meaning of social and environmental responsibility essay

Social and Environmental Responsibility Essay

Difference Between Corporate Social And Environmental Responsibility

Corporate social and environmental responsibility The term corporate social responsibility (CSR) appears for the first time in early 1970. Since then, it continues to develop and have different definitions and perceptions among private and government sector, and civil organizations. Corporate responsibly in relation to internal stakeholders and shareholders on local and national level, as well as, performance in serving the society and global community are the most common perspectives accepted by monument and individuals. “The first perspective includes ensuring good corporate governance, product responsibility, employment conditions, workers’ rights, training and education. The second includes corporate compliance with relevant legislation, and the company’s responsibility as a taxpayer, ensuring that the state can function effectively. The third perspective is multi-layered and may involve the company’s relations with the people and environment in the communities in which it operates, and those to which it exports” (Mazurkiewicz, 2004). Additionally, the protection of environmental resources and its implementation in CSR is…

Apple's Accountability Case Study

Apple’s supplier responsibility is based on the principles of accountability and improvement for the company and its suppliers, which are core business and operational objectives. The principles of accountability and improvement underlying the company’s supplier responsibility are major objectives because of the need to ensure safe and ethical working conditions as well as compliance with various regulations in the global business environment. This is primarily because the company increasingly…

Homer Dixon Argumentative Essay

have one responsibility, and that is to make as much money as possible (Friedman, 33). As the heads in charge of business are given a set of goals to accomplish by the owners, and most of the times the goal is to only increase profits(Friedman, 33). However, being the social animals there are social responsibilities of humans, which they must carry out independently, not involving the business (Friedman, 33). As per Friedman, “A corporation is an artificial person and may have artificial…

New Belgium Brewing Company Case Study

environmentally and socially. It is true that alcoholic beverages can be harmful to the health of the consumers and there are many people believe that a company sells alcoholic beverages is not socially responsible. However, just because the product that they sell might have a harmful effect to the consumers does not make the company automatically irresponsible. Also, the company is promoting responsible drinking and discouraging the sale of alcohol to minors. Moreover, the company is doing a…

Ups Case Analysis Essay

Bree Barnes Professor Barnes BUSN 105 2/12/2017 Case Analysis 1.UPS’s approach toward sustainability impact the triple bottom line by affecting its social and finical performance. UPS doesn’t focus much on the environmental side of it. It really digs deep on the social side of things such as philanthropic, strengths, relationships, building a productive partnership, etc. It could potentially affect them because the things they are doing now might not meet the needs or apply to future generations…

Home Depot Social Responsibility Study

The attributes of the stakeholder can be considered in their power,in their legitimacy & urgency. They possess power as they refuse to shop at a firm that isn’t environmentally responsible, so this compels Home Depot to be endorsed by the Forest Stewardship Council & pushes them to be ‘honest’ as far as their environmental practices are concerned. The stakeholders possess legitimacy as they want to ensure that its appearance of being environmentally friendly isn’t a sham, so they push them to…

New Belgium Brewing Case Study

1. What environmental issues does the New Belgium Brewing Company work to address? How has NBB taken a strategic approach to addressing these issues? Why do you think the company has taken such a strong stance toward sustainability? New Belgium Brewing works to target three environmental issues, cost-efficient energy-saving alternatives for conducting its business and reducing its impact on the environment, recycling, creative reuse strategies, and green building techniques. To manage these…

Business Ethics Of Qantas: Corporate Social Responsibility

Social Performance Corporate social responsibility is the the obligation of an entity for their actions to align with the interest of their stakeholders, the environment and society in general (Birt 2014). Qantas has eight key business principles and group policies in order to maintain a socially responsible business. These policies have been board approved and are non-negotiable. They are presented in a mandatory training program to ensure they are understood and reliably implemented by all…

What Is The Impact On Carbon Footprint Within The Environment

order to accomplish this objective, it is imperative that an action plan is implemented into the organization in order to improve its corporate social responsibility efforts. To maintain its corporate social responsibility, the organization must also take environmental efforts that is not ethical morally satisfying to the public’s eye. The following action plan outlines were major issues that is associated with stakeholders as well as the action of the company. This is an attempt to improve…

Liquid Telecom Corporate Social Responsibility Essay

Liquid Telecom Corporate Social Responsibility Strategy Proposal ‘Lasting and effective answers can only be found if business-working together with other actors including government and civil society-are fully engaged,’ Kofi Annan. All the actions that we make today will affect everything and everyone in future generations. Therefore as part of society it is also then in the interest of all businesses to contribute in addressing social, economical and environmental issues faced by society. A…

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Social and Environmental Responsibility Essay

Corporate social responsibility - 1812 Words

Corporate Social Responsibility (CSR) Corporate social responsibility (CSR) is increasingly discussed and recognized as essential as to existence of the corporations. In this contemporary world corporations are expected to report not only their accounting profits but also their social and environmental responsibility. Corporate social responsibility reporting is an emerging field at the global level, which is on its way of gaining its position as a mandatory business practice. However many of the

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The Importance Of Corporate Social Responsibility

Corporate social responsibility Corporate social responsibility (CSR) is a business approach that contributes to sustainable development by delivering economic, social and environmental benefits for all stakeholders. CSR is a idea with many definition and practices. The way it is understand and implement differs greatly for each company and country. Moreover, CSR is a very broad concept that address many and a variety of topics such as human rights, corporate governance, health and safety, environmental

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Marketing: Social Responsibility and Qantas Public Report

Introduction 2 2. Corporate social responsibility and ethical behaviour 2 3.1 social responsibility 2 3.2 environment responsibility 3 3. Reference

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Corporate Social Responsibility - 1080 Words

Corporate Social Responsibility: What is it? In essence, corporate responsibility entails the operation of a business in such a way that it (business owners) bears responsibility – or accounts – for the environmental or social impacts that arise as a result of its creation. Socially responsible businesses not only develop policies that incorporate responsible “Do's and Don’ts” into their everyday business operations, they also report on the progress made toward the implementation of these practices

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coca colA - 517 Words

Apple has done a good job with their social and ethical responsibilities. After the teen suicides at Chinese manufacturer Foxconn last year, Apple has investigated and reported child labor violation, toxic conditions, and other violations of their code of ethics. Using the Pyramid of Social Responsibility, I think it’s safe to say that Apple's actions against unethical and illegal conduct is to better society. Apple has done a tremendous job concerning environmental issues that range from toxic material

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CSR Report APRIL6 Yousef

Corporate Social Responsibility 3 Archie Carroll’s Pyramid of Corporate Social Responsibility 4 Advantages of Corporate Social Responsibility 4 Innovation 5 Cost Savings 5 Long-Term Thinking 5 Public Image and Brand Differentiation 5 Employee Engagement 5 Arguments against Corporate Social Responsibility 6 Misalignment with Profit Maximization 6 Accountability and Green-washing 6 Business Mandate and Skill Set 7 Issue Statement 7 Stakeholders 7 Aritiza’s Current CSR Strategy 8 The Social and Environmental

Words: 8336 - Pages: 34

Stakeholder and Social Responsibility - 2111 Words

groups themselves. Some of these requirements are also illustrated in Table 2.3. Corporate social responsibility (CSR) Strongly related to the stakeholder perspective of operations performance is that of corporate social responsibility (generally known as CSR). According to the UK government’s definition, ‘CSR is essentially about how business takes account of its economic, social and environmental impacts in the way it operates – maximizing the benefits and minimizing the downsides. . . .

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Howard R. Bowen's Corporate Social Responsibility

Corporate Social Responsibility refers to the responsibilities that a company has towards society. CSR can be described as decision making by a business that is linked to the ethical values and respect for individuals, society and the environment, as well as compliance with legal requirement. CSR is based on a concept that a company is a citizen of the society in which it exist and operates. The book “Social Responsibilities of the Businessman” by Howard R. Bowen started the discussion of CSR. Bowen

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Csr Critical Essay - 1943 Words

An Examination on Social Performance of BMW AG Corporate Social Responsibility can be defined as performances of businesses in completing good practices and standards to accomplish positive and sustainable results towards business, environment and society (CSR Singapore Compact 2005). Implementation of corporate social responsibility concept within the businesses means the businesses will always try their best to give positive outcomes to the society, which give satisfaction to the people and

Words: 1943 - Pages: 8

Corporate Social Responsibility Presentation Recovered

Corporate Social Responsibility Business School ACCO1084 BY: DAWOOD, DOINA, MUNEERA AND CHANDNI Objectives 1. Define the CSR from different visions; 2. Describe and then proceed to evaluate strengths and weaknesses of CSR; 3. Outline what social obligations and responsibilities should organizations have, providing practical examples; 4. Explain whether companies can satisfy both profit and social needs and obligations. CSR – What is this? Mass layouts and record profits Managers Salary Climate

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Ethical: Business Ethics and Ethical Codes

conduct of individuals and entire organisations. Business ethics can arise in relation to human right, corruption, economic growth, investment, corporate governance as well as environmental protection. The behaviours of business may violate with the broader community, human right of their employees and have serious economic and social effects. In the long run, ethical business methods are more profitable than unethical business methods. Unethical methods could seriously incur negative business reputation

Words: 692 - Pages: 3

Low-cost Carrier and Corporate Social Responsibility

Corporate Social Responsibility And Ryanair Business Essay This section of the report analyses the reputation of Ryanair as regards corporate social responsibility (CSR) issues in the environment in which the airline operates and also the role of the operation function of Ryanair in addressing CSR issues. Corporate social responsibility (CSR) CSR is the serious consideration of a company’s impact over the company’s environment. (CSR) refers to the responsibility that business organizations have

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Sony Group - 658 Words

Sony’s Views on Corporate Social Responsibility (CSR) The core responsibility of the Sony Group to society is to pursue the enhancement of corporate value through innovation and sound business practices. The Sony Group recognizes that its businesses have direct and indirect impact on the societies in which it operates. Sound business practices require that business decisions give due consideration to the interests of Sony stakeholders, including shareholders, customers, employees, suppliers

Words: 658 - Pages: 3

Corporate Social Responsibility - 747 Words

Corporate Social Responsibility Corporate social responsibility is a corporate incentive to assess the company’s effect on the environment and social welfare and take responsibility for the impact it makes. Corporate social responsible corporations go above the required regulations and want to improve and better the environment or world. This kind of responsibility includes possibly adding extra costs to create positive social and environmental change. Businesses that practice corporate social responsibility

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Sustainability and Packaging - 4990 Words

9216 8074 E-mail: [email protected] Abstract The packaging industry has been under pressure for more than 20 years to reduce the environmental impacts of its products. Despite significant investments in litter reduction and kerbside recycling programs over that period, packaging has maintained its high profile in the public discourse on environmental issues. Specific concerns about packaging are rarely articulated beyond those of waste and litter, but seem to step from deeper unease within

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Triple Bottom Line Strategy

Our triple bottom line strategy plans to address factors concerning economic, social, and environmental circumstances. These three key factors are essential in our efforts of striving for long-term financial performance. We are committed to uphold transparent economic, social, and environmental policies that will continually improve our performance. Our business model will always run through every aspect of our business and our products lifecycle. To assure the highest possible

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Contemporary issues in acounting - 1540 Words

assignment Use a theoretical framework of your choice to explain or predict the corporate social reporting (CSR) practices of five ASX listed companies in Australia and 5 listed companies in another country. Your analysis of CSR practices will be based on an examination of the most recent general purpose financial reports of the relevant companies. 1.1 Introduction This essay endeavours to explain the corporate social reporting practices and the motivations behind such practices of 5 predominant software

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Ethics Final Assignment 2 Social Corp

Table of contents Introduction 3 Corporate Social Responsibility (CSR) 4 CSR Stakeholders 5 CSR Importance 6 CSR Policies adopted by Robert Bosch GmbH & General Motors Company 7 Robert Bosch GmbH……..……….……………………………………..…….…………7 General Motors Company LLC (GM)……………………….……………….….…..…8 CSR practices at Bosch…………..…………….…………………….……….……..…...8 CSR practices at GM…..………….…………………….…………………….………..9 Discussion…………………………………………..………………...…………..…...…10 Successful CSR Implementation and its potential benefits……

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Business Ethic - 846 Words

high-end outdoor clothing. The company is a member of several environmental movements. It was founded by Yvon Chouinard in 1972. Patagonia is a major contributor to environmental groups. Patagonia commits 1% of their total sales or 10% of their profit, whichever is more, to environmental groups. Since 1985, when the program was first started, Patagonia has donated $46 million in cash and in-kind donations to domestic and international grassroots environmental groups making a difference in their local communities

Words: 846 - Pages: 4

Corporate Social Responsibility and Its Role in Community Development: An International Perspective

CORPORATE SOCIAL RESPONSIBILITY AND ITS ROLE IN COMMUNITY DEVELOPMENT: AN INTERNATIONAL PERSPECTIVE Maimunah ISMAIL• Abstract Corporate social responsibility (CSR) refers to strategies corporations or firms conduct their business in a way that is ethical, society friendly and beneficial to community in terms of development. This article analyses the meaning of CSR based on some theories available in literature. It is argued that three theories namely utilitarian, managerial and relational theories

Words: 6831 - Pages: 28

cpa SER - 3119 Words

Caroline Chaffer & Jill Webb_____________ Essay Title: The Benefits of Social and Environmental Reports and The Usefulness to Users_ Word Count: ____2837________ The Benefits of Social and Environmental Reports and The Usefulness to Users Abstract The increasing emphasis on environment result in a growing number of companies voluntary provide social and environmental reports. This paper brief evaluate the benefits of SERs, from users' perspective

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Home Depot Corporate Social Responsibility

Introduction Corporate Responsibility In the United States, social responsibility defines the organization's ability to impart cultural values and traditions that can either have a positive or negative impact on stakeholders. Corporate social responsibility means that the organization is accountable for its own actions that affect people, community, and environment which in turn gives aid and protect its stakeholders when making a business decision (Post, Lawrence & Weber, 2002). Firms engage

Words: 1111 - Pages: 5

Accounting Theory and Practice - 2215 Words

years have saw that listed firms, especially the large organisations, voluntarily disclose their Social and Environmental issues in their annual reports. As a result, a question was come up with by researchers: why managers would choose to undertake the voluntary activities? Although there is no consensus being reached about what perspective theories should be used to explain the Social and Environmental Accounting, and moreover critique voices are from the works of Marx or by the deep-green or feminist

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Social Responsibility In New Belgium

the home of New Belgium since the beginning in 1991(New Belgium). Social/environmental responsibility is the cornerstone of the company’s strategic focus. The company wanted to make sure its environmental stewardship, pioneer thinking on management, and broadly sharing equity spoke for the company (Eng, 2014).New Belgium’s focus on social responsibility does provide a key competitive advantage for the company. Social responsibility can be split into four categories; economic, legal, ethical, and voluntary

Words: 255 - Pages: 2

Studying: Corporate Social Responsibility and Csr

Corporate Social Responsibility is important The importance of CSR is increasing in a world strongly influenced by corporate trends and decisions. Corporate social responsibility refers to a company’s policy of protecting consumers, employees, and the environment in addition to its own bottom line. The activities of large corporations often have a far-reaching impact on the environment and in the lives of the people involved with them as consumers or employees. Despite this, some multinational

Words: 663 - Pages: 3

A Small Number Of Innovative And Entrepreneurial Companies And Their Aspiration For Social Change Thedriver Business Repositioning Is To Transform The Economic Success Of The Society As Well As The Best Throughtheir Products

Introduction : 2 Social responsibility : 3 Maritime New Zealand: 5 The Triple Bottom Line theory 8 Malcom Brands : 10 Conclusion : 13 Introduction : A small number of innovative and entrepreneurial companies and their aspiration for social change thedriver business repositioning is to transform the economic success of the society as well as the best throughtheir products. based on some of the faces of this report and business models (CSR-driven) firmsand looks at their corporate social responsibility-driven

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Csr Report on Tesco Plc

Corporate Social Responsibility (CSR) 2 Definition of CSR 2 Development of CSR 2 Approaches to CSR 2 Business Benefits of CSR 3 Critical Analysis of CSR 3 Factors influencing CSR 4 The Business Case for CSR 6 TESCO PLC 8 Tesco and Corporate Social Responsibility 8 Environment 8 Community 9 Suppliers 9 People / Employees 10 Government / Regulators 10 How Tesco manages their Corporate Responsibility (CR) 10 Conclusion 10 Bibliography 13 Corporate Social Responsibility (CSR) Definition

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Case Study 4 - 384 Words

employees and suppliers as stakeholders, but also considers the “earth” as a stakeholder as well. Their commitments to environmental issues are second to none in the apparel industry. It’s not everyday that you hear about a company giving its employees a week’s pay to volunteer in their communities. These days, most companies have policies for sustainability and corporate social responsibilities (CSR), but I think that Timberland actually lives it. Question 2 A) Green products sell. Timberland’s

Words: 384 - Pages: 2

Ethics and Responsibility - 881 Words

Ethics and Social Responsibility Successful companies have well established code of ethics. Members of an organization with high ethical standards are held to these standards, including the decision makers responsible for making strategic plans that affect the organization and its surrounding communities. Maximizing shareholder wealth should not be the only priority when developing strategic plans. However, an organization will need to generate revenues to be profitable and successful. Ethics and

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Human Resources - 1582 Words

MGMT 4125-01-HUMAN RESOURCE MANAGEMENT | Social Responsibility within the NBA | Instructor: Carolyn Brown | By: Montilia Tripp 9/21/2012 | Ever since I was a kid, I have taken a liking to the National Basketball Association better known as the NBA. Like millions of other kids around the world, the NBA caught my attention because of its larger than life athletes. Some of whom are the best athletes on the planet. I wanted to be just like those athletes, and the athletes that I have

Words: 1582 - Pages: 7

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Accountability

Social and environmental sustainability in undp.

UNDP is committed to ensuring that our programming and operations are socially and environmentally sustainable.

Sustainable Programme and project management

UNDP recognizes that social and environmental sustainability are fundamental to the achievement of sustainable development outcomes, and therefore must be fully integrated into our Programmes and Projects. To ensure this we have the following key policies, procedures and accountability mechanisms in place to underpin our support to countries:

Social and Environmental Standards for UNDP Programmes and Projects
Project-level Social and Environmental Screening Procedure
Accountability Mechanism with two key functions: 1. A Stakeholder Response Mechanism that ensures individuals, peoples, and communities affected by UNDP projects have access to appropriate procedures for hearing and addressing project-related grievances. 2. A Compliance Review process to respond to claims that UNDP is not in compliance with UNDP’s social and environmental policies.

Environmentally sustainable operations

As a global leader in the fight against climate change, UNDP is committed to being green, sustainable, and just. UNDP has been climate neutral in its global operations since 2015 and has made an ambitious commitment to reduce its carbon footprint by 50% by 2050 through the Greening UNDP Moonshot. Read more ...

Sustainable procurement

To help countries achieve the simultaneous eradication of poverty and significant reduction of inequalities and exclusion, while at the same time address the issues of climate change, UNDP makes a shift to more sustainable production and consumption practices. Sustainable procurement means making sure that the products and services UNDP buys are as sustainable as possible, with the lowest environmental impact and most positive social results. Procurement, therefore, plays a key role in contributing to sustainable development.

Please find more information on the UNDP Procurement Website .

Related resources

Framework for Advancing Environmental and Social Sustainability in the UN System
UN Greening the Blue

Explore more

Undp social and environmental standards.

The revised Social and Environmental Standards (SES) came into effect on 1 January 2021 . The SES underpin UNDP's commitment to mainstream social and environmental sustainability in our Programmes and Projects to support sustainable development.

The SES are an integral component of UNDP’s quality assurance and risk management approach to programming. This includes our Social and Environmental Screening Procedure .

Key Elements of the UNDP's Social and Environmental Standards include:

Part A: Programming Principles:

Leave No One Behind
Human Rights
Gender Equality and Women's Empowerment
Sustainability and Resilience
Accountability

Part B: Project-Level Standards:

Standard 1: Biodiversity Conservation and Sustainable Natural Resource Management
Standard 2: Climate Change and Disaster Risks
Standard 3: Community Health, Safety and Security
Standard 4: Cultural Heritage
Standard 5: Displacement and Resettlement
Standard 6: Indigenous Peoples
Standard 7: Labour and Working Conditions
Standard 8: Pollution Prevention and Resource Efficiency

Part C: Social and Environmental Management System Requirements:

Quality Assurance and Risk Management
Screening and Categorization
Assessment and Management
Stakeholder Engagement and Response Mechanism
Access to Information
Monitoring, Reporting and Compliance

UNDP Social and Environmental Standards Cover Image

UNDP's Social and Environmental Screening Procedure (SESP)

Screening and categorization of projects is one of the key requirements of the Social and Environmental Standards (SES) .

In this regard, the objectives of UNDP's Social and Environmental Screening Procedure (SESP) are to:

Integrate the SES Programming Principles in order to maximize social and environmental opportunities and benefits and strengthen social and environmental sustainability;
Identify potential social and environmental risks and their significance;
Determine the project's risk category (Low, Moderate, Substantial, High); and,
Determine the level of social and environmental assessment and management required to address potential risks and impacts.

News from the Columbia Climate School

The Role of Individual Responsibility in the Transition to Environmental Sustainability

Steven Cohen

We New Yorkers live in a city that is on a gradual transition toward environmental sustainability, but we are a long way from the place we need to end up. A circular economy where there is no waste and where all material outputs become inputs is well beyond our technological and organizational capacity today. But that does not mean we shouldn’t think about how to get from here to there. Much of the work in building environmental sustainability requires the development of systems that enable us to live our lives as we wish while damaging the planet as little as possible. Large-scale institutions are needed to manage sewage treatment and drinking water, to develop renewable energy and build a modern energy grid. Government policy is needed to ensure the conservation of forests, oceans, and biodiversity. Pandemic avoidance requires global, national and local systems of public health. Climate change mitigation and adaptation also require collective action. What then can individuals do?

As individuals, we make choices about our own activities and inevitably, they involve choices about resource consumption. I see little value in criticizing people who fly on airplanes to travel to global climate conferences. (I assume you do remember airplanes and conferences, don’t you?) But I see great value in considering the importance of your attendance at the conference and asking if the trip is an indulgence or if you will have an important opportunity to learn and teach. This year has taught us how to attend events virtually. There is little question that live presence at an event enables a type of communication that can’t be achieved virtually. Many times, you will judge that the financial and environmental cost of the trip is far outweighed by the benefits. Those are the times you should travel. My argument here is that it is the thought process, the analysis of environmental costs and benefits, that is at the heart of an individual’s responsibility for environmental sustainability. Individuals are responsible for thinking about their impact on the environment and, when possible, minimize the damage they do to the planet.

Everyone needs to turn on the lights at night, start the shower in the morning, turn on the air conditioning and possibly drive somewhere on Mother’s Day. I would never argue that you should give up these forms of consumption. Instead, I believe we should all pay attention to the resources we use and the impact it has. We are responsible for that thought process and the related analysis of how we, as individuals, might accomplish the same ends with less environmentally damaging means.

Some say that the fixation on individual responsibility is a distraction from the more important task of compelling government and major institutions to implement systemic change. This perspective was forcefully argued in 2019 in The Guardian by Professor Anders Levermann of the Potsdam Institute for Climate Impact Research. According to Professor Levermann:

“Personal sacrifice alone cannot be the solution to tackling the climate crisis. There’s no other area in which the individual is held so responsible for what’s going wrong. And it’s true: people drive too much, eat too much meat, and fly too often. But reaching zero emissions requires very fundamental changes. Individual sacrifice alone will not bring us to zero. It can be achieved only by real structural change; by a new industrial revolution. Looking for solutions to the climate crisis in individual responsibilities and actions risks obstructing this. It suggests that all we have to do is pull ourselves together over the next 30 years and save energy, walk, skip holidays abroad, and simply ‘do without.’ But these demands for individual action paralyse people, thereby preventing the large-scale change we so urgently need.”

