Lecture 5 - CSR & The Environment (2) - The University of Western Australia PDF

Management & Organisations: The challenge of environmental sustainability for M&O DR SHUKRULLAH FASSEHI ‘If the life-supporting ecosystems of the planet are to survive for future generations, the consumer...

Management & Organisations: The challenge of environmental sustainability for M&O DR SHUKRULLAH FASSEHI ‘If the life-supporting ecosystems of the planet are to survive for future generations, the consumer society will have to dramatically curtail its use of resources—partly by shifting to high quality, low input durable goods and partly by seeking fulfilment through leisure, human relationships and other non material avenues’ —Alan During, How Much Is Enough (1992) Multi-Choice Quiz 1 Reminder  20 Randomised questions to be completed in 20 minutes.  Questions will relate to lecture content covered from week 1 to week 5 inclusive  When: MCQ test 1 opens at 5pm on 21 August, and closes at 11:59pm on 22 August  The Quiz is Open Book The University of Western Australia 2 Essay Submission – Via Blackboard  Due 11:59pm, 29 August 2024  How to Submit? The University of Western Australia 3 Essay Submission – Turnitin Reports  You can submit your essay at anytime  This means you can check your Turnitin Similarity Report and adjust your essay if need be (see this library guide)  You simply make a new submission to override previous ‘draft’ submission  HOWEVER, your last submission before the due date is your final submission, meaning if you try and upload a new version of your essay after the due date (i.e. late) Turnitin will not allow you to make a new submission.  Turnitin % / Similarity Reports  % are only a guide. For example, 3% may still include plagiarism, 20% may have no plagiarism. Do not ask me or tutors questions about % - read the report carefully to ensure you are confident that you have addressed any academic integrity issues. The University of Western Australia 4 IMPORTANT INFO Next week (Week 6): NO MGMT1136 TUTORIALS Next week: NO FORMAL LECTURE - the usual lecture time slot will be a drop-in session to ask any last-minute questions about your essay 5 The University of Western Australia  Overview The challenge of sustainability and what lies behind the challenge A critical examination of CSR & sustainability Tools for assessing sustainability claims Define key sustainability principles At the end of today's class you will: have gained an understanding of the meaning and dimensions of sustainability and CSR be able to distinguish between strong and weak approaches towards sustainability be able to apply the sustainability concept to the business context The University of Western Australia 6 Why Should We Care About Sustainability?  What do you think are top 3 sustainability issues confronting humanity? The University of Western Australia 7 Why Should We Care About Sustainability?  What do you think are top 3 sustainability issues confronting humanity Rising world population Decline in arable land Decline in drinking water Biodiversity loss It is these trends that explain the Climate change growing interest in the Resource depletion sustainability of human Growing pollution and toxicity development Persistent poverty Exploitation of low wage economies 86 of the 90 critical environmental issues confronting the planet remain unresolved WHAT DO THESE ISSUES MEAN FOR ORGANISATIONS AND MANAGEMENT??? The University of Western Australia 8 Example: What Does Climate Change Mean For Management and Organisations? UN General Secretary Guterres warned: “We are sleepwalking to climate catastrophe…In our globally connected world, no country and no corporation, can insulate itself from these levels of chaos”. (Guterres, 2022) Source (IPCC, 2021) For the world to keep warming between 1.5°C and 2°C requires rapid and deep emissions reductions across all sectors in the next 10-15 years. Such mitigation demands: technological, economic, institutional and socio-cultural change from every actor The University of Western Australia 9  Sustainability of What? Sustainability was first conceived as an environmental issue only: Sustainability equals nature conservation Wider definition of sustainability – the use of resources to enable society to satisfy current needs, without compromising the ability of future generations to meet these needs (est. World Commission on Environment and Development, 1987) – “Brundtland Report” Today sustainability stands for the balancing of many issues and dimensions: Sustainability now encapsulates political, social and cultural as well as environmental and economic concerns e.g., Quadruple Bottom Line Meuer et al. 2019 identified 33 unique definitions of corporate sustainability The University of Western Australia  10 Think about what products you have used today The University of Western Australia  11 Assumptions of Humans & Management & Organisations – Nature as externality What Does this image convey? The paradox of GDP as an example: Great a measuring quantity, BUT totally disregards quality and consequences of quantity. What could be a better tool for measuring the success of an economy? The University of Western Australia  12 Dealing with sustainability is often referred to as a ‘Wicked’ Problem because: Long-term Focus Requires action from everyone Benefits are difficult to see or measure Costs are more immediate Let’s look at two approaches to dealing with this wicked problem: 1. Traditional approach reflected in Corporate