availability and sustainable management of water and sanitation for all 7. Ensure access to affordable, reliable, sustainable and modern energy for all 8. Promote sustained inclusive and sustainable economic growth, full and productive employment and decent work for all. 9. Industry, innovation and infrastructure 10. Reduce inequality 11. Sustainable cities and communities 12. Responsible consumption and production 13. Climate action 14. Life below water 15. Life on land 16. Peace and justice. Strong institutions 17. Partnerships for the goal”
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Fukuda-Parr (2016) expressed the concern about SDGs’ true implementation as SDGs are global goal, and it gives scope for selectivity and national adaptation, and here lies the loop hole for taking approach of incremental development that hardly makes real difference at the ground level.
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Goal 8 of SDG: Decent Work and Economic Growth
The full title of the goal 8 of SDG is “Promote inclusive and sustainable economic growth employment and decent work for all.” The central issue of the goal is decent work for all. The International Labour Organization (ILO) was arguing to include decent work as a global agenda which got realized in SDG. Why only work for all is not sufficient but work has to be decent as well, needs to be examined.
3.1
The Concept of Decent Work
The ILO launched the concept of decent work in 1999. As per the agenda of decent work, work means all sorts of employment: formal sector jobs, jobs of unregulated wage workers, self-employed workers, and home workers including digital platform workers as well. It has mainly four components: employment, social protection, workers’ rights, and social dialogue (Ghai 2003). The four components have 11 dimensions (Ferraro et al. 2016), which are depicted in Fig.1. In order to judge the progress, there must be indicators or matrices, which measures the status of achievement of any item. Ghai (2003) presented a set of Fig. 1
Adequate earnings through productive work
Social dialogue
Decent working Time
Context
Employment opportunities
Decent work
Social security
Safe work environ ment
Work, family, personal
life
Fig. 1 Indicators of Decent Work
Work to be abolished
Stability and
security
Equal opportunity and treatment
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indicators for measuring the status of any aspect of decent work. There are 17 indicators for measuring status of decent work.
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Agenda 2030 for SDG 8
2030 is the targeted year to achieve the SDG goals, which is only 10 years ahead from now. Therefore, it is crucial to take a stock of the situation and formulate the action plan to achieve the goals by 2030. Decent work is supposed to be the key drivers for achievement of other SDGs also.
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The Importance of SDG 8
According to UN Secretary General Ban Ki-moon, the 2030 goals “address the requirements for all humanity to be able to live decent lives free from poverty, hunger and inequality, with all men and women, girls and boys able to develop their full potential. They commit all of us to be responsible global citizens, caring for the less fortunate, as well as for our planet’s ecosystems and climate action on which all life depends.” Economic growth itself is not enough, but improvement in decent work along with economic growth results in desired outcome. Take the United States as a case. US national income grew 60% from 1979 and 2016, while those in the top 10% had income gains of about 100% the bottom half of the income distribution received 22% rise. Top 1% controls 40% of all wealth. Moreover 0.1% controls about 20% of wealth generated. The fall out of this lop-sided distribution results in poor emergency savings of 63% of Americans who cannot afford US$ 1000 for an emergency room visit and cannot afford US$ 500 for car repair (Mark 2020). The world as a whole is no better. Top 1% citizen of Thailand controls 58% of the country’s wealth, and the bottom 10% earn 35 times less than the top 10%. In Indonesia, the 1% controls 50% of the country’s wealth. Only four richest men of Thailand have more wealth than the poorest 100 million people. In Vietnam, the country’s richest man “earns more in a day than the poorest person earns in 10 years.” In Malaysia, on average, the picture is good, only 0.6% of its 31 million people are living under the poverty line. But the share of income is highly skewed, “34 percent of the country’s indigenous people and seven percent of children in urban low-cost housing projects live in poverty.” In the Philippines, the top 10% earned about US$14,708 in 2015, and the lowest 10% earned about US$1,609, which is nine times lesser than the top 10 percent’s income (The ASEAN Post Team 2018). As per World INEQUALITY Data Base, top 1% of Indians had share of national wealth of 6.7% in 1981, and in 2015, it is 21.3%. In the same period, bottom 50% s share was 23.5, and in 2015, it is 14.7%. In such a scenario, reduction of inequality in income is a big challenge. Income inequality gives birth to other types of inequality. Of course, equality in income does not prevent inequality in other form that may exist in society (OECD 2005). Ahmed (2003) conducted an empirical research to get empirical evidence for association of
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human development and decent work. He also inquired relationship between decent work and economic development. To measure the decent work, Ahmed used decent work deficit (DWD) compiled by Bescond, Ch^ataignier, and Mehran. DWD considers low hourly pay, excessive hours of work, unemployment, non-enrolment in school, youth unemployment, male-female gap in labor force participation, and old age without pension. Though it is a partial measure of decent work but fairly just for the purpose. Similarly, HDI of UNDP, which Ahmed used is also a partial one as it is based on indicators of education, health, and standard of living. But for the purpose of examining the relationship between the two – DWD and HDI, these indicators do provide significant important direction. The research has provided two important observations. One, the estimation indicates that a percentage-point reduction in the DWD index boosts the HDI score by 0.20 percentage points. Two, high levels of decent work can be achieved without high levels of income, and conversely, high incomes do not guarantee higher levels of decent work. Conversely, high incomes do not guarantee higher levels of decent work. As, for example, Turkey and Thailand have similar levels of per capita income, but Thailand has a much smaller decent work deficit. Ireland and Switzerland have same level of income, but Ireland has much larger decent work deficit than Switzerland. On the other hand, “the Republic of Korea has roughly the same decent work deficit as Belgium, but only two-thirds of its income level. Similarly, Hong Kong (China) has a decent work deficit as large as Mexico’s, despite being almost three times richer.” Pereira et al. (2019) conducted a literature review study on empirical research on decent work and its association with human development. They found that the area is understudied, and most of the studies are in the geographical area where the human development index is high or very high. They also found that most of the research have considered selective components of decent work. A few studies conducted to examine the decent work (DW) impact, but none have considered the impact on the different spheres of workers’ lives. Though the review found some association between DW and economic and human development, there is no conclusive evidence as the researches are not done with much rigor. But it may also be concluded that without economic growth job cannot be created in a sustainable manner (Arthur Okun 1962; World Bank Group 2012; Miklós Antal 2014). But what type of growth is needed is an issue. We have seen the world is facing jobless growth. Even if job is created but jobs may not be decent also. Without creation of decent work for all, inclusive growth cannot happen. Therefore, 2030 agenda has been set by the UN and ILO so that countries can identify the gap and chalk out action plan to meet the goal.
4.2
Where the World Is Now?
Under seven themes, SDG8 has 12 goals. One of the themes is “inclusive growth” on which the present paper is focused. I will consider two specific targets under inclusive employment as I am concentrating on DW. One, creation of decent job through entrepreneurship, creativity, and innovation and formalization of informal jobs and help growth of micro-, small-, and medium-sized enterprises. Two, achieve
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full and productive employment and decent work for all women and men, including for young people and persons with disabilities by 2030. On the status of SDG 8’s progress, UN Secretary General’s Sustainable Development Goals Report 2018 mentioned that though labor productivity has increased and the unemployment rate has decreased globally, “more progress is needed to increase employment opportunities, particularly for young people, reduce informal employment and labour market inequality (particularly in terms of the gender pay gap), promote safe and secure working environments.” Some key figures have been mentioned in the report: globally excluding the agricultural sector 51% of all workers are employed in informal employment in 2016. The rate of decrease of global unemployment is only 0.8% considering 2000 as the base year, which is too slow to meet the target by 2030. What is more disturbing that the report estimates that adults are three times more likely to get employment than the youth. The rate of unemployment of youth is 13% globally in 2017. MSME contributes major share of global employment both in developed and developing countries. MSMEs including the informal sector account for about 90% jobs in developing countries. It also stressed that “They (MSME and informal sector) are typically the main income source for the poorest population segments, especially in rural areas, and tend to employ a larger share of the workforces in vulnerable sectors.” We can summarize, that the report (UNO and ILO 2019) suggests increasing employment with decent work, bringing more employees under formal sector and encouraging the growth of the MSMEMs should be the priority to achieve SDG 8. Hence forth we will argue that in the present context, creating more employment with decent work by bringing more employees under formal sector and encouraging MSMEs at the same time, are inherently suffer from contradiction.
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What Is Informal Employment and Informal Sector
The ILO defined informal sector as “a group of production units comprised of unincorporated enterprises owned by households, including informal own-account enterprises and enterprises of informal employers (typically small and non-registered enterprises)” and informal employment as “all remunerative work (i.e., both selfemployment and wage employment) that is not registered, regulated or protected by existing legal or regulatory frameworks, as well as non-remunerative work undertaken in an income-producing enterprise.” It also adds that informal workers do not have secure employment contracts, workers’ benefits, and social protection or workers’ representation (ILO 2020). Before we deliberate on the argument, let us see how big gap that the world is having to achieve SDG 8 in more granular term. In 2015, 10% of the world’s workers lived on less than $1.90 per day, nearly two billion people lived on less than the $3.10 per day measure of “moderate poverty” in the developing world, as per ILO’s 2012 estimation, and over 300 million people lived in relative poverty. As we have seen economic growth is not directly linked
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with growth in decent work, some experts are questioning the rationality of linking the goals of full employment and decent work with economic growth in SDG 8, rather than poverty in SDG 1 as they were in MDG 1 (Frey 2017). David Woodward has presented a shocking statistic estimating that to bring 62% of the world’s population out of $5 per day, poverty line would require GDP growth in excess of $11,500 trillion and will take between 123 and 209 years to accomplish at current rates of economic growth. Redistribution of world’s GDP is the answer to achieve the same (ibid.). Informal labor is a big stumbling block to the Decent Work Agenda. “Most people enter the informal economy, which is characterized by low productivity and low pay, not by choice but impelled by the lack of opportunities in the formal economy and an absence of other means of livelihood. Informal employment constitutes more than one half of non-agricultural employment in most regions of the developing world” (Rai et al. 2019).
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Does MSME Create Jobs?
As we have discussed earlier, around the world, at the policy level, the perception is MSME creates jobs more than the large industry sector, and the perception is partly supported by the literature (Neumark et al. 2011; Teal 2016; Haltiwanger et al. 2011; Kok et al. 2011). Not all agree to this proposition. Broersma and Gautier (1997) have shown by studying Dutch manufacturing sector that the small firms create jobs, but it also destroys the jobs. As per OECD, job creation by small firms in Sweden and the United Kingdom are 75% and 95%, respectively. At the same time, small firms are also likely to exit. Seventy four percent of the exit are from small firms in Sweden, and it is 83% in the United Kingdom. In the Netherlands, about 65% jobs are created by the entry of small firms, and at the same time, 63% jobs disappear due to exit of small firms (ibid.). It is not clear how effective they are in net job creation. They persistently create jobs in higher rates than the large firms during economic slump. The possible reason is availability of cheap labor during economic slump. This trend is also supported by Moscarini and Postel-Vinay (2012) and Atkinson and Lind (2019). Their finding suggests that large firms destroy comparatively more jobs when the trend of unemployment rate is higher than average than the smaller ones and create more jobs when unemployment rate trend is below average trend. Atkin and Lind (2019) also commented that the people join small firms when they do not get job in large firms during economic slump. At the same time, entrepreneurship is also not an answer to job creation. “only one percent of the people work in companies less than two years old, while 60 percent work in companies more than ten years old.” Shane (2010) and Atkinson and Lind (2019) argued that “Only favoring firms when they are small is as perverse and unhealthy as the attitude of parents who hope that their children will never grow up.” One may argue that today’s small business will become large one tomorrow, but it is an illusion as study suggests most small business owners do not want to grow (Atkinson and Lind 2019).
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What Kind of Jobs MSME Create?
Evidence suggests that employment created by MSMEs is less productive, less remunerative, and low-quality jobs, which do not provide decent working conditions. SMEs across the world do not have trade union, and in the absence of TU, the scope of collective bargaining is highly limited (Croucher et al. 2013). Employment generated by MSMEs is at the cost of decent work. Keeping in view that “nearly half of all workers worldwide still live below the USD 2 a day poverty line,” the MSMEoriented economic policy will not be able to achieve decent work by 2030 (Reeg 2015).
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What Is the Possibility of Job Creation by Large Firms?
Till 2000, it was a commonsense – technology infusion increases productivity, the gains of productivity shared among all including the labor thus increasing the purchasing power of the people as a result market grow, which create more jobs. This is the logic I used to offer to the trade union members so as to get union’s cooperation for accepting technology and improving productivity. Post 2000, the world started experiencing different phenomenon, rise in productivity, and reduction in job creation. By 2011, it became quite clear – phenomenal economic growth with no increase in job creation. Brynjolfsson and McAfee called this as “great decoupling.” And Brynjolfsson said, “Productivity is at record levels, innovation has never been faster, and yet at the same time, we have a falling median income and we have fewer jobs. People are falling behind because technology is advancing so fast and our skills and organizations aren’t keeping up.” Two kinds of jobs are being created – one, highly skilled jobs involving digital technology and two, the low-skilled service sector jobs like hotel and hospitality sector. These low-skilled jobs are of poor quality. The middle is missing (Rotman 2013). Basu (2016) argued that two types of technology – one is labor saving and second is labor linking being introduced in the economy. While labor-saving technology is improving the productivity, labor linking is shifting the jobs from one place to the other, and as a result economy with low labor rate are getting opportunity to work for an employer sitting in a faraway place and serving customers residing in another places. This has created job in the low-cost countries with some developed infrastructure, but net job creation in totality may theoretically appear as negative. But study shows that in case US job shift to China resulted reduced employment within some establishments, but the effect was offset by gains in employment within the same firms in other places of the USA (Ospina 2020). Initially the low- quality jobs are offshored to low-cost economies, but over a period of time, this helps improve quality of life in low-cost economy countries like, “Brazil is now estimated to be more expensive than much of Western Europe” (Shirkin et al. 2014). Human society is facing the crisis created by technological development since the beginning but used to get adjusted within short time. But innovation in the twenty-first century is too fast to absorb by the society. More over modern technologies and innovation are creating jobs for the robots.
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According to the International Federation of Robotics’ World Robotics Report 422,000 industrial robots were shipped around the world in 2018, a 6% increase from 2017. This has created two problems – job loss for the labor and reduced share of wage in world GDP. Therefore, any new large organization will be using robots more than the labor as a result creation of jobs by the large firms is limited. Gelb et al. (2016) forwarded a different argument, which claims job situation is not that grievous as proposed by many. It is the tasks, which are getting automated, he claims, not the jobs. A job encompasses many tasks, and some require tacit knowledge that cannot be automated. But if tasks are getting automated across jobs, then jobs are restructured, and new jobs are created, and the old jobs vanish. This is the core function of industrial engineers, and they are routinely doing since the 1920s. Another fact is, in many assembly line jobs, particularly in automotive sector, single or limited task oriented and robots wipe out such jobs entirely. Gelab and Khan (ibid.) have taken the example of low-skilled assembly line jobs of footwear industry, which will not be automated as at present these jobs are being done by low-skilled cheap labor. The number of such jobs will be increased, they argued. But these jobs, even if created, will be low paid and cannot offer “decent work.” In support of their argument, Gelab and Khan (ibid.) have referred the estimated jobs at risk due to automation as estimated by OECD. As, for example, OECD estimates about 9% of US jobs, 6% of Korea and Estonia, and 12% in Germany and Austria are at risk of being lost to automation. While the Oxford/ World Bank methodology predicts that on average about 57% jobs will be wiped out due to automation in OECD countries over the next two decades. Similar figure for Uzbekistan, Ethiopia, China, and India is 55,85,77 and 69%, respectively. Gelab and Khan (ibid.) attributed this anomaly in the estimated job loss out of automation between the OECD research and the Oxford/World Bank research, to not differentiating between the concept of job, occupation, and tasks by the later. But looking at the magnitude of the difference, it is highly unlikely to be the assignable cause. Till date, there is no empirical evidence that structural adjustment of employment is happening to mitigate the risk of job loss.
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Solutions Ahead
With apparently no solution of achieving decent work in the near future, the only possible solution may be thought of is taking innovative socioeconomic policies across the world. Some ideas are on the table, which needs to be seriously considered instead of rejecting outright- universal basic income (UBI), profit sharing, and taxing robots. Universal basic income – as per UBI, a basic level of income, is guaranteed by the government to all rich and poor so as to provide every citizen the basic cost of living. On the question of why to give the income those who do not deserve it, the economists are of view that the money may be recovered by taxation, which is easy to implement rather than screening people who needs and who don’t need it. This is not entirely new. A form of it was first suggested by Sir Thomas More in
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his sixteenth-century work “Utopia.” This has the support of Friedrich Hayek and Milton Friedman in the twentieth century. Economist Pranab Bardhan strongly support UBI over various social programs, which they feel ineffective and corrupt (Bardhan 2017). Some form of UBI has been implemented on trial basis in Finland, Kenya, Italy, the Netherlands, and Scotland. The result of Finland is now available. The result of a controlled group study shows no significant improvement in employability of the benefit group. But there is an indication of indirect benefit like the benefit group reported better health and less stress. Larger countries like India may try this intervention keeping a long-term view rather than immediate employment generation as a target (Kulkarni 2019). Profit sharing – to compensate the declining share of wage in the world economy, the shadow chancellor of the exchequer, of UK, John McDonnell, proposed a scheme of granting workers’ share of equity in the firms where they are employed, which will protect workers’ right to some share of economy’s profit. But this is restricted only to workers who are employed. Therefore, its effectivity to combat daunting task of providing decent work is limited (Basu 2018). Taxing robots – A unique idea proposed by Bill Gates. Gates proposed that the government would tax companies for using robots to replace human. He rationalized his concept, “Right now the human worker who does, say, $ 50,000 worth of work in a factory, that income is taxed and you get income tax, social security tax, all those things. If a robot comes in to do the same thing, you’d think that we’d tax the robot at a similar level.” This way the rate of automation may be retarded, and with the money accrued by taxing robots may fund other types of social welfare-oriented jobs for which there is a huge requirement (Delaney 2017).
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What Are the Possible Future Developments?
The massive scale of the current ongoing pandemic – COVID 19, which can only be compared with the Spanish flue that happened exactly 100 years back has put everybody in an uncertain position. There is no official forecast of the economic impact of COVID 19. As per UN, COVID 19 may wipe out about 195 million of jobs globally (UN, April 2020). This is an additional threat to the achievement of SDG 8 by 2030. But there will be recovery indeed after things get settled. Behind this gloomy scene, there is a silver lining. COVID 19 has exposed that all the countries are inadequately prepared, both in terms of infrastructure and structural facilities to combat COVID 19. All are facing shortage in hospital beds, ICU capacity, ventilator, health-care professionals, testing facilities, and PPEs. As per OECD data base, 41 countries including some non-OECD countries, the number of beds (2017) varies from 13.05 to 0.65 per 1000 people, while the number of ICUCCB beds per 100,000 people varies from 34.7 to 1.2. In usual time, among OECD countries, curative beds’ occupancy rate average was 75%, from 94.9% (Ireland) to 61.6% (Greece). As per some estimate in the best-case scenario, in the present scenario, the peak caseload would require 7.5 times the current number of available ICU beds. As per present WHO’s norm, the required number of beds per 1000
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population is 5, and the number of doctors is 1. These figures are required to be reworked. As for example, Italy asked physicians from China to meet the demand, while they have 4.09 doctors per 1000 populations – four times the who prescribed norm of 1 doctor per 1000 population. As per media, in many places, the situation is managed by giving more priorities to corona patients ignoring the other patients. Mortality of such patients is not known. What is known is the huge mortality due to coronavirus is attributed to the nonavailability of health-care facilities and experts. In other words, to mitigate the impact of such epidemics, the world has to substantially increase the health-care facilities and create a huge number of quality jobs in healthcare sector. Take the case of India. As per The Economic Times (April 14, 2019), India needs more 600,000 doctors and two million nurses. This is as per the situation of pre corona epidemics. One can imagine if we factor the epidemics like corona into this estimation what could be the revised requirement even if we keep 70% of the peak load. And this estimation does not take care of other health-care nonclinical professionals including pathology staffs. The WHO is suggesting countries to create six million nursing jobs to combat COVID 19-like epidemics by 2030. It has also predicted 40% shortage of medical equipment to meet demand. Therefore, all the countries along with the ILO, WHO, UNIDO, and the World Bank shall consider as to how to enhance total health-care capacity and create more quality jobs in this sector. SDG should be reviewed under the present context once the virus is in control. If the world leaders sincerely work on health care, SDG 8 may be a reality in the future. SDG 8 becomes all the more important in the present context as after opening of the economy there will be more chance of employees getting infected if safe work is not taken care of at the workplaces.
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Summary
Unemployment rate, vulnerable employment rate, and extreme working poverty rate during 2007–2019 are more or less stable for developed countries, developing countries, and emerging economy countries (ILO 2018). We have also seen in this paper that the possibility of growth in employment by large firms is highly limited, and MSMEs are neither creating substantial jobs nor offering decent work. Therefore, the priority of informal sectors to bring under formal sector is neither viable nor any solution to the achievement of decent work by 2030. Scherrer (2018) has shown that the fertility rate though decreasing but does not match the speedier increase in life expectancy as it happened in the era of earlier industrialization. Even those countries who missed the industrial revolution and started industrialization late, like India, are facing limitations in growth in manufacturing sectors. Scherrer (2018) has also identified an important option that used by the early industrialized countries, which is large- scale migration through colonial power is no longer a viable option for the late industrial countries. This option helped early technology adopters to absorb increased population in gainful employment. In summary, we find technology is reducing the scope of employment in large firms; MSMEs contrary to the popular view do not create net job growth and also do not offer quality jobs. Informal
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employment is here to stay across the world, and the obvious conclusion is “decent work” is an illusion which is also supported by Scherrer (2018). The only viable solution is to distribute available good jobs among all at the cost of full employment supported with good wage and sharing the profit from automation among all, which is now only enjoyed by those who provide capital and who provides technology. This needs an entirely different policy framework, and this paper has mentioned three such proposals, which has surfaced in various policy development discussions. All these ideas are at a very nascent stage, and lot of work to be done to make these happen. The paper has also examined the short-term challenges posed by the COVID 19 pandemic. It also pointed out that huge opportunity is there to increase substantial increase in employment in health care across the globe. The health and safety issue at the workplace need unprecedented focus post COVID 19 pandemic world that makes SDG 8 is an urgent issue. Therefore, to make SDG8 a reality by 2030, world leaders may recognize the reality of the practicality of achieving decent work for all by 2030 and seriously consider all these options into their agenda of the next meeting.
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Cross-References
▶ Human Rights ▶ Modern Slavery Disclosures in a Voluntary Regime ▶ Work-Life Balance and Well-Being at Work
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Work-Life Balance and Well-Being at Work Employees’ Perspective to Promote a Psychologically Healthy Workplace Nicole Cvenkel
Contents 1 2 3 4 5
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Work-Life Balance and Work Life . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Work-Life Conflict . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Methodology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.1 Work-Family Conflicts that Affect Work-Life Balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Health and Well-Being Initiatives to Promote Work-Life Balance Satisfaction . . . . . . . . . . . 6.1 Flexible Working Arrangements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.2 Work-Life Balance and Well-Being Coordinator . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.3 Healthy Meals and Dietitian . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.4 EAP Program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.5 Education and Training . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.6 Day Care Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.7 Fun at Work . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.8 Healthy Working Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.9 Company Group Health Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.10 Gym Membership and Exercise Classes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.11 Meditation Room . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.12 Water Cooler in Offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.13 Team Working . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.14 Reduction of Working Hours . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.15 Appreciation and Respect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.16 Fairness at Work . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.17 Vacation Leave . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Employer Implementation of Family-Friendly Practices to Promote a Psychologically Healthy Workplace . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.1 Fun and Family Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.2 Time Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.3 Work-Life Conflict Counselling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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N. Cvenkel (*) My Work & Well-Being Consulting Inc, Prince George, BC, Canada e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Switzerland AG 2021 D. Crowther, S. Seifi (eds.), The Palgrave Handbook of Corporate Social Responsibility, https://doi.org/10.1007/978-3-030-42465-7_19
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7.4 Improved Trust and Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.5 After School Programs for Employees’ Children . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.6 Good Work Relationships . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.7 Peer Support . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.8 Quiet Break Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.9 Bring your Child to Work Day . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.10 Respect and Fairness at Work . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.11 Flexible Working Arrangements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Discussion and Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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Abstract
Work-life balance is growing to be an issue of focus for organizational leaders, employees, HR professionals, and wellness coordinators as individuals and the organization benefit from having health and well-being when work-life balance is embraced strategically, which in turn impacts on productivity and performance. The purpose of this chapter and empirical research study is to explore managerial and nonmanagerial employees’ perspectives that relate to work-life balance from the perspective of work-family conflicts, health and well-being initiatives to promote work-life balance satisfaction, and the organization’s implementation of work-life balance (aka family supportive or family-friendly policies) to promote a more psychologically healthy workplace. A qualitative methodological approach was adopted, and data was collected through 36 semi-structured interviews and 2 focus groups with managerial and nonmanagerial employees from diverse occupational groups. The research found that work-life conflicts that affect employees work-life balance includes limited resources, workplace stress, poor relationships, substance abuse, and other external factors. Organizational family-friendly work-life balance initiatives that were found to help employee health and well-being include fun and family-friendly activities, counselling, periodic breaks, trust, and confidentiality. Organizational health and well-being policy initiatives that promote work-life balance satisfaction consist of company group health plan, employee assistance program (EAP), gym membership, flexible working arrangements, wellness strategies, and fairness at work. The originality and value of this research reveal an important interface with employees’ work-life balance strategies and organizational work-life balance policies and programs in addressing overall employee health and well-being. The results have implications for organizational delivery of work-life balance policies and practices, corporate social responsibility, and other human resource management practices to support employees’ work-life balance, health, and well-being. Keywords
Work-Life Balance · Well-Being at Work · Work-Life Conflicts · Psychologically Healthy Workplace · Human Resource Management · Corporate Social Responsibility · Family-Friendly Policies · Workplace Stress · Mental Health in the workplace
Work-Life Balance and Well-Being at Work
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Introduction
The purpose of this study is to explore managerial and nonmanagerial employees’ perspectives of work-life balance as it relates to work-family conflicts, health, and well-being initiatives and organization’s implementation of family-friendly policies to promote a more psychologically healthy workplace. Literature identifies that employee health and well-being can be affected by many factors such as work stress, a degree of job control, conflict between work and life, inadequate human resource management, and a lack of organizational support (Williams et al. 2000; Wood and de Menezes 2008; Yeandle et al. 2002) that are contributing factors to employees’ decisions to leave their jobs (Boamah and Laschinger 2015). Despite the prevalence of research on work-life balance practices in organizations, research on individual and organizational effects of such practices is not well integrated. Due to the demographic and workplace changes such as the rising number of women at work, an aging population, longer working hours, competing demands between work and home, and the use of communications technology that works toward 24/7 constant contact (Beauregard and Lesley 2009; Wood and de Menezes 2008) with the workplace have been linked to a number of deleterious and costly individual and organizational outcomes, such as job dissatisfaction, burnout, absenteeism, decreased productivity, poor customer satisfaction, and increased turnover (Chen and Cooper 2014; Hayes et al. 2006). These concerns have sustained a continuing interest of worker satisfaction with their work environment to ensure that the working conditions are positive to foster motivation, engagement, well-being, performance and retention. According to Hayes et al. (2006) there are numerous factors associated with employee turnover including heavy workloads, high-level stress, and burnout. Studies indicate that work interference with personal life also influences employees’ decision to leave the organization and their profession (Greenhaus et al. 2006) because of job dissatisfaction and psychological distress. Work-life balance is commonly referred to organizational support for dependent care, flexible work options, and family or personal leave (Allen 2001; Estes and Michael 2005) and thought to promote individual’s psychological well-being, an overall sense of satisfaction, and enhanced performance and productivity (Chen and Cooper 2014). Flexible work hours allow employees to vary their start and finish times provided a certain number of hours are worked (Fleetwood 2006); compressed work week, in which employees work a full week’s of worked hours in 4 days and take the fifth day off; voluntary part-time, working from home (telework); sharing a full-time job between two employees (job-sharing); family leave programs (e.g., parental leave, adoption leave, compassion leave); shift swapping; self-rostering; time off in lieu; sabbaticals; career breaks; and on-site childcare; and financial and/or informational assistance with childcare and eldercare services (Beauregard and Lesley 2009; Fleetwood 2006; Wood and de Menezes 2008; Estes and Michael 2005). Furthermore, Fleetwood (2006) argues that some flexible working practices tend to be sought by employers and are usually referred to as employer-friendly or business-friendly or conversely as employee-unfriendly. These practices are typically involuntary temporary working and involuntary part-time working (with loss
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of pay), zero-hour contracts, unsocial hours working such as twilight shifts, 24/7 shift rotations, Saturday and Sunday working, overtime (especially enforced and/or unpaid), annualized hours, standby and callout arrangements, seasonal work, and job-and-finish (Fleetwood 2006). The employer’s flexible working practices are usually resisted by employees and the union and are commonly referred to as flexploitation (Gray 2005):3. Literature also highlights flexible working practices that are neutral and friendly to both employees and the organization. These practices are sought by employees, and employers can often grant them without incurring additional costs, such as flexible start and finish times. Thus, the business case can often be made that employee-friendly flexible working practices make satisfied employees and satisfied employees are more profitable (Clutterbuck 2003). From a business case perspective, work-life balance (WLB) practices implemented in an organization allows the organization to be viewed by high-caliber professionals as a good organization to work for, thereby attracting new talent to the organization. WLB practices also facilitate reduced levels of work-life conflict, improve recruitment, reduce workplace stress, enhance individual mental health and well-being, and increase organizational effectiveness (Chen and Cooper 2014). In contrast, work-life imbalance culminates in high levels of stress, which affect the quality of life, and eventually reduces individuals’ work effectiveness (Greenhaus et al. 2003). The provision of work-life balance practices that will affect employee behavior and organizational performance is still under-researched (Allen 2001; Saltzstein et al. 2001). This research seeks to contribute toward the debate in this area.
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Work-Life Balance and Work Life
Work-life balance (WLB) is a concept that refers to “a state wherein an individual’s work and family lives experience little conflict while enjoying substantial facilitation” (Frone 2003; Nielsen et al. 2002). Work-life balance is also defined as “the accomplishment of role-related expectations that are negotiated and shared between an individual and his/her role-related partners in the work and family domains” (Grzywacz and Carlson 2007). WLB practices are associated with flexible working practices (referred to as employee-friendly) that once implemented creates a positive and supportive culture and to deliver the potential benefits for employees and the organization both in terms of performance and employee well-being (CIPD 2006, 2020). WLB is suggested as being attainable in spite of short-term experiences of work-family conflict and shifts the construct from the psychological into the social domain, reflecting the dynamic and complex realities of daily work and family life (Grzywacz and Carlson 2007). The implications of work-life balance practices on individual and organizational performance are reduced work-life conflict, improved job-related attitude, and perceived organizational support and use of practices (Fleetwood 2006). Consequences of poor work-life balance (or absence thereof) have been reported to have fewer focus on the association with sickness absence (Bratberg et al. 2002; Frone 2003). Differences in work-life balance across countries
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are often due to variations in the implementation of policies that reconcile work and family life (Jansen et al. 2006), including family-friendly policies, e.g., childcare services, extended and flexible parental leave scheme, and generous support to single parent (Crompton and Lyonette 2006), the best overall work-life balance being reported among women (Antai et al. 2015). Maslach and Leiter’s (1997) work-life model and Greenhaus et al.’s (2003) worklife balance theorized that a person-job match in six areas of work life is central to the employees’ degree of engagement in work or burnout. The six areas include manageable workloads, control over work, rewards for contribution, fair treatment, a sense of community, and congruence between personal and organizational values. A “manageable workload” refers to the job-related physical and emotional demands an employee encounters under time and resource constraints. “Control” is the professional capability of employees to make important decisions about their work, as well as their ability to gain access to resources necessary to do their job effectively. “Reward” is the extent to which employee’s expectations are fulfilled by the social reward systems, which can be intrinsic and extrinsic. “Community” is the quality of social interaction at work, including relationships with colleagues, managers, and subordinates. “Fairness” is the extent to which the decision-making process at work is perceived by employees as being impartial and the existence of managerial support in the organization. Finally, “values” represent how an organization’s priorities and ethics are congruent with those of the employee (Maslach and Leiter 1997). Maslach and Leiter (1997) argue that when an employee experiences high levels of these six areas of work life, it reflects a high person-job match and, therefore, the employee is less likely to experience burnout and have turnover intentions. In contrast, incongruences in these six areas can result in burnout, performance, and retention challenges (Maslach and Leiter 1997). Research and literature have supported the relationship between person-job fit with these six work-life factors and work-related outcomes. Cho et al. (2006) research in nursing found that a good fit with the six areas of work life was related to lower emotional exhaustion, which in turn affected organizational commitment. In contrast, a mismatch in one of more of the areas of work life, such as unmanageable workload, has been strongly related to emotional exhaustion (Cho et al. 2006) and feelings of cynicism in employees (Leiter and Maslach 2004). Further research found that unmanageable workload and perceived lack of fairness predicted emotional exhaustion among employee, which subsequently influenced their physical and mental health (Boamah and Laschinger 2015). The findings from diverse research studies are consistent with the areas of work-life model and suggest ways that organizations can address situational factors that affect employees’ relationships with their work but do not address personal factors, such as work-life interconnection, that may influence the way employees experience stress at work, mental health and well-being at work, and their intentions to remain with the organization. Work and family characteristics are distinct domains of a person’s life and are antecedents of work-family balance since they impact role performance and subsequently impact role pressures (Michel et al. 2011). Achieving good work-life balance requires the implementation of organizational policies for improved work-
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life balance (Michel et al. 2011), work domain variables, nonwork or household domain variables, and individual and demographic variables. Work domain variables may include type of contract, which is a reflection of the extent of certainty of continuing work; fixed-term or short contracts increase the risk of unemployment and job insecurity (Bosch 2004) and may result in poor work-life balance. Job tenure (i.e., the length of time [in years] a worker has been in the current workplace) is known to increase job security and the likelihood of good work-life balance (Virtanen et al. 2003). Weekly working hours, i.e., excessive work demands assessed by intensive or long working hours or more than 48 h a week, are reported to be the most consistent predictor of poor work-life balance (Voydanoff 2004) and are linked to psychological ill-health and adverse physical effects such as occupational injuries and accidents, musculoskeletal disorders, and unhealthy behaviors (Bosch 2004). Organizational practices that reflect the erosion of power of organized labor and employer-determined employment relations have been linked with constant variations in work schedule, which influence employees to work-life balance (Voydanoff 2004). Job insecurity, which reflects concerns about future job loss, is regarded among the most important sources of work stress (Antai et al. 2015; Beauregard and Henry 2009). Job insecurity is suggested to affect work-life balance through employees’ fear of losing their jobs, pressurizing them to perform in excess of explicit work demands. Job insecurity may also create anxiety about uncertain income and working hours (Serena 2014). A company’s size affects the extent and type of work-life balance policies an organization can provide, with large companies offering longer and paid parental leave and flexible working time arrangements (Beauregard and Henry 2009). Nonwork domain variables include living together with a spouse or partner in the household with responsibilities that can create competing demands for work and family-related roles (Jacobs and Gerson 2004). Contributing to household earnings is important to work-family life balance, given that employees in low-wage jobs have limited control over their work hours and schedules (Lambert and Waxman 2005). Low-income employees are reported to have predisposed to poor workfamily life balance as a result of reduced access to leave, income replacement, greater care-giving responsibilities, and inability to benefit from childcare services (Bond et al. 2005).
3
Work-Life Conflict
Work-life conflict or interference is an important factor in determining organizational commitment, job satisfaction, and turnover (Akintayo 2010). Parasuraman and Greenhaus (1997) define work-life interference as a form of inter-role conflict, whereby the demands of one’s work and the demands of personal life are mutually incompatible, such that meeting demands in one domain (i.e., work) makes it difficult to meet demands in the other (i.e., home). Frone et al. (1997) state that a lack of balance between work and nonwork activities is often associated with lower psychological and physical well-being. Frone et al. (1997) further points out that
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work-related stressors primarily cause work-life interference that can lead to feelings of frustrations and negative job and health outcomes, such as job dissatisfaction and psychological distress (Akintayo 2010). Studies have found that work demands such as workloads, number of hours worked, shift work, and overtime are strongly associated with work-life interference among employees, especially individuals working in service-oriented professions such as nursing, teaching, and hospitality to name a few (Cho et al. 2006). Moreover, employees with heavy workload and irregular work schedules are more likely to experience work-life conflict or interference as compared with their counterparts and are likely to be less satisfied with their job and life (Burke and Greenglass 2001; Simon et al., (2004). High levels of worklife conflict or interference have been associated with job dissatisfaction, absenteeism, psychological burnout, emotional exhaustion, and cynicism among employees (Boamah and Laschinger 2015). High turnover intentions among employees are a major concern because they can result in high costs to the organization and impact negatively on the organization’s capability to remain competitive, and meet customers’ needs (Hayes et al. 2006), and subsequently enhance productivity, the bottom line, and remain sustainable. Changes in the work environment within the past decades have led to steady increases in work intensity and job demands (Antai et al. 2015; Kossek et al. 2011). Employees increasingly find themselves struggling to balance the competing demands of work and family life; the resulting pressures have increased interest in achieving work-life balance, both for women as wage earners/ home carers and for men with greater involvement in family responsibilities (Kossek et al. 2011).
4
Methodology
The objective of this study is to explore managerial and nonmanagerial employees’ (i.e., employee representatives, supervisors, managers, and executives administrators) perspectives that relate to work-life balance from the perspective of workfamily conflicts, health and well-being initiatives to promote work-life balance satisfaction, and the organizations’ implementation of work-life balance initiatives (aka family supportive or family-friendly policies) to promote a more psychologically healthy workplace. The methodological approach adopted in this study is qualitative. Thirty-six semi-structured interviews were conducted with key informants and two focus groups with managerial and nonmanagerial employees from diverse occupational groups (i.e., education, health, finance, forestry, public sector, social work, First Nations, not-for-profit organizations, hospitality, legal, information technology, and retail). The informants comprised of 12 men and 24 women who participated in the interviews and focus groups. The semi-structured interviews and focus groups were conducted and were guided using an interview and focus group scripts that covered broad domains with follow-up questions and prompts for each domain. The informants’ group that participated in the interviews and focus groups were relatively homogeneous to their occupational type regarding the position held,
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income, age, marital status, and tenure with their respective organization. Purposive sampling (Saunders et al. 2009) was used to target the range of employees from each occupational group, which emerged a balance proportion of informants of lower-, medium-, and high-income workers. The key informers were recruited from a broader study that focused on employees’ reactions and perspectives to HRM practices, quality of working life, line management leadership, and well-being at work. The interviews and focus groups were conducted in person. The interviews and focus groups were tape-recorded with permission from the informants. Each interview and focus group discussion was transcribed and coded to identity main themes related to work-family conflicts, health and well-being factors that promote work-life balance satisfaction, and organizational family-friendly support initiatives to promote a psychologically healthy workforce. Transcriptions were entered into QSR International’s NVivo 12 software (QSR International Pty Ltd.), and all were coded by two independent raters using a predefined code book based on the domains from the interview and focus group scripts (Patton 2002). After the initial coding and consensus of all transcripts, hermeneutic phenomenological analysis (HPA) was applied to find the “essence” and “meaning” or common themes across individual experiences (Miles and Huberman 1994; Van Maanen 1994). The thematic analysis was used to answer the research questions in this study. Through systematic review and discussion, codes were merged and grouped under main themes. Each transcript was reread and re-coded for consistency.
5
Results
5.1
Work-Family Conflicts that Affect Work-Life Balance
Informants highlighted 14 key themes that interfered and conflicted with their worklife balance. These themes include long working hours, limited finances and resources, bills, divorce, stress, poor family relationships, family conflict, expensive childcare, excessive traffic, lack of time, substance abuse, family illness, and unfair pay practices. There were commonalities and differences in the factors that contributed to work-life conflict for employees. Three employee groups (i.e., executive directors, managers, and employees) held the view that long working hours affected their ability to spend quality time with their family and affected their stress levels, health, and well-being at work and home. The union representatives and managers held a common view that poor family relationships were another factor that interfered with work-life balance. Executive directors and managers held the view that a lack of time affected their work-life balance. In contrast, employees highlighted that limited finances, bills, divorce, stress, family conflict, expensive childcare, substance abuse, family illness, and unfair pay practices are all work-life conflicts that affected their work-life balance, stress levels, well-being, and performance at their respective organizations. These themes are captured in the verbal accounts presented below.
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5.1.1 Long Working Hours Working for an NGO religious organization sometimes the work bleeds into family time. . . working late evenings and weekends when my family is home affects my work-life balance (Executive Director, Male) Working too much and seeing family less, this overworking cuts into family time and the desire family time is curtailed (Manager, Female) Not having enough time to spend with my family due to long hours of work. I had a father that overworked himself, and this was a major factor in my childhood and now I overwork. Therefore, working too many hours and not being able to always have time for myself or my family affect my work-life balance and overall well-being (Employee, Female) 5.1.2 Poor Family Relationship When there is conflict with colleagues, and you don’t get along with co-workers. When there is a disagreement with your spouse, there is work-family conflict or challenges (Manager, Male) Marriage, poor relationships with your spouse. Poor relationships with my spouse. When someone is sarcastic and breathing down my neck. Having a poor relationship with my husband (Union, Female) 5.1.3 Lack of Time Lack of quality time to spend with family and friends. The lack of time to get everything done (Director, Male) Appointment conflicts with scheduled time and not being able to have time off on special dates and occasions or at short notice to help family members or to attend important appointments (Manager, Female) In contrast, employees’ perspectives of work-family conflict interference that affect their work-life balance include limited finances, bills, divorce, stress, family conflict, expensive childcare, excessive traffic, substance abuse, family illness, and unfair pay practices. The executive directors also highlighted “excessive traffic” as a work-family conflict that affects his work-life balance. Table 1 verbal accounts echo these themes (Fig. 1).
6
Health and Well-Being Initiatives to Promote Work-Life Balance Satisfaction
The informants highlighted key factors that they perceive should be implemented to promote work-life balance satisfaction. These 17 factors include flexible working arrangements, hiring a work-life balance and wellness coordinator, healthy meals and dietitian, employee assistance program (EAP), education and training, day care services, fun at work initiatives, healthy working conditions, company group health plan, gym membership and exercise classes, meditation room, water cooler in the office, team working, reduction of working hours, appreciation and respect, fairness at work, and vacation leave. There are commonalities and differences in the themes
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Table 1 Work-family conflicts that affect work-life balance Employees Limited resources Bills Divorce Stress Family conflict Expensive childcare Substance abuse Family illness Unfair pay practices Executive director Excessive traffic
Lack of basic needs at home as well as a lack of finances (Employee, Male) Bills are a main cause for work-family conflict (Employee, Male) Divorce is a cause for my work-family conflict (Employee, Male) Feeling overwhelmed and stressed (Employee, Female) Family challenges and conflict with family affect my peace and work-life balance (Employee, Male) Childcare is very expensive and sometimes inaccessible (Employee, Female) Drunkenness affects my work-life balance (Employee, Male) Big changes in my family life like major sickness (Employee, Female) Knowing that new employees in lower departments, who are less experienced and don’t do their work, are making more than hard-working people do, who have been in this organization for 10–12 years (Employee, Male)
Excessive traffic impacts on my work-life balance (director, female)
that were highlighted. Both employees and the union expressed the desire to have flexible working arrangements, healthy meals in the work canteen, as well as a dietitian whom workers can consult with regarding obesity problems. Executive directors and employees declared that employers should hire a worklife balance and well-being coordinator who will assist employees and management to facilitate and manage these processes. Managers highlighted that EAP program, education and training, and day care services should be promoted. The union highlighted that employers should implement fun at work team-building practices as well as promote healthy working conditions throughout the organization that will enhance work-life balance satisfaction. Finally, employees’ perspectives include the implementation of a company group health plan, gym membership and exercise classes, meditation room, to have a water cooler installed in the office, team working, reduction of working hours, appreciation and respect, fairness at work, and vacation leave. The following outlines the informants verbal account of the questions asked:
6.1
Flexible Working Arrangements
Provide more flexibility such as flex days, compressed work week, and flexible working hours. Flexible start and finish time to work (Employee, Female) Management can be more insightful as to how work times affect different families (Union, Female)
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Work-Family-Conflict that affects Work-Life-Balance
Long Working Hours Poor Family Relationships Lack of Time Limited Finances Bills Divorce
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Individual and Organizational Outcomes Increased Stress Job Dissatisfaction Mental Ill-health Burnout Absenteeism Lack of Commitment Poor Performance Substance Abuse Depression and Anxiety Turnover
Stress Family Conflict Expensive Childcare
Work-FamilyConflicts and Interruptions
Excessive Traffic Lack of Time Substance Abuse Family Illness Unfair Pay Practices
Fig. 1 Informants’ perspective of work-family conflict that affects work-life balance
6.2
Work-Life Balance and Well-Being Coordinator
My employer should hire a person specifically to advocate for work-life balance and well-being in the organization. This person will be able to intervene if stress levels are unbearable. This person will also be able to deal with confidential issues, and their focus will be to assist staff with any health, well-being, and work-life balance matters (Employee, Female) To have an occupational health advisor, nurse or doctor at the office so that staff can visit a professional if they have problems that need attention (Manager, Male)
6.3
Healthy Meals and Dietitian
Healthy meals to be made available for purchase at work that will assist employees to maintain a balanced diet (Employee, Female)
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Hire a dietitian to assist employees who are struggling with obesity to assist them to manage their weight, health, and well-being (Union, Female) Managerial respondents highlighted EAP programs, education and training, and day care services should be promoted to enhance work-life balance satisfaction and well-being at work.
6.4
EAP Program
An employee care service or an employee assistance program where employee can access support confidentially. . . it would be good to have counselling options available as well (Manager, Female)
6.5
Education and Training
Provide workshops and training. Promote more health-related training topics and bring in a guest speaker to educate and train employees and management to raise awareness about health-related issues. . . there should be worker retreats to discuss these matters (Manager, Male)
6.6
Day Care Services
To implement day care services for all employees’ children that they can access before and after school (Manager, Female) The union respondents highlighted fun at work initiatives, and healthy working conditions are integral to work-life balance satisfaction.
6.7
Fun at Work
To have noncompetitive fun stuff where workers can come together and enjoy themselves with recreational activities (Union, Male)
6.8
Healthy Working Conditions
To have regular meetings between HR and staff to strategize on ways to improve working conditions for all employees (Union, Female) Employees declared that employers should implement a company group health plan to promote work-life balance satisfaction. Other key factors include group membership and exercise classes, meditation room, install a water cooler in the office, team working, reduction of working hours, appreciation and respect, fairness at work, and vacation leave.
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Company Group Health Plan
I would like to see management implement a company group health plan that is accessible by all employees (Employee, Male)
6.10
Gym Membership and Exercise Classes
Start exercise classes with an instructor. For example, yoga classes during lunch break or after work. Management can also establish gym membership for employees or Zumba classes. These things assist with work-life balance and well-being (Employee, Female)
6.11
Meditation Room
To have a meditation room for staff to relax and be refreshed will be nice to promote work-life balance and well-being at work (Employee, Female)
6.12
Water Cooler in Offices
Access to drinking water in the office via a water cooler because at the moment employees have to walk with their own water so it would be nice if there is a water cooler at the office; this will help with well-being (Employee, Female)
6.13
Team Working
Team working amongst colleagues and departments. Having interactive groups where we collaborate on improving our workplace will assist in promoting worklife balance and well-being at work (Employee, Male)
6.14
Reduction of Working Hours
To reduce the workday from 10 h to 8 h (Employee, Female)
6.15
Appreciation and Respect
To appreciate all employees for the work that they do and respect employees as individuals (Employee, Male)
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6.16
Fairness at Work
Treat all employees fairly and equitably (Employee, Female)
6.17
Vacation Leave
Allocate and implement more annual vacation leave for all employees (Employee, Female) (Fig. 2)
Health and Well-Being Initiatives to Promote Work-Life-Balance Satisfaction
Flexible Working Arrangements Work-Life-Balance and Wellbeing Coordinator Healthy Meals and Dietitian Company Group Health Plan Employee Assistance Program (EAP) Gym Membership and Exercise Classes Meditation Room Education and Training Water Cooler at Office
Outcomes Job Satisfaction Mental Health Psychologically healthy employees Commitment Trust Innovation Creativity Customer Satisfaction Performance
Team Working Day Care Services Fun at Work Healthy Working Conditions Reduction of Working Hours Appreciation and Respect Fairness at Work
Fig. 2 Informants’ perspective of health and well-being initiatives to promote work-life balance satisfaction
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443
Employer Implementation of Family-Friendly Practices to Promote a Psychologically Healthy Workplace
The respondents highlighted 11 key factors that they perceive employers should implement for WLB practices and family-friendly initiatives to promote a psychologically healthy workplace. These factors include fun and family activities, good working relationship, peer support, work-life conflict counselling, quiet break time, bring your child to work day, improved trust and confidentiality, respect and fairness at work, after school programs for employees’ children, time management, and flexible working arrangements. There were commonalities in views between employees and union who both agreed that “fun and family activities” in the workplace will promote a psychologically healthy workplace. The following text echoes employees and union representatives’ views:
7.1
Fun and Family Activities
Family days and trips for staff. For example, the Christmas lunch or dinner celebration should include the entire family or staff members (Employees, Female) Plan events quarterly to incorporate family and friends. My employer has several annual activities which involves all family members. This practice should be continued and increased (Union, Female) More sporting and social events for workers. Introduce a breakfast club. For example, once a week, a group of people can collaborate to bring breakfast for participants of the club (Employee, Female) Executive directors echoed that support to assist them to manage their time will enhance their health and well-being and will also work toward promoting a psychologically healthy organization. The following director supports this point:
7.2
Time Management
To implement systems that will assist in the management of time to facilitate health and wellness needs (Executive Director, Male) Managerial respondents held the view that counselling for work-life conflict problems for employees is likely to be effective in promoting a psychologically healthy organization. One manager echoes this point:
7.3
Work-Life Conflict Counselling
To have access to mental health counselling and support for staff as required. There should also be more counsellors to support work-life conflict and any domestic violence problems at home as well (Manager, Female)
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The union respondents highlight that improved trust and confidentiality between employer and employees and authorizing afterschool programs for employees’ children are support initiatives that will promote a psychologically healthy organization. The following echoes these points:
7.4
Improved Trust and Confidentiality
When a concern is shared with employers and manager and it results in being talked about by other employees, then there is no trust and confidentiality and that can lead to psychological stress at the workplace. Therefore, improved trust and confidentiality has to be significantly improved to promote a more psychologically healthy workforce (Union, Male)
7.5
After School Programs for Employees’ Children
The employer should introduce after school programs for the children of employees. This will provide a peace of mind for employees with the knowledge that their children are taken care of by professionals until they finish work. If this is implemented, this will go a long way to building a psychologically healthy workforce (Union, Female) Employees declare that good working relationships, peer support, quiet break time, bring your child to work day, respect and fairness at work, and flexible working arrangements are key factors to promote a psychologically healthy workplace. The following verbal accounts support these themes:
7.6
Good Work Relationships
To have good healthy relationships with staff and their line managers (Employee, Male)
7.7
Peer Support
Introduce a peer support, buddy system to motivate, support, and care for staff (Employee, Female)
7.8
Quiet Break Time
To introduce a quiet time break for all employees during the workday. This will not take too much time; perhaps each employee being allowed a 10–15-minute quiet
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time break will promote a more psychologically healthy workforce in my opinion (Employee, Female)
7.9
Bring your Child to Work Day
There should be a day specifically allocated to “bring your child to work day” where employees can bring their children or child to work with them (Employee, Female)
7.10
Respect and Fairness at Work
Deal with workplace problems right away and treat everyone with respect, fairness, and equality (Employee, Female)
7.11
Flexible Working Arrangements
Introduce flexible working arrangements to allow employees to have staggered start and finish times in keeping with their individual requirements, like having to drop their kids off to school before work or if you have caring responsibility for elderly parents (Employee, Female) (Fig. 3)
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Discussion and Conclusion
The chapter explored managerial and nonmanagerial employees’ perspectives to answer research questions that relate to work-family conflicts that affect work-life balance, health and well-being initiatives to promote work-life balance satisfaction, and employees’ perspectives regarding the implementation of family-friendly initiatives to promote a psychologically healthy workplace. Using a mixed qualitative methodological approach (i.e., semi-structured interviews and focus groups) from diverse occupational groups, key and central themes emerged to answer the research questions. The findings that center on subordinate themes of personal and family challenges, financial well-being, the employment relationship, relationships at work, social well-being at work, wellness management strategies, and fair and humane practices at work are key factors that employees perceive will promote a healthy workplace and work-life balance satisfaction. Work-Family Conflicts that Affect Work-Life Balance – the findings reveal that work-life conflicts and interference that affect positive work-life balance include “personal individual challenges” that are associated with finances, family challenges, personal dysfunction, relationships, communication, and a lack of flexible working that can support employees to spend more time with their family and to perceive that they are cared for and treated fairly by the organization. The themes highlighted by respondents that affect their work-life balance include limited finances, bills, divorce,
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Workplace WLB and FamilyFriendly Practices
Fun and Family Activities Good Working Relationships Work-Life-Conflict Counselling Peer Support Quiet Break Time Bring Your Child to Work Day
Psychologically Healthy and Balanced Employees and Workplace
Improved Trust and Confidentiality After School Programs for Employees’ Children Time Management Respect and Fairness at Work Flexible Working Arrangements
Fig. 3: Employees’ perspectives of employer family-friendly practices to promote a psychologically healthy workplace
poor family relationships, family conflicts, expensive childcare, substance abuse, family illness, communication challenges, long working hours, stress, and a lack of time. The findings also show that employees perceived that unfair pay practices were another key factor that negatively affects their work-life and subsequently positive work-life balance. The study shows that employees’ life challenges and stressors are psychologically distressing and are interconnected to their work life and create a disparity that increases stress and affects employees’ quality of life, effectiveness, and performance. According to Chen and Cooper (2014), work-life balance is commonly thought to promote an individual’s psychological well-being and overall sense of satisfaction. In contrast, work-life imbalance culminates in high levels of stress, which affect the quality of life, and eventually reduces individuals’ work effectiveness (Greenhaus et al. 2003). Numerous life challenges experienced by individuals interfere with their ability to function effectively at work, and it can also impact organizational commitment, job satisfaction, and turnover (Akintayo 2010). Accordingly, Parasuraman and Greenhaus (1997) define work-life interference as a form of inter-role conflict, whereby the demands of one’s work and the demands of personal life are mutually incompatible, such that meeting demands in one domain (i.e., work) makes it difficult to meet demands in the other (i.e., home). This study
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shows that meeting the demands of “home” forms an inter-role conflict of meeting the demands at “work,” thereby creating stress and psychological imbalance for employees. The work stressor experienced by employees is their perception of “unfair pay practices” which is the cause of their work-life interference that can lead to feelings of frustrations and negative job and health outcomes, such as job dissatisfaction, psychological distress, and negative work-life balance (Akintayo 2010). The findings show that these employees are less satisfied with their life and job. Boamah and Laschinger (2015) state that high levels of work-life conflict and interference are associated with absenteeism, psychological burnout, emotional exhaustion, cynicism, and turnover. It is essential for organizational leaders to have greater insight into the life challenges that individuals experience in their personal lives that are interconnected to their ability to perform and be creative and innovate at work. This knowledge can assist policy-makers, unions, and managers to develop strategies and policies to effectively support workers to bridge the “life-work divide” so that more employees can enjoy the balance between life and work. In turn, organizations will also benefit from this major concern of having a “tighter balance” of work life for their employees which will pay dividends through lower turnover intentions, more satisfied employees, higher performance and productivity, enhanced customer satisfaction, increased competitiveness, a growing bottom line, and sustainability. Health and Well-Being Initiatives to Promote Work-Life Balance Satisfaction – the findings clustered into four key strategic themes, which include wellness practices, social and relational practices, HRM practices, and organizational practices. “Wellness practices” that employees perceive will promote their work-life balance satisfaction include introduce a company group health plan, gym membership and exercise classes, meditation room, install a water cooler in the office, healthy meals and dietitian available to employees, fun at work initiatives, day care services, and an EAP program. The “social and relational practices” include showing appreciation and respect to employees and ensuring that employees experience fairness at work. The “HRM practices” relate to high commitment, high performance, stress reduction, and mental health and include team working, education and training, recruitment and selection of a work-life balance and well-being coordinator, flexible working arrangements, and vacation leave. The “organizational practices” include review job design to reduce long working hours, implement flexible working arrangements, and healthy working conditions. Changes in the work environment within the past decades have led to steady increases in work intensity and job demands (Kossek et al. 2011). Employees that are satisfied with their work-life balance are likely to enjoy positive mental health and well-being at work as they are unlikely to be prone to being absent from work due to sickness as a result of workrelated stress and life challenges. Antai et al. (2015) state that poor work-life balance is associated with self-reported sickness absence and more health problems, workrelated characteristics, and job insecurity that increases the likelihood of sickness absence. Organizations that view work-life balance satisfaction as one of the strategic tools that is required for managing the twenty-first-century workforce are businesses that will reap the rewards of being a socially responsible employer, and
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the return of investments (ROI) is likely to far exceed the investment and focus of work-life balance satisfaction. Employer Implementation of Family-Friendly Initiatives to Promote a Psychologically Healthy Workplace – the findings reveal that employees’ perspectives for family-friendly initiatives that will promote a psychologically healthy workplace were clustered into three key themes, which include wellness management initiatives, social and relational aspect of the employment relationship and corporate social responsibility, and human resource management policies and practices. The “wellness management initiatives” include work-life conflict counselling, fun and family activities, quiet break time, bring your child to work days, and after school program for employees’ children. The social and relational aspect of employment relationship and corporate social responsibility includes good working relationships, peer support, respect and fairness at work, and improved trust and confidentiality. The “human resource management” employee champion policies and practices include flexible working arrangements and job redesign to facilitate more effective time management. The findings from this research show that organizations have to focus on three domains (i.e., wellness, social/relational support, and HRM practices) to implement family-friendly policies and practices to reconcile work and family life. The findings support literature as it relates to family-friendly policies that are adopted in organizations. The findings also present additional family-friendly policies and information as perceived by employees that are required to promote worklife balance connection. Bratberg et al. (2002) state that the consequences of poor work-life balance are associated with sickness absence, and Jensen et al. (2006) point out that family-friendly policies that have been adopted in diverse organizations include childcare services, extended and flexible parental leave schemes, and generous support to single parents. The concern for work-life balance and well-being at work have sustained a continuing interest of worker satisfaction with their work environment to ensure that the working conditions are positive to foster motivation, engagement, well-being, performance, and retention. Moving Forward – Work-life balance policies are not simply ways of representing family-friendly culture and practices in organizations; they can also influence behavior and practice of employees, organizational leaders, and HR professionals. Selection or exclusion of WLB and flexible working practices can influence the mental health and well-being of employees as well as the way organizations operate. This does not, of course, mean that WLB practices mechanically follows health, well-being, and performance, nor that WLB policies and practices always have the desired causal effect on practice. It is important to note here that the relationship between WLB policies and practices is not always stable. While some organizations have implemented family-friendly policies and practices to support and enhance employees’ health and well-being and enhance performance, certain organizations’ “unfriendly” flexible working remains largely in place, thereby ceasing to enhance a psychologically healthy workplace. Literature shows the changing nature of WLB practices and flexible working as the economy, labor markets, and organizations go through continuous changes to remain competitive and stable (CIPD 2020; Fleetwood 2006; Lewis 2003). The fluctuations of the labor markets
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mean that fewer or more employees are willing to adopt or reject friendly or unfriendly flexible working practices. Likewise, attempts for employers to overcome labor shortages and the “war on talent” prompt the extensive use of flexible working initiatives such as part-time working for women and men and job-sharing so that both women and men can spend more time with their families (Crompton 2002; Hyman et al. 2002; Lewis 2003). The discourse of WLB policies and practices is fluid and open for continuous debate as employers have the corporate social responsibility to provide an array of WLB ( family-friendly) and flexible working practices to accommodate, support, and maintain the mental health and well-being of their workforce if they want to position themselves as an “Employer of First Choice” to attract, recruit, and retain top talent. Employers should also embrace the opportunities from WLB initiatives that are beneficial to everyone (i.e., employers, employees, and their families). Fleetwood (2006) argues that many employers know that it makes good business sense to provide flexible working opportunities for their staff and these employers know flexible working arrangements enable them to retain skilled staff and reduce recruitment costs, to boost their staff morale, to decrease absenteeism, and to react to the changing market conditions more effectively (DTI 2003). Moreover, the competitiveness, labor market conditions, and financial stability of organizations are likely to prompt the implementation of unfriendly working practices as perceived by employees to safeguard organizations’ profitability and the bottom line. The changing nature of the world of work will continue to alternate the business case and influence of WLB practices and flexible working as these working time arrangements are likely to be used as a “power strategy” to influence the culture, behavior, and sustainability of employees and employers moving forward. In conclusion, the findings from this study will assist organizational leaders, managers, HR, and well-being professionals as they work toward developing and implementing strategies to attract, recruit, motivate, and retain their most important resource – people.