Perhaps, but I do not see it that way. I consider individual responsibility and the thought process and value shift that stimulates individual action as the foundation of the social learning process required for effective collective action. In other words, individual change and collective system-level change are interconnected. The fact is that on a planet of nearly 8 billion people, it is too late for many of us to get back to the land and live as one with nature. There’s too many of us and not enough nature. There is an absolute limit to our ability as individuals to reduce our impact on the planet. Therefore, system-level change is absolutely needed. But system change requires individuals to understand the need for change along with a well-understood definition of the problem. The cognitive dissonance of identifying a problem but never acting on it is difficult to live with. If you see a poor child on the street begging for food, you can provide that child with food and money while continuing to support public policy that addresses the child poverty issue at the systems level. In fact, the emotional impact of that child’s face may well provide the drive that leads you to fight harder for the policy that would prevent that child from needing to beg. We learn by example, and vivid experiences and cases can lead to transformative systemic change.

While I consider individual and collective responsibility connected, without collective systems and infrastructure supporting environmental sustainability, there are distinct limits to what individual action can achieve. That is why I see no value in shaming individuals for consuming fossil fuels, eating meat, or buying a child a Mylar birthday balloon. I believe an attitude of moral superiority is particularly destructive in any effort to build the political support needed for systemic change.

As my mentor, the late Professor Lester Milbrath, often argued, the only way to save the planet is through social learning that would enable us to “learn our way to a sustainable society.” He made this argument in his pathbreaking work: Envisioning a Sustainable Society: Learning Our Way Out . In Milbrath’s view, the key was to understand environmental perceptions and values and to build on those values and perceptions to change both individual behavior and the institutions their politics generated. To Milbrath, the human effort to dominate nature had worked too well, and a new approach was needed. As he observed in Envisioning a Sustainable Society :

“Learning how to reason together about values is crucial to saving our species. As a society we have to learn better how to learn, I call it social learning; it is the dynamic for change that could lead us to a new kind of society that will not destroy itself from its own excess.”

My view is that one method to pursue social learning is learning by doing — in other words by encouraging the individual behaviors we might each take to reduce our environmental impact. Those behaviors remind us to think about the planet’s wellbeing along with our own. They reinforce and remind us and as they become habit, they impact our values and our shared understanding of how the world works.

There is, therefore, no tradeoff between individual and collective responsibility for protecting the environment unless we insist on creating one. Additionally, in a world of extreme levels of income inequality, wealthy people who have given up eating meat have the resources to consume alternative sources of nourishment. They do not occupy the moral high ground criticizing an impoverished parent proudly serving meat to their hungry child. In our complex world, we should mistrust simple answers and instead work hard to understand the varied cultures, values and perceptions that can contribute to the transition to an environmentally sustainable global economy. The path to environmental sustainability is long and winding and will require decades of listening and learning from each other.

Can Digital Payments Help Countries Adapt to Climate Change?

Alumni Spotlight: A Journey From Climate Conservation to Corporate Consulting

Finding Public Space in a Crowded New York City

Columbia Climate School has once again been selected as university partner for Climate Week NYC, an annual convening of climate leaders to drive the transition, speed up progress and champion change. Join us for events and follow our coverage .

Steve, I appreciate your perspective on individual responsibility. I am developing a similar position and submitted an “OpEd” piece to Times about a month ago but alas it didn’t get published. I would like to share and develop the conversation with you so please reach out.

What are the responsibilities of individuals, governments and the international community in helping people have access to water?

While this highly educated society continues the GDP rat race and decimating all other patterns that create balance in the world we live in, here’s a little story of obvious stupidity for fun and profit. In 1975 my wife and I after several years of college chose to listen to scientists’ warnings about continued expansionism economically. We simplified our lives and did without things like electricity, fancy new vehicles and useless bling. We did without as a plausible direction for a template of living lightly and securing a viable future for more than just humans. We endured countless slurs ( tree huggers, eco-terrorists, hippies,) and were subjected to verbal and realistic abuse . Now at 72 and 68 we are wondering where the hell were the rest of you? Read the book “Small is Beautiful ” to see the wrongheaded direction your politicians and some clergy and certainly all greedy vulture capitalist have led the general public. I have no patience for obvious stupidity .Yeah, we were WOKE long before most people and feel no compulsion to be apologetic as all of you are to blame if you help continue the narrative of GDP unlimited growth and the population explosion. nats remark

“perhaps, but i do not see it that way” sorry but that kinda just means your guile is weak and you’re extremely credulous and succeptable to propeganda, dunno what to tell ya bud but this perspective is a total nothingburger. Of Course we must needs rely on some great measure of personal choice here, but if my choices are: Waste, Waste, Out of my Budget well i dont REALLY have a choice then Do I? which means that for the majority of americans there is no ethical choice list they can follow to fix the problem, only by compelling legislation can those choices be made available to them.

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The Truth About CSR

V. Kasturi Rangan,
Lisa Chase,
Sohel Karim

Despite the widely accepted ideal of “shared value,” research led by Harvard Business School’s Kasturi Rangan suggests that this is not the norm—and that’s OK. Most companies practice a multifaceted version of CSR that spans theaters ranging from pure philanthropy to environmental sustainability to the explicitly strategic. To maximize their impact, companies must ensure that initiatives in the various theaters form a unified platform. Four steps can help them do so:

Pruning and aligning programs within theaters. Companies must examine their existing programs in each theater, reducing or eliminating those that do not address an important social or environmental problem in keeping with the firm’s business purpose and values.

Developing metrics to gauge performance. Just as the goals of programs vary from theater to theater, so do the definitions of success.

Coordinating programs across theaters. This does not mean that all initiatives necessarily address the same problem; it means that they are mutually reinforcing and form a cogent whole.

Developing an interdisciplinary CSR strategy. The range of purposes underlying initiatives in different theaters and the variation in how those initiatives are managed pose major barriers for many firms. Strategy development can be top-down or bottom-up, but ongoing communication is key.

These practices have helped companies including PNC Bank, IKEA, and Ambuja Cements bring discipline and coherence to their CSR portfolios.

Most of these programs aren’t strategic—and that’s OK.

Idea in Brief

The problem.

Many companies’ CSR initiatives are disparate and uncoordinated, run by a variety of managers without the active engagement of the CEO. Such firms cannot maximize their positive impact on the social and environmental systems in which they operate.

The Solution

Firms must develop coherent CSR strategies, with activities typically divided among three theaters of practice. Theater one focuses on philanthropy, theater two on improving operational effectiveness, and theater three on transforming the business model to create shared value.

Companies must prune existing programs in each theater to align them with the firm’s purpose and values; develop ways of measuring initiatives’ success; coordinate programs across theaters; and create an interdisciplinary management team to drive CSR strategy.

Most companies have long practiced some form of corporate social and environmental responsibility with the broad goal, simply, of contributing to the well-being of the communities and society they affect and on which they depend. But there is increasing pressure to dress up CSR as a business discipline and demand that every initiative deliver business results. That is asking too much of CSR and distracts from what must be its main goal: to align a company’s social and environmental activities with its business purpose and values. If in doing so CSR activities mitigate risks, enhance reputation, and contribute to business results, that is all to the good. But for many CSR programs, those outcomes should be a spillover, not their reason for being. This article explains why firms must refocus their CSR activities on this fundamental goal and provides a systematic process for bringing coherence and discipline to CSR strategies.

VR V. Kasturi Rangan is a Baker Foundation Professor at Harvard Business School and a cofounder and cochair of the HBS Social Enterprise Initiative.
Lisa Chase is a research associate at Harvard Business School and a freelance consultant.
SK Sohel Karim is a cofounder and the managing director of Socient Associates, a social enterprise consulting firm.

Partner Center

Contributors

Introduction to ESG

Mark S. Bergman , Ariel J. Deckelbaum , and Brad S. Karp are partners at Paul, Weiss, Rifkind, Wharton & Garrison LLP. This post is based on a recent Paul Weiss memorandum by Mr. Bergman, Mr. Deckelbaum, Mr. Karp, David Curran , Jeh Charles Johnson , and Loretta E. Lynch . Related research from the Program on Corporate Governance includes The Illusory Promise of Stakeholder Governance by Lucian A. Bebchuk and Roberto Tallarita (discussed on the Forum here ) and Socially Responsible Firms by Alan Ferrell, Hao Liang, and Luc Renneboog (discussed on the Forum here ).

Interest on the part of investors and other corporate stakeholders in environmental, social and governance (“ESG”) matters has surged in recent years, and the current economic, public health and social justice crises have only intensified this focus. ESG, at its core, is a means by which companies can be evaluated with respect to a broad range of socially desirable ends. ESG describes a set of factors used to measure the non-financial impacts of particular investments and companies. At the same time, ESG also provides a range of business and investment opportunities.

Net flows into ESG funds available to U.S. investors have skyrocketed, totalling $20.6 billion in 2019, nearly four times the previous annual record set in 2018, [1] while ESG funds in Europe also attracted record inflows of $132 billion in 2019. [2] More than 70% of funds focused on ESG investments outperformed their counterparts in the first four months of 2020, [3] and nearly 60% of ESG funds outperformed the wider market over the past decade. [4] Consumers and investors are placing a growing value on ESG, and industry leaders have responded in a number of ways, including issuing comprehensive sustainability reports and expanding ESG disclosures in their annual reports, providing information to ESG rating agencies and publicly communicating ESG commitments.

This post, the first in a series focused on ESG disclosure and regulatory developments, provides an introduction to ESG and identifies several critical issues for companies and their in-house counsel to keep in mind in evaluating and monitoring ESG actions and statements.

The Fundamentals of ESG

ESG grew out of investment philosophies clustered around sustainability and, thereafter, socially responsible investing. Early efforts focused on “screening out” (that is, excluding) companies from portfolios largely due to environmental, social or governance concerns, while more recently ESG has favorably distinguished companies that are making positive contributions to the elements of ESG, premised on treating environmental and social issues as core elements of strategic positioning. While climate figures prominently in ESG discussions, there is no single list of ESG goals or examples, and ESG concepts often overlap. That being said, the three categories of ESG are increasingly integrated into investment analysis, processes and decision-making.

The “E” captures energy efficiencies, carbon footprints, greenhouse gas emissions, deforestation, biodiversity, climate change and pollution mitigation, waste management and water usage.
The “S” covers labor standards, wages and benefits, workplace and board diversity, racial justice, pay equity, human rights, talent management, community relations, privacy and data protection, health and safety, supply-chain management and other human capital and social justice issues.
The “G” covers the governing of the “E” and the “S” categories—corporate board composition and structure, strategic sustainability oversight and compliance, executive compensation, political contributions and lobbying, and bribery and corruption.

ESG metrics have evolved in recent years to measure risk as well as opportunity. In his “Dear CEO” letter in 2018, BlackRock Chairman and CEO Larry Fink wrote that:

[s]ociety is demanding that companies, both public and private, serve a social purpose. To prosper over time, every company must not only deliver financial performance, but also show how it makes a positive contribution to society. Companies must benefit all of their stakeholders, including shareholders, employees, customers, and the communities in which they operate.

He goes on to say that:

Companies must ask themselves: What role do we play in the community? How are we managing our impact on the environment? Are we working to create a diverse workforce? Are we adapting to technological change? Are we providing the retraining and opportunities that our employees and our business will need to adjust to an increasingly automated world? Are we using behavioral finance and other tools to prepare workers for retirement, so that they invest in a way that will help them achieve their goals? [5]

Other leading business leaders have also supported more expansive views regarding the purpose of a corporation. In August 2019, the Business Roundtable, a non-profit organization comprised of corporate CEOs, released a new Statement on the Purpose of a Corporation (the “BRT Statement”). [6] The BRT Statement was signed by the CEOs of nearly 200 leading U.S. companies and identified shareholders as one of five key stakeholders—along with customers, workers, suppliers and communities. The BRT Statement supersedes prior statements that endorsed shareholder primacy (the idea that corporations exist principally to serve shareholders), and “outlines a modern standard for corporate responsibility.” [7]

ESG in Practice

Under the current disclosure regime applicable to public companies listed in the United States, there is no affirmative duty to provide disclosures on ESG matters. As a practical matter, however, it can be anticipated that important stakeholders, such as investors, insurance companies, lenders, regulators and others, will increasingly look to companies’ disclosures to allow them to evaluate whether those companies have embraced ESG agendas. And, even in the absence of an affirmative duty to disclose, the substance of the information that companies do elect to report regarding their actions to identify and manage ESG risks and opportunities will be subject to the securities laws.

As we will discuss in future posts in this series, the ESG regulatory landscape regarding disclosure is rapidly evolving. While there is a general recognition of the value of, and the imperative for, consistent and decision-critical information to more easily evaluate how companies are overseeing and managing ESG-related risks and opportunities, most companies have yet to achieve that level of consistency. Moreover, ESG factors cover a broad range of activities that may or may not be relevant to particular businesses and their performance, or their potential positive effect on communities, or more broadly, societies. These metrics need to be refined. Accordingly, a prudent public company will find it desirable to establish its own criteria for determining the scope and content of its ESG disclosures, both to mitigate legal risk and identify future opportunities that ESG presents in terms of growth and differentiation.

In the absence of international consensus regarding ESG disclosures, a number of frameworks and indices have emerged to guide company disclosures and inform investors. Some of the leading international frameworks include the Global Reporting Initiative standards, the Sustainability Accounting Standards Board (SASB) standards, the United Nations Principles for Responsible Investment and the United Nations Sustainable Development Goals. Ratings have also proliferated over the last decade. Morgan Stanley Capital International (MSCI) and specialist firms such as Sustainalytics have recently been joined by traditional credit rating agencies such as Moody’s and S&P Global. A recent estimate suggests that the “global market for ESG ratings is currently worth about $200m and could grow to $500m within five years.” [8] The influence of these frameworks and rating agencies is such that they may shape regulation to come.

ESG is also influenced by public opinion. ESG issues are inherently reputational, especially given recent societal events. As more companies provide ESG disclosures and commitments, and given the speed of social media responses and the news cycle, observations about a company’s ESG actions or inactions are often published and sometimes go viral. Companies that are out of step with public opinion and market demands may face punishing reputational consequences.

Matching Aspiration and Action

We will describe in subsequent alerts the challenges faced by companies in developing a disclosure posture that satisfies the needs of a growing number of stakeholders, as well as the challenges faced by many of those stakeholders in obtaining information that is consistent and decision-critical. While ESG disclosures today are, from an SEC perspective, purely voluntary, over time that could change, and in the meantime there may be increasing pressure from a range of stakeholders to incorporate ESG statements. If a company’s ESG disclosures (for example, those in relation to compliance with legal, regulatory or voluntary standards or a particular commitment to achieve an ESG-positive outcome) later appear to be false or misleading, the company could face reputational backlash, shareholder lawsuits or possibly regulatory enforcement. Putting aside which disclosure standards they adopt, companies should ensure that they take a systematic approach to ESG reporting.

We highlight below considerations that should facilitate tying aspirations to actions and mitigating legal and reputational risks for commitments that cannot realistically be achieved:

Monitor internal ESG disclosures and commitments . Management should appoint a team tasked with monitoring the company’s ESG disclosures and commitments, recognizing that these statements can appear in a variety of formal communications ( g. , SEC filings, or in documents incorporated by reference in SEC filings, sustainability reports and corporate responsibility reports) as well as informal communications ( e.g. , communications to employees, social media posts, media interviews and website postings). The team should identify existing ESG commitments to establish a baseline. Thereafter, the team should have a procedure in place to monitor ESG disclosures of the company as well as of peer firms.
ESG statements made publicly should be vetted for factual accuracy and context in the same way as any other statement of fact.
Forward-looking commitments should be qualified as such, much as other forward-looking statements are (with aspirational qualifiers and appropriate disclaimers).
Management should consider extending the internal disclosure controls and procedures process to ESG statements, since some statements may well find their way into SEC filings.
Even though ESG disclosure standards are not mandatory, the SEC has noted that it will be comparing information that is voluntarily provided with disclosures made in SEC reports and registration statements, which is consistent with its general approach of monitoring analyst and investor calls as well as other statements made outside of SEC filings (for example, to police the use of non-GAAP financial measures and selective disclosure rules).
As with all material statements that are included in public disclosure, coordination among the relevant internal constituencies is critical and collaboration should be encouraged.
Educate employees on the risks associated with ESG disclosures . Employees responsible for preparing and updating ESG disclosures should be sensitized to the risks associated with public disclosures and to the importance of ensuring that ESG statements are consistent with the company’s description of its business, its MD&A and its risk factors in annual and quarterly reports, even if those latter disclosures have no apparent ESG themes.
Measure ESG performance . The ESG team should establish procedures to determine whether the company’s actions match its public ESG goals, the standards set by industry leaders and the frameworks established by third parties that the company has committed to—or is required to—follow. Doing so can help a company identify any vulnerabilities in order to mitigate potential legal and reputational risks.

1 See Greg Iacurci, “Money moving into environmental funds shatters previous record,” CNBC (January 14, 2020) , available here . (go back)

2 Lucca De Paoli, “European ESG Funds Pulled in Record $132 Billion in 2019,” Bloomberg (January 31, 2020), available here . (go back)

3 See Madison Darbyshire, “ESG funds continue to outperform wider market,” Financial Times (April 3, 2020), available here . (go back)

4 See Siobhan Riding, “Majority of ESG funds outperform wider market over 10 years,” Financial Times (June 13, 2020), available here . (go back)

5 Larry Fink, Blackrock, “‘Dear CEO Letter” (2018), available here . (go back)

6 Business Roundtable, “Business Roundtable Redefines the Purpose of a Corporation to Promote ‘An Economy That Serves All Americans’” (August 19, 2019), available here . (go back)

7 Id . (go back)

8 Billy Nauman, “Credit rating agencies join battle for ESG supremacy,” Financial Times (September 17, 2019), available here . (go back)

One Comment

Common ESG metrics by Deloitte, EY, KPMG, PwC: Please show business case.

The Big Four accounting firms EY, PwC, KPMG, and Deloitte have unveiled on 22 September 2020 a paper proposing to harmonize ESG reporting standards. However, they have not presented any business case. Real data with real companies is what is needed.

Author: Sharafat A. Paracha, 25 September 2020.

Many years ago, before ESG was even coined, I was a young graduate with a Masters’ in Sustainability and I proposed Bordier & Cie, one of the oldest private banks in Geneva (and the only one to have maintained its unlimited liability status), to develop a Corporate Social Responsibility Index for one of its clients. That was 1999 and again in 2000. Claude Morgenegg, the person who hired me, had a Ph.D. in mathematics and in charge of the analysis team. He looked at the general framework I submitted to and then said: you have a model. Great! Now prove it works by collecting the data. That is when reality kicked me in the face and showed me that it was easier said than done.

So, I had to design a system for collecting the data I needed that was not publicly available. Remember, this was before sustainability reports were a common staple. Only a few Scandinavian companies were informing the public on CSR issues. I had to design a questionnaire to give to companies and follow-up with them to obtain answers. Answers from companies were not enough. No, no, no. I had to validate their answers by conducting investigations into their activities around the world, comparing their reports from what NGOs and other sources said. Then I had to convert it all into understandable, measurable and comparable metrics before arriving at a final selection. Then, there was the process of analyzing all the information I had, filtering it and assessing it before it could be ready to be transcribed into a system of notation. This CSR index needed also to be reproducible in the future. Only then one could use it for decision making in portfolio selection. I still have the work I did for them in a diskette. Remember those? I cannot read it as the technology is now obsolete. It was hard work which I did alone but with good guidance and serious oversight. It was necessary as what was at stake was tens of millions of Swiss francs and Bordier & Cie reputation to deliver to the client and to the rest of the private banks. Bordier & Cie became among the first private banks in Switzerland to offer CSR analysis to its clients.

The situation in ESG now in 2020 is completely different from 20 years ago. Sustainability reports have become a staple for corporations. There are a plethora of sustainability standards. There are now teams of ESG analysts who work in banks and for specialized funds producing streams of reports regularly. There is an overload of sustainability perspectives, systems and data. Complexity in ESG has become the norm.

The big four accounting firms EY, PwC, KPMG, and Deloitte are not facing the challenges I faced. They are not alone and are not operating with limited resources. They have access to every ESG source and data. They have substantial resources. They have knowledge, experience and clout. Together with the World Economic Forum they have unveiled on 22 September 2020 a paper proposing to harmonize ESG reporting standards. However, they fail to provide any data, any case study, any business model to back their proposal. Putting a table of metrics together is the easy part. The harder part is getting companies to agree, getting the data, independently validating the data (be in no doubt that if you don’t do this you expose yourself to serious risks – after all, there are also short sellers), getting banks to find them useful, getting clients to put their money.

This is a welcome first step, don’t get me wrong. ESG needs this to take-off and anything that starts the ball rolling is to be encouraged. But I believe a solid business case is necessary. When I developed the Bordier & Cie CSR system, I looked into more than 20 companies. It is reasonable to ask the Big Four accounting firms and the World Economic Forum to commit to providing 20 ESG evaluations of diverse types of corporations based on their harmonized metrics for IBC’s Winter Meeting in January 2021.

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Essay on Social Responsibility

Social responsibility is a term that has been used in different contexts, including the economy, education, politics , and religion. Social responsibility is challenging because it encompasses so many aspects, and there is no single definition of social responsibility. In simple words, social responsibility is the responsibility of an individual to act in a way that promotes social well-being. This means that a person has a sense of obligation to society and sacrifices for the good of others. BYJU’S essay on social responsibility explains the importance of being a socially responsible citizen.

A society’s responsibility to the individuals in that society can be seen through the various social programmes and laws. Governments try to create a better world for their citizens, so they implement various social programmes like welfare, tax assistance, and unemployment benefits. Laws are also crucial to a society because they enforce practical actions by its citizens and punish harmful actions. Now, let us understand the significance of social responsibility by reading a short essay on social responsibility.

Importance of Social Responsibility

BYJU’S essay on social responsibility highlights the importance of doing good deeds for society. The short essay lists different ways people can contribute to social responsibility, such as donating time and money to charities and giving back by visiting places like hospitals or schools. This essay discusses how companies can support specific causes and how people can be actively involved in volunteering and organisations to help humanitarian efforts.

Social responsibility is essential in many aspects of life. It helps to bring people together and also promotes respect for others. Social responsibility can be seen in how you treat other people, behave outside of work, and contribute to the world around you. In addition, there are many ways to be responsible for the protection of the environment, and recycling is one way. It is crucial to recycle materials to conserve resources, create less pollution, and protect the natural environment.

Society is constantly changing, and the way people live their lives may also vary. It is crucial to keep up with new technology so that it doesn’t negatively impact everyone else. Social responsibility is key to making sure that society is prosperous. For example, social media has created a platform for people to share their experiences and insights with other people. If a company were going to develop a new product or service, it would be beneficial for them to survey people about what they think about the idea before implementing it because prior knowledge can positively impact future decisions.

Social responsibility is essential because it creates a sense of responsibility to the environment . It can lead to greater trust among members of society. Another reason is that companies could find themselves at a competitive disadvantage if they do not ensure their practices are socially responsible. Moreover, companies help people in need through money, time, and clothing, which is a great way to showcase social responsibility.

Being socially responsible is a great responsibility of every human being, and we have briefly explained this in the short essay on social responsibility. Moreover, being socially responsible helps people upgrade the environment and society. For more essays, click on BYJU’S kids learning activities.

Frequently Asked Questions

Does being socially responsible help in protecting the environment.

Yes. Being socially responsible helps in protecting the environment.

Why should we be socially responsible?

We should be socially responsible because it is the right thing to upgrade society and the environment. Another reason is to help those in need because when more people have jobs, the economy can thrive, and people will have more opportunities.

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Essays on Social Responsibility

The importance of sociological theories.

Social responsibility is a modern philosophy that states that all individuals and organizations are obligated to help the community at large. This is typically an active effort involving acting against a social issue or prevention of committing harmful acts to the environment. Many companies and individuals engage in social responsibility because of its benefits on their immediate community as well as their business and profitability. It is an ongoing topic in society with many questions available for discussion.

Argumentative Essay

Social responsibility is an ideal topic for debate; there have been mixed results for companies and individuals who have pursued social responsibility. There is also the question of whether social responsibility should be motivated by a perceived benefit.This type of essay is based on philosophical theories on the necessity of social responsibility backed up with facts about previous social responsibility efforts. For example, an essay could be about how giving support to disaster victims can significantly boost an entity's professional image.

Analytical Essay

Social responsibility is a broad field of study; there are numerous factors to analyze in determining which mix of factors will have the highest chance of a successful social responsibility effort. For example, an author can look into the different types of philanthropy that address a social injustice, including: giving monetary gifts, hosting social awareness events and starting a sub-organization which addresses the issue at hand. Each type of social effort may have varying levels of effectiveness depending on the people’s acceptance and the complexity of the issue itself.

