CSR can be effective even when it is just pure greenwashing.
Many companies implement corporate social responsibility (CSR) policies in order to present themselves in a favorable light and thus 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 only undertake environmental projects for marketing purposes or to enhance their brand image. Or they only do what they are required to do by legislation and stakeholder pressure. Others use CSR to gain long-term competitive advantages. They consider these "sustainable strategies" to be an essential part of their overall business strategy. Social commitments are then aligned with business objectives.
To better understand strategic corporate social responsibility, we analyzed relevant studies and theories on CSR strategies. Two types of CSR strategies emerged: those introduced to address environmental and social legislation and stakeholder pressure (or reactive CSR); and those that view CSR as a differentiation process that organizes social, environmental, and financial performance.
We examined how large companies in the energy sector appear to use CSR to legitimize bad practices. Misleading messages have been observed on social media concerning investment in low-carbon projects, whileexploration of deposits is increasing in parallel. The energy sector is one of the world's biggest polluters. It produced 47% of global greenhouse gas emissions in 2019. Based on " greenwashing " scandals (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.
A purely strategic CSR?
Based on a literature review that examines the different methodologies used in over 100 studies, we conclude that companies in various sectors often use basic strategies to comply with social and environmental regulations. They seek to gain 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 the Paris Agreement and a net-zero emissions world, aiming to keep global warming below 1.5℃. But a US Congressional investigation that analyzed 200 pages of internal company memos revealed that oil giants such as Shell, Chevron, and ExxonMobil were merely paying lip service to the agreement.
For example, we can read:
"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 evidence that oil giants continue to lie about their commitments to solving 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 with regard to activities related to corporate social responsibility and sustainable development.
When this raises accusations of greenwashing, there is nevertheless scope for companies to rethink their social and environmental strategies and introduce effective changes.
Sometimes positive spin-offs from greenwashing
The negative effects of greenwashing, such as deceiving and manipulating consumers, avoiding concrete action, and blocking the ecological transition, can be significant. However, this situation can also lead to positive change. This is particularly the case when stakeholders, political and business decision-makers, and researchers raise awareness of these practices. Consumers can demand greater transparency and hold companies accountable when they behave badly.
The Volkswagen case in 2015 is instructive. The US government had discovered "irregularities" in tests measuring carbon dioxide emissions affecting thousands of cars produced by the German company.The agreement reached with the US Environmental Protection Agency prompted the company to invest in electric vehicle infrastructure and technology. Volkswagen subsequently 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 largest oil companies, Shell, of misleading US authorities and investors about its ecological transition.
Shell revealed in its 2021 annual report that 12% of its capital expenditure was devoted to developing 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 gas projects that were harmful to the climate. The NGO filed a complaint with the Securities and Exchange Commission in the United States to investigate the claims made by the global energy giant.
This is not the only scandal Shell has been involved in. 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 brought the lawsuit. Shell's reputation has been severely tarnished. The company has committed to compensating the Nigerian farmers to the tune of €15 million and to installing a leak detection system.
Shell also partnered with British Cycling, an environmental think tank, to promote a green image and improve the acceptance and desirability of its products and services. However, British Cycling was quickly accused of greenwashing.
As we show in our study, when consumers become aware of socially irresponsible behavior, their positive identification with the company is interrupted. Ordinary citizens have thus contributed to raising awareness of cases of greenwashing through campaigns denouncing such practices. In July 2020, for example, a misleading statement by Air France about itsCO2-neutral flights was widely retweeted.
Advertisements sheltered by a certain complexity
Carbon footprints can only be assessed if the consequences and emissions associated with a range of technologies are taken into account. These range from raw material extraction to disposal or recycling. However, many renewable energy technologies still depend, to some extent, on fossil fuels. Many companies take advantage of this complexity and marketing to greenwash their business models without making any significant changes.
To combat this phenomenon, public authorities would need to impose a certain degree of transparency, implement effective regulations, and develop control mechanisms.
Ouidad Yousfi, Associate Professor of Finance, University of Montpellier and Maha El Kateb, Ph.D candidate, University of Montpellier
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