This relatively new concept encompasses an array of different ideas, actions and ideologies. It has to do with the role that corporations play and have played in the ongoing environmental crisis. Its basic premise is that a corporation engages in environmentally beneficial actions to reduce society’s burden on our ecosystem and promote environmental sustainability. The motivations for and results of these actions vary dramatically, but they are usually self-regulatory business initiatives, even though there are public policy examples requiring corporations to be environmentally responsible.
The beginning of corporate involvement in environmental responsibility trailed the powerful environmental movement of the 1960’s. Unprecedented affluence in the postwar years enabled millions of Americans to reject the previous notion that pollution and environmental degradation was the price society must pay for economic progress.
New environmental hazards stirred public concern as atomic energy was developed, the chemical revolution in agriculture boomed with innovation, and the proliferation of synthetic materials grew with the dominance of multinational corporations. The increased scale of power generation and resource extraction technology resulted in environmental degradation. The 1960’s exploded with public outrage over the environmental damage resulting from the business practices of various industries.
In the late 1960‘s and early 1970’s, a few corporations began to respond to public concern though the adaptation of codes of ethics and “Corporate Social Responsibility” (CSR) principles. As dramatic environmental catastrophes continued to occur -- pollutant fires on rivers in Cleveland and Buffalo, children exposed to toxins at Love Canal, the Union Carbide gas leak in Bhopal, the nuclear power plant meltdown in Chernobyl, and the Exxon Valdez oil spill -- corporations began to be held responsible for the environmental effects of their actions, socially, politically and legally.
Public outrage over these and other environmental disasters motivated policymakers to craft legislation such as the Environmental Protection Act in 1969 and the U.S Occupational Safety and Health Act of 1970 which forced corporations to take environmental issues and worker safety seriously and to internalize the costs of what had previously been considered an external concern.
Responding to growing pressure, corporations developed self-regulating codes and strategic policies on environmental management, environmental certification programs, self-monitoring practices, as well as voluntary participation in monitoring by independent auditors. In addition to the tenets of CSR, the notion of a Triple Bottom Line (people, planet and profits), Stakeholder Theory, Environmental Management Systems (EMS), Life Cycle Assessments (LCA), biomimicry, and other corporate movements emerged in the 1990’s. These concepts sought to change corporate culture and management practices by placing a new importance on the environment.
This movement toward environmental protection was a global corporate phenomenon. Indeed, it can be said that European Union-based corporate activity in this area has been much more pronounced than in the US. Over half of the firms that have achieved ISO-14001 standardization that requires rigorous environmental management systems to be installed at a corporation are located in the EU. Many NGOs that promote the idea of corporate environmental responsibility can be found in Europe as well.
Various motivating factors surround the environmental focus that has altered business practice today. These typically have been found to be opportunism or market motives. Some corporations have found an increased competitive advantage and value for shareholders through improved process efficiency, while other businesses have found that product differentiation has helped to capture additional market share by attracting environmentally conscious consumers.
As being a “green” corporation continues to grow in popularity and importance, concerns have risen over whether some businesses are misleading the public about the true environmental impact of their actions. What has become known as “greenwashing” refers to corporations claiming to be “green” though advertising, marketing, event sponsorship, educational material, or reporting, but merely doing so to give the impression that the company is helping to improve society’s ecological footprint, without effective factual basis to those claims.
Although the impact or sincerity behind many of these campaigns is unclear at this time, many powerful business names have signed on to the cause. The CEO of General Electric, Jeffery Immelt, insisted when they launched their “Ecomagination” campaign that “it’s no longer a zero-sum game—things that are good for the environment are also good for business.” Similar sentiments were echoed by Wal-Mart’s CEO Lee Scott when they announced their green initiative: “being a good steward of the environment and in our communities, and being an efficient and profitable business are not mutually exclusive. In fact they are one in the same.”