There are an abundant number of social responsibility campaigns enacted by different companies and individuals. Authors choose a particular entity and write a case study about that entity’s social responsibility efforts. This includes researching the motivation behind the effort, analyzing the program execution and judging the overall social impact of the campaign. Moreover, the essay can also highlight how the social responsibility effort directly affected the entity itself. Some common methods include doing a profitability comparison before and after the social responsibility campaign and conducting a qualitative study of how the campaign improves the entity’s image and reputation.

Future Application

Social responsibility is a highly evolving topic. Given the reported indirect benefits of social responsibility, there is a growing argument of how it should become a new form of business. Based on the original philosophy of social responsibility, this type of essay discusses the outlook on the integration of social responsibility in the work force. Some topics include the feasibility of a pure social responsibility company, ways for a single company to efficiently help macro audiences such as third world countries, or the possibility of legally enforcing social responsibility efforts from all companies.

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"Essays on Efficiency Measurement and Corporate Social Responsibility"; Constantin Belu; 2009
"Professional Ethics and Social Responsibility"; Daniel E. Wueste; 1994
"Corporate Social Responsibility"; Philip Kotler; 2005

Raleigh Kung has been a social-media specialist and copywriter since 2010. He has worked with various companies on their online marketing campaigns and keeps a blog about social-media platforms. Now, he mainly writes about online media and education for various websites. Kung holds a master's degree in management and entrepreneurship from the University of San Francisco.

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Corporate social responsibility.

Abagail McWilliams Abagail McWilliams College of Business Administration, University of Illinois at Chicago
https://doi.org/10.1093/acrefore/9780190224851.013.12
Published online: 28 February 2020

Corporate social responsibility (CSR) is a legitimate responsibility to society, based on the principle that corporations should share some of the benefit that accrues from the control of vast resources. CSR goes beyond the legal, ethical, and financial obligations that create profits.

In the research literature, corporate social responsibility is defined in a variety of ways, depending on the aspect of CSR being examined. An inclusive definition is that social responsibility requires the firm to take into account the interests of all stakeholders, where stakeholders are defined as everyone who affects or is affected by the firm’s decisions and actions. A firm-focused definition holds that social responsibility includes actions that further a social goal, beyond what is required by ethics, law, and profitability. A political economy–oriented definition posits that firms have a responsibility to correct market failures such as negative externalities and government failures such as limits to jurisdiction that result in worker rights violations.

When implemented, altruistic CSR implies that firms provide a social good unrelated to the firms’ business that does not benefit the bottom line. Strategic CSR implies that firms are simultaneously profitable and socially responsible. To achieve this, CSR must be a core value of the firm and must be integrated into processes and products. When employed strategically, CSR can be an element of a differentiation strategy, leading to premium prices, enhanced brand and firm reputation, and supportive community relations. Corporate environmental responsibility often takes the form of overcompliance with regulation, improving the environment more than is required. A primary benefit of this is to stave off further regulation.

To capture the benefits of being socially responsible, the firm must make stakeholders aware of its record. This has led to triple bottom line reporting—that is, reporting about firm performance in terms of profits, people, and the planet. Social enterprises go a step further and make social responsibility the primary goal of the organization.

corporate environmental responsibility (CER)
corporate social performance (CSP)
greenwashing
overcompliance
political corporate social responsibility
psychological benefits
stakeholders
strategic CSR
sustainability
triple bottom line

Historical Perspective

Corporate social responsibility (CSR) can be thought of as legitimate responsibility to society that goes beyond the legal, ethical, and financial obligations that create profits, based on the principle that corporations should share some of the benefit that accrues from the control of vast resources. Or, more plainly, in market economies corporations can amass great wealth because society protects their right to do so, therefore the corporations owe something back to all of society, not just those engaged in market exchange with the corporations. The world’s resources should benefit the poorest in addition to the wealthiest, and corporations can be the conduit through which resources are befittingly distributed.

When resources are not equitably distributed, the disadvantaged look first to the government for help and support. But when the government hasn’t the resources, the will, or either, it cannot provide adequately for those in need and may engineer public policy to require businesses to be responsible.

The idea that corporations should act responsibly dates back to the inception of industrialization. With industrialization, the poor were often driven off the land and into cities to look for employment. The available employment, however, did not pay a living wage for an individual, let alone a family. This led to crushing poverty, ill health, and short lives for the working poor. Some industries employed young children, and low pay and inhumane working conditions were common (Marx & Engels, 1967 ). In general, governments didn’t have the will to require firms to act responsibly toward exploited groups. However, in 1833 , the English Parliament passed Lord Althorp’s Factory Act, which effectively regulated child labor in the textile industry in England. Responsible behavior was forced upon rich industrialists, but more importantly the act established the right of government to regulate industry for a clear social purpose (Marvel, 1977 ).

A hundred years after the passage of the first effective industrial regulation, the plight of the disadvantaged was not much improved. The Great Depression highlighted the resource disparities inherent in industrialized economies and triggered attention to the lack of social responsibility displayed by wealthy corporations. But World War II intervened, and the focus turned away from social needs and toward supplying the military. After the war ended and throughout the 1950s, economies turned to modernization and, in much of the world, replacement of lost industrial capacity. It was a time of great prosperity in industrial nations, but, as before, the benefits of prosperity were not equally distributed. The politically weak, including women and minorities, didn’t garner much of the benefits.

In the 1960s there was intense focus on social problems, including disparity of opportunity as well as disparity of resources. It was clear that disadvantaged groups did not have equal access to resources, many of which were controlled by corporations for the benefit of their shareholders. As women and minorities gained political power, calls for corporations to be socially responsible became more direct and visible.

Definitions

There are myriad definitions of corporate social responsibility, a few of which follow. In a managerial context, McWilliams and Siegel ( 2001 , p. 117) define corporate social responsibility as “actions that appear to further some social good, beyond the interests of the firm and that which is required by law.” From an economic perspective, Lundgren ( 2011 , p. 70) defines corporate social responsibility as “actions that, to some degree, imply corporate beyond-compliance behavior in the social and/or the environmental arena,” and Bénabou and Tirole ( 2010 , p. 2) define corporate social responsibility as “sacrificing profits in the social interest.” From a political economy viewpoint, Heal ( 2005 , p. 387) defines corporate social responsibility as “a programme of actions to reduce externalized costs or to avoid distributional conflicts.” The examples go on, with Dahlsrud examining 37 of them and concluding that “Although they apply different phrases, the definitions are predominantly congruent, making the lack of one universally accepted definition less problematic than it might seem at first glance ( 2008 , p. 6).” In a discussion of why there is no definitive definition of corporate social responsibility, McWilliams, Rupp, Siegel, Stahl, and Waldman ( 2019 , p. 3) speculate that “Targeted definitions allow researchers to focus on an area of study such as the environment or stakeholders, or on processes such as operations or strategy, while broad definitions allow interdisciplinary discourse on the motivations and ramifications of CSR.”

Beyond defining what corporate social responsibility is, it is helpful to clarify related terms that are sometimes confused with corporate social responsibility.

Compliance, Ethics, and the Triple Bottom Line

The terms compliance, ethics, and corporate social responsibility are often used interchangeably, but mistakenly so. Carroll’s pyramid of responsibilities is a good guide for separating the concepts. According to Carroll, compliance is a legal requirement, while ethics is the requirement to do no harm, and corporate social responsibility is the expectation for corporations to go beyond compliance and ethics and do good for society, creating social value (Carroll, 1991 ).

But being socially responsible and being irresponsible are not mirror images of each other. That is, being socially responsible is not just the absence of irresponsibility, and neither is social irresponsibility simply the absence of being responsible. Failing to meet any of the three explicit requirements of fiscal responsibility, laws, and ethics is irresponsible management. But meeting all three of these responsibilities does not rise to being socially responsible. Between irresponsible and socially responsible is the state of meeting fiscal, legal, and ethical responsibilities while not going the extra mile to create social good. This can be called socially neutral.

Corporate social responsibility is sometimes referred to as balancing the triple bottom line: profits, people, and the planet. The triple bottom line incorporates the idea of economic, social, and environmental concerns for which a corporation may have responsibility. A corporation that measures its performance against a triple bottom line explicitly promotes a broader responsibility than that of profit maximization and uses triple bottom line performance to convey to internal and external stakeholders that the corporation is being socially responsible in its decisions and operations.

Theoretical Perspectives

Conventional exclusionary view.

Nobel Prize–winning economist Milton Friedman argued that the responsibility of business is to maximize profits for the benefit of the owners (shareholders), within ethical and legal boundaries. Responsibility for social programs, he argued, rightfully adheres to elected officials (Friedman, 1970 ).

Arrow ( 1973 ) challenged Friedman’s broad conclusion that corporations have no responsibilities beyond profit maximization on two counts. Count one is that production often generates negative externalities (such as air and water pollution) that are not appropriately priced in the market. Count two is that there is asymmetric information between producers and consumers. Producers have more knowledge about the true quality (and therefore true value) of products than do the consumers who purchase them. Arrow concludes these two market imperfections create a social responsibility for corporations because, while externalities are sometimes regulated by government, asymmetric information is not, and both can be addressed more efficiently by corporations than by governments.

Heal ( 2005 ) offers an updated perspective of corporate social responsibility that builds on Arrow, adding the risk of protests, such as Occupy Wall Street, to Arrow’s challenge of Friedman. Heal proposes that corporate social responsibility programs (such as corporate environmentalism) can reduce externalities and also ward off conflicts and demands for distributive justice, such as Black Lives Matter (Schulz, 2017 ). Arrow and Heal’s arguments also provide a basis for stakeholder theory.

Inclusive View

Stakeholder theory challenges the assumption that shareholders have the only valid claim on the resources controlled by corporations. Freeman and Reed ( 1983 ) argue that any group that affects or is affected by the behavior of the corporation is a stakeholder whose interests should be considered in corporate decision-making. As corporations increasingly acknowledged responsibilities beyond profit maximization, stakeholder management became a means of enhancing firms’ reputations and improving community relations, and stakeholder theory became a dominant logic in corporate social responsibility. Incorporating stakeholder theory into strategic management has resulted in stakeholder analysis being directed at helping managers identify stakeholders and prioritize claims on corporate resources (Chandler, 2017 ).

Carroll ( 1991 ) repudiates Friedman’s conclusion that corporations have no social responsibility. He proposes a normative model of corporations as organizations with multiple responsibilities: economic/fiscal, legal, ethical, and philanthropic. The economic responsibility is necessary for survival, legal responsibility is required for legitimacy, ethical responsibility is required to do no harm, and philanthropic responsibilities are expected of a good corporate citizen. Carroll depicts the responsibilities as a pyramid, with profitability as the base, followed by legal, then ethical and finally philanthropic as the pinnacle. Carroll’s characterization of corporate responsibility is that it includes all four categories, including the philanthropic contributions to the community to promote social good. However, philanthropy differs in being expected, but not required.

Economic View

To explain the link between corporate social responsibility and profitability, McWilliams and Siegel ( 2001 ) take a micro-economic–based theory of the firm perspective. From this perspective, they assume that corporate managers seek to maximize profits and ask the question: How can managers determine the optimal amount of investment to make in corporate social responsibility, that is, how can they determine the amount of investment in corporate social responsibility that is consistent with profit maximization? They propose that corporate social responsibility can be a component of a differentiation strategy. Consumers demonstrate a demand for socially responsible products (e.g., LED lights, free trade coffee, hybrid vehicles) and production processes (e.g., animal-free testing, green production, organic farming), and firms respond by adding the demanded socially responsible characteristics, thereby creating a differentiated product. The added costs of differentiating the product lead to premium prices. McWilliams and Siegel ( 2001 ) therefore conclude that, because the investment in corporate social responsibility supports the firm’s differentiation strategy, it should be treated the same as any strategic investment. To maximize profits, the corporation should invest up to the point where the additional cost of corporate social responsibility is equal to the additional revenue generated by corporate social responsibility.

Lundgren ( 2011 ) provides a formal, mathematical model of corporate social responsibility at the firm level based on micro-economic theory. He proposes that the costs of socially responsible programs can be offset by the increased revenues from consumers who value corporate social responsibility and the increased market value generated by investors who value corporate social responsibility. He explicitly models goodwill capital, an intangible asset, as a primary benefit of corporate social responsibility, tying corporate social responsibility explicitly to firm value and potential profitability.

Corporate social responsibility can also be conceptualized as a form of reputation insurance that protects the firm’s reputation when adverse events occur (Minor & Morgan, 2011 ). Adverse events, such as the 2010 Deepwater Horizon oil spill, are especially costly because they include both direct cost—such as fines, legal costs, and compensation to injured parties—and the indirect costs associated with loss of corporate reputation (Mejri & DeWolf, 2013 ). Loss of reputation can affect stock price, financing terms, and future revenue far into the future. When an adverse event occurs, external stakeholders will make judgments about what went wrong. They may decide that the adverse event was the result of poor management and downgrade the reputation of the firm or they may decide that the event was just bad luck and not recalibrate the reputation of the firm. Being known for corporate social responsibility can sway external judgments in favor of management and the firm, protecting the firm’s reputation and significantly lowering the indirect costs of such an event.

Political View

Bagnoli and Watts ( 2003 ) characterize corporate social responsibility as the private provision (by the corporation) of a public good (such as pollution abatement). Building on this, Scherer and Palazzo ( 2011 ) propose that globalization of business has resulted in political, rather than normative or economic, corporate social responsibility. They point out that laws and regulations are enforced within national boundaries, while social problems know no boundaries and negative externalities (such as air pollution) cross boundaries. The void in global governance may be (perhaps by necessity) addressed by businesses, especially multinational corporations. According to Scherer and Palazzo ( 2011 ), political corporate social responsibility suggests that corporations will contribute to global regulation (such as sustainability or workplace safety) and provide public goods (such as human rights protections and community wellness programs).

Bénabou and Tirole ( 2010 ) characterize corporate social responsibility as a response to government failure. They discuss three ways in which governments fail: capture by special interest groups, limits to jurisdiction, and poor information and inefficiency.

In addressing the problem of limited jurisdiction, Christmann ( 2004 ) suggested that multinationals will embrace a global strategy so that they can transfer best practices of social responsibility across boundaries, effectively creating global standards. Multinational corporations that enforce the same standards everywhere they operate may be merely complying with regulation in their home country but being socially responsible in countries with lower standards. Implementing the same standards globally allows multinational corporations to be more efficient by taking advantage of scale economies and also benefiting from reputation insurance.

McWilliams and Siegel ( 2011 ) reject Baron’s view that motivation determines what is socially responsible behavior and, in contrast, argue that social responsibility that is motivated by profitability can reconcile Friedman’s view of the profit maximization responsibility of the firm with that of social responsibility. That is, by being socially responsible, firms can attend to the bottom line (profits) while also creating social good. This is known as strategic corporate social responsibility, a term introduced by Burke and Logsdon ( 1996 ). To the extent that corporations are meeting expectations of stakeholders, strategic corporate social responsibility disputes Friedman’s view that social responsibility adheres to public officials. According to the Organisation for Economic Co-operation and Development, “Strategic behaviour is the general term for actions taken by firms which are intended to influence the market in which they compete. Strategic behavior includes actions to influence rivals to act cooperatively so as to raise joint profits, as well as non-cooperative actions to raise the firm’s profits at the expense of rivals” (OECD, 2007 , p. 751).

McWilliams and Siegel ( 2001 ) concluded that firms can respond to demands for corporate social responsibility by incorporating social responsibility into a differentiation strategy. The firm differentiates its products/services to include CSR attributes, as well as incorporating CSR into firm processes. Differentiation should allow the firm to charge premium prices to cover additional costs of providing the socially responsible attributes.

However, when asymmetric information allows firms that do not engage in corporate social responsibility to position their products as similar to those that do embody corporate social responsibility, the socially responsible firm may face a competitive disadvantage. The socially responsible firm invests in corporate social responsibility but cannot charge more than the firms that do not. In this situation, the socially responsible firms may be forced to lobby their government for legally enforceable standards that apply to all firms in the industry (Heslin & Ochoa, 2008 ). Conversely, some firms will lobby for standards that cost their competitors more to meet than they cost the lobbying firm. The lobbying firm can create a competitive advantage by masking competitive behavior as social responsibility (McWilliams, Van Fleet, & Cory, 2002 ).

An important distinction of strategic corporate social responsibility is that it is embedded in the corporation’s operations, processes, and core competencies (Aguinis & Glavas, 2013 ), regardless of whether it is implicit as was more conventional in European companies or explicit as in U.S. companies (Matten & Moon, 2008 ). Embedding corporate social responsibility allows for synergistic effects, such as when a steel company uses its core competency in plant design and construction to build plants that are more efficient and use less energy (i.e., are environmentally responsible). Linking the corporation’s social responsibility to its core competencies can produce maximum social benefit. Being explicit and transparent about its corporate social responsibility also enables and enhances positive effects on firm reputation (Servaes & Tamayo, 2013 ).

Corporate social responsibility can be a long-term strategic asset that enhances reputation and brand image. As such, it can lead to customer loyalty and repeat sales and, in some industries, premium prices. Originally thought to only support a differentiation strategy, we now see corporate social responsibility prominently reported by low-cost-leader companies in business-to-business and commodity industries (Nucor, 2018 ). This indicates that while corporate social responsibility can support premium pricing, it also can result in lower costs, such as lower financing costs, lower legal costs, or lower turnover costs, as well as a higher-quality, better-motivated workforce (Sprinkle & Maines, 2010 ). Therefore, strategic corporate social responsibility can support a low-cost-leader strategy when embedded in the core competencies that create low-cost advantage.

However, corporate social responsibility activities will create benefits for the corporation only if they are effectively and honestly communicated to internal and external stakeholders (Lee, Oh, & Kim, 2013 ). When the corporation appears to be claiming to do more than it actually does, employees and consumers quickly become jaded and remain skeptical of future corporate social responsibility claims. Therefore, corporations must be forthright about their social responsibility so as to not generate or escalate skepticism.

Environmental

Environmental responsibility is one of the fastest growing areas of corporate social responsibility worldwide. Because compliance with environmental standards is a legal responsibility, being socially responsible means overcompliance. Corporate environmentalism is sometimes referred to as corporate environmental responsibility.

In the United States, the Environmental Protection Agency (EPA) was created by executive order in 1970 and made responsible for enforcing environmental laws. Early regulation was command and control: the EPA set standards and mandated how corporations complied. Over time, more attention was paid to gathering and disseminating information, and corporations moved to design solutions that met standards in more efficient/cost-effective ways, providing a springboard for corporate environmentalism.

Maxwell, Lyon, and Hackett ( 2000 ) couched corporate environmentalism as strategic self-regulation to preempt political action. They find that the threat of increased regulation is sufficient to prompt corporations to overcomply with existing environmental regulation. Because political action is costly for the firm and for the activists, it makes sense for firms to overcomply to fend off political action, benefiting both the corporation and the environment.

Voluntary environmental reporting such as the Global Reporting Initiative of 1997 encourages corporations to overcomply with environmental regulations and to actively engage in corporate environmentalism (Sheehy, 2019 ) to enhance firm reputation and brand. A reputation for environmentalism can result in many benefits, including attracting environmentally conscious consumers and investors (Lyon & Maxwell, 2008 ), the aforementioned preemption of regulation, and lower legal and financing costs. This last is a result of the lower probability that the firm will incur legal costs as a result of violating environmental standards, such as those tied to oil spills and poisonous gas leaks, since the internal target exceeds the legal regulation (Sheehy, 2019 ).

Environmental laws and regulations differ around the globe, requiring firms to be aware of local regulations but also providing them with opportunities to search for favorable (presumably less stringent) standards. However, Dowell, Hart, and Yeung ( 2000 ) found that firms that enforce the most stringent regulations worldwide are most successful. Additionally, Nidumolu, Prahalad, and Rangaswami ( 2009 ) found that corporations that innovate ahead of increasing standards have time to experiment and test new solutions and that corporations that enforce a single standard worldwide can take advantage of scale economies.

Conversely, corporate environmentalism branding can have serious negative consequences if not designed and implemented properly. Firms that fail to deliver on their environmental claims can be charged with “greenwashing,” that is, overstating their environmentalism. A particularly insidious form of “greenwashing” takes place when a corporation masks its true environmental performance by engaging in selective disclosure of benign impacts rather than full disclosure (Marquis, Toffel, & Zhou, 2016 ). In an empirical study of “greenwashing,” Walker and Wan ( 2012 ) demonstrated that claiming to be green (i.e., environmentally responsible) without actual green behavior negatively affects a corporation’s financial performance.

Sustainability

Corporate environmentalism increasingly embraces sustainability, which is a more comprehensive program of environmental stewardship. Sustainability requires attention to global and intergenerational effects of corporate operations.

According to the 1987 UN Brundtland report (World Commission on Environment and Development, 1987 ), “development that meets the needs of the present without compromising the ability of future generations to meet their own needs” is sustainable. From this, one can extrapolate a definition of corporate environmental sustainability that incorporates a universal dimension—not just a clean environment where the corporation operates now, but a global and intergenerational one. That is, socially responsible corporations must consider the effects of current operations on the environment both now and in the future. They must also balance current and future economic and equity responsibilities.

Sustainability implies more than environmental impact management: all resources must be managed to ensure sustainability. Corporations must be mindful of how they manage farm land, forests, ocean fish stocks, animal and plant breeding, and valuable minerals, as well as how they can support sustainable development in developing economies. Hart ( 2010 ) coined the phrase “sustainable global enterprise” to label multinational enterprises that deliver economic, social, and environmental benefits across all their global operations. An example of a sustainable global enterprise is a multinational food company that “has implemented living wage standards for all of its farm workers in every country in which it harvests fruit, and which has introduced state-of-the-art environmental practices throughout its supply chain” (Aguilera, Rupp, Williams, & Ganapathi, 2007 , p. 838).

Nidumolu et al. ( 2009 ) studied sustainability initiatives of multinational corporations and found that embracing sustainability led to innovation that creates better products and new businesses, increases brand loyalty, and reduces costs—contributing to both the top line (revenue) and bottom line (profitability) of the corporation. Consumers perceive that products that are produced sustainably or have sustainable characteristics are better products and, therefore, worth more. New revenue streams can come from businesses created by recycling and reusing products that have exhausted their original purpose. Additional revenue is generated when consumers develop brand loyalty through their experience with sustainable products. Cost reductions come from using fewer inputs in all parts of the value chain (from raw materials, through production and distribution to final sales). Additionally, firms that anticipate increasing environmental regulation can innovate ahead of their competitors and reap first-mover advantages. All of these increase the bottom line as well as being socially responsible.

Social Enterprise

The simplest type of corporate social responsibility is philanthropy, where a corporation donates part of its profits to programs that address social problems. The inner workings of the firm, its organization, its mission, its strategy, etc., are unaffected by the goals of the programs that receive financial support.

The social goods produced by the financially supported programs can be peripheral to the corporation. Some corporations that engage in strategic corporate social responsibility explicitly align social goods produced with other strategic components of the firm. For example, firms may have “buy one–give one” program where customers buy a branded product (e.g., a pair of shoes) and the firm gives one (pair of shoes) to a child in need. The social mission is less peripheral to profit-making.

Social enterprises go one step further than that and make their social mission part of the firm’s core. Defourny and Nyssens ( 2008 , p. 202) define social enterprises as “not-for-profit private organizations providing goods or services directly related to their explicit aim to benefit the community.”

One type of social enterprise is a benefit corporation, which is a legal business entity that is required to have a social mission at its core (Hiller, 2013 ). In the United States, the need for a new legal form of for-profit that explicitly recognizes a social mission led to laws in some states that allow for benefit corporations. These corporations must declare themselves as such in their articles of incorporation and are required to submit to review by an independent third party to confirm that they are fulfilling their social mission. It should be noted that the independent review of the impact of benefit corporations is holistic—that is, it comprises all of the effects of the corporation on society, not merely its effect on selected areas such as profitability and environmentalism (B Lab Company, 2017 ). This is in contrast to standard corporations, which can legally engage in “greenwashing,” promoting corporate social responsibility activities while simultaneously obfuscating socially irresponsible actions (Marquis et al., 2016 ; Walker & Wan, 2012 ).

