The transformative lifestyle shifts, spurred by the pandemic restrictions, have forced us to reflect and think radically about our consumption and our role in the sustainable economy. Businesses undertaking corporate social responsibility (CSR) initiatives aim to affect transparency and environmental welfare which mark a positive step forward – but they are not transformative. Ultimately, these initiatives are often marketable, part of a “corporate greening” mechanism to attract environmentally conscious consumers.
Speaking at the Trinity Business Ethics Speaker Series, Nancy Bocken, professor in sustainable business at Maastricht University, explains that “it’s still a combination of voluntary action, cooperation, but also lobbying for change of regulations, and also have incentives to make the innovation happen”. However, traditional linear business models must adapt to focus on environmental impact reduction and assessment rather than introducing incremental and cosmetic changes.
Tom Gamble is associate director of the Council on Business & Society, an alliance of seven higher education schools, including Trinity Business School, whose aim is to create and disseminate knowledge about ethical and sustainable practices in business. Gamble explains the benefit of blending and embracing the inter-cultural approaches to ethical leadership and responsible governance in education around the globe. “Responsible governance is all about swapping ideas, challenging the status quo, having all different kinds of stakeholders – local community, representatives, union representative staff, representative students – to have their say in the decision process.”
Gamble explains that along with greater awareness of climate change, the value that is increasingly placed on ambitious and sustained action, and business model reinvigoration, is unprecedented. “Five to 10 years ago, we talked about CSR. And within CSR, you had human resources, ethics, compliance, ethical accounting or social accounting, and then you add sustainability. And now it’s changed the other way around. If we look at the United Nations, and what they term as a sustainable company, then within sustainability you have CSR.”
Responsible governance is all about swapping ideas, challenging the status quo, having all different kinds of stakeholders – local community, representatives, union representative staff, representative students – to have their say in the decision process
According to Laura Brennan, co-founder of EthiCart, a service that provides information about food product sustainability and ethical standards, this paradigm shift is driven by consumers. “It is clear that this generation of consumers is demanding transparency and accountability. They are becoming increasingly invested in the impact brands have on people and the planet.” Lindsay Wright, Communications and Media Manager at the Ethical Trading Initiative, explains that the pandemic has produced an awareness among the public to “make decisions based on the company’s ethical profile in a way that they perhaps have not done so much in the past”.
What can be neglected in analysing the threat of climate change in business is the impact on workers along supply chains who may not be accounted for. Wright explains that “there is going to be a massive impact on workers. Because of climate change, people are going to be displaced, in the food/farm sector in particular.” For global supply chains, ascertaining where these risks are and where practice transparency falls short of targets is critical for mitigating the impact of climate change on workers. Understandable and relevant metrics are needed to carry out this work and for consumers to make assessments based on this greater awareness.
Eleanor Saunders, however, explains that unsustainable practices are so embedded in some regions of the world, and that the kind of incremental shifts in customer behaviour in western countries cannot be replicated – or expected – elsewhere. “You have to go through an entire paradigm shift for an existing system to end and we are in a stage globally, where the system that we have is still fossil based, is still based around kind of unsustainable practices, use of human labour in a way that is unacceptable, monetary flows that do not support kind of sustainable living styles globally.”
At the industry level, similarly, for the fashion and agri-food production industries, Saunders details how it is challenging to enact large-scale change. “[They] have so many layers to their supply chain, or the different processes that they’re doing that for them to overnight say ‘we need to switch and be sustainable’ – it’s almost impossible.”
It is clear that this generation of consumers is demanding transparency and accountability. They are becoming increasingly invested in the impact brands have on people and the planet
Businesses are being propelled towards change by a variety of factors, including environmental regulation, incentivising the building of green industries and the greening of existing industries. Dr Rory Rowan, assistant professor of geography at Trinity, explains that “a more complex understanding of the role of the state, where the state is trying to not be anti-business per se but to try to increase transparency responsibility from business” is needed. “To move forward, there needs to be an idea that environmental regulation and sustainability can be a driver of business”, he says.
Investors are also increasingly paying attention to green investments. Although the moral imperative for change cannot be dismissed, it is this foundation in monetary incentive for businesses to embrace sustainability operations that may be the best assessment of, and indicator for, this change.
Dr Maximilian Schormair, assistant professor of business ethics at Trinity, explains that green investments are “a very growing niche in the investment space. [Investors] select companies based on their reporting criteria. And so for companies to access capital markets, it becomes more important to report on their performance and then also improve on their performance once they have established a mechanism to do so”.
New and agile sustainable businesses are starting to operate from the bottom up, applying a new mindset to every facet of their business, including ethical hiring, streamlining and shortening product chains, and new product models. They are attractive prospects for young people seeking work at businesses which ingrain social values at the centre of their operating model.
Brennan explains that “social enterprises and mission-driven businesses become a lot more common than in the past, young people can not only buy products aligned with their values but work for companies that align with them too”.
To move forward, there needs to be an idea that environmental regulation and sustainability can be a driver of business
But Shormair insists that businesses like this, while promising, are in the minority. “Many companies are now moving in the direction of adopting a weak sustainability approach,” which encompasses economic, social and ecological aspects. The challenge for companies to transition to strong sustainability is to “take these three dimensions into consideration simultaneously. We cannot make easy trade-offs… it means you have to find ways and to be strong in the ecological and social parts in a way that is also financially sustainable”.
With the slow progress in consumption patterns and system changes, however, destabilising the current system will require drastic policy shifts and regulation as well as disruption to the mainstream linear business models.Developing standards for environmental, social, and governance information is a concern not only for investors and consumers, but also jobseekers.
According to Brennan, ethical standards in companies are becoming an increasing factor for young people entering the workforce who “now want to know the companies they are putting their time, efforts and skills into are making a positive impact. Especially since social enterprises and mission-driven businesses become a lot more common than in the past, young people can not only buy products aligned with their values but work for companies that align with them too”.
Whether corporate social responsibility will be enough to appease consumers as a substitute for transparent supply chains, ethical business practices and transformative sustainability shifts remains uncertain. What is clear, however, is that the industries premised against sustainability – fossil fuels and fast fashion – will not be capable of adaptation, and will suffer under the new and emerging business paradigm for it.