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Social Capital, Community Engagement, and Corporate Social Responsibility The Holy Grail for Synergistic Networks Roopinder Oberoi
Contents 1 Extended Stakeholder Model, Community Engagement, and CSR . . . . . . . . . . . . . . . . . . . . . . . . 2 Community Embeddings of CSR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Constructive Synergy Networks with Social Capital and CSR . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Community and Corporates: Win-Win for All . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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Abstract
Lately trust, faith, credibility and fair norm of reciprocity and collaboration has received attention in economic analysis, specifically in reference to the concepts of social capital, community engagement and corporate social responsibility. A business ecosystem is a reciprocally contingent arrangement interrelated by loose arrangements of a range of ecosystem components, including customers, dealers, challengers, and other stakeholders. So the subject that needs probing are: Can these three components form the Holy Grail to engender social inclusion and social networks based on trust and trustworthiness thereby enhancing the impact of CSR? What positive synergies can be activated if CSR were extended beyond the boundaries of patronage, philanthropy and paternalism? Are firms paying adequate attention to construct social capital? This chapter assesses the literature on the role of social capital, community engagement and CSR with emphasis on its ‘value’ for Corporates. It advances the descriptive and theoretical literature on social capital, CSR and social networks and attempts to shed light on characteristic and linkage by exploratory design of the virtuous synergistic circles that are established between Social Capital, Community Engagements and the implementation of CSR practices. R. Oberoi (*) Department of Political Science, University of Delhi, Delhi, India e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Switzerland AG 2021 D. Crowther, S. Seifi (eds.), The Palgrave Handbook of Corporate Social Responsibility, https://doi.org/10.1007/978-3-030-42465-7_24
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Keywords
Social capital · Community engagement · Trust · Social embeddedness · CSR
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Extended Stakeholder Model, Community Engagement, and CSR
The role of business vis-à-vis the society first became a matter of debate in the USA in the 1950s. Bowen’s book Social Responsibilities of the Businessman (1953) made significant contribution to the debate on CSR (Carroll 1999). Indeed, Brammer et al. (2012: 4) argued that “C‘S’R includes the aspect of ‘society’ it is fair to say that the literature on CSR has ignored the ‘societal’ aspects of CSR” Literature on CSR has often viewed the ‘social’ constituent as a black box.” “The examination of such relationships can provide useful insights into how organizations should deal with CSR in contemporary market where there is a heightened demand from societies for the firms to conduct in a socially responsible manner” (Aguilera et al. 2007; Hillman and Keim 2001:7). “Corporate social responsibility (CSR) is a model of corporate governance (CG) extending fiduciary duties from fulfillment of responsibilities towards the firm’s owners to fulfillment of analogous fiduciary duties towards all the firm’s stakeholders. CSR is a social norm that would endogenously emerge from the stakeholders’ social contract” (Sacconi 2012:1). In fact, “institutions including Corporate Governance contain norms, such as constitutional principles, laws, statutes, ethical codes, standard rules, and shared social values, which are expressed by explicit utterances in the players’ language concerning values, rights, and obligations. These statements have a primarily prescriptive meaning, and if individuals attribute them moral meaning, such prescriptions are also universalizable” (Sacconi 2012:18). CSR has become a mainstream business activity (The Economist 2008). Firms are investing in public goods provision, and many companies aim to trim down their negative externalities. Corporate social responsibility (CSR) is situated in “wider responsibility systems in which business, governmental, legal, and social actors operate according to some measure of mutual responsiveness, interdependency, choice, and capacity” (Matten and Moon 2008:0.407). “The organizational success depends not only on coordination and control of productive activities, but also the ability in becoming isomorphic with the institutional environment. Institutional theory both constrains and enables firms’ behavior: constraining through rules, negative sanctions or punishments and enabling through the use of incentives, rewards or other positive mechanisms” (Ros and Kunapatarawong 2013). CSR is present when businesses respond positively to society’s problems. It has also become noteworthy approach to tackle the essential dilemmas with contemporary globalization. Rapid proliferation of cross-border business activity by MNEs has resulted in a growing interest in work practices like human rights, greenhouse immersions, health, and safety especially mentioned in the UNGC. The post-2008
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era of financial crisis has taught this essential lesson: the limited liability of the privately owned corporation has to be replaced as the collective liability of society. Furthermore, improved information communication technology allows for the monitoring of corporate activities internationally resulting in well-versed national/international community. Scherer and Palazzo (2008) concisely summarize the evolving public view: “paradoxically, today, business firms are not just considered the terrible guys, causing ecological calamity, fiscal outrage, and social troubles. They are simultaneously considered as solution provider of global regulation and public goods problems.” The new “extended CSR model understands CSR as a social norm making sense of both existing legal orderings and social reform movements aimed at designing CG so that employees and managers’ specific investment in human capital is safeguarded no less than financial capital investments” (Sacconi 2012:2). Companies motivated by pure competitiveness will spotlight on act in response to shareholders and investors, those motivated by legitimization act in response to diverse stakeholders, and lastly altruistic firms typically meet the concerns of larger and more loosely defined groups, i.e., the environment and society in general. Barley (2007: 214) argues that the management literature has yet to be fully appreciative of the connection between business and its economic, social, political, and technical repercussions. Corporates often struggle with the predicament between being wealth-generating agents and being social agents (Scherer et al. 2010). If business is linked with social initiatives and social capital, things become more multifarious with varied motives pulling them in different zones. CSR is located in “wider responsibility systems in which business, governmental, legal, and social actors operate according to some measure of mutual responsiveness, interdependency, choice, and capacity” (Matten and Moon 2008:407). It is often initiated to mitigate the calls for corporate partaking in social participation, providing legitimacy, enhancing repute, or essentially aiding society (Margolis and Walsh 2003). Brammer (2012:4) argues that “The influence of corporations penetrates into the very fabric of modern cultural understandings and practices, as documented by the debates surrounding ‘McDonaldization’, ‘Starbuckization’” (Ritzer 2010), and “Disneyization’ in the sphere of consumption (Bryman 1999) as well as surrounding understandings of gender” (Orenstein 2011). So are corporations in their new avatar filling institutional voids and are better positioned than governments to address many social problems (Besley and Ghatak 2007)? CSR initiatives are to some extent surrogating for government in providing for critical social services (Gond et al. 2011). Rose-Ackerman (1996) understands the problem as the “blurring of the analytically motivated division between forprofit, nonprofit and public sectors in reality.” Similarly, Besley and Ghatak (2001) observe that public goods provision has noticeably reallocated from public to mixed or full private ownership in recent years. CSR may be envisaged as an interface between companies and society, which may perhaps play the part of a business innovator to transfer humanistic and cultural values from the macro-level and embed them into corporate ethos at the micro-level (Carrasco-Monteagudo and BuendiaMartinez 2013).
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Community Embeddings of CSR
Key priority for a socially responsible business is to extend and preserve reciprocally valuable interaction with community. It is at the community level that the impact of improved CSR action can be experienced. Businesses are stakeholders in community and share their concerns. CSR in this context of the community embedding can go from monetary support to empowering of local communities and fostering of partnerships for social inclusion. Through this, businesses have a considerable prospect to support economic and social development and to align their actions with government priorities. Especially, they can offer opportunity for employment, skill development, experience, health, and education to vulnerable and marginalized groups (Ireland National Plan on Corporate Social Responsibility 2013: 3). Mattessich and Monsey definitions of community are like “People who live within a geographically defined area and who have social and psychological ties with each other and with the place where they live” (Mattessich and Monsey 2004: 56). It is an arrangement of social structure which carry out the foremost social functions (Mattessich and Monsey 2004:57). These ideas confirm that community development is both a method and a product. Thus, a definition of community development in extensive terms is a progression of enhancing the ability to act collectively and an outcome of collective action and results in improvement in a community in all realms: physical, environmental, cultural, social, political, and economic. The community development literature frequently refers to this as social capital or social capacity, which explains the capacity of community to systematize and marshal resources for completion of shared objectives (Mattessich and Monsey 2004: 61), or the wherewithal embedded in social relationships that facilitate collaboration and partnership in communities (Mattessich and Monsey 2004: 62). Most businesses operate in competitive markets, and one of the major factors influencing business profitability is their location. Shaffer, Deller, and Marcouiller describe the relationship and synergy between community development and economic development as follows: “We maintain that community economic development occurs when people in a community analyze the economic conditions of that community, determine its economic needs and unfulfilled opportunities, decide what can be done to improve economic conditions in that community, and then move to achieve agreed upon economic goals and objectives” (2006: 61). “While communities benefit from CSR initiatives, there are also benefits to business, as enterprises build relationships and trust which may be helpful to them in gaining future support from communities for company development initiatives. Meaningful consultation with, and participation of, stakeholders ensures their views are seriously considered and acted upon where appropriate. This engagement with local stakeholders can also help build reputation and social trust and provide customer insights into the business, leading to future product and service development” (Ireland National Plan on Corporate Social Responsibility 2013: 5). The foundation of CSR is on the authority and influence that organizations wield in shaping the ethical code of a society (L’Etang 1995). Some corporates consider
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themselves as “a living company” whose motivation is to realize its potential and engage community, in contrast to “economic company,” whose sole concern is profitability (De geus and Senge 1997). Consequently, it implies that corporate may at times relinquish profit to accomplish morally and socially accepted goals (Vinten 2000). Similarly, Sethi (1975) posits that CSR implies a level of organizational behavior which is congruent with the social norms, values, and expectations of performance. Taking a historical perspective, Lantos (2001) suggests that the social contract evolved from the micro view of aiming to maximize profits within the legal boundaries to the macro view of seeing social and economic progress as interwoven. Finally, Wilson (2000) argues that an organization has a moral responsibility to help solve social problems, expanding the micro view’s “license to operate” to include social legitimacy as well as the mere maximization of profit (Mostovicz and Kakabadse in Idowu and Louche 2011: 165). Scholars have empirically shown that CSR can surely provide relational, reputational, and financial benefits to the firms (Fombrun et al. 2000) but have hardly ever wanted to validate the assumed profit to the society in general. Many studies have exhaustively aimed to explain “if” (Orlitzky et al. 2003), “how” (Peloza and Shang 2011), and ‘why’ (Grewatsch and Kleindienst 2017) it “pays to be good” but without giving due heed to how much “good” is actually produced for the society (Barnett et al. 2020). Community involvement is also a method of stakeholder engagement. The immediate community is often a consumer of locally produced goods and services, and local input can offer a different perspective on business proposals and allow businesses to keep in touch with stakeholders and remain close to market trends (Ireland National Plan on Corporate Social Responsibility 2013: 5). There are studies now that deem CSR initiatives as an approach to mitigate assault on the “capitalist system is under siege” while “creating shared value” that benefits both firms and society (Porter and Kramer 2011), in addition to intentional investments in stakeholder relations (Freeman et al. 2018). Its significance can be gauged by the fact that the annual expenditure by Fortune 500 firms on corporate philanthropy exceeded $15 billion; combined with time and money spent on other CSR projects, the sum of corporate investment is “countless” (Davidson et al. 2018). Firms use CSR as a form of differentiation strategy, as reputational capital, to obtain legitimacy, to signal quality and honesty (Porter and Kramer 2006). “Each company can identify the particular set of societal problems that it is best equipped to help resolve and from which it can gain the greatest competitive advantage. Thus, companies are able to use these “charitable efforts to improve their competitive context as well as improve the company’s long-term business prospects” (Porter and Kramer 2006). It is no longer just acceptable that a corporation does well. Corpoartes need to do well by doing good. (Kotler and Lee 2005). Jones et al. (2009) list “nine potential benefits of CSR which are: a) Improved financial performance and profitability b) Reduced operating costs c) Long term sustainability for companies and their employees d) Increased staff commitment and involvement e) Enhanced capacity to innovate f) Good relations with government and communities g) Better risk and crisis management h) Enhanced reputation and brand value i) Development of
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closer links with customers and greater awareness of their needs” (Idowu and Louche 2011: xv). Similarly, stakeholders are more expected to “do whatever it takes” to facilitate high-social-capital firms weather a crisis, given that such firms exhibit better consideration to, and cooperation with, stakeholders in the past. Eccles et al. (2014) show that high-CSR firms execute processes that consistently engage with stakeholders over the long term. Bénabou and Tirole (2010) demonstrate stronger stakeholder engagement via CSR can lessen the probability of immediate opportunistic behavior by managers, an analysis supported by the empirical evidence, the underlying principle being that social spending is analogous to promotion. This justification echoes the conviction that a corporation that nurtures constructive and unique standing will draw more customers (Sen and Bhattacharya 2001) and reliable human resources and thus enhances profitability. The civic engagement aspect of social capital refers to the activities through which agents contribute positively to the community and social life (e.g., volunteering, political participation, donations) (Guiso et al. (2011), Scrivens and Smith (2013)). Civic engagement can engender positive outcomes by, for example, fostering trust and norms of cooperation, such as reciprocity.
3
Constructive Synergy Networks with Social Capital and CSR
“Capital,” first of all, is both a concept and a theory. As a concept, it represents investment in certain types of resources of value in a given society. As a theory, it describes the process by which capital is captured and reproduced for returns (Lin 2001:1). Likewise, social capital theory conceptualizes production as a process by which “surplus value” is generated through investment in social relations (Lin 2001: 2). Social capital despite its immense significance remains a broad and vague concept. Social capital shares several attributes with other forms of capital (Grootaert and van Bastelaer 2001). Often used indistinguishably, both concepts are fairly abstract, although social capital is more multifarious to explain due to its multidimensional nature. Trust is frequently identified with as “the hope that individual or organization will carry out actions that are advantageous, or as a minimum not unfavorable to other notwithstanding our competence to watch those dealings” (Sapienza and Zingales 2012). Over the last 20 years, the terms “social capital” and “trust” have become increasingly popular in the economics and finance literature. Even though the financial crisis of 2008 underscored the importance of wellfunctioning markets and economic stability, the debate on the position of trust and social capital in economic life is not entirely new. In 1972, Arrow argued that “virtually every economic transaction has within itself an element of trust.” Putnam (1993) showed that higher social capital societies, in which trust is greater, display higher economic development. Putnam discussed social capital as follows: “Whereas physical capital refers to physical objects and human capital refers to
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the properties of individuals, social capital refers to connections among individuals – social networks and the norms of reciprocity and trustworthiness that arise from them.” (Putnam 1993: 178)In that sense, social capital is closely related to what some have called “civic virtue.” The difference is that “social capital” calls attention to the fact that civic virtue is most powerful when embedded in a sense network of reciprocal social relations. A society of many virtuous but isolated individuals is not necessarily rich in social capital (Putnam 2000: 19). Putnam states that “a dense network of secondary associations both embodies and contributes to effective social collaboration” (Putnam 1993:89–90). Furthermore, Putnam (1993) states that “social trust, norms of reciprocity, networks of civic engagement, and successful cooperation are mutually reinforcing [. . .] norms and networks of civic engagement contribute to economic prosperity and are in turn reinforced by organized collaboration” (Putnam 1993: 180), and Fukuyama strengthens (1996: 26): “Trust is the expectation that arise within a community of regular, honest and cooperative behavior, based on commonly shared norms, on the part of other members of that community,” and “social capital is a capability that arise from the prevalence of trust in a society or in a certain part of it.” Trust between individuals thus becomes trust between strangers and trust of a broad fabric of social institutions; ultimately, it becomes a shared set of values, virtues, and expectations within society as a whole. Without this interaction, on the other hand, trust decays; at a certain point, this decay begins to manifest itself in serious social problems. . .. The concept of social capital contends that building or rebuilding community and trust requires face-to-face encounters (Beem 1999: 20). Social capital is often viewed as a value in the economics and political science literature. James Coleman (1990, 598) opened the “door to a broader”—or “meso”— interpretation of social capital. His definition of social capital as “a variety of different entities [which] all consist of some aspect of social structure, and [which] facilitate certain actions of actors—whether personal or corporate actors—within the structure” implicitly considers relations among groups, rather than individuals. This definition expands the concept to include “vertical as well as horizontal associations and behavior within and among other entities, such as firms” (Grootaert and van Bastelaer 2001:67). Guiso et al. (2004) define social capital as the levels of mutual trust and altruistic tendency in a society. They documented that trust derived from social capital allows more stock market participation. Social network fosters norms favorable to collaboration. Whether at the micro, meso, or macro level, social capital exerts its influence on development as a result of the interactions between two distinct types of social capital— structural and cognitive. Structural social capital facilitates information-sharing and collective action and decision-making through established roles, social networks, and other social structures supplemented by rules, procedures, and precedents (Grootaert and van Bastelaer 2001: 69). With regard to the forms SC takes, Ostrom (1999: 176) notes the shared knowledge, understanding, norms, rules, and expectations about patterns of interactions that groups of individuals bring to a recurrent activity. Granovetter (1973) highlighted in “The strength of weak ties” the roles loose bridging networks could play in the flow of new ideas and information within complex social systems. Storper (2005: 33) holds that “Putnam’s bonding operationalises the classical notion of community, and bridging that of
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society,” in other words “gemeinschaft (community) and gesellschaft (society), and claims that these two forces act as mutual checks and balances on their potentially negative effects, while allowing the positive contributions of each to economic efficiency. Indeed, there is a weakness in bridging networks, too” (Kusakabe 2012:1046). The notion of social capital is mostly related to the last two interpretations of the OECD (2007): “Social capital framework is infused by the following characteristics: reciprocity, participation, citizen power (proactivity), values, norms and outlook in life, diversity, sense of belonging, feelings of trust and safety and networks i.e., bonding and bridging” (Pavlíková et al. 2013: 269). Nahapiet and Ghoshal (2008) classified social capital into (1) structural, (2) relational, and (3) cognitive dimensions. From the structural perspective, the network and interactions among participants develop the social capital. In the relational perspective, trust, beliefs, and reciprocity between participants create social capital. From the cognitive perspective, the level of sharing and value within the network determines social capital. Social capital has been a subject of extensive investigation across various fields in the social sciences. Researches that focused on community social capital have emphasized its function as a public good (Coleman 1988; Putnam et al. 2000; Guiso et al. 2015). They argued that community social capital produces diffused influences “not only to those who possess social capital but also to people living in regions with a high level of social capital” and it promotes “community cohesion and information flow that accrue to community members who do not have high levels of personal social capital themselves” (Kwon et al. 2013, p. 981). Social networks capture horizontal social relations that exist in associations and organizations in the community which provide closures in social relations (Coleman 1988). Fukuyama (2000) stated “that the economic life depends on the moral bonds of social trust that facilitate transactions, empowering the individual creativity and the reason for the need of collective action.” “Trust is an unspoken bond and unwritten. Social capital does not bind or bridge. It is the nature of the social networks that bind, bond or bridge. The relative advantage of networks that bind, bond or bridge afforded to social capital depends on the purpose of action” (Lin 2001: 4). Social norms provide effective social control (Woolcock 1998: 152). In economics, Douglass North (1990) argued that formal and informal institutions (the legal structures and normative “rules of the game”) were crucial to understanding economic performance. The capacity to leverage resources, ideas, and information from formal institutions beyond the community is a key function of linking social capital (World Bank 2000a). In sociology, Peter Evans (1995) demonstrated that whether a state was “developmental” or “predatory” was crucially dependent on both the capacity of its public institutions and the nature of state-society relations. By the late 1990s, the development literature on institutional capacity, social networks, and community participation inspired by these works began to coalesce around a general framework loosely held together by the idea of “social capital” (Woolcock 2001:3). In this tradition, Sobel (2002) stated that social capital “describes circumstances in which individuals can use membership in groups and networks to secure benefits.”
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Institutions “are not rules exogenously given by the polity, culture or a metagame” but “rules created through the strategic interaction of agents, held in the minds of agents and thus self-sustaining” (Aoki 2011: 11). An institution is “a selfsustaining system of shared beliefs about a salient way in which the game is repeatedly played” (Aoki 2011: 11). The content of shared beliefs is “a summary representation (compressed information) of equilibrium in a repeated game” (Aoki 2011: 11). Thus, the salient feature of the equilibrium played has a symbolic representation inside the agents’ minds and coordinates beliefs that in turn induce behaviors and their replication over time (Sacconi 2012:15). If good social capital and trustworthiness are weak, handing over the fiduciary duties of sovereign trustees is worthless (Macey 2008). Social capital are synchronization game equilibria that may perhaps endogenously materialize from frequent premeditated choices among actors partaking in a specified realm of interface. They are unwavering and selfenforceable when system has reciprocally reliable prospect and is maintained by the trust that all participants will uphold conduct reliable with the norms. “Spontaneous orders” with self-enforceability and motivation compatibility are the types of association that economists are eager on (Hayek 1973; Sugden 1986) (Sacconi 2012:15).
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Community and Corporates: Win-Win for All
Academic work linking social capital, trust, and CSR is emerging and gaining significance. Sacconi and Degli Antoni (2011) note that studies chart the facets of social capital such as civic engagement, cooperative norms, shared beliefs, trust, and CSR. The World Business Council for Sustainable Development (2000: 5) also extends this view that “CSR is the commitment of a business to contribute to sustainable economic development, working with employees, their families, the local community and society at large to improve the quality of life.” This description integrates various characteristics of social capital. Corporate functioning and growth are not just the consequence of its operations but also the product of the local milieu. Social capital has a remarkable influence on forging the business social networks. It facilitates companies to build reputations, augment trust, and establish collaboration. Through CSR activities, corporations’ network with community gets instituted. Concurrently, corporations regain support, responsiveness, and standing from the community. This generates a virtuous circle, whereby businesses tend to be more efficient in fulfilling their social responsibilities and begin constructive interactions with stakeholders (Sun and Lii 2018). Social capital is thereby multidimensional involving multifaceted interrelationship. It cannot be condensed to a sole variable or set of variables. It is tacit within the milieu of concern. It can allow for the “reclarification and reframing of social and environmental problems beyond the profit motive. It can refocus the salience of human rights and wellbeing, and the importance and benefits of an engaged and empowered society. It can help to reverse the problems of rampant individualism and its associated competition, greed and exploitation. It helps to reverse the under-
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socialised view that assumes that humans are overly rational and self-interested, and largely beyond the influence of social factors” (Claridge 19th Oct 2019). Intra-organizational trust also bridges social capital and facilitates information exchange and resource flow, saves transaction costs, and motivates product innovation (Schiele et al. 2015). It diminishes the risk of opportunism and maintains smooth cooperation (Lins et al. 2017). As Nahapiet and Ghoshal (2008:252) stress, tying social capital within business certainly influences the intellectual capital construction, obligation validation, and work flexibility (Nahapiet and Ghoshal 2008). The dynamic prospective of social capital lies in its capacity to uphold the structure of human capital or intellectual capital (Semrau and Hopp 2016). Wherever corporate interests’ conflict with that of society, the company’s desired financial gains can get disrupted (Palacios 2004). Conflicts between companies and communities create dire picture for the company. The need for good reciprocal relationship with the community has made corporate social responsibility (CSR) the most valuable business capitals for the company. CSR activities can decrease the escalating clash between companies and local communities (Calvano 2008). It develops the status of the company, provides license to operate, improves risk management, and is able to attract, motivate, and increase employee loyalty (Weber 2008; Emerson 2003). Recent work by Flammer (2015) draws “the inference on the outcome of CSR on performance. She uses regression discontinuity approach using votes by shareholders on CSR proposals.” Edmans (2011) focuses on employee satisfaction, an element that can be due to CSR investments. Turning to a quantitative analysis of economic outcomes, Guiso et al. (2009) studied the impact of customs and norms on economic activity using trust as a measure of culture. They find that bilateral trust affects trade, portfolio investment, and direct investment. Hilary and Huang (2016) trust reduces the cost from agency problems. Trust also affects corporate policies and can have valuation consequences. Kelly et al. (2019) reported that dividend-paying corporations that are headquartered in low trust regions trade at a premium relative to other firms headquartered in those regions. Knack and Keefer (1997) found that social capital is interconnected to profitable. To evaluate social capital, they utilize surrogates that investigate civic norms and trust on performance. La Porta et al. (1997) look at the connection between social capital, calculated by using the World Values Survey response to the trust inquiry as in Knack and Keefer (1997), and a number of economic outcomes. They discover that trust is coupled with GDP increase, size of the largest firms in the economy, tax conformity, and the lack of dishonesty. Zak and Knack (2001) exhibit that trust is vital after including such controls and, significantly, that much of the impact of formal institutional factors is due to their effect on trust. Lins et al. (2017) study the relation between CSR and returns during the financial crisis. They focus on the period from August 2008 to March 2009 when trust in firms, markets, and institutions erode (Sapienza and Zingales 2012). They find that “firms that entered the crisis with CSR scores in the top quartile earned stock returns during the crisis of about 5–7% points higher compared to firms from the lowest quartile” (Servaes and Tamayo 2017: 213–215).
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Sacconi and Degli Antoni (2011) provide a sequence of findings that demonstrate that firms can put together social capital and trust through CSR investments. In two latest CEO surveys conducted by PricewaterhouseCoopers (2013, 2014), CEOs use their firms’ commitment in CSR activities to reinstate stakeholder trust after the financial crisis. The World Bank (1999) has given credence to social capital theory stating “Social capital refers to the institutions, relationships, and norms that shape the quality and quantity of a society’s social interactions. Increasing evidence shows that social cohesion is critical for societies to prosper economically and for development to be sustainable. Social capital is not just the sum of the institutions which underpin a society – it is the glue that holds them together.” The World Bank (2000b:68) also accepts that social capital “when utilized properly can enhance the efficacy and sustainability of projects” (Lins et al. 2017: 9). The interim report on The Purposeful Company by the Big Innovation Centre (2016) gives similar advice signifying that purpose has to be at forefront of corporate thinking. A number of leading businesses are nowadays reorienting their activities with the objective of bringing positive impact to complex societal challenges as a core part of their business and organizational strategies. “Such strategies have come to be known as pursuit of “shared value” – which involves creating economic value in a way that also creates value for society by addressing its needs and challenges. As a result, businesses employing these strategies do not see themselves standing outside civil society but rather as part of an emerging group of leaders acting in the common interest” (World Economic Forum 2013: 16). Balakrishnan (2004) argued that companies are increasingly functioning on orchestrating their business operations with the social values that they want to uphold. It is no longer about just writing a check or philanthropy which is CSR. Gary S. Becker cautioned that “firms that combine the profit motive with a true nonprofit consideration (including CSR) can only thrive in a competitive environment if they are able to attract employees and customers that also value these other corporate goals” (The Becker–Posner Blog February 10, 2008 “On Corporate Altruism—Becker”). This bridges the gap between shareholder interests and social needs and results in positive business and community impacts (Birch 2004; Bullis and Fumiko 2007; Hart 2005; Porter and Kramer 2006). Porter and Kramer note that “many companies have done much to improve the social consequences of their activities, yet these efforts have not been nearly as productive as they could be.” These two scholars argue that in order for these corporate and individual actions to yield productive results, the enormous benefits inherent in the interdependency between business and society should be tapped and made use of instead of propagating a “them” and “us” culture (Idowu and Louche 2011: 266). Porter and Kramer assess the “Social Influences on Competitiveness’ through the classical Porter diamond framework, which is made of four corners: 1. Context for firm strategy and rivalry: the roles and incentives that govern competition. 2. Local demand conditions: the nature and sophistication of local customer needs. 3. Related and supporting industries: the local availability of supporting industries. 4. Factor input conditions: pressure of high-quality, specialized inputs available to firms” (Porter and Kramer 2011:7).
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Rake and Grayson also cited the findings from studies by GlobeScan and Edelman which reveal that around the world, society expects more and more from business while simultaneously trusting business less. The issue of trust between business and society is vital for business and society to coexist conveniently for each other’s mutual benefits which was perhaps why Mostovicz and Kakabadse in their paper on “Between Trust and CSR: The Role of Leadership” explore the role which corporate leaders need to perform in restoring the badly needed trust between society and business. The lack of trust between the two, since society and business are interwoven (Wood 1991), could lead to a series of social, economic, and environmental problems which could make it impossible for business to achieve its objectives and for society to continue to function effectively (Rake and Grayson in Idowu and Louche 2011: 267). These studies provide evidence that social capital, built up through CSR activities, pays off. Collectively, these results suggest that increased social capital created through CSR efforts matters predominantly in periods when trust in corporations at large has eroded and that during normal times any benefits of social capital are already embedded in a firm’s share price. “This reconnection does not just relate to other people but also to ecological systems upon which society and future generations depend. Therefore, a deep and meaningful understanding of social capital helps to change societal value systems that are currently leading to a lack of sustainability. A greater appreciation for social capital is the change that is required to help transition to a more sustainable future” (Claridge 19th Oct 2019).
5
Summary
Corporate CSR activities, purely and complementarily combined, can thus link economic, common, and social-exchange games between business corporations (and their stakeholders, such as CSR entrepreneurs and employees) and concerned citizens (Sacconi and Degli Antoni 2011). Granovetter (1985) terms embeddedness as corporate practice for social change that is anchored in networks of associations, both private and public, and in the communities to which they are attached. “The content and configuration of ties among businesses, non-profits, local governments, and elite civic organizations all assist to familiarize firms to particular nature of social action. We suppose that this orientation helps to reconnect “organizations and social systems” (Stern and Barley 1996). This theoretical study indicates that the new generation of consumers is conscious and they prioritize the symbiotic and communally favorable affluence of corporation alongside the pursuit of profits. “The level of cognitive social capital both beliefs and dispositions and the decision to adopt CSR principles and norms generate structural social capital understood as long-term cooperative relationships between the firm and its stakeholders. Almost all studies on the topic advocate that building social capital is allied to work that support the welfare of all stakeholders in the firm” (Sacconi et al. 2010). As such, social or investments in community by corporates are usually classified under the corporate social responsibility (CSR). The remit from
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this could be measured as building blocks of a firm’s social capital. This analysis has been illustrated by practitioners and academics equally. “CSR has moved from the periphery of business to centre stage and that companies must set out their own values and build trust by applying these values to everything they do” (Niall Fitzgerald in Servaes and Tamayo 2017: 208). In conclusion, my analysis identifies the conditions for a virtuous circle between cognitive social capitals, community engagement and CSR practices make sustainable cooperative relations between the firm and stakeholders that leads to sustainable development.
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Employee Volunteering Risa Bhinekawati, Wiwiek M. Daryanto, Amelia Naim Indradjaja, Chrysanti Hasibuan-Sedyono, and Yanti Triwadiantini
Contents 1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Employee Volunteering Definitions: Different Terminologies with Slightly Different Meanings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Global Trends in Employee Volunteering . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Effective Implementation of Employee Volunteering . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1 Employers’ and Employees’ Motives in Conducting Employee Volunteering . . . . . . 4.2 Managing Employee Volunteering Effectively . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.3 Types of Employee Volunteering Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.4 Benefits of Employee Volunteering . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 A Snapshot of EV Implementation in Indonesia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.1 Respondents’ Profile . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.2 Practices and Employers’ Investment on Employee Volunteering . . . . . . . . . . . . . . . . . . . 5.3 Measuring Employee Volunteering Outputs, Outcomes, and Impacts . . . . . . . . . . . . . . . 5.4 The Benefits of Employee Volunteering to Employers and Society . . . . . . . . . . . . . . . . . 5.5 Challenges and Key Success Factors in Conducting Employee Volunteering . . . . . . 6 Discussions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Cross-References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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Abstract
Employee volunteering (EV) was introduced as employer-supported volunteering and now also covers employee-led volunteering initiatives. For employers, EV is usually embedded in the company’s corporate social responsibility (CSR) R. Bhinekawati (*) · W. M. Daryanto · A. N. Indradjaja Business and Management, Sekolah Tinggi Manajemen IPMI, Jakarta Selatan, DKI Jakarta, Indonesia e-mail: [email protected]; [email protected]; [email protected] C. Hasibuan-Sedyono · Y. Triwadiantini Indonesia Business Links, Central Jakarta, Indonesia e-mail: [email protected]; [email protected] © The Author(s), under exclusive license to Springer Nature Switzerland AG 2021 D. Crowther, S. Seifi (eds.), The Palgrave Handbook of Corporate Social Responsibility, https://doi.org/10.1007/978-3-030-42465-7_25
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strategy in addressing social issues by involving employees. Research has shown that EV can fulfill intrinsic and extrinsic motives for employers in achieving their economic, social, and environmental performances simultaneously. As for employees, working for companies that allow them to do EV has given them more job satisfaction that enhance their organizational citizenship behavior (OCB). Globally, EV has achieved its importance as a way of companies to contribute to global issues and the achievements of Sustainable Development Goals (SDGs). To contribute to EV discussions, this chapter covers several aspects of EV, including different terminologies used by researchers and companies; global trends of EV implementation; effective management of EV; impacts of EV to the employers, employees, and society; and challenges in EV implementation. To illustrate EV practices, this chapter highlights EV implementation in Indonesia based on a recent survey designed for gaining empirical evidence. In the conclusion, a virtuous cycle between EV, corporate sustainability, and SDGs is suggested. Keywords
Corporate volunteering · Corporate social responsibility · Employee volunteering · Organizational citizenship behavior · Sustainable Development Goals
1
Introduction
Globally, more and more employees around the world are expecting their employers to contribute to solutions of social issues and improve social conditions in the area where their employers operate (Edelman 2019, p. 35). Corporations are expected to perform their corporate social responsibility (CSR) in the way they perform their “economic, legal, ethical, and discretionary” actions (Carroll 1979, p. 500). In many contexts, CSR relates to the company’s stakeholder management, policies, and actions to achieve its economic, social, and environmental performances simultaneously and to contribute to sustainable development (Aguinis and Glavas 2012, p. 2). Through CSR, corporations can collectively address global issues stipulated in the 17 Sustainable Development Goals (SDGs) including poverty eradication and improvements in health, education, employment, and the environment (United Nations 2019). Companies’ contributions to SDGs through CSR can be justified for intrinsic and extrinsic reasons. The intrinsic rationales of CSR provide ethical justifications for CSR actions where companies contribute to universal issues like poverty, whereas extrinsic reasons of CSR will justify the company’s investment toward more pragmatic goals such as compliance with regulations, risk management, and improvement of corporate reputation (Basu and Palazzo 2008, pp. 122–127). With regard to CSR programs, employee volunteering (EV) or an employee volunteer program (EVP) is defined as “a planned, managed effort that seeks to
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motivate and enable employees to effectively serve community needs through the employer. . . are typically one component of a company’s corporate social responsibility (CSR) strategy . . . that addresses the company’s involvement in societal causes” (Points of Light 2017, p. 5). EV can be implemented by private or public employers by giving “financial incentives, provisions for special leave, special rewards, or other means of direct support” (European Commission 2014, p. 34). EV has been seen as one of the most effective ways in conducting CSR for companies to contribute to SDGs (Cook and Burchell 2018), and it can be considered as a tactical and strategic implementation of CSR (Mozes et al. 2011) where companies can solve social issues by deploying employee talents and skills (Peloza et al. 2009). Collectively, EV can make a grand contribution to the world’s problems if companies around the globe deploy their employees to solve social issues in their surrounding communities while benefitting from increased employee loyalty to the companies with an increased affective commitment (Rodell et al. 2017). Besides, EV will contribute to organizational citizenship behavior (OCB) when the employees trust and feel proud of the altruistic purposes of volunteering efforts conducted by the company (Im and Chung 2018). Eventually, CSR programs that are implemented through EV will contribute to corporate sustainability (Im and Chung 2018) which can be achieved through employee loyalty that leads to the company’s ability to achieve its business social performance simultaneously (Lee and Chen 2018). To manage EV effectively, employers need to consider the motives of employees for being volunteers and apply EV strategies accordingly. Like companies, employees have intrinsic or social-oriented and extrinsic or career-oriented rationales in conducting EV (Lough and Turner 2018; Points of Light 2015). Points of Light (2015) found that the social-oriented volunteers use volunteering opportunities to collaborate with peers and friends in handling social services like helping homeless shelters or park cleanups, whereas career-oriented volunteers prefer activities that are linked to skill development like doing consulting or mentoring, and they are more motivated if the volunteering assignments are recognized formally by the organization. Furthermore, companies need to be alert that social-oriented employees will support the company’s EV programs which are truly altruistic in nature and they may view negatively on the company’s self-serving motives like public relations purposes of EV (Gatignon-Turnau and Mignonac 2015, p. 7). The attitudes of employees toward the company’s motives in conducting EV support the social exchange and social identity theories (Gatignon-Turnau and Mignonac 2015). When employees feel supported by the companies in implementing their “pro-social motives,” they will reciprocate emotionally to the company (Gatignon-Turnau and Mignonac 2015, p. 9). As EV has become a global practice for CSR, institutions like Boston College Center for Corporate Citizenship (BCCCC), Points of Light, Volunteering Australia, and London Benchmarking Group have conducted a global survey and developed tools for successful EV management. Researchers have also started to contribute to academic research to investigate the links between EV and corporate performance (Dreesbach-Bundy and Scheck 2017; Rodell et al. 2016). Hence, this
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chapter attempts to contribute to discussions on EV by providing an overview of EV development thus far. The chapter is outlined by discussing (1) different terminologies of EV; (2) global trends of EV; (3) effective management of EV, which covers motivations of employers and employees in conducting EV, mechanisms for effective EV implementation, key success factors and challenges in EV implementation, types of EV activities, and benefits of EV to employers, employees, and society; (4) a snapshot of EV implementation in Indonesia; (5) how Indonesian experience relates to previous studies on EV; and (6) conclusion and ways forward.
2
Employee Volunteering Definitions: Different Terminologies with Slightly Different Meanings
Employee volunteering (EV) differs from personal volunteering (PV) in terms of supports given by employers. While EV activities are usually done with the knowledge and supports from employers, PV activities are conducted “without employer involvement and directions” (Runte and Basil 2011, p. 133). The literature review on definitions of EV has shown different terminologies with similarities in meanings, including employee volunteering (EV), corporate volunteerism (CV), employersupported volunteering (ESV), employee volunteering program (EVP), workplace volunteer programs (WVP), company-sponsored volunteer programs (CSVP), and company support for employee volunteering (CSEV) as listed in Table 1. From EV definitions listed in Table 1, it can be concluded that most of the authors suggest that EV involves activities that are planned and organized by employers or companies (European Commission 2014; Lorenz et al. 2011; Mathieu et al. 2004; Points of Light 2017; Rodell 2013; Rodell et al. 2016). However, EV can also be initiated by both employers and employees (Lukka 2000). In terms of the type of employers, the European Commission (2014) suggests that employers can be both private and public organizations, while some authors mention the “employer” without being specific (Mathieu et al. 2004; Points of Light 2017; Rodell 2013; Rodell et al. 2016) or employers are specifically mentioned as companies (GatignonTurnau and Mignonac 2015; Lorenz et al. 2011; Runte and Basil 2011). EV activities are usually coordinated with nonprofit organizations or charitable groups as partners and beneficiaries of the activities (Lorenz et al. 2011; Rodell 2013; Rodell et al. 2016), or they can also be addressed directly to community needs (Points of Light 2017). In terms of resources given by employers, authors agree that the employers allow the employees to become volunteers by giving their time and skills, besides giving financial supports and other incentives. Based on similarities and differences of EV definitions developed by the cited authors, for the purpose of this chapter, common terminologies are used: (1) EV can be initiated by employers or employees with the knowledge and support of employers. (2) The employers are both public and private organizations. (3) EV can be done in partnership with nonprofit or charity organizations or directly with community groups.
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Table 1 Definitions related to employee volunteering Terminology Employee volunteering (EV)
Author(s) European Commission (2014, p. 34)
Lorenz et al. (2011, p. 184)
Mathieu et al. (2004, p. 8)
Rodell (2013, p. 1274). Rodell et al. (2016, p. 3) Dreesbach-Bundy and Scheck (2017, p. 1)
Corporate volunteerism (CV) Employer-supported volunteering (ESV)
Runte and Basil (2011, p. 133) Lukka (2000, p. 4)
Employee volunteering program (EVP)
Points of Light (2017, p. 5)
Company support for employee volunteering (CSEV)
Gatignon-Turnau and Mignonac (2015, p. 7)
Definition “Volunteering organized and/or supported by private or public employers, be it through financial incentives, provisions for special leave, special rewards, or other means of direct support.” “company’s invitation to employees to get involved voluntarily in charitable efforts beyond their job descriptions, where the company provide resources and collaborate with non-profit organizations” “a planned, managed effort that seeks to motivate and enable employees to effectively volunteer under the sponsorship and leadership of the employer.” (p. 8) “Giving time or skills during a planned activity for a volunteer group or organization.” “Employed individuals giving time during a planned activity for an external non-profit or charitable group or organization.” (p.3) “The encouragement and facilitation of volunteering in the community through the organization by which an individual is employed” which is a subset of corporate social responsibility” “Volunteering activities which are initiated and supported by companies” “An activity which has been developed by an employer with a view to involving those members of the workforce who wish to volunteer, or initiated by the employee themselves, with full knowledge and approval on the part of the employer” “An employee volunteer program (EVP) is defined as a planned, managed effort that seeks to motivate and enable employees to effectively serve community needs through the employer. . .” EVPs, also called workplace volunteer programs or companysponsored volunteer programs” “Companies’ encouragement or an accommodation of employee’s volunteer activities during working hours and/or own time.”
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Global Trends in Employee Volunteering
Globally, EV has been conducted by employers in contributing to common goods and societal causes. In North America, especially in the USA, research by Grant (2012) found growing importance of EV as a way for a company to contribute to society. Since the 1990s, companies in the USA have started to include EV into their business plans, and employees stated to learn about volunteering from their companies (Toppe et al. 2001). The Boston College Center for Corporate Citizenship (BCCCC) survey found that nine of ten Fortune 500 companies operating globally have formal employee volunteering and giving programs and have already embedded EV in the ways of business, where the majority of large companies are very supportive to corporate volunteering (Boccalandro 2009, p. 4). BCCCC found strong indications that EV has contributed to business operations in terms of the development of employee skills, teamwork, and morale. Hence, EV helps companies in recruiting and retaining employees which then contribute to stakeholder relations, corporate branding, and reputation and eventually enhance sales performance (Boccalandro 2009, p. 15). In Canada, a study was conducted by Runte and Basil (2011) on the employees’ views on volunteering. They found the difference between personal volunteerism and corporate volunteerism among employees. Personal volunteerism refers to “activities during personal time undertaken without employer involvement or direction” whereas corporate volunteerism refers to volunteering activities which are initiated and supported by companies” (Runte and Basil 2011, p. 133). In both cases, employees are driven by their beliefs in the cause and the “feeling good” about what they are doing when volunteering. However, personal volunteers are more driven by “intrinsic” motives in helping others, solving social issues, building their capacity, and developing a social network, as compared to corporate volunteering which is motivated by more “extrinsic” matters like career progression (Runte and Basil 2011). In Latin America, although the progress is not as advanced as in North America, EV activities have started to emerge in countries like Mexico, Brazil, Argentina, and Chile as they are practiced by multinational companies such as P&G working in the countries (Schlenkhoff-Hus 2018). In Western Europe, in a survey of 103 companies in 53 European Union countries, 80% of companies make employee volunteering programs available for their employee (Perez et al. 2014). According to Perez et al. (2014), EV has been growing in Europe, and it is in line with the growth of CSR practices of European companies. EV has been implemented not only by corporations but also by public and nonprofit organizations. The study also found that EV has given benefits to the companies, employees, and communities at large, hence helping employers to build their sustainability objectives (Perez et al. 2014). In the UK, EV has grown its significance in the way in which companies conduct their business. In 2018, it was predicted that over 11 million employees in the UK were allowed by their employers to do voluntary work (Benefacto 2018). Indeed, EV has been supported by the government with the Prime Minister’s encouragement for
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UK companies to provide a day in a year for volunteering activities (Bussell and Forbes 2008). Like in Western Europe, there are also interests in EV in Eastern Europe, for example, in Russia. Krasnopolskaya et al. (2016) found from their research in 37 Russian companies four types of employee volunteering which are effective in building community engagement: informal volunteering, formal volunteering, formal monetary donation, and informal monetary donation (p. 1). They observed that employee volunteering can enhance community engagement because of three reasons: First, employee volunteering can generate trust between the company and the community. Second, employee volunteering gives opportunities for employees to encounter social issues. Third, employee volunteering enhances employees’ spirit of volunteerism. In the Asia Pacific, countries like Australia, South Korea, and Japan are very advanced in corporate volunteering, while in China, India, and ASEAN countries, the practice of corporate volunteering is emerging very fast (Schlenkhoff-Hus 2018). Points of Light (2017) found that volunteerism, including employee volunteerism, has shaped the way in which companies conduct their CSR and nonprofit organization operates in Asian countries. For example, in South Korea, over 50% of employees are participating in employee volunteering activities which are provided by more than 70% of companies in the country (Federation of Korean Industries 2018). Points of Light (2017) argue that the growth of volunteerism among youth in Asian countries will exceed other regions in the world as increasing numbers of nonprofit organizations and CSR programs of companies will utilize highly skilled laborers that can be made available through volunteering programs. Besides, the governments and the nonprofit organizations are increasingly aware of the potential of employee volunteerism to be a powerful source for humanitarian activities like disaster response, poverty alleviation, skill development of communities, and people with special needs. Hence, they may look for better collaborations with companies in handling social issues through employee volunteering. In Asian countries, measurements of the social impact of employee volunteering have been developed and are expected to be adopted as good practice by leading companies as employee volunteering has proven to benefit the brands of the company and the morale of its employees (Points of Light 2017). However, despite the rapid growth of EV in Asian countries, in Arab nations, corporate volunteering is also at early development as the company prefers to give cash donations rather than conducting employee volunteering (Allen et al. 2011, p. 44). In Australia, EV which is also commonly called corporate volunteering (CV) (Volunteering Australia 2015, p. 1) has grown its significance as a company strategy to contribute to society and enhance employees’ motivation (Volunteering Australia 2015). Volunteering Australia (2015) found that 24% of Australian employees work for employers that provide them with volunteering activities. In Australia, EV has also contributed to consumer perception of the company. A study by Plewa et al. (2015) found that corporate volunteering contributes to consumers’ perception of the corporate image, thereby improving consumer
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loyalty. Australian companies consider CSR or the intention to be socially responsible companies as the driver or the reason why they are doing corporate volunteering. Plewa et al. (2015) found that by having corporate volunteering program, it is then easier for companies to have good stories to project their image as a responsible company through their internal and external communication channel, including the marketing and promotion channels. By creating awareness about the company’s CSR achievement, company can increase consumers’ knowledge about the company’s CSR that leads to enhancing their perception about the company’s image (Plewa et al. 2015). As in New Zealand, Lee and Higgins (2001) found that EV opens opportunities for a company to contribute to social issues and engage with local communities. Through dialogue among stakeholders, employee volunteering generates sustainable business-community partnerships which bring benefits to the company, employee, and the community. Finally, in Africa, corporate volunteering is not yet a known concept as people volunteers privately to help the needs of families and communities, except in South Africa where many multinational companies operate and implement corporate volunteering (Allen et al. 2011, p. 34). In sum, EV has become a global phenomenon with a continuing awareness of companies in contributing to global issues although the practices around the globe vary among countries and regions. Indeed, EV allows companies to conduct their CSR programs which contribute to employee morale and common goods. While most of the EV activities are conducted directly with communities or in partnership with nonprofit organizations, EV programs have been able to contribute to solutions to social issues. Globally and collectively, corporations can address global issues stipulated in the 17 Sustainable Development Goals where 181 member countries of the United Nations pledge their commitment to improve significantly the world’s conditions, especially in dealing with the issues of poverty, hunger, health and wellbeing, inequality, and sustainable cities and communities (United Nations 2019; Volonteurope 2015, p. 47).
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Effective Implementation of Employee Volunteering
4.1
Employers’ and Employees’ Motives in Conducting Employee Volunteering
Research has shown that both employers and employees have intrinsic and extrinsic motives in doing EV. Hence, the ability to recognize the motives as the drivers in conducting EV from the employers and employees’ sides will be one of the key success factors of EV implementation. For employers, there are three main drivers in conducting EV: first, charity to support a good cause with a minimum expectation of getting something in return; second, community investment, which is a strategic involvement of a company in solving long-term social issues that will impact the company (Boccalandro 2009); and third, commercial
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initiatives including commercial and marketing activities, as well as the promotion of corporate identities and corporate branding involving employee volunteers (Barkay 2012; Boccalandro 2009). As for the third reason, employers use EV to build their branding by publishing community development projects through public relations channels in the public media and their own reports to show that they perform good corporate governance and participate in global Sustainable Development Goals (Crowther 2008). From these three reasons, the first and the second reasons to contribute to common goods can be categorized as intrinsic, while the third reasons in portraying corporate image can be categorized as extrinsic motives of conducting EV. As for employees, Runte and Basil (2011) found extrinsic and extrinsic motives in conducting EV. They found that intrinsic motivational factors, including “the desire to help others, the feeling good, the intention to gain new knowledge, and the ability to make social contacts,” are the top four drivers for employees to volunteer. On the contrary, the extrinsic motive is “to help my career” rank fifth the motivational factors (p. 140). Similarly, Points of Light (2015, p. 1) classifies two types of employees’ orientations in corporate volunteering, that is, “social-oriented volunteers” and “career-oriented volunteers.” The social-oriented volunteers would have intrinsic motives to use volunteering opportunities to collaborate with peers and friends in handling social issues that require social services like helping homeless shelters or park cleanups, whereas career-oriented volunteers have more extrinsic motives and prefer activities that are linked to skill development like doing consulting or mentoring, and they are more motivated if the volunteering assignments are recognized formally by the organization. Therefore, companies need to apply a suitable strategy to cater to employees who have intrinsic and extrinsic motives. Lough and Turner (2018) found that company leadership would attract social-oriented volunteers, while the integration of EV activities in performance management would entice employees who are motivated by career progression. Besides, putting EV in performance review will be beneficial when the company wants to establish a culture of volunteering within the company and increase the company’s commitment to helping communities (Allen 2012; Lough and Turner 2018). Furthermore, companies need to consider putting their intrinsic before extrinsic purposes when communicating with employees. As found by Gatignon-Turnau and Mignonac (2015), volunteers would appreciate and enhance their organizational citizenship behavior if their volunteerism is utilized for truly altruistic purposes rather than for supporting “self-serving intentions” of the employers (p. 14).
4.2
Managing Employee Volunteering Effectively
For effective management of EV, employers need to integrate internal mechanisms to ensure optimum benefits of EV for employees, employers, and communities. Points of Light (2017) suggest seven practices that have helped employers to manage
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their employee volunteering program (EVP) effectively, which cover “the plan, design, leadership, partnerships, employee engagement, measurement, and success and growth” practices of EV (Points of Light 2017, pp. 7–40). Another tool that has been used to measure EV performance of Fortune 500 companies is developed by Boston College Center for Corporate Citizenship (BCCCC). BCCCC calls it as “Drivers of Effectiveness for Employee Volunteering and Giving Program (EVGPs)” (Boccalandro 2009, p. 1). For employers that aspire to implement effective EV programs, Points of Light and BCCCC have developed comprehensive tool kits available from their websites. The tool kits of Points of Light and BCCCC are summarized in Table 2, which captures similarities between the practices suggested by the Points of Light (in column 1) and the drivers suggested by BCCCC (in column 2). As shown in Table 2, Points of Light’s seven practices and BCCCC’s drivers are interrelated and complementary to each other. They fit into employers’ strategic
Table 2 Mechanisms for effective employee volunteering Seven practices of effective EVP (Points of Light) 1. The Plan– Clear vision, strategies, efforts, and tactics to achieve specific goals for business, employees, and society
2. The Design – Alignment of employees’ motives, talents with corporate resources, societal impacts 3. Leadership – leadership supports at all level to further EV mission, goals, and plans 4. Partnership – Strategic, high-impact collaborations with government, private, and nonprofit partners
5. Employee Engagement – Appeal to extrinsic and intrinsic motives of employees and access to all employees 6. Measurement– Measurements of output, outcomes, and impact on business and societal causes
Drivers of effectiveness for EVGPs (BCCCC) Driver 1: Cause-effective configuration – Structuring EVGPs to focus on specific causes, leverage employers’ resources, integrated to employer’s philanthropy, and productive partnerships Driver 2: Strategic business positioning – Aligning EVGPs with business goals, infrastructure, resonant causes, corporate citizenship strategy Driver 3: Sufficient investment – The existence of a strong team, operating budget, and grant support Driver 4: Culture of engagement – Encouragement and facilitation to encourage employee involvement, including procedures, encouragement, departmental support, middle management outreach, senior management modeling, accessible information Driver 5: Strong participation – Involving more than 50% of employees, generating at least 8 h/employee/year of volunteering Driver 6: Actionable evaluation – Tracing participation and volume metrics, employee and nonprofit feedback, business, and social sector outcome metrics
7. Success and Growth– Communicating and celebrating success with internal and external stakeholders Adapted from (Boccalandro 2009; Points of Light 2017)
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management process that flows from strategic analysis, strategic formulation, and strategic implementation. At the strategic analysis phase, employers need to have a good understanding of internal and external environment and the organization’s overarching goals. At this stage, Points of Light and BCCCC suggest employers’ clear vision and strategic goals to tackle the intersection between the needs of business, employees, and society. Indeed, a study on the mission statements of 100 companies listed in Fortune 500 has found that employers that explicitly mention their commitment to solving social issues in their mission statements would ensure that they take necessary actions (Bartkus and Glassman 2008). Furthermore, Bhinekawati (2016) confirms that the mission statements containing CSR and corporate sustainability strategy would guide companies to achieve their strategic intent in contributing to Sustainable Development Goals. At the strategy formulation phase, employers need to develop overall plans to succeed in EV implementation by using their strength, maximizing the opportunities, understanding their own weaknesses, and mitigating the threats simultaneously. At this stage, Points of Light and BCCCC suggest that employers should develop strategic business positioning by aligning EV with corporate citizenship strategy, societal causes, and business goals. Hence, companies can deploy suitable infrastructure and resources, as well as employees’ talents and skills. By ensuring a strategic fit between EV activities with the company’s strategic goals, core values, and resources, EV will bring competitive advantage for the employers (McCallum et al. 2013). Lastly at the strategic implementation stage, Points of Light and BCCCC posit that leadership commitment at all level is important to build the culture, to ensure sufficient investment, to develop a strategic partnership with stakeholders, and to gain a high level of employee engagement. In this stage, employers should be able to cater to both intrinsic and extrinsic motives of the employees and make EV accessible to employees. BCCCC suggests that for large companies, it is expected that employers should provide at least 8 h of volunteering per year and involve more than 50% of employees to volunteer (Boccalandro 2009). Employers also need to evaluate the EV programs by measuring the output, outcomes, and impact of EV to the employees, business, and social causes. Lastly, Points of Light suggest that the lessons learned and success stories from EV should be communicated and celebrated with both internal and external stakeholders. The whole process of strategic management is necessary to ensure the effective implementation of EV. A review of available documents issued by Fortune’s 100 most admired companies reveals that those companies strategically integrate their EV into their CSR that leads to increased employee’s organizational citizenship behavior (OCB) and the external benefits for the company, especially the company reputation (Cycyota et al. 2016, p. 326). Indeed, EV requires employers to have a system within the organization in managing EV programs as there is a positive linkage between the effectiveness of EV and enabling policies (European Commission 2014).
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In sum, effective EV management will mitigate potential sources of failures. BCCCC found the following five main weaknesses that contribute to the failures of EV programs implemented by Fortune 500 companies (Boccalandro 2009, p. i): • • • • •
EV programs are not strategically positioned as a business functioning Insufficient resources to support EV programs. Lack of procedures, practices, and guidelines to facilitate EV programs. Low employee participation due to lack of engagement. Lack of measurements and evaluation on the impacts of EV programs.
Those five reasons resonate with the findings from other studies. For example, Lukka (2000) found several reasons why EV fails, including lack of employees’ awareness due to the lack of internal communication when a company has an EV program, the cultural difference between the company and its nonprofit partners, and the lack of support from top- and middle-level management. Another research by Gatignon-Turnau and Mignonac (2015) reveals that volunteers would appreciate if the company shows true altruistic motives by supporting them to volunteer without expecting something in return. Hence, GatignonTurnau and Mignonac (2015) argue that CSEV may not necessarily bring positive impact to organizational commitment and organizational citizenship behavior, depending on employees’ perception on company’s motives, whether it is perceived as truly altruistic or it is seen as a tactic to support company’s “self-serving intentions” (p. 15). Furthermore, Lough and Turner (2018) also found that company leadership influences EV participation of employees who have intrinsic motives, while the integration of EV as part of performance management will attract employees who are motivated by extrinsic motives such as career progression. Nevertheless, it is necessary for employers to integrate EV in a performance review when they want to establish a culture of and commitment to volunteering within the organization (Allen 2012; Lough and Turner 2018). To conclude, the integration of EV into the strategic management process will mitigate potential risks of EV failures and enhance the possibility of EV contribution to an employer’s strategic objectives.
4.3
Types of Employee Volunteering Activities
As discussed above, employee participation is one of the key success factors of the EV program. Therefore, when designing EV activities, employers need to consider employees’ intrinsic (social-oriented) and extrinsic (career-oriented) motivations. Halley (1999) and Lukka (2000) found that employee-led activities will satisfy employees’ intrinsic motives, while employer-initiated activities will attract employees with extrinsic motives. Table 3 summarizes the types of EV activities as suggested by Halley (1999) in Lukka (2000).
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Table 3 Employee-led and employer-initiated employee volunteering activities Employee-led activity supported and recognized by the employer Matching funds. Employers match fundraised by employees through their volunteering events One-time local events. Employee’s friends and families are invited to participate in an event organized by the local community In-kind contributions. Employees donate equipment, facilities, or furniture on behalf of the company Volunteer awards. Employer rewards employee’s achievement in their volunteering work Volunteering committees. Employer allows employees to use the building facilities and resources to organize events which can generate publicity for the company Charity of the year. Employee-initiated events supported by the employer to focus on a certain organization Time banks. Employer allocates the same amount as the time invested by employees to volunteer in the community
Employer- initiated activity Employee placement for a transition. Fulltime work for 6–24 months, usually in line with organizational change or employee retirement Short-term assignment. A placement for about 100 h in a community organization so both the employees and the nonprofit organizations can learn from each other Team-building assignment. An assignment in team-building training for about 3–4 days Coaching. An assignment for one-on-one mentoring, usually on interpersonal skills for a few hours per month, for students or nonprofit organization staff Secondment. The employees can bring managerial expertise while learning about decision-making and policy-making processes, as a board member of schools or nonprofit organizations
Source: Adapted from Halley (1999) in Lukka (2000)
Several studies have shown interesting findings on the impacts of the above categories of EV activities. Lough and Turner (2018) found that offering employees with matching funds and time off for their volunteering activities will trigger their intrinsic and extrinsic motivations. The types of employee-initiated activities like collaborating with peers and friends in handling social issues that require social services like helping homeless shelters or park cleanups will trigger social-oriented volunteers, whereas career-oriented volunteers prefer activities that are linked to skill development like doing consulting or mentoring, and they are more motivated if the volunteering assignments are recognized formally by the organization (Points of Light 2015).
4.4
Benefits of Employee Volunteering
The benefits of EV to the employers and employees and society have been widely researched. EV will benefit the employees, companies, communities, and nonprofit organizations that work as the company’s partners in implementing employee volunteering programs (Rochlin et al. 2015). Generally, EV will enhance the
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relationships of related stakeholders involved in the program, as it gives opportunities for the employees, the nonprofit sectors, and the community to build social relationships, thereby building the quality of social capital in terms of the strength of the network, shared norms, and trust among parties involved in the EV program (Muthuri et al. 2009). Specifically, the benefits of EV can be categorized into “internal and external” benefits (Cycyota et al. 2016, p. 326) which can be summarized in Table 4. In a nutshell, Cycyota et al. (2016) argue that internally, EV would enhance employee motivation as the EV opportunities will give a sense of altruism, meaningfulness that would give tangible and intangible rewards for companies that will increase their organizational citizenship behaviors (OCB). In terms of skill development, it can be achieved as employees gain variety in their tasks and improve their relational and social skills. Increased motivations and skills will contribute to employees’ job satisfaction and higher organizational commitment. These will reduce turnover, increase productivity, and increase morale. Externally, EV would increase the company reputation that will attract potential employees, retain current employees, improve organizational culture, and strengthen brand equity. As for the contribution of EV to increase profitability, it can be achieved through enhanced customer perceptions about the company which contributes to customer loyalty. Finally, as there are improvements in stakeholder engagement through EV, the company will gain its legitimacy, community relations, and shareholder relations (p. 326). The EV benefits listed in Table 4 are aligned with other research, including BCCCC survey on the impacts of EV to Fortune 500 companies (Boccalandro 2009) and the literature review by Lukka (2000). Lukka (2000) further posits that EV would enhance communication and caring culture within the company and between the community and the company. As such, EV will help companies to manage risks and reduce costs due to improvements in employee’s skills and knowledge in dealing with stakeholders. EV also facilitates companies’ strategic goal achievements in leadership development, builds their reputation as they are perceived as responsible companies by their related stakeholders, and create value for both the employees and nonprofit partners or larger Table 4 Benefits of employee volunteering to employers Internal benefits Enhanced employee motivation Enhanced organizational citizenship behaviors (OCB) Enhanced employee soft skill Enhanced employee satisfaction Enhanced organizational commitment Reduced employee turnover Increased employee productivity Increased employee morale
Source: Adapted from Cycyota et al. (2016)
External benefits Increased of company reputation Attractive to potential employees Enhanced employee retention Enhanced organizational culture Strengthened brand equity Increased profitability Enhanced customer perceptions Enhanced customer loyalty Improved stakeholder engagement Enhanced company legitimacy
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communities through mutual relationship and continuous learning (McCallum et al. 2013).