Another type of social enterprise is social entrepreneurship, which is an “innovative, social value creating activity that can occur within or across the nonprofit, business, or government sectors” (Austin, Stevenson, & Wei-Skillern, 2012 , p. 371). While the social mission is always core to social entrepreneurship, it is not always obviously so, because it may be either explicit or implicit. In social entrepreneurship for the disadvantaged the social mission is explicit, that is, benefits (such as jobs) are provided to the disadvantaged. In social entrepreneurship by the disadvantaged, there is an implicit social mission of improving the (disadvantaged) entrepreneur’s circumstances, irrespective of whether there is an explicit social mission, such as providing jobs for others who are disadvantaged (Renko & Freeman, 2019 ).

The implicit social mission of entrepreneurship by the disadvantaged provides a conduit for social good created by corporate social responsibility programs, making support of entrepreneurship an attractive option for firms that engage with disadvantaged populations. For example, multinational corporations in Africa are adding to their corporate social responsibility portfolios the support of entrepreneurship in disadvantaged economies through education, training, and skills development initiatives (DeBerry-Spence, Torres, & Hinson, 2019 ).

The Business Case

The business case for corporate social responsibility refers to the belief that there is a causal link between being socially responsible and achieving profitability. It is argued that firms that do good (for society) will do well (be more profitable and have higher market value). In the context of corporate social responsibility, “doing well” can be the result of many advantages, such as premium pricing, repeat sales, higher employee productivity, lower cost of capital, or lower legal costs, all of which may translate into higher profitability and firm value in either the short run or the long run. Determining if firms “do good” is more problematic but is generally referred to as corporate social performance, which Wood defines as “a business organization’s configuration of principles of social responsibility, processes of social responsiveness, and policies, programs, and observable outcomes as they relate to the firm’s societal relationships” ( 1991 , p. 693). Two widely used measures of corporate social performance are the Fortune Corporate Reputation Index and the Kinder, Lydenberg and Domini (KLD) index of reputation (Fombrun, Gardberg, & Sever, 2000 ).

In the 1990s the business case for corporate social responsibility (doing well by doing good) became a dominant theme in academic research. Countless empirical studies attempted to show a causal link between corporate social responsibility and corporate financial performance. These studies were hampered by difficulties in defining and measuring corporate social performance, often leading to inconsistent results (Margolis & Walsh, 2003 ) and sometimes suffering from lack of methodological rigor (McWilliams & Siegel, 2000 ). Barnett ( 2007 ) concludes that there is no universal evidence of doing well by doing good, because doing well is contingent upon the corporation, the timing, and the particular socially responsible investment. He suggests that academic research should focus on figuring out when, where, and what type of social responsibility will allow corporations to do well by doing good. Carroll and Shabana ( 2010 , p. 101) support Barnett’s findings and conclude that “the benefits of CSR are not homogeneous, and effective CSR initiatives are not generic.”

Although meta-analyses have been conducted (e.g., Friede, Busch, & Bassen, 2015 ) in an attempt to make sense of the inconsistent results of earlier studies, the inclusion of criticized empirical studies and the bias toward publishing only studies that have statistically significant results makes the results of meta-analyses problematic. Given the inherent difficulties of testing the business case for corporate social responsibility, including, “the inaccessibility, both apparent and actual, of good data” (Wood, 2010 , p. 75) and the lack of consensus on appropriate methodology, academic research has subsequently moved beyond trying to empirically verify a causal link between corporate social responsibility and profitability to accepting that corporations have social responsibilities and examining how such responsibilities can be met to the advantage of the corporation and society, ultimately arriving at the concept of strategic corporate social responsibility.

Non-Pecuniary Benefits

Although it’s difficult to separate out and quantify the effects of corporate social responsibility on firm performance, the effects on individuals can be measured directly by survey methodology. Therefore, we have better evidence of the non-pecuniary effects of corporate social responsibility than we have of corporate social performance. Corporate social responsibility is by definition about the corporation, but it is individuals who make decisions, carry out corporate social responsibility programs, and are affected by corporate actions. Stakeholders such as managers, employees, consumers, investors, and community members can shape and be shaped by corporate social responsibility activity and consequently often receive psychological benefits from their association with socially responsible corporations. The psychological benefits generated by these associations with the corporation are a component of the social value created by corporations that engage in corporate social responsibility.

Internal Stakeholders

Internal stakeholders include managers, employees, and board members, all of whom may affect or be affected by the firm’s social responsibility programs, processes, and reputation. Corporate social responsibility can be initiated by managers for personal reasons, including personal values, religious beliefs, commitment to social causes, professional image building, or a need to feel good about themselves (Hemingway & Maclagan, 2004 ). Manager-initiated corporate social responsibility can be either strategic or philanthropic, depending on the constraints of corporate governance, firm strategic orientation, and the availability of discretionary funds. Managers receive a psychological benefit when they can support their personal values, religious beliefs, or identity. It is common for large corporations to have social responsibility officers who shape the culture and reputation of the firm, maintain corporate social responsibility programs, and communicate to internal and external stakeholders. These executives have more opportunity to reap social and psychological benefits from corporate social responsibility.

In general, people desire to have meaning in their lives and often look for meaning in their work. Aguinis and Glavas ( 2019 ) explored how corporate social responsibility can help employees find meaning in their work. The closer the fit between the corporation’s identity and the employee’s identity, the more meaningful the work will seem. For example, a person who identifies as a caregiver will find meaningfulness in their work in a hospital. Corporate social responsibility programs provide additional information and experience that can help workers find more meaning in their work, that is, they may perceive that their work can serve a greater purpose.

Corporate social responsibility can affect employees’ perceptions and attitudes about their work and workplace. Gavin and Maynard ( 1975 ) tested the relationship between the employee’s perception of the corporation’s concern for the environment and the employee’s general satisfaction with their employment. They found that employees tended to report more satisfaction the greater the perceived corporate concern for the environment. Perhaps more telling, they found that the younger workers in the 1970s were most concerned about corporate environmentalism, which perhaps foretold increasing environmental awareness and activism.

Chong ( 2009 ) examined how participation in corporate social responsibility programs affect employee’s understanding and commitment to the corporation’s identity, where organization identity can be defined as “the set of meanings by which a company allows itself to be known and through which it allows people to describe, remember and relate to it” (Wheeler, Richey, Tokkman, & Sablynski, 2006 , p. 98). Chong found that participation in corporate social responsibility programs feeds off of and reinforces corporate identity, resulting in the employee experiencing higher motivation, satisfaction, and commitment to the corporation.

Mozes, Josman, and Yaniv ( 2011 ) studied the relationship between corporate social responsibility activity and both organizational identification (a driver of loyalty) and motivation to work. Workers in their study were classified as either active participants or non-active participants in volunteerism programs. Active participants demonstrated higher levels of organizational identification and motivation to work. To be most effective for external beneficiaries and most meaningful for the employees, corporate social responsibility must be embedded in the routines and processes of the organization (Aguinis & Glavas, 2013 ).

Meister ( 2012 ) found that 53% of workers surveyed by the nonprofit Net Impact reported that having a job where they can make a difference to society is important to their happiness. Further, 72% of students getting ready to enter the workforce also felt this way. According to Meister, to recruit and retain young top talent, corporations not only have to engage in corporate social responsibility, they must communicate their engagement through social media.

External Stakeholders

External stakeholders may be affected by the firm’s social responsibility programs, processes, or products, but as outsiders they do not affect these. External stakeholders include consumers, suppliers, investors, and community.

Consumers derive psychological value from purchasing socially responsible products. According to Green and Peloza ( 2011 ) there are three categories of benefit: emotional, social, and functional. Buying products from socially responsible companies allows consumers to feel good about themselves. This emotional response can be associated with companies that make charitable contributions to social causes. Consumers feels good about themselves (emotional benefit) for buying from a company that is altruistic. Alternatively, buying products from a socially responsible company can define the consumer as a good person to others and elevate their position in the community (social benefit). This social response can be associated with companies that champion a social cause such as environmental sustainability. Functional benefit comes from purchasing products that function better because of CSR attributes, such as fuel-efficient cars. The three types of benefit can work together and amplify each other. “For example, a hybrid vehicle can provide functional value (lower operating costs), emotional value (joy in saving or environmental stewardship), and social value (meeting relevant norms)” (Green & Peloza, 2011 , p. 52). For consumers to derive value from corporate social responsibility, they must be aware of it. Corporations traditionally used company reports, web pages, and advertising to make consumers aware of their corporate social responsibility but are now feeling pressure to communicate more broadly and often over social media.

Socially responsible investing provides psychological value to investors. According to Beal, Goyen, and Philips ( 2005 ), this value can take the form of “fun of participation” similar to what gamblers experience, or it can take the form of happiness similar to that generated by pleasurable activities. Psychological value augments the financial returns to socially responsible investments and helps explain the decision to invest in screened funds. According to Dam and Scholtens ( 2015 , p. 104), “consumers receive a warm-glow” when they invest responsibly.

Benefits to Investors

Investing in socially responsible firms, commonly referred to as socially responsible investing (SRI), is a way for investors to join their values and their desire for monetary gain. This has become easier for individual and institutional investors with the growth of mutual funds focused on socially responsible investing. At the start of 2018 there was over $30 trillion invested in socially responsible stock, with nearly half this amount held in Europe (Global Sustainable Investment Alliance, 2019 ). In the United States there are mutual funds that filter for social responsibility, allowing individual and institutional investors to encourage socially responsible corporations while withholding support from firms that engage in industries (such as gambling) or activities (such as genetic modification) that are not viewed as socially responsible. Because perceptions of what is socially responsible and what is not can vary, mutual fund managers develop screens to appeal to different viewpoints and choose stock of firms that meet the criteria of the screen but also meet the criteria for firm/stock performance. Several empirical studies comparing the returns to socially responsible funds and unrestricted funds have found that there is no systematic difference (e.g., Bauer, Koedijk, & Otten, 2005 ; Hamilton, Jo, & Statman, 1993 ; Sauer, 1997 ). In a meta-analysis of earlier studies, Revelli and Viviani ( 2015 , p. 158) found that “the consideration of corporate social responsibility in stock market portfolios is neither a weakness nor a strength compared with conventional investments.” On average the returns to SRI funds are the same as the returns to unrestricted funds, making SRI funds attractive to both individual and institutional investors because they combine competitive financial returns with psychological benefits (feeling good about oneself for being socially responsible).

Other avenues for socially responsible investing include individual stocks (with the opportunity to engage directly with the corporation) and community development financial institutions which engage in socially responsible investing by providing loans to small businesses in low-income, at-risk communities who otherwise would not have access to financing (Schueth, 2003 ).

Corporate social responsibility is a well-researched and thoroughly discussed topic. While there is general consensus among researchers and commentators that corporations have responsibilities to society that go beyond profit maximization, what those responsibilities are and how they should be met are still open questions. Stakeholder theory, Carroll’s pyramid of corporate responsibilities, micro-economic theory of the firm, altruistic and strategic corporate social responsibility, corporate self-regulation, political corporate social responsibility, corporate environmentalism, and sustainability all offer insights into the responsibilities of corporations and how those responsibilities may be met.

When viewed from the perspective of the firm, the evidence of corporate social responsibility has generally been about the link between corporate social performance and financial performance or firm value, with mixed results. But financial effects are not the only effects of corporate social responsibility. Individuals experience psychological effects that are also a part of the social good created by socially responsible corporations. Researchers have reported significant effects, including:

Workers find meaning in their work and experience higher motivation, satisfactionm and commitment to the firm.

Consumers feel good about themselves.

Investors get a warm glow from supporting socially responsible firms.

We have abundant information about what is and isn’t corporate social responsibility, how corporate social responsibility benefits corporations and individuals, and how investors can encourage socially responsible corporations and discourage irresponsible corporations. However, we know less about how corporations can address social problems such as human rights, justice, poverty, and environmental sustainability and next to nothing about the record of corporate social responsibility in addressing such social problems.

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Does ESG really matter—and why?

Since the acronym “ESG” (environmental, social, and governance) was coined in 2005, and until recently, its fortunes were steadily growing. To take one example, there has been a fivefold growth in internet searches for ESG since 2019, even as searches for “CSR” (corporate social responsibility)—an earlier area of focus more reflective of corporate engagement than changes to a core business model—have declined. Across industries, geographies, and company sizes, organizations have been allocating more resources toward improving ESG. More than 90 percent of S&P 500 companies now publish ESG reports in some form, as do approximately 70 percent of Russell 1000 companies. 1 Sustainability reporting in focus , G&A Institute, 2021. In a number of jurisdictions, reporting ESG elements is either mandatory or under active consideration. In the United States, the Securities and Exchange Commission (SEC) is considering new rules that would require more detailed disclosure of climate-related risks and greenhouse-gas (GHG) emissions. 2 Release Nos. 33-11042, 34-94478, File No. S7-10-22, US Securities and Exchange Commission (SEC), March 21, 2022. The proposed rule would not come into effect until fiscal year 2023 and could face legal challenges; “We are not the Securities and Environment Commission—At least not yet,” statement of Commissioner Hester M. Peirce, SEC, March 21, 2022; Dan Papscun, “SEC’s climate proposal tees up test of ‘material’ info standard,” Bloomberg Law, March 23, 2022. Additional SEC regulations on other facets of ESG have also been proposed or are pending. 3 See “SEC response to climate and ESG risks and opportunities,” SEC, modified April 11, 2022; “SEC proposes to enhance disclosures by certain investment advisers and investment companies about ESG investment practices,” SEC press release, May 25, 2022.

The rising profile of ESG has also been plainly evident in investments, even while the rate of new investments has recently been falling. Inflows into sustainable funds, for example, rose from $5 billion in 2018 to more than $50 billion in 2020—and then to nearly $70 billion in 2021; these funds gained $87 billion of net new money in the first quarter of 2022, followed by $33 billion in the second quarter. 4 “Global Sustainable Fund Flows: Q2 2022 in Review,” Morningstar Manager Research, July 28, 2022; Cathy Curtis, “Op-ed: While green investments are underperforming, investors need to remain patient,” CNBC, March 28, 2022. Midway through 2022, global sustainable assets are about $2.5 trillion. This represents a 13.3 percent fall from the end of Q1 2022 but is less than the 14.6 percent decline over the same period for the broader market. 5 “Global Sustainable Fund Flows: Q2 2022 in Review,” Morningstar Manager Research, July 28, 2022; Cathy Curtis, “Op-ed: While green investments are underperforming, investors need to remain patient,” CNBC, March 28, 2022.

A major part of ESG growth has been driven by the environmental component of ESG and responses to climate change. But other components of ESG, in particular the social dimension, have also been gaining prominence. One analysis found that social-related shareholder proposals rose 37 percent in the 2021 proxy season compared with the previous year. 6 Richard Vanderford, “Shareholder voices poised to grow louder with SEC’s help,” Wall Street Journal , February 11, 2022.

In the wake of the war in Ukraine and the ensuing human tragedy, as well as the cumulative geopolitical, economic, and societal effects, critics have argued that the importance of ESG has peaked. 7 Simon Jessop and Patturaja Murugaboopathy, “Demand for sustainable funds wanes as Ukraine war puts focus on oil and gas,” Reuters, March 17, 2022; Peggy Hollinger, “Ukraine war prompts investor rethink of ESG and the defence sector,” Financial Times , March 9, 2022. Attention, they contend, will shift increasingly to the more foundational elements of a Maslow-type hierarchy of public- and private-sector needs, 8 Bérengère Sim, “Ukraine war ‘bankrupts’ ESG case, says BlackRock’s former sustainable investing boss,” Financial News , March 14, 2022. and in the future, today’s preoccupation with ESG may be remembered as merely a fad and go the way of similar acronyms that have been used in the past. 9 Charles Gasparino, “Russian invasion sheds light on hypocrisy of Gary Gensler, woke investment,” New York Post , March 5, 2022; James Mackintosh, “Why the sustainable investment craze is flawed,” Wall Street Journal , January 23, 2022; David L. Bahnsen, “Praying that ESG goes MIA,” National Review , March 17, 2022. Others have argued that ESG represents an odd and unstable combination of elements and that attention should be only focused on environmental sustainability. 10 See, for example, “ESG should be boiled down to one simple measure: emissions,” Economist , July 21, 2022. In parallel, challenges to the integrity of ESG investing have been multiplying. While some of these arguments have also been directed to policy makers, analysts, and investment funds, the analysis presented in this article (and in the accompanying piece “ How to make ESG real ”) is focused at the level of the individual company. In other words: Does ESG really matter to companies ? What is the business-grounded, strategic rationale?

A critical lens on ESG

Criticisms of ESG are not new. As ESG has gone mainstream and gained support and traction, it has consistently encountered doubt and criticism as well. The main objections fall into four main categories.

1. ESG is not desirable, because it is a distraction

Perhaps the most prominent objection to ESG has been that it gets in the way of what critics see as the substance of what businesses are supposed to do: “make as much money as possible while conforming to the basic rules of the society,” as Milton Friedman phrased it more than a half-century ago.” 11 Milton Friedman, “The social responsibility of business to increase its profits,” New York Times Magazine , September 13, 1970. Viewed in this perspective, ESG can be presented as something of a sideshow—a public-relations move, or even a means to cash in on the higher motives of customers, investors, or employees. ESG is something “good for the brand” but not foundational to company strategy. It is additive and occasional. ESG ratings and score provider MSCI, for example, found that nearly 60 percent of “say on climate” votes 12 Say-on-climate votes are generally nonbinding resolutions submitted to shareholders (similar to “say-on-pay” resolutions), which seek shareholder backing for emissions reductions initiatives. See, for example, John Galloway, “Vanguard insights on evaluating say on climate proposals,” Harvard Law School Forum of Corporate Governance, June 14, 2021. in 2021 were only one-time events; fewer than one in four of these votes were scheduled to have annual follow-ups. 13 “Say on climate: Investor distraction or climate action?,” blog post by Florian Sommer and Harlan Tufford, MSCI, February 15, 2022. Other critics have cast ESG efforts as “greenwashing,” “purpose washing,” 14 Laurie Hays, et al., “Why ESG can no longer be a PR exercise,” Harvard Law School Forum on Corporate Governance, January 20, 2021. or “woke washing.” 15 See Owen Jones, “Woke-washing: How brands are cashing in on the culture wars,” Guardian , May 23, 2019; Vivek Ramaswamy, Woke Inc.: Inside Corporate America’s Social Justice Scam , New York, NY: Hachette Book Group, 2021. One Edelman survey, for example, reported that nearly three out of four institutional investors do not trust companies to achieve their stated sustainability, ESG, or diversity, equity, and inclusion (DEI) commitments. 16 Special report: Institutional investors , Edelman Trust Barometer, 2021.

2. ESG is not feasible because it is intrinsically too difficult

A second critique of ESG is that, beyond meeting the technical requirements of each of the E, S, and G components, striking the balance required to implement ESG in a way that resonates among multiple stakeholders is simply too hard. When solving for a financial return, the objective is clear: to maximize value for the corporation and its shareholders. But what if the remit is broader and the feasible solutions vastly more complex? Solving for multiple stakeholders can be fraught with trade-offs and may even be impossible. To whom should a manager pay the incremental ESG dollar? To the customer, by way of lower prices? To the employees, through increased benefits or higher wages? To suppliers? Toward environmental issues, perhaps by means of an internal carbon tax? An optimal choice is not always clear. And even if such a choice existed, it is not certain that a company would have a clear mandate from its shareholders to make it.

3. ESG is not measurable, at least to any practicable degree

A third objection is that ESG, particularly as reflected in ESG scores, cannot be accurately measured. While individual E, S, and G dimensions can be assessed if the required, auditable data are captured, some critics argue that aggregate ESG scores have little meaning. The deficiency is further compounded by differences of weighting and methodology across ESG ratings and scores providers. For example, while credit scores of S&P and Moody’s correlated at 99 percent, ESG scores across six of the most prominent ESG ratings and scores providers correlate on average by only 54 percent and range from 38 percent to 71 percent. 17 Florian Berg, Julian Kölbel, and Roberto Rigobon, “Aggregate confusion: The divergence of ESG ratings,” Review of Finance , forthcoming, updated April 26, 2022. Moreover, organizations such as the Global Reporting Initiative (GRI) and the Sustainability Accounting Standards Board (SASB) can measure the same phenomena differently; for example, GRI considers employee training, in part, by amounts invested in training, while SASB measures by training hours. It is to be expected, therefore, that different ratings and scores providers—which incorporate their own analyses and weightings—would provide diverging scores. Moreover, major investors often use their own proprietary methodologies that draw from a variety of inputs (including ESG scores), which these investors have honed over the years.

4. Even when ESG can be measured, there is no meaningful relationship with financial performance

The fourth objection to ESG is that positive correlations with outperformance, when they exist, could be explained by other factors and, in any event, are not causative. It would indeed challenge reason if ESG ratings across ratings and scores providers, measuring different industries, using distinct methodologies, weighting metrics differently, and examining a range of companies that operate in various geographies, all produced a near-identical score that almost perfectly matched company performance. Correlations with performance could be explained by multiple factors (for example, industry headwinds or tailwinds) and are subject to change. 18 See, for example, James Mackintosh, “Credit Suisse shows flaws of trying to quantify ESG risks,” Wall Street Journal , January 17, 2022. Several studies have questioned any causal link between ESG performance and financial performance. 19 See, for example, Chart of the Week , “Does ESG outperform? It’s a challenging question to answer,” blog post by Raymond Fu, Penn Mutual, September 23, 2021; Gregor Dorfleitner and Gerhard Halbritter, “The wages of social responsibility—where are they? A critical review of ESG investing,” Review of Financial Economics , Volume 26, Issue 1, September 2015. While, according to a recent metastudy, the majority of ESG-focused investment funds do outperform the broader market, 20 Ulrich Atz, Casey Clark, and Tensie Whelan, ESG and financial performance: Uncovering the relationship by aggregating evidence from 1,000 plus studies published between 2015 – 2020 , NYU Stern Center for Sustainable Business, 2021. some ESG funds do not, and even those companies and funds that have outperformed could well have an alternative explanation for their outperformance. (For example, technology and asset-light companies are often among broader market leaders in ESG ratings; because they have a relatively low carbon footprint, they tend to merit higher ESG scores.) The director of one recent study 21 Giovanni Bruno, Mikheil Esakia, and Felix Goltz, “‘Honey, I shrunk the ESG alpha’: Risk-adjusting ESG portfolio returns,” Journal of Investing , April 2022. proclaimed starkly: “There is no ESG alpha.” 22 Steve Johnson, “ESG outperformance narrative ‘is flawed,’ new research shows,” Financial Times , May 3, 2021.

In addition to these four objections, recent events and roiled markets have led some to call into question the applicability of ESG ratings at this point. 23 See James Mackintosh, “War in Ukraine reveals flaws in sustainable investing,” Wall Street Journal , March 27, 2022. It is true that the recognized, pressing need to strengthen energy security in the wake of the invasion of Ukraine may lead to more fossil-fuel extraction and usage in the immediate term, and the global collaboration required for a more orderly net-zero transition may be jeopardized by the war and its aftermath. It is also likely that patience for what may be called “performative ESG,” as opposed to what may be called true ESG, will likely wear thin. True ESG is consistent with a judicious, well-considered strategy that advances a company’s purpose and business model (exhibit).

Yet, many companies today are making major decisions, such as discontinuing operations in Russia, protecting employees in at-risk countries, organizing relief to an unprecedented degree, and doing so in response to societal concerns. They also continue to commit to science-based targets and to define and execute plans for realizing these commitments. That indicates that ESG considerations are becoming more —not less—important in companies’ decision making.

Sustainable performance is not possible without social license

The fundamental issue that underlies each of the four ESG critiques is a failure to take adequate account of social license—that is, the perception by stakeholders that a business or industry is acting in a way that is fair, appropriate, and deserving of trust. 24 “‘Corporate diplomacy’: Why firms need to build ties with external stakeholders,” Knowledge at Wharton , May 5, 2014; and Witold J. Henisz, Corporate Diplomacy: Building Reputations and Relationships with External Stakeholders , first edition, London, UK: Routledge, 2014; see also Robert G. Boutilier, “Frequently asked questions about the social license to operate,” Impact Assessment and Project Appraisal , Volume 32, Issue 4, 2014. It has become dogma to state that businesses exist to create value in the long term. If a business does something to destroy value (for example, misallocating resources on “virtue signaling,” or trying to measure with precision what can only be imperfectly estimated, at least to date, through external scores), we would expect that criticisms of ESG could resonate, particularly when one is applying a long-term, value-creating lens.

