What your IE professors didn’t tell you about CSR
I followed a discussion among Chinese sustainability professionals in a chat group about CSR and found one speaker’s comments especially refreshing because he spoke from his experience of working with corporations as a sustainability consultant. I found his area of expertise really intriguing, so I invited him for an interview to pick his brain. This blog post is a synthesis of that hour long conversation (Translated from Chinese).
Q: What’s your view on the status quo and future development of sustainability consulting?
A: Sustainability consulting has evolved from traditional environmental impact assessment to LCA and risk analysis with established database and methodologies. However it still doesn’t quite meet the corporate customers’ demand because what they care about is beyond environmental impact facts, but their implications such as social benefits and brand image benefits. What their competitors are doing and how to benchmark are also of great interest to companies.
To better meet the customers’ demand, sustainability consultancies need to know their language. Consultancies are driven to explore the connection between sustainability and business management, and to help corporations to understand sustainability’s positive impact on their brand image.
Q: What are the motivational factors for corporations to invest in sustainability?
A: It varies and depends a lot on the characteristics of the business. For example, agriculture and food related industries have to pay attention to the environment because it poses unavoidable risks to the business hence plays an important role in decision making.
But in the case of IT and electronics industry, sustainability doesn’t have much visible importance because it is not so relevant to the operational business itself. Besides, there are no clear regulations to enforce principles like eco-design. For many companies, their main driver to do CSR is just compliance.
There aren’t so many companies that would go to the extra mile, even though sustainability can often be used as a competitive advantage. For example, Tesla took advantage of being environmental friendly and got a lot of subsidies and credits from the government, while also setting a good brand image to the customers.
It is very smart of Tesla, especially because nowadays brand image are gaining importance and sometimes can even be more effective than flat-out marketing: the emerging middle class are no longer only looking at the price tags but are caring more and more about the product quality and positive brand image (ie, fairtrade). It could be an opportunity for corporations to improve their brand image, increase product differentiation and competitive advantage. Once recognizing the trend towards sustainability, they wouldn’t want to be dragged along but would try to be the rule makers to get ahead of the game.
Q: On the micro, personal level, who are the key figures in the corporations to attend to sustainability?
A: As CSR consultants, the people we are in contact with are either from the marketing department or “sustainability managers” from the higher management teams of Fortune 500 companies. In reality, how much a company invests in sustainability is often up the judgement of the CEO and the shareholders.
Q: On the global scale, which region is more ahead of the game in terms of CSR?
A: Europe and North America are quite different in this area. North America is still at the beginning stage and is looking up to Europe, who is more experienced with the advantage of a mature market, developed strategies and good coverage of sustainability focus areas. Consultancies have frequent interaction with the academia and are at the cutting edge of making rules for the game. One thing worth noting is that CSR is also very locally based, dependent on personal relationships, so companies often get help from consultancies in their own region.
The gap between North America and Europe is rooted in the differences of their social mechanisms. Europe has a longer history and the social democrats are more sensitive to the environmental issues. Sustainability has become more or less a political issue that corporations have to take it into consideration. The Americans have a relatively late realization of sustainability, social welfare and environmental justice; they are still at the early exploration phase in this area. Many technologies are illegal in Europe but are still ok in the US.
Q: In comparison, how is the development of CSR and sustainability consultancies in China? What are the gaps?
A: Professional sustainability consultancies are still rare in China, good thing is that universities are also taking part. In general sustainable development is still at the early stage in China, largely limited to government led projects like building industrial parks, end of pipe treatment of heavy industries, whose sustainability is questionable in its own. They are too dependent on the top down control but doesn’t leave much space for bottom up actions.
In reality, many manufacture industries in China probably doesn’t even measure up for compliance, let alone doing CSR. It’s a pity because sustainability should be very important to many Chinese companies, as a risk to assess and to manage, or as a strategy to enhance brand image. They still don’t have a good understanding of CSR so they need convincing professionals to communicate these ideas to them in a language that makes sense to them.
Q: What role is academia playing in CSR research and how can they improve?
A: Research on management hasn’t paid enough attention to CSR and there isn’t too many published peer reviewed journal articles on this topic.
Academia on sustainability on the other hand is putting a lot of energy on the macro level: there are a lot of research on data and technological analysis. Even though these studies are necessary, more attention should be directed to connecting sustainability to management in real situations or the studies are not applicable. Scholars should go beyond the technical aspect and look more into operational problems in reality, with considerations to the realistic scale and current political and economic limitations. For example, how does an executive decision that favors sustainability impact the company’s long and short term performance? This kind of analysis is quite interesting, but nowadays mostly fall on the plates of consultancies who are learning by doing. Academia should get out of their ivory towers to get more in touch with the corporations and industries, in order to get a better understanding of their concerns and demands, as well as the practical meaning of policies. Academia could act as a powerful think tank to pave the way to solving real problems.
Q: How is “greenwashing” dealt with in reality?
A: Consultancies are very sensitive and alert to “greenwashing”. However, it is quite difficult to define or regulate “greenwashing” by legislation, which instead can only regulate by setting hard environmental standards. As a result, some companies would take advantage of the blurry boundaries. For example, a globally renowned company presented questionable data in their published carbon emission reports and also avoided discussing the real issues like the intensive carbon emission of the production lines. On the other hand, they oversold their increased renewable energy share in the minor energy intensive areas like the office buildings. The efforts are quite on the surface level and doesn’t really motivate effective actions. However these reports could really paint them a green facade in front of common consumers. These actions are already wandering in the “greenwashing” grey area. Average consumers may lack the professional knowledge to distinguish “greenwashing” from honest effort, so it is the NGO and sustainability professionals’ responsibility to help them make judgments.
Leave a comment below to let me know your thoughts.
And subscribe to email notification on the upper right for more sustainability stories.
Image credit: https://www.google.se/search?q=science+communication&safe=active&espv=2&biw=1366&bih=643&source=lnms&tbm=isch&sa=X&ved=0ahUKEwjvmKuq9vTMAhWuZpoKHZDNBN4Q_AUIBigB#safe=active&tbm=isch&q=sustainability+business&imgrc=kq626bcpLoS86M%3A http://ensia.com/voices/when-science-communication-backfires/ http://www.businessinsider.com/sc/make-sure-your-company-isnt-greenwashing-2013-10?r=US&IR=T&IR=T