5
A Snapshot of EV Implementation in Indonesia
To provide empirical evidence on the findings and tools from studies discussed in previous subchapters, a survey to 106 Indonesian employers was conducted during the period of January to March 2020. A convenience sampling method was used, with questionnaires distributed to 254 employers who are connected to the networks of Sekolah Tinggi Manajemen IPMI (IPMI) and Indonesia Business Links (IBL). Of 254 questionnaires, 106 are returned, showing 60 employers (57%) integrate their EV with CSR strategy, 33 employers (31%) have EV programs but not integrated into CSR strategy, and 13 employers (12%) do not have EV programs. The reasons of 13 employers for not having EV program is because EV is not part of their strategy and the organizations only have ad hoc charity activities, not involving volunteers, for their community relations purposes. As for 33 employers who conduct EV but do not integrate it into their CSR strategy, they have EV programs as their corporate giving activities and community engagement programs. However, they do not claim those activities as CSR. The summary of the types of EV programs which are not part of CSR is depicted in Table 5. As the purpose of this chapter is to get a deeper understanding of how employers integrate EV with their organizational strategy, this chapter focuses on exploring the practices of 60 respondents who stated that EV is part of their CSR strategy. The employers here are both public and private organizations that support EV which are initiated by employers or employees as defined by the European Commission (2014). The findings of the survey capture the demographic profiles of the respondents, the types of activities, the resources deployed for EV program, the benefits of EV to the employers, and the challenges faced by employers in managing EV. Table 5 Employers with employee volunteering not part of CSR program Categories 1. Health 2. Education 3. Economic development 4. Environment 5. Infrastructure 6. Relief programs Total
Activities Health-related donations Teaching children, scholarships, internships Entrepreneurship training for farmers, tourism village development, partnership with small business, financial literacy, asset management Tree planting, waste management Small repairs for mosque, schools Donations for orphans, foster children, lunches for surrounding communities
Respondents 1 12 8
Percent (%) 3 37 24
2 2 8
6 6 24
33
100
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Table 6 Type of institutions Type of the institution Private higher education Government Private enterprise State-owned enterprises TOTAL
Number of respondents 3 4 45 8 60
Percentage (%) 5 7 75 13 100
Table 7 Gender of respondents Gender Male Female TOTAL
Number of respondents 38 22 60
Percentage (%) 63 37 100
Table 8 Age group of respondents Age group Boomers Gen X Millennials Gen Z TOTAL
Age 56–74 years old 44–55 years old 25–43 years old < 25 years old
Number of respondents 9 11 38 2 60
Percentage (%) 15 18 63 3 100
Table 9 Respondent’s position in the organization Positions Lower-level management Middle-level management Staff Top-level management TOTAL
5.1
Number of respondents 4 31 6 19 60
Percentage (%) 7 52 10 32 100
Respondents’ Profile
The unit of analysis of this chapter is the employer. As shown in Table 6, the majority of employers (75%) are private companies, followed by state-owned enterprises (13%), government (7%), and private higher education (5%). As for the profile of respondents representing the employers to fill in the questionnaires, the survey categorizes them into gender (see Table 7), age group (see Table 8), and their positions in the companies (see Table 9). In terms of business size, most of the employers are large companies employing more than 250 people (66%), followed by medium-sized enterprises (17%), small enterprises (10%), and microenterprises (7%) as presented in Table 10.
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Table 10 Business sizes of respondents Business size Microenterprises Small enterprises Medium-sized enterprises Large enterprises TOTAL
Number of employees employeda 250 employees
40 60
66 100
a Note: OEDC categories of company size (https://data.oecd.org/entrepreneur/enterprises-by-busi ness-size.htm)
Table 11 Types of industry integrating EV as a CSR strategy The industry of the institutions Agriculture and agribusiness Automotive Banking, insurance, and financial services Construction Consulting Consumer goods Education Mining and energy Health Manufacturing Pharmaceuticals Publishing Real estate Service Shipping Technology Travel TOTAL
Number of respondents 2 1 14 3 4 6 3 10 1 1 2 1 2 1 5 2 2 60
Percentage (%) 3 2 23 5 7 10 5 17 2 2 3 2 3 2 8 3 3 100
As for the lines of business, the respondents come from a diverse organization, but the majority comes from the banking and financial services (23%), mining and energy (17%), and consumer goods (10%), as shown in Table 11.
5.2
Practices and Employers’ Investment on Employee Volunteering
The survey found that EV has been practiced by the majority of respondents for more than 1 year, where the 42% of the respondents have conducted EV for over 6 years, as shown in Table 12.
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Table 12 Length of experience in employee volunteering program Length in conducting EV 6 (years Total
Number of respondents 9 20 6 25 60
Percentage (%) 15 33 10 42 100
Table 13 Average participants of employee volunteering program per year Average participants of EV in a year 249 persons No data or don’t know TOTAL
Number of respondents 12 10 18 12 8 60
Percentage (%) 20 17 30 20 13 100
Table 14 Time of employee volunteering implementation Time of EV implementation Both inside and outside working hours During free time or outside working hours During working hours Total
Number of respondents 36 13 11 60
Percentage (%) 60 22 18 100
The respondents also report the numbers of employees involved in EV, where half of the respondents (50%) have more than 50 employees per year as volunteers in their EV programs, of which 20% even have 250 employees or more per year which is considerably high, as summarized in Table 13. As presented in Table 14, in terms of the time when the employees conduct their EV programs, the majority of respondents (60%) report that their employees are conducting EV programs both inside and outside working hours. Coupled with the above figures of Table 13, those reflect generous and serious attitudes of majority of the respondents toward EV. As for the stakeholders involved in EV, from multiple answers from the respondents, the survey has captured that EV has actually involved both internal and external stakeholders of the employers, including the employees, customers, NGOs, and other social organizations, educational institutions, and local communities (see Table 15). The survey also shows that the employers invest in the resources to support EV activities, including the use of company facilities, the time for employees to do volunteering activities, the money to support volunteers or to donate, and the training for volunteers (see Table 16). When it comes to the types of facilities provided by employers to support EV programs, the survey captures a variety of facilities, including electronic equipment, vehicle building, transportations and accommodation, farmland, books, cleaning equipment, and merchandise (see Table 17).
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Table 15 Stakeholders involved in employee volunteering Stakeholders involved in EV Customer of the company NGO or other social organizations Employees Educational institutions Local community Government
Number of respondents (multiple answers) 24 27
Percentage (%) 40 45
60 2 2 2
100 3 3 3
Table 16 Employers’ resources to support employee volunteering Resources of the company Use of company facilities Time off exchange, where the company provides leave to the employees for volunteering Money, as a reward to volunteers or for donations Human resources for training or mentoring the volunteers
Number of respondents (multiple answers) 58 31
Percentage (%) 97 52
28 43
47 72
Table 17 Types of facilities provided for employee volunteering Input (type of facilities) Electronic equipment, e.g., laptop, projector, etc. Vehicle Building or venue Flight ticket or accommodation Agricultural or farmland Books Cleaning supplies or equipment (boots, gloves, trash bags, etc.) Merchandise for people in the community who involved in the EV program (e.g., participants in training or workshop sessions)
5.3
Number of respondents (multiple answers) 48 40 33 4 2 1 1 1
Percentage (%) 80 67 55 7 3 2 2 2
Measuring Employee Volunteering Outputs, Outcomes, and Impacts
One of the key success factors of EV is that the programs should be measured. All respondents measure the outputs of EV quantitatively on the numbers of activities or the numbers of people receiving benefits from EV programs as presented in Table 18. As for the outcomes, respondents measure the changes made through EV programs as shown in Table 19.
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Table 18 Outputs of employee volunteering Number of respondents 3
Outputs Number of participants based on the EV activities or program Number of people reached for health services Number of local people or community (teaching community) Number of donation to children in needs Number of scholarship distributed Number of children or students being taught Number of public facilities Number of entrepreneurs and UMKM Number of participants and sponsor in the event Number of events Number of houses built for the poor Numbers of nutritional package Numbers of the living environment covered Number of worshipers TOTAL
Percentage (%) 5
3 11
5 18
3 1 14 6 6 1 2 1 2 6 1 60
5 2 23 10 10 2 3 2 3 10 2 100
Table 19 Outcomes of employee volunteering programs Outcomes Attitudes toward a sustainable environment Conditions of public facilities Understand the concept of financial literacy Quality of home as a place to live Employee’s understanding of the culture of local people Entrepreneurial capability Improvement of children’s education Motivation to pursue higher education Better health condition Better condition for natural disaster victims Nutritional improvement Various life quality improvements Volunteer understanding of social issues Public understanding of the company Better company operations TOTAL
Number of respondents 10 5 5 1 1
% of respondents 17 8 8 2 2
6 6 3 4 2 2 6 2 3 4 60
10 10 5 7 3 3 10 3 5 7 100
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Table 20 Employers’ internal and external benefits of employee volunteering
Internal and external benefits of EV Employee recruitment Employee retention, morale, or work-life balance Employee skill development Employee team building Public relations, branding, and reputation Improved morale and motivation Development of caring culture and community service Better communication across the company Being seen as a good citizen, trust-building with the community, and gaining a “license to operate” Sales and profitability
5.4
Number of respondents (multianswers) 7 11 33 2 24 14 13 1 3 5
Percentage (%) 12 18 55 3 40 23 22 2 5 8
The Benefits of Employee Volunteering to Employers and Society
In terms of benefits of EV to the company, the survey supports previous studies about the internal and external benefits of EV. As shown in Table 20, EV has contributed to the employers in the aspects of human capital development, organizational citizenship behavior, business performance, and social responsibility of the organization. As for the benefits of EV to broader societal and environmental issues as stipulated in Sustainable Development Goals, the survey found that respondents’ activities relate and contribute to the achievement of the 17 SDGs through EV activities where companies focus on certain social and environmental issues. Table 19 shows respondents’ contributions to the improvements of environmental quality and climate change (32%), quality education (23%), economic opportunities and decent work (20%), eradication of poverty and hunger (13%), and improvement of health and well-being (12%) (Table 21).
5.5
Challenges and Key Success Factors in Conducting Employee Volunteering
In terms of challenges in conducting EV, the survey supports previous findings suggested by BCCC discussed in Sect. 4. Table 22 shows the challenges faced by respondents in conducting effective EV, relating the major challenges captured, i.e., lack of employee engagement (32%) and limited time and fund (27%), with findings in Table 13. With the average participants of EV program per year, there is an indication that despite the challenges, half of the respondents have done well in overcoming them, therefore enabling to attract a good number of employee volunteers.
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Table 21 Employee volunteering contributions to SDGs Sustainable Development Goals No poverty and zero hunger
Good health and well-being
Quality education Decent work, economic growth, inequalities Environmental issues – Sustainable cities and communities, climate change, life on land, life below water
Activities Charity event management, food supplies to surrounding communities Counseling on health services, nutrition improvement programs Book donations, scholarships, internships Entrepreneurship education, women entrepreneur development, financial literacy Biopore infiltration holes, environmental research and observation, trash cleanup in tourism areas, waste management
TOTAL
Number of respondents 8
Percentage (%) 13
7
12
14
23
12
20
19
32
60
100
Table 22 Challenges in implementing employee volunteering Challenges in EV implementation Lack of employee engagement The capacity of the third sector organization The knowledge gap between company and its partners Limited time and funds Partnerships with community groups Permit to execute the program Consistency and continuity Access to the EV location Integration of social and business benefits No obstacles yet TOTAL
Number of respondents 19 2 2
% of respondents 32 3 3
16 9 1 4 1 2 4 60
27 15 2 7 2 3 7 100
Finally, the survey also captures the key success factors for EV implementation which resonates with the BCCCC and Points of Light assertions discussed in Sect. 4. The summary of respondents’ views of key success factors is depicted in Table 23. Overall, the survey on EV implementations in Indonesia provides empirical evidence that illuminates the linkages between EV motivations, inputs, and activities conducted by employers and employees, the benefits of EV to internal and external stakeholders, key success factors and challenges of implementing EV, and overall impact of EV to SDGs.
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Table 23 Key success factors of employee volunteering programs Key success factors in EV It focuses on causes for which the company is especially well suited to support A company culture that promotes the employee involvement in the community A good evaluation for the results of the employee volunteering program Sufficient investment or resources from the company Levels of involvement or participation from the majority of employees The goals of volunteer project contribute toward the company business success TOTAL
6
Number of respondents 23
Percentage (%) 38
13
22
9
15
2 5
3 8
8
13
60
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Discussions
The phenomena of EV in Indonesia support the findings of previous research on EV in several ways. Firstly, EV as part of CSR program is driven by intrinsic and extrinsic motivations to serve business needs and societal causes, respectively (Basu and Palazzo 2008), as illustrated by HR Manager of a Consumer Goods Company 2, “Our corporate values drive us to care for communities. . .. We work with communities with mutual respects to solve social issues while helping the company to achieve its long-term sustainability goals,” and by the Manager of Private Bank 2, “Our EV programs are designed to involve employees in social activities aside from their routine work responsibilities.” Secondly, as suggested by previous studies (e.g., Lukka 2000), EV can be initiated by the employers and employees, and it can be implemented within and outside working hours where companies provide supports in terms of facilities and time off for employees. The survey in Indonesia reveals that the program can be driven by employees: “Our employee volunteering activities are driven by employees’ initiatives, and they are integrated into our overall CSR strategy. . . It makes me feel motivated because I see my company cares about our surrounding communities” (IT Manager, Insurance Company). Furthermore, the survey shows that employers allow EV programs to use company facilities, provide time off for employees involved in EV, give monetary donations for the programs, and provide training and mentoring for employees to conduct EV. Thirdly, EV generates internal and external benefits to employers (Cycyota et al. 2016). Internally, EV would enhance employee skills and motivation that lead to increase their organizational citizenship behaviors (OCB). The survey shows that 33 respondents stated that EV has improved the skills, for instance: “Employee volunteering has improved our employees’ public speaking skills” (Executive Director, Central Bank). Furthermore, 11 respondents expressed their pride for
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working in company that have EV program, for example: “I am very proud to be part of my company’s volunteering program as I can make a difference by contributing directly to improving social conditions” (Senior Analyst, State Owned Company 1). Externally, EV would increase of company reputation that will attract potential employees, retain current employees, improve organizational culture, and strengthen brand equity and eventually increase profitability (Cycyota et al. 2016). The evidence from Indonesia has sown that EV contributes to the enhancement of the employers’ public relations, branding, and reputation, in addition to being seen as a good citizen. Overall, EV have facilitated trust-building with the community and gaining a “license to operate” which reduce social risks and contribute to higher profitability. Fourthly, EV can contribute to the mitigation of the world’s problems if companies around the globe allow their employees to volunteer (Rodell et al. 2017). The survey in Indonesia shows that EV contributes to the achievement of SDGs in eradicating poverty and hunger by providing food supplies to surrounding communities; in improving good health and well-being by providing counseling on health services and nutrition improvement programs; in supporting quality education by donating books and providing scholarships and internships; in facilitating decent work, economic growth, and reduction of inequalities by providing entrepreneurship education, women entrepreneurs development, and financial literacy; and in dealing with environmental issues related to sustainable cities and communities, climate change, life on land, and life below water by preserving the land, conducting environmental research and observation and trash cleanup in tourism areas, and improving waste management system. Finally, the survey also identifies the key success factors and challenges in conducting EV. Points of Light (2017) and BCCCC (Boccalandro 2009) suggest that employers need to have clear vision and strategic goals to tackle the intersection between the needs of business, employees, and society. The survey found that majority of respondents agree that EV should be placed within the strategic goals of the company. For instance: “Employee volunteering is integrated into our corporate strategy, so we can sustain our program. . . The program has to be aligned with our overall strategy in entering new market or in promoting our brands to community” (Manager, Private Bank 2). As for the challenges, the study found that the biggest challenges for implementing EV are lack of employee engagement, limited resources, and difficulties to finding the right partners to collaborate. The Department Head of Private Bank 3 mentioned: “We still have challenges in attracting employees to join our employee volunteering program,” and a Group Head of an Agribusiness Company said: “Finding suitable local champions and partners to collaborate is one of the main challenges in our employee volunteering.” Overall, a linkages between CSR strategies; benefits of EV to the employers, employees, and society; and EV impacts in contributing to SDGs can be drawn from a combination of empirical evidence from Indonesia and findings from previous studies on EV. Such a conclusion is discussed in the next section.
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Summary
This chapter contribute to EV, CSR, OCB, corporate sustainability, and sustainable development discussions by providing snapshots of important aspects of EV, including different terminologies used by researchers and companies; global trends of EV implementation; effective management of EV; impacts of EV to the employers, employees, and society; and challenges in EV implementation. This chapter also highlights EV implementation in Indonesia based on a recent survey designed for gaining empirical evidence to support this chapter. In conclusion, a virtuous cycle between EV as part of CSR strategy, corporate sustainability, and SDGs can be drawn. Firstly, the chapter has shown that EV can be applied as a strategic management tool of an employer to obtain internal benefits of improving OCB and external benefits of enhancing stakeholder management and corporate reputation while solving sustainable development issues. Secondly, the chapter has provided insights on how employers can implement EV effectively by considering intrinsic and extrinsic motives of both employers and employees. Thirdly, EV programs have the potential to contribute to every aspect of SDGs as the activities are conducted at community level, touching the lives of people directly. The global trends of EV have shown that over 90% Fortune 500 companies are having EV program, while in Indonesia, 88% companies in the survey also have EV activities (57% have integrated EV into their CSR strategy). Evidence from Indonesia also shown that EV programs have dealt with the issues stipulated in SDGs including poverty, hunger, good health and well-being, education, decent work, economic growth, and inequalities, as well as environmental issues covering sustainable cities and communities, climate change, life on land, and life below water. Therefore, globally EV can be a very powerful force for employers around the globe to achieve their economic, social, and environmental goals simultaneously by contributing to the achievement of Sustainable Development Goals collectively.
8
Cross-References
▶ Corporate Social Responsibility (CSR) in Multinational Companies (MNCs), Small-to-Medium Enterprises (SMEs), and Small Businesses ▶ Corporate Social Responsibility Reporting: Evolution, Institutionalization, and Current State ▶ Definitions of Corporate Social Responsibility ▶ Social Capital, Community Engagement, and Corporate Social Responsibility ▶ Triple Bottom Line ▶ Work-Life Balance and Well-Being at Work Acknowledgments This chapter is jointly funded by the research funds of Sekolah Tinggi Manajemen IPMI and PT Bhineka Belitung Lestari.
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Socially Responsible Retailing Ghulam Sughra
Contents 1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Development of CSR in the Retail Sector . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Literature Review and Theoretical Perspectives in Retail Context . . . . . . . . . . . . . . . . . . . . . . . . 3.1 Legitimacy Theory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.2 Carroll’s CSR Pyramid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.3 Sustainable Development Model . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.4 Stakeholder Pressures in the Retail Sector . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 CSR Reporting in the Retailing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 CSR Issues in the UK Retail Sector . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.1 Environmental Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.2 Community Investment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.3 Health and Safety and Workplace Disclosures in CSR Reports . . . . . . . . . . . . . . . . . . . . . 5.4 Customer Expectations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.5 Community Expectations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Cross-References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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Abstract
Corporate social responsibility (CSR) is becoming an increasingly popular concept in competitive retail sector and deals with the economic, ethical, and environmental integrations in the business environment. This chapter sets out to explore the commitments and agendas of socially responsible retailers in the UK and provide a snapshot of the key issues in the CSR reporting in the UK retail sector. The chapter draws its information from the top socially responsible retailers in the UK. It aims to provide a review of CSR agendas being pursued by eminent retailers by exploring CSR reports of the selected retailers under four themes such as community, environment, health and safety, and workforce. The G. Sughra (*) London School of Commerce, Cardiff Metropolitan University, London, UK © The Author(s), under exclusive license to Springer Nature Switzerland AG 2021 D. Crowther, S. Seifi (eds.), The Palgrave Handbook of Corporate Social Responsibility, https://doi.org/10.1007/978-3-030-42465-7_65
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findings revealed that each of the selected retailer had its own approach to CSR with some variations in providing the detail about the nature and extent of the CSR agendas. However, the message is evident that retailers considered the key CSR themes as an integral part of their core business which could be a source of added advantage. The chapter begins with discussing the development of CSR, theoretical perspectives, importance of CSR reports, and key issues discussed in the retail context. The review of the CSR agendas in the retail sector can be of interest to academics, practitioners, and professionals working in the retail sector. Keywords
Corporate social responsibility · Environment · Community · Sustainability
1
Introduction
Retail firms’ mindset has been shifted since the emergence of CSR programs. Although CSR is described as a social responsibility of the business to increase profits (Friedman 1970), some argue that it exists to serve the good of the greater community (Weber 2013) and represents activities and initiatives of the retail firms with significant social, environmental, and economic implications (Du et al. 2010). There are different terms and concepts related to social responsibility of retail firms, such as “corporate sustainability,” a business approach that creates value for the retail firms through social and environmental developments; corporate social responsibility or “corporate citizenship” which involves the social responsibility of the retailers to meet ethical, legal, and economic requirements; “stakeholder concept” that firms should consider values and ethics in managing the interests of other groups; and “shareholder value theory” which focuses on the interests of the shareholders of the retail organizations. Retailers’ thinking about the role of the society is not new; however, in recent years, the social movement toward CSR has boomed. According to KMPG, more than 90% of the world’s top 250 companies now produce an annual report on their CSR activities. The impact of climate change has featured in the World Economic Forum’s top five global risks every year since 2011. The scientists warned that we are running out of time to address climate change; therefore, concerns about sustainability are becoming mainstream which means that retail firms increasingly see sustainability as a way forward to add value by looking into low carbon solutions, community performance, and addressing workforce issues. Hence, retail firms have moved beyond perceiving CSR as a risk agenda to seeing opportunities for value creation.
2
Development of CSR in the Retail Sector
The increasing awareness level of customer and community expectations and, with the progression of globalization, the impact of retail business on the society and environment became more important as the retailers started to have more
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influence on the society which could not only expand the opportunities available to the society but also be detrimental in the sense that retailers had more control over the local communities, work force, local produce, and economy. With the realization of the political power that retail firms had on the society, governments became more interested in monitoring corporate behavior (Beesley and Evans 1978). A mapping of retail firms’ important stakeholders may include communities, employees, investors, suppliers, shareholders, consumers, suppliers, NGOs, and governments. Despite being the dominant ideology, there has been criticism on focusing the profit maximization and ignoring the roles of corporations in the society (Freeman 1984). For some researchers, CSR is a simple philosophy about the relationship between business and society (Ofori and Hinson 2007) and comprises of the actions of the retail firms that seem to further some social good beyond the interest of the firm (McWilliam and Siegel 2001). For others, it is a sensitive concept, a term that draws attention to a complex range of elements and issues that are related to the function and position of the business enterprise in contemporary society (Blowfield and Murray 2008). Weber (2009) argued that business exists to serve the good of the community. Likewise, Henderson (2001) considered CSR to be set of actions which respond to various stakeholders to improve sustainable development in economic, social, and environmental aspects. Stakeholders, shareholders and investors make most of their decisions based on the financial performance. Dahlsrud (2008) defines CSR as a social construction and coded the CSR activities into five groups or dimensions, namely, environmental, social, economic, voluntariness, and stakeholder dimensions. Argandona and Hoivik (2009) maintain that CSR is an ethical concept that demands for actions which are socially responsible. The conservative view of CSR is that it should be voluntary and should be focused on the retail firms’ own willingness based on their size and level of profits. However, proponents of this group ignore the fact that CSR is self-regulated and argue that it is not voluntary in the sense that it exists because of social and external market pressures which hold the retailers socially accountability (McBarnet et al. 2007). Therefore, it is impractical to expect that firms perform CSR initiatives on their own without the intervention of external pressures (Kerr et al. 2009). The theory of CSR encourages the firms to consider not only its financial dealings but also the social and environmental consequences that they place on their shareholders and the society. Retail firms should be responsible for all their actions that affect their surroundings and society at large and must repair any damage they cause as a result of their actions. Moreover, they should also be willing to redeploy some of their profits to fix any problems or to generate positive social impact in the society (Lawrence and Weber 2008). The role of the companies in the broader social environment created different perspectives of CSR from economic viewpoint, for example, CSR as maximizing returns to shareholders (Friedman 1970). CSR is the continuous commitment by a business to behave ethically and contribute to economic development while improving the life of the workforce, their families, local community, and society at large (Moir 2001).
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Modern developmental CSR intermingles social goals with economic goals as the stakeholder influences and pressures are crucial for factors such as image building, improving financial performance and public relations with the aim of obtaining social support and approval (Moneva et al. 2007). One way to achieve this objective is to make all the information available either by making that information available on the annual reports and websites or by producing a separate report regarding their social responsibility activities (Du et al. 2010). The European Commission (2001) defined CSR as a concept whereby companies integrate social and environmental concerns in their business operations and in their interactions with stakeholders on a voluntary basis. The literature suggests the importance of business ethics which can lead to competitive advantage. However, businesses dealing with ethical obligations can attain competitive advantage and better financial performance by attracting excellent employees; improving company’s image of customers, shareholders, and suppliers; and avoiding unethical behavior and legal compensations that can damage the company’s image (Donker et al. 2008). CSR comprises of the notion that organizations should meet the expectations of the society (Gossling and Vocht 2007). The pressure of corporate accountability is increasing day by day (Waddock 2004). This controls the social, moral, legal, and financial aspects. As the government restrictions are increasing even in the times of liberalization, consumers’ concerns are increasing with the rising transparency of markets. On the top of this, customers are asking for sustainable products (Gauthier 2005). Apart from looking at the financial performance of corporation’s portfolio, investors are also valuing the way corporations meet their social responsibilities (Barnett and Salomon 2002). Social expectations and pressures can affect retail firms’ reputation and may dissuade customers from buying the products or hurt employees’ motivation or morale. To deal with the new realities and increasing pressures of the customers’ expectations and demands, retailers revolve their corporate strategies to the social dynamics that promote their responsible image. As a result of these pressures, governments, social activists, and non-governmental organizations steer the retailers toward increasing their social performance. These pressures can come through various sources such as media campaigns, regulatory enforcements, or product boycotts. As a result of the increasing pressures, retailers step up to progressive community and environmental practices, responsible behavior, and initiatives to minimize energy use and promote eco-responsibility among the suppliers.
3
Literature Review and Theoretical Perspectives in Retail Context
3.1
Legitimacy Theory
This theory is found on the concept that corporations are obliged to act within the norms and bounds of what society explains it to be socially acceptable to operate successfully (Deegan and Gordon 1996; Schwartz 2005). Legitimacy theory is one
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of the most widely used theories to elaborate CSR disclosures (Islam and Deegan 2007) for the retailers. Organizations seek to ensure continuously that their activities are acceptable to the society (Wilmshurst and Frost 2000). Social perceptions and expectations about what can be termed as legitimate fluctuate with the passage of time. Consistent with the legitimacy theory, it becomes imperative for the companies to adjust their boundaries and maintain their legitimacy according to the changing needs and expectations of the society (Islam and Deegan 2007). Also, legitimacy theory emphasizes the alignment of the value system of the organization with the society and ensures that aims and objectives of the organization meet social expectations. However, this theory does not specify the norms or the formulation of social expectations. The notion of legitimacy seems to be relevant for other theories such as stakeholder theory, institutional theory, and resource-based theory (Gray et al. 1997; Sonpar et al. 2010). For instance, legitimacy is imperative for any organization to operate in the society. Hence, legitimacy theory and stakeholder theories are one of the most influential theories within the domains of environmental and social research. Researchers (Higginson et al. 2006; Milne and Patten 2002; Brennan et al. 2013) have used this theory to unfold the motivation underneath voluntary environmental disclosures of the retail organizations. However, the challenge of this theory is that it is widely used but loosely defined as it provides understanding of certain managerial actions but fails to specify what is needed to be done. Suchman (1995) found that many researchers would use the term legitimacy, but a few would define it. The fact that this theory has been failed to define the specific tasks to be done, it is called as a “blind man’s hammer” by social scientists (Hybels 1995). Proponents of legitimacy theory have insisted that retail firms should be obliged to act according to the norms and values of society (Islam and Deegan 2010; Bhattacharyya 2014; Nurhayati et al. 2016). They require the value systems of organizations to be designed and implemented to meet social expectations (Bhattacharyya 2014; Nurhayati et al. 2016). The legitimacy theory has unfolded corporations’ motivation for voluntary environmental disclosures and demonstrated firms’ commitment to reducing carbon emissions and improving eco-friendly society (Islam and Deegan 2010) which has implications for improving their financial performance. Its voluntary appropriation has, however, led to criticisms that the legitimacy theory only provides understanding of managerial actions but fails to specify what exactly is needed to be done.
3.2
Carroll’s CSR Pyramid
As a general concept of CSR, the performance of the firms should be socially endorsed. Carroll’s CSR pyramid deals with a simple framework that helps argue why and how firms should approach their social responsibilities. Carroll (1979) came out with the concept of corporate social performance (CSP) and pin-pointed the concrete issues that the firms had to face while making CSR the center of their
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business. Schwartz and Carroll (2008) have also proposed an alternative approach that is based on the three important dimensions of ethical, legal, and economic responsibilities. The first main concept which contains the utmost importance in the literature review is corporate social performance (CSP) which includes stakeholder management, management issues, and organizational process of environmental assessment (Crane et al. 2008). Carroll (1991) proposed a four-part, comprehensive model of the “pyramid of CSR” as the government bodies (Environmental Protection Agency and Consumer Product Safety Commission) in the USA became more interested in aligning social enterprises and stakeholder theories because the corporations were criticized for not being accountable to their stakeholders and society. Carroll (1979) supported the concept that businesses should create profits for their stakeholders. This model was one of the basic models of CSR enlisting, structuring, and organizing the responsibilities of the corporations. Carroll (1991) supported Friedman’s argument that business should create profit for their shareholders and made it a foundation of the pyramid by positioning it at the bottom. The first tier of the pyramid was the base and mandatory to be accomplished only after other responsibilities (Carroll 1991). Second tier comprised of the legal responsibilities where corporations must adhere to the rules and regulations and the law by maintaining good business practices. Third tier stated the ethical responsibilities where corporations were obliged to do right, fair for their stakeholders avoid any actions that could harm them. The last layer was based on the philanthropic activities where corporations should enact as a good citizen to the community and allocate the resources where needed (Carroll 1991). Klonoski (1991) also develops the idea that apart from making money, businesses should have the responsibility for social problems either created by the external factors or the business itself. This also includes the ethical obligations and discretionary actions done by the business in the favor of the society. Wood (1991) states that the real meaning of the corporate social performance (CSP) lies in more lucrative results for the society. Apart from that, corporate reputation is connected to the acceptance of the community where the company operates. The theory of CSP proposed by Wood (1991) is one of the best theories of CSR because it combines its principles at three levels, namely, individual, institutional, and organizational level, and states the outcome of the corporate behavior and the process of the corporate responsiveness. A major criticism of Carroll’s Pyramid was observed lack of consideration of corporate sustainability and environmental management in the pyramid (Visser 2006). The critical analysis of the Carroll’s Pyramid shows that it favors the positive relationship between CSR and financial performance, as it provides the economic component as the foundation of the pyramid upon which all other categories are relied upon. On the other side, companies can be called socially responsible provided they are profitable (Visser 2006). To take his argument further, Campbell et al. (2012) observed that companies which are economically weak less likely to engage in CSR. This model is one of the earliest models of CSR enlisting and structuring the responsibilities within the corporations. Although simple structure of this pyramid
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holds the main appeal, it is not considered an adequate tool to explain complex relationships between business, environment, and society (Campbell et al. 2012).
3.3
Sustainable Development Model
Aras and Crowther (2009) propounded a comprehensive model of sustainability that revolved around four aspects of CSR such as environment, society, financial performance, and organizational culture in both short-term and long-term contexts. Sustainability development could be achieved by maintaining economic activity, conserving the environment, developing spiritual and cultural values, and ensuring human rights and social justice (Aras and Crowther 2009). Aras and Crowther (2009) focused on the development of the model relating to CSR and sustainability and argued that most of models relating to sustainability were inadequate because of focusing too much on environmental and social part and over-looking financial performance which was imperative to sustainability. It could be because authors saw a conflict between financial performance of the corporations and their social and environmental performance (Aras and Crowther 2009). Kramer Porter and (2011) supported this model and suggested that firms could create business case for them by incorporating sustainable business model. Notwithstanding, sustainability model and Carroll’s Pyramid have taken inspirations from the stakeholder theory to explain how firms can develop and maintain economic activities without compromising the continuing development of future generations (Carroll 1999; Aras and Crowther 2009; Samy et al. 2010). This approach to improving firms’ performance has been the focal point of the sustainable development model that invokes businesses to adopt strategies that aim to protect the environment, develop cultural values, and promote human rights and social justice (Aras and Crowther 2009). In a way, it supports the concept of corporate citizenship in which firms are encouraged to behave responsibly and commit to shared community values that are socially sustainable for business and its interest groups (Crane et al. 2019).
3.4
Stakeholder Pressures in the Retail Sector
Before the development of stakeholder theory, there was a common concept that firms should satisfy the needs of their shareholders. The justification for this is that shareholders invest their money in firms and they should have maximum financial returns in a way to receive their equity share of profits (Friedman 1982). The stakeholder theory, however, suggests that apart from making money for the shareholders, firms should consider the needs of other stakeholder groups such as employees, communities, investors, managers, customers, governments, suppliers, and competitors depending on their influence, experience, and legitimate claims in the operating environment (Garriga and Melé 2004; Ismail 2009).
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Despite having different definitions of the stakeholder groups, the important and typical stakeholder groups personify those individuals or amalgamation of individuals who can impact or impacted by the activities of the organization (Freeman 1984). So, this relationship is reciprocal in which both parts have equitable interests. The examples include customers who can be affected by the firm in terms of product, marketing, and customer services and can leave an impact on the firm in terms of buying or boycotting the product. Businesses can also increase stakeholders’ trust, commitment, and satisfaction when ethical values fulfill their expectations. Stakeholders and their interests are important regardless of their contribution to the business (Jones et al. 2018). Thus, businesses should have obligations to treat the stakeholders fairly and inform them of any behavior or performance that can affect the society and environment. Stieb (2009) observed that stakeholder theory asks more questions and answers less regarding the role of the business in society. With little clarity, this theory suggests that the purpose of the business is to create values for the stakeholders and not just the shareholders. If the stakeholders are those who can affect or affected by the business, then they should have serious decision-making power which was not clarified by Freeman (1984). Moreover, this theory assumed that interests of all the stakeholders could be met easily but ignored the shortcomings that exist in the businesses. For instance, it offered no explanation of what should be done with the stakeholders in case of market monopolies and the private ownerships which could make it difficult for the businesses to fulfill the needs of all stakeholders (Stieb 2009). Another limitation of this theory was noted by Mansell (2013) that if market economy was based on social contract of the corporations, then stakeholder theory undermined the rules of the business (Mansell 2013). External pressures compel the firms to adopt different CSR strategies and practices to create value and long-term benefits. Lozano (2013) focused on heavy polluted industries and highlighted pressures from different groups of stakeholders such as government, communities, customers, and competitors and explained that the strong impact of stakeholder pressures was mainly responsible for the moderating role of pressures in the relationships of CSR and financial performance (Lozano 2013). Zhu and Sarkis (2007) argue that both non-market and market pressures play a role of moderating variables between performance and environmental practice. Their study focused on the environmental dimension of CSR and its related pressures from the stakeholders. Forced pressure improves environmental practices such as green purchasing and investment recovery, whereas competitors’ pressure improves economic performance. Therefore, firms adopt social and environmental practices because of stakeholder pressures (Zhu and Sarkis 2007). By fulfilling the needs of the stakeholders, firms can lead to improve their business performance (Freeman 1984). Therefore, stakeholder theory provides the foundation to the study of business and society (Haskins 2009). It is a strategic concept which aims to create competitive advantage by developing good relationship with its stakeholders (Freeman 1984; Porter and Kramer 2006). This strategic concept stems from the fact that various stakeholder groups have the basic power to enhance or reduce financial performance of the companies (Sweeney 2009; Obalola
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2010). It postulates that corporations owe some obligations to various groups of stakeholders and individuals (Haskins 2009). This theory was designed to balance the interests of various groups and stakeholders and reposition firms within the broad theory of the corporation (Garriga and Melé 2004). Advocates of the stakeholder theory suggest that apart from making money for the shareholders, firms should consider the needs of other interest groups such as employees, managers, customers, suppliers, government, communities, and even competitors, depending on their influence, experience, and legitimate claims in the operating business environment (Freeman 1984; Samy et al. 2010). The stakeholder theory therefore expands the agency theory and supports the notion that managers should be empowered to prioritize maximum financial returns for owners who invest their money in firms, and it aims to satisfy the expectations of all those who have interest in a business (McWilliams et al. 2006). The varying expectations of stakeholders have influenced firms to develop CSR strategies that seek to support charitable organizations (Maas and Liket 2011), promote community development (Chiara and Spena 2011), and reduce environmental concerns (Ameer and Othman 2012). By fulfilling the needs of the stakeholders, firms are expected to improve their financial performance through the reciprocal returns from, or economic exchanges with, the individual stakeholders whose interest might have been satisfied (Samy et al. 2010; Chiara and Spena 2011). For instance, customers who buy a firm’s products can rate the quality of the products high to attract many potential buyers which would eventually increase the firm’s sales growth. By assuming that all stakeholders’ interests should be satisfied, the stakeholder theory may struggle to address the conflicting needs of different stakeholder groups whose changing interests may differ from the normative strategies of businesses (Stieb 2009). Stakeholder theory is a dominant theoretical tenet in the field of CSR that influence firms’ obligation to charitable course, community investment, and environmental-friendly responsibility and encourage them to demonstrate their moral responsibility to the customers, the needy and society in general (Samy et al. 2010), whereas the sustainable development model has been instrumental in retailers’ CSR activities relating to environmental concerns and protection (Aras and Crowther 2009).
4
CSR Reporting in the Retailing
The aim of the CSR reporting is to provide stakeholders with relevant information based on which they can make credible decisions. Governments can use them for regulatory purposes and investors base their investment decisions on CSR reports (Aragon-Correa et al. 2008). However, in the marketplace, little is known about what consumers understand about CSR activities (Fatma et al. 2015). The way a firm report on the bigger matters of society shows how a firm is operating in the market. This can be taken as an indicator of how it has a linked action on its economic stability and decision-making processes. The purpose of such integration is
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considered as going beyond short-term profit-making issues and concentrates on the wider aim of emphasizing long-term economic performance issues (Pava and Krausz 1996; Aragon-Correa et al. 2008). CSR activities can be seen as influencing various stakeholders of the firm. Firm’s stakeholders can be external or internal (Hopkins and Crowe 2003). Many scholars supported that by applying CSR strategies primarily involving environmental activities can help the firms to acquire differentiation or cost leadership (Porter and Kramer 2006). Moreover, doing strategic CSR activities can help the retail firms to project a good image of being philanthropic, socially responsible, ethically driven, and environmentally sensitive firms (Karna et al. 2003; Porter and Kramer 2006). This can help the firms to differentiate their products from their competitors who are less engaged in CSR. UK retail industry is often expanded geographically, with distribution, manufacturing, and retail operations divided across various countries and regions. Retail firms should work hard to ensure their international corporate standards for labor, safety, quality of products, and more so for sustainability. So, their responsibility is unique, containing various components of law, supply chain, manufacturing, compliance, human resources, and ethics. When firms perform responsibly or commit fraud and show irresponsible behavior, society reacts and takes notice. As companies continue to perform CSR, they are required to be in the business and be profitable to be able to perform at customers’ expectation level. Late in the twentieth century, the governments in Western European countries, what is now called European Union, legislated that companies would have to involve employees in decision-making process; hence the establishment of work councils took place in workplace (Deegan and Blomquist 2006). Later, UK government passed many acts of parliament such as equal pay act 1970, health and safety at work act 1974, and sex discrimination act 1976. These acts were introduced to place some responsibility on corporate entities toward their employees. Because of UK government legislations, there came a change in the attitude. In late 1970s, companies started to publish annual employee reports. It was a self-regulatory or voluntary report with no specified layout or standard format (Jones 2010). Financial reports were primarily prepared for the investment purposes, for potential investors, financial institutions, shareholders, and lending institutions (Doh and Guay 2006; Kemper and Martin 2010). CSR reports were little different from the financial reports because they were expected to address the needs of vast network of stakeholders which included employees, shareholders, customers, suppliers, governments, management, NGOs, media, and public. As CSR reporting was a step toward the sustainable and successful business of the company, it had a direct effect on the economic performance of the companies (Doh and Guay 2006; Yeung 2011). Many specialized companies used different ways to analyze CSR reports such as G4 guideline initiatives, social accountability (SA) 8000, London Benchmarking Group (LBG), Global Reporting Initiative (GRI), Organization for Economic Cooperation and Development (OECD) guideline for multinational enterprises, or International Standard Organization (ISO) 26000. Soana (2011) pondered on the methods that could quantify social performance, survey study for the management,
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content analysis of CSR reports or documents with information about CSR activities, measurement of reputation by specialize agencies, measurement of individual indicators targeting on specific CSR activity, and ethical rating such as comprehensive measurement of CSR indicators (Soana 2011). Retail firms needed to demonstrate great awareness to develop their behavior and corporate strategy in the light of stakeholder’s expectations. Hence, they tried to become community-friendly organizations to sustain and be successful in the competitive market. Therefore, retailors became a well-integrated part of the community developing their corporate strategies based on serving the legal interest and welfare of the community and demonstrated these strategic decisions through CSR reports (Porter and Kramer 2006). Oberseder et al. (2014) based their study on qualitative research to measure the impact of consumer and manager’s perception of CSR. They conducted interviews to see how managers and consumers perceive CSR strategies. The authors developed conceptualization of CSR that could help the retailers to monitor their CSR activities and help them gain competitive advantage. Maignan and Ralston (2002) conducted a study on the differences of CSR reporting of large companies in the USA and Europe. The researchers collected the data from the companies’ websites to examine the justification for the CSR in different locations. According to the study, US firms made elevated claims about their good corporate citizenship as compare to the other regions. The authors found that most of the stakeholder issues that emerged were in the sections of the environment and community. Moreover, the study results indicated that 11.3% of US reports discussed CSR activities through stakeholder approach (Maignan and Ralston 2002; Hahn and Kuhnen 2013). Wagner et al. (2009) reported the inconsistent effect of CSR on consumers, whereas Smith (2008) argued that consumers can boycott unethical conducts of the firms. Trudel and Cotte (2009) agreed with Smith (2008) and explored that some consumers would pay premium prices for ethical attributes of the products to the point where they would punish unfair conducts. Klein and Dawar (2004) explored that CSR might mediate the effect of product crisis on consumer’s brand perception and evaluation. Luchs et al. (2010) explained a reconciliation between the effectiveness of the products and their ethical attributes. Moreover, they proposed that consumers understood that ethical products would be effective if they were in line with the important ethical issues prevailing in the society. Taking the viewpoints of these scholars, one can understand that consumers are among the key stakeholders to influence the strategies of the firms. Schnietz and Epstein (2005) revealed that many firms had various types of external and internal stakeholders, and to satisfy these stakeholders, firms needed community investments and social work to protect the organization from negative thoughts and intentions. Many consumers with social responsibility conscience bought the products from the firms who held positive influence on the society (Webster 1975; Sen and Bhattacharya 2001). Xu and Yang (2010) summarized nine dimensions of CSR through survey and statistical analysis to reflect certain expectations of the customers toward enterprises under Chinese social background. The contents of the survey included public assessment of Chinese CSR status, public
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perception of CSR, and public attention of each dimension of CSR. The findings revealed that most needed social responsibilities for Chinese enterprises were environmental protection, product safety, tax payment, public welfare programs, and public safety (Xu and Yang 2010). It was an interesting study to determine which aspect of CSR was preferred by Chinese customers. However, due to demographic restrictions, it could not be generalized in other regions. Bronn and Vrioni (2001) stated that firms use CSR in their marketing communication activities and that changing attitudes of the stakeholders have driven companies to innovate new ways of marketing increasingly relevant to social issues. To prove this, they cited findings from survey conducted in the USA which showed that when quality and price of the product were perceived as equal, many customers had shown their inclination toward socially responsible products and companies. Customer perception can be dynamic and can change with the passage of time. Therefore, retailers need to ensure that they keep on adopting such strategies that can fulfill their needs and expectations (Girod and Michael 2003). Customers’ opinion toward certain issues such as environmental concerns or community issues can fluctuate from fashion trends to public expectations of corporate citizenship or other CSR strategies such as reducing co2 emissions, energy control, donations, health and educational programs, or community work (Jones et al. 2009). Therefore, retail companies are doing a lot in order to attract customers, gain competitive advantage, and improve their relationship with consumers. Moreover, the authors observed that main dimensions of CSR reporting focused on marketplace, environment, workplace, and community (Jones et al. 2009). In making the case to CSR in the UK retail industry, focal point of UK government has been transparency in the ways that firms manage and address social, environmental, and economic issues. Moreover, transparent CSR disclosures can help the firms to improve their relationship with customers, employees, and other stakeholders. As a result, retailers are keen to disclose their CSR commitments increasingly (Jones et al. 2005). As these reports are accessed by all stakeholders, they are generally directed toward shareholders, pressure groups, consumers, policy makers, and investors (Snider et al. 2003).
5
CSR Issues in the UK Retail Sector
The retail sector includes any entity or business involved with selling products directly to customers or consumers. It is a large and dynamic sector of UK’s economy offering diverse range of products and services to the consumers and currently facing an upheaval as a result of many factors such as changing consumer demands, challenging economic conditions, and increased internet shopping. It includes department stores, supermarkets, shops, market stalls, and Internet retailers. In 2017, total value of UK sales accounted for £381 billion accounting for 5% of the total GDP (retail economics.com). It provided 2.8 million jobs to the UK economy, whereas economic output was £92.8 billion in 2017, which has been consistently contributing to the UK’s economy for the past 10 years (Rhodes 2018).
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Supermarkets are the fundamental components of the retail landscape in the UK. In the past few years, UK’s big three supermarkets’ (Tesco, Sainsbury, and Morrison) market share grew from around two thirds in 2000 to three quarters in 2011. Apart from the market share, this growth has been accompanied by several other features such as more energy-efficient stores, broadening product range, and increased multi-channel retailing such as home delivery and click and collect. However, this trend of expansions and increased market share has been reversed in the past few years from 77% in 2011 to 68% in 2018. This decline in the market share of the big retailers was accompanied by the rapid rise and increase of the lower cost competitors such as Lidl and Aldi. Since 2008, the combined market share of Lidl and Aldi rose from 5% to 13% in 2018 (Rhodes 2018). Considering the intense competition, the major supermarkets have moved away from out of town stores toward town center convenient stores and small supermarkets. Tesco, the largest retailer in the UK with over 3000 outlets, and £38.7 billion sales (2017/2018), announced that its convenient stores outnumbered the supermarkets in 2013. Tesco is a British multinational groceries and general merchandise retailer operating in the UK, Asia, and across Europe. In the UK it is the market leader with 27.3% of market share. Sainsbury’s is another eminent chain of supermarkets in the UK with 15.7% share of supermarket sector. Co-op is another major retailer in the UK promising clear social commitments with £7247 m sales and 6.3% market share. The firm is committed to ethical trade ensuring the rights of the consumers, manufacturers, and suppliers embedding ethical trade into core business processes and driving innovation in supply chain transparency. Lidl’s CSR report revolves around mainly three themes such as producers, people, and planet. Since its opening in 1994 in Britain, it has grown to more than 760 stores in the UK. The firm’s visions for the good food are the food produced, sold, and consumed in a way that benefits the producers, people, and planet. In its efforts to promote sustainable and efficient use of resources, low carbon economy following a science-based trajectory of the business minimizes the food loss and eliminates plastic and packaging, sourcing timber-based products and seafood from sustainable resources (Table 1). UK retail sector is mindful of the CSR issues prevailing in the society at a rapid speed. This can have significant implications on stakeholder’ perceptions as well as spending and purchasing power of the consumers. Due to uncertainty over breadth, speed and magnitude of changes can weigh on the economic prospects of retail Table 1 Market share of Company the top retailers in the UK Tesco collected from Kantar Sainsbury’s (2018) Morrisons Aldi Co-op Lidl M&Ss
Market share (%) 27.3 15.7 10.1 8.0 6.3 6.1 7.6
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companies. It is thus becoming critical for the businesses to understand the magnitude of social, ethical, and environmental issues.
5.1
Environmental Performance
Environmental issues have been more commonly reported CSR agenda addressed in the CSR reports by the global retailers, and UK retailers are no exception as these issues loom large within the CSR reports posted on the Internet by the firms (Jones et al. 2007). These environmental issues of the retail sector include water consumption, waste, raw material usage, energy consumption and co2 emissions, packaging volumes, use of chemicals, recycling and re-use, and biodiversity and relationship building with the environmental agencies. The firms have also introduced new trials and different LED lightings, solar panels, and HFC-free refrigeration systems. Marks and Spencer, for instance, stresses its commitment to conduct business in an environmentally responsible way, and it claims to be always looking for the innovative ways to reduce environmental impact. The projects include tightly temperature-controlled air conditioning within the stores, equipping new stores with efficient lighting technology, and efficient fixtures in the distribution centers and minimize the use of air shipment. The bulk of the company emissions into the atmosphere come from the transport distribution fleet. Retail companies are under pressure by markets, regulators, governments, and customers to constantly perform as a corporate citizen and do good for the society. Participation in charitable giving, disaster relief efforts, protecting the environment, providing help to solve community issues, offering healthcare benefits, complying with regulations and remaining profitable, and staying in the business prove to be a daunting task for the retail firms. Social expectations and pressures from media, markets, employees, NGOs, suppliers, and other stakeholders are considered as social norms. Society considers the moral reasoning of helping others and setting precedence for their competitors. Retail firms focus on the vital issues of energy conservation, emission reduction, sustainable and green products, supply chain, packaging, waste reduction, biodiversity conservation, green stores, and environmental reporting. Therefore, while having a better understanding among the UK retail industry, it enables them to better identify the areas of improvement and the issues that are easy to address. Firms can select and prioritize CSR strategies that will have significant potential enhancing their profits and understand that by planning CSR as a part of their overall plan, they can ensure that shareholder value and profit do not overshadow the requirement to behave ethically. So, CSR strategies can be considered as an investment opportunity rather than the cost between the firm and society. In the UK, DEFRA (Department for Environment Food and Rural Affairs) is regularly consulting on ways to help businesses to demonstrate their sustainability credentials. Retail firms are working hard to conserve energy, save money, and want to deliver better resource efficiency by increasing the operational efficiency of their delivery fleets.
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The retail industry is highly resource intensive, depending heavily on water and natural reserves and energy. It is also one of the major contributors to the UK economy and is important as a distribution channel for water, food, and lifestyle products. Retailers like Tesco and Marks and Spencer have acquired proactive environmental and sustainability agendas in particularly establishing sustainable supply chain. Initiative taken by the retail firms is not only cost saving but also helps them to create and enhance their brand image. Those companies that are willing to learn from such CSR strategies will have more competitive edge and will position themselves for the long-term sustainable growth. Auditing energy use and opting for more efficient ways to use is a trend for the retail businesses. Many firms in the UK have stopped using single-use plastics. In retail industry, supply chain can account for up to 80% of a company’s emission of greenhouse gases, waste, energy and water consumption, volume of packaging, transportation, co2 emissions, and green issues. Tesco aims to be zero carbon by 2050 and pledges to use scarce resources responsibly including supply chain. The company understands that climate change is the biggest threat world is facing and retail industry is no exception. It has profound impact on the planet; displaced population, rising sea levels, increased water scarcity, food productions, and extreme weather events are some examples. It has three tier strategies to reduce emissions, i.e., improving energy efficiency, reducing hydrofluorocarbons or HFCs leakage from the refrigeration system, and replacing them with lower emission alternatives such as natural refrigeration systems and using renewable energy such as solar panels. Carbon emissions include grid electricity, distribution fuel, refrigerants, use of natural gas such as district heating, and business travel. Carbon footprints which come from grid electricity are the pivotal focus for the retailers’ environmental performance because most of its electricity is used in lighting and heating. Some retailers such as Tesco have made an “F Plan” strategy to tackle emissions from distribution which includes fuller trucks and containers, fuller cages and pallets, fuel economy, and fewer miles. Some researchers argue that according to the top retailers, environmental issues were among the most reported CSR agendas for the retail companies (Jones et al. 2007; Batle et al. 2018). They included Co2 emissions, water and energy consumption, raw material usage, recycling, waste and packaging volume, and application of chemicals. Reducing carbon emissions has been one of the important motives of the retailers as highlighted in their CSR reports. The focus on the reduction of carbon dioxide emission is based on the global concern about the levels of the greenhouse gas emissions that result in climate change and global warming (Jones et al. 2007). Co2 is the long-lived gas remaining in the atmosphere for 50 to 200 years, and its main source is the ignition or flaming of fossil fuels. The UK government Energy White Paper set a goal to reduce CO2 emissions by 60% by 2050. The environmental aspect of CSR focuses on eco-efficiency, innovation, pollution prevention, and environmental leadership as suggested in the literature (Buysse and Verbeke 2003). Environment-related CSR aims to minimize the firm’s
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ecological impact during the entire process of product life cycle. The firms adopt international compliant environmental management systems to ensure that the environmental impacts as a result of the firm’s activities are managed and monitored systematically. Thus, by doing that, these firms build good relationship with the external stakeholders based on the trust and integrity. Many researchers posit that SMEs face more problems than large enterprises in following environmental CSR because its complexity in integration and management of value chain activities is beyond the acumen of SMEs (Spence et al. 2000). For instance, recycling-based programs require the assimilation of multiple activities such as production, inbound and outbound logistics, and post-sales service. So, the complexity of the assimilation of multiple activities and joining the value chain process emphasize the fact that environment-related CSR requires abundant resources and expertise (Torugsa et al. 2013). Stakeholders are concerned about the social and environmental impact of the retail firms’ activities, and they are ready to punish the firms through their spending or investment decisions. This concern has been manifested in their increased demand of environment-friendly products and eco-efficient programs based on highly recognized standards. The retail firms realize that consumers are concerned about the social issues that can impact how consumers perceive these companies and their products. Retail firms believe that tougher regulations are not enough rather companies should make informed decisions on the high street.
5.2
Community Investment
Community-based development projects indicate another important approach to CSR. The main idea of the CSR concept is to play a deeper role in society than only making profits and producing goods. This includes social and environmentally driven actions which means that the business sector is expected to go beyond its profit-oriented commercial activities and increase the well-being of the community to make the world a better place (Robins 2005). From the perspective of the firms, ethical behavior must be managed with reference to the local context. While selecting the strategy to use for the community-based CSR, the objective of the firms is to design projects that reflect the companies’ philosophy, match the available resources of the firms, and fulfill the needs of the local communities within which firms operate (Robins 2005; Varadarajan and Kaul 2018). There are many motivating factors driving the companies to adopt community initiatives in order to enhance their company’s image and reputation ultimately leading them to financial gains. The practice of ethics which is often referred as socially responsible investment (SRI) has grown considerably over the years (Walmsley and Bond 2003; Hoi et al. 2018). The importance of ethical investing contributing toward corporate philanthropic practice and enhancing sustainable development cannot be belittled. It shows an opportunity for the global financial markets to inculcate the social costs into their patterns of investment providing a market-based incentive to improve performance.
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All the multi-national companies seek the information and input from outside groups such as community members, NGOs, and governmental or industrial organizations to build good reputation and increase their financial performance (Chiara and Spena 2011). Another perspective of the firms is to be able to play a role of good citizen and bring benefit to the society and the environment. But at the same time, the purpose is to increase the competitiveness by doing the good for the society (Husted and Allen 2009; Varadarajan and Kaul 2018). Good employers create good communities. There is a notion that CSR is core to create successful and sustainable business. Retail industry is dynamic and valued participant when it comes to implementing its philanthropic plans with improved financial ambitions. Retail firms can try to accelerate their social impact by working with charities. By doing so, firms can show delivery of a positive net contribution to the world around them and can also align their business and social purposes. Community interactions are essential for the retailers for the harmonious community relationships and for the vitality of the effective communication of brand (Luo et al. 2016). Organizations are concerned about the well-being of the society in which they operate. All the companies seek to engage workers in the communities where they work and live to create a better standard of life not only for themselves but for the communities as well. Community work can range from various projects such as sponsoring the local sport team, engaging staff in raising funds for the charity, or initiating health awareness and educational programs for the local communities. Good relationships with the local communities represent responsible strategic objectives. Involvement practices with a social responsibility approach and engagement of the local stakeholders become critical and represent a strategic matter in the management of localized activities for the global business (Chiara and Spena 2011).
5.3
Health and Safety and Workplace Disclosures in CSR Reports
A healthy and safe workplace is a big challenge for the retailers, and different stakeholders put pressures on the firms to demonstrate their commitment to the continuous improvement of their working conditions. In the light of the society demands, retailers implement these occupational health and safety actions as an integral part of their general corporate strategy (Tang and Gekara 2018). Firms use CSR reporting as a communication tool to inform their stakeholders about firms’ performance, and health and safety disclosures are no exception. All the selected retailers report on their workplace commitment to their internal (employees) and external stakeholders (customers, investors, suppliers). Hence the basic argument is that by showing caring for their staff, firms may put themselves on the path of continuous success and growth in the competitive retail environment (Radzi et al. 2018). The selected retailers’ commitment to the workplace covers a range of incentives such as career progression, fair treatment, equal opportunities, diversity, flexible working hours, training and development, and apprenticeships.
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Table 2 Key CSR issues addressed by the top retailers Name Tesco Sainsbury’s M&S Morrisons Aldi Co-op Lidl
Community ✓ ✓ ✓ ✓ ✓ ✓ ✓
Environment ✓ ✓ ✓ ✓ ✓ ✓ ✓
Health and Well-being ✓ ✓ ✓ ✓ ✓ ✓ ✓
Workplace ✓ ✓ ✓ ✓ ✓ ✓ ✓
Better health and safety reports can support strategic marketing advantages given the growing number of consumers that are willing to choose products or services from the firms providing credible information on their working conditions (Neumann et al. 2014). Such competitive advantage within the firms (Porter and Kramer 2006) can act as a motivator to maintain and enhance higher level of accountability and information disclosure on employees’ working conditions and occupational hazards to endorse better working environment. By linking the transparent reporting around the health and safety agenda with organizational reputation and brand image, firms may leverage differentiation strategies to boost their market advantage (Neumann et al. 2014). Attending these issues equally as environmental and community performance, health and safety issues in the workplace can play as a reservoir of the added value of the firm. It is evident from Table 2 that all key retailers in the UK place health safety disclosures on their key agenda to address in their CSR reports.
5.4
Customer Expectations
Apart from other pressures, policy makers and retail managers use customers’ expectations as a driver for setting their corporate policies. Customers are one of the major financial stakeholders that can directly exert considerable pressure on the retailers in adopting sustainable strategies and environmental performance (Doonan et al. 2005; Peng and Lin 2008). The customer pressure is one of the key motivators for the diffusion of sustainable activities and green purchasing for the retailers. For instance, Rao (2006) argued that customer pressures and expected benefits such as increase in sales have significant influence for devising sustainable strategies. Moreover, the retailers, in turn, reciprocate these pressures and expectations on their suppliers to adopt environmental, community, and workforce initiatives. Retailers need to consider the social problems and adopt proactive socially responsible initiatives that respond to the customers’ expectations as customers are increasingly keen to buy socially responsible products and participate in actions aimed at social responsibility. Under pressure from customer demands, retailers often transform their corporate strategies and try to convert them into competitive advantage. The endeavor of acquiring sustainable strategies in retail business may also be revealed into their marketing concepts and business policies manifested in
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their CSR reports. Retailers are confronted with empowered customers and competitors which are constantly evolving. Therefore, customers pressure calls upon retailers to build ethical, social, and ecological in their production and business process (Kotler 2000). Due to fierce competition in the retail industry, many companies are trying to adopt CSR strategies in their efforts to become competitive. Customers are increasingly price sensitive, looking for bargains at marketplaces. But on the other side, they enjoy and like to buy products from socially responsible companies (Bronn and Vrioni 2011). Because of increased use of social media, today’s customers are much better informed than ever. Customers are widely aware of their influence and power which increases their expectations from the retail organizations. In these circumstances, the development of good relationship between consumers and companies can be a great opportunity for gaining competitive advantage (Bronn and Vrioni 2001; Hahn and Kuhnen 2013). Hence, appropriate CSR strategies aimed toward the betterment of the society and environment can strengthen the relationship between customers and retailers.
