Corporate Social Responsibility and the Environment: Why It Matters

Corporate social responsibility (CSR) is the idea that businesses have obligations not only to shareholders but to society at large and must act in social and environmentally responsible ways. This is sometimes referred to as the “triple bottom line,” measuring and responding to social and environmental impacts alongside profits. 

The triple bottom line consists of “three Ps”: profit, people, and the planet. By focusing on people, businesses consider all stakeholders, including customers, employees, and the communities affected by their operations. In focusing on the planet, businesses commit to reducing their environmental impact.

Environmental CSR Approaches

Corporate social responsibility means a business’s performance is measured not only in terms of profit, but in how well it addresses its social and environmental impacts. While the notion of businesses “doing good” isn’t new, the modern iteration of CSR emerged in the 1950s and evolved during the 1960s, influenced by social movements for racial justice, labor rights, and environmental protection. Over time, the environment became a prominent focus. 

Business and industry have enormous environmental impacts, from emitting hazardous pollutants to consuming vast amounts of natural resources. Today, many companies undertake environmental sustainability not just as a legal obligation, but as a business opportunity and moral imperative. 

Carroll's Pyramid of CSR

One of the most influential CSR frameworks, published in 1991 by management expert Archie B. Carroll, is a simple pyramid with four domains: economic, legal, ethical, and discretionary (philanthropic). Together, these domains serve as a guide for how businesses can navigate societal responsibilities.

In the economic realm, quite simply, businesses must make a profit in order to continue operating, but they must do so within the law. The ethical domain means operating in ways that defend stakeholders’ (not just stockholders’) rights: the obligation to “do no harm.” The discretionary domain involves anything related to corporate giving: donations, volunteerism, and other ways of “doing good.”

Circularity

Many businesses are trying to integrate the “circular economy” into at least some of their practices. Circularity seeks to avoid waste by putting into action the old mantra of “reduce, reuse, recycle” along with activities like renting rather than owning, and repairing instead of tossing damaged goods. In this way, production becomes a closed-loop system in which old or undesirable products avoid the landfill. 

Reducing Pollution

So many products contain toxic chemicals or emit them during manufacturing processes. But some companies are reducing dangerous pollutants. From clothing companies switching to non-toxic dyes to restaurants replacing single-use plastics with biodegradables, many businesses practicing CSR strive to reduce or eliminate toxic substances in the air, soil, and water. 

Cradle-to-cradle design is one solid approach to reducing the pollution footprint. The circular framework strives to eliminate waste by breaking down products into their basic components. A cell phone’s metals and minerals are extracted for reuse instead of going to e-waste landfills and becoming toxic waste that harms workers and nearby communities. Biological materials like food or natural fabrics become compost to produce more raw materials. One challenge is building infrastructure that can accomplish these tasks efficiently and to scale. 

Mitigating Climate Change

Some businesses focus explicitly on reducing greenhouse gas emissions that cause climate change by limiting energy consumption, generating clean energy, or offsetting their emissions with carbon credits. This can also mean capturing carbon or methane for re-use—another example of circularity. 

A business can approach such efforts in myriad ways. It might mean installing solar panels on company headquarters or retrofitting offices and manufacturing facilities so that they consume less energy. It could involve developing more energy efficient manufacturing techniques, or reducing emissions from shipping and transport. Businesses can also apply pressure on supply chain partners. 

Land and Biodiversity Conservation

Whether it’s the sourcing of raw materials or siting of manufacturing facilities and office buildings, businesses have a substantial ecological footprint. Funding projects to restore or protect biodiversity are ways companies can mitigate those impacts. 

Sometimes this takes the form of conservation. It could also mean supporting Indigenous-led land management practices that protect biodiversity. It might involve cleaning up a former mine and restoring the ecosystem. Other approaches explore co-existence: for example, regenerative silvopastoral systems that combine crops, livestock, and trees in ways that protect biodiversity and natural resources.

Success Stories

The outdoor recreation company Patagonia has become a global model for CSR and environmental sustainability. The company strives to be truly circular, from verifying supply chain sustainability, to using recycled and organic materials, to limiting consumption through reuse and repair of its products. For 35 years, Patagonia has also contributed a portion of its sales to environmental preservation and restoration, and started a non-profit to encourage other companies to follow suit. 

Dr. Bronner’s Magic Soaps has an extensive history of social sustainability, and more recently has made significant strides in environmental sustainability. It switched to all organic ingredients in 2003, and since then has worked to improve its supply chains. Dr. Bronner’s now sources its ingredients from certified Fair Trade and Organic smallholder farms and has assisted them in developing sustainable practices. Now the company is collaborating on regenerative agriculture initiatives to ensure an ethical supply of palm oil. 

The Fair Trade-certified clothing maker Indigenous sources its raw materials from local artisans in Peru and provides fair wages to workers. Indigenous uses natural materials and low-impact dyes,  working with independent organic cotton farmers and alpaca herders. Indigenous supports a number of social programs in partner communities, including childcare services, clean water provision, and local economic development initiatives.

Concerns

Reducing unethical and environmentally damaging practices are laudable goals, but considerable gaps often exist between intentions and results. While most companies today articulate CSR and some form of environmental protection as priorities, many lack the will or vision to make truly systemic change. 

There is no shortage of companies getting called out for ineffective sustainability policies and greenwashing. Fiji Water faced a class action lawsuit for labeling its bottled water as carbon negative, which the plaintiffs claimed was based on dubious carbon accounting. H&M, the global clothing retailer, has an impressive sustainability portfolio, but still produces resource-intensive fast-fashion apparel. Oil companies are routinely criticized for advertising that misrepresents their contributions to climate change and overstates their mitigation efforts. Most companies that have implemented CSR exist on a spectrum somewhere between intentional greenwashing and genuine sustainability. 

Companies must also guard against the risk of unintended consequences leading to environmental injustice. Reducing pollution is a good thing, but not if it just shifts harm to vulnerable communities. Carbon trading programs have come under scrutiny for allowing companies to continue polluting if they finance emissions reductions elsewhere. The resulting environmental damage often falls on low-income communities and people of color. Real corporate responsibility means ending the practice of “solving” environmental problems at others’ expense.

There are still far too many loopholes, pitfalls, and opportunities for greenwashing to take any company's sustainability claims at face value. Today, a wide array of sustainability certification schemes are available to help companies gain an accurate bottom line assessment of their social and environmental impacts. Like CSR policies, the quality of certification programs can vary considerably. Treehugger has published a guide to some of the most rigorous independent certifications to help you sort through what true sustainability entails.