But what some critics overlook is that a precondition for sustaining long-term value is to manage, and address, massive, paradigm-shifting externalities . Companies can conduct their operations in a seemingly rational way, aspire to deliver returns quarter to quarter, and determine their strategy over a span of five or more years. But if they assume that the base case does not include externalities or the erosion of social license by failing to take externalities into account, their forecasts—and indeed, their core strategies—may not be achievable at all. Amid a thicket of metrics, estimates, targets, and benchmarks, managers can miss the very point of why they are measuring in the first place: to ensure that their business endures, with societal support, in a sustainable, environmentally viable way.

ESG ratings: Does change matter?

Among the most sharply debated questions about environmental, social, and governance (ESG) is the extent to which ESG, as measured by ratings, can offer meaningful insights about future financial or TSR performance—particularly when ratings and scores providers use different, and sometimes mutually inconsistent, methodologies. A number of studies find a positive relationship between ESG ratings and financial performance. 1 Florian Berg, Julian Kölbel, and Roberto Rigobon, “Aggregate confusion: The divergence of ESG ratings,” Review of Finance, forthcoming, updated April 2022; Ulrich Atz, Casey Clark, and Tensie Whelan, ESG and financial performance: Uncovering the relationship by aggregating evidence from 1,000 plus studies published between 2015–2020 , NYU Stern Center for Sustainable Business, 2021. Other research suggests that while scoring well in ESG does not destroy financial value, the relationship between ESG ratings at any given time, and value creation at the identical time, can be tenuous or nonexistent. 2 See Chart of the Week , “Does ESG outperform? It’s a challenging question to answer,” blog post by Raymond Fu, Penn Mutual, September 23, 2021; Giovanni Bruno, Mikheil Esakia, and Felix Goltz, “‘Honey, I shrunk the ESG alpha’: Risk-adjusting ESG portfolio returns,” Journal of Investing , April 2022. Because of the short time frame over which the topic has been studied, and the resulting lack of robust analyses, conclusions from the analyses should be tempered. 3 When the ESG characteristic of a company changes, based on MSCI ESG data, it may be a useful financial indicator for generating alpha. Guido Giese et al., “Foundations of ESG investing: How ESG affects equity valuation, risk, and performance,” Journal of Portfolio Management , July 2019, Volume 45, Number 5.

In exploring the connection between ESG ratings and financial performance, another approach is to look at the effect of a change in ESG ratings. This approach mitigates issues deriving from differences among various ESG rating methodologies (assuming the methodologies are relatively consistent over time). It stands to reason that demonstrating real improvement—if reflected in the scores—could, in turn, drive TSR outperformance for multiple reasons, including those we explore in this article. Our initial research indicates, however, that it is too soon to tell. We found that on average companies that show an improvement in ESG ratings over multiyear time periods may exhibit higher shareholder returns compared with industry peers in the period after the improvement in ESG scores. We found, too, that the effect of this result has increased in recent years (exhibit). This initial finding is in line with some of the recent academic research and was also generally consistent across data from multiple ratings and scores providers.

Still, the findings are not yet conclusive. For example, only 54 percent of the companies we categorize as “improvers” and less than one-half of those categorized as “slight improvers” demonstrated a positive excess TSR. The research also does not prove causation. It is important to bear in mind that ESG scores are still evolving, observations in the aggregate may be less applicable to companies considered individually, and exogenous factors such as headwinds and tailwinds in industries and individual companies cannot be fully controlled for.

Most important, this research does not explain the mechanism of TSR outperformance and whether the outperformance is sustainable. We know from decades of research that companies with a higher expected return on capital and growth are ultimately TSR outperformers and that there is clear, statistically significant correlation. Are ESG ratings a sign of greater expected resilience of margins in the transition, an indication of higher growth through green portfolios—or do they suggest something else? Will these increased expectations relative to peers ultimately materialize, or will they revert to the mean? ESG ratings are very new compared with financial ratings, and therefore, it will take time for them to evolve. We will continue to research these questions as data sets increase and refinements to ESG scores continue to be refined.

Regardless of current ratings scores, many companies are already advancing in ESG to improve their long-term financial performance. High performers consider and seek to learn from ESG ratings, but they do not get unduly distracted or make superficial changes merely to score higher. Companies should focus on ESG improvements that matter most to their business models, even if the improvements do not directly translate to higher ratings.

Since conclusions about the relationship between ESG ratings and financial performance are not yet certain, they might not be compelling enough, on their own, to persuade executives to invest significant resources in ESG. But there is a tangible cost to waiting. In fact, companies should adopt a bias toward focusing on ESG today ; if companies, particularly those with significant externalities (such as high-emitting industries), hold out for perfect data and a “flawless” rating process, they may not have a business in 20 to 30 years.

Accordingly, the responses to ESG critics coalesce on three critical points: the acute reality of externalities, the early success of some organizations, and the improvement of ESG measurements over time. And the case for ESG cannot be dismissed by connections between ESG scores and financial performance and changes in ESG scores over time. (For a discussion about ESG ratings and their relationship to financial performance, see sidebar, “ESG ratings: Does change matter?”)

1. Externalities are increasing

Company actions can have meaningful consequences for people who are not immediately involved with the company. Externalities such as a company’s GHG emissions, effects on labor markets, and consequences for supplier health and safety are becoming an urgent challenge in our interconnected world. Regulators clearly take notice. 25 See, for example, Sinziana Dorobantu, Witold J. Henisz and Lite J. Nartey, “Spinning gold: The financial returns to stakeholder engagement,” Strategic Management Journal , December 2014, Volume 35, Issue 12. Even if some governments and their agencies demand changes more quickly and more forcefully than others, multinational businesses, in particular, cannot afford to take a wait-and-see approach. To the contrary, their stakeholders expect them to take part now in how the regulatory landscape, and broader societal domain, will likely evolve. More than 5,000 businesses , for example, have made net-zero commitments as part of the United Nations’ “Race to Zero” campaign. Workers are also increasingly prioritizing factors such as belonging and inclusion as they choose whether to remain with their company or join a competing employer. 26 ” ‘Great Attrition’ or ‘Great Attraction’? The choice is yours ,” McKinsey Quarterly , September 8, 2021. Many companies, in turn, are moving aggressively to reallocate resources and operate differently; nearly all are feeling intense pressure to change. Even before the Ukraine war induced dramatic company action, the pandemic had prompted companies to reconsider and change core business operations. Many have embarked on a similar path with respect to climate change. This pressure, visceral and tangible, is an expression of social license—and it has been made more pressing as rising externalities have become more urgent.

2. Some companies have performed remarkably, showing that ESG success is indeed possible

Social license is not static, and companies do not earn the continued trust of consumers, employees, suppliers, regulators, and other stakeholders based merely upon prior actions. Indeed, earning social capital is analogous to earning debt or equity capital—those who extend it look to past results for insights about present performance and are most concerned with intermediate and longer-term prospects. Yet unlike traditional sources of capital, where there are often creative financing alternatives, there are ultimately no alternatives for companies that do not meet the societal bar and no prospect of business as usual, or business by workaround, under conditions of catastrophic climate change.

Because ESG efforts are a journey, bumps along the way are to be expected. No company is perfect. Key trends can be overlooked, errors can be made, rogue behaviors can manifest themselves, and actions can have unintended consequences. But since social license is corporate “oxygen”—thus impossible to survive without it—companies cannot just wait and hope that things will all work out. Instead, they need to get ahead of future issues and events by building purpose into their business models and demonstrating that they benefit multiple stakeholders and the broader public. Every firm has an implicit purpose—a unique raison d’être that answers the question, “What would the world lose if this company disappeared?” Companies that embed purpose in their business model not only mitigate risk; they can also create value from their values. For example, Patagonia, a US outdoor-equipment and clothing retailer, has always been purpose driven—and announced boldly that it is “in business to save our home planet.” Natura &Co, a Brazil-based cosmetics and personal-care company in business to “promote the harmonious relationship of the individual with oneself, with others and with nature,” directs its ESG efforts to initiatives such as protecting the Amazon, defending human rights, and embracing circularity. Multiple other companies, across geographies and industries, are using ESG to achieve societal impact and ancillary financial benefits, as well.

3. Measurements can be improved over time

While ESG measurements are still a work in progress, it is important to note that there have been advancements. ESG measurements will be further improved over time. They are already changing; there is a trend toward consolidation of ESG reporting and disclosure frameworks (though further consolidation is not inevitable). Private ratings and scores providers such as MSCI, Refinitiv, S&P Global, and Sustainalytics, for their part, are competing to provide insightful, standardized measures of ESG performance.

There is also a trend toward more active regulation with increasingly granular requirements. Despite the differences in assessing ESG, the push longitudinally has been for more accurate and robust disclosure, not fewer data points or less specificity. It is worth bearing in mind, too, that financial accounting arose from stakeholder pull, not from spontaneous regulatory push, and did not materialize, fully formed, along the principles and formats that we see today. Rather, reporting has been the product of a long evolution—and a sometimes sharp, debate. It continues to evolve—and, in the case of generally accepted accounting principles (GAAP) and International Financial Reporting Standards (IFRS) reporting, continues to have differences. Those differences, reflecting how important these matters are to stakeholders, do not negate the case for rigorous reporting—if anything, they strengthen it.

While the acronym ESG as a construct may have lost some of its luster, its underlying proposition remains essential at the level of principle. Names will come and go (ESG itself arose after CSR, corporate engagement, and similar terms), and these undertakings are by nature difficult and can mature only after many iterations. But we believe that the importance of the underlying ideas has not peaked; indeed, the imperative for companies to earn their social license appears to be rising. Companies must approach externalities as a core strategic challenge, not only to help future-proof their organizations but to deliver meaningful impact over the long term.

Lucy Pérez is a senior partner in McKinsey’s Boston office; Vivian Hunt is a senior partner in the London office; Hamid Samandari is a senior partner in the New York office; Robin Nuttall is a partner in the London office; and Krysta Biniek is a senior expert in the Denver office.

The authors wish to thank Donatela Bellone, Elena Gerasimova, Ashley Gorman, Celine Guo, Pablo Illanes, Conor Kehoe, Tim Koller, Lazar Krstic, Burak Ovali, Werner Rehm, and Sophia Savas for their contributions to this article.

This article was edited by David Schwartz, an executive editor in the Tel Aviv office.

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Three pillars of sustainability: in search of conceptual origins

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Published: 03 September 2018
Volume 14 , pages 681–695, ( 2019 )

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Ben Purvis ORCID: orcid.org/0000-0001-8883-5472 1 ,
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The three-pillar conception of (social, economic and environmental) sustainability, commonly represented by three intersecting circles with overall sustainability at the centre, has become ubiquitous. With a view of identifying the genesis and theoretical foundations of this conception, this paper reviews and discusses relevant historical sustainability literature. From this we find that there is no single point of origin of this three-pillar conception, but rather a gradual emergence from various critiques in the early academic literature of the economic status quo from both social and ecological perspectives on the one hand, and the quest to reconcile economic growth as a solution to social and ecological problems on the part of the United Nations on the other. The popular three circles diagram appears to have been first presented by Barbier (Environ Conserv 14:101, doi: 10.1017/s0376892900011449, 1987 ), albeit purposed towards developing nations with foci which differ from modern interpretations. The conceptualisation of three pillars seems to predate this, however. Nowhere have we found a theoretically rigorous description of the three pillars. This is thought to be in part due to the nature of the sustainability discourse arising from broadly different schools of thought historically. The absence of such a theoretically solid conception frustrates approaches towards a theoretically rigorous operationalisation of ‘sustainability’.

Sustainability Definitions, Historical Context, and Frameworks

Introduction: The Anthropology of Sustainability: Beyond Development and Progress

A global view on sustainability: a review of the book “Sustainability perspectives: science, policy and practice” by Peter A. Khaiter and Marina G. Erechtchoukova (eds.), Springer Nature Publishing, Cham, Switzerland, 1st ed. 2020, 362 pp., ISBN: 978-3-030-19552-6 (Softcover), US$ 109.99

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Introduction

The last 20 years have witnessed a surge in publications on ‘sustainability’, to the extent where ‘sustainability science’ is often seen as a distinct field (Kates et al. 2001 ; Komiyama and Takeuchi 2006 ; Schoolman et al. 2012 ; Kajikawa et al. 2014 ). Yet despite this, ‘sustainability’ remains an open concept with myriad interpretations and context-specific understanding.

One particularly prevalent description of ‘sustainability’ employs three interconnected ‘pillars’ (Basiago 1999 ; Pope et al. 2004 ; Gibson 2006 ; Waas et al. 2011 ; Moldan et al. 2012 ; Schoolman et al. 2012 ; Boyer et al. 2016 ), ‘dimensions’ (Stirling 1999 ; Lehtonen 2004 ; Carter and Moir 2012 ; Mori and Christodoulou 2012 ), ‘components’ (Du Pisani 2006 ; Zijp et al. 2015 ), ‘stool legs’ (Dawe and Ryan 2003 ; Vos 2007 ), ‘aspects’ (Goodland 1995 ; Lozano 2008 ; Tanguay et al. 2010 ), ‘perspectives’ (Brown et al. 1987 ; Arushanyan et al. 2017 ), etc. encompassing economic, social, and environmental (or ecological) factors or ‘goals’. It should be noted here that these competing terms are primarily used interchangeably, and our preference for ‘pillars’ is largely arbitrary. This tripartite description is often, but not always, presented in the form of three intersecting circles of society, environment, and economy, with sustainability being placed at the intersection, as shown in Fig. 1 . This graphic is found in various forms as a descriptor of ‘sustainability’ within academic literature, policy documentation, business literature, and online, and whilst often described as a ‘Venn diagram’, it commonly lacks the strict logical properties associated with such a construction. Alternative manifestations include the three depicted visually as nested concentric circles or literal ‘pillars’, or independent of visual aids as distinct categories for sustainability goals or indicators. Whilst attractive for their simplicity, the meaning conveyed by these diagrams and the wider ‘pillar’ conception itself is often unclear, hampering its ability to be coherently operationalised. If we are prepared to overlook the lack of semantic clarity and confusion of competing terms, it can be argued that the ‘three-pillar’ conception of ‘sustainability’ (or ‘sustainable development’ Footnote 1 ) is a dominant interpretation within the literature. Yet the conceptual origins of this description, and the point at which it emerged into the mainstream, are far from clear, and its exact meaning is a matter of contention. As Thompson puts it, “much of the…discourse around sustainability…is organized around…the three-circle rubric without much disciplined thought about how it does and does not translate into a more comprehensive understanding of sustainability” (Thompson 2017 ).

Left, typical representation of sustainability as three intersecting circles. Right, alternative depictions: literal ‘pillars’ and a concentric circles approach

Whilst much contemporary sustainability literature may centre around the UN’s more diverse set of sustainable development goals (SDGs), the three pillars themselves were explicitly embedded in their formulation (UN 2012a ). This paper aims to shed light on the origins of the ‘three pillars’, taking the structure of an initial review of the historical emergence of the concept of ‘sustainability’ from its disparate early roots to the genesis of ‘sustainable development’ in the 1970s and 1980s. This is followed by a literature survey tracking the early development of these concepts with an aim to probe the origins of the three pillars, prior to 2001, when the three circles diagram is first described as a ‘common view’ (Giddings et al. 2002 ). In the final discussion, we argue that the emergence of the three-pillar paradigm, with little theoretical foundation, is primarily the product of the specific origins of ‘sustainability’ as a concept, aided in part by the agenda of the various actors that helped to shape its early history.

Historical origins of ‘sustainability’

To understand the emergence of ‘sustainability’ into the mainstream in the 1980s, it is important to examine the broad roots from which the concept emerged. This is confounded by the fact that much of the work whose concepts feed into the narrative predate the language of ‘sustainability’.

Authors such as Grober, Caradonna, and Du Pisani have contributed much to shedding light on a wide range of early roots (Du Pisani 2006 ; Grober 2012 ; Caradonna 2014 ). Of particular note are the forestry experts of the 17th and 18th centuries such as Evelyn, and Carlowitz, who introduced the concept of sustainable yield in response to dwindling forest resources across Europe (Warde 2011 ; Grober 2012 ). Of relevance too are the early political economists such as Smith, Mill, Ricardo, and Malthus who, in the shadow of the industrial revolution, questioned the limits of both economic and demographic growth, and recognised the inherent trade-offs between wealth generation and social justice (Lumley and Armstrong 2004 ; Caradonna 2014 ). The natural scientists and ecologists of the 19th century and early 20th century too help precipitate the schism between the anthropocentric conservationists on one hand, prescribing conservation of natural resources for sustainable consumption, and the biocentric preservationists, who call for preservation of nature due to its inherent worth (Callicott and Mumford 1997 ).

The modern concept, along with the language of sustainability in a global sense did not emerge, however, until the late 20th century. The Club of Rome’s ‘ Limits to Growth ’ argues for a “world system … that is sustainable” (Meadows et al. 1972 ); this, claims Grober ( 2012 , p155), marks the first modern appearance of the term in its broad global context. The same year, in ‘A Blueprint for Survival’ , which draws on the unpublished manuscript for ‘Limits to Growth’ , the editors of The Ecologist present their proposals for the creation of a ‘sustainable society’ (The Ecologist 1972 ). Whatever the exact origins of the language, it is from the early 1970s that the concept snowballs; the World Council of Churches’ commission on ‘The Future of Man and Society’ in 1974 deem the notion of a ‘sustainable society’ more palatable than the language of limits (Grober 2012 , p167). The Ecology Party (later to become the British Green Party) adopted their ‘Manifesto for a Sustainable Society’ in 1975 (The Ecology Party 1975 ), and a series of books were published prominently featuring the language of sustainability (Stivers 1976 ; Meadows 1977 ; Pirages 1977 ; Cleveland 1979 ; Coomer 1979 ).

In the interests of brevity, we leave much of the earlier discussion to authors already mentioned. Instead we pick up the narrative at the cusp of the 1960s environmental movements, choosing to focus on the strand of ‘development’ and how its critique contributed to the rise of ‘sustainable development’ in the 1980s.

A twin critique of ‘economic development’

Soon after the Second World War, there emerged a consensus in the Western world that there was an urgent need for international efforts to aid the ‘development’ of ‘less advanced countries’ (Arndt 1987 , p49). It was during this time that the notion of ‘economic development’, outside of Marxist discourse, evolved from specifically denoting the exploitation of natural resources in a colonial context, to refer to a rise in material well-being indicated by an increase in the flow of goods and services, and growth in per capita income (Arndt 1981 ). Thus from the 1950s, ‘economic development’ became almost synonymous with ‘economic growth’, which in turn had become a major goal of Western economic policy, although the application of the former term was primarily reserved for poorer countries (Arndt 1987 , p51). Truman’s 1949 ‘Point Four’ marked the first large-scale technical assistance development programme, notions of building up capital followed, and by 1961 the United Nations declared “International Trade as the primary instrument for economic development” (ibid. p72).

The late 1960s and early 1970s witnessed the rise of the modern environmental movement in the West (Rome 2003 ; Du Pisani 2006 ; Tulloch 2013 ). Popular publications such as Carson’s ‘ Silent Spring ’ (1962), Ehrlich’s ‘ The Population Bomb ’ (1968), and The Ecologist’s ‘ A Blueprint for Survival’ (1972), coupled with widespread media coverage of environmental disasters, such as the Santa Barbra oil spill (1969), acted to increase awareness of the magnitude of the widespread environmental destruction caused by humans. It has also been argued that the environment and quality of life issues came to the fore in the West at this point because ‘basic economic needs’ had been met following the economic growth of the post-war period (Dunlap and Mertig 1991 ; Martínez-Alier 1995 ).

The questioning of economic growth began to re-emerge, with the prominent works of ‘ Limits to Growth ’ (1972) and Schumacher’s ‘ Small is Beautiful ’ (1973) both arguing that the modern growth-based economy was unsustainable on a finite planet. The 1973 Oil Crisis, however, and the worldwide recession that followed, helped to crystallise the idea of the limitations of growth into both the mainstream and the academic discourse (Du Pisani 2006 ). This early discourse was radical and argued that the capitalist economic growth of the Western world was fundamentally incompatible with ecological and social sustainability and called for structural reform (Van Der Heijden 1999 ; Tulloch 2013 ; Tulloch and Neilson 2014 ).

Coupled with an environmental critique of the economic growth paradigm in the West was a broad criticism of economic development programmes being implemented in the developing world for their lack of environmental considerations. Caldwell details several of numerous cases of failed development projects presented at the 1968 Airlie House Conference on Ecological Aspects of International Development (Caldwell 1984 ). The recurring theme of these projects was a tendency to prioritise short-term gains over serious considerations of ecological impacts, either to biodiversity or ecosystem services. This forms part of a broader critique of the seeming hubristic belief inherent in the mainstream development discourse of man’s ability to dominate and control natural ecological processes (Woodhouse 1972 ).

At the same time it was becoming apparent to many that the ‘progress’ that had been promised by the early economic growth-based development programmes was in many ways failing to materialise. Whilst the post-war economic boom had seen a broad rise in living standards in the West, the focus began to shift to the gross inequalities and poverties that still existed in many of these societies (Hicks and Streeten 1979 ). This led to a second prominent counter-discourse in the development literature, critiquing the focus on economic growth, with calls for a shift from a focus of means to ends, to better consider social problems, and a ‘basic needs’ approach. Arndt suggests that the first prominent example of this was Seers’ ‘ The Meaning of Development’ (1969), which argued that economic growth not only failed as a solution to social difficulties, but often was the cause of them. Seers argued that indicators of poverty, unemployment, and inequality provided a truer depiction of the state of ‘development’ or ‘progress’ (Seers 1969 ; Arndt 1987 , p91). Notable too is Hirsch’s ‘Social Limits to Growth’ (1976), which probes the pursuit of growth and its fetishisation at the societal level, arguing that it acts to perpetuate inequalities, and that in fact the social limits to e.g. productivity gains are more prescient than distant physical limits (Hirsch 1995 ). This broad social critique of growth-focused development received attention from both the International Labour Office (ILO) and the World Bank (see e.g. Hicks and Streeten 1979 ; ILO 1976 ; Streeten and Burki 1978 ), to the extent that it was considered by some to be the “current consensus” (Arndt 1987 , p92).

The 1972 UN Conference on the Human–Environment in Stockholm marked the first global summit to consider human impacts on the environment, and the first major attempt to reconcile economic development with environmental integrity which were commonly regarded as incompatible (Caldwell 1984 ). Emergent from the conference was the concept of ‘environmentally sound development’, which by 1973 had been coined as ‘eco-development’ (Clinton 1977 ; Mebratu 1998 ). ‘Eco-development’ was defined by Ignacy Sachs in 1978 as “an approach to development aimed at harmonising social and economic objectives with ecologically sound management, in a spirit of solidarity with future generations”, further calling for “another kind of qualitative growth” (Glaeser 1984 , p25). Credited as one of the earliest ecological economists, Sachs, as an adviser to the United Nations Environmental Program (UNEP), was influential in promoting this growth-sceptic concept in policy circles during the 1970s (Gómez-Baggethun and Naredo 2015 ; Martinez-Alier 2015 ).

The core elements of ‘eco-development’ are described as the meeting of ‘essential human needs’, participation, environmental considerations, and the unifying principle of ‘self-reliance’, understood as not just freedom from the structural dependence on other nations, but freedom for the individual from the pressures of political powers or transnational corporations (Glaeser 1984 , pp25–28). Important was the discussion of both local and international power structures and how eco-development faced an uphill battle in challenging them. In this body of literature, economic growth plays something of a neutral role. Sachs downplays the notion of ‘trade-offs’ between environmental management and economic growth, instead arguing for “a different, environmentally prudent, sustainable, and socially responsible growth”, bearing remarkable similarities with later United Nations rhetoric (Glaeser 1984 , p216; Berr 2015 ). This approach seems to differ from that of other early ecological economists such as Daly and Mishan who suggested no-growth, and slow-growth economies (Daly 1973 ; Mishan 1977 ).

Whilst the environment was being reconciled with economic development, the ‘basic needs’ approach was being rejected by governments in the developing world; following the global economic slump of the late 1970s, there arose a tendency to see the aspirations of ‘modernisation’, and the creation of a ‘new international economic order’, as more important than, and incompatible with, a basic needs approach (Arndt 1987 , pp104–111). Coupled with this, Sachs claims the basic needs-focused ‘eco-development’ was vetoed as a term in international policy forms by the US administration (Gómez-Baggethun and Naredo 2015 ). With social critique somewhat pushed aside, McNamara, President of the World Bank, called for the need to “recapture the momentum of economic growth” (Arndt 1987 ).

