CSR can be effective even when it's pure Greenwashing
Many companies implement corporate social responsibility (CSR ) policies in order to present themselves in the best possible light and gain legitimacy in the eyes of their stakeholders. Some, however, fail to live up to their claims.
Ouidad Yousfi, University of Montpellier and Maha El Kateb, University of Montpellier
Many only undertake green projects for marketing purposes or to brand their products. Or do they only do what legislation and stakeholder pressure force them to do. Others use CSR to gain long-term competitive advantage. They see these "sustainable strategies" as an essential part of their overall corporate strategy. Social commitments are then aligned with business objectives.
To better understand the strategic social responsibility of companies, we have analyzed the relevant studies and theories on CSR strategies. Two types of CSR strategies emerge: those introduced in response to environmental and social legislation and stakeholder pressure (or reactive CSR); and those that view CSR as a differentiation process organizing social, environmental and financial performance.
We examined how large energy companies appear to be using CSR to legitimize bad practices. Misleading social media messages about investing in low-carbon projects have been observed, withexploration increasing at the same time. The energy sector is one of the world's biggest polluters. It accounts for 47% of global emissions.) of greenhouse gases in 2019. Based on " greenwashing " scandals, our work also explains why and how civil society can play an active role in promoting sustainable practices.
Purely strategic CSR?
Based on an analysis of the literature, which reviews the different methodologies of over 100 studies, we conclude that companies in different sectors often use elementary 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 pledged to abide by the Paris Agreement and a net-zero emissions world, aimed at keeping 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 paying lip service to the agreement.
For example:
"Shell has no immediate plans to move to a zero net emissions portfolio over our 10-20 year investment horizon."
According to Richard Wiles, President of the Centre for Climate Integrity, these revelations are "the latest proof that the oil giants continue to lie about their commitments to solving the climate crisis, and that policymakers should never trust them".
Ambiguous assertions, sophisticated euphemisms or outright lies seem to have become commonplace in corporate communications, particularly when it comes to activities linked to corporate social responsibility and sustainable development.
When this raises accusations of greenwashing, there is nonetheless a case for companies to rethink their social and environmental strategies and introduce effective changes.
Greenwashing can have a positive impact
The negative effects of greenwashing, such as misleading and manipulating consumers, avoiding concrete action and blocking the ecological transition, can be significant. But it can also bring about 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 to account when they behave badly.
The Volkswagen affair of 2015 is instructive. The US government had discovered "irregularities" in tests measuring carbon dioxide emission levels affecting thousands of cars produced by the German company. Thesettlement 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 commitment by companies can also motivate employees to work towards these goals, and help set a sustainability standard for business.
Civil society, driving change
As another example, in February 2023, the international NGO Global Witness accused one of the world's 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 sources and plants. Global Witness found that the company was in fact undertaking climate-damaging gas projects. The NGO has filed a complaint with the US Securities and Exchange Commission to investigate the global energy giant's claims.
This is not the only scandal in which Shell has found itself implicated. In 2021, a Dutch court found the Shell 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 case. Shell's reputation was severely damaged. The company has undertaken to compensate the Nigerian farmers to the tune of 15 million euros and to install a leak detection system.
Shell also teamed up with an environmental think-tank, British Cycling, to create a green image and improve the acceptance and desirability 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 interrupted. Ordinary citizens have been involved in raising awareness of cases of greenwashing through whistleblowing campaigns. In July 2020, for example, a misleading Air France communication about itsCO2-neutral flights was widely retweeted.
Advertisements protected by a certain complexity
The carbon footprint can only be assessed if the consequences and emissions associated with a range of technologies are taken into account. These range from the extraction of raw materials to disposal or recycling. Yet many renewable energy technologies are still to some extent dependent on fossil fuels. Many companies take advantage of this complexity and marketing to green their business models without making significant changes.
To combat this phenomenon, public authorities need to impose a certain level 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
This article is republished from The Conversation under a Creative Commons license. Read theoriginal article.