Social Responsibility 2. Operating within planetary boundaries ‘donut economics’ The University of Western Australia  13 Corporate Social Responsibility  CSR: the obligation of organisation management to make decisions and take actions that will enhance the welfare and interests of society as well as the organisation  View organisation as having internal and external stakeholders  Careful balancing of stakeholder needs The University of Western Australia  14  Corporate Social Responsibility – doing well while doing good? Friedman’s Doctrine (1970: 17): Businesses that consider their social responsibility are ‘accepting a socialist view’ or at best ‘hypocritical window dressing’. Why? Responsibility is to maximise profits', founded on his deeply ideological view that, ‘there is no “social” values, no “social” responsibilities…[because] society is a collection of individuals’. Problem, business will ‘make as much as possible while conforming to the basic rules of society, both those embodied in law and those embodied in custom’ Source: Samson et al, 2018: 207 The University of Western Australia  15 Ben and Jerry’s Ice Cream an Example of CSR The University of Western Australia  16 Political Corporate Social Responsibility  Political CSR: an extended model of governance where corporations contribute to global regulation and provide public goods  BlackRock CEO Larry Fink has stated that, as governments fail to deal with the major challenges now facing the world, the public ‘are pushing companies’ to step in where politicians have failed (i.e. companies become the mechanism to achieve public goods)  Its proponents argue that corporations can represent the public interest if they engage in stakeholder dialogue  Its critics argue that political CSR facilitates the corporate takeover of democracy… and risks plutocracy Business’s engaging in CSR ‘is to be simultaneously legislator, executive and jurist’ (Friedman,1970: 17) The University of Western Australia  17 PCSR?  Corporate tax avoidance through the lens of political CSR Paying a fair share of corporate tax is THE corporate social responsibility Amazon – paid zero corporate tax in 2018 and only 1.2% in 2019 While the US corporate tax rate was 21% In 2020 – Bezos pledges $10 billion towards his Earth Fund Political CSR: The transfer of decision making on public issues from democratic governments to private individuals Other example: Carbon Offsetting Schemes Rhodes. (2021). Woke capitalism : how corporate morality is sabotaging democracy. Bristol University Press. The University of Western Australia  18 A Critical Appraisal of CSR – Lecture Reading 1  Banerjee, S. B. (2008). Corporate Social Responsibility: The Good, the Bad and the Ugly. Critical Sociology, 34(1), 51-79.  CSR and its current limitations can not be understood without understanding the political economic foundations and history or corporations which are a particular form of organisation.  Legal frameworks have created structures where corporations are required to act in the interest of the corporation not the interest of society. CSR is therefore structured by a particular legal and market logic.  In contrast to this logic CSR makes some very different assumptions. The University of Western Australia  19  A Critical Appraisal of CSR – Lecture Reading 1 Banerjee, S. B. (2008). Corporate Social Responsibility: The Good, the Bad and the Ugly. Critical Sociology, 34(1), 51-79. 1. Corporations should think beyond making money and pay attention to social and environmental issues; 2. Corporations should behave in an ethical manner and demonstrate the highest level of integrity and transparency in all their operations; 3. Corporations should be involved with the community they operate in terms of enhancing social welfare and providing community support through philanthropy or other means. Corporations should do all these things because: 4. Good corporate citizenship is related to good financial performance, and 5. If a corporation is a bad citizen its licence to operate will be revoked by ‘society The University of Western Australia  20  Does CSR lead to bad behaviour?  Does Doing Good Give You License to Be Bad?  Yes / No  http://freakonomics.com/podcast/corpor ate-social-responsibility/  Moral licensing  What should we do about CSR? Banerjee suggest that to make CSR Good rather than Ugly we need to make it mandatory not voluntary…, what else can we do? Unilever repeatedly found in breach on human rights OECD guidelines  Have a tool to call out good, bad or ugly (Ford & Gillan 2021). The University of Western Australia  21 Lecture Reading: Fanning, A.L., O’Neill, D.W., Hickel, J. et al. The social shortfall and ecological overshoot of nations. Nat Sustain 5, 26–36 (2022). According to the article, the pursuit of sustainability should focus on two core principles: “(1) an ecological ceiling that avoids critical planetary degradation, which is informed by the planetary boundaries framework for Earth-system stability and (2) a sufficient social foundation that avoids critical human deprivation, which is closely aligned with the 12 social priorities of the Sustainable Development Goals”. This idea has become known as ‘donut economics’ The University of Western Australia  22 Traditional Economic Model The University of Western Australia  23 Doughnut Economics  Rather than the pure pursuit of growth economics we should focus on achieving the ‘sweet spot’ of meeting human needs within ecological boundaries  The city of Amsterd am has