The role of corporations in climate change and social inequality

Companies say all the time that they are or want to become sustainable. Corporate social responsibility (CSR) is also a concept that companies often use in the same breath. But what exactly do those terms mean? And don’t they encompass much more than the business community sometimes thinks? We asked Christopher Wickert, Associate Professor of Ethics & Sustainability at VU Amsterdam, and alumna Skadi Mobius of Move to Impact.

Source: VU Magazine December 2021

Author: Aafke Jochems

Although the terms corporate social responsibility and sustainability are used interchangeably, they do not mean exactly the same thing. ‘They largely overlap,’ says Christopher Wickert. ‘Both are about the question of how companies make money and not how they spend money. In other words, instead of engaging in charity, companies need to rearrange their core processes and consider both the positive and negative effects they have on society and the environment. It’s about how companies can work with stakeholders to address the most pressing issues, such as climate change and social inequalities, as part of how they make their profits. It’s also about recognising tensions, because profit, people and planet are in many cases not in alignment.’

One of the things Christopher investigates is the role of companies in the biggest challenges facing the world today. That role is one that is constantly changing, as the recent climate summit has shown. Christopher says, ‘There are progressive voices that recognise much-needed action and large-scale transformation to save the climate. But unfortunately, there are also voices that slow down progress or even make it go backwards. A major fault line is that between market-based and regulatory-based mechanisms, and between voluntary and mandatory measures’.

Framing sustainability

When Christopher was a student himself, CSR was hardly part of the curriculum. Now it has become mainstream. Under Christopher’s leadership, students investigate, for example, how sustainable large international companies are. Core processes are measured on how ecological, social and ethical they are on the basis of objective criteria. Large companies can count on communication departments that know how to frame sustainability. Plenty of communication about the sustainable aspects of the company, but the less sustainable ones are hidden. ‘SMEs communicate much less about sustainability, which does not mean that they take less responsibility,’ explains Christopher. Family businesses in particular feel a responsibility to include sustainability in their core values.

From commitments to responsibility

Christopher thinks the fact that sustainability has become a fashionable term is simultaneously good and bad news. ‘It is good news that as many companies as possible put sustainability high on the agenda. The bad news is that if everyone does that, it becomes more challenging to stand out and gain a competitive advantage. It is often enough to be considered socially responsible, at least in the short term. In this sense, it is a serious problem that many companies do not do what they convey. In many cases, sustainability remains disconnected from the core activities.

What we often see is that companies do apply sustainability, but only address the low-hanging fruit and not the high-hanging fruit, such as CSR issues for which there is no direct business case. Companies need to move from commitments to responsibility. We need to measure their concrete output in terms of real improvements in key social and environmental conditions, rather than in relative emission reductions.’

Companies and organisations that really want to gain insight into their sustainability can turn to various companies, including Move to Impact, the impact consultancy firm of alumni Skadi Mobius and Amber Kesselaer. They got to know each other during the VU Master’s programme in Management Consulting. With a data-driven approach, they make it clear to companies and organisations how sustainable they are and how they can subsequently minimise their negative impact. Skadi and her colleagues look at the company’s existing strategy and connect that strategy with sustainable targets. This concerns the impact in three areas: ecological, social and financial/economic. In other words, what do you take from the earth to create profit, which people are involved and what is the financial, economic context? With dashboards, tools, templates and checklists, they show the impact journey and show companies all the things on their path to becoming more sustainable.

Technological waste as eyeopener

Skadi says, ‘Companies often say that they are sustainable because they serve sustainable coffee or recycle. Or they have appointed a sustainability manager and think, ”He will take care of it”. But that’s not how it works. Being sustainable involves much more. An eye-opener for companies is often their technological waste. Think of minerals and metals that have to be extracted from the ground. Or the energy consumption of servers. They don’t consider that.’ Skadi emphasises that it is essential that there is commitment from the top. Sustainability must be integrated into all processes and supported by the employees. In this way, not only does the company become sustainable, but the sustainability also adds value to the company. ‘Sustainability really needs to be embedded throughout the company.’

Reducing is crucial

To become a sustainable organisation, Move to Impact uses four steps that companies must take: inform, measure, reduce and compensate. Reducing is the step that companies regularly skip; compensating is easier. Skadi says, ‘But reducing is crucial; 85% of the world’s emissions is caused by industry. As a company, you really must consider what your possibilities are to reduce and act accordingly. That costs money, but you can’t escape it. We need to get rid of the idea that companies are to be judged only on their profit-making. This must also apply to sustainability.’ This will not happen voluntarily; legislation and regulations are necessary. For example, the European Union’s Corporate Sustainability Reporting Directive requires larger companies to be more transparent about their sustainability. Skadi says, ‘Companies really must do something about it now. Sustainability may be a hype, but hype or not, the future is here and now!’