Beyond Economics and Values: Why do companies really behave in socially and environmentally responsible ways?

By now, most managers are familiar with the rhetoric of sustainable business practices. In books, conferences, MBA programs, and business journals, the “buzz” around the 3P approach has helped raise the consciousness of the business world. There are two main arguments often cited for why a company should implement sustainable practices: (1) companies can save and/or generate more revenue and (2) values matter and operating in a socially and environmentally responsible way is the “right” thing to do. To date, many Fortune 500 companies have made significant steps towards implementing sustainable business practices. But are ethics and financial self-interest primarily responsible for this transition?
Companies do not exist in a vacuum. They are greatly influenced by what others in the business world are doing. Businesses learn to “walk the talk” by operating in an environment where others are doing the same.

John Campbell, a sociologist at Dartmouth College and Copenhagen Business School, helps us understand how normative pressures in the sustainable business world influence a company’s social and environmental perfomance. (See his recent article published in the Academy of Management Review), These include effective and organized industry self-regulation (like Fair Trade or Forest Stewardship Council certification); monitoring by NGOs, investors, and the press; institutionalization of the 3P approach in business curricula; institutionalized dialogue with stakeholders; and membership in 3P trade associations (like BSR, Co-Op America, and SVN).
The main idea behind this research is that normative pressures to behave in socially and environmentally responsible ways matter. Absent government regulation, influence from industry associations, civil society, and the education sector serve to motivate companies to adopt the 3P approach.
However, the big question remains – is this type of pressure significant enough to create large-scale “enlightened capitalism,” or will federal/state regulation facilitate this process faster? Tell me what you think…

Shannon Arvizu, Ph.D., is a clean tech educator and cutting-edge consultant for the auto industry. You can follow her test drives in the cars of the future at

5 responses

  1. Perhaps the question we should be asking is less “why” companies are going for the triple bottom line nowadays, but “why it took so long” for them to move in this direction in the first place. If government mandates are what is needed to speed up the process, then let’s have more of those. I suppose the first step in that direction is a change in the current political leadership in DC. 2008 anyone?

  2. Hi Shannon,
    It does not surprise me that businesses are pressured by legislation or practices of other competing businesses. Businesses are people, on a macro level and so peer-pressure or the need to conform to the certain extent will always exist. Ultimately, the motive for sustainable change has to be for the sake of the city/state/country/world community at large and not for profitable reasons. Otherwise, the essence of what sustainability stands for will eventually be tarnished, yet again.
    Of course federal/state legislature will force companies to implement certain practices, however, if the “heads” of these companies begin to work, not only for themselves, but for the sake of “the people” and for the sake of having a healthy living environment (realizing that they are not separate from the people and can not exist without the environment) then I belive companies will begin to practice sustainable ways of operation for the LONG TERM benefits that this will have on the earth and the people who must ultimatly live here.
    Thanks for this blog.

  3. Green is the new red white and blue. I’ve been saying that for a while and I just saw it on a magazine. Budgets for CSR are great, but solid recycling programs can help companies get started in a “revenue neutral” way. For example, a surprising amount of businesses can generate revenue doing cardboard recycling ($150+ per ton currently) and
    as well. These programs can pay for their waste management program and provide a surplus. The big win of course is in good PR and brand equity. Green and CSR are hard to translate into shareholder value.

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