DE
30 Apr
2021

Corporate sustainability:
Between Saving the World and Green Washing.

Is sustainability a business trend?

Pressure from politicians and NGOs is now being joined by increasing pressure from consumers. This is leading companies to address the issue of sustainability. Without the contribution of companies, sustainable development would not be possible today. Their influence on social and ecological conditions is too great through their production processes, production conditions, products and services, but also through their involvement in political decision-making. (see Kurz & Wild 2015, p.323)

Companies deal with this responsibility in different ways. While some set positive examples and recognized the seriousness of the situation early on, others try to use sustainability as an instrument. Profit-oriented communication in line with the current trend, without a clear objective, inevitably leads to a large discrepancy between actual sustainable benefits and what is communicated about them. (see Brugger 2010, p.2)

What is sustainability in the first place?

Sustainability is a term characterized by ambivalence and vagueness. A term whose meaning has adapted to people's needs over the centuries, without a universally valid definition. Today, this conceptual ambiguity gives political and economic players the opportunity to interpret sustainability according to their own interests. For the world, it thus becomes a doom.

We often understand sustainability as environmental protection and resource conservation. This is a misconception, because the subject is more comprehensive. It is an overall concept that also includes social justice and economic performance. (see Ludwikowski 2010, p.1)

At least that is the case today. The first sustainable actions were indeed limited to the reasonable use of raw materials. In a broader sense, primitive peoples can be understood as the founders of the concept. Thousands of years ago, they lived in harmony with nature, taking what they needed without exploiting or unnecessarily burdening the ecosystem. If we take a leap back in time to pre-modern Europe, sustainable action can be seen above all in the use of resources whose exploitation is clearly identifiable, i.e. forests, ores and minerals. In 1144, this simple principle of balance was written down for the first time in the Mauermünster monastery in Alsace. The forestry ordinance stated that no more wood should be felled than could grow back in the natural regeneration cycle. (see Brugger 2010, p.13f)

In the centuries that followed, however, sustainability in companies was a rare exception. As a rule, business was conducted according to the supposedly unlimited availability of production resources (see Brugger 2010, p.14f). Until the 1970s, when mankind was suddenly confronted with the reality of an impending global shortage of raw materials. It was the 'Club of Rome' that made the term sustainability prominent with its report 'Limits to Growth' (see Ludwikowski 2010, p.5). At the same time, the word also lost its purely resource-economic character - sustainability became a holistic issue.

Studies and research followed, all of which identified global collapse as a threat and ecological and economic balance as a goal. The previously dominant sustainability field of environmental protection became inseparably linked to the issue of development, with a simple realization: if the world suffers, its inhabitants suffer. But even at the first UN Environment Program in 1972, the interpretation of sustainability was shaped by different interests. While developed industrialized countries focused on the environment, social issues were paramount for the global South.

In 1987, a program of the World Commission on Environment and Development (WCED) produced the most widely used definition of sustainable development to date: „Sustainable development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs.“– a definition of terms that again leaves room for interpretation. Equally general was the content of the program presented, which was limited to basic demands and compromise-oriented recommendations.

Although more than 30 years have passed since the publication of the WCED program, the political approach to sustainability has not changed sufficiently to date. Attempts to implement sustainability globally have produced sobering results, as concrete commitments have been difficult to reconcile with their economic interests and have therefore met with aversion. A problem that also manifests itself at the corporate level.

Sustainability in companies

Companies refuse to accept binding accountability even more than states do. Instead, they mostly rely on voluntary commitments (see Kurz & Wild 2015, p.324). With moderate success, as can quickly be seen from the continuing unchecked climate change.

However, it is hardly imaginable for firms to act entirely without sustainability. Today, it is no longer possible for the private sector to act without involving society. Companies are expected to assume responsibility. In the case of sustainability, this means that companies are involved in the public debate, have to assume obligations, but also gain a greater position of power, have an influence on lifestyles and consumption patterns, and can help determine sustainability trends. (see Brugger 2010, p.25)

The reasons for a company to act in a sustainable manner are therefore many and varied. From a business perspective, the most important is undoubtedly the image level. Sustainability helps to build trust, in some industries it is even a prerequisite to be accepted by consumers. If a company gains a good reputation through sustainability, it simply makes it more appealing to customers and an attractive company to recruit employees.

Another reason for acting sustainably is the actual economic profit potential. Measures to save energy or reduce waste not only have an added social value and satisfy customers, but also reduce expenses for the business.

