CSR can be effective even when it is nothing more than greenwashing
Many companies implement corporate social and environmental responsibility (CSR) policies to project a positive image and thereby gain legitimacy in the eyes of their stakeholders. However, some do not live up to their claims.
Ouidad Yousfi, University of Montpellier and Maha El Kateb, University of Montpellier
Many companies undertake environmental projects solely for marketing purposes or to enhance their products’ brand image. Or they do only what legislation and pressure from stakeholders require them to do. Others use CSR to gain long-term competitive advantages. They view these “sustainability strategies” as an essential part of their overall business strategy. Social commitments are thus aligned with business objectives.
To better understand corporate social responsibility, we analyzed relevant studies and theories on CSR strategies. This analysis revealed two types of CSR strategies: those implemented in response to environmental and social legislation and stakeholder pressure (or reactive CSR); and those that view CSR as a differentiation strategy that integrates social, environmental, and financial performance.
We have thus examined how large companies in the energy sector appear to use CSR to legitimize harmful practices. Misleading messages have been observed on social media regarding investment in low-carbon projects, whileexploration for new deposits continues to increase in parallel. The energy sector is one of the world’s largest polluters. It accounted for 47% of global greenhouse gas emissions in 2019. Drawing on scandals involving “greenwashing” (i.e., misleading the public about environmental achievements), our work also explains why and how civil society can play an active role in promoting sustainable practices.
CSR as a purely strategic initiative?
Based on a literature review that examines the methodologies of more than 100 studies, we conclude that companies across various sectors frequently employ basic strategies to comply with social and environmental regulations. They seek to enhance their legitimacy in the eyes of stakeholders without making corporate social responsibility a cornerstone of their overall strategy.
Energy companies from 55 countries have committed to upholding the Paris Agreement and working toward a net-zero emissions world, with the goal of keeping global warming below 1.5°C. But a U.S. Congressional investigation that analyzed 200 pages of internal company memos revealed that oil giants such as Shell, Chevron, and ExxonMobil were content with merely paying lip service to the agreement.
For example, it reads:
“Shell does not currently plan to transition to a net-zero emissions portfolio within our 10- to 20-year investment horizon.”
According to Richard Wiles, president of the Center for Climate Integrity, these revelations are “the latest proof that oil giants continue to lie about their commitments to addressing the climate crisis and that policymakers should never trust them.”
Ambiguous statements, sophisticated euphemisms, or outright lies seem to have become commonplace in corporate communications, particularly when it comes to activities related to corporate social responsibility and sustainable development.
While this may lead to accusations of greenwashing, it nevertheless provides companies with an opportunity to rethink their social and environmental strategies and implement meaningful changes.
The occasional positive side effects of greenwashing
The negative effects of greenwashing—such as misleading and manipulating consumers, avoiding concrete action, and hindering the ecological transition—can be significant. However, this situation can also lead to positive changes. This is particularly true when stakeholders, policymakers, business leaders, and researchers raise awareness about these practices. Consumers can demand greater transparency and hold companies accountable when they act improperly.
The 2015 Volkswagen scandal is instructive. The U.S. government had discovered “irregularities” in tests measuring carbon dioxide emissions levels affecting thousands of cars produced by the German company.The agreement reached with the U.S. Environmental Protection Agency prompted the company to invest in electric vehicle infrastructure and technology. Subsequently, Volkswagen became a key player in the electric vehicle market.
Public commitments made by companies can also motivate employees to work toward achieving these goals and help establish a standard of sustainability for businesses.
Civil society: a driving force for change
Another example: in February 2023, the international NGO Global Witness accused one of the world’s largest oil companies, Shell, of misleading U.S. authorities and investors about its environmental transition.
Shell revealed in its 2021 annual report that 12% of its capital expenditures were allocated to the development of renewable and green energy solutions. However, only 1.5% was used to develop solar and wind power sources and plants. Global Witness found that the company was in fact undertaking climate-damaging gas projects. The NGO filed a complaint with the U.S. Securities and Exchange Commission asking it to investigate the global energy giant’s claims.
This is not the only scandal in which Shell has been implicated. In 2021, a Dutch court found Shell’s subsidiary liable for oil spills that occurred between 2004 and 2007 in Nigeria. It ordered the company to pay compensation to the four Nigerian farmers who filed the lawsuit. Shell’s reputation has been severely tarnished. The company has committed to compensating the Nigerian farmers to the tune of 15 million euros and to installing a leak detection system.
Shell also partnered with British Cycling, an environmental advocacy group, to project a green image and boost the acceptance and appeal of its products and services. But British Cycling was soon accused of greenwashing.
As we show in our study, when consumers become aware of socially irresponsible behavior, their positive identification with the company is disrupted. Ordinary citizens have thus helped raise awareness of cases of greenwashing through exposé campaigns. In July 2020, for example, a misleading statement by Air France regarding itscarbon-neutral flights was widely retweeted.
Ads that are somewhat complex
A carbon footprint can only be assessed if the impacts and emissions associated with a range of technologies are taken into account. These range from the extraction of raw materials to disposal or recycling. However, many renewable energy technologies still rely, to some extent, on fossil fuels. Many companies take advantage of this complexity and marketing to greenwash their business models without making significant changes.
To combat this phenomenon, public authorities would need to ensure a certain level of transparency, implement effective regulations, and develop oversight mechanisms.
Ouidad Yousfi, Associate Professor of Finance, University of Montpellier and Maha El Kateb, Ph.D. candidate, University of Montpellier
This article is republished from The Conversation under a Creative Commons license. Readthe original article.