5.5
Community Expectations
The retail landscape has been reshaped by the increased community expectations and public demands. Increased pressures from large retailers are reducing small retailer’s profits and sales, causing numerous store closings on both national and local levels. Community engagement may be an answer for the small or local retailers. Strong community expectations lead retailers toward minimum load on environment and work with local community, employees, and society at large to improve the quality of life. Many social issues such as health and safety, public concerns about animal testing, workplace, and reducing the damaging effect of environment on the local communities play a key role for the retailers’ community involvement (Varadarajan and Kaul 2018). The retail firms can build stronger customer relationships through community engagements that can be an effective strategy with increased sales growth especially for the small retailers. Numerous retailers have established themselves as good community servants through fundraising events, donations to the local charities, employee volunteerism, and sponsorship of community events and have benefitted from their communities’ loyal patronage. Retailers have many opportunities to interact face to face with customers and in connecting and strengthening communities allowing them to create shared value for themselves by leading the projects and generating the social value. Organizations must be concerned about the well-being of the society in which they operate. All the companies seek to engage workers in the communities where they work and live to create a better standard of life not only for themselves but for the communities as well. Community work can range from various projects such as sponsoring the local sport team, engaging staff in raising funds for the charity, or initiating health awareness and educational programs for the local communities.
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Good relationships with the local communities represent responsible strategic objectives. Involvement practices with a social responsibility approach and engagement of the local stakeholders become critical and represent a strategic matter in the management of localized activities for the global business (Chiara and Spena 2011).
6
Summary
All the UK’s eminent supermarket retailers publicly recognize the importance of environment, community, health and safety, and workforce in their CSR disclosures. Although the leading retailers may claim to integrate CSR issues in their reports, it is important to recognize that in practice, severely competitive and rapidly changing business environment may steer these retailers to balance their CSR commitments against their commercial activities. Retailers make considerable efforts to curtail the negative impact of their operational activities on the environment and community and pursue strategic community support and environmental performance and highlight better working environment that may help them to increase their business performance and gain competitive advantage (Graham and Potter 2015; Golgeci et al. 2019). Although it may be naïve to consider that only these factors can yield added advantage as there may be other factors such as firms’ internal and external resources, capabilities, and core competencies involved in their overall success. In today’s competitive world, CSR and morality have found a special place in companies’ strategies. Increased attention toward product ingredients, new production process techniques, and obesity concerns has influenced levels of trust in the retail industry. CSR strategies can be considered as an investment opportunity rather than the cost between the firm and society. Identification of the intersection points between firm and society allowing the firm to utilize the value proposition that is niche for its customers. Charitable giving, donations, helping the community, or reducing carbon footprints are the ways to maintain the customers’ goodwill and increase margins. Retail companies should encourage dialogue and communications with its stakeholders to harmonize social expectations and business practices. They should adopt cutting edge strategies aligned with business transparency and mutual trust with stakeholders (Kearns 2017). Moreover, they should establish instruments to strengthen their competitiveness of their products among the consumers through efficient transmission and distribution processes. During the recent years, the firms are under enormous pressure from the stakeholders’ scrutiny of the social and environmental impact of their operations which can compel them to develop CSR agendas and policies to publicly address their CSR achievements and commitments (Kearns 2017; Wang and Huang 2018). The review of the CSR commitments revealed that each of the UK’s selected retailer had its own approach to CSR with some variations in extent, nature, and content of the reporting details. Some of the UK retailers provide relatively limited CSR information, whereas others offered comprehensive and detailed reports. Yet it is evident that all selected retailers make a case for putting environmental performance, community
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performance, health and safety, and workplace as an integral part of their core businesses. The retailers can further integrate these themes into their core businesses which may place them in a better position to yield long-term growth and economic viability.
7
Cross-References
▶ Corporate Social Responsibility Reporting: Evolution, Institutionalization, and Current State
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Gender and Corporate Social Responsibility Ilke Oruc
Contents 1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Feminist Discourses and Women in Working Life . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 CSR and Women . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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Abstract
The aim of this study is to highlight CSR activities intended to strengthen the status of women in work life and their presence in social life. CSR has analyzed wide-macro meanings of the developments and provided new insights for the activities aiming to remove the existing inequalities between men and women with a strategic perspective since it became an important component of the business world. Therefore, this study will examine the integration of women into working life within the framework of the development of feminist movement. Later, the study will discuss the importance of CSR activities in socially, legally, and politically improving women’s status in work life in terms of gender mainstreaming and genderization. Keywords
Women · CSR · Feminist theory · Mainstreaming · Feminization
I. Oruc (*) Faculty of Economics and Administrative Sciences, Trakya University, Edirne, Turkey e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Switzerland AG 2021 D. Crowther, S. Seifi (eds.), The Palgrave Handbook of Corporate Social Responsibility, https://doi.org/10.1007/978-3-030-42465-7_88
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Introduction
Since 1980s, CSR activities have first evolved into sustainability practices and later into integrated report in today’s world. World Business Council for Sustainable Development (WBCSD) reports that “sustainable economic development aims to improve life quality of employees, their families, local communities and societies.” Similarly, ILO highlights the importance of work codes for women (Pearson 2007). Thanks to the insistent calls of the feminist movement, increasing opportunities for more quality education, and more conscious attempts for awareness raising activities, the inequalities experienced by women both in work life and social life have become an important issue to discuss in many disciplines. Therefore, this section of the study deals with the current place of women in work life. This historical perspective is expected to shed light on gender discrimination observed in today’s work life. As Tanilli (2006) points out, women have been silent since the beginning of history. Women rarely voiced their opinions and expressed their feelings during the period between the Antiquity and the Middle Age, which lasted thousands of years. Historians claim that women had a more significant status in the societies during the ancient times due to poor health conditions and high mortality rates among children and women. Thus, women had an equal social status as men, if not superior, due to their relatively low population and valuable contributions to economic life (Michel 1993: 11–12). However, this situation dramatically changed when people started to have a settled life. This new life style resulted in radical changes in economic, social, and political structure of societies (Coskun 2003), and such changes considerably affected social status and roles of men and women by giving women a lower social status. The main reasons of this increase in men’s social status were the increasing importance of activities requiring physical power such as military actions, hunting, mining as well as the emergence of production tools (Aytac et al. 2002). As a result, women were confined to their homes as the only working environment and their social roles were defined accordingly. Another period when women and men had relatively equal social status is slavery period, during when labor force consisted of slaves seized as booty during the wars (Aytaç et.al. 2002). Because men were “the head of family,” which was a privilege given to males under settled life conditions, they were also the owner of other family members and slaves. Since male and female slaves contributed to production processes equally, gender discrimination was not observed during this period. Feudalism, which is another social stratification system, refers to a social and economic system in which a minority group consisting of landlords rules masses that involve serfs and villagers (Kocacik 2003: 143). In feudal societies, economy was based on agriculture in villages; however, craftsmanship controlled by guilds was the dominant economic activity in the cities of the period. As Aytac et al. (2002) stated, women intensely worked in agriculture sector in feudal societies and continued to do housework at home. In other words, women largely contributed to agricultural production. In fact, all family members, including women, actively worked in agricultural activities as serfs. In addition, women and young girls often
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worked as servants in landlords’ houses. These services were not paid at the beginning; however, women worked as paid employees as the conditions changed. Also, there were few women who worked in several industrial sectors under the supervision and audit of the guilds (Tanilli 2006). During the Middle Age, women actively worked together with men in Europe as tailors, shoemakers, and bakers (Giddens 2000: 339). During this period, women had an active role in work life, in guilds, in agriculture sector, and, of course, at home, although they were not employed in jobs related to politics and war, which were considered male jobs. In feudal systems, the aim of the production process is to supply all agricultural products demanded by the landlord and his family. There were also blacksmiths and carpenters working in these large estates owned by the landlords. In this respect, we can say that feudal life was a closed and recursive system if we define it in economic terms. However, the next period, which is called the Industrial Revolution, caused radical changes in social, economic, and political life due to various economic and social transformations. Senel (1998: 277–279) listed some facts about this period as follows: the tradesmen who became rich thanks to manufacturing practices and overseas commerce played an important active role in the development of the revolution; the entrepreneurs established large-scale production plants and manufactured the products demanded by tradesmen instead of searching for these products from local craftsmen; since products made by craftsmen were more expensive than mass-produced ones and they could not sell them easily, they started to work in these factories as workers; and serfs working in agriculture sector also became workers in these production plants. Abovementioned conditions combined with the technological developments of the period triggered the Industrial Revolution. As Deane (1988) pointed out, the following developments led to this revolution: 1. Extensive and systematic integration of modern knowledge and experience into “production for market” process 2. Specialization of economic activities in a way to produce for national and international markets rather than for in-family use and local markets 3. Migration from rural areas to urban areas 4. Extension of typical production units: no more personal production; production less based on family or extended family collaboration but more on public entrepreneurships 5. Transfer of labor force from production of basic goods to packaged goods and service provision 6. Using capital resources more commonly and intensively 7. Emergence of new social and occupational classes where the ownership of production tools except land and the relationships with these tools are determined Use of machines instead of physical human power in working life radically changed production processes. Larger factories needed more labor force and people living in rural areas and those who worked in agriculture and livestock breeding sector started to work in these factories as unqualified workers. Advancement in
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agriculture and enclosure movement might have caused the labor force to move to the cities. These events were clearly the beginning of the developments leading to unplanned urbanization, which is a serious problem even today. Thanks to illuminated working environments, working hours increased to 16 h. The reason of low wages was the presence of legal gaps which encouraged capital owners to take the advantage of the situation. Factory owners did not care about labor safety and occupational health due to concerns about increasing costs, which, in turn, increased occupational accidents and illnesses in working environments, especially in mines and textile mills. Low wages also caused financial problems in families, so all family members had to work (Altan 2006: 46–47). These developments had severe effects on social life, especially in industrial countries. First, migration from villages to cities became an important phenomenon in industrialized countries. This situation led to the emergence of serious urban problems such as ghettos, poverty, and insufficient infrastructure, which made industrialization and urbanization problems two interrelated social dynamics. Women, who were once unpaid family workers, became paid workers after the shift of labor force use from agriculture to industry and service sector. Women easily worked as paid workers in cities because of simple production techniques and lack of the need for physical power. However, they had to work in challenging working conditions (Koray et al. 1999: 10) and had to agree to accept 12-hour of underpaid labor in bad working conditions (Ozer and Bicerli 2003: 57), which means that they were abused as cheap labor force. Women who were involved in work life had to work in ordinary jobs because they had not received quality education and did not have any qualifications. As a result, they were abused as cheap labor force because the capital owners took the advantage of the prevailing economic and social conditions (Koray et al. 1999: 11). The following factors also caused a social breakdown by extending their effects beyond work life: economic inequalities due to widespread poverty; unemployment and harsh working conditions; merciless abuse of women and children as labor force; collapse of family unity because all family members had to work; and discomfort and conflicts caused by financial problems and unemployment in factories (Altan 2006: 51–52). Thanks to the unity among workers’ as an attempt to defense their rights and prevent undesired developments in social structure, new social policies were adopted in the countries where Industrial Revolution took place. One striking example of these policies was the regulation that reduced working hours of child workers to 12 hours. This regulation was followed by other social policies about women. Another development that triggered active female contribution to work life was the Second World War. During the war, female employment rate in factories dramatically increased due to alarmingly low male population. Women worked both in military fields and the private sector. They were often employed in parttime jobs during the war. Henry L. Stimson, an American Naval Secretary, reported that female employment rate increased from 3% to 8% in June 1942. Similarly, around 12 million women worked in the USA in 1940s, which increased to 19 million five years later. Women had the opportunity to earn their own money and took part in the war by leaving their kitchens for factories
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(Cardinali 2002: 123–125). Although some of the women involved in working life during the war returned to home life after the war, most of them continued to work (Goldin 1991: 743–744). Prior to the Second World War, the female employment rate in OECD countries was quite low (15–30%); however, this rate and positions of women in working life remarkably changed in OECD countries after the war. Currently, female employment rate in most of these countries is higher than 50% and still increasing regularly. Women worked long hours during the war and had the chance to improve themselves and learn various job skills that they had never been allowed beforehand. Increasing female employment due to the war conditions liberated women and helped them change their traditional roles. Unfortunately, men responded to this development by practicing gender discrimination and sexual harassment, which continued to be problem even after the war. Thus, women physically and psychologically struggled against discrimination, sexual harassment, long working hours, and bad working conditions throughout the war. Since the women working in the factories in the USA at those times were not properly trained about occupational procedures and technical details, 3700 women lost their lives and more than 210,000 got injured in occupational accidents. Despite certain rises in wages, women earned almost 65% of men’s salary (Cardinali 2002: 130). We can list many reasons for the increasing involvement of women in work life after the Industrial Revolution and the Second World War. Advancement of technology, especially the technologies to make housework easier (iron, washing machine, etc.), helped women to fulfill their responsibilities at home more easily so that they could save time for work life. Economic and social revolution resulted in smaller family structure, and women and children mortality rates decreased due to the developments in health services. After this period, global transformation and capitalist system have become more prevalent worldwide and dramatically changed work life and the place of women in business world. The social breakdown caused by the Second World War questioned modernist views which suggest that everything can be solved through reasoning. The sufferings of human beings caused demoralization and desperation. Absolute confidence in reasoning and science was questioned after the destruction of cities with bombs, and there were increasing doubts about the idea that reasoning and science will provide “the best single solution.” Fordism, which was developed in the USA by Henry Ford, is a concept used to define principles applied in capitalist industrial production (Sugur 1999). Satisfied demands for mass production and varying customer preferences resulted in a crisis in Fordist production system. The reasons of the crisis experienced by Fordism can be listed as follows (Sugur 1999; Odabaşı 2004): • Varying demands: satisfied demand for mass production, varying customer preferences, lack of technological infrastructure in Fordism that is flexible enough to satisfy this variety. • Varying production: Varying demands and fluctuations in amounts of these demands required a new organizational structure as well as production structures that are flexible enough to meet customer preferences
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• Flexible and small-scale production: Production technology should be flexible, and amount of production should be low in order to satisfy variations in demands and vary production. • More extensive use of information technologies: This development has increased production quality in organizations and helped companies to meet customer demands more quickly and make fast and accurate decisions. • Organizational culture, Full-time Production, and Total Quality Applications: More flexible organizational structures required more flexible organizational culture, and certain applications were developed such as Full-time Production and Total Quality Management in order to meet changing demands of customers. • Employment flexibility: Fordist production requires qualified employees rather than unqualified ordinary employees. In other words, employees should have both physical and mental power. Thus, it was essential that Fordist production process, which failed keep up with the latest developments, should change and new production systems that can adapt themselves to new conditions would be developed accordingly. As Şaylan (2002) pointed out, the pace of this change accelerated in the late nineteenth century and the early twentieth century and spread worldwide in a short time. Today, the developments in science and technology affect changes in all other fields in this globalized world, so those who cannot keep up with new conditions will suffer from social, political, and economic problems. Flexible production, labor, and technologic structures of post-Fordism affected organization and management structures, so new structures were established in order to ensure flexibility and organizational success. This mentality gave way to radical changes in business enterprises in some practices such as production processes, organizational structures, and working hours. Thanks to technological developments, innovative technologies were integrated into production processes, which made these processes more flexible. The necessity to adapt to changing competition conditions due to technological developments also required flexible production and flexibility in employment practices. As a consequence of globalization, women in many countries now prefer to work in small or large-scale paid jobs rather than as unpaid workers in family enterprises. Two developments in the world, which are “development of trade” and “more involvement of women in labor force,” considerably increased female employment rate. Fortunately, governments’ policies to improve export activities increase female employment rate in formal sectors even today (Colak 2004). The integration of technological advancements into daily life and its efficient use in developed capitalist countries emphasized knowledge and knowledge production rather than physical labor. This extensive use and importance of knowledge, in turn, required companies to employ individuals equipped with sufficient amount of knowledge. The most serious problem here is educating qualified individuals by providing them with quality teaching and learning environments. Providing these opportunities for young girls is the basic condition to increase women’s involvement in production processes. Unfortunately, women are less likely to benefit from these
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educational opportunities than men due to various social, cultural, and political reasons. Women who are not well-educated cannot work in jobs that require knowledge and specialization skills. They often work in low-paid jobs that do not require acquisition of this knowledge and specialization or they stay out of work life. In short, women’s involvement in work life both in rural and urban areas is limited to low income and low prestige jobs due to low education levels and other social and economic conditions. According to Sungur (1997: 181), one interesting point to consider here is that the originality scores obtained by the children of mothers with low education levels from Torrance Creative Thinking Test are significantly lower than those of the children who have well-educated mothers. We can easily conclude that this issue is quite important when we consider the fact that societies which make a difference by integrating learned knowledge and innovative technology into their structures are more successful than other rival societies. Economic transformations in the world inevitably affect work life and employees. While capitalist countries become more prosperous due to globalization, other countries suffer from more serious poverty. New types of employment such as part-time working, temporary employment, contract manufacturing, selfemployment, working at weekends, work sharing, and flexible working hours are becoming more and more common due to global competition that requires lower labor costs. Flexible working practices require flexibility in labor force use and job definitions as well as flexibility in production techniques and machines. Thus, it is necessary to redefine the functions and roles of labor force and revise production organization and vocational skill groups. In this system, ethnic and female labor force are becoming more important, the strength of unionized labor force is disturbed, and labor force market is transforming accordingly (Ozkalp and Sungur 1997: 417). Recently, working hours, job definitions, and organizational structures have been made flexible thanks to flexible working practices so that employment opportunities can increase (Tarcan 2000). Increasing practices of flexibility in work life and part-time working opportunities for women have helped them to maintain their economic independence and establish a balance between work life and family life. Flexible employment policies adopted by governments to reduce unemployment rates are believed to have caused such an increase, and this situation is not welcomed by many feminists since such policies confine women to their private spaces. Most of the business enterprises established in 1980s and 1990s were based on part-time working principles. For instance, 80% of the business enterprises established in European Union in 1995 offered part-time work option. The practice of this type of working is not equally distributed among sectors. To illustrate with, part-time employment rate in banking sector in England, France, and Denmark is over 40%. Also, part-time employment rate in northern European countries except Finland is considerably high. Thirty percent of total labor force in the Netherlands in late 1980s worked in part-time jobs; however, more than 60% of women worked in part-time jobs. Similarly, the percentage of people working in part-time jobs in Denmark, Norway, Sweden, and England is 20 while 40% of women work in part-time jobs in these countries (Tarcan 2000). Part-time work practices have been largely preferred by women since they can both earn
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money and fulfill their responsibilities at home, which allow them to create a balance between family and work life. Another factor leading to higher levels of female involvement in working life is “working at home,” which enables women to contribute to family budget without sacrificing their responsibilities at home. Applied as a method to reduce production costs, contract manufacturing has allowed women to contribute to work life by working at home, especially in developing countries (Eraydin et al. 1999: 20). Although women play more active roles in working life in today’s world, it is still debatable that they are not treated equally when it comes to senior executive positions and some other positions in companies. As stated by Yesilmen (2006), European Parliament resolutions show that women living in European countries, most of which are developed countries, suffer from violence, benefit from educational right less, and are less employed in parliaments, local administrations, and labor market. It is possible to conclude that the problem is more serious in developing countries. Unethical practices against women in working environments include social gender and violence-based practices by men who do not want women in work life. The next section discusses feminist transformation within the framework of the issues mentioned above and focuses on practices aiming to remove inequalities through CSR activities in companies.
2
Feminist Discourses and Women in Working Life
Discussions about the place of women in work life would be incomplete without feminist discourses, which form the basis for discussions focusing on men-women equality. Therefore, it is necessary that evolution of these equality discussions, which were quite soft at the beginning, into a post-feminist structures – even black and Islamic feminism – should be dealt with within the framework of work life. Female identity historically has been labeled as “the other” when compared to male identity. Is it difficult to define feminism approach in terms of its development and historical perspectives and basic approaches (Freedman 2001: 2)? Defined in many ways, feminism can refer to a concept dealing with subordinate position of women in social life and inequalities between two genders (Bierema and Cseh 2003; Kark 2004). In other words, it is a term through which women started to question their status and demanded a better social status (Freedman 2001: 3). Therefore, the main objective of a feminist is to eliminate gender discrimination in social, political, and economic environments (Bierema and Cseh 2003). Feminist theorists studied social and political goals again so that male theorists will not get involved in discussions regarding gender issues. Thus, it is important to define sexist criticisms of traditional theory and their study methods that are different from those of other feminists. There are cultural prejudices against women in the context of modern philosophy. Patriarchal theory does not explain social status of women; instead, it adds another factor to their status (Gattens 1991: 1–3). Stereotypes are determined according to the differences in cultural expectations of societies and social learning (Carless 1998).
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From a process-based perspective, it is possible to claim that historical conditions affected how women rights were dealt with. Therefore, different approaches emerged accordingly. The issues focused on at the beginning varied in time in different fields and produced different focus points. Social conditions and feminism, which liberated individuals’ ideas, evolved into an important theoretical structure which questioned women’s “other,” or subordinate, status in a structure built on male-dominated ideas through history. The status of women in a particular society is closely related to the levels of civilization and humanization in this society. Unfortunately, women failed to be a part of a society where everybody is, in theory, assumed to be equal and free and have natural rights. Interestingly, half of the population was ignored, although men ardently argued for equality and social change (Berktay 2003: 41). In other words, the history of women is the history of resistance against oppressive patriarchal system and confinement to homes. This resistance gained strength when individuals’ liberation ideals, which were triggered during the Renaissance period, spread to different layers of societies, which considerably contributed to women’s struggle against equality. It is essential to examine this resistance according to the prevalent social conditions of the period. Systematical perspective that varies depending on development levels caused women to have different social status in developing and underdeveloped countries. All the struggles initiated by feminism concern most of women in the world. Thus, despite the differences in women’s struggles in Turkey and Western countries, the concepts and issues stem from similar problems. In social terms, because social conditions of women differ according to countries, it is necessary to examine different ideas across the world. Historically speaking, why did women, who were forced to have subordinate status in society for a long time, felt the need to demand equality after a long process? How did they develop awareness about their gender and “other” perspective, although they had a secondary status for a long time throughout history? We should always keep in mind that these developments evolved through a sociological movement. Here, certain factors related to women’s lives became more significant. Among these factors are their educational background, economic freedom they gained due to involvement in work life, rising awareness of selfconsciousness, and their struggle for equal rights. Historically speaking, it is known that the first attempts regarding human rights were initiated by bourgeois women. The reason for this situation might be that their conditions were a bit different than other groups of women. When prevalent conditions changed in time, women studies and movements reached different layers of societies and evolved into different developments. Moreover, there are some differences in how authors deal with studies and opinions. Thus, it is often difficult to classify these authors in terms of feminism. Feminist thought plays an active role in the improvement of women’s status not only in society but also in organizations. The assumption that women can be equal to men forms the basis for all feminist theories (Calas and Smircich 1993). Since majority of modern feminist theories emerged as a reaction to traditional liberal feminism, liberalism is the most appropriate basis to be used while defining feminist
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mentality (Tong 2006: 10). The most basic common principles of traditional liberal feminists can be listed as follows (Donovan 2007: 27): 1. Traditional liberal feminists claim that women and men have the same reasoning ability. Reaction to the dominant claim in history stating that women have weaker mind is the basic approach to be adopted. 2. The best way to ensure social change and social transformation is to provide equal educational opportunities for both men and women. It is believed that education is necessary, especially for critical thinking. 3. In social terms, they suggested that women and men must have equal legal and political rights in the issues which had once confined women’s freedom such as “right to own property” (inheritance) and “right to vote and to be elected.” Proponents of liberal feminism believed that inequalities in educational opportunities should be the starting point for the movement. It was Betty Friedan who focused on work life within the framework of this mentality. She emphasized the difficulties of being a mother and a spouse and pursuing a career at the same time for women in her book titled The Feminine Mystique (1983). Highlighting work-family conflict, this book also discusses various important issues related to women such as the attempts to create a balance between work and family life (Friedan 1983). In another book she wrote in 1980 titled The Second Stage, Friedan studied the challenges of women’s multiple roles and discussed how public values, leadership practices and working together with men in the same working environments affected them (Ollenburger and Moore 1992). Unlike classical liberalists, modern liberal feminists mainly focused on the patriarchal point of view which claims that women should work as teacher, nurse, and civil servants because they are considered suitable jobs for women and also women do not have any talents for other jobs. Modern liberal feminists also noted that gender-stereotypes classifications are excessively unequal so these inequalities should be eliminated. They suggested that women should have the same rights as men and struggled against gender discrimination accordingly. Finally, they emphasized the importance of focusing on certain issues such as gender differences, social gender roles, liberty, and equality. Many inequality-related issues discussed in the management literature became clearer thanks to these discussions. Finally, these theories help authorities to identify many reasons such as work-family conflict due to women’s involvement in work life, being encouraged for female jobs and challenges of being involved in a maledominated working environment. Marxist feminists claim that the following issues should be discussed intensively: women’s labor at home; women as low-paid workers; and family ideologies that contributes to the disadvantageous status of women (Barnett 1998: 26–34; Smith 1993: 5). The key point that distinguishes Marxist feminists from other feminist groups is that capitalism or class pressure is the dominant pressure (Evans 1986: 113; Massey 1989: 692). Marxist feminists asserted that women have a lower status in work life due to class pressure. They also assume that eliminating patriarchal structure can remove class discrimination in economic structure. Radical social
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change and class-based inequality should be removed so that society can change (Ollenburger and Moore 1992). The key point supported by Marxist authors is the roles of women at home and pressures on them in public domain. Some of these authors focused on “paying for housework,” which is an issue discussed even today, in order to emphasize that women’s labor both in work and at home is valuable. According to Mies (1988), production processes influenced by capitalism discriminate women in traditional terms and incite gender differences in work life. Rapid spread of new technologies worldwide negatively affects women and their families. Thus, women’s role is confined into patriarchal structure, and unlimited means of mass production kills common traditional production practices of women such as basket making and embroidery and prevent them from entering work life. However, the mostly criticized characteristic of this mentality is that it focuses on class pressure rather than social gender. Although some studies on women’s involvement in work life claim that women should be paid for housework, this mentality has not been adopted in today’s societies yet. Women’s taking part in work life does not prevent them from fulfilling their responsibilities at home. In addition, technological advancements have negative effects on developing countries by reducing the number of job opportunities for women. Also, women, who already suffered from inequality in many areas, became agents of cheap labor due to investments made in the countries where wages are quite low. Unfortunately, even the countries that experienced socialist revolution failed to give women these rights supported by Marxists. Women had to bow to the pressures of the system and continued to fulfill their responsibilities at home. Patriarchal structure continued to exist both in societies and organizations despite observed changes in the current structural order. Therefore, issues should be discussed based on different point of views about women. Social feminists discuss how socialism can create self-confident and competent women unless it frees them from male dominance despite the current presence of relatively better economic conditions. Unlike liberal feminists, social feminists focused on power-based differences between men and women. They believe that oppression of women is caused by mutual interaction between patriarchy and capitalism. Social feminists reject office-home dichotomy and emphasize the role of home labor in the continuation of exploitation practiced by class-based society (Ramazanoglu 1998: 34–35). The main issue discussed by social feminists such as Juliet Mitchel and Heidi Hartman is that gender discrimination forms the basis of patriarchy. Thus, women continue to feel oppressed due to continuous and dynamic existence of patriarchal structure. According to Jaggar (1983), human activities, which met alienation through capitalism, also alienated women’s self-awareness. Developed by socialist feminists based on Marxist feminism, these opinions help us analyze why women have secondary status in work life. Social feminists also reported that all unethical practices to be discussed in work life were due to patriarchal and economic structure. It was possible to examine men-women inequality throughout history from different perspectives thanks to this feminist approach focusing on women’s work and home life. Shaped by feminist perspectives, these opinions played a significant
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role in the emergence of feminist ethics. This approach also emphasizes oppression women experience in work life and presents a different point of view to understand women’s status in work life. The basic idea lying behind radical feminism is that women are oppressed by patriarchal social system. Pressures such as racism, transsexuality, and classism are important patriarchal pressures. Patriarchal structure should change so that women can free themselves from such pressures. Each social structure evolves along with a specific historical process. Therefore, it is quite challenging to transform such a big structure. Radical feminists emphasize pressure that men impose on women due to patriarchal system (Tong 1992) as follows: 1. Historically speaking, women are the first oppressed group. 2. Women’s oppression exists on all societies. 3. Women’s oppression is the most difficult one to eliminate. Social changes such as eliminating class society will not solve this problem. 4. Women’s oppression results in unfair treatments. 5. Women’s oppression provides a model to understand all other forms of oppression. Many radical feminists are against marriage and claim that marriage is an extension of patriarchal system that keeps women under pressure. According to radical feminists, women are forced to be a mother and sex slave; thus, avoiding marriage practices will be an important step to keep women away from such oppressions (Ryan 1992: 50). In addition to marriage, patriarchy also encourages dominance over female body. Unfair treatment of female body (such as pornography) seems to be a practice that tries to justify the myth which suggests that female sexuality is passive and masochist and males are active and sadist (Hinman 2003: 331). In addition, language and culture all over the world has been shaped according to masculine perspectives so far in history. Finally, how women are presented to society also implies a sort of male dominance over women. For instance, many commercials emphasize female nudity to attract people’s attention. Therefore, it is essential to review and revise these practices to carry out radical changes (Coole 1988: 235; Michel 1993: 90). Radical feminists note that womanhood is important and it might provide certain advantages and better status for women (Caha 1996: 53). They also suggest that women are oppressed just because of their gender regardless of their race, class, and other differences. They define women as “universally oppressed sisters” in a world owned and controlled by males and where males are physically dominant (Ramazanoglu 1989: 13; Ollenburger and Moore 1992). According to radical feminists, violence against women is the basic component of patriarchal structure and it occurs in the forms of sexual assault, harassment, and pressure. Sexual terrorism, as a tool of patriarchy, also oppresses women (Ollenburger and Moore 1992). In addition, patriarchal pressure is a way to practice inequality on women. However, feminist thinkers develop various theories to explain this oppression and discuss the issue from different perspectives.
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The origin of postmodern feminism lies in Existentialism philosophy. The ideas of Simone de Beauvoir on women’s problems and feminism notably affected the women movements that emerged after the Second World War. Enriched with the contributions of Satre, Hegel, and Heidegger, these opinions became the content of the book The Second Sex written by Beavoir. Beauvoir claims that the reason of women’s subordination against men and “other” mentality is customs, traditions, mythology, religious theory, and practices. He also believes that women’s acceptance of this subordination is due to the need for reproduction and care. Finally, he suggests that the consequence of this acceptance is schizophrenia and feeling of despair (Donovan 1997). This point of view gave way to the development of postmodern feminism In this approach, logocentism critics, differences, localities, and originalities gained importance and are included in the theory. Therefore, it contributed to the development of new perspectives such as black feminism, Islamic feminism, and queer theory. All the feminist discourses mentioned above explains the basic reasons lying behind the inequalities experienced by women in work life. Although the ways how feminist approaches deal with men-women inequality differ from each other, using one of these approaches as a strong basis for women studies is important for those studying feminist methodology. Therefore, the next section discusses the place of women in CSR studies.
3
CSR and Women
Business ethics and social responsibility are still important issues for business enterprises that operate depending on certain relationships in today’s world. Since they should operate along wide social networks and their actions depend on their shareholders, they need to adopt a balanced approach between their own expectations and shareholders’ expectations. This approach involves management and ethics theories and emphasizes the importance of values and morality for business enterprises (Philips et al. 2003: 34–35). Although social responsibility started to set up an agenda for companies only after the Industrial Revolution, the issue gained importance especially in 1980s and in relation to increasing competition. Other issues that became increasingly significant were customers’ interest in company activities and organizational image. This new situation clearly showed that companies should care about not only internal shareholders but also external ones (Karsak 2008). Thanks to post-modern management movements in 1990s, mutual gains for all shareholders and social and information sharing responsibilities gained importance (Akıncıoglu 2005). Continuing to carry out economic activities, which is one of the most important objectives of business enterprises, was encouraged by the idea of sustainability and companies started to give more importance to their shareholders. Therefore, business enterprises focused on sustainability and strategic importance of CSR. Accordingly, the reports submitted by companies on sustainability revealed the existence of some practices
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addressing to women and showed that these companies focused on inequality experienced by women both in work life and society (Oruc 2015). Organizational reports are among the most important tools used by business enterprises to communicate with internal and external shareholders via printed, electronic, and video materials. Companies are now more transparent and accountable thanks to these reports. In addition, knowledge level differences among shareholders decrease to minimal level. Contents of these reports once used to include only financial figures; however, nonfinancial information is also a part of today’s organizational reports. Among the reports prepared by organizations for both internal and external shareholders are Organizational Management Integration Report, Corporate Social Responsibility Report, Sustainability Report, Financial Report, Activity Report, Integrated Report, some audit and assurance reports, pricing reports, external audit reports, and environmental reports. In addition, the following factors triggered the attempts to find a new type of report: organizations prepare reports to meet different demands of shareholders; reports lack unity in terms of content and language; it is difficult to comprehend these reports because they are quite long and use complex language of reporting; and organizational strategy are not associated with the content of reports. In the late 2000s, the inclusion of integrated report was proposed after the following developments worldwide: globalization, population growth, environmental concerns, already existing and expected future shortage of resources, increasing expectations for more transparency and accountability, and more frequent demonstrations protesting financial, managerial, and other types of crisis (2008 economic crisis, Occupy Wall Street Demonstration, etc.). It is essential to relate investment decisions, organizational behavior, and reporting practices to each other more effectively so that financial stability can be achieved (https://integratedreporting.org/why-the-need-for-change/). Integrated reporting, which refers to associating significant financial and non-financial information; business model; organizational management; strategies, opportunities, and risks; combines tangible and intangible assets of a company; environmental, social, and economic information about it; its financial and nonfinancial risks; and business activities. In other words, integrated reports include both financial and nonfinancial information that affect overall business model. Sustainability report, on the other hand, can only be a component or the sub cluster of an integrated report because it only includes information about environment, society and sustainability. IIRC notes that integrated report involves important information related to environmental and managerial issues as well as social ones. It also suggests that non-financial information about certain issues should be included in integrated reports such as strategy and resource distribution, which make it easier for shareholders to understand how value is created. http://www. pwc.com/en_US/us/cfodirect/assets/pdf/point-of-view-integrated- reporting.pdf Today, companies started to prepare an integrated report which includes financial report, organizational management report, activity report, and sustainability report. However, this report is not submitted as one single report in which all reports are combined. These reports are prepared in a way to meet minimum conditions of other reports. Thus, companies do not prepare a separate sustainability report; they rather
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present necessary information in the integrated report. All integrated reports are prepared according to International Integrated Reporting Framework published by IIRC (International Integrated Reporting Council) on December 9, 2013. IIRC reviews and revises IR framework as part of improvement actions, which will continue throughout 2020 (https://integratedreporting.org/2020revision/). Under the light of the issues mentioned above, it will be useful to provide information about sustainable development and the place of women in this development. The notification suggesting an amendment in the “Notification about Determining and Implementing Organizational Management Principles” (numbered 57 Serial: IV) prepared by Capital Markets Board (CMB) and published on Official Gazette (numbered 28,201) on February 11, 2012, stipulates that “an executive board should include at least one female member.” This amendment does not require an obligatory practice; it is rather a recommendation according to “apply, if not explain” principle. In addition, CMB suggests that the percentage of women in executive boards should be at least 25%. Despite some promising improvements, we still need time and mentality change to reach this percentage suggested by CMB (https://www.spk.gov.tr/Duyuru/Goster/20120211/0; https://www.globalcom pactturkiye.org/surdurulebilir-kalkinma-amaclari/; https://www.tr.undp.org/content/ turkey/tr/home/sustainable-development-goals.html; Accessed April 2020). Sustainable Development Goals (SDG), also known as Global Goals, is a universal call for action aiming to eradicate poverty, preserve our planet, and help people to live in peace and welfare. These goals were built on Millennium Development Goals, which were adopted by the governments worldwide in 2001 but became out of date in December 2015. SDGs were recognized in September by the United Nations member countries and have been effective since January 1, 2016. In addition, “2030 Agenda,” which was prepared in a way to address and involve all the nations, includes 17 Sustainable Development Goals (SGDs) that define the ideal world in our minds (https://www.tr.undp.org/content/turkey/tr/home/sustainabledevelopment-goals/background.html; Accessed April 2020). All 17 goals are interrelated, that is, success in one goal will affect others. For instance, taking precautions against climate change affects how we will manage our limited natural resources; maintaining gender equality or general health helps eradication of poverty; and supporting peace and inclusive social structures decreases cases of inequality and promotes economic welfare. In summary, this action is a great opportunity, if not the greatest, to improve life conditions for future generations. The fifth goal in the list is about social gender equality. Removing all kinds of discrimination against women and young girls is not only a human right but also plays an important role in accelerating sustainable development. It is acknowledged that having stronger and conscious women and young girls positively affects society and accelerates economic growth and development. SDGs aim to eliminate all kinds of discrimination against women and young girls. Unfortunately, they suffer from inequalities in labor markets and do not have equal access to opportunities. Sexual violence and harassment, unfair distribution of unpaid services and housework, and discrimination in public jobs are great obstacles toward a more quality life for women and young girls. One vital goal to achieve here is to
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provide opportunities for women to have equal rights over economic resources such as land and property acquisition. Similarly, easy access to sexual health and reproduction health is crucially important. Finally, although the number of female employees are currently higher of all times, encouraging women to be in leading positions will contribute to the development of policies that will guarantee and strengthen gender equality as well as the preparation of comprehensive and efficient regulations (https://www.tr.undp.org/content/turkey/tr/home/sustainable-develop ment-goals/goal-5-gender-equality.html; Accessed April 2020; Jatana and Crowther 2007). There are academic studies focusing on CSR and liberation of women within the framework of the issues mentioned above. Despite some successful attempts by companies, some governments fail to provide efficient solutions for certain issues such as sexual harassment, violence, and insufficient access to means of transportation. Liberation of women and stronger women are important in eliminating power relationships between men and women, as suggested by many feminist movements (Jatana and Crowther 2007; Grosser 2009; Vijayalakshmi 2020). Involvement of women in higher managerial positions is considered a strong factor in economic growth. Women are important not only as an employee but also as a consumer, an investor and a manager (Koričan and Jelavić 2008). Secondary issues related to women such as working conditions, low wage, and long working hours are among the issues discussed during the early feminist period. Feminist researchers provided important perspectives for these issues in many studies conducted by using various research methods such as ethnography (Ruwanpura 2011). Despite the presence of practices aiming to improve women’s status in societies, it might be concluded that women are underrepresented in executive boards. In addition to work and family responsibilities, personality characteristics and company and industry structures play important roles here (Brieger et al. 2019). It is also a good idea to approach these issues in terms of ethics of care so that the issue can become clear. Benhabib discusses this underrepresentation through feminization by emphasizing that women’s private space responsibilities are still more important (Demir and Pakkan 2009). Therefore, work codes developed for women in business enterprises should not be ignored (Pearson 2007). The following statements should be taken into consideration by companies so that women can be stronger through CSR practices (Vijayalakshmi 2020): • • • • • • •
Companies should adopt a clear gender policy. Employee ratio should be balanced. Ethical practices in working hours should be included. A certain business culture should be developed. Innovation technology development through training should be provided. Operational productivity should be improved among women. Media and nongovernmental organizations should support women issues.
We can statistically support what we mentioned above about women. The research conducted by ILO (International Labor Office) in Women in Business: Scope of Enterprise Survey on 17 sectors is presented in Fig. 1.
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Fig. 1 Women and management, ILO 2018
As we have seen above, it tries to take place in the management levels in the sectors that are predominantly women, which are called women’s jobs. Research participants believe that gender diversity policies increase profitability and efficiency, in terms of data on average women accounted for around 26% of junior management positions, 32% of middle, 34% senior, and 35% of executive management level. The striking point here is that they are mostly in the CSR part of the middle and senior management level (50%). Around 27% of enterprises reported female CEO and around 32% of enterprises reported female chairperson on the board of directors (ILO 2018). The highlighted point at the end of the report is as follows: Enterprises globally recognize the imperative of having a gender diverse workplace, including the integral benefits of having women in top decision-making positions. Mounting evidence shows that achieving gender balance and diverse management teams at all levels deliver positive business outcomes. . . ..women’s representation at management and board level and the various success factors that drive enterprises behaviour for inclusion. . . .enterprises still need to translate their policies in to concrete action and critically address gender diversity within their organizational culture.
In short, it is clear that business enterprises should try harder to liberate women and assure gender equality and contribute to the attempts to strengthen women economically, politically, and socially. CSR activities are the most important guides for these companies in these attempts.
4
Summary
Historically speaking, women have been treated as “others” both in social life and work life. Women fulfill their private space responsibilities, through which they are associated with, and they also try to survive in public domain at the same time.
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Women also suffer from discrimination in work life in addition to other difficulties. Among the discrimination-related problems are glass ceiling, not benefiting from educational opportunities, wages inequality, sexual harassment, and mobbing. Thus, it is important for companies to design activities addressing to women issues and struggle against inequality due to the increasing importance of CSR practices. Women studies would be incomplete without a feminist perspective Therefore, there should be more attempts to increase public awareness, and people should not be afraid of discussing about the issue and express their opinions. Finally, companies should be more determined and insistent to take the necessary steps stated in integrated reports and sustainability reports for a better future for women.
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Contents 1 2 3 4 5
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Corporate Social Responsibility and Neoliberal Economics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Institutional Arguments for Corporate Social Responsibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Corporate Social Responsibility Between Ethics and Economics . . . . . . . . . . . . . . . . . . . . . . . . . Toward an Institutional Concept of Corporate Social Responsibility: Defining the “Good Citizen Corporation” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Developing Trends of Sustainability After the 2020 Corona Crisis: Extension of Corporate Social Responsibility to All Dimensions the Supply Chain, Customers, and Other Stakeholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Cross-References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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Abstract
This chapter examines the development trends of possibility of corporate social responsibility toward being institutionalized as an institutional concept of collective responsibility. The issue of development trends at the level of philosophy of management is to which extent social responsibility of the firm can be formulated in terms of corporate intentionality and to which extent this agency can be conceived as moral agency. In this context, the chapter will address the development of conceptions of corporate social responsibility based on economic, theory and economic sociology and relate them to insights of business ethics, legal theory, and philosophy. This analysis aims at clarifying how to talk about development of corporate social responsibility at the level of the firm as an independent agent, an institutional actor to whom it is possible to ascribe intentions, actions, and motives. New developing trends also imply responsibility for J. D. Rendtorff (*) Department of Social Sciences and Business, Roskilde University, Copenhagen, Denmark e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Switzerland AG 2021 D. Crowther, S. Seifi (eds.), The Palgrave Handbook of Corporate Social Responsibility, https://doi.org/10.1007/978-3-030-42465-7_43
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all members of the supply chain, customers, and other stakeholders in the perspective of sustainable development. Keywords
Collective responsibility · Institutional responsibility · Business ethics · Philosophy of management · Values-driven management · Stakeholder engagement · Supply chain responsibility · Sustainable Development Goals
1
Introduction
In order to clarify this concept of the development trend of institutionalization of corporate social responsibility, this chapter distinguishes between (1) economic responsibility, (2) legal responsibility, (3) ethical responsibility, and (4) philanthropic responsibility (Carroll 1979). Economic responsibility may be defined by the mandates of efficiency and profit maximization. It implies good corporate governance and conscious and prudent use of resources as well as technical and professional duties of management and production to discover and exploit possible markets. Economic responsibility may be in tension with moral responsibility understood as respect for the common good and justice, because economic responsibility of the firm is about following self-interest and exchange goods at the market according to capitalist principles. Legal responsibilities are about the obligation to follow the law and custom of society and to play “within the rules of the game” (Carroll 1979). This also means not to do everything to operate at the limit of the law and to do an effort to comply with the intentions of the legislator regarding specific laws. Indeed, efforts to formulate internal compliance programs and programs of values-driven management can be considered as a contribution to such compliance with the laws of society. Moreover, legal compliance should not only be promoted at the national level but indeed also locally and internationally. The ethical and moral responsibilities can be defined as an effort to go beyond economic efficiency and legal rules and act according to ethical principles (Carroll 1979). Ethics is about finding the right balance in the gray zone where things may be economically prospective but not legally justified. The ethical duty may override economic and legal concerns in cases of conflict, and the ethical responsibility is about formulating values and norms for the corporation that contribute to the performance as a good corporate citizen. The ethical responsibilities imply wider concerns for justice and sustainability of the corporation in nature and society. In this way the level of ethical responsibilities goes beyond the two other levels of economic and legal responsibility. It is defined by the respect for justice and by fair treatment of all stakeholders. The ethical responsibility contributes to the democratic legitimacy of the firm in the community. The corporation’s philanthropic responsibility is not only about the virtues of being philanthropic but indeed also about the responsibility to be philanthropic in a
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way that really benefits society (Carroll 1979). There is a long tradition of corporate philanthropy in which corporations give grand donations to society as a demonstration of power and wealth because they want to do some good for local community. In many cases corporate philanthropy is directly linked with efforts to obtain a better public image in society. These fundamental distinctions are essential for understanding the developing trend of a collective concept of responsibility in research, in business ethics, and in corporate social responsibility (Rendtorff 2009a, 2011a, c, 2014c, 2017b). In order to discuss whether these different dimensions of corporate social responsibility – economic, legal, ethical, and philanthropic responsibility – can be ascribed to the corporation as a social and moral agent, this chapter relies on the institutional approach as the theoretical basis for my analysis (Powell and DiMaggio 1991). It is important to emphasize the following characteristics of the development trend of the institutionalist approach in economics and sociology (Hodgson 1994, pp. 68–69). Institutionalism is a theory that looks at “holistic and organicist alternatives” to atomism and reductionism. The institutional approach does not reduce human beings to rational utility maximizing agents but also considers agents as driven by culture and moral values. Moreover, focus is not on individuals but on institutions as “selfreinforcing” or “even alternative analytical units” (Hodgson 1994, p. 69). From this perspective, the economy is not only considered as a “mechanical equilibra,” but as an “evolving open system” which is in constant interaction with its social and political environment. Individuals are situated and their preferences are “not given and fixed but in a process of continuous adoption and change” (Hodgson 1994, p. 69). This institutionalism is occupied with the conflict and tensions and possible harmonies between individual and institutional actions, values, and perspectives. But normative behavior and human and institutional welfare are not evaluated exclusively in terms of efficiency or utility and pleasure, but the focus is on “identification of real human need” (Hodgson 1994, p. 69) in design and evaluation of institutions. Considering the concept of corporate social responsibility as a normative value concept, it is necessary to combine the analysis from sociological and institutional viewpoints on the firm with the perspective of business ethics (Rendtorff 2009a, 2010b, 2011b, 2012, 2017a, c). Business ethics focuses on the conceptions of values and ethics in business and economics. This research tradition is interested in social legitimacy of corporations and status of the idea of corporate social responsibility in economic life and political community. The perspective is the viewpoint of “integrative business ethics” proposing mediation between economics, political rationality, and ethical reasoning within the field of institutional analysis. The integrative approach to business ethics argues for critical reflection of economics that is not restricted to the paradigms of efficiency, egoism, and rational utility maximization but discusses the foundations of economics as a truly value-creating science (Ulrich and Maak 1997, p. 28). The task of covering human needs and wants has always been moral as a part of the search of human beings for the good life in just institutions. Business ethics in institutional theory is about finding the right principles for human social life and for our relations with the natural environment. Therefore, research on CSR and business ethics should not separate economics
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and sociology from ethics but rather seeing them as serving the purpose of the good life and justice in social institutions. In business ethics the aim of institutional analysis is to contribute to the evaluation of requirements for just institutions in economic life. In this perspective the problem of moral agency and responsibility of institutions is very important. Institutional actors may be said to reflect a dialectics of what Max Weber calls an “ethics of conviction” (of personal beliefs) on the one hand and an “ethics of responsibility” (consequences of actions) on the other hand (Maesschalck 1999, p. 7). An ideal concept of corporate social responsibility would combine ethical responsibility with economic efficiency. This means that companies are required to merge social and financial imperative to achieve superior performance based on a value shift in the economy where society no longer conceives the firm as exclusively an amoral instrument for profit maximization or a fictive legal person but as a morally responsible actor with values and ethical principles (Paine 2002). This is the basis for a political concept of the corporation as a good citizen that in addition to earn money is concerned about caring for its social and ecological environment. Such a moral concept of corporate social responsibility implies that the firm should not only obey constraints of markets and legal rules but also engage constructively in the social betterment of society (Rendtorff 2009b, 2011a, c, 2014c, 2017b). With such an integration of business ethics and institutional analysis, the research program of new institutionalism in sociology emphasizes the importance of social institutions and skepticism toward the view of social institutions as a result of individual rational choice (Powell and DiMaggio 1991). Individuals operate under conditions of limited knowledge and bounded rationality. Focus moves from individuals to institutional arrangements, cultures, values, rules, and collective assumptions. I also agree with the new institutionalism in economics (North 1990) and transaction cost theory (Williamson 1984) to the extent that this approach emphasizes the importance of mentalities, cultures, deep values, and institutions, the limits of rational decision-making of economic agents. The institutional approach provides an extension of the individual basis of economics, for example, by prioritization of process analysis instead of analysis of equilibrium conditions. However, there is still a fundamental tension between sociological and economic analysis in the traditions of new institutionalism. Even though they are open to the importance of governance structures, institutions, and institutional environments for economic action, new economic institutionalists are reluctant to abandon their view of the economic actor as fundamentally rational, self-interested, goal-maximizing, and opportunistic (self-interested with guile) (Powell and DiMaggio 1991, p. 4). This view of the basis for institutional agency is in tension with the development of institutionalism in political science and sociology. Moreover, this implied concept of economic anthropology is questioned by the concept of human beings as autonomous responsible actors who even though they are embedded in institutions are morally committed in their choices of action. The new institutionalism in sociology represents a stronger reaction against functionalism and rational choice theory in organizational analysis when establishment of social relationships in the perspective of phenomenology of daily life (Schütz) and phenomenological social
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constructivism (Berger & Luckmann) is viewed as based on creations of common rationality conceived as cognitions, values, and customs shaping individual narratives and understandings (Powell and DiMaggio 1991, p. 21). The proposal of an institutional concept of corporate social responsibility is situated in the tension between these different new institutionalisms in sociology and in economics (Rendtorff 2010a, 2013b, d, 2015a, 2019d). At the end of the day, the economic institutionalist would have to agree that there is an ethical aspect of institutional behavior and corporate responsibility that cannot be captured exclusively in terms of economic efficiency and utility maximization. However, business ethicists and institutional sociologists would also have to admit that the economic imperative of the position of the firm in competitive market interactions would have to imply focus on efficiency when evaluating values and culture of the firm. With this in mind, this analysis of the foundations of collective responsibility in organizations aims at clarifying the concept of corporate social responsibility within traditional neoliberal economic thought and confronting it with an institutional approach to corporate agency. The chapter looks at the more fundamental philosophical issue of how it is possible to ascribe agency, moral personality, responsibility, and intentionality to corporations as institutional actors. Here, the point of departure is the philosophy of basic ethical principles of responsibility for protection of the human person, as developed in bioethics and health studies (Rendtorff 1998, 2003, 2015c, Rendtorff and Kemp 2009; Jørgensen et al. 2018). The problem is whether this concept of full moral responsibility of persons can be applied at the collective level of institutions and organizations. In this context, the chapter examines collectivist arguments for corporate responsibility in order to show the limits of a strong collectivist conception of corporate social responsibility (Rendtorff 2013a, b, d, 2015a, 2017c). After this the chapter looks at some possible economic, anti-essentialist and individualist criticisms of the collectivist concept of corporate social responsibility. Finally, the chapter proposes a third possible institutional view on corporate intentionality and moral agency of the firm, which aims at overcoming the oppositions between collectivists and individualists’ view on corporate social responsibility. This approach is essential for values-driven management and integrity (Pedersen and Rendtorff 2004; Mattsson and Rendtorff 2006; Rendtorff and Mattsson 2012; Rendtorff 2015b, 2017b, 2019b). Accordingly, the chapter is structured in the following parts (Rendtorff 2009a): (1) corporate social responsibility and neoliberal economics; (2) institutionalist arguments for corporate social responsibility; (3) corporate social responsibility between ethics and economics; (4) toward an institutional concept of corporate social responsibility, defining the “good citizen corporation”; and (5) developing trends of sustainability after the 2020 Corona crisis, extension of corporate social responsibility to all dimensions of the supply chain, customers, and other stakeholders
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Corporate Social Responsibility and Neoliberal Economics
The issue of corporate social responsibility emerges from international developments and new challenges and societal expectations to business corporations. The development trends of evolvements of international markets, easy and inexpensive communication structures, increased consumer awareness, debates about international justice, poverty and risk distribution, environmental awareness, and concern for global equality have put more emphasis on social responsibility of corporations (McIntosh et al. 1998). In this context many employees, business managers, NGOs, consumer movements, and democratic public generally promote human rights and standards of labor conditions, codes of good business conduct, ethics, and values as indispensable for long-term sustainability and good corporate governance (Elkington 1999). These external and internal expectations of developing trends imply that corporations who want to survive at increasingly competitive markets are required to take initiatives of values-driven management and corporate social responsibility in order to promote work security, high-quality products, and corporate engagement in society and local community (Rendtorff 2009b, 2011a, c, 2014c, 2017b). Many governments are introducing new forms of regulations that promote business ethics and corporate social responsibility. In many years the Danish government has worked with the creation of social partnership between corporations and public authorities (Pedersen and Rendtorff 2004; Rendtorff 2016, 2019a, b, c). Following international guidelines, there has been an increasing focus on corporate governance and social responsibility in European countries (Gribbon et al. 2000). Moreover, the US government has in the 1991 US Federal Sentencing Guidelines for Organizations made corporate ethics and compliance programs a mitigating factor when sentencing corporate crime (Fiorelli 1992). The European Commission formulated a communication about corporate social responsibility (2002) based on the Green paper on corporate social responsibility Promoting a European Framework for Corporate Social Responsibility (2001b), and ever since this has been the framework for European policies on CSR. This policy argued for corporate social responsibility as a “voluntary” but important effort for European corporations, which is necessary for Europe to become “the most competitive and dynamic knowledge economy of the World” (European Commission 2001a), and since 2015 the European Commission defined CSR as the impact on society of the corporation (Rendtorff 2019d). Indeed, in the postcommunist countries and in many developing countries, corporate social responsibility is also a major concern. Following a number of international guidelines and recommendations, the UN has with the global compact principles on responsible business and its famous guiding principles on human rights in business from 2012 agreed about principles and rules of conduct with regard to respect for human rights of multinational corporations. An institutional interpretation of this developing trend of searching for new values to back up economic markets and business practice would be to regard the new expectations of ethics and corporate social responsibility as an integrated part of mainstream economics (Rendtorff 2010a, 2013b, d, 2015a, 2019d). The idea of good
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corporate citizenship becomes the license to operate the firm. There is a shift from shareholder to stakeholder values in which the firm is becoming aware of the need to respect the interests of a wide number of stakeholders, rather than exclusively seeking to maximize profits for the shareholders or owners of the company. The need for codes of conduct and corporate social responsibility can be viewed as an expression of this change of values in the corporation because values-driven management in many cases is used as an instrument to promote corporate social responsibility. Responsible corporations represent normative values, based on visions and conceptions of the good society at the limits of ordinary view of economic markets. The theory of “embeddedness” helps us to interpret this development when it argues that economic actions cannot be separated from their specific social context (Granovetter 1985). This means that the values of the firm reflect a number of organizational goals (Simon 1964), which are dependent of its specific economic context and embedded in the social expectations of society. The developments in the ethics and law of values-driven management in the last 30 years in the USA and Europe can be viewed as an indication of this change in fundamental values orientations of companies. Many observers argue that there are important mutations in preferences, rationales, and reasons for decision-making functioning as normative foundations for economic actions (Elkington 1999; Zadek 2001). Uses of valuesdriven management in firms indicate the efforts of companies to define qualitative justifications for their economic activities. While values of shareholders and owners are considered as strict economic values, blank of other contents, the values of other stakeholders are viewed as social values. Thus, from the perspective of sociology of economic action, economic activities are viewed as forms of social action governed by values, rules, and norms. How does this development of corporate social responsibility relate to mainstream economic theory? In general, neoliberals have been skeptical to the doctrine of corporate social responsibility, which they consider to be too vague and dismissive of the real objectives of the firm of serving stockholders and contribute to economic efficiency. It is trivial that the firm should follow the rule of law, be decent, and do some charity, but any social engagement beyond that would be damaging for the free market economy (Hayek 1960, p. 225). However, the neoliberal paradigm of economics may admit that ethics and corporate social responsibility in some cases can be used as a strategic instrument to ensure long-term shareholder values. In this view increased pressure on corporations due to economic globalization and new societal expectations requires inclusion of corporate values and improved image as nothing more than an improved competitive device. According to the neoliberal conception of economics, the basis of economic action was conceived as utility maximizing individuals acting rationally on an economic market in order to secure the most effective allocation of resources and goods in society. It is argued that corporations are responsible for production of goods and services, but this responsibility is based on a pure economical definition of rationality, utility, and efficiency. Milton Friedman has clearly defined the neoliberal concept of corporate social responsibility the infamous article “The social responsibility of business is to
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increase its profits” (Friedman 1970). The concept of corporate social responsibility is considered as a subversive doctrine and a threat to free market capitalism. According to the neoliberal paradigm, the corporation should exclusively serve the interests of its shareholders while staying within the rules of the game, i.e., legal requirement and other rules within the market economy (Hayek 1960; Friedman 1970). The neoliberal paradigm represents a skeptical attitude to the rationality of the values-based organization and to the idea that the firm should act for social betterment. Indeed, these views represent a challenge to the proposed concepts of institutional agency and to the conditions of embeddedness of economic values. The argument of the neoliberals is based on a refusal of the idea that companies at all can be attributed responsibility at the institutional level. Companies do not represent anything else than the sum of individual actions (Hayek 1960; Friedman 1970). Indeed, an organization has legal responsibilities as an artificial, judicial person, but this is nothing more than a legal fiction, because it is never the organization as such but specific individuals who are attributed vicarious responsibility for the actions of the organization. Accordingly, from the neoliberal perspective, the concept of social responsibility of business organizations is meaningless, because organizations are nothing but collections of individuals. Only human individuals with consciousness and intentions and with free will be attributed moral responsibility. In connection with this criticism of the idea that organizations should be independent units with specific responsibilities for specific actions, neoliberals point at another possible significance of social responsibility stating that the CEO is the one who has social responsibility of the organization (Friedman 1970). As Hayek has put it, “nobody would seriously contend that. . . corporations should be run in . . . (management’s) . . ... interests” (Hayek 1960, p. 227). Even though one refuses to view organizations as special independent units, one can maintain that the manager is the one who has social responsibility in order to avoid discrimination, employs less favored people, has environmental concern, and in this way ensures the socially responsible profile of the company. In responding to this view, neoliberals introduce an argument stating that the corporate executive officer (CEO) of the organization only has economic and legal responsibility toward his employers (Friedman 1970). If it is a market-driven organization, it is natural to presuppose that the owners and shareholders primarily are interested in earning money. The manager should not have any other responsibility than being an agent for the interests of the owners and the shareholders (Hayek 1960, p. 232). Neoliberals may admit that the personal responsibility of the CEO may be oriented toward society, but this does not coincide with his responsibility as an employee in the company (Friedman 1970). But if the CEO anyway wants to serve social goals, he is misusing his position instead of doing his job making profit to the owners and shareholders of the company. Furthermore, it is a major worry of neoliberals that the idea of the social engagement of corporations transcending the limits of neutral economic markets not only is illegal, but not very democratic. The reason is that the CEO and the board have no political support in using the money of the firm for social purposes
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(Friedman 1970). Moreover, in the long run, corporate social responsibility would have the damaging effect of more control of the state by corporations (Hayek 1960, p. 238). In this case, the firm is no longer an economic actor, but it also functions as a political agent, which in the same way as the state takes taxes and reallocates resources between shareholders, customers, consumers, and the weakest in society. The state is the only one who really can be responsible for making environmental protection, protecting local community or fighting unemployment, and keep prices low in order to fight and avoid inflation (Friedman 1970). Neoliberals do not exclude that individual citizens have the right to work for social issues. In this case they only work as normal citizens following their political rights and duties as members of democratic societies. However, when they are in the role as CEO’s or as individual shareholders, they act for social purposes in order to make the company pursue political purposes, and they go beyond what is acceptable for a corporate action in a democratic liberal society with a sharp distinction between economy and politics. Accordingly, neoliberals argue that “social responsibility” in many cases is not really social responsibility but rather covers the firm’s interest in getting stability in order to secure long-term shareholder value (Hayek 1960; Friedman 1970). This is in some cases acceptable, but it can also be problematic when it hides the profitmaximizing motives of the corporation and consequently destroys the possibilities of fair competition, because society is given the false impression that the company works with social motives for social values (Friedman 1970). Today many people find neoliberal conceptions of corporate social responsibility very provocative, and the developments of business ethics and corporate social responsibility seem to have moved far beyond the neoliberal conception of economics (Rendtorff 2009b, 2010b, 2011a, 2012, 2017a, b). However, the arguments have in many years been characteristic for mainstream economic thinking about social responsibility, which can be summarized in the following ideas: (1) that only individuals and not organizations can have responsibility, (2) that the firm has exclusive responsibility to shareholders and owners, (3) that companies must be politically neutral, and (4) that social responsibility in many cases covers other concepts of long-term shareholder value and therefore does not follow the logic of liberal market economics. Basically, neoliberal economic thinking regards social responsibility as a doctrine that is damaging for a free market economy. Even though the debate about corporate social responsibility already was present in Keynes’ arguments for broader responsibilities of managers in the 1920s and in John Kenneth Galbraith’s criticism of the system of the industrial state in the 1950s and 1960s (Galbraith 1967), the discussions came in again in the 1970s as a part of the leftist criticism of capitalist economics (Dubbink 2001). These criticisms were met with arguments that corporate social responsibility was socialism. Today, however, the frameworks of the debates have changed considerably. Corporate social responsibility is no longer considered radical criticism of capitalism but moves in the center of mainstream capitalism, and most companies see it as an integrated part of good corporate citizenship. Scholars of business ethics emphasize that the corporation should be
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considered as a morally responsible agent (De George 1999; Paine 2002). It is argued that market organizations and corporations have responsibilities that go beyond legal requirements at the market and the rules of the game of economic competition. An integrative conception of business ethics would argue that companies have social obligations to society and that they should act as good citizens that are part of a social community and cannot be neutral in public debates (Ulrich 1998). The developments of ethics and law of corporate social responsibility as well as values-driven management and ethics programs in the USA and Europe in the last 30 years have supported this tendency of movement toward integrity-based concepts of values-driven management (Rendtorff 2015b, 2016, 2017b, 2019a, c). Most companies go beyond compliance toward organizational integrity when they are working with the implementation of values-driven management (Paine 1994). They are not only interested in following the law, but they also want “to do the right thing” following an idea of virtuous behavior. This idea has indeed been considered as “do no harm” principles (Dubbink 2001). However, many corporations do not rest with neutral compliance with the law and do more than negatively refrain from doing bad things. They want to make positive contributions to the community and reconcile their positions at the market with their position as good corporate citizens taking part of the community. In this way, values-driven organizations that do not operate in isolated economic systems challenge the neoliberal conception of corporate social responsibility. Responsibility is no longer exclusively situated on the level of individual persons, but organizations are attributed collective and independent responsibility (Paine 2002). Modern commercial law and the laws of welfare states operate increasingly with collective responsibility where agency and responsibility for errors and damage are attributed to organizations independently of individual actors (Ewald 1984). Moreover, the idea that companies only have responsibilities toward owners and shareholders is challenged by the activities of many corporations that include concerns for a wide range of stakeholders in decision-making processes (Rendtorff 2013a, c, d, 2015a, 2017c, 2019d). The concept of the rights of individual shareholders is less applicable on modern companies, where different types of institutional and governmental investors play a larger role on capital markets. In addition, society, for example, customers, consumers, and employees, expects that companies are presenting their values and political opinions. The emergence of a values-driven organization based on ethics and integrity as an expression of the concern for corporate social responsibility makes it difficult to stick to the idea of a politically neutral company that acts independently of social politics, maximizing profit according to ideals of fair competition in a closed economic sphere. These promotions of corporate social responsibility represent a challenge idea of Adam Smith’s invisible hand of the market where leaving the market operating on its own terms is supposed to increase social prosperity. Mainstream economic action can no longer be considered as value-neutral, and organizations are open systems interacting with political and social spheres of communities. Institutional economics acknowledges the possible economic efficiency of culture and
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values for corporate development (Williamson 1984, 1985; North 1990), and management thinkers are reflecting about the right strategy for corporate social responsibility and philanthropy (Porter and Kramer 2003). Thus, companies are evaluated both for their economic performance and for their position in society as responsible agents (De George 1999). The relation between goals and means is considered as a critical issue, and public debates question to which extent it is legitimate to use socially and environmentally destructive means to produce economically profitable goals. Companies are not only required to act instrumentally in order to ensure long-term shareholder value, but they are also dependent on specific external and internal spheres of legitimacy, defining the acceptance and stability of the corporation as a social actor.