By the 1980s, the early environmental movements had lost momentum, as the wave of the radical social movements broke and rolled back (Van Der Heijden 1999 ). Having been somewhat subdued, throughout the 1980s, the twin ecological and social critiques of economic development began to interweave with economic development under what was to be termed ‘sustainable development’ (O’Riordan 1985 ; Barbier 1987 ; Brown et al. 1987 ). Thus, in 1987 when the UN World Commission on Environment and Development published its report ‘ Our Common Future ’ (the Brundtland Report), calling for “a new era of economic growth—growth that is forceful and at the same time socially and environmentally sustainable”, the debate had come full circle: economic growth was no longer the problem, but it was the solution (UN 1987 ). Co-opting the eco-development argument of a ‘different quality’ of economic growth, a new ‘win–win’ scenario emerged by recasting the same old economic growth in “socially and environmentally sustainable” colours.

Assimilation into the mainstream: the institutionalising of ‘sustainable development’

Although the term had been in use for some time (e.g. IUCN, UNEP, WWF 1980 ), the Brundtland commission is widely credited with popularising the concept of ‘sustainable development’ by introducing it into international policy discourse (Basiago 1999 ; Castro 2004 ; Johnston et al. 2007 ; Pope et al. 2004 ; Redclift 2005 ; etc.). It defined ‘sustainable development’ as “development that meets the needs of the present without compromising the ability of future generations to meet their own needs”. In the years following the publication of the Brundtland Report, ‘sustainable development’ became the dominant paradigm of the environmental movement, and the literature considering it grew exponentially.

The institutionalising of ‘sustainable development’ would continue with the ‘Rio Process’, initiated at the 1992 Earth Summit in Rio, where the world’s political leaders pledged their support to the principle of sustainable development (Jordan and Voisey 1998 ). Central to this was the publication of the ‘Rio Declaration’ consisting of 27 principles intending to guide future ‘sustainable development’, and ‘Agenda 21’ which articulates a plan for putting these principles into practice. Agenda 21 built upon the Brundtland Report, emphasising the problems of the North–South development divide, championing economic growth and free trade, and emphasised the need to link social and economic development with environmental protection (UN 1992 ). Subsequent summits occurred in 1997, 2002, and 2012.

Despite the importance of global efforts such as the Rio Declaration and Brundtland Report in bringing ‘sustainability’ into the mainstream policy discourse, the consensus building through compromise approach taken has been criticised. Tulloch argues these documents were responsible for transforming what was a “marginal counter-hegemonic radical movement” into a platform for legitimising and obscuring globalised neoliberal policy (Tulloch 2013 ). Indeed, the approach taken by the UN follows the assumptions that poverty causes environmental degradation; this environmental degradation can be reduced by reducing poverty; to reduce poverty, developing countries need economic growth, which requires freer markets (Castro 2004 ). This logic is at best simplistic (Lélé 1991 ), and at worst smuggling an inherently ideological agenda under the guise of benign necessity (Tulloch 2013 ), clearly running in direct opposition to the earlier growth-critical works. Indeed Dryzek, in his categorisation of environmental discourses, describes sustainability as ‘reformist’, in opposition to the ‘radical’ discourses advocating systemic change, such as the limits discourse (Dryzek 2005 , pp13–16).

Criticism of the almost ‘business-as-usual’ approach of ‘sustainable development’, which has been promoted to the mainstream by bodies such as the UN, has led to a heterogeneous counter-discourse. A common critique is of the ‘sufficiently vague’ (Daly 1996 ) definition promoted by the international mainstream, ambiguous enough to allow for consensus building, but devoid of much substance. By the mid-1990s, the concept of ‘sustainable development’ and the notion of ‘sustainability’ were in vogue (Gatto 1995 ), finding their way into academic literature and policy agendas around the globe.

Environment, economics, and the society: three pillars of sustainability emerge?

Despite the relative dearth of literature probing ‘sustainability’ and ‘sustainable development’ conceptually, one conceptualisation, that of ‘three pillars’, environmental, economic, and social, has gained widespread traction. This is typically realised as the balancing of trade-offs between seemingly equally desirable goals within these three categorisations, although uses vary. One problematic facet of this conceptualisation, however, is its lack of theoretical development; there appears to be no original urtext from which it derives, seemingly just appearing in the literature and commonly taken at face value. As early as 2001, this approach has been presented as a ‘common view’ of sustainable development (Giddings et al. 2002 ), so commonplace it seems not to require a reference.

Although the ‘three pillars’ have become commonplace throughout the literature, they are not universal. Some works consider additional pillars such as institutional (Spangenberg et al. 2002 ; Turcu 2012 ), cultural (Soini and Birkeland 2014 ), and technical (Hill and Bowen 1997 ). Other frameworks bypass the compartmentalisation of sustainability completely. Milbrath for example presents a vision of a ‘sustainable society’ based on a set of defined values (Milbrath 1989 ), the ‘Natural Step’ framework is based upon four guiding criteria (Upham 2000 ), and Giddings et al.’s conceptualisation involves principles of equity (Giddings et al. 2002 ). More recently too, the SDGs developed by the UN have evolved an ‘integrated’ approach adopting 17 broad goals over a smaller number of categorisations.

The origins of the ‘three-pillar’ paradigm have been variously attributed to the Brundtland Report, Agenda 21, and the 2002 World Summit on Sustainable Development (Moldan et al. 2012 ), yet in none of these documents is a clear framework or theoretical background made explicit. In what follows, in an attempt to uncover the origins of the ‘three pillars’, we analyse the documents of the International Union for Conservation of Nature (IUCN), which present the first widely cited conceptualisation of ‘sustainable development’ (Pezzey 1992 ; Sneddon 2000 ), and those of the United Nations, whose 1987 report is widely credited with bringing sustainable development to the mainstream. We then turn to the academic literature of the 1980s and 1990s which considers sustainability conceptually, prior to its 2001 description as a ‘common view’.

The first prominent occurrence of the phrase ‘sustainable development’ in published literature appeared in 1980 when the IUCN, in collaboration with the UNEP and the World Wildlife Fund (WWF), published their ‘ World Conservation Strategy ’, subtitled ‘ Living Resource Conservation for Sustainable Development ’ (IUCN, UNEP, WWF 1980 ). This early conception of sustainable development is motivated by the need for economic development, with its social and economic objectives, to take conservation into account by considering resource limitations and ecosystem carrying capacity. Whilst there is no explicit mention of the three pillars, their roots can clearly be seen, and sustainable development is briefly defined as that which “must take account of social and ecological factors, as well as economic ones” (ibid. pI). It should be emphasised that these three aspects are not held up as a framework and no judgement is made upon them. The implication appears to be that the current development policy primarily focuses on economic objectives, when it is imperative to integrate conservation objectives into policy. There is no discussion of ‘trade-offs’, or the relative importance of the three objectives.

The IUCN Conference on Conservation and Development in Ottawa 1986 was convened to evaluate progress in implementing the World Conservation Strategy. It concluded with a definition: “The emerging paradigm of sustainable development… seeks … to respond to five broad requirements: integration of conservation and development; satisfaction of basic human needs; achievement of equity & social justice; provision for social self-determination and cultural diversity; and maintenance of ecological integrity” (Jacobs et al. 1987 ). These requirements cohere well with social and environmental aspects, but there is nothing to suggest a predecessor of anything approaching an economic pillar.

This appears to be a consistent narrative throughout the work of the IUCN. The successor to the World Conservation Strategy, ‘ Caring for the Earth ’, calls for development that is “both people-centered … and conservation-based” (IUCN, UNEP, WWF 1991 ). The strategy is based upon nine “interrelated and mutually supporting” principles of a “sustainable society”, including changing attitudes, conservation of Earth’s vitality and diversity, and a global alliance for attaining sustainability (ibid. pp8–12), and indicators for sustainability are presented under just two themes, “quality of life”, and “ecological sustainability” (ibid. p198). In 1996, an “increased emphasis given to people” was seen as an emerging issue, as well as the need to expand use of “legal and economic tools for conservation” (IUCN 1997 , pp43–45). At the same time, the models of sustainability being considered by the IUCN included the ‘Egg of Sustainability’ and the ‘Barometer of Sustainability’ both of which considered the dual goals of improving ecosystem wellbeing and human wellbeing as the essence of sustainability (IUCN 1996 ).

Apart from a short-lived consideration in the early 2000s, when intersecting circles are presented as the “conventional model of sustainable development” (IUCN 2004 , pp9–11), the IUCN thus largely avoids the use of the three pillars, preferring instead a model of sustainability that focuses on the goals of improving the ecosystem and human well-being. Discussion of the economy is generally focused on mitigating the negative impacts on the planet’s ecosystems of current practices and the need for a ‘greener’ economy.

The United Nations

The articulation of distinct social, economic, and environmental aspects of ‘sustainable development’ can be seen in Agenda 21 (1992) and are arguably implicit in the Brundtland Report (1987), although cultural and political/institutional aspects are also present. Indeed, Agenda 21 mentions “economic, social and environmental dimensions” of sustainable development (8.4.1), but there is no conceptual justification or framework presented (UN 1992 ).

Following the 1992 Rio Summit, the UN established the Commission on Sustainable Development (CSD) for the provision of guidance and monitoring of progress in the implementation of Agenda 21 and the Rio Declaration. In 1995, a workshop involving policy makers, members of international organisations, and scientists was held with the intention of reviewing indicators of the “three principal aspects of sustainability” (environmental, social and economic) (UN 1995 , p3). The conclusions were that the CSD should work towards a core set of indicators which equally emphasise the “economic, social, environmental and institutional aspects of sustainable development”, with the extra inclusion of the institutional aspect being left unelaborated (ibid. p5). It has been argued that this inclusion was due to the institutional aspect being integral to addressing the problems of unsustainable development practice (Spangenberg et al. 2002 ).

The following year, the CSD published a testbed selection of 130 indicators, with the aim of having a “good set of indicators” by 2000. These indicators were categorised under the four aspects presented in the 1995 workshop (UN 1996 ). Despite this, the CSD does not use these four dimensions universally. A 1997 report on progress achieved since Rio is structured on the basis of three “mutually reinforcing components” of sustainable development, “economic growth, social development and environmental sustainability” with the aim of achieving “balanced achievement of sustained economic development, improved social equity and environmental sustainability” (UN 1997 , pp4–5), but with no discussion of the tensions between these objectives. The existence of “three components—economic and social development and environmental protection” is again emphasised in the sixth session report of the CSD (UN 1998 , p3).

In 2001 the CSD published the second edition of their indicator framework which maintains the categorisation of economic, social, institutional and environmental ‘dimensions’ of sustainable development (UN 2001a ). The goals of “advancement of social and institutional development, to maintain ecological integrity, and to ensure economic prosperity” are also mentioned (ibid. p21). By the third edition, however, the four dimensions were no longer elaborated explicitly to emphasise the “multi-dimensional nature” of sustainable development (UN 2007 ).

In parallel to the work of the CSD, the UN launched 8 millennium development goals (MDGs), to be achieved by the global community by 2015 (UN 2001b ). Interestingly, Goal 7 was to “ensure environmental sustainability”, although the concepts of social or economic sustainability are not explicitly explored. The report of the 2002 Earth Summit prescribes the need to “promote the integration of the three components of sustainable development—economic development, social development and environmental protection—as interdependent and mutually reinforcing pillars” (UN 2002 , p8). The need for “integration” of these pillars, and a “balanced and holistic approach” is emphasised (ibid. p128).

The narrative of “integrating economic, social and environmental aspects” of sustainable development continues throughout the report of the next World Summit 10 years later (UN 2012b ). Following the 2012 summit, an ‘Open Working Group’ was established to develop the SDGs for the UN’s ‘post-2015 process’, with part of the brief being to “incorporate in a balanced way all three dimensions of sustainable development and their linkages” (ibid. p47). Indeed, when the General Assembly adopted the finalised SDGs in 2015, it is stated how the goals are “integrated and indivisible and balance the three dimensions of sustainable development: the economic, social and environmental” (UN 2015 , p1). However, these three dimensions do not explicitly form any part of the framework of the 17 goals.

The academic literature

Whilst the IUCN introduced the term ‘sustainable development’ into the mainstream in 1980, it received little conceptualisation in the academic literature prior to the 1987 publication of the Brundtland Report. Within this period, there existed notably Caldwell’s consideration of the history of ‘ecologically sustainable development’ as the “uneasy union” of ecological and economic values; in the absence of three explicit pillars, the need for holistic thinking was emphasised, as well as “social, legal, religious, and demographic” factors (Caldwell 1984 ). O’Riordan too proposes “two main kinds of sustainable utilization: ecological and sociocultural [later ‘socioeconomic’]” (O’Riordan 1985 , p1443).

In 1987, Brown et al. identified three “perspectives, or contexts, in which the term [sustainability] is used” emerging from their review of the literature (Brown et al. 1987 ). The ‘social’ perspective concerns itself with the “continued satisfaction of basic human needs” of individuals, the ‘ecological’ focuses on the “continued productivity and functioning of ecosystems” as well as the “protection of genetic resources and the conservation of biological diversity”, and the “elusive” ‘economic’ definition entails resolving “the limitations that a sustainable society must place on economic growth” (pp716–717). To Brown et al., these are different perspectives on the same concept which have emerged from the literature, closer to observation than anything approaching a conceptual framework.

The same year, Barbier articulates the development process as “an interaction among three systems: the biological (and other resource) system, the economic system, and the social system”, presenting an early antecedent of the intersecting circles diagram (Barbier 1987 ). Each system is ascribed goals: “genetic diversity, resilience, biological productivity”; “satisfying basic needs (reducing poverty), equity-enhancing, increasing useful goods and services”; and “cultural diversity, institutional sustainability, social justice, participation”, respectively. The objective of sustainable development then is to “maximise the goals across all these systems through an adaptive process of trade-offs” (p104). This work marks what seems to be the first explicit conceptualisation of the pillars, complete with diagram, and discussion of inherent ‘trade-offs’. Indeed, it is claimed that Barbier first presented this as a result of a 1986 meeting within the IIED, where he was working as an economist, proposing a more analytical approach to understanding sustainable development (Holmberg 1992 , p23). Barbier too identifies himself as the progenitor of the ‘Venn diagram’ in a later work (Barbier and Burgess 2017 ), at one point referring to it as “infamous” (Barbier 2011 ).

Cocklin draws on Barbier, conceptualising ‘sustainability’ in terms of a set of goals relating to social, economic, and environmental subsystems. The relation of sustainability to other management goals such as resilience and economic efficiency is considered to be ultimately ideological in nature, and thus trade-offs occur both internally and externally (Cocklin 1989 ).

Dixon and Fallon differentiate between purely ‘biological/physical’, and ‘socioeconomic’ definitions of sustainability which revolve around “social and economic wellbeing”, hinting at necessary structural changes to current economic activity (Dixon and Fallon 1989 ). Lélé distinguishes between two competing understandings of sustainable development: sustained growth, which he deems a contradiction; and ecologically sound development with implicit social objectives (Lélé 1991 ). Lélé holds that the concept of sustainable development requires strong clarification, arguing for the need to reject attempts to focus on economic growth and to recognise the inadequacies of neoclassical economics.

Hancock ( 1993 ) approaches a three-pillar model in efforts to consider issues of ‘health’ alongside sustainable communities (Hancock 1993 ). Hancock argues for a shift in focus from economic development to a “system of economic activity that enhances human development while being environmentally and socially sustainable” (p43). A ‘Venn diagram’ model is presented of health, or ‘human development’, being the confluence of three systems which meet several requirements: a ‘community’ which is ‘convivial’, an ‘environment’ which is ‘viable’, and ‘livable’ with respect to the community, and an economy which is ‘adequately prosperous’, ‘equitable’ with respect to the community, and ‘sustainable’ with respect to the environment. Superficially, this model is remarkably similar to contemporary models of the three pillars, but it presents the economy as ‘subservient’ to the community and environment, rather than as an entity with which trade-offs must be made.

Munasinghe claims ‘sustainable development’ encompasses “three major points of view: economic, social, and ecological”, whereby progress is best made via integration of their competing “non-comparable” objectives. Further, three differing approaches to ‘sustainability’ or ‘sustainable development’ are articulated: the economic which maximises income whilst maintaining capital stock, the ecological which seeks to preserve biological and physical systems, and the sociocultural which encompasses equity and participation (Munasinghe 1993 ).

Yunlong and Smit develop Brown et al’s three general definitions in reference to ‘sustainable agriculture’. They stress the need for integration, but do not elaborate on how this might be achieved (Yunlong and Smit 1994 ). Altieri presents a version of the ‘Venn diagram’ in his discussion of sustainable agriculture; here, specific economic, social, and environmental goals are detailed, with the confluence representing ‘agroecology’ (Altieri 1995 , p376). It has been suggested by Thompson ( 2017 ) that Altieri draws on Douglass ( 1984 ) in his articulation of these three domains; however, it should be noted that this diagram is absent in the first edition of Altieri’s book (Altieri 1987 ). Derived from a 1982 conference on “Agricultural Sustainability in a Changing World Order” , Douglass divides his contributors’ perspectives along “economic, biological, and cultural” lines of thinking, later reiterated with the subtitles “Food Sufficiency: Resources, Technology, and Economics”, “Stewardship: Biology, Ecology, and Population”, and “Community: Justice, Participation, and Development”. Despite the focus on agriculture, these categorisations bear many similarities with perspectives drawn in the wider sustainability literature; however like Brown et al., these are separate perspectives as observed in the literature rather than having theoretical basis. Altieri’s work is placed here within the ‘stewardship’ camp, yet his concluding chapter emphasises the inherent linkages between the biological and socioeconomic problems of agricultural systems. He concludes, “The requirements to develop sustainable agriculture clearly are not just biological or technical, but also social, economic, and political, and illustrate the requirements needed to create a sustainable society” (Altieri 1987 , p199; 1995, p379).

Basiago describes sustainability as a “methodology designed to maximize the vitality of social and environmental systems” (Basiago 1995 , p119). Economic methods of defining sustainability are described (along with biological, sociological, planning, and ethical methods), although Basiago argues that “a major restructuring of the economy is implied by economic methods”.

The work of Goodland and Daly (Goodland 1995 ; Goodland and Daly 1996 ) seeks to distinguish the concept of ‘environmental sustainability’ from social and economic sustainability. They take a largely systems-based approach to the environmental pillar, defining it in terms of input–output laws. They are critical of what they perceive as the term ‘sustainability’ becoming a “landfill dump for everyone’s environmental and social wishlists” (Goodland and Daly 1996 , p1002). Contrasting to a holistic integrated approach, they argue that the three ‘types’ of sustainability are “clearest when kept separate”, and that “the disciplines best able to analyse each type of sustainability are different” (ibid.).

In contrast, Milne suggests that it is “generally accepted that ‘sustainability’ is about integrating social, economic, and ecological values” (p137), but cautions a lack of agreement in interpretation, distinguishing between authors who call for ‘balancing’, and those who prioritise the biological aspect (Milne 1996 ). Milne leans towards the latter, concluding that “sustainability requires the subordination of traditional economic criteria to criteria based on social and ecological values”. The World Resources Institute, attempting to produce environmental indicators for ‘sustainable development’ argue that “sustainability involves—at a minimum—interacting economic, social, and environmental factors” arguing that inadequate attention has been given to the latter (pp2–3). They too argue that sustainable development is that which attempts to “reconcile or establish a balance” (p31) between these factors (Hammond et al. 1995 ).

Macnaghten and Jacobs ( 1997 ) argue that the ‘general model’ of sustainable development, which emerges from the literature, emphasises trade-offs between economic growth, deteriorating environmental conditions, and a decline in the quality of life (Macnaghten and Jacobs 1997 ). The authors argue for a model whereby ‘economic welfare’ is a component of the quality of life, which in turn is ultimately constrained by ‘environmental limits’. Such a nested model, as presented to the right of Fig. 1 , has been viewed as preferable to a ‘Venn diagram’ of trade-offs by numerous authors for its emphasis that the three systems represented by the pillars cannot be separated and are in fact subsystems of each other (Mebratu 1998 ; Giddings et al. 2002 ). Striking similarities can be seen between this nested model and a much earlier one by Renè Passet, a contemporary of Ignacy Sachs (Passet 1979 ). Passet’s systems approach emphasises that the sphere of economy is situated within the sphere of human activities, where social welfare is not reduced to the mere accumulation of goods and services, which in turn is situated within the biosphere (pp9–12). The diffusion of this model into the sustainability literature is uncertain; Passet’s work was likely familiar to Sachs, yet the model appeared to receive little attention as a primary source in the English language until much later.

Custance and Hillier ( 1998 ) detail their work in developing a set of sustainable development indicators for the UK government (Custance and Hillier 1998 ). Here, sustainable development is again understood as the “balance between three broad objectives—maintenance of economic growth, protection of the environment … and social progress”. They build upon a set of indicators developed in 1996 which focused primarily on the economic–environmental interaction, acknowledge the importance of including a social dimension, but question whose role it is to define sustainable development. This work reflects a broader body of literature considering ‘indicators’ of sustainable development utilising the three pillars which appears to arise around this time (Bradley Guy and Kibert 1998 ; Fricker 1998 ; Stirling 1999 ; Azapagic and Perdan 2000 ; Valentin and Spangenberg 2000 ).

Parallels to the three pillars can be seen in Campbell’s ‘planning triangle’. Campbell produced a model of what he perceived as three major goals or priorities of urban planning: social justice, economic growth, and environmental protection (Campbell 1996 ). Campbell argues that these goals introduce three fundamental conflicts, yet at the elusive centre of the three lies ‘sustainable development’, the balance of these goals. Campbell acknowledges the difficulty of finding this balance, emphasises the need to think holistically and move towards shared language, and urges collaboration between development planners and environmental planners. Campbell’s discussion explicitly highlights the notion of conflict or competition between these goals and of the need for interdisciplinary approaches in elaborating upon them towards a more comprehensive and rigorous conceptual framework.

Of final note is the treatment of sustainability within the business literature. From the late 1990s, Elkington’s ‘triple bottom line’ (TBL) accounting method gained traction with the publication of his popular book ‘Cannibals With Forks’ (Elkington 1997 ). Drawing strong parallels with three pillars, the traditional financial ‘bottom line’ of a corporation is complimented by bottom lines for social and environmental performance, termed ‘people, planet, profit’, encouraging firms to consider longer-term perspectives in their decision making. Corporate usage of the TBL has been met with scepticism in academic circles, however, with little evidence of effective use among the bodies that claim to advocate it. It has been argued that the TBL jargon is inherently empty, vague, and misleading (Norman and Macdonald 2004 ), paradoxically perpetuating business-as-usual approaches (Milne and Gray 2013 ). Whilst ‘corporate sustainability’ may trace its roots to ‘corporate social responsibility’ which arose in the 1950s, it was not until the 1990s that larger companies started publishing reports emphasising environmental issues, and later certain health issues, although the language of sustainability was rarely used (Milne and Gray 2013 ). Numerous ‘sustainability accounting’ methods predate the TBL, yet Elkington’s work appears to mark the first use of a three-pillar conceptualisation here (Lamberton 2005 ). Whilst this body of literature does not appear to be the origin of the three-pillar framework, it seems that the TBL, which is presented in many cases as synonymous with sustainability, may have been influential in cementing its position in the mainstream into the 21st century.

Having reviewed much of the early literature, with the motivation of probing the genesis of the ‘three-pillar’ paradigm, it is of some concern to find no clear answers. Whilst the work of Barbier ( 1987 ) appears to provide the origin of the widespread circles diagram and provides a framework to encourage maximisation of the goals of three systems, subject to implied trade-offs, it differs from later uses, most notably in its treatment of the economic system. The ‘three-pillar’ formulation itself, however, predates Barbier, at least implicitly, appearing in the IUCN’s 1980 ‘World Conservation Strategy’, O’Riordan ( 1985 ), the contemporaneous Brown et al. ( 1987 ), as well as in works preceding the language of sustainability, such as the discussions of ‘eco-development’ by Sachs and Passet’s 1979 work.