The third incentive, simply put, is self-protection. On the one hand, a violation of political rules and regulations can result in serious fines. Much more serious, however, is the risk of imminent calls for boycotts by NGOs or shitstorms on the Internet, which can lead to massive reputational losses and even damage to the company's image that could threaten its very existence. Countries where social and political pressure is stronger usually come closer to fulfilling sustainability plans. Because when non-compliance with sustainability principles can lead to serious crises, companies take the risk seriously. (see Ludwikowski 2010, p.83)

Sustainability as an instrument

At first glance, sustainability is omnipresent, even in companies. 'Green' actions are used as figureheads, and companies distinguish themselves with sustainable efforts. However, a closer look at the companies soon reveals that the topic usually runs parallel to the actual business field. Decisions in the sense of sustainability serve solely to directly increase the value of the company. Long-term processes are often completely dispensed with. There is a lack of integration into the corporate structure and of in-depth strategic analysis of the effects of sustainability on productivity, efficiency and effectiveness.

The focus for companies clearly lies on marketing and public relations activities. Sustainability rhetoric and beautifully designed sustainability reports are placed above the actual sustainability value of measures (see Kurz & Wild 2015, p.323). Companies rarely act, but rather invest vast amounts in actionism and supposed best practice examples with short effectiveness. While this often achieves the goal of an improved corporate image to the outside world, outdated internal structures remain unchanged. Only very few companies seem to have understood the seriousness of the problem.

The respective areas in which companies communicate sustainability also provide an indication that value is usually placed only on appearance. Topics that are considered particularly important by stakeholders and governments, or have a strong media presence, very often become the focus of sustainability communication for companies.

Talking about good behavior in terms of sustainability is legitimate and also increases corporate value, as studies show. As a rule, companies are still primarily profit-oriented, which makes 'green highlighting', i.e. emphasizing sustainable actions, understandable. It only becomes dangerous when the actual intentions of sustainability concepts are completely lost and give way to profit-oriented communication. The example of the so-called rebound effect illustrates how deceptive such an appearance of companies can be: As mentioned before, companies that are considered sustainable have a great influence on consumer behavior. In order to maximize profits, it is in the company's interest to keep the satisfaction span of its consumers as short as possible and to arouse their desire for ever new products. This style of communication is neither unusual nor new in the private sector. However, pseudo-sustainable companies entice consumers to buy their products by arguing that they are doing something good, that they are acting sustainably. Yet, although the products themselves may be based on sustainability, the volume of sales renders the pretended efforts ineffective and makes of sustainability a cover for consumerism. (see Kopnina 2019, p.613) Paradoxes like this draw a fine line between 'saving the world' and 'greenwashing'.

Does sustainability pay off?

Symbolic sustainability actions by companies often create more harm to the world than value. But the company itself has nothing to gain from them either. Not anymore. The growing interest in and attention to corporate sustainability work means that strategic attempts at concealment through PR work are increasingly unlikely to go undetected. The consequences are then, in addition to financial damage due to inefficient, non-sustainable business activities, even more serious consequences, for example through shitstorms and calls for boycotts. (see Walker & Wan 2011, p.238)

Communicating sustainably is not enough, acting sustainably will be the only way for companies to survive in the market in the future. But acting sustainably is not only about avoiding risks, but also about seizing opportunities. Sustainable business development offers opportunities for innovative products, services and processes. These lead to a greater quality of life, but above all to long-term economic growth. (see Ludwikowski 2010, p.83)

So is sustainability a business trend? The answer is a resounding no. Sustainability has become an integral part of a healthy business. The demand for environmentally friendly goods and services will not disappear over time, but will increase continuously - because there is no other way.


 

Sources:

 

Brugger Florian (2010): Nachhaltigkeit in der Unternehmenskommunikation. Bedeutung, Charakteristika und Herausforderungen. Wiesbaden. Gabler.

Kopnina, Helena (2019): Green-washing or best case practices? Using circular economy and Cradle to Cradle case studies in business education. In:Journal of Cleaner Production. 219. Amsterdam. Elsevier. p. 613-621

 

Kurz, Rudi & Wild, Werner (2015): Nachhaltigkeit und Unternehmen. Thesen. In: uwf UmweltWirtschaftsForum. 23 (4). Berlin. Springer. p.323-328

 

Ludwikowski, Joanna (2010): Das Nachhaltigkeits-Konzept in deutschen Unternehmen. Modetrend oder Notwendigkeit? Hamburg. Diplomica.

 

Walker, Kent & Wan, Fang (2012): The Harm of Symbolic Actions and Green-Washing. Corporate Actions and Communications on Environmental Performance and Their Financial Implications. In: Journal of Business Ethics. 109. Berlin. Springer.