3
Institutional Arguments for Corporate Social Responsibility
These development trends in the ethics and law of corporate social responsibility and values-driven management imply that philosophy of management moves beyond the horizon of neoliberal economics when evaluating the position of the firm in society. Moreover, the content and definition of corporate social responsibility have changed significantly with the development toward institutionalization of CSR (Rendtorff 2009a, b, 2010b, 2011a, b, c). Corporate social responsibility no longer exclusively concerns effective allocation of resources based on rational actions on value-neutral markets as indicated by mainstream economic thinking. In addition, borderlines between issues of state responsibility and problems of corporate responsibility are changing. Traditionally, in using legislative measures, the state has been responsible for social and environmental issues (McIntosh et al. 1998). Sharp divisions between economics and politics have characterized Western welfare societies. This implied a functional division of labor where companies were responsible for economic prosperity, while the state was responsible for social welfare. It was exclusively the market i.e., consumer choices, that determined the legitimacy of firms as long as they acted in accordance with basic legal and economic rules. However, recent focus on stakeholder values in internal and external management signifies that corporate social responsibility has moved beyond legal responsibility. This is expressed in a new repartition of responsibilities between states and corporations on economic markets. Values-driven organizations are attributed moral and social responsibility in relation to many different stakeholders, for example, consumers, suppliers, customers, ethnic minorities, the environment, etc. (Paine 2002). Moreover, new areas of responsibility are currently defined during technological and social development, i.e., responsibilities related to bioethics and biolaw regarding computer technology, biotechnology inventions, or health and medical sciences (Rendtorff 1998, 2002, 2003, 2008, 2014a; Rendtorff and Kemp 2009). Thus, corporations are no longer viewed exclusively as economically and legally responsible, but developments in the ethics and law of ethics and compliance programs and
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values-driven management include emergence of the concept of a morally and ethically responsible organization. In addition to the European emphasis on corporate social responsibility to other spheres of society in the policy of the European Commission, the US developments focusing on the compliance programs and relations between ethics and law represent an effort to make the corporation responsible at the institutional level. As an example, the 1991 US Federal Sentencing Guidelines for Organizations imply a conception of responsibility which is not only based on individual actions but also includes that institutions, organizations, and firms can be attributed moral and legal responsibility. These guidelines define seven steps as required for legal recognition of an effort of a corporation to act responsible with regard to establishment of a responsible compliance and ethics program for the organization (United States Sentencing Commission 2004): 1. Establish Standards and Procedures. The organization must have established compliance standards and procedures to be followed by its employees and other agents that are reasonably capable of reducing the prospect of criminal conduct (Guidelines, supra note 1, § 8A1.2.). 2. Assign Oversight Responsibility. Specific individual(s) within high-level personnel of the organization must have been assigned overall responsibility to oversee compliance with such standards and procedures (Guidelines, supra note 1, § 8A1.2.). 3. Delegation of Discretionary Authority. The organization must have used due care not to delegate substantial discretionary authority to individuals whom the organization knew or should have known through the exercise of due diligence and had a propensity to engage in illegal activities (Guidelines, supra note 1, § 8A1.2.). 4. Communication of Standards and Procedures. The organization must have taken steps to communicate effectively its standards and procedures to all employees and other agents, e.g., by requiring participation in training programs or by disseminating publications that explain in a practical manner what is required (Guidelines, supra note 1, § 8A1.2.). 5. Achieving Employee Compliance. The organization must have taken reasonable steps to achieve compliance with its standards, e.g., by utilizing monitoring and auditing systems reasonably designed to detect criminal conduct by its employees and other agents and by having in place and publicizing a reporting system, whereby employees and other agents could report criminal conduct by others within the organization without fear of retribution (Guidelines, supra note 1, § 8A1.2.). 6. Enforcement and Discipline. The standards must have been consistently enforced through appropriate disciplinary mechanisms, including, as appropriate, discipline of individuals responsible for the failure to detect an offense. Adequate discipline of individuals responsible for an offense is a necessary component of enforcement; however, the form of discipline that will be appropriate will be case specific (Guidelines, supra note 1, § 8A1.2.).
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7. Organizational Response to Ethics Violations: After an offense has been detected, the organization must have taken all reasonable steps to respond appropriately to the offense and to prevent further similar offenses – including any necessary modifications to its program to prevent and detect violations of law (Guidelines, supra note 1, § 8A1.2.). These strong recommendations of necessary elements of responsible ethics programs can be interpreted as an indication of the fact that the US regulation of valuesdriven management conceives “vicarious responsibility” as institutional, social responsibility, so that the firm is considered responsible as an institution that takes over individual responsibilities (US Sentencing Commission 1995). The regulation is based on a “stick and carrot approach” to compliance and ethics programs because it promises firms who have established ethics programs according to the guidelines a possible mitigation of fines if they are considered as guilty in violation of the law. Accordingly establishing an ethics and compliance program works as a legal insurance for the firm. What is interesting about this element of the Federal Sentencing Guidelines for an organization is that they are based on a combination between an economic approach to law regarding economic incentives in institutions as a foundation of obeying the law and a business ethics approach emphasizing the social responsibility of corporations. This means that fundamental economic notions like profits, organizations, stakeholders, and management not only should be viewed from the perspective of individual responsibility of managers or directors. They should also be considered from the institutional perspective in so far as the organization in court cases is evaluated from the perspectives of its policies, missions, values, and institutionally based compliance and ethics programs. These guidelines may therefore be considered as an expression of an increasing emphasis on good organizational behavior. Ethical concepts of integrity, honesty, and responsibility are applied directly at the organizational levels (Paine 1997). Organizations are held institutionally responsible and evaluated at the organizational level dependent on the amount of comprehensive institutional structures indicating the level of institutional awareness of their economic, ethical, legal, and philanthropic responsibilities (Rendtorff 2011c, 2012, 2014c, 2017a, b, c). Accordingly, it can be argued that the use of notions of “organizational culpability” and “corporate citizenship” implied in US legal development requires a much more comprehensive concept of institutional corporate legal and moral responsibility – compared to the one that was proposed by the neoliberal paradigm of economics. The basis for such a conception of the corporation as a legal person with specific moral and social responsibility, liability, and accountability can be conceived as the notion of corporate institutional agency. Contrary to the neoliberal conception of the firm as an aggregation of individuals, new institutionalisms in economic and sociology help us to justify the idea of corporate institutional agency because institutional analysis recognizes the impact of institutions on economic activity. It is therefore needed to propose the new institutional economics as an economic theory, which can help us to understand corporate social agency. Institutional economics has
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understood the need for foundations of economic activity in other values than economic values. Institutional economists are aware of the significance of national culture½ for economic progress, morality, ethics, and the relations between firms and other institutions. They have proposed concepts of “trust” and social capital in order to take into account the significance of values and ethics for economic progress. Institutional economics does not consider economics exclusively as a natural science based on mathematic analysis (Williamson 1975). Rather economics should draw on multidisciplinary methods in order to conceive the complexity of the social world. This approach implies a complex concept of rational behavior of consumers and agents on economic markets. It argues that many different rationalities influence consumer behavior. Consumers do not have full information, and therefore they are motivated by many other patterns of behavior. Price and quality uncertainty introduce other requirements in order to predict and understand consumer behavior. Moreover, economics cannot operate with the idea of individual actors on perfect markets. Social costs and other kinds of transactions costs are fundamental in order to understand the need for firms and the structure of economic institutions. In addition, law and economics, property rights, and legal rules must be considered as important institutional factors. And it is necessary to add other factors as culture, anthropological implications, ethics, and norms (Rendtorff 2016, 2017b, 2019a, b, c). In this perspective, it is possible to argue that economics is forced to include ethical and cultural dimensions as an appropriate area of research in order to create incentives and to achieve the traditional ideals of efficiency and progress. As indicated many of the normative presuppositions on economic markets of honest behavior of actors depend on values and cultural traditions. Today, it is not possible to discuss corporate management and economic calculations without including ideals of business ethics and corporate social responsibility. Contrary to the neoliberal emphasis on self-interest, there is much more emphasis on the role of collective participatory processes of organizations at markets. Traditional economic problems of opportunism, strategic relations between actors, and insecurity of asymmetric information have to be confronted from these perspectives (Williamson 1985). Improved social responsibility, values, and ethics in the economic system might be good for reducing transactions costs. This is partly recognized by some of the most prominent representatives from institutional economics. Williamson has argued in his organization theory that there is quasi-moral involvement among parties in transactions of economic exchange and in the development of organizational hierarchies (Williamson 1984). Moreover, Douglass North has emphasized the function of ideological commitments, honesty, and integrity in order to ensure efficient functions and reduce transaction costs in organizations (North 1990). Institutions are determined by a certain path dependency, where values affect their efficiency and possible change is based on their history and culture. Thus, the new institutional economics helps us to be aware of the importance of considering the firm as an institutional agent with governance structures and institutional environments that matter for economic performance, and it also helps to understand the role of incentives in effective ethics and compliance programs. However, the question remains whether this agency of the corporation should be
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considered as more than a sum of individuals or that only individuals can be held responsible. In this context, the position based on sociological and philosophical institutionalism argues that it is possible to consider the corporation as an independent agent with social responsibility. The philosopher Peter French presents this concept of corporate social responsibility in his classic article “The corporation as a moral person” (1979) in order to develop this institutional argument for corporate social responsibility (French 1979, p. 133). The argument rests on the presupposition that it is possible to ascribe intentions and purposeful actions to corporations. The concept of intentionality (Donald Davidson) is used as the foundation for his argument for considering the corporation as a moral person. This argument was a contribution to the debate on collective responsibility, which emerged in 1970s. According to this position, it is possible to consider intentionality not solely as interplay between desire and belief but rather redefine intentionality as “planned intentionality.” In order to understand collective action in organizations, it is necessary to operate with a notion of agency that is not restricted to human persons. This concept of agency makes it possible to develop a notion of the firm as an institutional reagent that is attributed liability and responsibility for its actions. The basis of this argument is that the corporation as organizational unities of individuals can be morally dangerous agents that are able to do much more harm than individual agents can do. Thus, the philosophy of management presents a collectivist concept of responsibility (Rendtorff 2013d, 2014b, 2015a, 2017c, 2019d). Therefore, corporations can be considered as moral persons that can be held responsible for their actions. Like human beings, organizations make decisions and do things voluntarily (French 1984). And this has consequences for their character, identity, and culture. This argument implies a criticism of methodological individualism of the neoliberal paradigm of Hayek and Friedman, who argued that collective units are nothing more than an aggregate of individuals and therefore cannot be held responsible as such. The institutional counterargument is that groups and collectivities can have intentions and a common identity, which is more than the sum of individuals. For example, the Gulf Oil Corporation is more than the group of individuals who belong to the corporation. It cannot be identified with the aggregation of the persons who are associated with it (French 1984, p. 30). Nevertheless, the idea of the corporation as a moral person does not automatically integrate individuals in collectivities. For example, the medical profession may be held responsible as a group for the general state of health care, even though this does not directly imply actions and intentions of particular physicians (French 1984, p. 128). But what does it really mean to consider the corporation as a responsible agent? For some people, it may seem rather counterintuitive to describe corporations as persons. They would argue that intentionality is a human notion that only can be meaningfully ascribed to actions of individual human beings. However, it makes perfectly sense to speak about collective intentionality as something independent and different from individual intentionality. A group action in organizations is characterized by an intentional unity, which, although it consists of the sum of individual actions, cannot be reduced to this collective unity. As intentional actors
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in society corporations may be held responsible at the institutional level, corporate responsibility cannot be reduced to individual responsibility. It is possible and necessary to distinguish between corporate and individual responsibility, when judging actions of individuals and corporations. Indeed, the notion of corporate identity may be a way to illustrate this noncoincidence between the firm and the aggregate of individual intentional intentions. As a unity, the corporation has a specific moral identity, which cannot be identified with the sum of individuals in the corporation. Efforts to grasp the identity of a corporation over time show that law and economics need to operate with a specific level of corporate identity. For example, a corporation can persist even though all human individuals in it have been replaced. In this case it would be necessary to give an institutional definition of when managers say that a corporation has changed its identity from being a “bad corporation” guilty in many harmful things to the status of being a “good citizen corporation.” In order to respond to this problem of institutional agency, corporate social responsibility, personhood, and planned intentionality can be defined by the concept of corporate “internal decision-making structure” (CID-Structure) (French 1984). This structure may be understood as the unity of values codes, formulated policy statements and strategies, and indeed concepts as well as formal and informal understandings of corporate traditions and cultures. Corporations make many decisions, which are based on routines and habits, but though they sometimes seem arbitrary, this does not mean that they do not originate in the CID structure. The CID structure is the totality of meanings and intentions, which makes up the corporate ethos and culture and constructs the collective identity of a company. The CID structure defines the goal of the organization and its level of liability and integrity. It is constituted by the identity and history of the organization (Rendtorff 2010a, 2013a, b, c). Therefore, the corporation as a collectivity forms a community with certain practices. Individuals are partly responsible for this practice as they are taking part in the organization, but the practice is also an independent activity, which determines the purpose and aims of organizations (Rendtorff 2011c, 2012, 2014c, 2017a, b, c). Indeed, meaningful compliance and ethics programs as proposed in the abovementioned US Federal Sentencing Guidelines for Organizations are a manner of objectifying the CID structure of a company, and therefore they are good indications of corporate personality and level of accountability and responsibility of the firm. On the foundation of this concept of collective responsibility, the question is how a corporation should be punished? Here, indeed, the CID structure may be the basis for punishment. Referring to CID structures, corporate identities and cultures may be a way to talk about collective legal liability and responsibility without reducing these factors to the actions of certain individuals. It is not possible to attribute fault and culpability to collectives that may be responsible without direct reference to individuals’ intentions and actions. In this context the problem is how to sentence the corporation when some of its members even though they take part in the corporation have not been directly involved in its criminal actions. Moreover, given the concept
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of moral personhood of corporations, it would be wrong to state that only individuals can be responsible for actions of corporations. However, punishment of the corporation is not a substitute for individual punishment, because individuals may be viewed as having complicity in the offenses. Instead of a direct retribution, philosophy of management can propose a shame-guilt model where the corporation in being punished is getting a bad reputation (French 1984). Indeed, the moral reputation of a company is important, so hurting the image and reputation of a company may be a very strong punishment. Another way to punish corporations would be to submit it to community service, sanction it to pay fines, and in all possible manners make it responsible for restoring of the harm it has done (French 1984, p. 202)
4
Corporate Social Responsibility Between Ethics and Economics
It is important to stress that this concept of corporate social responsibility does not have to rely on essentialist ontology with the corporate soul as a somewhat strange “ghost in the machine.” When philosophy of management defends the idea of corporate social responsibility as an institutional concept central to developing trends, it implies the conception of the firm as a social agent with a “moral consciousness” (Rendtorff 2013c, d, 2014b, 2015a, 2017c, 2019d). This means that philosophy of management relies on the insights of new sociological institutionalism and its concept of institutionalization as defended by the phenomenological constructivism (Berger and Luckmann 1966). This idea of the corporation as an intentional agent combines this institutionalism with concepts from moral philosophy. Taking the moral point of view on the organization means that corporate social responsibility implies that the corporation has a conscience (Goodpaster and Matthews (1982) 2003, p. 136). To ascribe personhood to the corporation includes that it has the capacity to take a moral point of view making rational and respectful decisions with honesty, integrity, trustworthiness, reliability, and accountability (Goodpaster and Matthews 1982) 2003, p. 138). From the constructivist and institutionalist sociological and philosophical point of view, it makes perfectly sense to evaluate responsibility of corporations in terms of ethical behavior. Some corporations have been establishing systematic features of ethics and compliance programs and internal monitoring systems, which help them built their reputation as reliable institutions which distinguish them from other corporations who are behaving in a much less trustworthy manner (Goodpaster and Matthews (1982) 2003, p. 140). Thus, it can be argued that corporate social responsibility expresses the capacity of the corporation to act as a moral agent regardless of the economic constraints of the market. Precisely this point may be a controversial point of tension between sociological, philosophical, and economic institutionalism. It may be argued that economic institutionalism, while recognizing the importance of institutions and organization in economic behavior, does not go as far as to adopt the concept moral corporate personhood. Economic organization theory cannot overcome the economic concept
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of self-interested utility maximizing subjects that are projected unto the analysis of organizations (Fukuyama 2004). According to this criticism, economic organization theory conceives the organization in terms of rational choice, principal-agent models, and incentive models that leave no room for defining a moral viewpoint of the organization. Organizations are viewed as contract relations between individuals who tend to maximize their own benefit. The argument is that only efficiency and profit maximization are relevant organizational considerations (Goodpaster and Matthews (1982) 2003, p. 143). So even if economic organization theory recognizes the importance of institutions and institutional agency, it does not have to share the point of view that corporate social responsibility is relevant or possible. Such criticism can be considered as a major challenge to the sociological and philosophical defense of an institutional concept of corporate social responsibility. Economic institutionalists come close to neoliberal economists when they argue that it is impossible to conceive corporations as moral persons with responsibility and intentionality that go beyond economic and legal responsibility. Such an argument would restate the neoliberal idea that only human beings not organizations can have intentions or consciousness (Velasquez 1984). Intentionality would be considered as a strictly psychological notion that can only be attributed metaphorically to corporations. Corporations are in this view nothing but functionalist instruments that are used as principals of the agent to obtain certain specific goals, and when managers speak about the actions and responsibilities of corporations, they only do this in a vague sense that cannot be said to have a substantial ontological content. According to this criticism, it is only individuals and not groups organizations, which can be socially responsible. It is only in cases where it is possible to find a direct relation to agents – conceived as human beings in flesh and blood with freedom and conscience – that managers can talk about “moral responsibility.” This is the kind of responsibility that is found in classical criminal law, where an individual was held responsible for a criminal act, which he or she causally had intended to do. According to such a concept of moral responsibility based on direct intentionality, it is possible to refer directly to human intentions, and it is only human beings that can be blamed and punished for their intentional actions. The individual can only be morally responsible for his or her direct bodily actions. Responsibility originates directly in the intentions of an agent, which are executed in a bodily movement of the individual. Therefore, only individuals can be submitted to blame and punishment (Velasquez 1984, p. 115). Punishment is strictly limited to the perspective of classical notions of accountability and responsibility. Corporate policies and procedures are not linked to human bodies, and they do not in themselves perform intentional actions. So, therefore, the corporation cannot be an entity who can be held morally responsible for its actions (Velasquez 1984, p. 122). The corporation may be held legally responsible as a unity that can have compensatory responsibility toward certain individuals. But this is not the same as moral and social responsibility. This individualist criticism of the idea of collective institutional action expresses an important element of the tension between different institutionalist approaches in organization theory. Collectivists are said to operate with a wrong premise stating
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that because corporations have properties, which cannot be attributed to their individual members, they are ontological entities which are distinct from their members with properties like intentionality or responsibility. Collectivists seem to attribute properties to objects that are not real. There does not have to be a specific intentionality of the corporation, which is qualitatively different from the aggregates of individual intentions. When philosophy of management attributes intentions to groups, it does it in a metaphorical or analogous sense, signifying that corporate intentionality may be determined as an “as if intentionality,” a kind of prescriptive intentionality, where intentions are ascribed to groups, e.g., their policies and procedures, that is their CID structures, which are dependent on actions and intentions of individual actors. Even though this argument may seem very plausible, it is important to point to some difficulties for such criticism of corporate social responsibility, which count in favor of some conception of the corporation as a moral person (Rendtorff 2009a, b, 2010b, 2011a, b, c). It seems to be embedded in modern economic life that corporations have a specific moral responsibility, which goes beyond the responsibility of its members (Dubbink 2001). In modern economic life, organizations are supposed to act as independent unities with specific rights and duties. Moreover, these developments imply, as indicated, that “vicarious responsibility” or “respondent superior” doctrines – about individuals representing the firm or taking the responsibility of the firm – are not sufficient in order to capture the specific responsibilities of this new position of corporations as socially responsible agents. Within actual developments of commercial law, welfare law, and criminal law, there has been significant changes of prevailing legal doctrines (Ewald 1984). Classical legal doctrines have been opened up in such a way that there is room for responsibility of groups and institutions. This responsibility does not rely on individual intentionality but implies compensatory responsibility of organizations, even in cases where it is not possible to point to any specific individual fault (Ewald 1984). In addition, it may be argued that in case where the CEO or specific managers are held responsible, it is not done on the basis of their particular personalities but rather because of the positions as representatives of the corporation (Goodpaster and Matthews (1982) 2003). In this case the CEO has a function or role as a representative of the corporation as an institution being a part of economic markets as a social system with specific functions in society. It is also possible to defend the collectivist position against the individualist criticism by pointing to the fact that the vision of corporate personhood does not have to be a person in the same sense as a human person, although philosophy of management can apply the ethical principles from individualist ethics to the collectivist level (Rendtorff 2014a, 2015c; Jørgensen and Rendtorff 2018; Jørgensen et al. 2018). Arguing for a status of corporations as intentional agents does not even have to presuppose an ontological, intrinsic character of corporations, a kind of substantial being on its own, which has its own reality independent of human affairs. Indeed, as philosophy of management does not have to accept the essentialist theories of organic states of Plato, Hegel, or Bradley when philosophy of management defends
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an institutionalist conception of corporate social responsibility. Instead of being based in a mysterious essentialist world, the idea of corporate responsibility may simply be founded on the concept of human collective intentionality, where individuals acting together as a group can be said to constitute a meaningful collective action. In order to make this position acceptable for mainstream economics, philosophy might propose a strategy of convergence between institutional economics and business ethics as proposed by John Boatright who builds a theory of business on the tradition of economics of governance of contractual relations from Coase and Williamson (Williamson 1985). The idea is that research in business ethics has been too critical toward the conception of the firm as a “nexus of contracts” based on bounded rationality and a system of more or less formal and informal contracts. Boatright argues: “Should researchers in business ethics adopt the framework provided by the contractual theory of the firm? Certainly, philosophical ethics provides its own perspective and suggest deficiencies in the contractual theory for understanding and addressing business ethics problems. The neglect of the contractual theory of the firm, however, deprives business ethics research of a potentially useful framework that could integrate its results with the work in financial economics and corporate law. In addition, the failure of business ethics researchers to work within the contractual theory – or develop a rival theory with the same intellectual rigor and explanatory power – diminishes the relevance of their work to these other disciplines. Much is to be gained therefore by taking seriously the framework provided by the contractual theory, and develop this framework is a necessary step” (Boatright 1996, p. 238). From this perspective, business ethics and institutional theory should not propose a pluralistic concept of the values and goals of the firm but rather try to integrate the institutional economics and business ethics. Corporate social responsibility should not be considered as an alternative to contract theory, but instead it is possible to integrate business ethics into the already existing legal framework of the economic market (Boatright 1996, p. 218). In the framework of this theory of the firm as a nexus of contracts, it is not possible to conceive the economic concerns for efficacy and profit maximization as central goals of the firm and important concern of organizational governance. However, all goals and values of a firm are ambiguous, and concerns for values and stakeholders may be in the interests of owners and shareholders in order to ensure long-term returns. Even though it is possible to consider the firm as an instrument for obtaining economic returns, it is not necessary to exclude ethical concerns and the interests of a broad number of stakeholders in the perspective of the firm as a system of contracts and negotiations (Boatright 1996). In the perspective of the institutional theory, owners and shareholders of the firm have an interest in the broad concern for all stakeholders in so far as this helps to increase competitiveness and sustainability of the firm (Boatright 1996). However, this convergence between ethics and economics does not exclude a potential conflict since transaction cost theory first of all focuses on efficiency and economic return (Boatright 1996, p. 234). Therefore, institutional economics may
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sometimes be blind and limited in regard to the effort of conceptualizing the firm as a moral agent with social and environmental responsibilities. It may after all not be so easy to combine institutional economics and the concept of the moral firm (Midtun 1999). What is needed is a broader concept of the organization integrating different external and internal value conceptions and views of the goals of the firm. The concept of moral responsibility of the firm is at the limits of transaction cost economics in so far as this theory does not transcend the neoclassical conception of an economic man as a self-interested utility and profit maximizer (Midtun 1999, p. 3). Therefore, it is necessary to move to business ethics and institutional sociology when philosophy of management wants to propose an institutional concept of corporate social responsibility containing all four – economic, legal, ethical, and philanthropic dimensions of our definition of corporate social responsibility (Rendtorff 2009a, b, 2010b, 2011a, b, c).
5
Toward an Institutional Concept of Corporate Social Responsibility: Defining the “Good Citizen Corporation”
Thus, the chapter defends a view of corporate agency with moral and social responsibility as a defining development trend of corporate social responsibility, which is compatible with a sociological and philosophical institutionalism based on a constructivist view of institutions and social reality. John Searle has recently made a powerful argument as a reply to that tradition in The Construction of Social Reality (Searle 1995) that can be used to support our argument for institutional agency and corporate responsibility on constructivist and anti-essentialist premises. Searle distinguished between collective and individual intentionality, maintaining that the latter cannot be reduced to the former, although it is not to be considered as an independent ontological fact at the same level as natural objects. This supports the conception of corporate decision-making and of collective intentionality as different from a mere aggregate of individual intentional ties, but not comparable with any essentialist conception of institutions and organizations (Rendtorff 2014b, 2015a, 2017c, 2019d). The foundation of this conception of agency of the corporation is the conception of corporate personhood as a constructed institutional fact, determined by processes and actions (Searle 1995). It can be argued that there is a basic difference between natural reality and social reality, which is the result of human symbolic interaction. Thus, social reality, social objects, and institutions should be viewed as constituted by a collective intentionality, which cannot be reduced to individual reality (Searle 1995, p. 24). At the same time “all institutional facts are ontologically subjective even though they are epistemically objective” (Searle 1995, p. 63). There is no need for an essentialist ontology, a mysterious collective consciousness, or a Hegelian spirit in order to explain social reality (Searle 1995, p. 25). Neither is it possible to reduce collective intentionality to individual intentionality. This account of social facts and institutions represents an important basis for considering the corporation as an independent social actor with specific duties and
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obligations. In this perspective corporations and other institutions are a result of collective agreements, or acceptance of them can be considered as specific institutional facts involving rights and responsibilities (Searle 1995, p. 36). For example, money or marriage, governments, or universities are institutional facts that are results of collective intentionality. Even though society has forgotten its original status as a convention, the institution of money continues to exist as a common social reality. This might help to understand the emergence of the CID structure of a company as an indication of corporate agency. In fact, the moral personality of the corporation is not something as a preexisting odd essentialist structure, but as an institutional fact, it is constituted as a system of collectively recognized duties and obligations. In the same way, human rights can be considered as an example of social creation of institutional facts, based on institutional powers and symbolic functions. In this framework, the concept of corporate intentionality and responsibility is the result of such a collective institutional creation. Once accepted as an institutional fact, corporate agency has become an integrated part of the background abilities of rule recognition of social reality (Searle 1995, p. 126). Legal regulation, judicial doctrine, and legal argumentation may be considered as important tools for this construction of social reality. With regard to the corporation, legal developments toward conceiving the corporation as a “good citizen corporation” indicate such a symbolization of corporate responsibility as an institutional fact. The 1991 US Federal Sentencing Guidelines for Organizations represent a good example of this construction of corporate criminal liability (US Sentencing Commission 1995). Even though it may seem paradoxical to attribute mental states to organizations, legal theorists have argued for the concept of “the criminal state of mind” of the corporation (Laufer and Strudler 2000, p. 1285). The legal system would function with more fairness and justice if corporations were considered as moral agents with intentionality that can be attributed criminal responsibility. This concept of legal and moral responsibility of the corporation is more comprehensive than the concept of “vicarious responsibility” because it is based on the idea that it is possible to determine the guilty state of corporations as collective units (Rendtorff 2016, 2017b, 2019a, b, c). Accordingly, corporations as legal and moral persons have specific legal rights and duties (Laufer and Strudler 2000, p. 1295) Instead of focusing legal judgment of the company on evaluation of actions of specific persons, it is the totality of the policy, strategy, mission, codes of ethics, and principles of values-driven management as well as company culture and more or less formal rules and actions that are judged as expressions of the intentionality of the corporation. On this basis, as it is the case in the US Federal Sentencing Guidelines for Organizations, ethics and law of values driven management operates as the basis for legal determination of culpability, responsibility and character of punishment including the size of eventual fines. Such legal construction of corporate culpability and responsibility also operates with the criminal identity and history of the corporation as an indication of the level of culpability (Laufer and Strudler 2000, p. 1305). Codes of ethics, compliance programs, and other more or less formal and informal structures are
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viewed as indications of the structures of intentionality of the corporation as a responsible social institution (Rendtorff 2009a, b, 2010b, 2011a, b, c). Even though this concept of social responsibility of the corporation should not exclude individual responsibility, it implies that collective intentionality of corporations not necessarily coincides with the intentions of specific employees (Laufer and Strudler 2000, p. 1308). Therefore, corporate intentionality and agency of the firm do not reflect the totality of the intentions of individual agents. This concept of the corporation as a moral and legal person viewed as an independent institutional entity may be characterized by intentional structures of agency including the following elements: “(1) agents whose actions and intentions are related to each other in such a way that they assume the characteristics of a corporate firm (2) Agents whose status in the organization is such that their actions and intentions are those of the organization and (3) Aspects of the organization such as policies, goals and practices, that reflect not merely the sum total of individual agent’s intentions, but instead attributes and conditions of the corporation that make it possible for these agents to cooperate and collaborate in legally problematic ways” (Laufer and Strudler 2000, p. 1309). This conception of collective agency may be viewed as a comprehensive formulation of the CID structure of the corporation including codes of ethics and compliance programs. In the evaluation of corporate social responsibility, these factors are combined with evaluations of purposes of actions, the knowledge of the firm about the illegal action, as well as the seriousness of the offense. It is indeed presupposed that those individual actions and decisions are framed by the normative structure of the organization. But, at the same time, the concept of corporate institutional responsibility implies that it is possible to sentence and hold an organization responsible for specific actions without finding a basis for this in the faults and actions of specific individual agents (Laufer and Strudler 2000, p. 1311).
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Developing Trends of Sustainability After the 2020 Corona Crisis: Extension of Corporate Social Responsibility to All Dimensions the Supply Chain, Customers, and Other Stakeholders
An important recent development trend related to collective agency and social responsibility has been the extension of corporate social responsibility to a broader field of responsibility after the development of UN policy of sustainability. This trend has become more predominant after the Covid-19 crisis since spring 2020. The Corona crisis has made us focus on the disease, but it has also provided the basis for a more responsible reflection on the global sustainability agenda and the visions of the UN’s global sustainability goals (SDGs) in relation to CSR and all dimensions of the supply chain and stakeholders of the firm. The course of the Corona crisis documents the seriousness of the global environmental crisis, where humans are deeply dependent on nature. Covid-19 is largely an expression of the Anthropocene age in which the human species controls and takes over nature, but at the same time, the disease also shows that humans are an integral part of nature in the Anthropocene
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(Rendtorff 2019d). Humanity became paradoxically more at the mercy of nature while dominating the world, and Covid-19 has shown that our complex society is incredibly vulnerable to nature. Covid-19 has become a widespread pandemic made possible by today’s globalized and mutually dependent communities, integrating nature and people into an inseparable whole. In this context, the challenge of institutional responsibility after the crisis implies that companies relate themselves responsible to all members and contributors to the supply chain defining the social and environmental impact of the business corporation. The Corona crisis is thus another serious sustainability challenge that, in addition to the problems of increasing plastic pollution, global warming, loss of biodiversity, and predation of natural resources, shows that a global transition to a more sustainable society is needed. At the same time, Covid-19 has led to a strengthening of global inequality, with the poorest and most vulnerable people on earth also being the ones who are least resistant to the disease. Covid-19 has gone above and beyond those who are already on the edge of society with social and economic problems, i.e., the sick and the weak, the old, those with changing jobs, the unemployed, lonely, and socially marginalized, while most people in the well-integrated middle class have gone through the shutdown without any major problems. Here, business corporations have to open up their sense of responsibility to all important stakeholders and contributors to the supply chain, accepting the network of corporate citizenship as a global dependence of companies and their environments. The Corona crisis thus makes the debate on responsibility and sustainability even more important, and corporations have to take into account all stakeholders and contributors to their supply chain while formulating new visions and policies of CSR. With making remote work and restructuring necessary, Covid-19 has made social responsibility for employees far more comprehensive and complex, but it has also strengthened the culture of care in the labor market, and HR employees have become much more visionary. At the same time, the social minds and social responsibility of business corporations are challenged with the crisis, which tends to excite those who would out of the crisis as easily as possible be quickly firing employees. The crisis has made social solidarity a requirement. This points out that corporate responsibility today is not just a responsibility to generate profits and earnings, but corporate social responsibility is ethical responsibility for people, for the environment, and for saving the globe (Rendtorff 2019d). We need to focus on the people, planet, and profit that are becoming essential elements of institutional corporate social responsibility. As a result, social responsibility has become a global environmental responsibility to avoid climate change and ensure a sustainable future. The concept of responsibility is thus important as the foundation of ethics, especially in the politics and economics of modern civilization, characterized by globalization and technological progress. In addition to a discouraged paralysis and existential nihilism and cynicism, the world community must find new solutions of collective responsibility. The focus on solidarity and concern for the weak, which has arisen as a result of the joint responsibility to fight Covid-19, is here an important building block for moving forward with the agenda for the transition to be a more sustainable society.
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The need for reflection and to rethink the future that the Corona crisis entails provides a good opportunity to evoke the true vision behind the hope of a transition to a more sustainable economy and policy that underlies the UN’s global goals. The vision is the notion of a great future for everyone on earth, based on a deep respect for the noble greatness and dignity of humanity. The United Nations’ World Committee on the Environment, the famous Brundtland Commission defined in 1987 “sustainable development” in a philosophically unifying perspective as the fundamental goal of the political work of the international community. Sustainable development was a vision of the respectful use of natural resources for the purpose of respecting the good life of the community and the good living conditions of future generations on earth. It is important to remember that it is this unifying ethical and political vision that is behind the UN World Agenda for 2030. This illustrates how the link between social responsibility and sustainability implies that companies consider corporate citizenship as global and that companies take into account all stakeholders and members of the supply chain when formulating visions and policies for responsible citizenship. Thus, the vision of the SDGs of a better future is what really lies behind the 17 goals and 169 subgoals that oblige all 193 UN member states to completely eradicate poverty and hunger in the world, reduce inequalities, and ensure good education and better health for all, decent jobs, and more sustainable economic growth (Rendtorff 2019d). The vision of a good society also lies behind the UN’s SDGs of promoting peace and security and strong institutions and of strengthening international partnerships. The new agenda thus recognizes that social, economic, and environmental development, peace, security, and international cooperation are closely linked and that sustainable development requires an integrated effort. The Sustainable Development Goals’ (SDGs) visions build on the eight so-called 2015 Millennium Development Goals (MDGs), which had a deadline by the end of 2015. Not least, partnerships and joint action are important for the SDGs. The key to realizing the UN’s 17 SDGs is partnerships between states, businesses, and civil society. Here, Covid-19 has shown that there is a willingness to cooperate in the crisis, and this has helped to develop the partnership to “strengthen the means of implementation and give new life to global sustainable development partnerships” taking into account all stakeholders. The Corona crisis’ joint fight against the panic epidemic has shown that the various actors can come together and find common solutions when it really matters, and it is a good warning for the future. The focus on visions and involvement of all stakeholders and members of the supply chain is thus central to the companies’ contribution to creating a better world. Understanding the SDGs is about realizing the unity of visions of corporate good citizenship, which sees the environment and the climate challenge as a social and economic challenge and at the same time sees the social and economic challenge as inseparable from the transition to sustainability (Rendtorff 2019d). To the question “What can companies do for the future of institutional responsibility and sustainability?” we can answer: We need new business models! Everything must be rethought from the vision of the good life and respect for human dignity (Rendtorff 2019d). Keep in mind that corporate social responsibility as extended responsibility
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for achieving the SDGs includes financial responsibility, legal responsibility, social responsibility, and environmental responsibility but also the more fundamental visionary ethical and philanthropic responsibility of creating a better world for everyone on the planet. Therefore, companies must also contribute to realizing the visions of the SDGs in close cooperation with important stakeholders and suppliers (Rendtorff 2019d). We can only do this if we move beyond the criticism of the SDGs, where it has been emphasized that the SDGs serve as a new advanced growth engine that forgets developing countries and combines capitalism and development in a way that is just old wine on new bottles. The SDGs should not just be an expression of Western growth philosophy over the developing world. Being preoccupied with the visions of the SDGs is about understanding them as more than incoherent goals that contradict each other. When working visionally with the SDGs, one must go beyond a selection strategy where the company simply chooses the goals that are easiest to fulfill based on a vision to get over where the requirements are the least and the easiest to achieve. The SDGs are not just a matter of quantitative economic indicators, but they are based on normative political thinking about the just society. Is it all just bullshit and greenwashing when we talk about companies’ new responsibility for global sustainability? No, the Corona crisis is forcing us to take our ideals seriously. Companies must end with smart words and smooth words, and responsible adherence to SDHs implies the need to bring the visions of the SDGs into the work of the companies with all stakeholders and suppliers. The SDGs build humanistic ideals of global respect for the infinite value and inviolability of the individual. The global effort to save lives in the fight against Covid-19 has had a strong eye for the irreplaceability of the individual when closing everything down to save the weak. This insight is important for sustainability efforts taking into account suppliers, customers, and other stakeholders. We must keep in mind the basic ethics behind the SDGs when formulating corporate policies. Here, the environmental, social, and economic bottom-line – respect for the people, planet, and profit in the activities of the firm- are integrated into a philosophical whole (Rendtorff 2017d). The SDGs integrate the concern for human freedom and social rights into a universalist and cosmopolitan approach to the global transformation toward a circular and ecological economy (Rendtorff 2019d).
7
Summary
In conclusion, in terms of developing trends in business ethics and philosophy of management, there has in the last 30 years been institutionalization of collective responsibility as fundamental for corporate social responsibility (Rendtorff 2009a, 2010b, 2011b, c, 2012, 2017a, c). On this basis it may be argued that the legal notion of integrity and of the “good citizen corporation” mediates between the individualist and collectivist concept of corporate agency and intentionality. The construction of corporate intentionality and personhood as the basis of corporate integrity cannot totally replace “vicarious liability” and the doctrine of “respondent superior.”
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However, recent legal and ethical developments in both Europe and the USA toward corporate social responsibility and ethics programs have moved toward the concept of corporate integrity as the basis for the idea of the good citizen corporation (Laufer 1996, p. 159). In law, this virtue of corporate integrity is expressed in the idea of “due diligence.” This concept can be said to reflect the idea of self-imposed values of corporations through corporate compliance and ethics programs. The idea of due diligence signifies legal requirements of integrity and virtuous action as the basis of attribution of criminal liability. In order to be a responsible and virtuous corporation, it is not sufficient to have beliefs and desires, but the corporation must have established compliance and ethics standards to show its good intentions (Laufer 1996, p. 160). Based on integrity, the idea of due diligence goes beyond legal compliance and requires “organizational integrity” (Paine 1997). Integrity and due diligence are considered important for corporate culpability. This is the basis for determining “good corporate citizenship” of specific organizations. Concretely this idea of corporate social responsibility provides the framework for real corporate responsiveness. William C. Frederick has described this development from corporate social responsibility (CSR1) to corporate social responsiveness (CSR2) (Frederick 1994, p. 155). After solving the conceptual issue, there is a problem of applying corporate social responsibility to the concrete reality of the corporation. In this sense corporate responsiveness is defined as the capacity of the corporation to go into stakeholder dialogue and really do something about corporate social responsibility as a good corporate citizen (Rendtorff 2012, 2014c, 2017a, b, c). The theory of the institutional theory of corporate agency provides the necessary framework for corporate social responsibility, which has been wanted by the proponents of corporate social responsiveness (Buchholz and Rosenthal 2002, p. 306). Thus, social responsibility lays emphasis on the company’s practical contribution to social management rather on its capacity to talk about it (Rendtorff 2009a, b, 2010b, 2011a, b, c). Corporate social responsiveness is not only about government initiative to make incentives for social responsibility but also proposals for corporations to make concrete contributions to social betterment (Frederick 1994, p. 160). With these efforts to bridge the tension between business ethics, institutional sociology, and institutional economics, a final illustration of an approach to corporate social responsibility is the effort to combine moral and economic agency of the firm. This is the strategic approach to the competitive advantage of corporate social responsibility as proposed by Michael Porter and Mark R. Kramer who propose a concrete application of corporate social responsibility as a strategic instrument to improve the competitive advantage of the firm (Porter and Kramer 2003, 2006, 2011). Such an approach can be said to apply the economic conception of the firm while still be aware of the moral responsibility of corporate agents. What is needed is an approach that combines economic considerations with a broader engagement of the firm with different stakeholders (Rendtorff 2010a, 2013a, b, c). This model of corporate social responsibility addresses social and economic goals simultaneously by improving a company’s competitive context. Corporate social responsibility should not be considered as something external to the firm but rather be integrated
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in its core strategy and business (Pedersen and Rendtorff 2004; Mattsson and Rendtorff 2006; Rendtorff and Mattsson 2012; Rendtorff 2015b). A proactive and affirmative strategy of corporate social responsibility would imply that social responsibility is used of the firm to make a competitive advantage by long-term investments and sustainability strategies. Thus, future business management is based on “stakeholder engagement” for all dimensions of the supply chain, customers, and other stakeholders, which is an ethical paradigm for SDG leadership. The new developing trends imply that management philosophy, corporate ethics, and social responsibility, focusing on SDGs, are the key elements of a new paradigm of “reflective leadership.” Here, it is important to rethink the business models of each company in the light of the necessary global transformation to a more social, economic, and political sustainable society (Rendtorff 2019d). In this perspective there no longer has to be gap between economic action and socially responsible behavior because companies are contributing to the social good by considering social responsibility as an integrated part of their core business (Rendtorff 2009a, b, 2010b, 2011a, b). If the corporation relates social responsibility with its core business, there will be a closer connection between business and social concerns, and the corporation will appear reliable and trustworthy in society because its core business in itself will express social concerns and contribution to the common good of society in sustainable development.
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Cross-References
▶ Sustainable Development Goal 8: Achieving Decent Work – An Illusion
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The State of Social Media Research in CSR Communication Lina M. Gomez
Contents 1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 The Importance of CSR Communication Through Social Media . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Main Themes in CSR Communication Literature Through Social Media . . . . . . . . . . . . . . . . . 3.1 Theme 1. Stakeholder Engagement and Interactivity on Social Media . . . . . . . . . . . . . . 3.2 Theme 2. Best Practices on Social Media Platforms: Facebook and Twitter . . . . . . . . 3.3 Theme 3. Tactics for CSR Message Effectiveness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.4 Theme 4. Transparency, Reputation, and Privacy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Opportunities and Challenges for CSR Communication on Social Media . . . . . . . . . . . . . . . . 5 Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Cross-References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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Abstract
Social media has brought opportunities for individuals to access news, data, and information immediately. These interactive platforms are a fundamental part of people’s everyday life where they can create, share, and curate content. There is no doubt that social media has changed the way organizations and companies communicate and cultivate relationships with stakeholders. Due to this immediacy in communication, companies must be honest, be reputable, and behave as good citizens. Firms should keep publics informed about their CSR initiatives for encouraging their loyalty and commitment to environmental and socially responsible efforts. This chapter discusses the state of corporate social responsibility (CSR) communication through social media, explaining main contributions in the field. Social media is an excellent and cost-effective tool for communicating economic, social, and environmental issues with different groups of stakeholders. Communicating CSR through social media demonstrates commitment, influence, L. M. Gomez (*) The University of Tampa, Tampa, FL, USA e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Switzerland AG 2021 D. Crowther, S. Seifi (eds.), The Palgrave Handbook of Corporate Social Responsibility, https://doi.org/10.1007/978-3-030-42465-7_66
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and reputation. It provides immediate feedback from publics, which can instantly lead a company to success or failure due to word-of-mouth and viral information. This exploratory study employs a thematic analysis of studies about CSR communication and social media published in the past 10 years. It highlights the main themes and trends in the literature, making emphasis on the importance of interactivity and stakeholder engagement. The chapter concludes with a discussion of both key opportunities and challenges for firms and stakeholders in the communication of CSR through social media, focusing on how interactivity is a way to transform CSR online communication. Keywords
Social media · Corporate social responsibility · CSR communication · Interactivity · Stakeholder engagement
1
Introduction
From corporations to local businesses, organizations and companies around the world are committed to developing corporate social responsibility (CSR) initiatives and efforts toward diverse groups of stakeholders in areas such as economy, society, and environment. Definitions of CSR are abundant in the literature (Carroll and Shabana 2010; Dahlsrud 2008; Maignan and Ralston 2002), but still, there is not a universally accepted definition of what CSR entails (Carroll 1991; Pompper 2015). CSR can be defined as the way companies manage their operations that could cause harm or benefits toward publics and society in general. CSR is also associated with ethical and legal responsibilities, community relations, and corporate philanthropy (Carroll 1991; Kim and Reber 2008; Maignan and Ferrell 2004). CSR overall strengthens relationships between society, firms, and stakeholders (Ali et al. 2015). Then, being a good corporate citizen can foster loyalty and turn consumers into company/brand ambassadors. Companies that contribute to the well-being of the economy, society, and environment must communicate CSR efforts to educate stakeholders, making them both actors and witnesses of CSR activities. This indicates that a more communicative or interactive approach is needed to engage stakeholders as actors or participants of CSR practices. According to Golob and Podnar (2018), communicating CSR also implies how messages are constructed and shared and what they mean to diverse stakeholders. CSR communication can impact positive reputation and product perceptions (Chernev and Blair 2015) and increase purchase intention (Lee and Shin 2010). The Internet has changed the way people and organizations communicate, making it a little easier to communicate with multiple audiences. Companies have mostly broadcasted messages on traditional media (e.g., corporate websites or corporate reports/newsletters), which are based on hierarchical one-to-many communication, making distinctions between producers and consumers of information (Colleoni 2013). But social media encourages an environment where all users can create
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content and participate at any time. Digital media platforms make more accessible the communication of messages to more people at a relatively low cost with high efficiency (Mishra and Bakshi 2018). Anyone with an Internet connection can have access to an unlimited amount of information, making social media users active participants in conversations, broadcasting and conversing their opinions and experiences with the world. Social media popularity is an advantage for firms because these platforms can increase public awareness and involvement of stakeholders in conversations (Farache et al. 2018). Today, social media is widely used by different generations of users around the world. It is utilized for knowledge sharing, collaboration, participation, networking, and expressing thoughts, opinions, and experiences about anything. Overall, social media is impacting how people access information and buy products/services and how they are entertained. Organizations are starting to actively incorporate and report CSR initiatives and efforts on social media platforms such as blogs, Facebook, and Twitter. However, previous studies (Cho et al. 2017; Colleoni 2013; Gomez 2018) have found that social media platforms are still used as another traditional channel to broadcast information, missing the beneficial opportunities that it brings to relationship building and stakeholder engagement. The purpose of this chapter is to explore the state of social media research in CSR communication to reveal opportunities for best practices in CSR communication through social media. The chapter follows a discussion on the importance of using social media for CSR communication. Next, it examines the main themes found in the literature and a descriptive analysis of the papers found in the literature. Then, it concludes with a discussion of both key opportunities and challenges for firms and stakeholders in the communication of CSR through social media. The chapter also finishes with recommendations for future research of CSR communication and its effectiveness, explaining practical implications for companies and practitioners.
2
The Importance of CSR Communication Through Social Media
Corporate social responsibility is a “communicative event” because it is communicatively constructed in dynamic interactions (Schultz et al. 2013) between senders and receivers. CSR communication through social media should be viewed as a storytelling process created by different types of publics from different backgrounds and life experiences (Wehmeier and Schultz 2011). This indicates that CSR should include the involvement and participation of diverse groups of stakeholders for message effectiveness. Social media platforms provide advantages for firms to communicate with consumers and fans. Through social media, companies can post videos, images, infographics, polls, etc., to engage more interactively with publics. According to Quesenberry (2019), social media has different array of categories such as social networks (e.g., Facebook, LinkedIn), blogs and forums (e.g., WordPress, Blogger, Tumblr), microblogging (e.g., Twitter and Pinterest), media sharing (e.g., YouTube, Instagram, Snapchat), geosocial (e.g., Foursquare), ratings and reviews
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(e.g., Yelp, TripAdvisor, Amazon), social bookmarking (Reddit, Digg, BuzzFeed), social knowledge (Wikipedia, Yahoo! Answers, Quora), and podcasts (Apple Podcasts, Stitcher), which are considered all social media platforms. Social media can employ any mobile and web-based technologies where individuals can share, cocreate, discuss, and modify content created by users (Kietzmann et al. 2011). Social media is built on the ideological and technological foundations of Web. 2.0, which is characterized by the creation of UGC, a popular concept on the social media world, which stands for user-generated content (Kaplan and Haenlein 2010). This means that any user with an Internet account can create and post any content in the form of blog posts, songs, memes, infographics, videos, etc. According to the Global Digital report produced by We Are Social (2019), Internet users are growing by an average of more than one million new users every day. Currently, there are 4.388 billion Internet users, 5.112 billion mobile users, and 3.484 billion active social media users. Facebook is the most used platform with 2.271 billion monthly active users, followed by YouTube (1.900 billion active users). Two hours and 16 min of average (worldwide) of time are spent per day using social media. Social media platforms are increasingly advocated as an ideal channel for CSR communication (Dunn and Harness 2018; Lee et al. 2013) because it promotes transparency, being a most trustworthy medium than traditional media (Sparks and Bradley 2018) with more individuals turning to messages shared in these channels (Du et al. 2010). However, with the rise of these interactive platforms, there are more expectations from the public about how corporations act as socially responsible citizens (Ali et al. 2015). Despite the dialogic and interactive nature of social media, it has brought challenges for companies when communicating CSR efforts. For instance, social media is uncontrolled and has democratized corporate communications (Cho et al. 2017; Golob and Podnar 2018; Lee et al. 2013). Consumers and publics are pressuring companies to be transparent and responsible for their operations. They are also demanding more interactive and honest communication of CSR initiatives. Nonetheless, the information flow through these platforms is multidirectional, interconnected, and sometimes difficult to predict for firms (Cho et al. 2017). For companies to keep up with how information is distributed and shared on social media, effective CSR communication must consider stakeholders’ needs and expectations (Capriotti 2017). Usually, companies prefer control channels (e.g., press releases, product packing, corporate websites), but reduced control channels, such as social media, have its benefits. On social media, companies can engage stakeholders in CSR initiatives and decision-making processes (Araujo and Kollat 2018) and identify influencers that can be part of their CSR communication messages (Fieseler and Fleck 2013; Morsing and Schultz 2006). Having third-party endorsement or influencers in CSR activities could help decrease stakeholder criticism or skepticism, making CSR messages more honest and trustworthy (Cho et al. 2017). Strategic content planning is key for designing CSR messages on social media, using elements such as transparency, interactivity, authenticity, and emotions to decrease public skepticism and communication problems (Gomez and Borges 2018). The 2017 US Chamber of Commerce Foundation report indicates that if
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companies strategically communicate and discuss CSR efforts online, this translates in real value for organizations. This report presents the importance of encouraging thoughtful and emotional responses of CSR actions on social media, encouraging people to think about a company neutrally to positively. Furthermore, open, dialogical, multidirectional (many-to-many), and symmetric communication (two-way communication) that encourages feedback and conversations with stakeholders is critical for long-term success of organizations (US Chamber of Commerce Foundation 2017). However, companies need to be aware and be engaged in constant listening in social media, because publics can act against any signs of misinformation, lack of transparency, and manipulation (Cho et al. 2017). Online CSR communication literature has focused mainly on corporate websites in which CSR communication is mostly unidirectional or one-way communication (Capriotti and Moreno 2007; Dawkins 2005; Gomez and Chalmeta 2011). However, there is a growing literature of CSR studies about social media communication, impacting the way CSR communication is developed and presented. Global studies on CSR communication (e.g., Cone Communications 2015) have shown that social media has been used as a platform to spark CSR conversations since 2010. It shows that consumers are using social media to get informed about CSR, contribute to the discussion, or talk to the companies about CSR issues (Cone Communications 2015). Companies that are more socially responsible should use more social media to talk about CSR issues for the effectiveness of social causes (Fieseler and Fleck 2013; Lee et al. 2013). Social media CSR communication encourages stronger stakeholder relationships and engagement and enhances corporate image, which leads to better financial performance (Ali et al. 2015; Farache et al. 2018). But despite these benefits and advantages of using social media platforms for communicating responsible initiatives, previous research shows little guidance on how to use effectively CSR-dedicated pages on social media (Abitbol and Lee 2016). Therefore, the main contribution of this chapter is to show current efforts in the literature from different outlets (not only journal papers) for understanding how to use effectively social media for CSR communication.
3
Main Themes in CSR Communication Literature Through Social Media
Since 2009, there has been an increase of literature on CSR communication through social media, covering most common avenues for publication dissemination (book chapters, journal papers, and conference papers). Previous studies have done literature review analysis of CSR communication studies on social media (Golob and Podnar 2018; Peeroo et al. 2018), but it focused on selected journal papers indexed in databases. This chapter contribution also analyzes book chapters (not only journal papers) that have been published in the last 10 years, revealing different and interesting highlights in the literature. There are two major edited book contributions about digital communication and CSR in the last 5 years (Adi et al. 2015; Lindgreen et al. 2018) showing increment in the importance of addressing CSR communication
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Fig. 1 Word cloud of publication titles
through digital platforms. These contributions discuss theoretical underpinnings in CSR online communication and best practices for online CSR from diverse industries and geographical locations. Although the literature on CSR is extensive, research in the use and effectiveness of digital media for CSR communication is still scarce. This chapter uses a thematic analysis to identify themes in the literature concerned to CSR communication on social media. Using Advanced Google Scholar, journal articles and book chapters were identified with the following keyword combinations in the title of the paper “Corporate Social Responsibility or CSR and social media,” “Corporate Social Responsibility or CSR and TwitterFacebook-Instagram.” Studies in the last 10 years (since 2009) were considered for inclusion. Theoretical, literature review and empirical papers were selected in the sample. A total of 52 papers were found that met all the criteria for inclusion. Figure 1 shows a word cloud of all the titles of these papers. Bigger words are the keywords most repeated in the publication titles. It is revealed that Twitter was the most used social media platform in the studies analyzed. It is also discovered that most of these studies focused on strategies in the communication of CSR messages. Descriptive results of the 52 publications analyzed showed that most publications were from 2018 (17 publications), followed by 2015 and 2016 with 7 publications each. A total of 31 journal papers were found and 21 book chapters. Ten of the papers analyzed were theoretical; the rest were empirical or case studies. Thirty-one of the chapters were quantitative, 9 were qualitative, 4 mixed methods, 8 theoretical/ discussion papers, and 2 were literature review papers. Most of the papers found used content analysis, followed by case studies. Five papers used social network analysis, while only six used surveys and three interviews (some papers used a combination of experiments/surveys or experiments/interviews). Descriptive results
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aligned with the word cloud generated from publication titles, 14 papers used Twitter as units of analysis, while only 6 used Facebook, 2 of them used blogs and a combination of corporate websites and social media, and 5 of them used social media in general. Seven of the papers used subjects as units of analysis. These results pointed out that most of the publications found in the literature analyzed the content (using content analysis techniques) on social media platforms by organizations. Early studies about CSR communication focused on blogging platforms (2010, 2013) and CEO letters (2015). Recent papers analyzed content on corporate websites, annual reports, and social media (2014–2016), including Facebook (2015–2017), and Twitter (2013–2019). Most studies took Fortune companies as a sample for the analysis (e.g., Abitbol and Lee 2016; Adi and Grigore 2015; Araujo and Kollat 2018; Cho et al. 2017; Fraustino and Connolly-Ahern 2015; Lee et al. 2013; Saxton et al. 2019). From the thematic analysis performed to these 52 publications, the following themes were discovered.
