Is the Environment the New Corporate Responsibility?

corp-resp.jpgI’ve recently struggled with the question: who bears primary responsibility for addressing the environmental crisis – government, companies, individuals, or all 3? Responses were split almost perfectly in quarters, suggesting that all parties are responsible for solving our environmental crisis. Fundamentally I believe that individuals hold the key – both government and businesses are beholden to them. But the reality of the situation is that institutions are far better organized to take concerted action. And without concerted action, we will see global warming, water shortages, and a series of other environmental problems come to roost.
Corporations are uniquely positioned to make a significant and positive impact on our environmental challenges, and for that reason they need to be held responsible. In other words, it’s time for them to step. It’s time for companies to step up to the plate and address our collective environmental challenges for 3 primary reasons.

First, it has to be done; and if companies don’t do it, government will. We already see this in a variety of areas in California, where government is imposing ever-stricter building and disposal requirements on businesses. Second, companies represent the will and interests of thousands if not millions of customers. By identifying and acting upon eco-friendly initiatives that matter to their customers, companies can have a huge environmental impact (and build loyalty with their customers at the same time) on the order of thousands or millions of people. Finally, companies should recognize that individual consumers do not have the time or financial resources to understand all of their choices in the marketplace; the result is that consumers’ desires and their purchase habits are frequently misaligned. It’s the company’s responsibility to recognize this fact and to make it easy for their customers to make eco-friendly choices. Ultimately, companies need to think of themselves as partners with their customers with a common mission of helping our planet, and they need to realize that the corporate entity is uniquely positioned to take a leadership position on behalf of their customers.
If we had 500 years before the effects of CO2 emissions and water usage and excessive waste were felt, then perhaps natural market mechanisms would be sufficient – the green revolution would penetrate consumer consciousness at a natural (and slow) pace, and companies would adjust their products and processes accordingly. But we don’t have 500 years. We don’t even have 50. That’s why it’s the responsibility of institutions to educate their customers and make green options easily accessible to them. If companies don’t embrace this responsibility soon, the dull hammer of government will be forced to act.

4 responses

  1. This is a great question that we should all think about all the time. The answer is us, through our government. I agree that corporations are uniquely positioned but expecting them to sacrifice profits (which is after all, their only purpose) when competitors do not is unrealistic. The good ones with management that cares, must sink to the level of the least, the most externalizing, profit seeking of all, or management will be looking for new jobs when Wall Street demands short term profits.
    Corporations will externalize everything they can. That’s the system government has given them. We need to place monetary values on air, water, CO2 emissions- everything that they use and don’t pay for. The balance sheets will show these as expenses.
    The dull hammer of government??? Today the administration with the lowest confidence ratings in history is buying equity positions in nine mega banks. Small non-voting positions (preferred stock). Some call it a nationalization, which is a bit silly. But the markets are liking it. Badly managed government is a tool of the free market fundamentalists to convince us that government is bad. Big government is necessary to manage a big economy. Too many of us have been convinced that there’s no difference between big government and bad government. Remember “Heck of a job Brownie”? FEMA was an excellent organization in the 90’s. His incompetence and inexperience convinced millions of us that the problem was government, when the real problem was incompetence and dogmatism of the people in the government.

  2. Well put. I agree that companies will play a disproportionately large role in environmental sustainability. The only open question is whether it will be largely voluntary or by fiat.

  3. @ Rob B
    I agree with much of what you have written. But corporate America drives profits by listening to their customers. And if customers/consumers care enough about the environment for the government to act, then they care enough about it for the companies (who drive profit by serving them) to act. Granted, there are many singularly unprofitable environmental initiatives that companies cannot be expected to lead. But there are also plenty of opportunities for companies to *both* profit and serve the environmental interests of their customers. Once companies understand the misalignment between green intentions and green actions among their customer base they will be in a good position to develop programs that are both good for the environment and for the bottom line.

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