As someone utters the word “sustainability”, what image does it conjure? Is it the vibrant glow of the sustainable development goals beaming with ambition from the website of the UN? Is it a serene, stability-radiating photo of the planet Earth from space? Regardless the powers of your imagination, these visions are tethered to one generic definition: creation and maintenance of the conditions under which humans and nature can co-exist in harmony to support present and future generations.
Conceptualizing sustainability brings us one leap closer towards taking action. And here our paths diverge in various directions. One calls for gathering under an umbrella of the 17 development goals. Another one goes through the ups and downs of promoting sustainability locally and reforming lifestyle choices and habits. Finally, one of the paths glides towards a well-trodden space of corporate social responsibility (CSR).
The concept of CSR has become ubiquitous as the websites and annual reports of all big businesses and corporations are peppered with it. While there exists no uniform definition of CSR, sustainability, accountability and transparency have been identified to be the bedrock principles upon which CSR rests. Additionally, the European Commission refers to it as a responsibility of “integrating social, environmental, ethical consumer, and human rights concerns into [companies’] business strategy and operations”. This prompts an immediate question of the manner in which the listed concerns are incorporated into business practices.
Up to this day, integration strategies have been purely voluntary, performed mostly in the interests of economy and business, which makes the nature of CSR rather controversial. It implies corporate self-regulation, positioning businesses above the established set of legal requirements and rules thus further curtailing the role of the state. But how effective is it? One example illustrates the gulf between promises and actual corporate practices.
A recent report in the Guardian condemns breaching of environmental standards perpetrated by global steel multinational ArcelorMittal in Zenica, Bosnia. The factory is allegedly carrying out steelmaking works without necessary permits driving up sulphur dioxide levels 166 times above the EU safe limit. Numerous appeals to install filters in the plants along with protests organised by the citizens association were ignored and no environmental improvements have been made. Moreover, the corporation is reported to be exploiting the precarious economic situation in the region as deficiency of accountability mechanisms creates a void for impunity and allows for manipulation and intimidation:
“We have one big corporation that is much more powerful than the state. When the state tries to impose any kind of pressure on them, they just say that they will leave and over 2,000 people will be without a job. The problem is that the state believes these threats,” – says Samir Lemes, a member of the environmental group Eko Forum Zenica.
However, the prevailing sentiment of ArcelorMittal’s website is a far cry from the grim picture painted by the Guardian and Samir Lemes. One of the tabs in the main menu is titled “Sustainability” to improve the plant’s environmental performance and boasts a broad coverage of challenges, outcomes, local cases and reports. Bosnia’s country profile suggests that since 2004, investments for modernisation of production equipment have exceeded 154 million Euros, in improving the plant’s environmental performance. ArcelorMittal promises that the creation of a stakeholder engagement plan will build a pathway for responding to the key social and environmental challenges for the company. It stresses its concerted effort to build a long-term and sustainable future for steelmaking. Rather ironically, the website cites “visible contribution to the local community and the country”, a jarring mismatch with reality.
Governmental intervention, however, can bring far-reaching CSR ambitions closer to reality. A research on a contentious subject of oil spill prevention is an illustration of the effectiveness of mandatory government regulation. Statistical data demonstrate that there was a reduction in the number and volume of oil spills in U.S. waters as a result of the 1990 Oil Pollution Act, specifically as a result of increased legal liability for oil spills and the introduction of double-hull tankers.
Overall, CSR is a futile endeavour unless accompanied with state regulation and increased monitoring of corporate accountability. By blurring the legal boundaries for corporations, governments risk reinforcing the role of CSR as a profit-maximising exercise for building a positive image and boosting the company’s reputation.
Additionally, unenforceable pledges of corporate social responsibility take a back seat when stacked off against commitments of financial returns to shareholders, or “fiduciary duty” in business jargon. Consequently, in order to save their public face and, most crucially, stay afloat financially, corporations convince both the government and the general public to play on their terms. The main purpose of the game is to eschew regulation. Governments need to wake up from the corporate hypnosis and stop seeing CSR through rose-tinted glasses.