3.1
Theme 1. Stakeholder Engagement and Interactivity on Social Media
Stakeholder engagement is the essence of CSR (Du et al. 2010). Both companies and stakeholders need to understand each other, negotiate, and commit to engaging in honest and interactive dialogues. Engagement occurs when both organizations and stakeholders interact by sharing information and providing feedback quickly and efficiently (Briones et al. 2011). For organizations to reach a level of complete openness and trust with stakeholders, they should shift from a broadcast model to an interactive model of communication as literature suggests in this chapter. Morsing and Schultz’s (2006) communication strategy framework (stakeholder information, stakeholder response, and stakeholder involvement strategy) has been one of the most used in the literature of CSR communication (e.g., Cho et al. 2017; Cortado and Chalmeta 2016; Etter 2014; Gomez and Vargas-Preciado 2016). For instance, Cho et al. (2017) used Morsing and Schultz’s framework to explore how stakeholders engage with CSR messages on Facebook. Forty-six Facebook pages from Fortune’s “World’s Most Admired Companies” were examined (two of them were CSRdedicated Facebook pages), and 3,766 corporate messages were collected for analysis. The study found that corporations used more one-way communication or information strategies than interactive strategies, but in the two CSR-dedicated Facebook pages, interactive strategies were used more frequently. Similar studies have indicated that CSR-devoted accounts have a significantly higher level of interactivity (Etter 2013; Abitbol and Lee 2016) than general corporate accounts. Cortado and Chalmeta (2016) also found that Spanish companies are using social media platforms as a one-way communication or informational platform to disseminate content without promoting engagement. Recent studies (Adi and Grigore 2015; Kent and Taylor 2016; Etter 2013, 2014; Gomez and Vargas-Preciado 2016)
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emphasize that CSR activities are still communicated unidirectionally, using a broadcasting strategy (informational, one-way communication). Surveys and interviews were used less frequently than content analysis techniques for understanding message strategy, stakeholder engagement, and influence. Dunn and Harness (2018) focused on how social media communication influences consumers’ skepticism regarding CSR, especially in the United Kingdom. Four hundred consumers participated in the survey and 20 in the interviews. Findings revealed that altruistic and transparent CSR efforts reduce skepticism or any potential adverse effects. Ali et al. (2015) analyzed how social media could be designed for effective CSR communication strategies through a survey performed to multiple stakeholders in Pakistan (employees, customers, and investors). Results indicated that social media is an important and trustworthy outlet to communicate CSR and build good relations with different groups. Furthermore, communicating CSR activities through social media can also influence the respondent’s buying behavior. It also leads to an increase of higher message credibility, boosting corporate reputation (Eberle et al. 2013). But for reaching higher levels of transparency, credibility, and reputation, messages should be planned to use an effective strategy. Kollat and Farache (2017) surveyed 507 respondents in the United Kingdom for analyzing reactions to different CSR communication approaches (asymmetric vs. symmetric) on social media, with emphasis on Twitter. Findings established that asymmetric communication approaches performed better than symmetric approaches. One of the reasons for this gap between these two approaches (asymmetric and symmetric) is due to that consumers do not appreciate it when a company is engaging too much, especially when self-promotion is detected. However, consumers that are already involved and committed to CSR initiatives are more likely to trust symmetric communication strategies from companies. Specific industries (such as CSR-certified hotels) were examined to find how CSR is communicated on websites and online review sites (Ettinger et al. 2018). Fortyseven Austrian CSR-certified hotels were analyzed using qualitative content analysis. Findings showed that topics such as environment and supplier relations were the most communicated in reviews and messages addressed by the hotels. Forty-two percent of the customer online reviews addressed CSR aspects. However, most of the CSR communication strategies employed were informational. Only 18 of the 47 hotels (38.3%) answered at least one of the customer reviews. Other industries, such as fashion micro-organizations, are also heavily committed to CSR practices; however, CSR communication on social media lacks a clear strategy (Henniger and Oates 2018). Information is randomly posted without a clear purpose, missing opportunities for stakeholder interactions. Recent studies (Illia et al. 2017) have suggested that dialogue spaces on social media are used frequently by corporations with a high reputation. However, these dialogues have a low degree of openness. Dialogue spaces that facilitate co-learning, co-innovating, and co-deciding are the most places valued by stakeholders to interact with corporations on CSR issues (Illia et al. 2017). Social media is dialogic, and that’s the main difference that sets apart from traditional media channels; it facilitates
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relationships, showing both benefits from firms and stakeholders (Lee et al. 2013). That is why messages on social media should be monitored, and CSR communication must be continuously evaluated to understand shifts in stakeholders’ expectations (Morsing and Schultz 2006). Dialogue, interactivity, and stakeholder engagement are key in CSR communication on social media. Therefore, companies need to turn their emphasis from managing to building and maintaining relationships with stakeholders. But there is still struggle among firms on how to deal with the different dynamics and risks that social media platforms produce for business communication (Castelló et al. 2016).
3.2
Theme 2. Best Practices on Social Media Platforms: Facebook and Twitter
Earlier CSR online communication studies focused on corporate blogs to examine stakeholder interactions. Fieseler et al. (2010) and Fieseler and Fleck (2013) employed social network analysis of corporate blogs devoted to sustainability and social responsibility, discovering the importance of blogs for stakeholder engagement. Few studies analyzed blogs; most of the literature on CSR communication and social media centers on Twitter and Facebook. Twitter is the most researched platforms in the CSR social media literature thanks to its easiest way of collecting data. Studies indicated that Twitter is an excellent platform for communicating CSR (Araujo and Kollat 2018; Cortado and Chalmeta 2016). Some studies analyzed Facebook-devoted CSR accounts (Abitbol and Lee 2016; Cho et al. 2017; Fraustino and Connolly-Ahern 2015) and Twitter accounts (Colleoni 2013; Etter 2013; Saxton et al. 2019) which resulted in more interactivity than general corporate accounts. Authors indicate the importance of having accounts exclusively for CSR activities to directly communicate and engage with specific publics that are interested in learning and participating in social responsibility initiatives. Studies on Twitter analyzed the effectiveness of CSR messages that generated engagement or themes, stakeholders’ perceptions, and social media elements presented in the messages. For instance, Araujo and Kollat (2018) discovered that posted CSR tweets are more likely to generate more engagement than non-related tweets, and the use of emotions and aspirational talk in messages contributes to higher levels of engagement. Chae and Park (2018) performed a computational content analysis of 178,908 CSR-related conversations on Twitter for identifying themes and topics. The topic most discussed on Twitter was about company issues, followed by corporate governance. India and Saudi Arabia were the most popular countries captured as a topic of discussion of messages, showing a growing interest in CSR in developing counties. Etter (2014) found that most topics addressed were the environment, followed by philanthropy. Employee relations, human rights, and governance were the least topics discussed. CSR disclosure on Twitter from Latin American countries (Chile, Colombia, Mexico, Peru) was examined by Suárez-Rico et al. (2018). Authors analyzed tweets before and after the publications of CSR reports, finding that firms in environmental industries present higher levels of CSR
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on Twitter than other sectors. Colombian and Chilean firms showed higher levels of disclosure. However, the CSR topics most communicated were about the community. Organizations with higher CSR ratings achieve more followers on Twitter than organizations with lower CSR ratings (Lee et al. 2013). Few studies analyzed CSR-related accounts on Twitter (Colleoni 2013; Etter 2013; Farache et al. 2018; Saxton et al. 2019). Saxton et al. (2019) examined how CSR topics on devoted Twitter CSR accounts resonate with the public (in the form of retweets) and which ones are effective. Retweets were found to be positive associated with topics such as environment and education. However, CSR retweets were positively related to CSR general accounts than devoted CSR accounts. In a similar direction, Farache et al. (2018) found that CSR-related tweets usually comprised between 29% and 50% of the messages sent over a general Twitter account. Most of the tweets were always positive and using a traditional advertising focus, showing a broadcasting strategy about business practices and philanthropy and very little about product-related initiatives. Colleoni (2013) analyzed the effectiveness of corporate communication strategies by corporations listed in the 100 Best Corporate Citizens of 2009. A social network analysis of tweets was carried out of the communities of these corporations that have a CSR corporate account (only seven accounts were found). Most relevant topics for audiences were about information seeking. Corporations discussed broad CSR issues that are very insignificant in the informationseeking process. The hashtag #CSR was analyzed on Twitter by Adi (2018) and Gomez (2018) to discover topics, concepts, themes, and influencers. Adi (2018) examined 15,000 tweets to understand what Twitter users are conversing about CSR. #CSR is usually used for self-promotional content and sharing articles including advice and guidelines. Most users that participated in the discussion were online publications and news aggregators devoted to CSR. However, #CSR conversations lacked interactivity and promotion of one-way communication. Gomez (2018) also analyzed the #CSR hashtag to examine how different actors are using social media to participate in CSR conversations. This study is also aligned with Adi (2018) indicating that most of the users found in CSR conversations were media outlets. Tweets were usually about CSR/sustainability as a broad topic, suggesting that most of the content was not explicit about a particular CSR specific topic such as labor practices. Most social media concepts and theories used were transparency followed by influence, but the impact was not bidirectional. Most of the tweets tagged users without encouraging users to discuss or act to an issue. The hashtag #sustainability was also analyzed revealing a large and fragmented community (Lipschultz 2017). Most of the messages sent were broadcasted/informative related to branding than community interaction. Contrary to the #CSR community, the #sustainability community also includes the inclusion of green businesses, organizations, and governments than news media stories. Facebook was the second most used social media platform among researchers. Studies on Facebook analyzed the communication strategies (including message features such as interactive language) needed in CSR messages to be effective and achieve public engagement (Abitbol and Lee 2016; Cho et al. 2017). Other studies
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examined particular countries and regions in the CSR social media communication. Tugrul and Gocer (2017) analyzed CSR and sustainability messages on corporate Facebook accounts of 62 Turkish and 31 global brands in Turkey, using content analysis. Results found that economic sustainability is emphasized more than environmental initiatives and that brand value is not a significant driver of CSR communication. D’Aprile et al. (2016) analyzed 288 Facebook messages posted by 2 large Italian enterprises and their stakeholders, finding that these communities continuously negotiated CSR on Facebook for sense-making processes. Other Facebook studies on CSR communication found that environmental stewardship was the most highlighted CSR strategy by corporations (Fraustino and ConnollyAhern 2015). Studies in Latin America found that CSR communication on Facebook centers around society and environment topics (Suárez-Rico et al. 2019). Message interactivity is low, but legitimacy is high in posts about consumer and financial companies (Suárez-Rico et al. 2019). Gomez and Borges (2018) analyzed social media concepts (e.g., dialogue, engagement, mobilization, authenticity, influence, and transparency) for CSR communication on Twitter among the top 25 largest firms in Latin America. Transparency was the social media concept most used among Latin American firms. However, most of the companies analyzed did not include other social media elements in their CSR communication messages, indicating social media was used for broadcasting information without engaging in dialogues or mobilizing stakeholders. It will be interesting to see how future studies will continue studying Facebook CSR messages due to restrictions in gathering public data from Facebook. Studies also examined Facebook and Twitter simultaneously. It seems based on these few studies that Facebook is a preferred channel than Twitter for interactive CSR communication. Cortado and Chalmeta (2016) analyzed the CSR efforts of 20 companies from the IBEX 35 in Spain on Facebook and Twitter accounts. Results indicated that Spanish companies have gradually increased the use of social media platforms over the years, including the number of CSR-related posts. Most of the CSR messages were posted on Twitter. However, Facebook attracted more interaction from users. Ros-Diego and Castelló-Martínez (2012) analyzed the presence and audience on Facebook, Tuenti, YouTube, Flickr, and corporate blogs of ten Spanish countries for CSR communication. Authors found that Facebook is the best channel for the dissemination of interactive formats such as videos and engagement. Other studies analyzed both CEO letters and social media presence (Reilly and Hynan 2014; Toppinen et al. 2015). Focused mostly on the world’s largest pulp and paper companies, Toppinene et al. (2015) found that environmental issues are the most common topic on social media followed by the community. Companies’ size is a significant factor in the quality of social media usage. Reilly and Hynan (2014) analyzed 16 global corporations from different sectors on how they use social media platforms to communicate about CSR (Facebook, Twitter, CEO letters, and CSR/ sustainability reports). Corporations were split in green and not green firms from the Newsweek’s Greenest Company 2012 rankings. Green companies were more likely than non-green firms to communicate about CSR and sustainability across social media platforms.
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Specific case studies of global companies, such as Pfizer, were researched by Adi and Grigore (2015), especially European offices in terms of CSR social media communication through corporate websites and social media platforms. But consistent with previous studies explained in this chapter, social media was used with minimal users’ interaction. Most of the Pfizer accounts included hyperlinks for more information and hashtags, but they hardly included media, replies, or mentions. Aligned with other recent studies, Adi (2018) discovered there is a very high level of sharing information and shallow engagement on CSR communication among organizations. This could be due to a lack of experience in managing social media accounts or fear of adopting a more open communication (Adi 2018). Although social media, specifically Twitter, is a useful platform to engage in dialogues with stakeholders, organizations are using these dialogic features sporadically (Araujo and Kollat 2018).
3.3
Theme 3. Tactics for CSR Message Effectiveness
Content value (how useful is or not) has a significant influence on engagement more than the message strategy (Kucukusta et al. 2019). CSR content should be congruent with the company’s mission and vision (Du et al. 2010) and include affective words and aspirational talk (Araujo and Kollat 2018), interactive language, and storytelling (Abitbol and Lee 2016). Posts encouraging CSR practices through video are the ones who achieve more engagement (Kucukusta et al. 2019). Araujo and Kollat (2018) analyzed the reasons (including communication strategies and elements of storytelling) behind the effectiveness of communicating CSR initiatives on Twitter. Authors examined tweets from 15 food companies included in the Fortune Global 500 ranking. Findings indicated that the way sustainability or CSR communication messages are presented and framed shapes how audiences understand those issues. Abitbol and Lee (2016) performed a quantitative content analysis of 533 posts on the CSR-dedicated Facebook pages of 16 companies from the 2014 Fortune list (only 16 from the 500 sample had CSR Facebook pages exclusively). Authors found that using multimedia components (photos and graphics) and call-to-action language (such as sharing a message or answering a question, something that is part of the online activity) in the message promotes effective stakeholder engagement, generating a higher number of likes, shares, and comments. If publications were mainly informational without suggestion, some mobilization, or action, fewer users would interact on the post (Abitbol and Lee 2016). Other aspects of the communication strategy are message framing and tone of voice on CSR messages (Oh and Ki 2019). CSR messages with a human voice make them more personal and relatable. Messages written in a gain-focused style (showing the positive benefits of actions) have a higher social media presence than those written in a loss-framed one (showing negative consequences) (Oh and Ki 2019). The importance of designing and maintaining a social media profile according to standards and best practices is another way to improve CSR message effectiveness. Gomez (2018) indicated that social media profiles for CSR
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communication should include essential information (photos, videos, and information of the company) for improving CSR communication. The CSR content of a social media profile could consist of company messages, annual reports, news, events, new products and services, CSR achievements, and messages in key CSR core areas, for example, following the G3 guidelines of the Global Reporting Initiative. Messages should be designed using a balance of communication strategies such as one-way communication (e.g. dissemination) communication (twoway communication) and mobilization (action). However, companies must avoid saturating with CSR messages. CSR information should not always be dominant and attract stakeholders’ interest rather than perceiving CSR efforts as self-promotion or self-congratulation (Coombs and Holladay 2015). CSR must be presented as facts than promoting the involvement of companies in CSR (Coombs and Holladay 2015). Firms must look for creative and interactive ways to engage stakeholders in CSR communication. First, one way to effectively do this is through storytelling because it is tied to emotions (Gill 2015; Yuki 2015). Gomez (2018) found that storytelling messages are not commonly used when crafting CSR messages. However, through storytelling, CSR messages can promote dialogue, engagement, influence, authenticity, transparency, and mobilization (Gomez 2018). Second, CSR communication strategies should be open to participation by multiple publics (Castelló et al. 2015). If this is achieved, organizations can promote different levels of engagement on social media (likes/reactions, shares/retweets, and comments) (Cho et al. 2017). Moreover, if social networked contacts or friends are involved in messages (i.e. people tagged in messages), it provides a more positive and active behavior to company messages (Crisan and Zbuchea 2015). Social media is changing the future of business in terms of marketing and communication of company issues such as CSR. Consumers and stakeholders are demanding more transparency and honesty in messages, looking for information and products/ services that are relevant to their lives.
3.4
Theme 4. Transparency, Reputation, and Privacy
In the social media world, stakeholders require firms to be transparent and authentic when communicating CSR messages (Oh and Ki 2019). Based on the literature, organizations are not engaging or interacting with publics when communicating CSR messages. But if companies interact with audiences, authenticity, honesty, and transparency can be achieved, providing a feeling of interpersonal communication (Fieseler et al. 2010). One important aspect that companies need to consider is the credibility in the communication. Organizations must change the focus of their corporate communication (from dissemination information/persuading stakeholders to facilitate dialogues and interactions) to be considered credible or trusted among publics (Capriotti 2011). Stakeholders perceive company CSR messages as controlled, mainly benefiting the firm’s own advantage than the community or society at large (Illia et al. 2017).
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Content analysis techniques were mostly used when analyzing transparency, reputation, and responsible behavior in the communication of CSR activities. Studies indicated that there is a link between CSR communication strategies and e-reputation when communicating CSR on social media. For example, Dutot et al. (2016) examined the influence on e-reputation specifically about corporate ability and CSR on social media from four international corporations. Results indicated that when companies focused on product quality or innovation (corporate ability strategy), e-reputation was increased. Similar studies (Fraustino and ConnollyAhern 2015) also noticed that corporate ability strategies are mostly implemented in social media platforms. Lee et al. (2013) examined the impact of CSR credentials (ratings) on the effectiveness of social media (specifically Twitter) for stakeholder engagement. Higher CSR ratings are a strong indicator of an early adopter of social media, a faster growing of a fan/follower community, higher responsiveness of a firm on social media (replies and mentions), and higher virality (retweets). Authors revealed that messages from socially responsible companies are more likely to “go viral.” This indicates that social media rewards companies for being honest and transparent in their social responsibility messages, but also punishes irresponsible firms. Also, using credible third-party information sources in CSR communication can help to reduce skepticism, making CSR messages more credible (Coombs and Holladay 2015). CSR advocates or influencers are usually unbiased, and stakeholders are more likely to perceive them as credible communicators than the company itself (Coombs and Holladay 2015). There is an increase of consumers expecting to become partners or advocates in CSR endeavors of organizations (Golob and Podnar 2018). For assuring transparency, CSR communication should be mandatory. According to Sutherland Global (2018), a data analytics company, Fortune Global 500 companies are spending $20 billion a year on CSR initiatives, showing that CSR is becoming more mainstream and mandatory. In some countries such as India, CSR is mandatory; for example, Mishra and Bakshi (2018) performed interviews of CSR/ corporate communication senior executives in medium/large public/private sectors in India. Interviewees make emphasis that CSR can mobilize publics more meaningfully and strategically. But going beyond mandatory CSR communication, specifically through social media, one way to achieve transparency is to provide positive online communication experiences through conversational human voice (Oh and Ki 2019). Through this, companies could demonstrate that they are honest and trustworthy. Firms currently are sharing positive messages but without showing interactivity (Colleoni 2013). But the only way to assure self-disclosure is through openness and dialogue (Illia et al. 2017). Having more spaces to engage in dialogue and being responsive to stakeholders’ inquiries communicatively and in a timely fashion (Coombs and Holladay 2015) are several ways of ensuring transparency and responsible behavior. Transparency must be assured when disclosing not only achievements but also shortcomings or crises in CSR communication; this helps to build trust with skeptical publics (Coombs and Holladay 2015). Therefore, when communication is sincere, this helps to increase consumer engagement and advocacy (Uzunoglu et al. 2017).
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Opportunities and Challenges for CSR Communication on Social Media
Recent studies indicate that three in five global consumers use social media to get informed about CSR issues, share opinions, or engage with companies to talk about CSR (Cone Communications 2015). The more trusted companies are in terms of CSR commitments and efforts (and one way to achieve this is through transparent communication on social media), the more responsive stakeholders are toward companies (Lee et al. 2013). CSR communication has evolved from monolithic to decentralized (Capriotti 2011, 2017). First, the amount of information produced and shared has changed, allowing multiple senders (not only organizations) in the communication of CSR activities thanks to social media platforms such as blogs, Facebook, and Twitter, among others (Capriotti 2017). One of the advantages of social media is the opportunities to engage in creative interactive experiences such as gamification. Using gamification elements on CSR communication is an interesting way to encourage audiences to involve in CSR (Coombs and Holladay 2015). Kraft used gamification for its anti-hunger CSR efforts, increasing the audience of these messages. One of the reasons for this successful initiative was due to that stakeholders were treated as the drivers of the CSR effort (Coombs and Holladay 2015). In other words, users were encouraged to created user-generated content or UGC. UGC is content created, shared, and consumed by users, reaching global audiences. Using UGC in CSR communication is also another opportunity for organizations to engage in a more interactive and authentic conversation because it encourages message credibility and reputation (Eberle et al. 2013; Illia et al. 2017; Mishra and Bakshi 2018). Crisan and Zbuchea (2015) pointed out the importance of using social media for regulatory CSR-related activities, specifically through online repositories. They conducted a study to understand if using an independent site where companies can report will result in more CSR activities and then more reporting about CSR-related activities. Results indicated that independent story repositories are playing a significant role in spreading the trend for CSR reporting. Social media for CSR communication is also influencing the way businesses report about CSR, changing corporate behavior (Peeroo et al. 2018). Particularly NGOs, as established by Chaudhri and Kaul (2018), could benefit from using social media to influence and challenge companies or corporations about social responsibility practices. This could be achieved by engaging in the co-construction or (re)definition of social standards. Communicating CSR on social media also influences purchase intention (Uzunoglu et al. 2017). Tweets about a product/economic and ethics/responsible approach produce a higher impact on purchase intention. However, product/economic and ethics posts on social media do not provide the same effect if they are posted separately (Uzunoglu et al. 2017). The communication of CSR activities and efforts is a continuous challenge for organizations and firms (Crisan and Zbuchea 2015). One of the biggest challenges in communicating CSR through social media is the lack of resources and staff to manage such accounts. This includes unfamiliarity with these channels (lack of
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personnel capable of handling social media correctly) and managerial skepticism in using these platforms for communication (Adi and Grigore 2015), which has resulted in lack of cohesive strategies and low levels of engagement (Abitbol and Lee 2016). Another challenge is to continue developing ways of engaging stakeholders when designing CSR communication strategies to reduce stakeholder skepticism (Ali et al. 2015). There has been an upward trend in using social media for CSR communication (Szumiak-Samolej 2018); however, there are still not groundbreaking CSR initiatives on social media that involve interactivity and relationship building with stakeholders. What are the current challenges seen by CSR practitioners? Glozer and Hibbert (2018) interviewed 39 participants about their views of CSR communication via social media. Respondents shared that companies must communicate CSR activities on social media, but skepticism could occur among stakeholders when messages are achievements or celebrations without critical reflection. CSR skepticism is one of the biggest challenges in CSR online communication because stakeholders could punish companies for discussing too much about CSR (self-promotion) of activities (Coombs and Holladay 2015). CSR skepticism could be reduced when the company acknowledges its own motives or engages in storytelling and employee engagement (Gill 2015). Another challenge that companies are facing when using social media is data misuse and privacy issues. Social media has created many risks for organizations’ reputation, so regularly monitoring and measurement are key. Companies engaging in CSR activities are feeling pressure to assure trust among their customers and publics when it comes to protecting their private data (Sutherland Global 2018). There are many issues in social media communication that companies should take into consideration when creating policies or guidelines such as privacy of personal information, invasion of privacy freedom of speech, identity theft, fake news, fake accounts, inaccurate information, data selling, and data leakages (Kumar and Nanda 2019). One of the most transparent ways companies can do to be responsible and avoiding crises such as data breaches is to designing secure data systems, apps, etc., with a human-centric approach, which could include restricting third-party access to user data (Sutherland Global 2018). Companies like Toshiba are listing data protection in annual CSR reports. Instead of treating as an IT or security issue, data protection must be at the core business strategy (Sutherland Global 2018). Companies must assure transparency and increase public participation for identifying and solving data privacy concerns and ethical challenges on communicating CSR through social media. Social media policies can provide guidelines among employees, customers, and different groups of stakeholders in how to address the risks that social media communication presents in terms of privacy, data security, and disclosure. According to DiStaso et al. (2011), companies fear that employees can leak sensitive information or criticism via social media that could cause some damage or embarrassment to the organization. Therefore, companies need to develop policies to protect privacy issues, specifically for CSR communication, that could put in danger the personal information of stakeholders (Digital Marketing Institute n.d.). Policies should be developed, published, and monitored for assuring intelligent use of social media for communicating diverse company efforts (Patel and Jasani 2010).
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However, research on this topic is scarce. Very few scholarly articles have covered CSR and social media policies and data privacy issues. Du et al. (2017) explored the role of CSR in reducing the damage in data breaches. They found that firms with more substantial CSR presence and stakeholder relationships will be more effective in mitigating the breach. Stohl et al. (2017) discovered that CSR tenets (such as free speech, collective information sharing, and stakeholder engagement) are increasingly inhibiting in most social media policies of the largest corporations in the world. Authors agreed that social media policies are not employed in the communication of CSR norms and practices, especially with the increased danger of how social media is used to monitor, critique, and voice skepticism about CSR efforts among stakeholders. CSR practitioners need to understand the implications of CSR social media communications, so it’s fundamental to strategically develop, publish, monitor, and evaluate policies regarding the organization’s use of social media communication. Capriotti (2011) pointed out that there have been two speeds in the Internet revolution: (1) technological changes that resulted in the rapid development of interactive tools and (2) sociological changes in the public (including organizations) for accepting the use of these new technological improvements. The latter has been a challenge for organizations, gradually trying to adapt to these new tools while evaluating opportunities and threats that could affect the relationships with stakeholders. Social media strategy and execution require investment, time, and resources in building relationships with stakeholders (Castelló et al. 2015). Based on the literature, CSR-dedicated platforms are an effective way to communicate and send meaningful CSR messages reducing information asymmetry (Saxton et al. 2019). This is an opportunity that organizations could use, specifically in more interactive platforms such as Instagram and Snapchat. However, CSR online communication cannot be viewed as the solution to all challenges and problems in CSR communication. This should be complemented or integrated with other traditional communication channels (Capriotti 2017) and innovative ways of communication. Above all, a CSR strategy plan should be developed first to promote genuine conversations and mobilizations among stakeholders. Just depending on a company’s social media account without having a clear strategy could result in failure. Companies need to evaluate diverse communication channels for cross-collaboration and synergies in CSR communication (Capriotti 2017), considering the type of communication platforms stakeholders use for information and interaction.
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Summary
Social media provides an opportunity to engage in dialogues and the creation and sharing of knowledge, and this will continue to grow exponentially in the future. In this sense, organizations must take a step further and take advantage of all the resources and opportunities that social media has for CSR communication. CSR is a fundamental part of any company’s communication strategy. CONE Communications study (2015) found that consumers prefer to get informed
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about CSR through videos, infographics, and interactive websites. Social media then will become a required platform for the disclosure and communication of CSR initiatives and issues. CSR messages should be based on quality than the quantity on social media (Lee et al. 2013). This book chapter contribution is not the first contribution in reviewing the literature on CSR communication on social media. For instance, Golob and Podnar (2018) analyzed journal papers with search terms “corporate social responsibility or CSR and social media or new media” in the title, keywords, or abstract. The authors identified clusters using a thematic word co-occurrence analysis. Forty papers were found that met the criteria. Three central groups were found: (1) interactivity and outcomes of CSR communication in social media, (2) practical aspects of using social media in CSR communication, and (3) Value and nature of social media in CSR communication. This chapter found similar topics as Golob and Podnar (2018); however, this book chapter contributes to highlighting the importance of specific strategies and tools for the communication of CSR on social media. It also differentiates from Golob and Podnar’s study at giving a comprehensive look at the main points in the literature enclosing not only journal papers but also book chapters. More research is needed that analyzes and discusses in depth how to effectively manage CSR communication on specific social media platforms (Abitbol and Lee 2016). Furthermore, studies must consider other unexplored avenues such as Instagram, Pinterest, and Snapchat. Instagram and Snapchat particularly present tools for deep engagement with publics, such as stories. Stories are short videos and photos that disappear after 24 h. With stories, companies can engage in meaningful and creative ways with stakeholders. Communicating CSR initiatives or information should be more relatable and personable because people in social media are looking for great content and human connections. Future studies should address different ways CSR communication is promoting content and stories that make people listen and engage, showing a human context in corporate CSR communication (e.g., General Electric on Instagram or Snapchat). Effective CSR communication on social media involves stakeholders’ needs and expectations, optimal communication channels, communication impact on audiences, and ethical practices (Bortree 2014). But if there is no commitment among firms in developing useful, relevant, transparent, creative, engaged CSR content, no advances in CSR interactive communication will be made. Today’s world is changing; audiences are different; stakeholders are more sophisticated and growing on skepticism of companies’ CSR activities. There is a need in creating relevant and interactive experiences for publics that they can be part of and feel that companies are listening and learning from them.
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Cross-References
▶ Corporate Responsibility Reporting and Storytelling ▶ Corporate Social Responsibility Reporting: Evolution, Institutionalization, and Current State
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Sustainability and Accountability in Higher Education Institutions Vero´nica Ribeiro, So´nia Monteiro, and Ka´tia Lemos
Contents 1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 The Social Responsibility of Higher Education Institutions (HEIs) . . . . . . . . . . . . . . . . . . . . . . . 3 Redesign HEIs for the Future in Support of Sustainable Development . . . . . . . . . . . . . . . . . . . 4 Accountability in HEIs in Favor of Sustainability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Summary and Cross-references . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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Abstract
Social responsibility (SR) assumes a voluntary character of the organizations toward the impacts of their decisions and activities in society and the environment, through a transparent and ethical behavior that contributes to sustainable development (SD). Like companies, higher education institutions (HEIs) should promote social responsibility as part of the mission, vision, and the strategy of the university. The concept of university social responsibility (USR) is very explored in the literature, but there is not a single definition. Universities should commit to the development of curricular/extracurricular activities to improve students’ educational level and skills in sustainability. It should also support studies/ research programs on SR, as well as publish their impacts on SD. HEIs need to be able to assess their social/environmental impacts and to review their strategies toward the SD. Therefore, the disclosure of SD/sustainability information is a key element in the transparency and accountability of HEIs. The aim of this chapter is to explore the role of HEIs in favor of sustainability through the achievement of sustainable development goals (SDGs), analyzing the accountability of sustainability in higher education, based on emerging nonfinancial reporting models. V. Ribeiro · S. Monteiro (*) · K. Lemos Research Centre on Accounting and Taxation, School of Management of the Polytechnic Institute of Cávado and Ave, Barcelos, Portugal e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Switzerland AG 2021 D. Crowther, S. Seifi (eds.), The Palgrave Handbook of Corporate Social Responsibility, https://doi.org/10.1007/978-3-030-42465-7_27
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Keywords
Social responsibility · Sustainable Development Goals · Higher Education Institutions · Accountability
1
Introduction
Social responsibility (SR) has been part of the strategy of organizations, which increasingly assumes the commitment to be linked, on a voluntary basis, with the purpose of contributing to a more just society and in favor of sustainable development. On the other hand, citizens’ awareness and sensibility of the need for economic growth to be accompanied by social and environmentally sustainable development has increased, resulting in stakeholders’ pressure for organizations to take social responsible measures. Higher education plays a vital role in society and in educating leaders, driving the research agenda for public and private sectors, and therefore in shaping the direction of state economies. Public entities, such as higher education institutions (HEIs), cannot remain oblivious to the reflection on SR, as they have an important role in the formation and transfer of knowledge of future professionals, of future citizens, who will have to democratically promote human rights and common welfare. HEIs should consider SR as a mechanism that, in addition to pursuing academic success, should make significant contributions to the community in its area of influence, region, and country, in general. This implies promoting SR as a strategic model in the mission, vision, and objective of the HEI, carrying out activities of social commitment. Thus, it is possible for HEIs to link teaching and research with work life and society, while transmitting social values and ethical conduct. In turn, stakeholders are attentive to the acts practiced by the HEIs, analyzing whether they have sustainable behaviors. This chapter has three sections: the first focuses on the concept of social responsibility of HEIs; the second part is dedicated to analyze different insights on how to redesign higher education for the future in support of achieving sustainable development goals (SDG).
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The Social Responsibility of Higher Education Institutions (HEIs)
Higher education plays an important role as a factor of social transformation, influencing the models and orientations of the economic, social, and cultural development of the surrounding community. In the last two decades, several international bodies provided possible definitions, policies, and practices that can be integrated under the umbrella term of university’s social responsibility (USR). Namely, the International Standards Organisation’s ISO
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26 000, (The International Standards Organisation’s “Guidelines on Social Responsibility”); the UNESCO 1998: “World Declaration on Education,” reinforced in UNESCO’s 2009 World Conference Announcement: “The New Dynamics of Higher Education and Research for Societal Change and Development”; in 2006, the Council of Europe: “Declaration on Higher Education Responsibility for a Democratic Culture – Citizenship, Human Rights and Sustainability” (EU-USR 2015). The EU-USR project was regarded as an answer to the policy priority of the European Commission about the need for a common social responsibility strategy for all European universities. In this context, the EU-USR project creates a Common European Reference Framework to improve social responsibility of universities in a long-term perspective. The EU-USR project defines USR as “the responsibilities of universities for the impacts of their decisions and activities on society and the environment through transparent and ethical strategies” (EU-USR 2015, p. 4). The USR concept is also explored in scientific literature, with no single definition (Quezada 2011; Vasilescu et al. 2010; Bokhari 2017). According to Fonseca et al. (2019), the concept of USR emerges as a policy of integral management of the substantive university’s functions – research, teaching, and social projection – and aims to strengthen the quality processes taking into account the curriculum, institutional policies, and research projects that meet the needs of communities in local, regional, and national contexts. For Vallaeys (2014), the concept of USR is based on the fair and sustainable management of the impacts generated by an HEI: (1) the organizational impacts – which come from the institution itself, from its campus and from its staff (labor and environmental impacts); (2) educational impacts – which derive from academic training; (3) the cognitive impacts – which come from research, and (4) the social impacts – which result from the relationship with the social environment, networks and partnerships, hiring, extension relations with the community/knowledge transfer to society. In Latin America, Professor François Vallaeys promotes USR by publishing the manual “Responsabilidad Social Universitaria: Manual de dois pasos” (Vallaeys et al. 2009). The importance attributed to this theme has even led to the approval of the Law of the Peruvian University No. 30220 (2014), which obliges universities to comply with their social responsibility based on a transversal impact management approach, the same approach that is promoted in the Green Paper on SR and HEIs, published in Portugal (ORSIES 2018). Lozano et al. (2013b) propose that, for HEIs to become leaders and drivers of change in matters of sustainability, they must ensure that the needs of present and future generations are better understood and built, so that professionals who are experts in SD can effectively teach and help students making the transition to “sustainable social standards.” To this end, HEI’s leaders and employees must be able to catalyze and implement new paradigms, and ensure that the SD is the “Golden Thread” throughout all the higher education system. In order to have the holistic integration of the main components of sustainability, Hooey et al. (2017) suggest a model for HEIs that we can observe in Fig. 1.
Fig. 1 A campus sustainability culture. (Source: Hooey et al. 2017, p. 289)
Technology
Access
Social justice
Diversity
STUDENTS
Purchasing
Recycling/Reuse
Diversity Energy efficiency
Equity
Growth enhancement Labor relations
Recycling
Campus
Operations
Equity
Community
Curriculum
Capital efficiency
Policy
OPERATIONS
Social programs
Economic impact
Donor/volunteer relationships
Public-private partnerships
OUTREACH
Compensation when appropriate
Framework to facilitate innovative teaching & research Professional Development opportunities
ADMINISTRATION
Assessment
Research
Courses/Programs/Certificates
FACULTY
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According to these authors, it is crucial to incorporate three elements of sustainability in university operations: curriculum, campus, and community outreach. HEIs tasked with developing the next generation of leaders, must strive to not only teach the concepts but must emulate sustainability in all facets of the institution. The HEI’s commitment to its social role requires the incorporation of SR in the institution’s vision/mission, ensuring the inclusion of SR in its objectives and strategic plan. According to Buchta et al. (2018), when designing its vision and mission, a SR HEI ought to make references to actions benefiting its surrounding environment and stakeholders. According to Jongbloed et al. (2008), to accomplish their commitment toward being a socially accountable institution and to prevent mission overload, universities will have to prudently select their stakeholders and identify the “right” degree of differentiation. The university’s stakeholders are numerous and they may be classified as internal or external; individual or collective; academic or nonacademic. In higher education, the most important internal stakeholder/main actor of educational process would be the students (Buchta et al. 2018; Fonseca et al. 2019; Jongbloed et al. 2008). Another important stakeholder is the government. As the main funder of higher education it would like to ensure that higher education meets the interests of students and society in general (Jongbloed et al. 2008). Actions which take stakeholders’ expectations into consideration are regarded as responsible. Thus, SR is considered a guiding policy of HEIs’ strategy, that motivates the rethinking of the training model, and is strengthened by the participation of managers, teachers, staff, among others, who commit themselves to respond to students’ needs and requirements (Severino-González et al. 2019). HEIs must develop curricula and extracurricular activities to improve the educational level and skills of students in matters of sustainability. New pedagogical practices also must be considered in order to sensitize the students to the role they will play in society. It is also essential to create an internal environment to adapt the implementation of green and SR activities, programs, and initiatives. HEIs also must support research studies/programs on SR and economic sustainability. Université Laval is an example to follow, which, in September 2015, began to offer a list of courses in sustainable development (Richard et al. 2017). Spodarczyk and Szelagowska-Rudza (2019) presented results of a pilot study that aimed to determine the main characteristics of SRU for students, shaping mutual relations based on five dimensions distinguished by the authors (values, relations, graduate, education, efficient organization) and to indicate the importance of these dimensions by students. They concluded that education is the most important dimension for students, and it should be included in the social responsibility strategy of the university, because it leads to the formation of a graduate looked-for in the modern labor market. Special care for education as a dimension of social responsibility will convince students that the objective of a socially responsible university, focused on values, relations, efficient organization, and education is actually a graduate with the favorite skills of modern economy.
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According to Fonseca et al. (2019), the strategies used by the HEIs to develop USR can be operationalized through the development of research in professional fields, to respond to real problems of the communities, and through the articulation of interdisciplinary projects that aim to respond to local and national challenges and achieve sustainable developments.
3
Redesign HEIs for the Future in Support of Sustainable Development
Like companies, HEIs need to adopt an SR strategy in order to meet the expectations of their stakeholders (students, employers, employees, teachers, and society) (Chen et al. 2015). Given the role of HEIs in social and innovation terms (the so-called third mission), they are called to contribute to society not only in teaching and research but also linking their agenda to sustainability issues (Neary and Osborne 2018). The year 2015 represents a historic mark with the approval of the 2030 Agenda at the United Nations (UN) summit, which defines 17 sustainable development goals (SDGs), placing education at the heart of the strategy to promote sustainable development (Annan-Diab and Molinari 2017). Thus, HEIs need to be able to assess their impact on the SDGs and review their strategies and practices accordingly. Within the 2030 Agenda, educational responses are key to the vision of the SDGs. Education is both a goal in itself and a means for attaining all the other SDGs. The SDG4 – Quality education (goal 4.7) intends that, by 2030, all students acquire the knowledge and skills necessary to promote SD, inclusively, among others, through education for sustainable development. The 2030 Agenda and the SDGs will help focus the efforts of governments and academic institutions in obtaining important contributions for development. Sustainable development cannot be achieved in isolation from the relationship between HEIs and organizations and society. Adams (2018) believes that universities have a central role to play in implementing the SDGs, and governments can hold them responsible to contribute that way. Several authorities also recognize the potential role of HEIs in supporting the SDGs initiative. The HEIs are able to produce, interpret, and spread appropriate knowledge that can help to achieve SDGs especially if they translate SDGs into measurable and specific targets through the matching of academic capital with public policy priorities in their countries and developing knowledge and skills in community members (Zhou et al. 2020). Therefore, according to Zhou et al. (2020, p. 88), “SDGs provide an ethos for HE to re-invent itself and to rethink teaching, research and community engagement. Part of this reinvention relates to HEIs using strategies that promote the following sustainable development activities: • Developing a high quality, diverse yet integrated curriculum with programmes that are professionally strong, academically rigorous, morally sound and relevant to the needs of society.
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• Building educational institutions that “speak,” breed and demonstrate innovations and knowledge for addressing challenges faced by society as well as adequately prepare populations to cope with globalisation-related challenges. • Empowering students to become critical, ethical and reflective citizens who possess the ability to evaluate situations and make evidence-based decisions.” According to Vilalta et al. (2018), HEIs can help achieve the SDGs in an holistic way, through their main activities (teaching, research, and dissemination), but also in other pioneering ways like cooperation, collaboration, and the exchange of knowledge among different state and nonstate actors and different parts of the globe (different cultures, perspectives, and ways of working) are vital in order to achieve the 2030 Agenda. To redesign higher education for the future in support of sustainable development is a complex ambition because there must be a deep institutional change in HEIs. Albareda-Tiana et al. (2018) argue that the SD agenda requires a paradigm shift in education. It is not enough to transform institutional responsibility, it is also necessary to reorient curriculum and teaching in order to meet the needs of current and future generations. The process is slow and must take a resilient and inclusive approach to change. Zhou et al. (2020) argue that HEIs represent an exclusive position in societies because they are neutral and trusted by stakeholders and according to Vilalta et al. (2018), such position allows to promote and help dialogs and to create spaces for collaboration between and among multiple stakeholders. There are several strategies for integrating SDGs into HEI’s practices. Zhou et al. (2020) suggest, in Fig. 2, four dimensions of SDGs (research; governance, and operations; education and public engagement) and how they interact with each other to support effective implementation of SDGs in HEI. The success of the implementation of SDGs depends on the level of interaction between and within the four dimensions (Zhou et al. 2020). The pandemic situation that we are currently living worldwide triggered a new reality that cannot be ignored. According to Al Falasi and Gulseven (2020), in order to prevent future pandemics, it should exist a global partnership to achieve sustainable development. For this purpose, we need to respect wildlife (SDG 15), provide universal healthcare (SDG 3), offer sustainable cities (SDG 11), clean water, and sanitation (SDG 6) in a coordinated global manner (SDG 17). SDG 4 aims to achieve a quality education that is the basis for improving people’s lives and sustainable development. For better treatment of pandemics, quality health professionals are needed, which is determined by their level of education. So education, but also research, are among the key factors to reduce the negative effects of this pandemic on people’s lives (Gulseven et al. 2020). Health crisis, therefore, puts higher education institutions in a different economic, social, and political context, thus creating new expectations in terms of links to communities, education, mobility, and values as well. In this sense, we can infer that this health crisis is closely related to the SDGs. If, on the one hand, it could have been avoided if the SDGs had been respected more rigorously, on the other hand, it is
Fig. 2 SDG dimensions. (Source: Zhou et al. 2020, p. 89)
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important to realize the impact of Covid-19 on the achievement of the SDGs and on the change of HE’s paradigm. Although health is related to SDG3, the remaining SDGs are also affected because they are all intertwined. The health crisis waits a response and has put the whole world in a challenge to achieve the SDGs and reorganize education system and higher education institutions in all its aspects.
4
Accountability in HEIs in Favor of Sustainability
Traditionally, the assessment and reporting of organizations’ performance, which are the requirements for effective accountability, have been based on the financial accounting model. However, the growing interest in sustainability has led to the evolution of accountability mechanisms, and new reporting models, to respond to stakeholders’ nonfinancial information needs. Organizations have expressed an interest in disseminating information in SR/ sustainability reports to meet the growing demand for transparency and accountability on the part of their stakeholders (KPMG 2008). Likewise, public entities that are increasingly governed by more efficient and transparent management, in response to the demands/pressures of citizens and other stakeholders, are led to disseminate more and better information on SR/sustainability. Ball and Bebbington (2008) refer that public entities have an increased responsibility in the disclosure of information, due to the functions that are inherent to their own competencies in matters of SR. With regard to higher education, HEIs should publish its results and recommendations with a high level of transparency. That is, to develop and disseminate SR indicators, which allow measuring the effort developed in SR area, according to the specific objectives defined (Bokhari 2017). The dissemination of SR practices developed by HEIs can be carried through their websites, thus ensuring greater proximity to the academic community. In this sense, several studies on SR/sustainability are based on the analysis of the websites of the HEIs (Nejati et al. 2011; Hinson et al. 2015; Aleixo et al. 2016). Some studies seek to assess transparency and accountability in HEIs, through the analysis of information released on a voluntary basis (Ntim et al. 2017). According to Buchta et al. (2018), a responsible HEI must provide reliable information, taking into account the expectations of interested parties, including students. In fact, according to Quezada (2011), one of the USR’s approaches is related, on the one hand, to the identification of stakeholders to be accountable to, and, on the other hand, to the accountability process, through the construction of indicators that allow to quantify the impact of the actions carried out in the scope of the USR results that are disseminated with the objective of giving transparency to the information disclosed to stakeholders. Disclosure and information on SR/sustainability through reports is a key element in the transparency and accountability of HEIs. The Green Book on SR and HEIs, published in Portugal by ORSIES (2018), in its point 1.7, about socially responsible communication and marketing, recommends HEIs to adopt reporting strategies
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about SR developed by HEIs, namely, the inclusion of the social responsibility theme on HEI’s institutional websites and the development of sustainability reports. On the other hand, Agenda 2030 for sustainable development covers all areas and sectors of any country. It represents an opportunity for the improvement of university management, the relationship with stakeholders and the community, and the articulation and consolidation of education policies with the SDGs. Thus, HEIs will need to be able to assess their impact on the SDGs and review their strategies accordingly, which requires the collection and reporting of new data, also evolving in the way they report. According to Lozano et al. (2013a), there has been a rapid growth of HEIs that seek to make SD an integral part of institutional culture and seek to incorporate sustainability into their curricula, research, operations, evaluation, and reporting. Mapping of the SDGs Agenda represents an essential source of inspiration for improving the structure and presentation of both sustainability and integrated reports. Five years have passed since the definition of the United Nations SDGs, under the 2030 Agenda, with the public sector, and HEIs in particular, playing a key role in helping to achieve the SDGs. In this sense, it is important to align the organization’s strategy and the organizational report with the SDGs, making known to stakeholders the current level of commitment to these goals. The target 12.6 of Agenda 2030 encourages organizations to adopt sustainable practices and to integrate sustainability information into their reporting cycle. Thus, transparent and relevant reports on SDGs are important to communicate to stakeholders how HEI are meeting with their set goals. Integrating the SDGs thematic into the HEIs reports represents, therefore, one of the challenges for HEIs. We share the opinion of Ceulemans et al. (2015), that higher education institutions should consider sustainability/integrated reports as a dynamic tool to plan the changes to be made in their actions in favor of sustainability, and not use them exclusively as a communication tool. Despite the growing number of companies that are already reporting on sustainability, it is still insignificant compared to the total number of companies operating in the world. And, in the particular case of HEIs, the number of reporting institutions is even smaller (Lozano 2011; Lozano et al. 2013a). Most of the reports published by HEIs are in Europe (54%) and America (32%), with the rest in Asia and Australia (Lozano et al. 2013a). In the opinion of Lozano et al. (2013a), when preparing a sustainability report in an HEI, it is important to have a holistic perspective, addressing the different interrelationships between indicators, categories, and dimensions, as well as stakeholders throughout the higher education system. The guidelines/standards developed by the Global Reporting Initiative (GRI) are singled out as the world’s foremost internationally recognized and globally accepted sustainability reporting framework (KPMG 2015). The GRI guidelines have not been developed for HEIs either. However, Lozano (2006) adapted them to include the educational dimension and developed a framework that he called the “Graphical Assessment of Sustainability in Universities” (GASU), providing a set of performance indicators that can be used to prepare a sustainability report in HEIs. This
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framework was used to analyze 12 universities that published sustainability reports based on the GRI guidelines (Lozano 2011). In 2011, GASU was adapted to adjust to the G3 version of the GRI, and interconnections between economic, social, environmental, and educational dimensions were added (Lozano and Huisingh 2011). This tool was used as a reference in the process undertaken to prepare the first draft of the sustainability report of the University of Leeds in the United Kingdom (Lozano et al. 2013a). In the context of higher education, Kräusche and Pilz (2018) consider that only a part of the GRI indicators can be applicable to universities, so the core business of an HEI cannot be mapped by the GRI guidelines. In this sense, the authors present an integrated sustainability reporting model developed at a German university. Although the integrated reporting framework (IIRC 2013) refers mainly to for-profit companies, it can also be a reference for the higher education sector (Brusca et al. 2018), and can be used with appropriate adaptations (Veltri and Silvestri 2015). In this context, the British Universities Finance Directors Group (BUFDG 2016) has encouraged universities in the United Kingdom to implement the integrated reporting and has developed a guide to help them in this regard, based on the IR framework, adjusting it to the specifics of the higher education sector in the United Kingdom. At a later stage, BUFDG (2017) developed a project in four universities in order to demonstrate how the framework can help them in the transition to a new approach based on “creating value.” The practical application of the integrated report in HEIs is therefore at a very early stage, but the academic debate is already starting to be reflected in some studies (Veltri and Silvestri 2015, Brusca et al. 2018 and Adhikariparajul et al. 2019). Adams (2018) considers that the framework represents an opportunity for organizations, and HEIs, that seek to respond to SDGs, by integrating them into the strategy and the organizational report. HEIs can illustrate how and for whom they create value, and develop strategies contributing to the SDGs on the six capitals of IR, as well as identifying the most relevant risks and opportunities.
5
Summary and Cross-references
It should be noted that the 2030 Agenda and the SDGs strengthen the efforts of governments and academic institutions in obtaining important contributions toward the SD and cannot be achieved in isolation, as it depends on the interaction not only between HEIs but also with public/private organizations and society itself. HEI’s leaders and employees must be able to catalyze and implement new paradigms and ensure that the SD is the “Golden Thread” throughout all the higher education system. In higher education, the most important internal stakeholder/main actor of educational process would be the students. One of the strategies to integrate the SDGs into HEI’s practices is the review and interaction of these four higher education dimensions: research, governance and operations, education, and public engagement.
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The 2030 Agenda gives a new impetus toward aligning harmonization of sustainability reporting with the SDG monitoring framework. According to Bebbington and Unerman (2018), the SDGs have the potential to inform and advance research and practice on sustainability reporting. They state “academic investigation is needed to help understand where specific SDG-related accounting initiatives lie on the continuum between pure rhetoric and meaningful action, and to inform the most effective use of the SDGs by a broad range of organizations in developing policies and practices that will contribute toward the achievement of the SDGs” (Bebbington and Unerman 2018: 10). Major challenges are placed on HEIs in identifying priority SDGs for their activities and stakeholders, incorporating them into their strategy, setting goals for their success, and measuring and reporting on their progress. Integrating the SDGs evaluation in the report implies showing to stakeholders their effective performance, resorting to the emerging nonfinancial reporting models. Whether through sustainability reports or through integrated reports, we understand that what is important is to align these reports with the structure and scope of the SDGs and should, therefore, be a research area to be favored in the future.
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Part V Economic Aspects
Foreign Direct Investment and Development in Developing Host Economies An Exploratory Analysis of Double Tax Treaties in Africa Hema Soondram, Martin Samy, and Bhavish Jugurnath
Contents 1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Benefits and Costs of DTTs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 DTTs and FDI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Network Effect of Tax Treaties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 DTTs and Taxing Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 The Impact of Double Tax Treaties on Welfare . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 DTTs, FDI, and Welfare Development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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Abstract
Double tax treaties (DTTs) are highly controversial in Africa. At the time of signing the treaties, African economies’ main objective was to promote FDI in their nations. However, there is inconclusive evidence to date on the positive impact of DTTs on FDI in the host developing economies. Many countries’ leaders are questioning the rationale for signing tax treaties. In fact, DTTs are these days being branded as contributing to poverty by depriving the African countries from fiscal revenue. Are DTTs therefore a boon or a curse to developing economies? Amid these controversial claims, this paper is a review of existing literature on the impact of tax treaties on developing host countries, focusing specifically on the African continent. Additionally, the authors argue that there is a significant empirical need to understand the relationship between DTTs, FDI, and the social welfare development of the host African economies. This paper
H. Soondram (*) · B. Jugurnath University of Mauritius, Moka, Mauritius e-mail: [email protected] M. Samy Universite Des Mascareignes, Beau Bassin-Rose Hill, Mauritius © The Author(s), under exclusive license to Springer Nature Switzerland AG 2021 D. Crowther, S. Seifi (eds.), The Palgrave Handbook of Corporate Social Responsibility, https://doi.org/10.1007/978-3-030-42465-7_7
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reviews a plethora of research evidence to identify the relationships of FDI and questions the practical implications to developing countries. Keywords
Double tax treaties · FDI · Developing countries · African economies
1
Introduction
With a view to promoting foreign direct investment (FDI), policy-makers increasingly have recourse to the ratification of double taxation treaties (DTTs). Double taxation has been branded as a major obstacle to FDI (Egger and Pfaffermayr 2004). This statement used to act as an incentive for governments to sign DTTs, but the real success of DTTs in giving rise to an increase in FDI is still highly debatable (Moore and Lundstol 2016; Lundstol et al. 2013; Balabushko et al. 2017). Indeed, the empirical evidence of past studies to date is inconclusive (Blonigen and Davies 2005; Louie and Roussland 2002; Egger et al. 2006; Millimet and Kumas 2009; Lejour 2014). The impact of bilateral tax treaties on FDI at both the macro- and the micro-level has been empirically researched in the past. However, the findings of the research are quite ambiguous and do point to insignificant or negative effects on quite a few occasions (Baker 2014; Shah and Qayyum 2015; Daniels and Ruhr 2015; Yue 2018). As per the IMF (2014), developing countries should exercise caution when they sign tax treaties. Along the same line, the OECD has introduced the base erosion and profit shifting (BEPS) project, and within it, it has already put forward amendments whereby the model treaty will include text with the aim of assisting the signing states as to the conclusion of a new treaty (OECD 2019). Meanwhile, there has been an apparent shift in opinion among policy-makers as to whether developing countries, especially sub-Saharan African countries, should sign treaties which are perceived to have a negative impact (Hearson 2016; ActionAid 2018). In recent years, there has been a major upheaval on the impact of tax treaties on developing countries (IMF 2014; ActionAid 2016, 2018; Hearson 2017). The popular perception is that the international tax regime is excessively vulnerable to tax avoidance and evasion (Buttner and Thiemann 2017; Christians 2010; Eccleston and Smith 2016; Hakelberg 2016; OECD 2013; Rixen 2008; Seabrooke and Wigan 2017). Hearson (2015) has stated that approximately 300 tax treaties have been signed and ratified among the sub-Saharan African countries. While analyzing the trends in tax treaties signatures, he noted that it was in the 1990s that African nations accelerated the putting in place of these treaties in their policies. The historical pattern is an important factor as it should be born in mind that about 100 of these treaties are old treaties since many of them were signed before the United Nations model tax treaty came into effect (Hearson 2015). A seam of critical analysis in the academic legal literature (Irish 1974; Thuronyi 2010; Avi-Yonah 2009) points out that the most important effect of tax treaties is to shift the burden of double tax relief onto the developing country and that treaties export tax concepts such as dispute
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settlement, transfer pricing rules, etc. to developing countries which may not be appropriate for them. Previous research argues that poor policy-making and weak negotiation by developing countries over several decades have created treaty networks whose costs probably outweigh any benefits. In June 2018, ActionAid, a leading international non-governmental organization, published a report on “The Impact of tax treaties on revenue collection” after undertaking a case study of developing and least developed countries (https:// actionaid.org/publications/2018/impact-tax-treaties-revenue-collection-case-studydeveloping-and-least-developed. Accessed 12 March 2020). They estimated potential tax losses of Bangladesh in 2015 with respect to dividends at 37 million USD. Dividend and interest tax revenue losses as high as close to 800 million euros were believed to have been incurred in 2011 by McGauran and Fernandez (2013). They conducted their study on a sample of developing countries which had signed tax treaties with the Netherlands, and the treaty conditions gave rise to lower withholding tax rates. Similarly, the IMF (IMF 2014) came up with a massive tax revenue loss for the year 2010 amounting to 1.6 billion US dollar. They focused on non-OECD countries which had signed tax treaties with the United States. These figures speak volumes. The chapter is structured as follows. The benefits and costs of DTTs will be explained, after which the empirical studies to show a link between tax treaties and FDI will be displayed. The burgeoning literature on the network effect of treaties is then touched upon. The rest of the chapter then moves on to elaborate on how taxing rights of developing host economies are affected sometimes negatively by treaty signature, and furthermore, the welfare impact of treaties which are meant to promote FDI in the first place is strongly debatable.
2
Benefits and Costs of DTTs
As explained comprehensively by Davies (2004), the theory on tax treaties is maybe better thought of as the potential of treaties rather than how existing treaties operate. The introduction to the OECD’s model tax treaty states that its purpose is to get rid of the barriers that double taxation brings, but as per empirical literature, there is little support for this expectation. There is a mismatch between the way treaties are modelled and how they are performing in practice. Avi-Yonah (2009) gives a brilliant historical account and outline of the structuring and implementation of double tax treaties. An illustration via a simple static framework of tax treaties is given by Davies (2004) that firstly all tax treaties use either credits or exemptions and that secondly many treaties lower withholding taxes in a significant manner. Gordon and Hines (2002) and de Mooij and Ederveen (2003) have shown that lower effective taxes are linked to greater FDI. Hamada (1966) argued that fixed tax rates can be lowered, while FDI can be boosted by having recourse to the tax relief methods of credit or exemption as opposed to deduction. However, Musgrave (1969) noted that the home country prefers deductions; indeed, the credit or exemption method instead produces excessive FDI from its perspective.
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Davies (2004) does point out though that the Hamada and Musgrave analyses have shortcomings, namely, that they both treat taxes as exogenous. Bond and Samuelson (1989) demonstrate the existence of a pure strategy of Nash equilibrium. Davies and Gresik (2003) demonstrate that endogenous host factor prices are constant in FDI levels with a sufficient number of additional host sectors and factors. The different models therefore imply that if a treaty leads to credits instead of deductions, effective tax rates would either not change or rise. Now, even if bilateral tax treaties reduce inefficient tax competition between home and host countries, they will not affect competition between hosts in a multilateral environment (Davies 2004). Treaties have a second feature which is tax rate coordination. Janeba (1995) notes that with tax coordination, it is possible to reduce the effective tax in a mutually beneficial manner under credits or exemptions. Tax treaties are not sufficient as a means to eradicate unhealthy tax competition, and the reason can be traced to their bilateral nature (Toumi 2006). The benefits of concluding treaties can also come in a different form since treaty provision in those countries leads the latter to achieve a certain “international economic recognition” (Dagan 2000, p. 32) or in the words of Rosenbloom (1982), a “badge of international economic respectability” with an extensive network of tax treaties. Tax definitions across jurisdictions are quite similar, and tax treaties may play the role of coordinating this further. Janeba (1996) shows that in theory definition differences can be a major barrier to investment. An empirical confirmation was given by Hines (1988) who considers the 1986 US Tax Reform Act and he finds that the revision of US tax definitions gave rise to an upward trend in US outbound investment. A UN report (1998a) stated that with an increased usage of hybrid instruments, the importance of cross-country variation in tax definitions will be higher. Even within treaties, the definitions may vary. If, for instance, we consider the definition of “permanent establishment,” we have differences since the OECD model treaty opts for a 12-month criterion, while the 1980 version of the UN model treaty (UN 1980) recommends 6 months. A study of 811 tax treaties (UN 1998d) finds that out of 811 treaties, 513 used a period of less than OECD’s 12-month guideline. Interestingly, most of these variations were between developed and developing countries. Further, nine treaties used periods ranging from 18 to 36 months. Subsequently, the UN revised its model treaty to make it more similar to the OECDs (UN 1998b, 2001). It is expected that tax treaties may increase FDI since they provide a higher level of certainty in the tax environment of both signing partners. Indeed, Edmiston et al. (2003) show that tax uncertainty is a notable obstacle to FDI. Jones (1996) argues that a tax treaty codifies the current practice between countries, and this does lead to an increased commitment to tax stability and hence boost FDI. Graham (2000) puts forward in the same manner that the failed Multilateral Agreement on Investment will have the same effect. It is also possible that tax treaties reduce uncertainty by providing a set of rules when dealing with disputes over jurisdictions, transfer pricing, and other tax conflicts (Gravelle 1988; Sasseville 1996). Egger et al. (2006) is renowned for his statement on how double taxation is a major barrier to investment overseas. In the light of the above, it is clear that theory
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on tax treaties therefore suggests that treaties will tend to increase FDI between signatories. It was only natural that researchers would conduct empirical studies to try and verify whether treaties had been playing that part. Hines and Willard (1992) analyzed patterns of treaty formation by using the number of treaties countries have. They find three broad themes. Firstly, a country’s history matters and was related to the large number of treaties sharing colonial ties. Secondly, a country size in terms of GDP and population is positively related to the number of treaties a country has. Thirdly, government policies are important in the sense that low inflation and high tax countries are found to sign a greater number of treaties in that study. There is an array of costs to the contracting parties to a treaty. The processes of negotiations and of ratification are lengthy and administratively significant (Baker 2014). The costs can be especially substantial for smaller or developing countries. The whole process of negotiation and ratification may take up to several years where the fiscal authorities of the smaller developing parties to the treaty invest a considerable amount of time and associated administrative costs to ensure the successful ratification of the treaty. Since DTTs often favor residence over source taxation, this more often than not will tend to lead to losses of tax revenue. When analyzing the flow of FDI and of stocks between developed and developing economies, it is found that the pattern is asymmetric to a large extent, and this can be explained by the fact that the latter economies tend to import capital more than their developed counterparts. When a party enters into treaty, this can lead to a loss of tax revenue in the developing nations (Easson 2000). As recently highlighted by ActionAid in their 2018 case study, they estimate the highest potential tax revenue losses for the Philippines (509 million USD) and Pakistan (130 million USD). Relative to their GDP, it is estimated that the potential losses are highest for the Philippines and Mongolia (0.17% of GDP for both). They also find that investing countries Japan, the Netherlands, Switzerland, and Singapore are together accountable for most of the estimated losses; the latter arise from dividends, and only around 5% is due to interest payments.