trialed this economic model Source: Raworth 2017 The University of Western Australia  24 The University of Western Australia  25  Some ‘Tools’ for Assessing Sustainability Claims and Actions  CSR  PCSR  Donut Economics (balancing ecological and social within planetary boundaries) Weak Sustainability Strong Sustainability Substitutability of natural capital Nature can not simply be substituted - Nature can be substituted Anthropocentric Ecocentric Mechanistic worldview Focuses on precaution and ecological boundaries Nature is ascribed utilitarian values only Challenges entrenched structures and beliefs Strong faith in: technology and efficiency Pessimistic assumptions about sustainability The University of Western Australia  26 Examples of Weak Sustainability Voluntary actions: targets, pledges and self-commitments  Brands announce ambitious voluntary self-regulation – but there are no means to enforce these targets  Woodside claims its emission have been reduced by 11%. Claim does not include emission from burning its gas. Emissions actually went up by 3.5%. 11% decrease was achieved by buying carbon offsets, not reducing emissions. The University of Western Australia  27 Examples of Weak Sustainability Greenwashing – making your organisation appear green while continuing with business as usual Example: Coca Cola Plant and paper bottle – weak application of circular economy principles as it still perpetuates the culture of single use Allow the company to appear ‘green’ but these alternatives are false solutions to the problem March 2023, Australian Competition and Consumer Commission found a large number (57%) of Australian businesses were potentially ‘greenwashing’ The University of Western Australia  28 Examples of Weak Sustainability The Rebound Effect / Jevons Paradox  “Technological progress makes equipment more energy efficient. Less energy is needed to produce the same amount of product, using the same amount of equipment — ceteris paribus. However, not everything stays the same. Because the equipment has become more energy efficient, the cost per unit of services of the equipment falls… A price decrease normally leads to increased consumption. ” Berkhout, Muskens, J. C., & W. Velthuijsen, J. (2000). Defining the rebound effect. Energy Policy, 28(6), 425–432. The University of Western Australia  29  Strong Sustainability Principles  Beder (2006) outlines 3 Environmental Protection principles:  The Precautionary Principle - Response to failures of reactive policy – better to prevent environmental problems  The Polluter Pays Principle - Pricing pollution  The Sustainability Principle - Systems in equilibrium Can we see some examples of these sustainability principles in contemporary organisations? The University of Western Australia  30 The Precautionary Principle: The Responsible Company? The University of Western Australia  31 The Polluter Pays Principle 1% for the planet companies commit to donate the equivalent of 1% of gross Carbon tax or Emissions pricing sales through a combination of monetary and in-kind contributions to support In 2019, the Western Australian Environmental Protection Authority Environmental Partners (EPA) said new projects which generate more than 100,000 tonnes per year of carbon dioxide would be required to buy credits to offset emissions in order to pass the EPA’s assessment process (like the Dutch ‘Waste Management safeguard mechanism) Contribution’ requires companies who use more than 50,000 kgs of single use packaging to pay a fee WA Government rejected the proposal after a significant backlash from the fossil fuel industry (i.e. The rationale behind this principle – Woodside; Chevron & Shell did not polluters bearing the cost will incentivise want to pay to pollute) change in organisational practice The University of Western Australia  32 Systems in Equilibrium Principle: Circular Economy – Closed Loop Systems  In contrast to the ‘take- make-waste’ linear model, a circular economy is regenerative by design  Strong circular economy models focus on reuse systems – recycling is a last resort The University of Western Australia  33  Two Swedish Firms, H&M Vs. Nudie Jeans, who claim to be trying to ‘close the loop’ H&M “BRING IT” CAMPAIGN The campaign raises awareness on the importance of garment recycling. H&M wants to close the loop on fashion by giving customers an easy solution to hand in unwanted garments so they can be reused or recycled through H&M’s garment collecting initiative. By doing so, less garments go to landfill. Nudie Jeans – The Naked Truth About Denim 100% Organic Cotton Free Repair Service Re-Sell Second Hand Products Recycle worn out products Committed to fair wages policy The University of Western Australia ‘Try not to be an asshole’ - Joakim Levin is the CEO and co- founder of Nudie Jeans The University of Western Australia Concluding Remarks Something to consider: Can we make sustainability a reality? What would true sustainability mean for organisations, management and society? Our collective future requires us to resolve the ‘wicked’ problem of sustainability, if we don’t we will live in a word of chaos. 36 The University of Western Australia IMPORTANT INFO  MCQ test 1 opens at 5pm on 21 August, and closes at 11:59pm on 22 August  Next Week (Week 6) is TUTORIAL FREE WEEK (no classes)  Next Week’s Lecture has NO FORMAL LECTURE CONTENTS – the usual lecture time slot will be a drop-in session to ask any last-minute questions about your essay 37 The University of Western Australia