Why don’t the environmental and societal good intentions professed by many businesses necessarily translate into real behaviors? The reality is that all organizations, large and small, face a multitude of practical challenges when they look to implement Corporate Social Responsibility (CSR) initiatives. We’re talking about it a lot these days, but CSR may be easier said than done.
Indeed, creating value for a business doesn’t always mean creating value for society, and vice versa. When businesses are faced with such trade-offs, as they fairly often do, businesses could keep a few points in mind as they look to take their good intentions and turn them into tangible results.
Talk about CSR too often includes references to the moral and/or ethical obligations of businesses and consumers alike – and therefore fails to take into account the real challenges they face when making a change to impact their sustainability. It’s not that they shouldn’t ‘care’, it’s just that we have to keep in mind that business leaders, just like people, have a lot of things on their minds.
Why, for example, do consumers consume responsibly? In fact, research shows it’s not so much about intention as it is about the availability of options. In their paper “the social context of recycling” published back in 1993, researchers Linda Derksen and John Gartrell showed that individuals who declared a desire to recycle yet didn’t necessarily have the readily available means to do so, were much less likely to recycle than those who had not declared the intention, but had the means. In other words, depending on the context, the availability of practical alternatives may be more likely to impact behaviors than feelings of moral obligation.
When we blame people for not taking societal concerns into account, we might not be taking actors in the CSR space seriously enough. It’s not always a moral question and there are many things that can stand between people’s intentions and their actual behaviors – so we have to be focused on finding better solutions for consumers and businesses.
Think about alternatives
If you really want to change people’s behaviors, you need to give them more than just an ethical reason to purchase a product. Companies should offer their consumers practical solutions – that just happen to have an added CSR bonus. Take for example the case of Green Pan: Teflon was well established as market leader where non-stick cookware was concerned, even though their non-stick coating causes environmental risks in the production and posed a potential health risk if heated when empty. There wasn’t a practical, healthier or more eco-friendly alternative until Green Pan came along with their ceramic coating. They were able to offer a similar product at a similar price and have since seen immense success.
And alternatives don’t necessarily need to be comparable in price to take on non-eco-friendly competitors in the marketplace. The Tesla Roadster and Model S cost upwards of $100 000, yet it’s success probably isn’t attributed to just consumers’ ethical desire to invest in an electric car alone: Tesla's consumers are likely also drawn in by Tesla’s image as a status symbol, or novelty. If Tesla is successful today, it’s because this company has taken the concerns of its customers seriously and provided them with an excellent solution.
Forget any perceived advantages or disadvantages
If there are practical hurdles that stand between intentions and behaviors, then one could argue that smaller businesses will experience more difficulties than larger ones, since bigger companies have more resources. But this isn’t necessarily the true. Sure, bigger companies might have deeper pockets, but overcoming any hurdle also requires an ability to change and innovate. In this area, larger companies are at a considerable disadvantage compared to smaller ones that are more flexible and agile. Furthermore, newer and smaller organizations tend to have less of a vested interest in maintaining the status quo, and can be more interested in finding a new way to approach a problem and to go where no other organizations have gone before.
That said, smaller businesses face their own problems. Even if the potential is there, it’s important to keep in mind that any new venture is a risk – start-up survival rates are low, even if the potential to innovate is there.
Smaller companies can also feel pulled in an unsustainable direction. Large firms are typically under more pressure and scrutiny from stakeholders holding them accountable to their actions and “good behaviors” can result in reputation premiums. Smaller businesses, on the other hand, might not have Greenpeace banging on their door, but they’ll nonetheless feel pressures: first and foremost from their employees, but also from industry peers and competitors. Unfortunately, this within-industry pressure is not typically in favor of environmental sustainability over and above what is already required by law. Such pressures are even harder to overcome if they come from a large supplier. Even if a smaller firm wants to engage a CSR strategy, realizing the objective can become very difficult if they depend on a powerful supplier that doesn’t.
Do what you do best…
Overall, most research has shown mixed associations between CSR and firm size. Organizations large and small, start-ups and well-established businesses, have a role to play and have their own challenges to overcome. For example, many of the most exciting clean and social innovations tend to happen within start-ups. At the recent French Cleantech Open there were innovations of all kinds: some that could have major impacts on the way we live in the future, as well as smaller contribution. Ultimately it takes all kinds. In the Cleantech space, start-ups have their role in launching new innovations, thinking outside of the box, taking paths un-tread.
However, start-ups are often limited when it comes to scaling up these innovations – and that’s where larger companies can bring in their deep pockets, marketing machine or supply chain to channel fast growth for small innovations.
… as part of a bigger game of trial and error
In fact, we start to understand that real change will come down to systemic changes of production and behavior patterns, which is complex to say the least. But what we also know is that complex changes requires trial and error and cooperation between multiple actors. Take for example the case of Better Place, an electric car company that raised nearly a billion dollars in venture capital and declared that they were going to single-handedly change the automotive industry. Even with substantial funds at their disposal, the company folded last year. Tesla, even if starting from very similar concerns and objectives, has recently opened up their patents and wants other businesses to use their innovations. They understand that they can’t change an industry on their own.
‘Trial and error’ means that a solution might not seem viable at first. Solar panels, at a time, were seen as too expensive to really survive on the market – until companies like SunEdison came up with the idea of renting factory rooftops, putting solar panels on them, collect the montly fixed payments for the energy provided to the factory from the solar panels, and then selling of these fixed payment contracts to investors like mortgage-backed securities.. All of a sudden, thanks to a new business model, and through trial an error, this eco-friendly technology became viable.
Even within large organizations, through trial and error, multiple factors can line up to create the perfect storm that will allow them to successfully disrupt their business model. InterfaceFLOR, for example, were doing well as a traditional manufacturer of carpeting – through first trying to manufacture carpets that used less fiber, and then testing the use of recycled materials, founder Ray Anderson was able to completely reinvent the Interface business model by selling carpet solutions rather than carpet as a product. This service business model has given them a real financial incentive to reduce waste and invest in product longevity. To this day the company is recognized for their commitment to sustainability.
Feelings of moral obligation, access to monetary and human resources, exposure to social pressures – at the end of the day, no one of these things matters more than the other. Every organization is going to have their own challenges and these challenges need to be taken seriously.
Lepoutre, J. and Heene, A. 2006. “Investigating the Impact of Firm Size on Small Business Social Responsibility: A Critical Review.” Journal of Business Ethics, 67(3): 257 – 273.
Lepoutre, J. 2010. Identifying Opportunities in Clean Technologies. Flanders DC and Vlerick Leuven Gent Management School. 41 pp.
 L. DERKSEN, J. GARTRELL, “The Social Context of Recycling”, American Sociological Review, Volume 58, Issue 3, 1993.