Of the various works discussed here, it is possible to broadly distinguish between two ways in which the pillars have been conceptualised. The first approach follows that of Barbier in presenting the individual dimensions as distinct, yet interacting systems , as taken by e.g. Cocklin ( 1989 ), Hancock ( 1993 ), and Basiago ( 1995 ). Secondly, there are those who follow from Brown et al. in seeing three distinct, yet interrelated perspectives or schools of thought such as Lélé ( 1991 ), Munasinghe ( 1993 ), and Goodland and Daly ( 1996 ).

Competing realities

The systems approach had been used earlier by Passet, who may have indirectly contributed to its use. This approach typically presents three distinct systems with their own ‘goals’, and the interactions of these systems must be managed to meet these goals and the emergent goal of sustainability or sustainable development. The clearest example of this is given by Barbier ( 1987 ) and Cocklin ( 1989 ) who both emphasise integration of the systems and management of trade-offs between them. Hancock ( 1993 ) and Basiago ( 1995 ) also take a systems approach, but the implication is that the individual systems strengthen and enhance each other. Campbell ( 1996 ) also emphasises reconciliation. Here, we would place the approaches taken by the UN and IUCN who, whilst generally avoiding the language of systems, talk about these individual dimensions having specific goals. In a similar vein then too, Munasinghe ( 1993 ), Altieri ( 1995 ), Milne ( 1996 ), and Custance and Hillier ( 1998 ) all discuss the integration and balancing of goals, whereas Macnaghten and Jacobs ( 1997 ) use the language of trade-offs. The language involved here frequently invokes the need to “integrate”, “balance”, and “reconcile” the pillars without necessarily articulating what this means in practice; whether this requires uncomfortable ‘trade-offs’ or not appears to depend on the level of optimism the work in question is pitching for. This missing link between theory and application is problematised by Barbier and others in a later work (Barbier and Markandya 2013 , p38; Barbier and Burgess 2017 ); it is difficult to make decisions about trade-offs without knowing the implications of such choices and, whilst they offer a utility maximisation approach, it remains value laden. There thus appears an uncomfortable gap between undertheorisation, on the one hand and making necessary political value judgements to allow for application, on the other.

Alternative to a systems interpretation are the authors who talk about the three pillars as distinct perspectives of sustainability. These discussions range from calls for clarity of competing definitions: Brown et al. ( 1987 ), Dixon and Fallon ( 1989 ), Lélé ( 1991 ); further undertheorised calls for integration of these perspectives: Douglass ( 1984 ), Yunlong and Smit ( 1994 ); and Goodland and Daly ( 1996 )’s argument to retain disciplinary distinctions: “social scientists are best able to define social sustainability” (p1002). Blurring the lines of systems/perspectives distinctions come later descriptions such as the ‘3Ps’ of Elkington, or the ‘3Es’ (environment, economy, equity) (Caradonna 2014 ), which embody broad values further removed from explicit conceptualisation.

Further to these distinctions, the meaning of the economic pillar remains a central point from which much of the early literature diverges. A prominent strand is heavily critical of the dominant global economic paradigm and sees the economic pillar as a means of producing systemic change, both by erring away from the growth narrative and thinking of the ‘economy’ as subordinate to social well-being and environmental health. This can be seen in Brown et al.’s ( 1987 ) considerations of placing limitations on growth, Basiago’s call for economic ‘restructuring’, and Milne’s call for “subordination of traditional economic criteria”. Barbier and Altieri both reject economic growth as their economic goals, and the IUCN too remains wary of the economic system throughout their literature, instead focusing on the balancing of environmental and social goals.

This contrasts heavily with the understanding pushed by the UN, where growth is imperative. Rather than being met with scepticism, a growth-focused economic pillar is central to their sustainable development narrative; here, growth is key to meeting the social and environmental goals through trickle-down effects. The presentation of an economic pillar centred on growth, equal in importance to social and environmental pillars of sustainability, as an unquestioned, unprobed necessity cements this framing of the pillars as common sense. A lack of a clear conceptual basis acts further to hide this framing from critique, allowing for broad consensus from institutional actors that would otherwise have conflicting priorities. This highlights the problems of undertheorised calls for ‘integration’ and ‘balancing’ of the pillars without the acknowledgement that any attempt to do so in practice is value driven.

Historical emergence?

It can be argued that many of the conflicting conceptualisations of the three pillars, and sustainability itself, can be attributed to the historical origins of this body of literature. As has been suggested above, the historical roots and emergence of ‘sustainability’ is far from a straightforward narrative; indeed, Kidd identifies six distinct but related strains of thought feeding in (Kidd 1992 ), and there are arguably more. It is here that we can begin to see the origins of why the sustainability literature is so broad and confusing; as Kidd argues, it is deeply embedded in fundamentally different concepts. From the development specialists to the ecological economists, and systems ecologists, various broadly distinct schools co-opt the language of ‘sustainability’ around the same time, leading to what has become such a heterogeneous discourse. As Dryzek has argued, we then see a wide range of actors who see the emergence of ‘sustainability’ as a dominant discourse and recognise it as ripe for shaping in terms that are favourable to them (Dryzek 2005 , p146). What arguably unites these disparate roots is criticism of the economic status quo, be that realised by blind pursuit of economic growth, short-sighted profit-driven agriculture, or industrialism with little regard to the fragility of complex ecosystems.

Thus, focusing on the economic development strand as explored previously, we argue that ‘sustainable development’ arose here from a twin critique of the previously popular notion of ‘economic development’, from both a ‘quality of life’ or social perspective, and an ecological perspective. Caldwell goes into some depth discussing the ecological critique, arguing that the 1972 Stockholm Conference succeeded in placing the need to reconcile economic development and environmental protection on the global agenda, and precipitated the notion of ‘eco-development’ (Caldwell 1984 ). The early social critique is explored by Arndt ( 1987 ) and is picked up by the Brundtland Report which holds that poverty and environmental problems are inherently linked, and that “meeting essential needs” is a key requirement of development (UN 1987 , p16).

Thus, we see the three pillars are fundamentally rooted here in ‘sustainable development’ from its conception. Further, we argue that this narrative of environmental and social critiques of the economic status quo is replayed over various other strands that adopt the language of sustainability. This can be seen in the work of the IUCN, which approaches ‘sustainable development’ from the concept of conservation, in the limits discourse, considerations of sustainable agriculture as articulated by Douglass, as well as in Elkington’s TBL. We now begin to see why the economic pillar is so fundamental—what unites these disparate discourses is the perceived inadequacy of the ‘economic’, be it from environmental or social perspectives. The confusion of competing conceptualisations and different interpretations of the economic pillar within this early literature can then be understood if we view sustainability not as a coherent singular concept, but as a common language of broad schools of thought with the commonality of this ‘economic’ critique.

The depiction of the economic pillar in terms of an economic growth goal, placed on equal footing with social and environmental factors, despite the wealth of critical literature, can be seen as an embodiment of the ideological win–win scenario of ‘sustainable growth’ pushed in the 1987 Brundtland Report. This was further reinforced by the 1992 Rio summit and publication Agenda 21 which brought this particular interpretation of ‘sustainable development’ to global attention. It has been argued by some that this neutralisation of the radical economic critique via institutionalisation was an inevitable consequence of the UN’s consensus building approach to addressing ‘sustainability’ (Huckle 1991 ; Carruthers 2001 ).

This ‘emergence’ of the three-pillar model thus leads to it being in many cases presented, with little to no theoretical foundation or justification, as the norm, or a ‘common sense’ understanding of sustainability. This is mirrored in the documents of the UN and may be seen too within organisations such as the OECD, which, in a 2000 report on indicators, heavily emphasise the need to better understand the “complex synergies and trade-offs” between the “three dimensions” of sustainable development (OECD 2000 , p19).

‘Sustainability’ vs. ‘sustainable development’

So far, we have sidestepped focusing on the competing language of ‘sustainability’ and ‘sustainable development’, as the two are often so intertwined in the literature that they remain difficult to tease apart. It is through this conflation though that economic growth-centred ‘development’ becomes an implicit part of ‘sustainability’, skipping over the questions: Development of what? Development for whom? Such strategic ambiguity allows this fuzzy concept to be utilised by any actor for their own means. In the earlier literature such as Caldwell, and Barbier, ‘sustainable development’ is understood as a necessity for developing nations and is often decoupled from growth. But this distinction is lost when the UN equates development with growth, and the OECD calls for sustainable development for their member countries, i.e. developed nations (OECD 2004 , p3).

This issue has been addressed by numerous authors who hold the term ‘sustainable development’, like that of ‘sustainable growth’, to be an oxymoron (Redclift 2005 ; Johnston et al. 2007 ; Brand 2012 ). Notably Redclift argues the notion of ‘development’, rooted in Western colonial capitalist narratives, presents numerous barriers to sustainability, and without interrogation and political change, sustainability itself is jeopardised (Redclift 1987 ). Sneddon proclaims that ‘sustainable development’ has “reached a conceptual dead-end”, and that for clarity it is necessary to decouple the notion of ‘sustainability’ from its counterpart (Sneddon 2000 ). He problematises the recasting of ‘development’ as sustainable, citing the numerous socio-ecological abuses enacted throughout its history and its blindness to deep-set structural issues. ‘Sustainability’ on the other hand, despite having perhaps a reputation as a buzzword, carries far less historical baggage and its necessity for a specific context prompts conceptual questions, such as for whom and of what. Looking at the more contemporary literature, however, it seems little has changed and the recent articulation of the SDGs has further entrenched the notion of ‘sustainable development’.

Conclusions

In seeking to clarify the origins of the notion of the ‘three pillars of sustainability’, we have shown that the conceptual foundations of this model are far from clear and there appears to be no singular source from which it derives. Whilst a diagram with explicit economic, social, and biological system goals is presented as a model of sustainable development by Barbier in 1987, the goals elaborated differ from those of the UN and the meaning is limited to developing nations. Further, an implicit notion of these three pillars predates this, appearing in work by the IUCN and in consideration of ‘eco-development’.

We have argued that the early literature considering the pillars may be split broadly between those who view the three as distinct perspectives, and those who take a systems approach. Within these formulations, there lacks a commonality in how interactions are treated, whether trade-offs occur or mutual reinforcements are made. The implications of ‘integration’ here are often undertheorised leading to the value judgements necessary for application often slipping by unnoticed and depoliticised. This is seen most clearly as the major source of disagreement stemming from the treatment of the economic pillar.

By drawing on Kidd’s argument that the discourse is fundamentally rooted in different schools of thought who have all adopted the common language of ‘sustainability’, we suggest that this presents itself as the source of much confusion and competing conceptualisation. Central to these distinct schools, however, can be seen a broad critique of the economic status quo, both from ecological and social perspectives. Focusing on the development literature has allowed us to present an example of twin ecological and ‘basic needs’ critiques of ‘economic development’ from the 1960s, crystallising into three pillars of ‘sustainable development’ in the 1980s. We have then argued that this narrative is replayed across various other schools of thought under the language of ‘sustainability’, such as those considering agriculture or conservation.

As these conflicts play out, ‘sustainable development’ is institutionalised by the UN in the 1987 Brundtland Report, and during the subsequent Rio process, which pushes an understanding placing economic growth as the solution to ecological and social problems. This ‘win–win’ approach reflects the biases inspired by their intergovernmental consensus building remit, and effectively neutralises much radical critique by depoliticising sustainability and presenting three sets of equally important economic, social, and environmental goals as benign necessity. This notion is further entrenched by the blurring of the language of ‘sustainability’ and ‘sustainable development’ such that economic development remained an implicit, but inadequately formulated, part of sustainability.

A consequence of the lack of rigour in the theoretical underpinnings of sustainability and the three-pillar paradigm is the difficulty in producing operational frameworks for the characterisation of sustainability which remain rooted in theory. Such applications would necessarily be context specific, requiring careful consideration of both spatial and functional boundaries. Although the targets and indicators associated with the UN SDGs are encouraging, a lack of detail is given to a transparent rigorous theoretical foundation in which to ground them and the value judgements that have been made along the way.

Despite this paper being mostly retrospective, focusing upon historical literature, it brings to light important issues that are still relevant today. There remains an urgent need to critically examine the models we employ for understanding. The inherently political nature of sustainability can often be forgotten, and we should be careful to avoid reproducing models without carefully considering their theoretical basis and the embedded ideology within them. Finally, it should be remembered that sustainability, through its complex and disparate historical origins, remains both context specific and ontologically open, and thus any rigorous operationalisation requires explicit description of how it is understood.

Whilst there exists an obvious semantic difference, and implicit focus in meaning, this distinction is not always present in the literature, especially in reference to the pillars formulation (Pope et al. 2004 ; Johnston et al. 2007 ; Waas et al. 2011 ; Carter and Moir 2012 ). We revisit this distinction in Sect. 4 .

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Zijp MC, Heijungs R, van der Voet E et al (2015) An identification key for selecting methods for sustainability assessments. Sustainability 7:2490–2512. https://doi.org/10.3390/su7032490

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Acknowledgements

This work was supported by the Engineering and Physical Sciences Research Council [grant number 1643433]; and the Leverhulme Trust research programme grant ‘Sustaining urban habitats: an interdisciplinary approach’.

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Ben Purvis, Yong Mao & Darren Robinson

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Purvis, B., Mao, Y. & Robinson, D. Three pillars of sustainability: in search of conceptual origins. Sustain Sci 14 , 681–695 (2019). https://doi.org/10.1007/s11625-018-0627-5

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J Med Ethics
v.33(8); 2007 Aug

Responsibility for health: personal, social, and environmental

Short abstract.

Most of the discussion in bioethics and health policy concerning social responsibility for health has focused on society's obligation to provide access to healthcare. While ensuring access to healthcare is an important social responsibility, societies can promote health in many other ways, such as through sanitation, pollution control, food and drug safety, health education, disease surveillance, urban planning and occupational health. Greater attention should be paid to strategies for health promotion other than access to healthcare, such as environmental and public health and health research.

Lifestyle plays a major role in most of the illnesses in industrialised nations. 1 Six of the 10 leading factors contributing to the global burden of disease are lifestyle related: unsafe sex, high blood pressure, tobacco use, alcohol use, high cholesterol and obesity. 2 Lifestyle‐related illnesses also contribute to the rising costs of healthcare. Spending on healthcare accounts for about 16% of the gross domestic product in the USA, or US$1.9 trillion. 3 Although smoking has declined steadily there since the 1960s, smoking‐related medical expenses are still about US$75.5 billion per year. 4 Obesity, which has been climbing in the past two decades, accounts for about US$75 billion in healthcare costs there each year. 5 Alcoholism and drug addiction in the USA account for annual healthcare costs of about US$22.5 billion and US$12 billion, respectively. 6 , 7 Federal government spending on healthcare relating to HIV/AIDS is over US$13 billion per year. 8

Given the well‐documented relationship between lifestyle, disease burden and healthcare costs, it makes economic and medical sense to hold individuals morally responsible for their health‐related choices. While this view has a great deal of intuitive appeal, it also faces numerous objections. 9 , 10 , 11 , 12 First, holding individuals entirely responsible for their own health conflicts with medicine's obligation to treat the sick and society's obligation to take care of vulnerable people. 9 Second, it is unfair to hold individuals responsible for their own health if they cannot make sound health‐related choices because of ignorance, mental incompetence, addictive behaviors or cultural pressures. 10 Third, it would be exceedingly difficult to implement a system that holds individuals responsible for their own health, since diseases and disabilities result from a complex interplay of genetic and environmental factors. 11 Although individuals should play an important role in maintaining their own health, they should not be held entirely responsible for it. Assuming that responsibility for health rests either with individuals or with society, it follows that society should also help to promote health and prevent disease. 9 , 10

Assuming that society is partly responsible for the health of its members, however, does not settle the question of how it should fulfil this responsibility. Most of the discussion in bioethics and health policy has focused on society's obligation to provide access to healthcare. 13 Undoubtedly, ensuring access is an important social responsibility, but there are many other ways in which societies can promote health, such as through sanitation, pollution control, food and drug safety, health education, disease surveillance, urban planning and occupational health. Greater attention should be paid to strategies of promoting health other than access to healthcare, such as environmental and public health and health research.

In recent years, some scholars and professionals have begun to draw attention to a variety of other methods that societies can use to promote health. 14 , 15 , 16 These other methods address strategies for preventing disease through public or environmental health, or through health research. (For a partial list of strategies for health promotion, see Table 1 1 .)

Access to care	Public health	Environmental health	Health research
Primary care	Surveillance	Sanitation/hygiene	Applied research
Specialists	Health education	Pollution control	Basic research
Emergency care	Infection/pest control	Food/drug safety	Policy research
Drugs	Vaccination	Housing/urban planning
Medical devices	Disaster preparedness	Occupational health

Since there are many different methods that a society can use to take responsibility for health, and resources are scarce, questions about priority‐setting naturally arise. Where should society invest its resources? Which areas need the most money? Access to healthcare usually draws the lion's share of society's resources.

In 2006, the US federal government budgeted more than US$530 billion (20% of the federal budget) for Medicare and Medicaid, health programs for the poor and for senior citizens, respectively. 17 By comparison, in the same year it budgeted US$28.4 billion for the National Institutes of Health, which funds biomedical research and education; US$7.9 billion for the Environmental Protection Agency, which protects the air, soil and water from pollution; US$5.98 billion for the Centers for Disease Control, which help to promote public health at national level; US$1.48 billion for the Food and Drug Administration, which helps to ensure the safety of foods, drugs, cosmetics and medical devices; and 0.47 billion for the Occupational Safety and Health Administration, which sets workplace safety standards—for a total of US$44.23 billion, or less than 10% of the amount allocated to government healthcare programs. 17

Although promoting access to healthcare is a very important function of the government, society should consider placing a greater emphasis on other strategies for health promotion. There are several arguments for focusing more on these and less on access to healthcare.

(1) Many of the other strategies are highly cost‐effective. Many of them focus on ways of managing the social and physical environment to prevent illnesses. Food and drug regulation, health education, pollution control, occupational health, pesticide/chemical regulation, and disease surveillance/epidemiology deal with disease prevention. Prevention is generally more cost‐effective and medically efficacious than treatment, and it avoids unnecessary pain and suffering. 18 It is far better—economically, medically and ethically—to prevent obesity than to try to treat it once it occurs. In addition, many of the other strategies help potentially all people, not just those who happen to be sick. Everyone can benefit from clean air and water, sanitation, safe food, control of infection and pests, urban planning and disaster preparedness. Cost‐effectiveness is always an important consideration in social policy but becomes paramount when resources are extremely scarce. If a village must choose between building a reservoir for potable water and building a health clinic, the water may take precedence over the clinic, because more lives can be saved by ensuring access to clean water than by ensuring access to the health clinic.

(2) Many of the other strategies address problems that are beyond the ability of individuals to deal with. While individuals often have the ability to take care of their own health, they lack the ability to promote health at the population or environmental level. Government action is required to monitor diseases, control infections, engage in urban planning, guarantee the safety of food and drugs, minimize pollution and sponsor basic biomedical research. Even people who emphasize personal responsibility would admit that society should promote environmental health and public health, and even those who believe in a minimal government would admit that public health institutions are necessary to prevent sick people from harming healthy people.

3. Many of the other strategies are compatible with and may even encourage individual responsibility for health. One of the problems with emphasizing social responsibility for health is that this may encourage individuals to take less responsibility. Making society responsible for the health of individuals can further add to the passivity and dependence that happen when one becomes sick. 19 , 20 Even though modern medical ethics emphasizes patients' autonomy, many people seek medical care to receive a pill or some other intervention that will make them well. Many of the other strategies for health promotion can empower individuals to take responsibility for their own health. Education in safe sex, for example, provides individuals with information about how to avoid sexually transmitted diseases. Urban planning can give individuals the ability to make healthy choices concerning transportation, work and recreation by allowing them to choose walking or other forms of exercise. 21 People may still choose to drive a car to work or engage in unsafe sex, but they at least have the option of making a healthy choice.

Responsibility for health should be a collaborative effort among individuals and the societies in which they live. Individuals should care for their own health and help to pay for their own healthcare, and societies should promote health and help to finance the costs of healthcare. Though access to care tends to dominate discussions of social responsibility for health and often receives the largest portion of society's resources, one should not forget the importance of environmental health, public health and health research.

These other strategies can be highly cost‐effective and may even encourage personal responsibility, by creating social and physical environments that enable individuals to maintain health and avoid disease. Recognizing the importance of these other methods still leaves important ethical and political questions unanswered, such as how to decide the appropriate level of government funding for access to care, public health, environmental health and health research. I encourage others to address these issues.

Acknowledgements

This research is supported by the intramural program of the National Institute of Environmental Health Science, National Institutes of Health. It does not represent the views of those organisations.

Competing interests: none declared.

Home — Essay Samples — Life — Responsibility — The Nature of Responsibility

The Nature of Responsibility

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Published: Sep 4, 2018

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Works Cited:

Bartholomew, R. E. (2018). Understanding conversion disorder: A guide for the medical profession. ABC-CLIO.
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Foskett, D. J. (2020). The Salem Witch Trials: A Day-by-Day Chronicle of a Community Under Siege. Rowman & Littlefield.
Hansen, C. B. (2017). Witches, Magic, and Transgression in the European Middle Ages. Oxford University Press.
Kirsch, G. E. (2019). The Salem witch trials: A reference guide. ABC-CLIO.
Norton, M. B. (2016). In the Devil's Snare: The Salem Witchcraft Crisis of 1692. Vintage.
Rosenthal, B. (2013). Salem story: reading the witch trials of 1692. Cambridge University Press.
Starkey, M. (2015). The Devil in Massachusetts: A Modern Enquiry into the Salem Witch Trials. Knopf Doubleday Publishing Group.
Wright, L. (2017). Salem witch trials. Routledge.
Woolf, A. (2019). The Salem Witch Trials. Pearson Education Limited.

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6 Examples of Corporate Social Responsibility That Were Successful

06 Jun 2019

Business is about more than just making a profit. Climate change, economic inequality, and other global challenges that impact communities worldwide have compelled companies to be purpose-driven and contribute to the greater good .

In a recent study by Deloitte , 93 percent of business leaders said they believe companies aren't just employers, but stewards of society. In addition, 95 percent reported they plan to take a stronger stance on large-scale issues in the coming years and devote significant resources to socially responsible initiatives. With more CEOs turning their focus to the long term, it’s important to consider what you can do in your career to make an impact .

Access your free e-book today.

What Is Corporate Social Responsibility?

Corporate social responsibility (CSR) is a business model in which for-profit companies seek ways to create social and environmental benefits while pursuing organizational goals, such as revenue growth and maximizing shareholder value.

Today’s organizations are implementing extensive corporate social responsibility programs, with many companies dedicating C-level executive roles and entire departments to social and environmental initiatives. These executives are commonly referred to as chief officers of corporate social responsibility or chief sustainability officers (CSO).

There are many types of corporate social responsibility , and CSR might look different for each organization, but the end goal is always the same: Do well by doing good . Companies that embrace corporate social responsibility aim to maintain profitability while supporting a larger purpose.

Rather than simply focusing on generating profit, or the bottom line, socially responsible companies are concerned with the triple bottom line , which considers the impact that business decisions have on profit, people, and the planet.

It’s no coincidence that some of today’s most profitable organizations are also socially responsible. Here are six successful examples of corporate social responsibility you can use to drive social change at your organization.

Check out our video on corporate social responsibility below, and subscribe to our YouTube channel for more explainer content!

6 Corporate Social Responsibility Examples

1. lego’s commitment to sustainability.

As one of the most reputable companies in the world, Lego aims to not only help children develop through creative play but also foster a healthy planet.

Lego is the first, and only, toy company to be named a World Wildlife Fund Climate Savers Partner , marking its pledge to reduce its carbon impact. And its commitment to sustainability extends beyond its partnerships.

By 2030, the toymaker plans to use environmentally friendly materials to produce all of its core products and packaging—and it’s already taken key steps to achieve that goal.

Over 2013 and 2014, Lego shrunk its box sizes by 14 percent , saving approximately 7,000 tons of cardboard. Then, in 2018, the company introduced 150 botanical pieces made from sustainably sourced sugarcane —a break from the petroleum-based plastic typically used to produce the company’s signature building blocks. The company has also recently committed to removing all single-use plastic packaging from its materials by 2025, among other initiatives .

Along with these changes, the toymaker has committed to investing $164 million into its Sustainable Materials Center , where researchers are experimenting with bio-based materials that can be implemented into the production process.