3
DTTs and FDI
In this section, we summarize critically the relevant and key studies to understand the conceptual relationship of the constructs both theoretically and practically. One of the early studies was by Blonigen and Davies (2000) who analyzed a data set on US inward and outward bilateral FDI (measured as stocks, flows and affiliate sales) from 1966 to 1992 to measure the effects of tax treaties on FDI. In their initial regression results, they utilize a simple dummy variable to indicate whether a treaty is in place and find significant effects in the US outbound data. However, these were only when they used the FDI specification which was developed by Carr et al. (2001). Their findings thus pointed to a positive relationship, in line with the abovementioned theory. On their next regression results, a treaty age variable was incorporated and was taken to be the number of years that a treaty was effective; positive and significant results in relation to the treaty age were obtained using both
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the Carr, Markusen, and Maskus framework and the standard gravity model. Significant effects were also found for both US inward and outward FDI. It was then concluded by the researchers that tax treaties have a strong, positive impact on FDI and that these effects would become larger over the years. However, as Davies pointed out, there was a problem with the approach in the 2000 paper: the new and old treaties were combined together in the sample. The US’s old treaty partners such as Europe, Japan, Canada, and Australia are responsible for the biggest amounts of US outbound FDI and the largest homes for US inbound FDI, and therefore, the treaty variables could be capturing unobserved differences between these countries and others. Consequently, Blonigen and Davies changed their approach in a 2004 paper and employed distinct dummy variables where old and new treaties are separated. They also extend the data to 2000, and after separating old and new treaty effects, it was found that the old treaty dummy is positive and significant, while the new treaty dummy is generally negative and significant. When FDI is measured in levels, this result for new treaties is valid for a variety of alternate specifications, including those with fixed effects. But when FDI is measured in logs and this helps with the skewed nature of the dependent variable, they find insignificant coefficients for the new treaty dummy. Theoretically, a treaty will improve tax certainty, and it would be expected that this would be reflected in US outbound FDI instead of the FDI coming to the United States from developing countries. The 2004 study did find some positive effects of treaty implementation particularly for US inbound FDI. Similarly, later studies by Blonigen and Davies (2005) used a different set of data on FDI from OECD countries from 1982 to 1992. In similar fashion to their 2000 paper, they found a positive effect of a treaty when pooling old and new treaties, but when separating them, the old treaty variable is positive and significant while the new treaty variable is negative and not significant. Upon deciding to control for the fixed effect, they again obtain negative coefficients for the new treaty variable. Louie and Roussland (2002) use another approach, and their results are similar in that treaties have little effect on FDI. They do not distinguish between old or new treaties impact and use 1990s income tax return data for US multinationals to compute the rate of return from a foreign subsidiary and test if it varies with the enforcement of a treaty. They come up with a negative significant coefficient on their treaty dummy. The authors believe that such a result is due to omitted variable bias since after introducing proxies for corruption, political instability, or bureaucratic efficiency (all variables which are negatively correlated with FDI), the significance of the treaty variable disappears. Their conclusion is that good governance tends to promote both FDI and tax treaties; nevertheless, DTT does not affect FDI. Davies (2003) examines the effect of revisions in an existing treaty on FDI and finds no robust evidence of a positive effect. Egger et al. (2006) use a differences-in-differences method whereby they look at a period of 2 years before and after that the treaty is concluded. Their dyadic data results in a negative result of new treaties. They argue that treaty conclusion is an endogenous event. Millimet and Kumas (2009) try to improve on the study by Blonigen and Davies (2005) by employing their data to determine whether it is true that the impact of a treaty depends on the size of FDI. Their results
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show a significant negative impact of DTTs for large FDI; when the latter is small, the advantages can be obtained still. Coupe et al. (2009) focus on bilateral investment treaties (BITs) as well as DTTs. Their data is over the time range 1990–2001, and they found inconsistent results since the sign and significance of their results change according to the estimation they adopt. Ohno (2010) measured the effect of DTTs on Japanese FDI in 13 Asian countries from 1981 to 2003 and found positive results in the case of DTTs which are newly signed. His argument was that with time, treaties become old and are no longer so important. Millimet and Kumas (2009) used panel data, and their results are that new treaties increase FDI when the level was low. Nevertheless, if the rate of FDI was high, the DTTs will have a potential benefit whereas the new treaty will have a negative impact if FDI level of activity is already high in a country. Hines (1998) examines the impact of “tax sparing” agreements and whether they affect the location of FDI from Japan. “Tax sparing” (Neumayer 2007) is said to be present when nations which export capital spare the income from its firms from taxes and the income is earned from fiscal incentives in the other foreign nations. The DTTs of most developed countries, except for the United States, with developing countries usually, contain “tax sparing” agreements. Hines (1998) compared Japanese and US investment patterns in 1990. His results show that FDI in developing countries is 1.4–2.4 times higher than without tax sparing. The second study Di Giovanni (2005) investigates merger and acquisitions instead of FDI, and interestingly, he concludes that the existence of a treaty is associated with larger volumes of flows across borders. Neumayer in 2007 pointed out that there were two major problems with the studies on treaties. First, he states that the by including OECD as well as developing countries in the sample, Blonigen and Davies (2004) and Egger et al. (2006) were not right. He argues that FDI flows usually originate from quite different motives in the two sets of countries (Blonigen and Wang 2004). Secondly, due to dyadic FDI data being used, these tend to impose restrictions on the sample. Indeed, the latter therefore exclude developing countries, and they are the ones to whom the existence of a treaty is a crucial means of attraction for investors. Hence, Neumayer tries to tackle these two problems in his research design by, firstly, using a sample which contains solely developing countries and secondly by creating a sample of developing nations which goes over a wide time range. He uses non-dyadic data, and his study was significant in that it shows that DTTs do lead to more FDI into developing economies from the United States and other countries. He concludes that it is mostly middle-income developing countries which are affected by DTTs. Barthel et al. (2010) use a large dataset on bilateral FDI stocks, and while controlling for standard determinants of FDI and using several estimations, they find that tax treaties give rise to larger FDI stocks. They conclude that the impact is highly significant. Murthy and Bhasin (2015) tried to study the impact of tax treaties on FDI inflows in India. Their control variables were FDI, openness, GDPPC, and GDP. They used the fixed effects model to show that tax treaties have a small but positive effect on FDI.
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Baker (2014) argues that the less developed countries are the principal ones to import and sign treaties to attract foreign investors. Despite the tax costs incurred during negotiation of the treaty, the benefit is they may become hubs of inward FDI. He concluded that tax treaties have insignificant impact on FDI. Shah and Qayyum (2015) analyzed the impact of treaties on 15 Latin American and Caribbean developing countries from 1983 to 2013 where they applied conventional FDI determinants such as market size, development level, trade openness, and human capital. Their empirical study shows that DTTs have no effect on the FDI inflows. Daniels and Ruhr (2015) show that US bilateral tax treaties have a negative impact on total US FDI outflows, equity capital, and reinvested earnings but have a positive and significant impact on debt between companies. Interestingly, it seems that although they have gone to extreme lengths to sign double tax treaties with a view to increasing FDI to their countries, developing countries do not benefit from FDI as they expect to. As a matter of fact, the tax treaties may instead be promoting huge losses in precious tax revenue to the developing host economies. Hence, are tax treaties a boon or a curse to the developing countries’ inhabitants? This is a real issue to be investigated further. Lejour (2014) examines the impact of tax treaties on bilateral FDI stocks using a database of all OECD countries covering the years 1985–2011 and uses geographical variables to make a correction due to the endogenous nature of DTTs. His findings contradict many papers by showing that DTTs give rise to higher FDI by about 16 percent, and for new treaties, it is about 21%. Yue (2018) studies the impact of DTTs on FDI inflows in 10 ASEAN countries from 1989 to 2016, and the findings suggest that new DTTs tend to have a positive but insignificant impact on the FDI inflows into Southeast Asia. Overall, the results show that tax treaties have little or even negative effect on FDI inflows into the ASEAN region. Castillo-Murciego and Lopez-Laborda (2019) analyze the impact of DTTs on Spanish inbound and outbound FDI for the period 1993–2013 and find in general terms that the existence of a DTT between Spain and another state is positively related to the FDI volume. Most empirical work trying to evaluate the link between tax treaties and investment has focused mainly on aggregate bilateral FDI flows or stocks across countries. Davies et al. (2009) decided to use a different approach by employing data at the firm level to investigate the impact of DTTs on FDI activity. They used data on MNCs in Sweden. They did not find proof of the impact of DTTs on the foreign affiliate’s level of activity. They did however obtain results whereby treaties lead to a positive probability of FDI entering a country which was similar to the US study by Millimet and Kumas (2007). The terms that they use are intensive and extensive margin. Although there is considerable proof that tax rates have a significant impact on international capital mobility (Wilson and Wildasin 2004), provisions of tax treaties do not seem to have a similar effect. The heterogeneity of tax treaties may have different effects between different economic areas, and these tend to neutralize each other. Blonigen et al. (2014) put forward the hypothesis that when MNCs operate in sectors where the share of differentiated inputs is bigger, there is a greater probability that tax treaties will have a good impact. This is effectively due to the new availability of the Mutual Agreement Procedures (MAP). MAP provides MNCs with the possibility to ask fiscal authorities to try and be on the same wavelength
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when it comes to definitions of tax base. They use US firm level data for the years from 1987 till 2007. They conclude that there is an important positive effect of tax treaties newly signed on the level of activity of foreign affiliates. It tends to decrease when the firm is dependent on inputs which are traded on a platform. In the cases of sales of existing affiliates and entry of new ones, they both find these differential DTT results.
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Network Effect of Tax Treaties
The inconclusive evidence to support the predicted link between tax treaties and FDI has encouraged researchers to take different approaches. A recent stream of research has endeavored to employ data at the firm level to tackle the aggregate nature of data on FDI (Davies et al. 2009; Blonigen et al. 2014). An avenue of research undertaken or proposed is the use of network optimization techniques which enable exploring of the underlying network effect of tax treaties on FDI. This in-depth literature has qualitatively analyzed the way FDI is shifted via subsidiaries by means of third countries where the aim is to capitalize on double tax treaties which is commonly referred to as treaty shopping. The phenomenon of treaty shopping does not have a precise definition (Avi-Yonah and Panayi 2011). The economic definition of Davies (2004) is usually taken: the case of FDI which run through a third country to use the benefits of a tax treaty which are not present between the mother country and the host country. German MNCs had fiscal motivations for setting up specific company structures in several nations (Weichenrieder and Mintz 2008). Factors such as the withholding tax or the taxation system in the home country are extremely important ones when FDI is through third parties. It is found that the withholding tax rate particularly is quantitatively important and is a major reason why MNCs from Germany choose the Netherlands as a platform when investing overseas. Weyzig (2013) utilizes micro-data of shell companies based in the Netherlands for analyzing FDI flows going through the latter country as a conduit. His results show that when a DTT is in existence between the source and host country with the Netherlands acting as a conduit country, the FDI through the latter country is 6 percentage points higher. This is a relatively significant increase. He also proves that a lower rate of withholding tax on dividends leads to a significant effect on treaty shopping. Van’t Riet and Lejour (2018) use the Floyd-Warshall algorithm. They calculate the quickest routes which will minimize taxes between countries which have signed tax treaties. They calculate tax rates reduced by treaty shopping which they show to be significantly related to FDI. Research is now focusing on how tax systems as well as motives not related to taxes have an impact on where MNCs decide to locate or which structure they will embrace. It is found by Barrios et al. (2012) that taxes on the foreign-source dividends of companies in resident countries can inhibit the entrance into potential source countries (Huizinga and Voget (2009) and Voget (2011)). In addition, studies by Dischinger and Riedel (2011) assess location decisions in the case of intangible assets such as patents and trademarks. They find that a
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lower corporate tax rate of a country will tend to encourage MNCs to invest in the latter’s intangible assets. The ownership structures of MNCs is largely motivated by fiscal incentives (Lewellen and Robinson 2013). Dyreng et al. (2015) corroborate these findings by further specifying that it is the withholding tax rate of dividends which is a determining factor for MNCs. Sunghoon Hong (2018) builds a tax rate matrix which is a model of the existing network of tax treaties between 70 countries in the real world. Hong shows that when a tax-minimizing direct route exists, there is a positive and significant relationship to FDI. Davies and Killeen (2018) use a firm level dataset and other measures to investigate whether factors such as DTTs do affect the decision-making process of non-bank financial institutions. Special purpose vehicles play a prominent role in the sample. The authors’ results show that DTTs have an impact on the extensive margin of non-bank financial FDI with conduit-related investments with a particular sensitivity to international tax. They apply some of the measures developed by van’t Riet and Lejour (2018) in their study. As noted by Zucman (2014), the establishment of thousands of DTTs has created a web of inconsistent rules. This then allows opportunistic strategies as multinational firms can potentially exploit these inconsistencies through treaty shopping. They choose different locations to shift their profits by looking at the treaty benefits of each country. They move their profits offshore by manipulating transfer prices and making use of intragroup transactions. Some country level studies have examined the role of tax treaties and treaty shopping on non-bank financial institutions (Weyzig 2013; Merz et al. 2017). Weyzig (2013) examined the importance of tax treaties for FDI routes through the Netherlands and finds that FDI diversion is higher when both the home and host countries do have a tax treaty signed with the Netherlands and lower when the home and host have a DTT. Similarly, using data from German financial FDI, Merz et al. (2017) show that a high number of DTTs increase the attractiveness for financial sector FDI. A number of academic papers also consider the importance of DTTs in determining cross-border portfolio investments (Lane 2006, Lane and Milesi-Ferretti 2008). Adrian and Ashcraft (2012) and Adrian et al. (2013) note the incentives of financial institutions to avoid taxes among other things. Adrian (2014) refers to regulatory and tax arbitrage as key determinants for the development of credit intermediation outside the regular banking system. Some non-bank financial institutions may be set up for tax purpose, and this is a strong indication that jurisdictions with a large network of treaties are attractive jurisdictions for the establishment of some types of non-bank financial institutions (Godfrey et al. 2015; Barrett et al. 2016; Grillet-Aubert et al. 2016; ESRB 2017).
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DTTs and Taxing Rights
Most of the DTTs are based on either the OECD Model or the UN Model Tax Conventions (Wijnen and de Goede 2014). In both the models, there is a shifting of taxing rights from the source state (where income is generated) to the residence state.
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This move of taxing powers gives rise to an erosion of tax base for the country which is an importer of capital (Rixen and Schwarz 2009). The general trend is for capital to flow particularly from developed to developing countries and for capital income flowing the other way. Consequently, DTTs place developing countries in an unfavorable position since they are the ones who import capital usually. It has been debated that a rise in capital inflows is expected by developing nations once they have signed DTTs (Lang and Owens 2014). Pickering (2013) asserts that capital exporting countries possess powers of negotiations which are unequalled by the capital importers who hence feel pressurized into the signature tax treaties. Generally, DTTs make the distinction between active business income and passive income. The former-type income refers to profits from a business, and the principal right to tax is possessed by the residence country. If an MNC has a permanent establishment (PE) in the other state, then the latter has all rights to levy taxes on the profits attributable to the PE (Article 7 OECD MTC). As per Article 23 of the OECD MTC, the country of residence will need to apply one of the exemptions or credits methods of taxation relief. The OECD MTC and the UN MTC tend to move the power of taxation from the source to the residence country. The process is by narrowing the definitions of a PE and of the income attributable to the PE (Braun and Fuentes 2016). When one considers passive income, like dividends, royalties, and interest payments, the principal rights to charge taxes lie on the country of residence. The source country is provided with rights to charge limited withholding tax rates on these types of income (see Articles 10, 11, and 12 of the OECD MTC). DTTs usually have a provision to cater for a reduction of withholding tax rates in the source state, leading to “a revenue transfer from the net capital importer to the net capital exporter” (Rixen and Schwarz 2009). Eurodad (2016) undertakes a study on the withholding tax rates in a sample of nations in Europe and concludes the tax rates in the DTTs are on average close to 4% lower than the corresponding tax rates in the source country. There has been several detailed investigations on the problematic clauses in DTTs, and they try to quantify their impact on developing countries (see, e.g., Braun and Fuentes (2016), McGauran (2013), Buergi and Meyer-Nandi (2013), and ActionAid (2014)). DTTs are said to be asymmetric when they encourage intrinsic disadvantages for capital-importing countries by imposing restrictions on their powers of restriction (Dagan 2000; Daurer 2013; Rixen and Schwarz 2009). Scholars have recently put forward the argument that capital exporters utilize foreign aid to encourage countries which import capital to sign DTTs (Braun and Zagler 2017). It is being claimed that capital importers who have signed a DTT will benefit eventually since they can access official development assistance (ODA), and this ODA is being regarded as a way to encourage the existence of DTTs. Since the benefits of DTTs are perceived to be for the most part on the side of capital-exporting countries, researchers from the legal and economics fields are pleading for the addition of revenue sharing mechanisms into DTTs (Paolini et al. 2015; Thuronyi 2010). Braun and Zagler (2014) dwelled on the linkages between tax treaties and foreign aid payments. The authors undertake a cross-section study and find bilateral ODA commitments, and the existence of DTTs is positively associated. In their 2017
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paper, Braun and Zagler examine DTTs which are in existence between 1991 and 2012. They use a fixed-effects Poisson model and found that on average, donor countries’ aid commitments to the other signature state increase by about 22% in the year of signature. They provided empirical evidence that there is an enormous increase in the year when the DTT is signed. This finding brings a new dimension to DTTs. The initial perception that DTTs are beneficial in promoting FDI is hence a shortsighted one, and future research should focus on the potential benefits of tax treaties from different angles. New approaches to research on tax treaties are starting to erupt, and this can only shed more light on the importance (or not) of signing tax treaties.
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The Impact of Double Tax Treaties on Welfare
One major reason why tax revenue is not higher in many developing countries is that these countries have effectively signed away their rights to tax multinational companies operating within their borders through so-called bilateral tax treaties. One fact is that close to 50% of Uganda’s FDI is owned in the Netherlands due to a DTT the two countries signed back in (ActionAid 2016; for an in-depth review of tax treaties in Uganda, see Hearson and Kangave 2016). While the developmental impact of bilateral tax treaties has not received much attention in the past, this is now starting to change with calls for developing and developed countries alike to assess the impact of their tax treaties and ensure they do not contradict development policy and aspirations (Hearson 2016). Another major reason why tax revenue is relatively low in developing countries is that tax is evaded and avoided by multinational companies. One such tax avoidance practice is profit shifting by multinational companies. Transfer price is responsible for the tax base erosion (Mascagni et al. 2014). With currently available data, it is not possible to pinpoint the amount of tax that multinational groups avoid each year through shifting profits to tax havens. However, recent estimates reported by the OECD indicate that the losses from base erosion and profit shifting could be between 4% and 10% of total worldwide corporate income tax revenue or USD 100 to 240 billion annually (Durst 2016). While aggregate estimates of profit shifting are difficult to make, individual examples of such practices abound. The government in Zambia lost millions of dollars due to profit shifting (Lewis 2013). Several African countries were the victims of losses of tax revenues of approximately USD 20 million per year again due to tax havens (ActionAid 2015). According to one study, a group of African governments could have collected USD 70 billion in additional tax in the years 2003–2008 if they had levied the same implicit rate of tax on mining as the Australian government (Moore and Lundstol 2016). It was revealed that profit-based corporate tax did not account for much of the revenue in Tanzania and Zambia and that Zambia, in 1 year alone, could realistically have improved its fiscal revenue from mining by more than USD 1 billion. This
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would have exceeded the annual foreign aid amount for the same year (Lundstøl et al. 2013). Another major cause of the tax gap seen in many developing countries is tax exemptions. Governments from low-income countries offer various tax holidays and exemptions that are difficult to categorize and control, with the aim of attracting investors and fostering economic growth (Mascagni et al. 2014). Governments are often under strong political and other pressures to grant large-scale investment incentives and, in effect, give away tax revenues (Moore 2013). Quite recently, Balabushko et al. (2017) use firm level data and provide quantitative evidence that tax treaty network amendment gives rise to changes in the profits of MNEs in the case of Ukraine. Jansky and Sedivy (2018) give illustrations of the magnitude losses in tax revenue which are suffered by developing economies. ActionAid is actively involved in research on tax treaties. They refer to the latter which deprive one partner signatory of tax rights as restrictive treaties (ActionAid 2016). They reveal that the United Kingdom and Italy are two countries which have signed restrictive treaties the most. These are usually signed with developing host economies located in sub-Saharan Africa and Asia. This is why ActionAid has raised the alarm on how lower-income countries should be extremely cautious so as not to surrender their tax rights to the rich developed countries, thus worsening the imbalance between these two types of economies. This may contribute to the poor becoming poorer while the rich becoming richer. Examples of how corporate structuring is abusing of the tax rights of the poorer developing economies are given in ActionAid’s report (ActionAid 2013). Approximately a third of foreign firms globally have an ownership structure which involves a tax haven (UNCTAD 1998).
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DTTs, FDI, and Welfare Development
The concept of welfare is a crucial one, and like so many other important concepts, it has been defined in a variety of ways depending on the context in which it is being utilized. This review paper wants to emphasize that social welfare is closely associated with the human development of the inhabitants of the African host economies in double tax treaties. Existing literature on welfare on economic growth has explored the relationship between FDI and human development to a large extent. The literature on the relationship between the welfare of a society and taxes as well as FDI is summarized below. Back in 1960, MacDougall showed that the tax revenue obtained from the income received from foreign investors did give rise to a boost in economic welfare. In similar fashion, Caves (1971) stated that the tax revenue collected from foreign corporate bodies led to a positive impact on welfare. In other words, FDI was giving rise to an increased overall welfare in the host economy via the fiscal revenue route. Consequently, whenever a host economy amends its taxation structure such that the tax revenue will decrease or due to transfer pricing, the welfare will automatically fall as a result (Kopits 1976). This view as not shared by Markusen (1984). He said
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that there was no certainty as to whether FDI does have a positive impact on welfare. He proposed the opposing view that FDI could lead to a reduction in welfare because of the transferring of income earned from local firms to the foreign firms. It is common practice for host countries to include tax holidays in their fiscal policies as a measure to attract to FDI. In the shorter run though, such a measure can lead the former economies to lose tax revenue (Bond and Samuelson 1986). Nevertheless, unless the foreign investors decide to leave the country in the long run, the taxes collected should pick up and rise as the tax holiday period comes to an end. Brander and Spencer (1987) stated FDI could promote welfare by several ways, namely, lowering unemployment, increasing productivity via transfers of technology, and improving fiscal revenue. Horstmann and Markusen (1987) showed welfare was dependent on whether FDI was present or tariffs were imposed on imports. A few year later, in 1992, they proved that the welfare also depended on whether the countries were with one domestic firm or with a double firms where one is an MNC. With a single firm, the welfare was lower but increases with two firms. The welfare of the country is affected by taxation policies brought about by the government. The bargaining power of the host economies with the investing parties was showed by Dunning (1993) to be instrumental in the way the FDI was associated with welfare. Given the numerous benefits associated with FDI in the form of employment, knowhow, and transfer of technology, Raff and Srinivasan (1997) stated that the government should not hesitate to forego revenues collected from taxes. It was further supported by Mudambi (1999) that welfare was an important result of FDI which could be measured by the upgrade in standards of living which can be observed in certain areas of the host country. The knowledge-capital model, which was mentioned in the FDI section above, stipulates that welfare and FDI are linked such that for larger countries and for smaller countries with low trading costs, the welfare effects of FDI are high (Markusen et al. 1996; Markusen 1997, 2002). Another way to investigate the impact of FDI on welfare is through tax revenue as a dependent variable. The results of Mahmood and Chaudhary (2013) point to the positively significant impact that FDI has on tax revenue and hence welfare. FDI can also have negative impact on the host economies, for instance, when MNCs act as substitutes for the domestic firms which therefore have limited chances to grow (Jones 1996). The competition brought about by the foreign investors may be such a large extent that new local firms feel threatened and do not get encouragement enough to prosper (Mencinger 2007). Environment impact is another way that FDI may cause harm to the developing countries. MNCs can play a bad role in that sense (Bora 2002; Adewumi et al. 2006). Transfer pricing has also been shown to lower the tax revenue payable in the host (Adewumi et al. 2006). MNCs have negative impacts as well on the host economies (Nguyen et al. 2010; Haddad and Harrison 1993; Barrios and Strobl 2002; Borensztein et al. 1998). Using corporate tax, Nguyen et al. (2013) did show that the impact of competition and technological spillovers will affect the way FDI changes government revenue. Sharma and Gani (2004) conduct a study on lower-income countries, and their results show that FDI and human development are positively associated. Arcelus
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et al. (2005) also observe that FDI will impact human development positively in a significant manner. As for Gohou and Soumare (2012), they conduct an investigation on the effects of FDI on poverty reduction or welfare; their research comes to confirm that FDI is positively related with reduction of poverty and also that the finds are of significance. Osemwengie and Sede (2013) use HDI and life expectancy at birth as proxies for poverty alleviation in their studies. Durusu-Ciftci et al. (2018) explore the effect of foreign direct investment (FDI) on the human development index (HDI) in Nigeria and find a lasting link between FDI and the indices of human development.
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Summary
This review paper has tried to summarize the current status of research so far on the impact of DTTs in developing economies: Do DTTs boost FDI as they were initially meant to or do they instead have the opposite effect by depriving the host economies of large amounts of tax revenue, for instance, and therefore contribute to poverty in the host economies? There has been a lot of empirical research till date on the effects of DTTs on FDI, and the results are not conclusive. With the recent waves of criticism on DTTs being responsible for the rise in poverty of the African developing host economies, there is an urgent need to undertake research to investigate whether these claims are founded or not. As noted in this review, there are quite a few studies exploring the effects of FDI on social welfare while including tax revenue as part of the study, but the double tax treaty impact on social welfare has not been researched per se. Clearly, there is a serious gap for further research on the impact of tax treaties on corporate social responsibility in the host countries. Before signing DTTs, African economies and other developing countries should exercise caution by taking into consideration not only the FDI impact of the treaty but also its social welfare effects. The need for in-depth research on the topic is omnipresent to shed light on whether DTTs are contributing to poverty in the developing countries.
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Social Business: A New Chapter of Hybrid Business Toward Sustainable Development Arifur Rahman and Naznin Sultana
Contents 1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1 Corporate Social Responsibility (CSR) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.2 Bottom of the Pyramid (BOP) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.3 Social Entrepreneurship (SE) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.4 Inclusive Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.5 Impact Investing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.6 Circular Economy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Social Business: Meaning and Definition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Inception of Social Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Why Social Business? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Social Business in Action: Practical Lessons from Grameen Experiences . . . . . . . . . . . . . . . 5.1 Grameen Danone . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.2 Grameen Veolia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Designing a Successful Social Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.1 Targeting the Focus Area to Serve . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.2 Developing a Successful Business Model . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.3 Constantly Learning and Adjusting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.4 Building Well-Organized and Sustainable Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.5 Assessing and Supervising Impact . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Social Business Across the World . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.1 Campo Vivo (Colombia) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.2 Hope Development Initiative (Uganda) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.3 Instituto Muda (Brazil) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.4 NextGen (Tunisia) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.5 Cashpor (India) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.6 Rizona (Kosovo) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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A. Rahman (*) Latrobe Business School, La Trobe University, Kingsbury Drive, VIC, Australia e-mail: [email protected] N. Sultana Department of Marketing, Faculty of Business Studies, University of Dhaka, Dhaka, Bangladesh e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Switzerland AG 2021 D. Crowther, S. Seifi (eds.), The Palgrave Handbook of Corporate Social Responsibility, https://doi.org/10.1007/978-3-030-42465-7_47
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7.7 Green Bio Energy (Uganda) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.8 St. George Organic Herb Farm (Albania) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.9 Human Harbor Inc. (Japan) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.10 Ashoka (Germany) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Opportunities and Strengths of Social Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Drawbacks and Challenges of Social Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Social Business and Sustainable Development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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Abstract
The concept of social business emerged in 2006 as a hybrid business model in response to the failure of government sector and philanthropic efforts to provide sustainable solutions to social and environmental problems. Social business is a cause-driven or social objective-driven business model that intends to harness the business principle and philanthropic motive together to achieve positive social change in a productive and commercially viable way. It is a business in every sense with the replacement of economic profit maximization goal with that of social benefit maximization. Theoretically, social business is assumed of being capable to resolve almost all sort of social problems including poverty, unemployment, environmental degradation, and health and sanitation problems by means of balanced allocation of scarce resources, thereby can help achieve sustainable development goals (SDGs). Thus, it seems apparent that the concept of social business and sustainable development is closely intertwined and the functions of social business encompass the agenda of social and environmental sustainability. Yet, social business is not meant to alter capitalism; instead, it tends to offer “enlightened capitalism” to cure the flaws of the free market system. However, as a relatively new mechanism, social business suffers from several limitations and encounters numerous challenges. Replication and scaling up successful ventures are required for this concept to advance magnificently and to serve the planet and the people effectively. Keywords
Social business · Hybrid business model · Sustainable development · Enlightened capitalism · Profit maximizing business
1
Introduction
Only a few, if any, would argue against the fact that the primary job of a business is to deliver benefit, in the form of profit for the owner and product or service for the customers; certainly not with an altruistic intention, as Smith (1904) stated, “it is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own self-interest” (p. 16). Hence, business
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conventionally takes the form of a non-loss, profit-sharing entity devoted exclusively to enhance the owners’ interest of economic gain (Agafonow and Donaldson 2015). Until the middle of the twentieth century, it was believed and strongly argued that the only responsibility of business is to serve the owners’ interest (Friedman 1970). The task of social welfare was left to the government and non-profit sectors. Since the last half of the previous century, social and environmental problems such as poverty, unemployment, carbon emission, environmental degradation, and the like have been so intensified and alarming that the non-profit and government’s efforts have fallen short to tackle those and, consequently, failed to ensure sustainable solutions to those problems. Gradually, business corporations that own and control all the resources and economic power in a capitalist economy are entitled and entrusted to live with the responsibility of solving social problems along with the previous ones (Hart 2007). However, counter argument continues to prevail as some took their stand against business’s role in social justice and welfare instead of focusing on shareholders’ interest and return on capital (Banerjee 2008). With the growing concern of sustainable development, a popular buzzword of these days which means “the development that meets the needs of the present without compromising the ability of future generations to meet their own needs” (WCED 1987, p.41), scholars are focusing on developing new approaches of economic development along with social development. Prahalad (2004) viewed the low-income fragment – which was long been ignored – as a profitable market and suggested the multinational corporations to embrace this prospect to serve this lucrative market and help them uplift their standard of living. Weiser et al. (2006) emphasized on tapping into the underserved market – a market consisted of a larger fraction of low-income and/or ethnic minorities – to exploit new market. Wilson and Wilson (2006), on the other hand, advocated to treat the poor not merely as consumers and recommended some convenient low-cost, low-risk attempts to work with the poor. Morgan (2010) identified impact investment as a potential alternative for creating social benefit through private sector investment. To this end, a number of new concepts emerged as a combination of business principles and social mission to provide sustainable solutions to combat social and economic problems. Comparable business concepts anticipated to ensure sustainable development are:
1.1
Corporate Social Responsibility (CSR)
Corporate social responsibility is one of the oldest attempts of business corporations for the optimization of social welfare and environmental upgradation. This concept has long been practiced as inextricable – often compulsory – job of business (Crowther and Reis 2011) and laid its foundation on the ground that business and society are necessarily interrelated and inseparable entities (Chaudhry and Krishnan 2007). The Commission of the European Communities (2001) defined CSR as “a concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary
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basis” (p. 8). Seifi and Crowther (2018) emphasized on the relationship of the firm with all other actors of the society while defining CSR. Vogel (2007), on the other hand, emphasized on going beyond the legal requirement of better workplace and social welfare of a firm. Scholars of CSR (such as Van Marrewijk 2003; Perrini 2005; and Muller 2006) described the term as synonymous to sustainable development, while others (such as Morimoto et al. 2005) attempted to relate it only with the social facet of sustainable development concept. Yet, CSR is repeatedly blamed for being used as a weapon of generating goodwill and brand image that eventually help achieving commercial success of a firm (Chakraborty et al. 2004; Chahal and Sharma 2006). However, there are arguments that the current practices of CSR have become outdated and need huge alteration focusing on the concurrent social and environmental challenges the world is facing right now (Crowther 2018; Seifi and Crowther 2018).
1.2
Bottom of the Pyramid (BOP)
The “bottom of the pyramid” concept was publicized by C.K. Prahalad and Stuart Hart in 2002 arguing that business organizations, especially multinational corporations (MNCs), have denied the people of the bottom of the economic pyramid as potential customers considering this market unprofitable. Prahalad (2004) debated that this untapped market can be of huge potential for the MNCs with a little change in the business operations and suggested them to approach proactively to serve the low-income segment as this stratum counts around two-thirds of the world population. However, in BOP model, the poor are considered as the consumers only, not as entrepreneurs or members of the value chain. Prahalad and Hart (2002) claimed that BOP approach of MNCs can help curb poverty as well as boost the living standard of the underprivileged. However, there exists strong criticism that without creating income potential and raising purchasing power, BOP business would merely be an unnecessary innovation and would shift its concentration toward upper ends of the pyramid (Agnihotri 2012).
1.3
Social Entrepreneurship (SE)
Social entrepreneurship is a broader concept of attaining social mission by hiring business mechanisms and tools along with entrepreneurial talents. Cochran (2007) defined the term as “the process of applying the principles of business and entrepreneurship to social problems” (p. 451). This field is characterized with a concrete mission of obtaining and nourishing social goals, creating prospects to accomplish those goals, constant innovation, and finely tuned accountability toward all stakeholders (Dees 1998). Wei-Skillern et al. (2007) claimed that SE can take the form of any of non-profit institute, conventional business, or even government organization and can help them run effectively while ensuring profitability. Elkington and Hartigan (2008) proposed three basic models of SE and claimed social business as one of them. Yunus (2006, 2008) also stated social business is a “subset” of SE and
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argued that a SE graduated as social business only when it earns the capability to recover full cost and generate surplus.
1.4
Inclusive Business
The term “inclusive business” was formulated by the World Business Council for sustainable development in 2005 with a view to fostering the accomplishment of Millennium Development Goals (MDGs) considering the BOP communities in the business value chain both as target market and stakeholders (Golja and Požega 2012). This business model evolved from the idea of integrating business function with philanthropic essence to ease the miseries of impoverished in financially and socially sustainable manner (Likoko and Kini 2017). Kelly et al. (2015) defined inclusive business as a business intended to move the poor out of poverty while creating shared benefits for both the business and the poor by means of participation of smallholders in the value chain. Unlike BOP approach, inclusive business not only ensures the access of goods and services for economically vulnerable group at an affordable price but also generates decent and sustainable income opportunities for them considering them as suppliers and distributors of goods and services (Likoko and Kini 2017). Inclusive business is claimed to offer dual benefits: increased profitability for the business in the form of lower costs, expanded market access, and superior sustainability and improved standard of living for the poor with the help of better goods and services and higher incomes (Golja and Požega 2012).
1.5
Impact Investing
Rockefeller Foundation introduced the term “impact investing” in 2007 in response to the collective effects of global economic turmoil that resulted from the failure of traditional business models, asymmetric distribution of wealth, growing social and environmental concerns, and inadequacy of resources to address such issues (Rockefeller Foundation 2012). Bugg-Levine and Emerson (2011) defined impact investing as “investment strategies that generate financial returns while intentionally improving social and environmental conditions” (p. 10). Rodin and Brandenburg (2014) cited this term as “middle way” of harnessing altruism and customary financial investment to ensure financial return and social and environmental impression altogether. The idea of impact investing depicts that pursuing social and environmental task is very much feasible alongside financial goal and denies the common conception that generating social impact requires sacrifice of financial returns of the investors (Bugg-Levine and Emerson 2011). Both profitability and social welfare are part of business operation, and a trade-off between these two is never encouraged (Vecchi et al. 2015). However, intention of creating social and environmental impact, additionally, i.e., enhancing the quantity and quality of those impacts, and generating turnover for investors is the distinguishing features of this business model (Brest and Born 2013; Rodin and Brandenburg 2014).
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Circular Economy
The idea of circular economy has drawn huge attention as one of the most effective and leading movements toward sustainable development. It alters the linear or oneway model of production and consumption that usually entails production of goods, sale, consumption, and disposal of waste. Circular economy, on the other hand, encourages the exploration of ways to reuse or regenerate products and recycle waste, thereby minimizing social, economic, and environmental adverse effects. Ellen MacArthur Foundation (2013) defined circular economy as “an industrial economy that is restorative or regenerative by intention and design” (p. 14). Geissdoerfer et al. (2017) explained circular economy as a “regenerative system in which resource input and waste, emission, and energy leakage are minimized by slowing, closing, and narrowing material and energy loops” (p. 6). Arguably, Germany was the first to embrace circular economy in 1996 (Su et al. 2013) followed by Japan in 2002 and China in 2009 (Geissdoerfer et al. 2017). All of these concepts, with significant differences among themselves, are grounded on the same principle: applying business techniques to address social problems. Social business also emerged as a hybrid, alternatively termed as fourth sector, for benefit, value-driven, and mission-oriented business model (Alter 2004; Boyd et al. 2009; Haigh and Hoffman 2011), to rectify intense social problems. However, fundamental aspects of social business, such as amalgamation of business identity with charitable notion, deliberative sacrifice of monetary return by the shareholders, and payback policy of investors’ capital, have made it unique from other corresponding models (Ballesteros-Sola 2014). Jäger (2010) placed this kind of hybrids at the intersection of business and civil society. Social business is recognized as a “third way” and “enlightened capitalism” (Grove and Berg 2014) that is capable of reducing social inequality and injustice through guaranteeing smooth distribution of wealth.
2
Social Business: Meaning and Definition
Social business, sometimes used wrongly as synonymous to such terms as “socially responsible business,” “social enterprise,” and “social entrepreneurship” (Yunus 2010), is a cause-driven business model (Yunus 2008). Using these terminologies as identical ones has become a common phenomenon in the contemporary literatures; some of the authors attempted to draw a demarcation line though (Grieve 2011). The European Commission, while launching their Social Business Initiative, also mentioned social business and social entrepreneurship interchangeably (European Commission 2011). Crowther and Reis (2011) on the other hand found a little or almost no difference between a social business and a socially responsible one. However, Dr. Yunus argued: A social entrepreneur may not be involved in a business at all, it could be just helping your neighbourhood, improving health care, helping people to do that in a new way.” (Kickul et al. 2012, p. 456)
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Social business is an under-construction business concept (Ballesteros-Sola 2014) and is gradually emerging as an academic and practical field. Theoretical foundation of this concept is not satisfactorily explored yet, and thus, the definitions of social business vary. One of the shortest and simplest definitions of social business is “a non-loss, non-dividend company dedicated entirely to achieving a social goal” (Yunus 2010, p. 6). Yunus et al. (2010) portrayed an even clear definition and elaborated the term as “a no-loss, no-dividend, self-sustaining company that sells goods or services and repays investments to its owners, but whose primary purpose is to serve society and improve the lot of the poor” (p. 311). Kleemann and Humberg (2014) viewed the concept from the point of human development and proposed it as “a business that contributes to human development by enlarging people’s choice in an economically, environmentally, and socially sustainable way. Its norms and standards are context-specific and result from societal negotiation” (p. 6). Thus, the expression “social business” is a proper blend of two different terms: social and business, where “social” signifies the objective or mission of such organizations which is to maximize social benefit and “business” denotes the way of executing that objective in a productive and commercially viable way. Yunus (2008) explained: Thus, a social business is designed and operated as a business enterprise, with products, services, customers, markets, expenses, and revenues—but with the profit-maximization principle replaced by the social-benefit principle.” (p. 29)
This statement implies that social business is not financial profit-driven; rather it is cause-driven or social objective-driven (Yunus 2008; Grieve 2011), and such social mission is the most significant feature that defines the nature of this type of organization and the activities they perform (Ballesteros-Sola 2014). Again, it does not mean that a social business organization is a non-profit entity. Earning reasonable profit is permissible and highly encouraged for the company itself, provided that the profit stays within the business (Yunus 2008, 2010). It is to be noted that the investors or shareholders of a social business initiative are not authorized to claim even a fraction of profit (except in the case of Type II social business which is discussed later); however, they are eligible to retrieve all of their original investment once the business reaches its breakeven or at an agreed-upon time. With the raison d’etre to maximize social benefit, social business should generate enough revenue to cover its operating costs, to sustain in the long run, and for further expansion of business. Yunus (2008) advocated against being loss-making for the greater sake of the target beneficiaries of this business: However, the bottom line for the social business is to operate without incurring losses while serving the people and the planet—and in particular those among us who are most disadvantaged—in the best possible manner.” (p. 30)
This state of profitability and earned revenue supports such businesses to ensure improved product quality, increased efficiency, innovation and access to updated
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technology, continuous research and experimentation, and efficient marketing strategy to reach the underserved markets (Yunus 2006). This point also distinguishes social businesses from non-profit entities and traditional philanthropic organizations. Rather than being dependent on donations and subsidies, social business aims to cover all of its operational costs as well as the cost of “doing good” to the society from the revenue earned from the sales of its products and services rendered (Grieve 2011). Philanthropic and charitable organizations, in spite of their necessity and noble intentions, suffer from some illness regarding sustainability, expansion, innovation, and accessibility to a greater number of beneficiaries due to its everlasting reliance on donations and grants. Yunus (2011), with due respect to such philanthropic bodies, is suspicious of their effectiveness in the development process because of the single life cycle of charity funds and stated it as a “one-way route.” A “Charity Dollar” has one life, but a ‘Social Business Dollar’ has endless life. That’s the power of social business. (Yunus 2011, p. 22)
Yunus et al. (2010) appealed social business as “a business in every sense.” Nevertheless, it does not bear the exact resemblance to the traditional profit-maximizing enterprises (PMEs) either. The doctrine of profit maximization is replaced with that of benefit maximization in the case of social business, and such benefit goes to the beneficiaries in the form of lower price, better quality, and extended service (Yunus 2006). Thus, social business is unique from all other types of business models and nonprofit organizations in terms of its objectives – satisfying a social need, solving an intense social problem, offering collective benefits to the society (Struthers 2011), and maximizing social benefits instead of personal financial gains of the owners, even though earning profit for the company itself is not prohibited. In fact, profitability is an important aspect of social business in order to ensure the long-term sustainability and to pay back the entrepreneurs, however, of course not at the cost of compromising or sacrificing its core objectives (Yunus 2008). This concept is positioned in the middle of the spectrum of two extremes, a profit-maximizing business and a not-for-profit organization, as it has taken some of its concepts from the traditional PMB and some from the latter (Yunus et al. 2010) (Table 1). Social business can take the form of any of the two types (Yunus 2008, 2010). Type I is exactly what the definition says, that is, a business that does not offer any dividend to its shareholders; rather the profit is reinvested for the expansion or improvement of the business, or the offerings and the benefit are passed on to the target groups. Grameen Shakti and Grameen Danone are the examples of this type of social business. Type II, on the other hand, is a profit-maximizing business owned and operated by the poor or underprivileged segment of the society, and such ownership serves as the source of social benefit. Grameen Bank and Grameen Otto are operating as Type II social business.
Social benefit maximization √
Social objectivedriven √
Source: Authors’ contribution
Charity/ non-profit
Conventional business Social business
Goal
Type Independent investment
Funding √
Table 1 Features of social business derived from conventional business and non-profits
Refundable
Payback policy √
Selfsustaining
Sustainability √
Nondividend √
Profit scheme
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However, an organization, to be a truly social business, needs to follow the seven principles proposed by Dr. Yunus (2010): (i) (ii) (iii) (iv) (v) (vi) (vii)
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Addressing one or more social problems Securing financial sustainability of the company Paying back the investment, but not any dividend Reinvestment of the profit for business expansion or quality improvement Environment-friendly Ensuring “better-than-standard” work environment and compensation package Doing with pleasure and satisfaction
Inception of Social Business
The social business concept that Dr. Yunus introduced in 2006 has become a popular buzzword of the twenty-first century. However, the idea is not as new as it appears to be. Comparable concept did exist in the nineteenth century as well. The “Rochdale Society of Equitable Pioneers,” more familiar as “Rochdale Pioneers” of England, that took the form of a multipurpose cooperative can arguably be said to be the predecessor of social business concept. Rochdale Pioneers was resulted from the social dislocation of the working class caused by the adverse effect of the Industrial Revolution and took inspiration from the “Owenism” movement (Fairbairn 1994). The handloom laborers of Rochdale were the worst sufferer of the Industrial Revolution which eventually caused them to lose their jobs and decrease in their wages. They were deprived of all social benefits and got themselves engaged in the unscrupulous practices of merchants and middlemen whom they were dependent on for their livelihood. In such a situation, the flannel weavers of Rochdale created this mutual self-help organization in 1844 with a view to helping each other within their community, bypassing the merchants and employers. The primary objective of Rochdale Pioneers was to improve the economic condition of its members; however, betterment of their social status and household condition was also given priority. They designed a set of principles for their cooperative that became famous as “Rochdale Principles” later. The International Cooperative Alliance (ICA) accepted these principles in 1937 as the “Rochdale Principles of Cooperation.” According to those principles, members were entitled to receive a little or no return on their investment, and surplus was reinvested for the improvement of the cooperative and to support other activities like education of the members and their children (Fairbairn 1994). Again, despite being entirely distinctive theories, the concept of social business and the concept of microfinance share a very close association between them. In fact, social business concept laid its foundation on the concept of microfinance. It needs to look long back in order to identify the base of both concepts.
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Dr. Yunus started his career in 1972 as the head of the Department of Economics at University of Chittagong (Bangladesh) after he had returned carrying out his higher study in the USA. The newly born Bangladesh then was struggling with a devastated economy along with poverty, unemployment, natural calamities, and deadly famine. He gradually started to feel it useless to teach the sophisticated economic theories and came to realize the feebleness of traditional economic system in such a situation of hunger and poverty. He started visiting the nearby village Jobra with a view to studying the livelihood pattern and economic condition of the villagers. He shockingly found that people were struggling there to get a little amount of money for their daily living only. During his visit to Jobra in 1976, he met a bamboo stool manufacturer named Suffiya Begum who borrowed 5 BDT (equivalent to 7 cents, according to the exchange rate of that time) from the money lender at a high rate of interest (as much as 10% per week) in order to buy the raw materials. Surprisingly, she was bound to sell the stools back to the lender at a price fixed by the lender with a profit of only 2 cents per day. This way, neither she got a fair price for her product, nor could she get out of poverty, thereby got stuck in a vicious circle of virtual enslavement (Yunus 2010). Yunus soon enlisted 42 borrowers who borrowed money from the lenders and took initiative to lend money on his own to those so that they could sell their products anywhere and ensure a fair price in exchange of their labor. Yunus then approached the branch manager of a local bank with a view to assisting those people get institutional loan but got refused in the face of the bank’s restriction of collateral free loan. The fact that the banks did not even consider the poor as creditworthy shocked him most (Yunus 2010; Yunus et al. 2010). Dr. Yunus, hence, took the responsibility of the reimbursement of the loan as a guarantor and had been able to ensure bank loans for the villagers. Later, he personally started providing loans with the facility of small amount of weekly repayment that would not impose any burden on the borrowers. Following the success of this endeavor, he wanted the existing banks to carry out microcredit policy but failed to convince. He felt the necessity of a financial institution for financially vulnerable group in order to help them contribute to the economic mainstream, thereby founded “Grameen Bank” (Grameen means rural in Bengali) as a specialized bank in 1983 (Yunus 2003, 2010). This “microfinance” concept led him to be an awardee of Nobel Peace Prize along with his bank in 2006. Following the success of “microfinance” concept in alleviating poverty, Dr. Yunus, in 2006, introduced another and even more effective business model targeting social problems in a business way (Sultana et al. 2019). The fact that the capitalist system has increasingly been inspiring the gap between the rich and the poor (Ahmed et al. 2011), that the traditional business corporations are not supposed to solve social problems, and that charity and welfare funds fall short to accommodate all problems led the foundation of such concept which is expected to be a “change agent” of the twenty-first century’s business arena (Yunus 2008). The
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concept of social business is a timely innovation, which has emerged with a view to fixing two major flaws of capitalism: First, misinterpretation of entrepreneurs as onedimensional and merely profit-oriented rational being that completely denies the selfless feature of human beings. In fact, human beings are blessed with multifaceted characteristics, and their satisfaction does not always depend on financial or economic gain (Yunus 2006, 2011). Second, free market capitalism has always ignored the poor, the biggest fraction of world’s population, both as customers (Prahalad and Hammond 2002) and as entrepreneurs (Yunus 2011) and therefore resulted into the inefficient allocation of resources (Yunus 2008). Social business is, thus, a refined form of capitalism to meet the most intense needs of the people and planet (Yunus 2017; Sultana et al. 2019).
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Why Social Business?
The idea of social business emerged in response to the inadequacy of government and charitable efforts to address social problems in a meaningful and sustainable way as well as the global economic crisis that resulted from the failure of capitalism (Aydin 2015). With the motivation of doing good to the society and environment along with securing the state of self-dependence, social businesses offer exciting benefits over the traditional and other relevant business concepts. Hypothetically, social businesses are assumed to resolve almost all sort of social problems (Villis et al. 2013) including poverty, unemployment, hunger and malnutrition, gender discrimination, health and sanitation problems, and environmental degradation, thereby can help achieve sustainable development goal (SDGs) (Sultana and Rahman 2019). Unlike the BOP model, social business not only considers the poor as mere consumers but also nurtures the entrepreneurial skill inside them and involves the poor in the economic mainstream. Yunus (2011) believed that poverty is an external imposition to the unfortunate as they have always been ignored as potential entrepreneurs. The microentrepreneurs and distribution channel members of social business belong to the base of economic pyramid. Social businesses are free from the responsibility of proliferation of shareholder value and distributing dividends. As a result, they can put their resources, talents, and efforts together to serve the underprivileged in the best possible manner. This also opens new horizons for the business to invest, expand, and replicate. Non-dividend policy of social business can essentially be a governance mechanism against impertinent market power of the influential elites to protect the unfortunates from their uneven practices (Agafonow and Donaldson 2015). Unlike traditional businesses, this policy also inhibits social business to involve itself in a competition to get the best out of financial return. Instead, it encourages best practices among the business organizations (Yunus et al. 2010). It is easier for a social mission-driven business to build favorable brand image and goodwill. Channel members and stakeholders act as the spokespersons for the firm and its products. Moreover, people tend to believe the products of such organizations as of better quality.
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Social Business in Action: Practical Lessons from Grameen Experiences
Currently, more than fifty social business ventures are operating in Bangladesh in collaboration with Grameen group. Most of them have partnered with giant multinational corporations of various sectors. Following are the most prominent social business ventures of Bangladesh.
5.1
Grameen Danone
Grameen Danone, founded in 2006, is the first ever social business enterprise. It is a 50:50 joint venture between the Grameen Group of Bangladesh and Groupe Danone of France which aims to deliver sustainable solution to the problem of malnutrition of rural children of Bangladesh as well as alleviating poverty through creating employment opportunity. Grameen Danone introduced a yogurt under the brand name “Shokti Doi” and “Shokti +” (fortified yogurt in English) enriched with protein, iron, calcium, zinc, vitamins, and other essential micronutrients that most of the rural children are deprived of. Grameen Danone set up its first production plant at Betgari upazila of Bogura district targeting the poorest people of that region as the key beneficiaries both as consumers and members of value chain. Vital components of the yogurt like cow’s milk, sugar, and molasses are sourced from local farmers and providers in order to maintain a lower cost of production as well as involve the providers into the value chain, thus improving their economic condition. Workers of the production plant are also hired from local source. Ingredients of this yogurt are enriched with protein, calcium, and some other micronutrients that guarantee proper growth, stronger bones, and good health and reduce the duration and intensity of diarrhea. Each cup of yogurt, if consumed on a regular basis, can meet 30% of the need of vitamin A, iron, zinc, and iodine of kids. Instead of conventional distribution channel, Grameen Danone follows their own delivery systems. First one is a door-to-door network of more than 250 trained rural women, known as “Grameen ladies.” They walk door to door to sell the yogurt at a reasonable rate and teach people about the nutritional facts and benefits of the yogurt. Another distribution system involves small proximity or convenience stores. Around 80% of the net sales take place in these stores. Currently, Danone is producing around 100,000 cups of yogurt per day (Sultana and Rahman 2019). While serving the primary objective of fighting malnutrition among the rural children, Grameen Danone has created job and additional income potential for the rural communities including women by involving them in various stages of value chain.
5.2
Grameen Veolia
Grameen Veolia, the second social business initiative, is a joint venture between Grameen Health Care Services (a subsidiary of Grameen group) and French
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multinational company Veolia Water AMI (Veolia Water’s subsidiary for Africa, Middle East, and the Indian subcontinent). The fact that the underground water of most of the regions of Bangladesh is getting contaminated with arsenic day by day and millions of citizens are at high risk of direct or indirect arsenic poisoning leads Grameen Veolia to offer safe drinking water to the impoverished villagers at cheapest possible price. These organizations put their skills and resources together and launched a social business venture as an equivalent partnership to combat the risk of arsenic pollution. Veolia Water provides all technical assistance and technological and managerial know-how, whereas Grameen is in charge of local networks and marketing support. The project was set up in some villages of Goalmari union and Padua union of Kumilla district, 50 km far from the capital city of Bangladesh. Those two unions consist of a group of villages with a population of about 40,000. Grameen Veolia chose this area for establishing the water treatment plant because 83% of the groundwater of this area is polluted with arsenic and river water is not fit for drinking due to the disposal of waste and sewage. Water treatment equipment is manufactured locally with the help of “know-how” provided by Veolia. The first plant has been treating surface water drawn from Meghna river and then filtered twice with the help of a sand filter and an activated carbon filter. It is then chlorinated to comply with the WHO standard. The treated water then is delivered via a 13 km network of storage reservoirs and standpipes. Almost 100,000 beneficiaries are being served by this initiative. There are a number of taps at different points of the standpipes where the “Grameen ladies” are supposed to distribute the water at certain times of the day at the rate of BDT 2.5 (approximately US$ 0.03) per 10 liters. Villagers can collect up to 30 L per house per day including 10 L for drinking. Water is also transported by auto-rickshaws with a comparatively higher cost. Households with higher disposable income can get a private connection. By 2010, the company became able to produce more than the local demand and decided to sell the additional amount in other areas including Dhaka city in order to increase profitability. This profit has been reinvested in infrastructural improvement like network extension and new tap points. The project of Grameen Veolia is flourishing significantly and appears to serve the basic need of clean water at an affordable price successfully. Besides, it is contributing in alleviating poverty through generating income opportunity for rural women. Grameen Veolia is expected to spread its activity in more areas of Bangladesh (Sultana and Rahman 2019) (Table 2).
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Designing a Successful Social Business
A business model is a blueprint or general guideline of conducting a business effectively in order to generate and sustain economic value (Teece 2010; Zott et al. 2011). Schaltegger et al. (2012) defined the term as a “strategic asset” that assists a firm to leverage such resources as knowledge and administrative and entrepreneurial
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Table 2 Successful Grameen ventures in Bangladesh Social business BASF Grameen
Problem address Risk of mosquitoborne diseases (especially malaria and dengue) Lack of modern agricultural knowledge and effective use of fertilizer Lack of access to affordable medical care Pregnancy-related difficulty Unemployment Poverty Want of agricultural knowledge and efficiency Limited access to eye care facilities and treatment for BOP people Shortage of ophthalmologist Lack of electricity Indoor air pollution, consequently, eye irritation Unhealthy and low living standard
Offerings Affordable, long-lasting, and insecticide-treated mosquito nets
Social impact Offer protection against dengue and malaria
Software and apps for computer and mobile Soil testing and fertilizerrelated guidance
Higher yields at lower cost of production Reduction of pregnancy-related mortality rate
Commercial cultivation and processing of mung beans for native and Japanese market
Employment opportunity Increased efficiency and quality Low cost and subsidized eye treatment Employment prospect
Grameen Caledonian College of Nursing
Shortage of nurse Limited access to medical facilities in rural areas Poor condition of maternal and child care
Nursing/ midwife school Health-care training for rural females Diploma program for rural young ladies
Grameen Distribution
Lack of access to highquality consumer goods at reasonable price Absence of bargaining power
Number of products and services including energy, health, and telecommunication
Grameen Intel Social Business
Grameen Yukiguni Maitake
Grameen GC Eye Care Hospital
Grameen Shakti
3 specialized hospitals for eye checkup and surgery Eye camp for underprivileged
Solar home system Environment-friendly cooking stoves Biogas plants
Access to clean energy for rural households Health and environmentfriendly cooking solution Empowerment of rural women Positive impact on mother and child health Employment as nurse and midwife Supplies daily necessities at a price 10% lower than opponents Serves remote areas Income opportunities for women (continued)
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Table 2 (continued) Social business Grameen Fabrics and Fashion
Problem address Unemployment Poverty
Offerings Products for specific social problems for local market, e. g., pesticide-treated mosquito net Export-oriented product
Social impact Job opportunities for poor through local production Earning overseas currency through export
Source: Adapted from Villis et al. (2013)
skills to improve its overall performance. However, a conventional business model comprises three fundamental components: value proposition (target customers and products), value constellation (internal and external value chain), and profit equation (revenue generation, capital employment, and cost structure) (Yunus et al. 2010). Social business as a young field of business model lacks sufficient theoretical and pragmatic research on developing a viable and successful business model in the respective field. The social business model proposed by Yunus et al. (2010) is almost similar to the conventional one with a replacement of “profit equation” with “social profit equation” and “economic profit equation.” Thus, the components of social business model are value proposition (stakeholders and product/ service), value constellation (internal and external value chain), social profit equation (social benefit and environmental benefit), and economic profit equation (sales revenue, cost structure, and capital employment, with no economic loss incurred). Yunus et al. (2010) also recommended five lessons in developing a social business model: (i) (ii) (iii) (iv) (v)
Challenging conventional wisdom Finding complementary partners Undertaking a continuous experimentation process Favoring social profit-oriented shareholders Clearly specifying the social profit objective
Based on the experiences of different Grameen affiliates, Villis et al. (2013) projected the following set of course of actions to develop and nurture a successful social business venture (Fig. 1).
6.1
Targeting the Focus Area to Serve
The very first job of any successful business attempt is to define the needs of its target customers. Being a socially driven business venture, a social business first attempts to identify a most pressing social problem or an untouched need of a specific segment of customers based on the core capabilities and business mission of the company and the intensity of the problem identified. A well-defined mission along with some fundamental strengths of the business is inevitable to generate
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Targeting the focus area to serve Developing a successful business model Constantly learning and adjusting Building well-organized and sustainable procedures Assessing and supervising impact
Fig. 1 Steps in developing a successful social business model (Adapted from Villis et al. 2013)
genuine social impact. It is also essential to apprehend the root of the problem identified and treat that in a sustainable way. Grameen Danone, for example, aimed to handle the problem of undernourishment of rural Bangladeshi children and, shockingly, identified that poverty is at the root of this problem. As a result, it took initiative to generate employment opportunities for the poor villagers.
6.2
Developing a Successful Business Model
Like a conventional business, social business needs to develop a unique value proposition along with a differentiated product or product line in order to be successful. Villis et al. (2013) identified four major challenges in doing so: a clear understanding of particular needs of the target market, a truly affordable price point while generating adequate returns for the business, developing and maintaining a distribution channel to ensure the reach of the offering to the neediest, and creating demand and awareness among the customers about the benefit of new offerings. However, it is to be strictly followed that social business, while serving the poorest segment at a rate affordable to those, must not compromise the quality of its product. Also, it must follow the needs and taste of the target customers and local culture and customize its offerings accordingly in order to ensure actual impact. To diminish the potential clash between profitability and affordability, social business can offer their products at any of three differentiated prices: lowest possible price for the destitute, a reasonable premium price with a value-added service, and differentiated pricing for different customer segments based on their ability to pay. Grameen Veolia, for example, supplies safe drinking water at a minimum price to the villagers through a network of standpipes with taps at different points. Rural households with a higher disposable income are also eligible to get a private connection with a higher rate. City dwellers, particularly the customers of Dhaka city, are served at an even higher rate. To reach the underprivileged fragment, social businesses usually hire distributors from the local communities, often village women called “Grameen Ladies,” to sell
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the products door to door. These members of distribution channels are provided with proper training facilities to teach the customers about the specific benefit of their products.
6.3
Constantly Learning and Adjusting
Learning social business is an iterative process and thus requires uninterrupted monitoring and revision to ensure a genuine outcome. Villis et al. (2013) suggested two ways to move into a social business. First is a “learn-by-doing” tactic with a very new conception and small-scale mock-ups to secure the first-mover advantage. Second approach is recommended to curtail the threat of failure in case of risky investments. Such projects require prior planning, aggressive market research, and product and market trial to justify its social and business significance.
6.4
Building Well-Organized and Sustainable Procedures
The dual role, social businesses are entitled to play, can be obtained only through efficient and viable business practices. To sustain in the long run, social businesses are often found to be in partnership with prominent multinational corporations. Such partnership offers reciprocal benefits to both of the parties. They can put their resources, competencies, experiences, and marketing knowledge together to maximize the social as well as financial returns. As noted earlier, Grameen Veolia, Grameen Danone, BASF Grameen, Grameen Uniqlo, and Grameen Intel are some of the joint ventures operating in various sectors of Bangladesh. In most cases, the foreign counterparts provide financial and technological supports, and Grameen group contributes in getting market access and local knowledge. However, finding a congenial and suitable partner and maintaining a long-term, strong, and mutual partnership are not an easy job and can be a potential source of conflict. Human resources for the production process and distribution channel are also locally hired in order to combat local unemployment crisis and to involve the local workforce into the economic mainstream. Social business organizations, as it is pointed out in the principles of social business, must arrange for a “better-thanstandard” compensation package for their employees in order to prevent employee turnover. Grameen Shakti, for instance, experiences a high rate of (approximately 25%) annual attrition of its field-level workforce. Yet, lack of education at the root level and shortage of employees enriched with both social and business skills sometimes complicate this issue.
6.5
Assessing and Supervising Impact
Success of a social business venture entails a right balance between guaranteeing actual social benefit and, at the same time, being self-sustainable, i.e., being independent of the financial patronage of the counterpart. However, measurement of
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impact is an obscure concept (Baker 2011); thus, assessing non-monetary consequences is even more problematic. Villis et al. (2013) advocated to evaluate the social impact on the basis of two extents: “the impact on each beneficiary and the number of targeted beneficiaries reached” (p. 19). Evaluating the tangible impact of such product, for example, “Shokti Doi” of Grameen Danone, seems really challenging; therefore, computing the number of actual beneficiaries reached can be helpful. However, there is no alternative of scaling up, replication, and portfolio expansion to enhance the reach of social business to the targeted beneficiaries, thereby boosting the social impact as well as financial return. However, replication and scaling up this model across the world appear to be a challenging job. Different nature and scale of social problems, visibility of estimated impact, legislative and cultural obstacles, and competition with mainstream businesses critically hold back the growth of development of social business model (Ballesteros-Sola 2014).
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Social Business Across the World
No doubt, social business is flourishing around the world but at a slow pace. A number of business corporations are showing interest to solve social problems in collaboration with Yunus Social Business (YSB). However, some authors (e.g., Grieve 2011) tend to demonstrate social enterprises as social business. Here are some global examples of social business that follow the seven principles of social business envisaged by Dr. Yunus.
7.1
Campo Vivo (Colombia)
Campo Vivo is the first social business joint venture between McCain Foods and Yunus Social Business (YSB) created with a view to overcoming rural poverty of Colombia. It aims to provide sustainable solutions to such problems as low yields, financial constraints, limited or almost no access to improved farming technologies, and lack of technical support and bargaining power. Campo Vivo provides financial and technological supports to the rural farmers, helps to improve their skill, and ensures them get a fair price for their products, thereby enhancing the standard of living of the rural communities including those who work in the entire supply chain of agro-product. This initiative of Campo Vivo and YSB helps individual families and rural communities get out of socioeconomic vulnerability (“Yunus Social Business,” n.d.).
7.2
Hope Development Initiative (Uganda)
Hope Development Initiative (HDI) is a social business venture operating in northern Uganda targeting farming-related constraints like dependence on outdated farming methods, need for quality agro-materials including seeds and fertilizer, and lack
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of access to extension and marketing facilities with a very specific focus on empowering women of that region who are devoid of the right to own lands. HDI introduces the cultivation of rice there and ensures the supply of all necessary assistance along with an assured market to thousands of female farmers of Amolatar District. The company also rents tractors and harvesting machineries to other farmers at a lower charge. However, the company has already started to export rice to South Sudan and Kenya. HDI helps the female farmers own lands with their income, thereby achieving emancipation (“Yunus Social Business,” n.d.).
7.3
Instituto Muda (Brazil)
With the conviction that “garbage” can necessarily be raw materials to other products, Instituto Muda and YSB formed a venture in 2017 in order to offer sustainable solution to the social problem of waste management in the city of Sao Paolo, Brazil. This organization attempts to train up the dwellers and employees of more than 150 residential apartments of the city about waste management and installs eco-friendly containers to collect the garbage. Instituto Muda collects the recyclable wastes every week and donates those to rural cooperatives made up of financially vulnerable fragment of the society. These cooperatives generate earnings by selling the waste to private sector manufacturers. Muda, on the other hand, earns revenue from the service of garbage collection and the production and sales of environment-friendly containers. Its services have been expanded from residential apartments to commercial buildings, and it has been able to dispose more than 100 tons of recyclable waste to the cooperatives every month (“Yunus Social Business,” n.d.).
7.4
NextGen (Tunisia)
This social business enterprise undertakes to deliver therapeutic support to disordered or disabled children of Tunisia and educate them with a view to assisting them to lead a normal and independent life and ensuring their participation in the socioeconomic mainstream. Children with developmental disorder of remote rural regions who have limited or no access to therapeutic support are the target beneficiaries of this organization. To fulfill its objective, NextGen has developed an app accessible from Android mobile or tablets and computers to make modern therapeutic support available to those children. It also sells scholastic apps and software in order to generate revenue (“Yunus Social Business,” n.d.).
7.5
Cashpor (India)
Cashpor is a microfinance organization built upon Grameen Bank model of Bangladesh. Like the case of Grameen Bank, Cashpor arises as a social business in response
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to the fact that millions of BOP people in India lack access to affordable credit facilities, and informal personal lenders confine them to perpetual enslavement in the name of financial assistance. Following the microfinance model of Dr. Yunus, Cashpor provides formal loans to rustic women in order to finance small enterprises run by them and helps them get out of poverty cycle. Cashpor is operating its activities in the poorest areas of 15 districts of the provinces of Uttar Pradesh, Madhya Pradesh, Bihar, Jharkhand, and Chhattisgarh. Beside credit, it provides its clients with health and sanitation services and primary education (“Yunus Social Business,” n.d.).
7.6
Rizona (Kosovo)
Rizona, as a social business, has targeted the issue of adverse trade balance of Kosovo as well as mitigating poverty and unemployment. It is a purely exportoriented business that aims to minimize trade deficit of the country. It collects vegetables from the rural growers at a fair price and processes and conserves those for exporting. Rizona exports processed vegetables mainly to countries of European Union. The project is in its infancy stage and yet to show its efficacy (“Yunus Social Business,” n.d.).
7.7
Green Bio Energy (Uganda)
Using logs and charcoal as cooking fuel causes deforestation and air pollution with its toxic fumes. With the help of its eco-friendly briquettes, Green Bio Energy attempts to tackle these two environmental concerns of Uganda. It produces briquettes from recycled biomaterials which ensure a minimum rate of carbon emission, thereby minimizing air pollution (“Yunus Social Business,” n.d.).
7.8
St. George Organic Herb Farm (Albania)
St. George Organic Herb Farm launched its operation with a view to preserving herbal and medicinal plants from careless harvesting in Albania. The farm grows herbal plants with the help of local farmers in its own seedling nursery in order to supply high-quality ingredients to the native and overseas traders of herbal products. It benefits the planters with higher income (“Yunus Social Business,” n.d.).
7.9
Human Harbor Inc. (Japan)
A good number of social business organizations are also found in developed countries like Japan, Germany, England, France, etc. People in Japan, who have previous criminal records, are usually unwelcomed to reenter the society once they
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are back from their imprisonment. They face great hardship regarding their lodging, education, and livelihood to lead a normal life which, in turn, leads them to repeat such offence. With the believe that these people, if utilized properly, also have talents and ambitions to restart their lives and serve the community, Human Harbor Inc. offers a wide-ranging rehabilitation program to help them overcome their stumbling blocks through engaging them in sustainable industrial recycling business. Human Harbor Inc. also conducts a “10% campaign” to invite other industrial recycling businesses to outsource at least 10% of their business to Human Harbor and, thereby, contribute to this social concern (SBRC n.d.).
7.10
Ashoka (Germany)
Founded by Bill Drayton in 1980 as a no-for-profit, Ashoka is a leading organization aimed primarily at supporting and promoting social entrepreneurs all over the world with its main focus on developing countries. Ashoka has been operating in various sectors of Germany since 2003 through a network of nearly 75 German fellows. They are concerned with a diverse assortment of social issues including skill development of children, preservation of farmland, and transparency-related issues. Besides, they are conducting a program “Program Engagement with Perspective” (PEP) to back up sustainable and auspicious ventures of young social entrepreneurs (Ryland 2018). These examples justify that social business is not meant to be operated in developing or poor countries only. Social business idea can be applied in all economies including developed ones.
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Opportunities and Strengths of Social Business
The greatest of all strengths of social business is its independence of continuous inflow of capital or fund. Once the business attains profitability, it is free of the inflow of investors’ capital as the profit then is supposed to be reinvested in the business for the purpose of expansion and quality improvement as envisaged by Dr. Yunus. Such financial viability (when achieved) relieves the effort of the executives for fundraising. This feature makes social business a stronger player relative to other relevant actors like social enterprises, philanthropy, and development aids. Again, the fact that social business does not distribute profit among its investors allows such business to offer their products at a lower price than profit-maximizing firms. This enables the social business to penetrate underserved markets where traditional profitmaximizing businesses (PMBs) do not suit or show interest or are even operating inefficiently, or in some cases, are not accessible to them (Grieve 2011). Unlike CSR or other forms of philanthropy which are usually project-oriented or time-based approaches to social problems, social business is a long-term problemoriented approach built upon market dynamics that ensures the demand of its offerings among target beneficiaries. It enhances the choice of products of the
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BOP consumers and helps them justify the quality of competitive ones and get them at an affordable price. Type II social business intends to offer greater income potential to BOP people through its ownership structure as only in this case owners are the claimants of profit earned, provided that they belong to the low-income segment of the society (Kleemann and Humberg 2014). By its very nature, Type I social business refrains its foreign counterparts from taking away profits beyond their initial investment, thereby encouraging capital accumulation which leads to further investments in the relative sectors. Such investments act as a circular process and help reduce the reliance on external capital. The idea of social business appears to best fit in “niche” markets that traditional PMBs feel unwilling to enter or that seem to be unprofitable or risky. A win-win situation between the business and its beneficiaries can be ensured by tapping these markets (Kleemann and Humberg 2014).
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Drawbacks and Challenges of Social Business
However, the idea of social business is not without flaws. Social business is claimed to be a financially independent entity (Yunus 2008, 2010); in reality, it is not. A social business is hooked on investors or development aids in the form of investment or debt for its initial funding. Kleemann and Humberg (2014) identified three major sources of social business funds: development aids, banks, and private equity investors in addition to personal or private funds. Peron (2011) expressed his doubt about the effectiveness of most of the potential sources of funds. Development grants are more likely to serve the motto of social welfare in a philanthropic and/or non-business way, and, of course, the erratic nature of such funds does not prove it to be a suitable source of social business funding. Financial institutions including banks are suspected to be reluctant to finance such high-risk projects where neither of the parties is certain about how long would it take to pay back the debt. Even if they are willing, the interest rate goes pretty high as the perceived risk is difficult to estimate (Kleemann and Humberg 2014). There is potential controversy about private investors as well. Peron (2011) expressed his suspicion about how willing would the private investors be to sacrifice the entire fraction of profit to a social mission; only a very few are “committed to making a difference to the world.” Besides financial issues, social business in developing countries confronts some other crucial challenges regarding distribution channels, product innovation, and partnership management in cases of joint ventures (Sabatier et al. 2017). Social business is dedicated to solve social problems by means of its products and services which require continuous research and upgradation of its products. These functions are subject to huge R&D cost. For instance, Grameen Shakti intends to supply solar home system in order to meet the demand of electricity of villagers and modern cooking stoves to combat air pollution. Both of the products are regarded as costly in terms of innovation and maintenance.
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Social business, in most cases, takes the form of joint ventures with giant MNs for financial and managerial assistance and technical know-how. Such MNs may take these initiatives as the test project to enter into a market in developing countries. Defining a dual value proposition and fitting social objectives, environmental concern, and financial sustainability altogether appear to be another major challenge confronted by social business (Kleemann and Humberg 2014; Sabatier et al. 2017). Social business aims to offer products and services to the BOP consumers at an affordable price. This, in turn, might affect the profitability, consequently, and financial sustainability adversely. Moreover, change in consumers’ taste and preferences may threaten profitability in the long run if they are not properly communicated, and consumers are not aware of the long-term benefits of the offerings. According to Grameen Danone, Shokti Doi is capable of meeting 30% of nutrition demands of a child if consumed for at least 6 months on a regular basis. However, the impact might not be visible or can take even longer time. Sesan et al. (2013) suspected that this challenge can lead to an alteration of their target audience. Grieve (2011) questioned the “reach” of social business in addressing social problems while incurring no loss and being independent of grants and subsidies. Funds might potentially limit its access to such areas where government agencies and philanthropic organizations are already serving. The number of replicable social businesses that are operating actively appears to be limited. In Bangladesh, only Grameen and its affiliates are found to run such initiatives (Sultana and Rahman 2019). Growth and development of social business practice across the world seem to be slow and unsatisfactory. Nevertheless, finding a congenial partner to scale up social business joint ventures and distributing contribution among them are also a challenging job (Sabatier et al. 2017). Assessment of social impact is a complex job until there is a universal standard (Kleemann and Humberg 2014; Sultana and Rahman 2019). However, segregating the role of social business is even arduous, provided that government agencies, NGOs, charities, CSR initiatives, and other forms of social enterprises are in operation with the identical motto.
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Social Business and Sustainable Development
The idea of social business got formally off the ground in 2006. In 2008 it was revealed theoretically as a proposition of business model aimed at eradicating poverty in a productive way (Sultana et al. 2019). Since then social business started getting popular and has become the fast-growing economic and social trend of the present world (Yunus 2010). Like the CSR activities of traditional profit-maximizing company, social business also intends to bring the business and society together but with broader and more specific objectives like poverty elimination, combating hunger, creating employment, or fixing any other social problem (Hossain et al. 2017) rather than doing no harm to the society or doing good for the society without sacrificing its profit (Yunus 2008). Social business is free from the pressure of offering dividend or profit to the owners. As a result, profit tends to be reinvented
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and recycled within the organization and enhances the opportunity to create job or to add value in the form of better service, lower price, or a combination of those (Yunus 2011). As soon as this business reaches its breakeven, it earns unlimited growth potential by means of reinvesting the profit over and over again, thus tending to maximize social benefits as well (Yunus 2008). Such characteristics lead this business to achieve its own sustainability and ensure sustainable development for the society it operates in (Sultana et al. 2019). Aydin (2015) attempted to examine the effectiveness of social business for sustainable development in the context of Islamic economies and concluded with the suggestion to embrace this concept in order to secure sustainable development of Islamic countries. Effectiveness of the concept of social business in some selective areas of sustainable development goals (SDGs) such as poverty alleviation, zero hunger, creating employment, ensuring good health and well-being, gender equality, providing quality education, women empowerment, and clean water and sanitation has been tested and found feasible (Sultana and Rahman 2019). However, fitting social goals, which remains at the core of such business, with financial and environmental aspects appears to be one of the crucial challenges to act as the change agent. Yunus (2017) claimed social business as the solution of three grave problems of present world: poverty, unemployment, and excessive carbon emission by means of “universal entrepreneurship.” He cited various examples of successful social business ventures currently operating around the world and expressed his firm belief of a radical revision of the current economic system to guarantee sustainable development. However, it is too early to assess the efficacy of the concept as it is passing through the development stage, and quantification of its role in sustainable development is a challenging job (Muktadir-Al-Mukit et al. 2016; Sultana and Rahman 2019; Sultana et al. 2019).
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Conclusion
Social business, as a hybrid business model, is both market- and mission-oriented (Boyd et al. 2009) and acting to bridge the gap between commercial and social sectors. It has succeeded to secure a distinctive place over the other alike entities and players of the marketplace. Non-profits and NGOs are also showing their interest in adopting social business concepts to shrink their burden of donor dependence and to increase operating efficiency and sustainability. Yet, social business is not meant to alter capitalism; instead, it tends to offer “enlightened capitalism” to cure the flaws of the free market system. It seems apparent that the concept of social business and sustainable development is closely intertwined and the functions of social business encompass the agenda of social and environmental sustainability. However, as a relatively new mechanism, social business suffers from several limitations. Replication and scaling up successful ventures are required for this concept to advance magnificently. Undoubtedly, social business has been getting momentum within a very short time from its inauguration. It has already been able to attract the attention of large multinational corporations and practitioners all over the world. Yet, it is too early to
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predict the future of social business. However, it can be strongly argued that social business will dominate the twenty-first century’s business arena as one of the most powerful tools of achieving sustainable development.
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Summary
A significant number of business concepts emerged in response to the growing concern of sustainable development and the shortfall of government and charitable endeavors to accomplish sustainable development. Hybrid business model that combines business principles and social mission together to combat social and economic problems is getting popularity in this regard. Social business is one of the latest hybrid business models and has been evolving gradually as an academic and practical field of business since Noble Laureate Dr. Muhammad Yunus coined the term in 2006. It is a “non-loss, non-dividend” company with the core objective of addressing intense social problems by applying business method. However, unlike a conventional business, social business does not offer financial return on shareholders’ investment. Profit stays within the company and is further invested for the purpose of business expansion or augmentation of social impact. In contrast to nonprofits, social business does not depend on continuous inflow of donation or subsidies. This concept is positioned in the middle of the spectrum of two extremes, a profit-maximizing business and a not-for-profit organization, as it has taken some of its concepts from the traditional PMB and some from the latter. A successful social business model comprises five consecutive steps: targeting the right focus area to serve, developing a suitable model, constant learning and adjustments, building well-organized and sustainable procedures, and assessing and supervising impact. The concept of social business has emerged with a view to fixing two major flaws of capitalism: misinterpretation of entrepreneurs as one-dimensional and merely profit-oriented rational being that completely denies the selfless feature of human beings and free market capitalism has always ignored the poor, both as customers and as entrepreneurs. With the motivation of doing good to the society, social business offers some comparative advantages over the non-profits and other business concepts. Social business concept, by its very nature, seems more suitable in “niche market” where conventional businesses are unwilling to penetrate. It also offers great income potential to the poorest segment of the society while serving their needs at an affordable price. In theory, social business is thought of as a panacea to almost all social problems including poverty, unemployment, malnutrition, health issues and the like, thus can be most fruitful way of accomplishing sustainable development. Nevertheless, social business, being in its infancy stage, confronts several challenges regarding funding, distribution channels, product innovation, partnership management, and defining dual value proposition. Assessment of social impact remains another major challenge of this kind of business. However, replication and scaling up more and more successful ventures are required for this concept to advance further.
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Modern Slavery Disclosures in a Voluntary Regime A Political Cost Perspective Susi Sarumpaet and Hasan Fauzi
Contents 1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Firm’s Incentives to Disclose Modern Slavery Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1 Economic Perspective of Modern Slavery Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2 The Political Costs of Modern Slavery Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3 Firm Size as Proxy for Political Cost in Modern Slavery Issues . . . . . . . . . . . . . . . . . . . . 2.4 Industry Type and Modern Slavery Disclosures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Research Design . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1 Data Sources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.2 Predictor Variables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.3 Content Analysis and Modern Slavery Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.4 Software for Content Analysis of the Modern Slavery Disclosure Index . . . . . . . . . . . 4 Results and Discussion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1 Correlations Among Variables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.2 Regression Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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Abstract
This paper asserts that firms vulnerable to modern slavery issues will avoid political costs and disclose more information about their commitments and systems against modern slavery. The rising global awareness of the issue and the enactment of modern slavery acts in some developed nations give incentives to potentially affected Indonesian listed firms to use voluntary disclosures as a lobbying strategy to prevent or delay such potential legislation in their S. Sarumpaet University of Lampung, Lampung, Indonesia e-mail: [email protected] H. Fauzi (*) Faculty of Economics and Business, Sebelas Maret University, Surakarta, Indonesia e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Switzerland AG 2021 D. Crowther, S. Seifi (eds.), The Palgrave Handbook of Corporate Social Responsibility, https://doi.org/10.1007/978-3-030-42465-7_81
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jurisdiction. A content analysis was carried out on the annual reports of 169 Indonesian listed firms published in 2018 to measure the level of modern slavery disclosure. The results were regressed using ordinary least squares regression on the proxies for firms’ political vulnerability, namely, firm size and industry sector. Agriculture and construction sectors are considered the most sensitive to modern slavery practices, particularly in a developing economy, due to their employment characteristics, i.e., low educational attainment, easily replaceable, seasonal, and reliance on low-skilled workers. The result supports the notion of political cost hypothesis: firms that are large and belong to sensitive industries disclose more information on anti-slavery programs or activities. This study also finds that consistent with the theories of voluntary disclosures and few empirical findings; in a voluntary disclosure regime, firms tend to reveal only favorable and narrative information; hence it is low in quantity and quality. Keywords
Modern slavery · Voluntary disclosures · Political cost · Annual reports · Content analysis · Developing country · Indonesia
1
Introduction
Modern slavery and human trafficking have become global issues in the last two decades. According to the Global Slavery Index (GSI) report in 2016, 40 million people were victims of modern slavery, including 25 million in forced labor. GSI also reported that, in business sectors, the highest level of modern slavery practices occurred in the constructions, followed by manufacturing, fishing, and agriculture. In the manufacturing sector, garment and footwear dominated the number of enslaved workers (Table 1). Responding to such trends, many organizations and governments undertake a large variety of projects to combat trafficking and slavery. Billions of dollars have been allocated to these efforts. Between fiscal years 2001 and 2010, the US government spent more than $1.45 billion on domestic and international anti-trafficking programs, and the funds allocated for FY2019–FY2021 totals $430 million. Table 1 Global modern slavery by industry sectors
Industry sectors Domestic work Constructions Manufacturing Fishing and agriculture Accommodation and food service activities Wholesale and trade Others Source: GSI report (2016)
% of identified slavery 24 18 15 11 10 9 13
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Expenditures by other governments and by international organizations have been substantial as well (Weitzer 2020). Governments around the globe have been introducing legislative measures imposing reporting requirements on corporations to address a range of human rights abuses, including modern slavery. Under the laws, companies have to report on modern slavery risks in their operations and supply chains and the action they have taken to tackle these. The emergence of modern slavery legislation in California, the UK, France, and Australia is giving the business and human rights area an increasing hard law dimension, which affects businesses across the board, primarily if their operations or supply chains encompass developing countries. Canada may be next to regulate modern slavery in global supply chains and follow a global trend in legislative measures to eliminate modern slavery in response to the 2012 UN Guiding Principles on Business and Human Rights (Johnston and Wray 2019). Comparable laws have been introduced across the European Union and in some states and sectors in the USA. Denmark has laws requiring corporate social responsibility reporting, and in Brazil, there is a “dirty list” enabling public shaming of businesses using forced labor. As business reporting on human rights is growing, several jurisdictions will also introduce reporting or due diligence requirements in the coming years. These modern slavery laws introduce social disclosure regimes requiring large businesses to report publicly on the actions they are taking to address modern slavery in their operations and supply chains. The intent behind such legislation is to facilitate public scrutiny of company statements on modern slavery by civil society, investors, and consumers. Interested parties can access a company’s public statement and assess the extent to which a business addresses the risk of modern slavery in its operations or those of its suppliers. The availability of this public information aims to facilitate sharing best practices and further engagement with those companies identified as lagging in their efforts, either because they fail to report or because they produce low-quality or noncompliant statements. In short, such legislation aims to spur companies into action through the power of public scrutiny, coupled with the fear of reputational damage. It is designed to create “a level playing field” for businesses and drive a “race to the top” in terms of respecting human rights. Some criticisms on the legislations have been voiced out by business and accounting scholars. For instance, Nolan and Bott (2018) were skeptical whether such disclosure requirements could link transparency with accountability and generate substantive (not just procedural) compliance with human rights standards. However, indicators suggest that modern slavery legislation is having an impact, at least in raising awareness of the issue, with the engagement of chief executive officers reportedly doubling in the UK since the act was put in place (Sinclair 2020). Although he was also uncertain whether existing modern slavery disclosure laws will achieve improved conditions for workers at the production end of global supply, but he proposed that mandatory due diligence would probably have a greater impact. As seen in Table 2, in Indonesia, there are 736,000 people trapped in slavery or 0.29% of the Indonesian population. As such, Indonesia ranks tenth in terms of countries with the largest absolute number of modern slaves. Indonesia has enacted a
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Table 2 Top ten global slavery index 2016 Country 1. India 2. China 3. Pakistan 4. Bangladesh 5. Uzbekistan 6. North Korea 7. Russia 8. Nigeria 9. Democratic Rep. of Congo 10. Indonesia
Est. number of modern slaves 18,354,700 3,388,400 2,134,900 1,531,300 1,236,600 1,110,000 1,048,500 875,500 873,100 736,100
Est. % of population in modern slavery 1.40 0.25 1.13 0.95 3.97 4.37 0.73 0.48 1.13 0.29
Population size 1,311,051,000 1,371,738,000 188,925,000 160,996,000 31,125,000 25,155,000 143,335,000 182,202,000 4,620,000 257,564,000
Source: Global Slavery Index 2016
couple of laws on the modern slavery issue, such as (1) Act number 39, the year 1999 on Human Rights; (2) Act Number 13, the Year 2003 on Manpower; and (3) Act no 21, the year 2007 on Eradication of the Criminal Act of the Trafficking in persons. Indonesia has also ratified The International Conventions 1926. However, it has not yet ratified the Slavery Convention and the Supplementary Slavery Convention. Furthermore, the government efforts to counter modern slavery practices seem to focus on individuals working overseas as domestic helpers and ship crews. One instance was the Indonesian Foreign Minister’s statement on the treatment by a Chinese fishing company toward Indonesian crews, which was considered a violation of human rights in 2020 (Yasmin 2020). Since it is one of the most prevalent nations with modern slavery, such disclosure requirements might be a prominent tool to be implemented in Indonesia to combat the issue faced by Indonesian businesses. Even though at present modern slavery disclosures are still voluntary, but large firms and those being exposed to mass media might expect the forthcoming regulations of such mandatory social disclosures following the global trends. Similar to the figures shown in Table 1, forced labor in agriculture (e.g., in the palm oil and tobacco sectors) and construction sectors is among the most prevalent forms of modern slavery in Indonesia. Indonesian listed firms are at risk of being exposed to global human rights abuses, such as forced labor and human trafficking. Local and international organizations might scrutinize the companies’ operations and reports, especially those in the industry where modern slavery has been indicated. More importantly, international investors in the share markets might be affected too. Anticipating these pressures and forthcoming regulations, Indonesian listed firms will need to have a strategy to avoid the associated costs. This paper asserts that firms vulnerable to modern slavery issues will avoid political costs and disclose more information about their programs and activities against modern slavery. Using the framework of political cost hypothesis (Watts and Zimmerman 1978), we argue that large firms and those belong to sensitive industries will use voluntary disclosures to avoid political costs. In the period of increased
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global attention on human trafficking and forced labor issues, these high-profile firms will disclose more information about anti-modern slavery programs and activities to avoid the risk of being imposed on the potential legislation. Previous empirical studies on modern slavery disclosures use legitimacy theory (Parsa et al. 2018), institutional theory (Christ et al. 2019; Flynn 2020), and transparency legislation theory (Voss et al. 2019) to explain corporate responses to the issue using information disclosures in annual reports. In general, the findings are consistent with Flynn (2020) finding that firms in FTSE 100 and higher-risk industries have been more proactive in making these changes and complying with modern slavery mandatory reporting requirements. Prior studies using UK firms find that the most sensitive industry sectors are manufacturing and accommodation (Flynn 2020b) and clothing and garment (Stevenson and Cole 2018; Voss et al. 2019). In the Australian setting, Christ et al. (2019) reported that many companies disclosing are in the banking and finance, mining, and retailing industries. These companies often use offshore outsourcing strategies and hire human resources from developing countries in the form of external service centers and for back-office transactions (Brudenall 2005). These studies found that firms from these corresponding sectors reported more information in their modern slavery statements mandated by the modern slavery act. However, in a developing economy that relies on natural resources and residential and business development, such as Indonesia, agriculture, fishing, and construction sectors are considered the most sensitive due to employment characteristics, such as labor-intensive, low-skilled, and seasonal. In this study, we include fishing companies in the agriculture sectors. ILO estimates point to the prevalence of forced labor in industries such as construction, manufacturing, agriculture, accommodation, and retail/wholesale (ILO 2017). Therefore, this study analyzes the annual reports of Indonesian listed firms and find out whether they contained information on forced labor, human trafficking, and other human rights issues that have become the major issues in the modern slavery. This paper contributes to the existing literature by improving our understanding of how firm size and certain industry sectors in a developing country responded to modern slavery by disclosing more voluntary information on the issue. It also provides empirical evidence on how voluntary disclosure is used as a tool by managers to avoid political costs associated with potential reporting regulations in the human rights issue. The finding of this study offers some implications for policymakers. First, the different levels of modern slavery disclosure by firms in different sizes and industry sectors might help authorities in risk-profiling strategies and setting up appropriate policies. Second, the low level of quantity and quality of modern slavery disclosure in a voluntary regime indicates companies’ low transparency in reporting risks and actions to tackle modern slavery within the organizations or their supply chains. Governments of similar circumstances might use this finding in considering adopting mandatory reporting requirements to improve transparency and accountability. Along with similar findings of studies from other countries, this study may also support the need to establish a global standard of mandatory modern slavery disclosures.
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Firm’s Incentives to Disclose Modern Slavery Information
Previous studies on the motives for modern slavery disclosures are very limited to the best of our knowledge and come from developed counties. Modern Slavery Act enacted in 2015 in the UK and in 2018 in Australia requires firms in the jurisdictions to file a modern slavery statement. These prior studies use the institutional lens to discover the motives for corporate modern slavery disclosures. For instance, Christ et al. (2019) use institutional theory as a general classificatory scheme from which to discuss how, given the results in a noncoercive institutional environment, they might best be advanced in the Australian context. Combining institutional theory with legitimacy theory, Flynn (2020b) asserts that the transparency in supply chain provision represents an institutional pressure on firms to combat modern slavery. Firms respond to such institutional pressure by adjusting their policies and practices according to the expectations of institutional stakeholders and maintaining social legitimacy. Modern slavery disclosure in Indonesia is still voluntary. Despite the Financial Service Authority’s corporate governance disclosure items recommended for listed companies (OJK 2015), there are no sanctions or penalties imposed on those noncompliant. Therefore, this literature review focuses on the conceptual framework of prior studies in similar topics, such as social responsibility and environmental disclosures in a voluntary regime. In addition to institutional theory, previous studies on the social responsibilityrelated topics approach the issue of voluntary disclosures incentives using two different perspectives – social or economic motives. The social perspectives rest mainly with legitimacy theory (Birkey et al. 2018; Burmester 2019; Parsa et al. 2018; Guthrie and Parker 1989; Patten 1992), stakeholder theory, (Benlemlih et al. 2018; (Clarkson 1995; Mitchell et al. 1997; Roberts 1992), social contract theory ((Muttakin et al. 2018, Shocker 1973), and accountability theory (Parsa et al. 2018; Gray 1992; Gray and Owen 1988). The economic perspective of voluntary disclosures in environmental and social issues, for example, has two main branches – proprietary cost theory (Li et al. 2017; Nahar et al. 2020; (Yue et al. 1997) and political cost theory (Enache and Hussainey 2020; Patten and Trompeter 2003; Walden 1993). Social theories that have emerged in the past two decades are generally rooted in the concept of a social contract (e.g., Shocker 1973) between a social institution (including a business) and its society. This implies that corporations have an unwritten social obligation to act according to society’s expectations (O’Donovan 2002). An ethical or normative approach seems inevitable from a social perspective. In the voluntary social disclosure context, this means that firms are obliged to undertake initiatives as part of their corporate social responsibility (Deegan 2000; O’Dwyer 2002). Legitimacy theory and the managerial perspective of stakeholder theory also take a positive approach. They recognize how corporations undertake different strategies to manage the influence of different stakeholders and prioritize more powerful stakeholders. Social theories view voluntary disclosure as a communication tool. This tool is used by corporations to convey their accountability and social responsibility and to
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maintain the legitimacy of operations that affect the environment and society. The following sections outline the approaches to voluntary corporate disclosures from the social perspective – namely, stakeholder theory, accountability theory, and legitimacy theory. Stakeholder theory focuses on the argument that corporations practicing stakeholder management will be relatively successful in conventional performance terms (e.g., profitability, stability, and growth) (Donaldson and Preston 1995). Mitchell (1994) describes stakeholder theory as an attempt to identify which groups are stakeholders deserving or requiring attention and which are not. Their influence in the corporation’s survival is highly recognized in social theories that seek to explain why corporations undertake corporate sustainability initiatives. Stakeholders include customers, suppliers, employees, shareholders, competitors, regulators, community, and other elements of society. By identifying each stakeholder group and its interests, management can respond to the issues that might affect its existence (Clarkson 1995). Stakeholder theory can be broken down into two branches – the positive/managerial branch and the ethical/normative branch. The positive branch posits that organizations will respond to stakeholders asymmetrically, favoring the powerful or those who can have significant impact upon the organization (O’Dwyer 2002). From a managerial perspective, the focus of stakeholder theory is to gain approval for corporate decisions by groups whose support is required for the firm to achieve its objectives (Tricker 1983). On the other hand, the ethical branch explains argues that “all stakeholders have the right to be treated fairly by an organization and that issues of stakeholder power are not directly relevant” (Deegan 2000). It can be said that the managerial perspective focuses on the identification of important stakeholders and the assessment of such importance in attempts to achieve corporate objectives. The positive branch is similar to the economic perspective of voluntary disclosure in that corporate decisions are based on the interests of the parties with the greatest influence or power. Meanwhile, the ethical branch is opposed to the assumptions of self-interest used in the economic perspective and views the issue normatively. However, both elements of stakeholder theory recognize the potential influence of stakeholders on a company’s prospects. Accountability theory is based on the relationship between principals and agents. In this sense, this theory is similar to agency theory, which is also part of the economic perspective of voluntary disclosure. However, while the underlying principle of agency theory is the self-interest of the agents and principals, accountability theory focuses on the responsibility of the party given the account (i.e., the agent) to undertake actions to the other party giving such account (i.e., the principal). Accountability theory does not consider the self-interest of the parties involved. Similar to the ethical branch of stakeholder theory, the framework of accountability theory indicates the use of an ethical approach. For example, the theory assumes that the agent must act in a manner which the principal approves (or at least does not disapprove) and must report how such action was undertaken (O’Donovan 2002). In the sustainability disclosure context that corporations provide, information to stakeholders involves some sort of obligation of the agent (i.e., the company) to the principal (i.e., society). This theory does not consider the influence of
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shareholders, to whom management might perceive greater accountability. This might be justified by treating management and shareholders as either a single party (which may be appropriate if there is a majority shareholder) or as two different parties with congruent objectives. Stakeholder influence is also acknowledged in legitimacy theory. According to this theory, a legitimacy gap is created when there is a conflict between a firm’s economic pursuits and the norms, values, beliefs, and definitions held by the surrounding society (Suchman 1995). When such a gap is seen or noticed by society, a firm becomes politically visible. Bowen (2000) argues that organizations are visible when they can be easily seen by relevant constituents and must respond to constituent demands and perceptions to maintain their social legitimacy (Goodstein 1994; Oliver 1991). However, because society’s perceptions are involved in assessing norms, values, and beliefs, legitimacy theory also suggests that management can influence stakeholders’ perceptions by adopting different strategies. Lindblom (1994) classifies these strategies into four categories: Educating stakeholders about the company’s intentions Changing stakeholder perceptions of issues/events Distracting or manipulating attention away from the issue/event of concern Changing external expectations about the company’s performance He also argues that communication is a key factor for a company to be able to carry out any of these strategies for the stakeholders. Modern slavery reporting is one means of communication that enables companies to maintain the congruence between firm intentions and societal perceptions on human rights-related issues and, thus, reduce their sensitivity to the issue. This argument’s ethical perspective is apparent, particularly at point (1) where a company is assumed to have intentions or motives. This is also consistent with the accountability framework (Gray and Owen 1988) that promotes the moral responsibility of companies to make corporate social disclosures to all stakeholders beyond the minimum requirements legally mandated, such as voluntary anti-slavery initiatives and disclosures. However, legitimacy theory also suggests that in an attempt to reach congruence between the company’s objectives and societal perceptions, a company can either substantially or symbolically comply with these societal demands (Savage et al. 2000). Substantial compliance means conducting a substantive activity that involves a real, material change to organizational goals, structures, and processes or socially institutionalized practices. Symbolic compliance means carrying out a symbolic activity that does not involve real changes but attempts to portray corporate activities as compatible with societal norms and values. The former means that the company would improve its actual performance and communicate the results to stakeholders, whereas the latter is similar to the legitimation strategies suggested by Lindblom (1994). In essence, the social perspective of modern slavery disclosure explains firm strategies to respond to societal demands and, hence, reduce their sensitivity.
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Economic Perspective of Modern Slavery Disclosure
Most social responsibility disclosure studies that adopt the economic perspective employ the theories of (1) proprietary cost or (2) political cost. Both theories are similar to each other and underpinned by the same self-interest assumption of positive accounting theory. However, their emphases are somewhat different. The proprietary costs of voluntary disclosure include all types of costs associated with the dissemination of proprietary information, including those imposed by the competitors in a market entry game. Political cost theory focuses on the political components of the proprietary costs as the incentive for visible companies to disclose social responsibility-related information. Grossman (1981) and Milgrom (1981) posit that firms will disclose information about their “type” to distinguish themselves from poor performers. This view is based on the argument that information asymmetry between seller and buyers occurs in the market (Akerlof 1970). When credible signals are feasible, full disclosure is optimal (Dye 1985). However, discretionary disclosure is possible because of (1) proprietary costs or (2) outsiders’ uncertainty about whether firms have private information. It is argued that firms will provide additional information only when the benefits exceed the costs of generating it (Christie and Zimmerman 1994; Dye 1985; Verrecchia 2001). Uninformed observers cannot tell whether the information is withheld because it is (1) bad news or (2) good news but not good enough to warrant incurring the proprietary costs (Verrechia 1983). Verrecchia (2001) refers to it as potentially damaging and asserts that firms will withhold information to avoid proprietary costs. Information regarding firms’ commitment to protecting human rights and modern slavery can be proprietary if interested parties can impose costs on targeted companies based on such information. For instance, in the environmental disclosure context, Bewley and Li (2000) point out some possible costs imposed by stakeholders on environmental information. Government agencies could use such information as a pretext for investigations that would increase compliance costs. Moreover, disclosure of modern slavery can lead to costly litigation, affect the availability of debt and equity capital, benefit competitive green marketing strategies for consumers with the awareness of human rights, and provide ammunition for unions and protection of human rights to press strict laws or boycott company products. Uncertain financial consequences from endowing private information may prevent firms from disclosing full information regarding their modern slavery prevention systems. Yue et al. (1997) suggest at least three dimensions of uncertainty involved in such disclosures – legal, technical, and political. Changes in legislation drive legal uncertainties. Technical uncertainties exist because other firms or competitors may use modern slavery risks disclosure (e.g., disclosing the list of suppliers) by falsifying such information as being a threat of information leakage and reputational risk, instead of improving transparency (Stevenson and Cole 2018). Political uncertainties are those coming from changes in society’s demands, as noted by the social theories.
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The Political Costs of Modern Slavery Disclosure
As indicated above, the development of disclosure theories has been influenced by the advancement of other accounting theories, such as agency theory and positive accounting theory. In agency theory (Jensen and Meckling 1976), a firm is treated as a nexus of contract in which interested parties are trying to maximize their welfare. According to this assumption, it does not make sense to assume that a firm has a motive (e.g., to commit in human rights protection) such as that highlighted by the social perspective discussed earlier. The firm’s personalization contradicts the agency concept, which assumes that conflicting individual objectives (although some may be congruent) is brought into disclosure equilibrium. Using self-interest assumption, Watts and Zimmerman (1978) argue that certain groups in society, such as government and nongovernment organizations, trade unions, and consumer groups, act upon their own interests to maximize their utility. These groups of stakeholders will lobby the political sector to impose costs on corporations through wealth transfer devices, such as taxes, wage claims, product boycotts, and subsidies. It seems that the notion of proprietary costs is more comprehensive than political costs because proprietary costs include political costs and other costs (e.g., competition in a market entry game). However, most studies of the economic motives of environmental and social disclosure have used the notion of the political cost due to the difficulty of measuring the other types of proprietary costs. For instance, proprietary costs are found in a couple of studies (Li et al. 2017; Nahar et al. 2020; Yue et al. 1997; Cormier and Gordon Irene 2001; Filbeck and Gorman 2004), whereas the many studies have used political costs (Enache and Hussainey 2020; Patten and Trompeter 2003; Walden 1993; Cahan and Elmendorf 1997). Watts and Zimmerman (1978) suggest that the magnitude of political costs is highly dependent upon political visibility. Politically visible firms easily attract public attention and become the potential targets of interested parties. These firms need to address visibility issues in order to reduce public attention and its consequences. In order to do so, these firms may employ a variety of devices, such as a media campaign, government lobbying, and discretionary accounting practices to reduce reported earnings. Several studies provide evidence that visibility triggers public scrutiny, which leads to political costs and gives incentive for corporate responses to social, environmental, and political issues (e.g., Belkaoui 1989; Friske 1994; Gill-de-Albornoz et al. 2005). The following sections will discuss the firm’s size and industry sector as two proxies of political costs that give incentives for firms to voluntarily disclose information regarding their systems and initiatives to combat modern slavery and other forms of exploitation.
2.3
Firm Size as Proxy for Political Cost in Modern Slavery Issues
Watts and Zimmerman (1978) argue that certain groups in society, such as government and nongovernment organizations, trade unions, and consumer groups, act upon their interests to maximize their utility. These groups of stakeholders will lobby
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the political sector to impose costs on corporations through wealth transfer devices, such as taxes, wage claims, product boycotts, and subsidies. A firm sensitivity to such political costs can be defined by its characteristics that attract the attention of these stakeholders, such as firms’ size and its industry profile. For instance, in environmental issues, previous studies consider firms in certain industry sectors as the most environmentally sensitive and therefore are imposed on high political costs (Buhr 1998; Deegan and Gordon 1996; Patten 1992). Firm size is probably the most popular indicator of firm sensitivity. This is consistent with the notion of the size hypothesis (Watts and Zimmerman 1978), which posits that large firms are more vulnerable to political costs. However, size also represents a firm’s capacity to be engaged and report various programs and initiatives due to the availability of resources or organizational slack. In the voluntary disclosure literature, most studies confirm that corporate environmental disclosure is a function of firm size (e.g., Cho et al. 2012; Griffin and Sun 2013). The findings are consistent across time and place of studies. This notion is very relevant to the modern slavery issue. For example, only businesses with an annual turnover of more than £36 million and AU $100 million in the UK and Australia fall under the act. Large firms are more visible and, therefore, more prone to political scrutiny. Given the notion of size as a proxy for political cost derived from firm sensitivity of the modern slavery issue, this paper contends that size is a vital incentive for firms to disclose anti-modern slavery information. Therefore, it is hypothesized that H1: Corporate modern slavery disclosure is positively associated with a firm’s size.
2.4
Industry Type and Modern Slavery Disclosures
Industry type has also been used extensively in the literature as a proxy for political sensitivity or visibility (Mitra and Larry Crumbley 2003; Moratis and van Egmond 2018; Walden 1993). Watts and Zimmerman (1978) contend that, like size, industry type is a weak proxy for firm visibility because firms in the same industry usually have a similar size. In the modern slavery context, industry type should be able to proxy for political vulnerability better than size. This is because particular industries are inevitably associated with potential modern slavery practices. Likewise, modern slavery regulations, protests, and critics normally target firms in the industries sensitive to the issue. This indicates that these industry sectors receive more attention due to their sensitive relationship to modern slavery and other forms of exploitation. Firms in the agriculture and construction industry are perceived to have higher risks of slavery than those in the banking industry. This might not be the case in other issues. For example, concerning antitrust concerns, large firms are naturally more vulnerable to political scrutiny than small ones irrespective of the industry sector in which they operate. Furthermore, geographical and economic contexts might have a different impact on the sensitivity of the industry sectors to modern slavery. Robinson (2013) highlights instances of slavery in the hospitality sector within developed
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countries. Examples include individuals working as cleaners, cooks, kitchen hands, and even debt-bonded entertainers who were forced to perform at venues across the USA. In developing countries, the agricultural sector is more prominent at high risk for forms of labor exploitation. The ILO places agriculture alongside construction, forestry, and fishing as the sector with the fourth highest proportion of forced labor victims worldwide. The characteristics of employment within these sectors with workers easily replaceable and reliance on low-skilled seasonal labor make these sectors vulnerable to modern slavery. As mentioned earlier, larger firms are not necessarily more sensitive to modern slavery issues if they do not belong to a sensitive sector. Therefore, the sensitivity of a firm’s characteristics may be the key factor. A limited number of prior studies of modern slavery disclosure has focused on firms in sensitive industries, such as clothing and garments (Stevenson and Cole 2018; Voss et al. 2019). However, Flynn (2020) included all types of industry in a study on modern slavery statements by UK companies. Using 350 sample companies, he finds that, compared with finance and insurance, which serves as the reference category, manufacturing, construction, wholesale, and retail, accommodation and food, transport, and other industries besides are more likely to give effect to the reporting requirements of the UK Modern Slavery Act. In fact, other industries have a higher probability of compliant behavior than finance and insurance except for real estate, public administration, and mining. The sensitivity of firms in the agriculture and construction sector means that they are more vulnerable to the political pressures on the potential reporting standards or regulations in modern slavery. Consequently, there are more incentives for these firms when it comes to using voluntary disclosures to reduce the political cost associated with such pressures. This leads to the following hypothesis: H2: Firm in agriculture and construction sectors are more sensitive to modern slavery issues, and therefore, will disclosure more information about their systems and commitments against modern slavery.
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Research Design
3.1
Data Sources
The population for this study is 600 firms listed on the Indonesia stock exchange in 2018. Based on data availability, the final sample consists of 169 listed across all industry types. The data is taken entirely from secondary sources using the archival method. Secondary data have been used extensively in social responsibility research due to its relative ease of access, opportunities for research replication, and reduced likelihood of researcher or respondent bias skewing the eventual findings (Trzesniewski et al. 2020).
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Corporate annual reports were used to assess corporate modern slavery disclosures, which were collected by downloading softcopies from the Indonesia Stock Exchange (IDX) website. Majority of research in voluntary disclosure uses corporate annual reports to measure the firms’ levels of information to their stakeholders. In addition, corporations may use other types of communication media to convey information, such as sustainability reports and corporate websites. Exclusive focus on annual reports is likely to result in an incomplete picture of reporting practices. Therefore, some studies use other forms of corporate reports in addition to annual reports. In this study, the annual reports were chosen as the sources of data to assess the level of modern slavery disclosure because it represents the most important document used by an organization to convey a view of its operations to the public and it is automatically sent to all shareholders. Data for the predictor variables, size, and industry type were extracted from external databases OSIRIS and, when unavailable, from company annual reports.
3.2
Predictor Variables
Two predictor variables were used in the model, and data were collected for the financial year-end 2018. Firm size was operationalized in terms of total asset. Following previous studies on the relationship between firm size and voluntary disclosure (e.g., Clarkson et al. 2008; Frost 1999; Zheng et al. 2019), this study uses a firm’s total asset as a proxy for firm vulnerability on modern slavery. The industry classification used in this study initially comes from the Indonesia Stock Exchange Fact Book 2018. It classifies the industry into nine sectors (see Table 4). There are 20 sub-sectors for the manufacturing sector and 5 sub-sectors in another sector called banking, credit agencies other than the bank, securities, insurance, and real estate. The industry groups in this study were reclassified into two sectors to reveal the sensitivity of the industry to the modern slavery: (1) sensitive industry groups which consist of agriculture and construction sectors and (2) less sensitive industry groups which consist of the sectors. The establishment of such a grouping means that the variable “industry” in this study is a category variable. Previous studies have used an industry dummy variable in the analysis (Flynn 2020b; Milne and Patten 2002; Patten and Trompeter 2003).
3.3
Content Analysis and Modern Slavery Index
We use content analysis to measure the level of information contained in the corporate modern slavery disclosures. Weber (1990) defines content analysis as a method of codifying the text (or content) of a piece of writing into various groups (or categories) depending on the selected criteria. This method has been widely used in studies assessing the quality of information, including in the modern slavery disclosures area (Christ et al. 2019; Flynn and Walker 2020a; Voss et al. 2019). This study generally counts any passage in corporate reports that mentions or relates to modern
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slavery issues. This study only counts once for each item in the modern slavery index to avoid the repetition of disclosure information in different parts of a report that may inflate the results. A researcher and an independent research assistant performed a pretest of the coding activity, using the research instrument keywords and decision rules established. Classification schemes and a set of keywords allowed the independent coder to determine “what” and “how” the coding was to be carried out. Several minor discrepancies were found when comparing the pretest results between the two coders. These are related to a lack of definition in disclosure categories and omission of some items in the instrument by either coder. The researcher and independent coder discussed these uncertainties in coding and reached a common agreement on correct classification. Revisions were undertaken to both the decision rules and research instruments accordingly. Although the researcher and the independent coder believed pretesting the instrument had produced high levels of coding reliability, the final pretesting was formally assessed using content analytic reliability measures. Often, the establishment of a disclosure index for a particular study is influenced by the study’s construct. For example, Al-Tuwaijri et al. (2004) only consider negative environmental disclosures, concerning issues such as pollution and litigation, in mandatory environmental reports in the index. This is to exclude information they consider part of a “greenwash” strategy in annual financial reporting. On the contrary, Clarkson et al. (2006) developed an environmental disclosure index that includes only voluntary environmental disclosures and excludes mandatory disclosures. They argue that, based on the theory of voluntary disclosure, firms with superior environmental performance have an incentive to disclose more environmental information. Thus, the assessment should be based only on voluntary disclosures. Other indices combine both mandatory and voluntary disclosure in the index (Freedman and Jaggi 2005; Wiseman 1982) simply to accommodate all types of information. Although the more sophisticated indices may be considered more accurate in assessing the level of disclosure, directly measuring disclosure quality is difficult (Botosan 1997). As a result, researchers tend to assume that quality and quantity are positively related. Some scholars measure the quality of disclosure by giving higher scores to more detailed and informative items. For instance, Wiseman (1982) rates each disclosed item as 1 for general or short items, 2 for more detailed narrative items, and 3 for information with quantitative or monetary contents. Other researchers use different methods to scale the information but generally award more scores for better quality environmental disclosures (Cormier et al. 2005; Patten 2002). Previous studies on modern slavery disclosures use an index with several items adopted from Global Reporting Initiatives (Parsa et al. 2018) or seven areas advised by UK Modern Slavery Act 2015 (Flynn 2020b; Voss et al. 2019). In this study, the index developed by Christ et al. (2019) was adopted and modified for the Indonesian reporting context for two reasons. First, the use of Modern Slavery Act reporting areas does not apply to this study since Indonesia has not enacted a Modern Slavery Act. Second, the index is suitable for modern slavery disclosure analysis using corporate annual reports. This is very appropriate to the Indonesian financial
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Table 3 Search strings used for modern slavery index 1. 2. 3. 4. 5.. 6. 7. 8. 9. 10. 11. 12. 13.
Abuse and violence Bribery and corruption Child labor Code of conduct Diversity Forced labor Human rights Human trafficking Minimum wages Risk assessment Safety Screening Whistleblowing
Harassment, violence, abuse Bribery, corruption, gratification Underage, child, under age Code of ethic, guidelines, policy, values Equal opportunity, discrimination Force employment, free to join worker union, illegal workers, collective labor agreement, industrial relation Employee right, right, exploitation Trafficking, illegal workers Decent remuneration, pay, salary Risk Health, safe Supplier Whistleblowing
reporting setting, which relies heavily on voluntary initiatives. Some modifications were made to the index to adapt it to the local conditions of modern slavery reporting, such as health insurance and safety work environment (BPJS and K3 in the Indonesian setting). Firms with a statement (in their annual report) that contained information on any one of the 14 items were scored 1; firms with a statement that contained information on any two of the 14 item were scored 2 and so forth; and firms with no modern slavery statement were scored 0. The index used in this study does not assign different scales for more detailed information. Neither does it counts negative scores for negative or meaningless information such as a statement that the company has not implemented or undertaken an anti-slavery program or activities. Only positive information mentioning real implementations are counted. Some search strings were used after reading a sample of corporate annual reports to achieve efficient and effective searching for the information contained in the annual reports (see Table 3).
3.4
Software for Content Analysis of the Modern Slavery Disclosure Index
Qualitative data analysis programs can be used by researchers to help perform content analysis more efficiently and conveniently. In this study, Atlas.ti, a package widely used in qualitative research, was employed. This software quantified modern slavery information in the corporate annual reports by matching its contents with the environmental disclosure index developed for this study.
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We used Atlas.ti to assign each modern slavery disclosure item in the sample firm’s annual and stand-alone reports a predetermined code in the modern slavery index. First, each annual report in PDF format was stored in a program file or hermeneutic unit (HU) in Atlas.ti version 7. Second, a list of all predetermined codes from the modern slavery index was stored. Each HU was then ready for coding. Coding was done by searching for a sentence, phrase, or paragraph of modern slavery information in the company reports. The search facility is available in Atlas.ti and is similar to the search function in any word processing software. Various strings were entered into the search function to find relevant sentences or phrases. For example, if the word “forced labor” is typed into Atlas.ti’s search facility, the program finds the location of that word. Once identified, the whole sentence or paragraph was then read to enable an appropriate category or item from the list of codes in the index to be selected. A code was then assigned to the appropriate piece of information (e.g., sentence, phrase, or paragraph). Sometimes more than one code was selected and assigned to one piece of information. The results of such codings can be summarized by Atlas.ti in a text of spreadsheet, such as Microsoft Excel.
4
Results and Discussion
Results for the content analysis provide an indication of how the sample of Indonesian listed companies accounted for modern slavery reporting in a voluntary regime. While modern slavery act has not been enacted or even proposed by relevant stakeholders, the cases of forced labor and human trafficking have been reported in local mass media, and this might have affected listed firms and provide incentives for listed companies to make such disclosures. As previously stated in research design section, this study classified the companies into two categories of industry sensitivity to modern slavery issues. Agriculture and building construction are considered as sensitive, while the remaining are nonsensitive. Approximately 76% (121 of 169) of firms disclose at least one item of information about modern slavery in their annual reports or stand-alone sustainability reports. As shown in Table 4, companies belonging to the sensitive industry are more likely to make modern slavery disclosures than their counterparts from the nonsensitive group. More than 88% (30 out of 34) sensitive companies are disclosers, whereas nonsensitive companies only hold 67% of disclosers. With the growing attention on human rights in business entities internationally, particularly in the two sensitive sectors in Indonesia, this finding indicates that modern slavery issue has affected these firms to respond proactively by disclosing information on anti-slavery practices. Nonetheless, the level of modern slavery by the sample companies are considerably low. Table 1 presents the level of modern slavery disclosures by the sample companies for each disclosure item. With a sample of 169 firms and 13 items in the index, the total firm items disclosed were only 291 or 0.1325 on average with standard deviations of 0.0212.
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Table 4 Modern slavery disclosure scores by industry sectors No. of industry sector 1. Agriculture 2. Mining 3. Basic industry and chemicals 4. Miscellaneous industry 5. Consumer goods industry 6. Property, real estate, and building construction 7. Infrastructure, utilities, and transportation 8. Finance 9. Trade, services, and investment Total (A) Sensitive (agriculture and building construction) (B) Nonsensitive (others) Total
Non-discloser 4 3 3 1 13 15 1 8 0 48 4 44 48
Discloser 14 3 2 5 30 48 3 14 2 121 30 91 121
Total 18 6 5 6 43 63 4 22 2 169 34 135 169
In general, all items under the theme of code of conduct were disclosed more than the other themes. The code of conduct is the most frequently disclosed item by 69 (41%) of 169 sample firms. In contrast, information regarding assessment is least reported. None of the sample firms has disclosed any information regarding risk assessment concerning modern slavery. This does not mean that no single company mentioned risk assessment at all. Risk assessment in financial or market stability was not assigned as risk assessment in this study. We only considered information about risk assessment related to modern slavery practices, such as risks of potential forced labor in the supply chains or employee outsourcing/subcontracting. This probably explains why screening is also recorded only by one firm, since both items are related under the same theme, assessment. The least disclosed items are abuse and violence, which is only mentioned in one annual report. However, another item under the same theme, safety, is mentioned by 37 companies in their annual report. Together with minimum wages, this item is compulsory by the Indonesian Ministry of Labour and respective regional governments where the companies or their facilities reside (Table 5). There are 291 firm items of modern slavery disclosures in the annual reports of the sample firms. The disclosure level is very low, with an average of 0.0202, or each firms on average only disclosed 0.2756 of the 13 items in the modern slavery index used for this study. Furthermore, the typical information provided in the annual reports is narrative and favorable to the disclosing firms. Even when they revealed unfavorable information due to mandatory requirements, they added non-substantive information to compensate. The following examples show how the firms reported unfavorable information by stating it did not have a code of conduct or an official whistleblowing system in 2018. However, they provided some additional information that the firms committed to promote and support such system or that the code of conduct is very important. Such action is considered the firms’ efforts to distinguish “their type” from the poor
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Table 5 Modern slavery disclosure index (MSDI) by items MSDI No. 1
Themes Human rights
2
Health and safety
3
Assessment
4
Code of conduct
Subthemes MSDI items Child labor Forced labor Human trafficking Minimum wages Human rights Safety Abuse and violence Screening Risk assessment Diversity Whistleblowing Bribery and corruption Code of conduct Totals
% of disclosers 6.51 7.69 1.78 30.18 7.10 21.89 0.59
Mean 0.0050 0.0059 0.0014 0.0232 0.0055 0.0168 0.0005
Std. dev. 0.0190 0.0206 0.0102 0.0354 0.0198 0.0319 0.0059
Obs. 169 169 169 169 169 169 169
Freq 11 13 3 51 12 37 1
169 169 169 169 169
1 0 27 40 26
0.59 0.00 15.98 23.67 15.38
0.0005 0.0000 0.0123 0.0182 0.0118
0.0059 0.0000 0.0283 0.0328 0.0278
169 169
69 291
40.83 13.25
0.0314 0.1325
0.0379 0.0212
Notes: MSDI (modern slavery disclosure index) was computed as the number of item disclosed in the corporate annual reports divided by the total number of items in the MSDI, which is 13
performers (i.e., those who are not committed to implementing the whistleblowing systems or establishing a code of conduct). Moreover, these actions are possible when information asymmetry between firms and their stakeholders occurs (see Akerlof 1970; Dye 1985). “The Company now has not had an official (written) mechanism that can be used by whistleblowers. In all its business activity, the Company committed to spending ultimate standard in terms of ethics and behavior and promoting and supporting culture frank and ethical, compliance corporate and terms of corporate governance” (ABBA, 2018 annual report). “Code of Conduct is the guideline for conducting and doing business. Any violation of the Code of conduct and Code of business will be penalized following the existing regulation. Until the end of 2018, the Company missed (did not have) the Code of Conduct, etc.” (DNET, 2018 Annual Report).
Another example is when the company did not mention that they did not have the code of conduct but it provided less substantial information about their process of establishing such a code of conduct in order to show their efforts in complying with the prevailing laws and regulations. The action of not disclosing bad news is consistent with the notion used in theories of voluntary disclosure that firms will provide additional information only when the benefits exceed the costs of generating it. They will opt to withhold bad information (i.e., the firm did
Modern Slavery Disclosures in a Voluntary Regime
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not have the code of conduct) because it may incur the proprietary costs (Verrechia 1983). “Colorpak is still in the process of formulating the Code of Conduct to maximize the implementation of a comprehensive Corporate Governance and following the prevailing laws and regulations” (CLPI, 2018 Annual report).
4.1
Correlations Among Variables
As seen in Table 6, the coefficient correlations among the predictor variables, industry, and size, are very insignificant ( p ¼ 9909), which means that firms in the sensitive industry are not necessarily large and vice versa. When predictor variables do not correlate with each other, the data set is prevented from multicollinearity issue. With regard to the correlations between the explanatory and response variables, size and industry seem to be consistently and strongly correlated with modern slavery disclosure index with correlation coefficients of 0.21 ( p < 0.0009) and 0.25 ( p < 0.0056), respectively. Such coefficients strongly indicate that modern slavery index is positively correlated to firm size and of its industry sensitivity. Consistent with prior studies, a higher level of corporate modern slavery reporting is attributed to larger firms and more sensitive industry sectors (Flynn 2020b).
4.2
Regression Analysis
The regression model in Table 7 shows that the model can explain 11 percent of the variation in modern slavery disclosures. The table also shows that the observations fit well with the model because the F values are significant (0.000). As predicted, modern slavery disclosure is positively associated with firm size and industry sector, and each has very significant p values ( p < 0.01). The larger the firms, the highest the modern slavery disclosures, and the level of such disclosures are higher for firms in the agriculture and construction sectors. Such a result shows that consistent with the prediction and prior literature, large firms disclose more information about their commitments and systems to tackle the issue of modern slavery disclosure (Voss et al. 2019). This study also supports the Table 6 Pairwise correlations and significance level Msdi Size Ind
Msdi 1 0.2542 0.0009 0.2125 0.0056
t_asset
Ind
1 0.001 0.9902
1
Notes: Msdi, modern slavery disclosure index; t_asset, total asset; and ind, industry sector, 1 for agriculture plantation and building and non-building construction, 0 otherwise
Coef. 0.000 0.062 0.077
St. err. 0.000 0.021 0.010 0.102 0.110 10.241 -267.372
t-value 3.47 2.90 7.58
p-value 0.001 0.004 0.000
[95% conf 0.000 0.020 0.057 SD dependent var. Number of obs. Prob > F Bayesian crit. (BIC)
Interval] 0.000 0.104 0.097
Sig *** *** *** 0.115 169.000 0.000 -261.113
Notes: dependent variable, msdi (modern slavery disclosure index); independent variable, t_asset (total asset); ind (industry sector: 1 for agriculture planation and building/nonbuilding construction, 0 otherwise) *p