Through these initiatives, Lego is well on its way to tackling pressing environmental challenges and furthering its mission to help build a more sustainable future.

Related : What Does "Sustainability" Mean in Business?

2. Salesforce’s 1-1-1 Philanthropic Model

Beyond being a leader in the technology space, cloud-based software giant Salesforce is a trailblazer in corporate philanthropy.

Since its outset, the company has championed its 1-1-1 philanthropic model , which involves giving one percent of product, one percent of equity, and one percent of employees’ time to communities and the nonprofit sector.

To date, Salesforce employees have logged more than 5 million volunteer hours . Not only that, the company has awarded upwards of $406 million in grants and donated to more than 40,000 nonprofit organizations and educational institutions.

In addition, through its work with San Francisco Unified and Oakland Unified School Districts, Salesforce has helped reduce algebra repeat rates and contributed to a high percentage of students receiving A’s or B’s in computer science classes.

As the company’s revenue grows, Salesforce stands as a prime example of the idea that profit-making and social impact initiatives don’t have to be at odds with one another.

3. Ben & Jerry’s Social Mission

At Ben & Jerry’s, positively impacting society is just as important as producing premium ice cream.

In 2012, the company became a certified B Corporation —a business that balances purpose and profit by meeting the highest standards of social and environmental performance, public transparency, and legal accountability.

As part of its overarching commitment to leading with progressive values, the ice cream maker established the Ben & Jerry’s Foundation in 1985, an organization dedicated to supporting grassroots movements that drive social change.

Each year, the foundation awards approximately $2.5 million in grants to organizations in Vermont and across the United States. Grant recipients have included the United Workers Association, a human rights group striving to end poverty, and the Clean Air Coalition, an environmental health and justice organization based in New York.

The foundation’s work earned it a National Committee for Responsive Philanthropy Award in 2014, and it continues to sponsor efforts to find solutions to systemic problems at both local and national levels.

Related : How to Create Social Change: 4 Business Strategies

4. Levi Strauss’s Social Impact

In addition to being one of the most successful fashion brands in history, Levi’s is also one of the first to push for a more ethical and sustainable supply chain.

In 1991, the brand created its Terms of Engagement , which established its global code of conduct regarding its supply chain and set standards for workers’ rights, a safe work environment, and an environmentally friendly production process.

To maintain its commitment in a changing world, Levi’s regularly updates its Terms of Engagement. In 2011, on the 20th anniversary of its code of conduct, Levi’s announced its Worker Well-being initiative to implement further programs focused on the health and well-being of supply chain workers.

Since 2011, the Worker Well-being initiative has been expanded to 12 countries, benefitting more than 100,000 workers. In 2016, the brand scaled up the initiative, vowing to expand the program to more than 300,000 workers and produce more than 80 percent of its product in Worker Well-being factories by 2025.

For its continued efforts to maintain the well-being of its people and the environment, Levi’s was named one of Engage for Good’s 2020 Golden Halo Award winners , the highest honor reserved for socially responsible companies.

5. Starbucks’s Commitment to Ethical Sourcing

Starbucks launched its first corporate social responsibility report in 2002 with the goal of becoming as well-known for its CSR initiatives as for its products. One of the ways the brand has fulfilled this goal is through ethical sourcing.

In 2015, Starbucks verified that 99 percent of its coffee supply chain is ethically sourced , and it seeks to boost that figure to 100 percent through continued efforts and partnerships with local coffee farmers and organizations.

The brand bases its approach on Coffee and Farmer Equity (CAFE) Practices , one of the coffee industry’s first set of ethical sourcing standards created in collaboration with Conservation International . CAFE assesses coffee farms against specific economic, social, and environmental standards, ensuring Starbucks can source its product while maintaining a positive social impact.

For its work, Starbucks was named one of the world’s most ethical companies in 2021 by Ethisphere.

Business and Climate Change | Prepare for the business risks and opportunities created by climate change | Learn More

6. New Belgium Brewing’s Sustainable Practices

New Belgium Brewing has always been a proponent of green initiatives . As early as 1999, it was one of the first breweries to use wind power to source 100 percent of its electricity, significantly reducing its operational carbon footprint.

In Harvard Business School Online’s Business and Climate Change course, Katie Wallace, New Belgium Brewing's chief environmental, social, and governance (ESG) officer, elaborates on the company’s sustainable practices.

"We have biogas here that we capture from our process water treatment plant," Wallace says in the course. "We make electricity with it. When we installed our solar panels on the Colorado packaging hall, it was the largest privately owned solar array at that time in Colorado. And today, we have many other sources of renewable electricity and have invested quite a bit in efficiencies."

New Belgium Brewing also turns outward in its sustainability practices by actively engaging with suppliers, customers, and competitors to promote broader environmental change. These efforts range from encouraging the use of renewable resources in supply chains to participating in policy-making discussions that foster industry-wide sustainability. For example, it co-founded the Glass Recycling Coalition to improve recycling nationwide after recognizing sustainability concerns in the bottling industry.

New Belgium's commitment to corporate social responsibility is an ongoing process, though. The brewery continues to set ambitious targets for reducing waste, conserving water, and supporting renewable energy projects to build a more sustainable future.

Which HBS Online Business in Society Course is Right for You? | Download Your Free Flowchart

The Value of Being Socially Responsible

As these firms demonstrate , a deep and abiding commitment to corporate social responsibility can pay dividends. By learning from these initiatives and taking a values-driven approach to business, you can help your organization thrive and grow, even as it confronts global challenges.

Corporate social responsibility is critical for businesses today. It enables organizations to contribute to society while also achieving operational goals. By prioritizing social responsibility, you can build trust with your stakeholders and leave a positive impact.

Do you want to understand how to combine purpose and profit and more effectively tackle global challenges? Explore our online business in society courses , including Sustainable Business Strategy and Business and Climate Change , to learn more about how business can be a catalyst for system-level change.

This post was updated on May 30, 2024. It was originally published on June 6, 2019.

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What Is CSR?

Understanding CSR

Types of CSR

Company examples, the bottom line.

Sustainable Investing
Socially Responsible Investing

What Is CSR? Corporate Social Responsibility Explained

Katrina Ávila Munichiello is an experienced editor, writer, fact-checker, and proofreader with more than fourteen years of experience working with print and online publications.

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Corporate social responsibility (CSR) is a self-regulating business model that helps a company be socially accountable to itself, its stakeholders, and the public.

By practicing corporate social responsibility, also called corporate citizenship , companies are aware of how they impact aspects of society, including economic, social, and environmental. Engaging in CSR means a company operates in ways that enhance society and the environment instead of contributing negatively to them.

Key Takeaways

Corporate social responsibility is a business model by which companies make a concerted effort to operate in ways that enhance rather than degrade society and the environment.
CSR can help improve society and promote a positive brand image for companies.
CSR includes four categories: environmental impacts, ethical responsibility, philanthropic endeavors, and financial responsibilities.

Investopedia / Zoe Hansen

Understanding Corporate Social Responsibility (CSR)

Through corporate social responsibility programs , philanthropy, and volunteer efforts, businesses can benefit society while boosting their brands. A socially responsible company is accountable to itself and its shareholders. CSR is commonly a strategy employed by large corporations. The more visible and successful a corporation is, the more responsibility it has to set standards of ethical behavior for its peers, competition, and industry .

Small and midsize businesses also create social responsibility programs, although their initiatives are rarely as well-publicized as those of larger corporations.

Environmental responsibility: Corporate social responsibility is rooted in preserving the environment. A company can pursue environmental stewardship by reducing pollution and emissions in manufacturing, recycling materials, replenishing natural resources like trees, or creating product lines consistent with CSR.
Ethical responsibility: Corporate social responsibility includes acting fairly and ethically. Instances of ethical responsibility include fair treatment of all customers regardless of age, race, culture, or sexual orientation, favorable pay and benefits for employees, vendor use across demographics, full disclosures, and transparency for investors.
Philanthropic responsibility: CSR requires a company to contribute to society, whether a company donates profit to charities, enters into transactions only with suppliers or vendors that align with the company philanthropically, supports employee philanthropic endeavors, or sponsors fundraising events.
Financial responsibility: A company might make plans to be more environmentally, ethically, and philanthropically focused, however, it must back these plans through financial investments in programs, donations, or product research including research and development for products that encourage sustainability, creating a diverse workforce, or implementing DEI, social awareness, or environmental initiatives.

Volunteering

Some corporate social responsibility models replace financial responsibility with a sense of volunteerism. Otherwise, most models still include environmental, ethical, and philanthropic as types of CSR.

Benefits of CSR

According to a study published in the Journal of Consumer Psychology, consumers are more likely to act favorably toward a company that has acted to benefit its customers. As a company engages in CSR, it is more likely to receive favorable brand recognition . Additionally, workers are more likely to stay with a company they believe in. This reduces employee turnover, disgruntled workers, and the total cost of a new employee .

For companies looking to outperform the market, enacting CSR strategies may improve how investors view the company's value. The Boston Consulting Group found that companies considered leaders in environmental, social, or governance matters had an 11% valuation premium over their competitors.

CSR practices help companies mitigate risk by avoiding troubling situations. This includes preventing adverse activities such as discrimination against employee groups, disregard for natural resources, unethical use of company funds, and activity that leads to lawsuits, and litigation .

CSR programs can raise morale in the workplace.

In its 2022 Environmental and Social Impact Report, Starbucks ( SBUX ) highlights taking care of its workforce and the planet among its CSR priorities through stock grants and additional medical, family, and educational benefits. The company's goals include achieving 50% reductions in greenhouse gas emissions, water consumption, and waste by 2030.

Home Depot ( HD ) has invested more than 1 million hours per year in training to help front-line employees advance in their careers, aims to produce or procure 100% renewable energy to operate its facilities by 2030, and has plans to spend $5 billion per year with diverse suppliers by 2025.

General Motors won the Sustainability Leadership Award from the Business Intelligence Group in 2022. The automaker provided $60 million in grants to more than 400 U.S. nonprofits focusing on social issues, and it has agreements in place to use 100% renewable electricity at its U.S. sites by 2025.

Why Should a Company Implement CSR Strategies?

Many companies view CSR as an integral part of their brand image, believing customers will be more likely to do business with brands they perceive to be more ethical. In this sense, CSR activities can be an important component of corporate public relations. At the same time, some company founders are also motivated to engage in CSR due to their convictions.

What Is ISO 26000?

In 2010, the International Organization for Standardization (ISO) released ISO 26000, a set of voluntary standards to help companies implement corporate social responsibility. Unlike other ISO standards, ISO 26000 provides guidance rather than requirements because the nature of CSR is more qualitative than quantitative, and its standards cannot be certified. ISO 26000 clarifies social responsibility and helps organizations translate CSR principles into practical actions.

What Are the Benefits of CSR?

CSR initiatives strive to have a positive impact on the world through direct benefits to society, nature and the community in which a business operations. In addition, a company may experience internal benefits through the initiatives. Knowing their company is promoting good causes, employee satisfaction may increase and retention of staff may be strengthened. In addition, members of society may be more likely to choose to transact with companies that are attempting to make a more conscious positive impact beyond the scope of its business.

What Companies Have the Best CSR?

Since 1999, Corporate Responsibility Magazine has ranked the top 100 Best Corporate Citizens each year among the 1,000 largest U.S. public companies. Rankings are based on employee relations, environmental impact, human rights, governance, and financial decisions. In 2023, the top-ranked companies include Hewlett-Packard Enterprise Company, Accenture, and Hasbro.

Companies striving to measure success beyond bottom-line financial results may adopt CSR strategies that target environmental, ethical, philanthropic, and fiscal responsibility that extend beyond the products they sell.

Society for Consumer Psychology. " Good Guys Can Finish First: How Brand Reputation Affects Extension Evaluations ."

Boston Consulting Group. " Your Supply Chain Needs a Sustainability Strategy ."

Frontiers in Psychology. " Corporate Social Responsibility and Employee Engagement: Enabling Employees to Employ More of Their Whole Selves at Work ."

Starbucks. " 2022 Starbucks Global Environmental and Social Impact Report ," Pages 6 and 32.

Home Depot. " ESG Report (2022) ," Pages 9-10.

General Motors. " 2022 Sustainability Report ," Pages 6-7.

International Organization for Standardization. " ISO 26000, Social Responsibility ."

3BL Media. " 100 Best Corporate Citizens of 2023 ."

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Corporate Social Responsibility Compliance

Corporate social responsibility (CSR) compliance is imperative for modern businesses, ensuring adherence to laws, regulations, and standards that promote responsible practices and sustainable development. Over 180 countries have enacted laws and policies to promote CSR, with the United Nations' Sustainable Development Goals providing a global blueprint. Compliance can lead to brand loyalty, competitive advantages, cost savings, and improved stakeholder relationships. Effective CSR risk management, implementation, and performance measurement are fundamental for achieving these benefits. By adopting a holistic approach to CSR, businesses can minimize risks, enhance their reputation, and contribute to a more sustainable future, and there is more to explore in this critical aspect of business operations.

Table of Contents

Understanding CSR Regulations

Across the globe, a complex web of regulations governs corporate social responsibility, with over 180 countries having enacted laws and policies to promote responsible business practices. This CSR Evolution has led to the development of a robust Regulatory Framework that guides companies in their social and environmental obligations. The framework spans a wide range of laws, standards, and guidelines that address various aspects of CSR, including labor rights, environmental sustainability, and community development.

The Regulatory Framework is shaped by international agreements, national laws, and industry-specific standards. For instance, the United Nations' Sustainable Development Goals (SDGs) provide a global blueprint for CSR, while national laws, such as the UK's Modern Slavery Act, address specific issues like human rights. Industry-specific standards, like the Global Reporting Initiative (GRI), offer guidelines for CSR reporting and disclosure. Understanding this complex Regulatory Framework is vital for businesses to navigate the CSR landscape, comply with regulations, and demonstrate their commitment to responsible practices.

Benefits of CSR Compliance

By adhering to the Regulatory Framework, businesses can reap numerous benefits that extend beyond mere compliance, ultimately enhancing their reputation, improving operational efficiency, and driving long-term profitability. One of the most significant advantages of CSR compliance is the development of Brand Loyalty. When companies demonstrate a commitment to social and environmental responsibility, customers are more likely to trust and remain loyal to the brand, leading to increased customer retention and advocacy. In addition, CSR compliance can provide a Competitive Advantage, setting businesses apart from their competitors and fostering a positive reputation in the market. This, in turn, can lead to increased market share, improved financial performance, and access to new business opportunities. Additionally, CSR compliance can also lead to cost savings, improved risk management, and enhanced stakeholder relationships. By prioritizing CSR compliance, businesses can tap into these benefits and position themselves for long-term success. By doing so, companies can create a positive impact on society while also driving business growth and profitability.

Conducting CSR Risk Assessments

Every organization should conduct regular CSR risk assessments to identify, assess, and mitigate potential social and environmental risks that could impact their reputation, operations, and bottom line. This involves scanning the risk landscape to identify potential threats and opportunities, and prioritizing those that are most critical to the organization's compliance culture.

Conducting CSR risk assessments involves several key steps:

Identify risks : Identify potential social and environmental risks that could impact the organization, such as supply chain disruptions, natural disasters, or human rights violations.
Assess risks : Assess the likelihood and potential impact of each risk, and prioritize those that are most critical to the organization's operations and reputation.
Mitigate risks : Develop and implement strategies to mitigate or manage each risk, such as implementing sustainable practices, diversifying supply chains, or developing emergency response plans.
Monitor and review : Continuously monitor and review the risk landscape, and update risk assessments and mitigation strategies as needed to maintain a strong compliance culture and guarantee the organization remains in compliance with CSR standards. By conducting regular CSR risk assessments, organizations can proactively manage risks and maintain a strong compliance culture.

Implementing CSR Management Systems

Effective CSR risk assessments lay the groundwork for implementing integrated CSR management systems that incorporate social and environmental considerations into an organization's daily operations and strategic decision-making processes. A well-structured CSR management system enables organizations to identify and prioritize CSR issues, set clear objectives, and allocate resources to address them. This is achieved by establishing a CSR Framework that outlines the organization's CSR vision, mission, and goals. The CSR Framework serves as a guiding document for system integration, ensuring that CSR considerations are embedded into existing management systems, such as quality, environment, and health and safety. System integration involves aligning CSR policies, procedures, and practices with existing management systems, thereby minimizing duplication of efforts and ensuring a cohesive approach to CSR management. By integrating CSR into daily operations, organizations can enhance their reputation, improve stakeholder engagement, and contribute to sustainable development. A robust CSR management system is vital for organizations seeking to demonstrate their commitment to CSR and achieve long-term success.

Measuring CSR Performance Metrics

Measuring CSR performance metrics is a vital step in evaluating the effectiveness of a company's social responsibility initiatives. This involves tracking and evaluating various key performance indicators, including CSR impact assessment, stakeholder engagement metrics, and goal achievement tracking. By monitoring and analyzing these metrics, organizations can refine their CSR strategies, identify areas for improvement, and demonstrate accountability to their stakeholders.

CSR Impact Assessment

How can organizations guarantee that their CSR initiatives are truly making a positive impact, and what metrics should they use to gauge their progress? Conducting a CSR impact assessment is essential to measuring the effectiveness of corporate social responsibility efforts. This assessment helps organizations understand their CSR footprint and identify areas for improvement.

To measure CSR performance metrics, organizations can use the following key indicators:

Social License : Measure the level of trust and acceptance from stakeholders, including customers, employees, and the wider community.
Environmental Impact : Track metrics such as carbon footprint, water usage, and waste reduction to assess the organization's environmental sustainability.
Social Return on Investment (SROI) : Calculate the financial value of social outcomes resulting from CSR initiatives, such as the impact of employee volunteer programs on community development.
Stakeholder Satisfaction : Conduct surveys and feedback sessions to gauge the satisfaction of stakeholders, including customers, employees, and suppliers.

Stakeholder Engagement Metrics

Organizations can leverage stakeholder engagement metrics to quantify the success of their CSR initiatives and identify opportunities to strengthen relationships with key groups, including customers, employees, suppliers, and the broader community. By tracking stakeholder engagement, companies can gauge the effectiveness of their CSR strategies and make data-driven decisions to improve their social and environmental impact.

Stakeholder trust is a critical metric to measure, as it reflects the level of confidence and faith that stakeholders have in an organization's ability to operate responsibly. To build stakeholder trust, organizations must prioritize transparency, accountability, and open communication. Community involvement is another vital metric, as it measures the extent to which an organization engages with and supports local communities. This can include metrics such as volunteer hours, charitable donations, and community development initiatives.

Community involvement is another key metric, as it measures the extent to which an organization engages with and supports local communities.

Goal Achievement Tracking

By establishing clear and measurable goals, companies can track their progress towards achieving CSR objectives and make adjustments to their strategies as needed. This is essential in ensuring that CSR initiatives are effective and aligned with the company's overall mission. To achieve this, companies can leverage CSR software that provides a framework for setting and tracking goals.

In terms of goal achievement tracking, companies should focus on the following key performance indicators (KPIs):

Carbon footprint reduction : Measure the decrease in greenhouse gas emissions resulting from CSR initiatives.
Community engagement metrics : Track the number of volunteers, hours volunteered, and community programs supported.
Supply chain transparency : Monitor the percentage of suppliers that meet CSR standards.
Employee engagement metrics : Measure the percentage of employees participating in CSR activities and their level of satisfaction.

Ensuring Supply Chain Compliance

Maintaining supply chain compliance is a critical aspect of corporate social responsibility, as it directly impacts a company's reputation and bottom line. To achieve compliance, organizations must implement a robust framework that spans supply chain due diligence, risk assessment and mitigation, and compliance monitoring and auditing. By adopting a proactive approach to managing their supply chains, companies can minimize the risk of non-compliance and guarantee that their operations align with ethical and regulatory standards.

Supply Chain Due Diligence

Conducting thorough supply chain due diligence is essential for companies to identify and mitigate potential risks, including human rights violations, environmental degradation, and corruption, within their global operations. This process involves evaluating the reliability of vendors, assessing their compliance with industry norms, and verifying their commitment to ethical practices. By doing so, companies can ensure that their supply chain is transparent, responsible, and aligned with their values.

Effective supply chain due diligence involves:

Vendor screening : Conducting thorough background checks on vendors to identify potential risks and red flags.
On-site audits : Conducting regular on-site audits to verify vendors' compliance with industry norms and regulations.
Risk-based assessments : Conducting risk-based assessments to identify and prioritize high-risk vendors and supply chain segments.
Ongoing monitoring : Continuously monitoring vendors' performance and compliance to ensure that they remain aligned with the company's values and standards.

Risk Assessment and Mitigation

Identifying and mitigating risks is a critical component of supply chain compliance, as it enables companies to proactively address potential threats to their operations, reputation, and bottom line. A thorough risk assessment involves understanding the risk landscape, including potential disruptions to supply chains, environmental and social impacts, and reputational risks. Companies must identify, assess, and prioritize risks, and develop strategies to mitigate or eliminate them.

Effective risk assessment and mitigation require a proactive approach, including crisis preparedness and contingency planning. This involves developing response plans, conducting regular drills and exercises, and establishing communication protocols to facilitate swift and effective response to crises. By identifying and mitigating risks, companies can minimize the likelihood and impact of disruptions, protect their reputation, and maintain business continuity. A robust risk assessment and mitigation framework is vital for maintaining supply chain compliance and sustaining a competitive edge in today's complex and dynamic business environment.

A robust risk assessment and mitigation framework is crucial for maintaining supply chain compliance and sustaining a competitive edge in today's complex and dynamic business environment.

Compliance Monitoring and Auditing

In an effort to maintain a compliant supply chain, regular monitoring and auditing are essential for detecting and addressing potential risks, violations, and weaknesses. This proactive approach enables companies to identify areas for improvement, prevent non-compliance, and foster a culture of transparency and accountability.

Effective compliance monitoring and auditing involve:

Regular assessments : Conducting frequent evaluations of supply chain operations to identify potential risks and weaknesses.
Audit trails : Maintaining detailed records of all audits, assessments, and corrective actions taken to provide transparency and accountability.
Compliance culture : Promoting a culture of compliance throughout the organization, encouraging employees to report concerns and violations.
Corrective action plans : Implementing corrective actions to address identified weaknesses and verifying their effectiveness.

Reporting CSR Progress Transparency

Through regular and detailed reporting, companies can demonstrate their commitment to transparency in CSR progress, fostering trust and credibility with stakeholders. This involves adopting a structured approach to reporting, leveraging frameworks such as the Global Reporting Initiative (GRI) or the Sustainability Accounting Standards Board (SASB). By doing so, companies can provide stakeholders with a thorough understanding of their CSR initiatives, progress, and impact. Effective CSR storytelling is vital in this regard, as it enables companies to convey their CSR narrative in a compelling and authentic manner. Transparency frameworks, such as those provided by the Transparency International, can also be employed to verify that reporting is accurate, reliable, and free from bias. By embracing transparency in CSR reporting, companies can strengthen their reputation, enhance stakeholder engagement, and ultimately drive long-term sustainability. In addition, transparent reporting enables companies to identify areas for improvement, track progress, and make data-driven decisions to optimize their CSR strategies.

Frequently Asked Questions

Can small businesses afford csr compliance programs?.

Small businesses often face resource allocation challenges and budget constraints, making it difficult to implement thorough programs, including CSR compliance initiatives, which may be perceived as an additional financial burden rather than a strategic investment.

Do CSR Efforts Impact a Company's Financial Performance?

Research suggests that companies prioritizing stakeholder engagement and fostering brand loyalty through social responsibility initiatives often experience improved financial performance, driven by enhanced reputation, increased customer loyalty, and better risk management.

Are CSR Initiatives Only Applicable to Environmental Issues?

No, CSR initiatives extend beyond environmental issues to address social justice and human rights concerns, such as labor practices, community development, and diversity and inclusion, demonstrating a company's commitment to a broader social impact.

Can CSR Compliance Be Outsourced to Third-Party Vendors?

Outsourcing compliance to third-party vendors introduces vendor risk, requiring diligent third-party audits to verify adherence to regulatory standards, as delegation of responsibility does not absolve organizations of accountability.

Are There Any Legal Consequences for Non-Compliance With CSR Regulations?

Non-compliance with regulations can result in severe legal consequences, including Reputation Damage and Fines Imposed, ultimately affecting a company's bottom line and credibility.

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